Hajiji (centre) accompanied by State Secretary, Datuk Seri Sr Safar Untong, in a group photo with the corporate and joint sponsors at the opening of SIBES 2022 at SICC here today.
KOTA KINABALU: The Sabah State Government is confident of a rebound this year despite the state economy being affected by the Covid-19 pandemic.
Chief Minister, Datuk Seri Hajiji Haji Noor said various initiatives which have been and are being implemented by the State Government, including reopening the economic sectors and allowing cross-district and state activities.
In addition, he said, the implementation of the National Recovery Plan (NRP) and various stimulus packages by the Federal Government has successfully hastened efforts in Sabah’s economic recovery.
“With the various initiatives implemented by the Government, the negative growth of various sectors in 2020 has shown positive growth in 2021.
“Therefore, Sabah’s economic growth in 2021 is expected to show a recovery trend and will grow slowly but at a positive rate of 3.8 per cent to 4 per cent.
“I am proud to inform you that Sabah created a new history when the state achieved the highest ever state revenue surpassing RM5 billion last year,” he said.
In 2020, the state economic growth declined by 9.5%, which was significantly less than the expected decrease of between 15% and 19%. Overall, the Malaysian economy declined by 5.4% in 2020 when the federal government implemented strict movement control orders.
“However, I am confident Sabah’s economy will grow in tandem with Malaysia’s economy as the world reopens. The Bank Negara Malaysia or Central Bank of Malaysia expects the economy to grow between 3% to 4% last year. The Ministry of Finance in its Economic Report 2022 expects the Malaysian economy to strengthen between 5.5% and 6.5%.
“In other words, Sabah’s best days are definitely ahead of us,” said Hajiji when presenting a keynote address at the opening of the two-day Sabah International Business and Economic Summit (SIBES) 2022 held at the Sabah International Convention Centre (SICC) here today.
The Chief Minister said when he took over as the Chief Minister of Sabah, the State Government embarked on a new journey to chart the state’s future in the next five years.
In March of last year, he said the Gabungan Rakyat Sabah (GRS) State Government launched the five-year Hala Tuju Sabah Maju Jaya (SMJ) Development Plan from 2021, a roadmap that sets out a new strategic direction for Sabah’s economic development.
“We saw this blueprint as pivotal in bringing Sabah into the next decade. As our motto Sabah Maju Jaya suggests, “Sabah Prosper” because when Sabah prospers, everyone prospers!” said Hajiji.
The SMJ Development Plan has three main thrusts. First, the State Government focuses on three main economic sectors, namely agriculture, industry and tourism. Second, the State Government emphasises the human capital and well-being of the people and thirdly, the plan puts an emphasis on connectivity, specifically green infrastructure and sustainability networks.
“The three sectoral economic thrusts as I believe it, will provide clarity on Sabah’s key focus areas, especially for businesses and investors.
“We start with the agriculture sector – encompassing crops, livestock and fisheries. It plays an important role having contributed 16% to Sabah’s GDP in 2019. We will put a heavy emphasis on building the value chain, specifically production, harvesting, processing and marketing. We are also focused on ensuring the agricultural sector is more competitive and sustainable. Thus, we are adopting sustainability practises, pursuing modernisation as well as creating an Aquaculture Industrial Zone for Sabah.
“The State Government also intends to leverage technology and innovation to boost productivity and growth. For example, using drones to map and manage large swaths of palm oil plantations in live time is already commonplace. In Sabah, there is an abundance of opportunities for investors. To give you an example: Last year, the Linaco Group of Companies committed to invest in and develop large-scale high-yield hybrid coconut plantations including downstream industrial development. The project involves an estimated initial investment of RM200 million and is expected to provide 4,250 job opportunities,” he explained.
He said the next sector is the Industrial sector, where Sabah was once an industrial powerhouse in the 1980s. The sub-sectors include mining and quarrying, construction and services with manufacturing being the biggest.
