Thursday, June 30, 2011

Lying about Sabah's economic performance and prospect

The current GDP for Sabah is 4%, not 6%.

The current GDP for Malaysia is 7% so West Malaysia should be around

If Sabah were to grow at 10% next year, a near impossibility, given no
commitment apart from empty promises, it is still the same as West
Malaysian's current rate of growth. With much more resources diverted
to WEst Malaysia, the situation will continue.

Just imagine, Sabah only getting 10% of the total natioinal budget,
with a population of 14% and area of 23%?

Will Sabah's GDP ever exceed that of West Malaysia that gets much more
of the national budget?
Never indeed. Just use your common sense.

Upbeat on Sabah's prospects

Published on: Tuesday, June 28, 2011

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Kota Kinabalu: Global publishing, research and consultancy firm,
Oxford Business Group (OBG), firmly believes Sabah has enormous
business and economic potential given what it has to offer investors.

So much so, it expects Sabah to increase its overall share in
Malaysia's GDP from six per cent to 10 per cent in the next five
years, saying it would grow faster than Peninsular Malaysia.

OBG Regional Director for Asia, Laura Herrero, said the book "The
Report: Sabah 2011" launched by Chief Minister Datuk Seri Musa Aman on
Monday is testament to this.

"Not only we have done good business here, it has (also) been a
pleasure to work and interact with the people of Sabah at all levels,"
she said.

"So, foreign businessmen and investors, read this report; take note of
our example; follow our lead and come to Sabah," she said.

She said the rapidly evolving economy of Sabah holds out enormous
business and economic potential.

She said the book that was produced by OBG over a six-month period of
research is worthwhile for the people, foreign businessmen and

The report provides in-depth coverage of Sabah's Development Corridor
(SDC) blueprint and considers the interest that the long-term
development plan is generating among global investors.

The publication charts the wave of new projects which spans
agricultural infrastructure, transport, tourism and logistics, while
analysing the role they are set to play in Sabah's plans to become a
leading economic and investment hub by 2025.

Asia Regional Director for OBG, Paulius Kuncinas said Sabah is blessed
with natural beauty and resources that is key to attracting visitors
and investors alike.

"(Hence) it is worth stating at the outset that the reason our
Publishing Group decided to come here was because we discovered there
are attractive investment opportunities for both domestic and foreign
investors, some of which are overlooked by mainstream investors," he

From OBG's research, he said Sabah is well positioned to benefit from
recent growth in Asean.

It is also well located in the Borneo region to attract Foreign Direct
Investment (FDI) in the next 5-10 years, he said.

He said Oxford Business Group found there are a number of sectors
outside traditional tourism, agri-business and energy that could
benefit from greater involvement of private sector and investment.

The organisation feels the policy momentum created under the Tenth
Malaysia Plan (10MP) will fuel fresh interest form smart investors
looking to locate in the country's most progressive regions, with
Sabah offering the most compelling case.

"In terms of numbers, we think Sabah will increase its overall share
in Malaysia's GDP from six per cent to 10 per cent in the next five
years as it will grow faster than the more saturated Peninsular
Malaysia," he said.

According to him, growth in new service sectors would likely push
total GDP to USD$12 billion with an average annual growth of above
five per cent.

He said their analysts argued in the report that Sabah had the fortune
of being insulated from the great financial crisis thanks to its
resource-based sector that continued to enjoy financial strength and
solid balance sheets throughout the crisis.

However, Kuncinas said there would be challenges going forward such as
to reduce the dependence on commodities and tourism sectors, which
when combined continue to dominate economic activity in the State.

He said one of the key growth areas is likely to be service-related
sectors that offer support services to established plantations,
agriculture, energy and manufacturing industries.

"Even though the rise of commodity prices recently offer attractive
returns to local business, we found it very encouraging the State
managed to post 6.8 per cent growth in services which will help to
diversify the overall economic mix of Sabah's economy," he said.

To achieve sustainable growth and the advanced economy status included
in Malaysia's 2020 Vision, he said Sabah needs to focus on creating
alternative sources of growth by focusing its efforts on education,
research and innovation.

Just like other states in Malaysia, he said Sabah is in competition
for young talent that will determine its competitiveness in the

He said retaining this talent within the State will be key to further
productivity growth and advancing the economy beyond natural

On the other hand, Kuncinas said Sabah's exports this year continue to
be dominated by palm oil, palm kernel oil, rubber, crude petroleum and
processed woods.

"We believe that these will continue to provide income momentum in the
next five to 10 years," he said.

Looking at the trade data, he said they found a high share of
processed fuels, lubricant and mineral, which accounted for 18.3 per
cent of the total this year.

He said there are still huge investment opportunities in the
downstream segments, especially in oil and gas sectors with Sabah in a
good position to become one of the leading downstream processing
centres in Borneo.

"We also see an upside in the logistics sector with Sabah well
positioned to cater for remote regions of East Asia with the Sapangar
Bay Container Port well placed to become one of the leading trans-
shipment centres in BIMP-EAGA," he said.

Supported by rising world palm oil consumption, Sabah's ports have
returned to full capacity after weathering the global economic crisis.

Nevertheless, he said one of the long term structural issues that will
need to be addressed is the Cabotage Policy and also the nation's hub-
and-spoke transport policy.

He said quite a number of businesses interviewed by the OGB said that
logistics operating costs in Sabah are higher than that in the
peninsula, which undermines the State's competitiveness.

However, he said that OBG was encouraged to learn that the State is
now addressing the vital issue of external and internal connectivity
through infrastructure upgrade investment.

Through the Sabah Development Corridor (SDC) programme, he said the
government is implementing road and rail projects across the State
that will have substantial benefits for both movements of goods as
well as the tourism sector.

Kuncinas noted that Kota Kinabalu is already enjoying advanced air
connectivity with a high frequency in both domestic and international

"We are compiling investment opportunities in Sabah in our first ever
report and as we continue our coverage, we hope to provide more detail
and insight," he said.

But the best case scenario now, he said, is that Sabah's economy will
continue to outperform other Malaysian states with GDP per capita
increases helping to drive rural and urban development across the
entire State with new growth sectors coming on stream in the next 5-10

Given its location and resources, he said Sabah is a natural choice
for many industries and a contender for the status of sub-regional

With effective implementation of the initiatives now under way, he
said it may be a prize soon captured by the Land Below the Wind.

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