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8 reasons why Sabah is lagging behind economically
Published on: Sunday, August 04, 2019
By: Datuk John Lo
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So much resources, so much poverty. So much potentials, so few opportunities. These two contradictions best describe Sabah’s peculiar economic circumstances. Sabah is still one of the poorest states with a very low GDP per capita. We used to be No. 2 during the Berjaya era. Since then, Sabah has a down-slide to the bottom, not much better than Kelantan. Why is this so when Sabah has the best soil, biggest acreage of planted oil palm, vast deposits of oil and gas.

Gold is also being mined. The income gap between W Malaysia, especially Klang Valley and Sabah is frightening. Much worse for our brothers and sisters in the rural and coastal areas. Here is my humble opinion of 8 reasons for Sabah’s poverty since independence.


Reason no. 8 – - Poor infrastructures.

Poor infrastructure means high cost, inefficiency and time consuming. Bad infrastructure cause slow and negative economic development in many ways.

Taking into consideration Sabah’s contribution to the national economy including revenue oil/gas, palm oil and tourism, our infrastructure have remained one of the poorest in Malaysia. We have accepted lamely that federal allocations for infrastructure for Sabah have been small because of our small population. It should be on the basis of revenue contribution to national economy. In the name of equity, Sabah should have, at the minimum, one highway equivalent to north/south highway to connect all our major towns.

Other essential infrastructure for economic growth that are lacking are electricity, water and internet access. Now that the federal government is about to introduce 5G, Sabahan political leaders must begin to fight for its early introduction. Sabah has been left very much behind in 4G. Don’t let it happen again with 5G implementation.

Very important is expansion/new airport for KK. KKIA is already on the brink of full capacity. By now, the Federal government should have completed the plan with Sabah government on what to do.

Sabah political leaders are not fighting hard enough for Sabah at the federal level.


Reason no. 7 – - High cost of living and low income.

Sabah has been hit with these “double whammy”. The Ringgit in W Malaysia and Sarawak goes a lot further than the Ringgit in Sabah. Prices of food, housing, cars and most essential items are more expensive. But minimum wage and all salaries are much less. More succinctly, there are very few high paying jobs in Sabah as no PLCs and major federal government GLCs have head offices in Sabah.

Adding to this is that Sabah produces very few items of our daily requirements. Most basic things are imported by W Malaysia and elsewhere. The federal price equalization scheme has limited efforts only.


Reason no.6 – - Poor employment and business opportunities.

The sad situation in the lack of job opportunities is best summarised thus. In the past, parents who have children studying overseas could not wait for their children to return. Jobs were readily available. Now, they encourage them to seek jobs overseas and not to come back to Sabah. Also look at the number of unemployed or under employed graduates.

Likewise, there is a total policy void to position Sabahans to start/own their business.


Reason no. 5 – - Low quality education, schools in poor condition.

Education is the cornerstone of a progressive society. Many government schools or government funded schools are of poor quality, dilapidated, especially in the outlying areas. The teachers’ housing is also well below par. These schools can only produce poor students who will continue the rural poverty cycle. This has been going on since time memorial. These rural students are not being educated to face the rapidly changing world.


Reason no.4 – - Low level investment.

Federal government has overall responsibility for promotion of both domestic and foreign investment. Sabah has received scant attention, even in areas where we have strong comparative advantages like oil/gas and oil palm. Sabah will soon become the largest producer of oil and has the largest deposit of gas. Why Sabah is not having an equitable share of investment in these two areas? I have never read or heard relevant federal ministries/agencies promoting investment for Sabah. Why states in W Malaysia without oil/gas have many petrochemical industries like Malacca and Johor?

Terengganu and Sarawak have been favoured with many petrochemical investments but NOT Sabah. Why not promote SOGIT? Why not position Sabah to service the expected boom in exploration in the South China Sea?

Likewise, federal government has given little or no attention to promoting investment in Sabah tourism development even though Sabah has built up an impressive tourism industry. Why no federal initiatives to upgrade KKIA as the gateway for Borneo? 


Reason no.3 – - failure to take cognisance of global economic opportunities.

Kampong politicians produce kampong mentality. Because our politicians have been overly self-centred, inward looking and some are just ignorant of global economic opportunities, Sabah has missed out a lot of opportunities outside. Best example is agriculture. We have missed out on shitake mushroom. Sabah could have supplied many high value agriculture products to China. Federal government has promoted durian export to China from W Malaysia in a big way.

But we are the verge of missing out in durians for the Chinese market. Sabah has not murmured any policy initiatives/directives on how Sabah durian growers can benefit so far. Our leaders are too slow. They have become insular. They are followers. We don’t have economic leaders.

Do we know the acreage already planted with durians? How much is being or will be planted in next 10 years? What specie? Where are they? When will they produce enough for export to China? Will the fruits be of export quality? How can Sabah growers export in term of logistics and cold room facilities? How will government give marketing assistance in China? Can Sabah brand our durians like Tampaka? Or follow W Malaysia in mau sang wang? How will export licence be issued or approved? How many export licences for Sabah? Will Sabah growers/exporters be given export licence separately? Chinese health compliance requirements? Time we look into all these and many other issues now. Procrastinations will be costly to our economy.


Reason no.2 – - Lack of economic model for long term planning.

Sabah has its annual budget. We have tried to piggy ride on the 5-year Malaysian Plan. Sabah has never, as far as I know, an economic model. Economic direction has been dependent to the sitting Chief Minister. Good economic progress if he is keen on economic development like Tan Sri Harris. Or can be very bad if the CM has interest elsewhere.

Depending on the whims and fancies of the CM has brought us “a yo-yo” economy. More urgent than never before, Sabah must have an economic model and economic leadership so that we can: - [a] Identify our economic problems. [b] Restructure the economy. We have been dependent on commodities namely oil palm and oil/gas both of which are on long term decline. We are overly dependent on tourism. [c] To diversify our economy, need to identify and establish new industries urgently.


Reason no.1 – - Inapt, selfish, corrupt, no economic leadership.

Definitely this is the no. 1 reason. Sabah has been unfortunate in having many leaders with such description since independence. For reasons known to themselves, [a] many of them have been overly keen to pander to the federal leaders at the expense of Sabahans’ interest, resulting in Sabah having been roughshod or ignored in many economic policies and worse, skimpy budget allocations. [b] Some have literally sabotaged Sabah’s long-term interest by applying for large pieces of land and selling them to non-Sabahan plantation companies for short term personal gain. Hence so many landless Sabahans [c] Instead of fighting for Sabahans, many have used their positions to butter up federal leaders for personal political favours and contracts. [d] Failure to provide economic direction and leadership. [e] Failures to keep promises to the people are nothing to them.

There are 3 fundamental values of Confucian teaching on good/benevolent leaders. Much of Sabah’s economic problems can be solved if our politicians bother to learn and act according to the philosophy in these three simple Chinese characters.



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