Overall, the industrial sector contributes to 8% of Sabah’s GDP. However, this figure truly does not reflect the sector’s true potential.
“We were on the top and we aim to reclaim our spot. The State Government is fully invested in enhancing infrastructure, nurturing entrepreneurship, boosting investment, and increasing competitiveness by leveraging advances in the Fourth Industrial Revolution.
“As we speak, I am happy to share with you that tomorrow I will witness the signing of three Memorandums of Understanding for high-impact investments in agriculture, industrial and tourism. We are certain these new investments – including an innovative solar glass manufacturing and a large-scale herbs plantation among them, will assure Sabah of good returns whilst creating job opportunities for our people. We look forward to partnering with more investors who are serious about doing business with us. I assure investors, foreign and domestic that the State Government will strengthen the implementation of these projects to ensure their success,” he said.
He said innovation does not necessarily mean technological adoption because it takes many forms.
“For example, the Industrial Tree Plantation or ITP is an innovative public-private partnership between the State Government and the timber industry to reduce and relieve pressure on tropical timber and forest. The ITP initiative has higher yield and shorter gestation period, which will be a game-changer to reviving Sabah’s timber industry to its former peak production of 12 million cubic metres in the 1980s.
“The private sector from the timber industry in Sabah will plant 80 million trees in 10 to 12 years with an investment of RM4 billion. Based on industry input, the establishment of 400,000 ha of forest plantation can create potential employment of 40,000 skilled and semi-skilled employees in the upstream sector. Another 40,000 in the downstream forest industries will be created when planted timber starts to flow.
“The ITP is projected to earn RM7 billion per year from the export of the timber products. In line with this, we must ensure that the timber industry is sustainable for future generations and for the industry. The Sabah Forestry Department as the conservator of the forest is tasked with monitoring the implementation of the ITP to ensure environmental sustainability and governance of the forest.
“The ITP, initiated by the Sabah Forestry Department is not only an economic game-changer but crucial for conservation and sustainability. By planting trees in areas degraded by logging activities, it will go a long way in achieving a carbon-neutral nation by as early as 2050.
“This effort is in line with the Environmental, Social, and Corporate Governance (ESG) and Sustainable Development Goals (SDGs). This is indeed an innovative initiative on the part of the private sector in the timber industry and I wish to congratulate them for taking the lead in making this bold investment,” he said.
Hajiji said high on the State Government’s agenda is the importance of green sustainability, adding the green sustainability agenda is very important as it not only involves environmental issues and global warming phenomenon, but also an asset for economic development and state revenue.
“Sabah is a big region. As such, we have several key industrial zones. There are two free economic zones, namely the Integrated Logistics Services in Kota Kinabalu Industrial Park (KKIP) and the Transhipment Hub in Sepanggar. We also have the Sabah Oil & Gas Terminal in Papar and the Sipitang Oil & Gas Industrial Park. In addition, there is the Palm Oil Industrial Cluster (POIC) in Lahad Datu and the Furniture Park in Sandakan,” said the Chief Minister.
Hajiji said suffice to say, there are many opportunities to leverage multiple sectors across the state.
The proof is in the pudding, he said, adding Sabah has secured RM4.4 billion worth of foreign investments as of June 2021, the third biggest in the country.
“And we are confident Sabah is and will be an attractive destination for investment. I have stressed from the onset that we want to be investor-friendly and we will ease all hurdles to facilitate all investments,” he said.
The third and final sector is Tourism, which was the third largest sector for the state economy as it contributed more than 10% of GDP with tourists coming from China, South Korea, Australia and Taiwan.
“Tourism is our comparative advantage because we have something for everyone from white sandy beaches and beautiful islands to rainforests and exotic wildlife. In short, Sabah is truly blessed with attractions from ocean deep to mountain high.
“We are exploring various ways to enhance our world-class tourism. The State Government recognises Tourism’s importance as an economic catalyst and welcomes investors for win-win business opportunities. This will enhance our competitiveness as we want to ensure that Sabah remains as one of Malaysia’s favourite tourism destinations.
