Investors, both local and foreign, can no longer afford to ignore Sabah, which is on its way to becoming the next economic powerhouse. Its economy is clearly thriving with billions of ringgit being pumped into various industries from palm oil to tourism.
Sabah’s economy was traditionally dependent on lumber. However, it has gradually made the transition to palm oil as this has proven to be a more sustainable resource. It is also highly dependent on agricultural products such as rubber and cocoa.
According to data gathered by the National Statistics Department (NSD), Sabah has been recording strong economic growth. The biggest contributor to its gross domestic product (GDP) was the services sector, which contributed about 50.4%, followed by agriculture at 22.9%, mining and quarrying 16.9%, manufacturing 7.9% and construction 1.4%.
Sabah also recorded a steady increase in exports and trade balance over the last three years. Dr Abdul Rahman Hasan, Chief Statistician of the NSD, pointed out that the state’s export value stood at RM49.4 billion with a trade surplus of RM16.6 billion last year, a significant increase from RM37.2 billion in exports and RM11.2 billion in trade surplus recorded in 2009. Last year, the biggest chunk of Sabah’s exports was palm oil at 38.8%, followed by crude petroleum at 32.88%.
Sabah’s biggest export destination was China. The latter imported RM10.9 billion worth of products or 22.1% of the state’s exports last year. Peninsular Malaysia, on the other hand, remained the biggest exporter to Sabah accounting for 48.1% of the total imports.
According to Norezan Wahid, director of the Sabah Statistics Department, the state recorded the biggest gross output in agriculture compared to other states in the country. He stated that Sabah produced 24.7% out of the total of RM53.45 billion in agricultural output in Malaysia last year.
In the manufacturing sector, Sabah contributed RM34.1 billion to the country’s total output, not including RM4.6 billion in value-added products. The state also recorded RM7.4 billion in the construction sector, the fifth highest in the country.
A Growth Supported by Mega Projects
This year, economists have unanimously agreed that Sabah’s economy is off to a strong start having secured several billion ringgit worth of investments in the first quarter of 2012, guided by an economic plan that is focused on wealth creation.
According to press reports, Datuk Seri Musa Haji Aman, the chief minister of Sabah, have stated that there are now RM112.8 billion worth of investments planned and committed in Sabah ever since the Sabah Development Corridor (SDC) was launched in January 2008. These funds will sustain 31 entry point projects (EPPs), which are expected to generate RM35.5 billion in incremental gross national income and approximately 144,000 new jobs.
The chief minister stressed that the SDC has stimulated the investment climate for the state with several huge investments, from both domestic and overseas, such as in the oil and natural gas industry, palm oil, fisheries, livestock breeding and tourism. The latter, particularly eco-tourism, is currently the second largest contributor to the state’s economy.
Sabah Development Corridor
The SDC is currently second among the five corridors in the country, according to Datuk Dr Yaakub Johari, chief executive officer of the Sabah Economic Development and Investment Authority (SEDIA). SEDIA is the one-stop authority responsible for planning, coordinating, promoting and accelerating the development of the SDC.
He pointed out that many of the economic developments and projects are already in place, thus making Sabah an exciting and vibrant place for foreign investors to come in. Some of the flagship projects include the Sabah Oil and Gas Terminal in Kimanis, which is projected to generate RM6.3 billion; the palm oil industrial cluster (POIC) in Lahad Datu worth RM8.6 billion; and coastal tourism development, expected to contribute RM8.6 billion.
Other projects such as the Keningau Integrated Livestock Centre, the Sandakan Education Hub, the Sabah Agro-Industrial Park, the Oil and Natural Gas Cluster, the Marine Industry Cluster, the Kinabalu Gold Coast Enclave and agropolitan projects are already in the implementation phase.
Launched in February, the RM4.7-billion Sabah Ammonia-Urea Complex project in Sipitan, commonly referred to as Samur, is also expected to have spin-off effects for many industries including agricultural chemicals, plastics and pharmaceuticals.
Other projects in the SDC include the Gleneagles Medical Centre; the integrated Jesselton Waterfront and Sabah International Convention Centre in Kota Kinabalu; the International Technology and Convention Centre in Penampang; the Dalit Bay integrated tourism resort in Tuaran; and the Sipadan Mangrove Resort.
Commercial real estate is not the only area affected by the recent surge in construction. There are also several projects in the energy sector including plans to build a 300MW power plant. The plant, backed by Tenaga Nasional, Malaysia’s largest electric utility company, is due for commissioning in 2015. All of these projects, costing nearly RM5.1 billion, have received around RM500 million in federal funds.