Sabah’s strategic location and natural resources hold great potential for foreign and domestic investors 

Kuala Lumpur, 28 July 2022 — The ASEAN Business Advisory Council (ASEAN-BAC) Malaysia held a consultation meeting today with the Sabah state government and state investment agencies on Thursday to discuss the state’s development and recovery efforts.

“Sabah plays an important role in the Malaysian economy, being the sixth largest contributor in terms of Gross Domestic Product (GDP) and strategically located in the heart of the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area (BIMP-EAGA). We are open for business and we welcome serious investors to come to Sabah to explore what we have to offer and establish win-win partnerships,” said Dr Ahemad Sade, Sabah Deputy State Secretary in his special remarks on behalf of the Chief Minister of Sabah, Datuk Seri Panglima Hj Hajiji Haji Noor.

The consultation meeting featured insights from Sabah’s investment promotion authorities Invest Sabah Berhad, Sabah Economic Development and Investment Authority (SEDIA), Malaysian Investment Development Authority (MIDA) Sabah, as well as ASEAN-BAC Malaysia council members.

“We consult the Sabah state government with the hope to be a facilitator in the ASEAN space as well as the domestic economy. So we wish to listen to and understand the problems you face and the opportunities you see. Also your development plans,” said Tan Sri Dr Munir Majid, Chairman of ASEAN-BAC Malaysia.

1. Sabah is strategically located and rich in natural resources but greater land connectivity is needed

“Sabah has great potential in attracting domestic and foreign investment due to its strategic location. Travelling from Kota Kinabalu International Airport one could reach neighbouring countries such as China, Hong Kong, Korea, Japan, Indonesia, Singapore and Taiwan within five hours,” said Datuk Madiyem Layapan, Chief Executive Officer of Invest Sabah Berhad.

“For example, Sabah’s fourth industrial park which is in a strategic location with good infrastructure such as world-class ports has brought more domestic and foreign investment to Kota Kinabalu. The state is also rich in natural resources and provides easy access to raw materials such as palm oil, natural gas, timber, and silica sand,” he added.

Kevin Ukang, Chief Investment Officer of SEDIA’s Investment Development Section, concurred but added that infrastructure challenges remain particularly in terms of land connectivity throughout Borneo and that broader road networks are needed.

The meeting also discussed the Sabah Gas Masterplan which was launched at the start of the year to develop the state’s natural gas resources.

“Sabah’s Gas Masterplan will pave the way for collaboration between the state government and Petronas and guide investment in the state’s natural gas resources,” said Dr Ahemad Sade, Sabah Deputy State Secretary.

“Foreign and domestic investors find access to gas and energy to be a big incentive for manufacturing and so having a gas pipeline passing through industrial estates could form the basis of a vibrant manufacturing sector in Sabah,” said Tan Sri Yong Poh Kon, ASEAN-BAC Malaysia Council Member.

2. Sabah’s investment agencies eyeing new ways to promote and cultivate the state’s potential

Director of Domestic Investment Division from MIDA Sabah Sukri Abu Bakar said “MIDA continues to assist Sabah in attracting investments guided by the National Investment Aspiration growth framework as well as the state’s Hala Tuju Sabah Maju Jaya development plan,” he said.

“SEDIA created a new investment promotion unit last year that focuses on building Sabah’s image as an investment destination while identifying segments that are ripe for promotion. We want to ensure that we can not only attract but also retain investors. Moving forward, we have to foster close working relationships with various investment promotion agencies to attract investments,” said SEDIA’s Mr Ukang.

Datuk Layapan stated that Investors who invest in Sabah enjoy attractive investment incentives from MIDA and SEDIA, and they gain access to a pool of skilled workers at low labour costs. The federal government also provides security measures to ensure investor safety, making Sabah one of the safest places to live and invest in.

ASEAN-BAC Malaysia Council Member Mr Raja Singham concurred: “Another area Sabah could look at is food security and agriculture what with the war in Ukraine and food shortages all over the world, especially since Sabah has large land banks and it could adopt modern methods of food production.”

“Then there is the need to build a digital workforce for Sabah through upskilling and reskilling talents to ensure that the state has people with the ability to meet investors’ needs,” he added.

3. Sabah drives recovery and growth through Sabah Maju Jaya Development Plan

“Sabah’s economy has remained resilient and highly diversified into various sectors notably tourism, manufacturing and services. The Hala Tuju Sabah Maju Jaya (SMJ) roadmap outlines our vision, strategy and priorities from 2021 to 2025. The development plan focuses on three main economic sectors, namely agriculture, industry, and tourism. The plan emphasises human capital development, the well-being of the people, as well as connectivity, specifically green infrastructure and sustainability networks,” said Dr Ahemad Sade, Sabah Deputy State Secretary.

However, the current economic climate presents challenges. “Supply chain disruptions, inflation and price increases are consequences of the COVID-19 pandemic. Then there is the ongoing economic trade war between the US and China, and global conflicts like the Russia-Ukraine war which will not make things easier for economic recovery,” noted SEDIA’s Mr Ukang. “We hope to consult with the federal government on how we can attract more investment in Sabah’s tourism industry and help in its recovery.”

On the topic of tourism, Mr Ramlee Kariah, Sabah State Deputy Director General of Public Service and Secretariat for Sabah Maju Jaya Roadmap said: “Sabah sees the pandemic as a chance to reset and fix the islands and mountains in Sabah. The state saw an increase in tourist inflows in the first six months of 2022 as compared to the same period in 2021.”

Tourism is the largest contributor to the Sabah economy. Tan Sri Munir said, “There is huge potential for growth. Sabah should look to expand the market for tourist arrivals to also include ASEAN countries whose income levels are rising. ASEAN-BAC Malaysia welcomes ideas from the Sabah government on how it can help in this regard, bearing in mind that issues such as connectivity, infrastructure and human resources need to be addressed.”