“Sabah’s tourism industry has always outperformed industry expectations in the past years. Prior to the onslaught of the pandemic in 2019, the industry has experienced an upward trend, recording 4.1 million arrivals and registering RM8.3 billion in total receipts and RM12 million in tourism tax revenue.
“While the Covid-19 pandemic has affected global tourism, we are optimistic the tourism sector will recover with the reopening of borders. Drawing lessons from the pandemic, we are balancing mass tourism with high-yield and high-end tourism products. In that regard, we are embarking on several projects to attract tourists in the high-end category such as the integrated Lok Kawi Resort City development, among others,” he said.
Hajiji said Sabah is not only the Land Below the Wind but also the land of endless potential.
“Sabah sits in the middle of a strategic location in Southeast Asia. We are in the heart of the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area or BIMP-EAGA. Through this sub regional cooperation, Sabah has been on the forefront of promoting closer economic collaboration. Sabah will be doing its part to ensure the success of the revival plans among them the BIMP-EAGA Economic Corridors development.
“Likewise, the Sabah–Sarawak 275 kV Interconnection Power Exchange Agreement supports the Borneo Grid and complements the Trans Borneo Power Grid Sarawak–West Kalimantan Interconnection Project, both vital to the ASEAN Power Grid project. This would boost Sabah’s power supply system. A stable electricity supply in addition to water will directly increase both domestic and foreign investments apart from supporting the growth of industrial manufacturing and upstream sectors as well as creating employment opportunities in the heavy and light industrial sector. Power and water supply are two key amenities the State Government is placing high emphasis on, including hydro power projects,” said Hajiji.
The Chief Minister also envisioned Sabah as a potential regional hub for manufacturing, maritime and transportation for emerging and developed countries.
“I foresee Sabah too will benefit from the economic cooperation in the Regional Comprehensive Economic Partnership that came into force earlier this month.
“The planned relocation of the Indonesian capital, Jakarta to East Kalimantan bodes well for Sabah. As more people and businesses move into Borneo, it will strengthen our position and spur economic activities. Investors, domestic and foreign, will have access to this sub region with a market of over 70 million people and growing,” he said.
Hajiji said the Federal Government has heavily invested in building and upgrading the Pan-Borneo Highway to link Sabah, Sarawak, Brunei, and the Kalimantan region in Indonesia.
“I believe connecting this highway with the Trans-Kalimantan Highway will be crucial in building connectivity and promoting economic linkages.
“Speaking of connectivity, it goes beyond physical infrastructure as much of economic and commercial activities take place on the Internet.
“The State Government is working hard to ramp up digitalisation efforts to fully leverage the potential of our digital economy. In this respect, we are working closely with the federal government to ensure every citizen will have access to Internet connection regardless of where they live in Sabah. The Federal Government has allocated RM 3.61 billion to provide wider coverage and better quality of broadband experience for the people, whilst preparing the country for 5G technology under the first phase of National Digital Network Plan or JENDELA from 2020 to 2022,” he explained.
The Federal Government has been very receptive to Sabah’s development needs as evident in the 12th Malaysia Plan which has committed to enhance Sabah’s development as one of the nine main focuses.
“We are confident that with the high level of federal government support we can push ahead to achieve what we have set out to do. With the Federal Government support and in a span of two weeks from December 7, 2021 the Commercial Collaboration Agreement (CCA) was signed between the State Government and PETRONAS which will give Sabah greater say, greater participation and greater revenue sharing in oil and gas related matters.
“Following this success, I launched the Sabah Gas Masterplan early this month on January 4, thus paving the way for collaboration between the State Government and PETRONAS to guide investments in Sabah’s natural gas resources,” he said.
All of this is to say that Sabah is open for business, said the Chief Minister, while calling on start-ups, entrepreneurs, businesses, and investors to have a closer look at Sabah and see what the state has to offer.
“We are always interested in exploring collaborations on building win-win private-public partnerships,” said Hajiji.