Sabah sees RM4.47b rise in FDIs
Published on: Sunday, November 27, 2022
By: Sherell Jeffrey
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Dr Joachim in a group photo with the MID Permanent Secretary, Datuk Thomas Logijin and Senior Officers from the State and Federal agencies during his work/site visit to the SK Nexilis South Korea (SK Nexilis Malaysia Sdn Bhd) at Kota Kinabalu Industrial Park (KKIP) on Oct 25, 2022.
DESPITE the Covid-19 pandemic, Sabah saw an RM4.47 billion increase in foreign and domestic direct investment last year, while the manufacturing sector contributed RM6.04 billion to the State’s GDP.

This was made possible by the Ministry of Industrial Development’s persistent efforts, which were headed by Datuk Seri Dr. Joachim Gunsalam.

The Covid-19 presented exceptional obstacles, but as of September this year, 20 production projects had been approved, 12 of which had received state government approval and eight of which had received a federal manufacturing licence, demonstrating their capacity to meet those challenges.

Dr Joachim

The entire amount invested is RM7.75 billion, of which RM203 million is local investment and RM7.55 billion is foreign investment.

Despite having a limited budget, the Ministry has continued to overcome fundamental obstacles while preserving the Sabah industrial sector’s development stage.

In contrast to the RM53.50 million in the Budget 2021, the Ministry has been given RM38.92 million under the Budget 2022.

The Kota Kinabalu Industrial Park (KKIP), which receives 49.6% of the total allocation for 2022, will use this money to expand and modernise the facilities and infrastructure of the Ministry’s industrial parks as well as run programmemes to help entrepreneurs improve their marketing skills.

Additionally, by aiding the machines and improving the packaging quality, they can increase their capacity.

The investor from South Korea, SK Nexilis Malaysia Sdn Bhd, is the main cause of the increase in the value of foreign investment. With an investment value of RM4.2 billion, it is the greatest amount of foreign investment the State would get in 2021.

According to Dr. Joachim, the investor has so far finished up to 42% of their construction progress rather than the intended 48pc in less than two years. The first half of 2024 is the projected completion date for all construction.

He said that in addition to South Korea, the Ministry also attracted foreign investment from China, with a total investment of RM2 billion and the creation of 2,100 jobs, to invest in silica sand mining, silica sand processing, and solar glass manufacture.

The KKIP’s solar glass production facility is currently under construction and is scheduled to be finished in June 2023. In October 2023, it will be completely functioning.

According to him, the Ministry set up a special Task Force to support a high-impact investment from South Korea, SK Nexilis (M) Sdn.Bhd. The investor was able to get all of the necessary approvals to build their plant in just seven months from the start of conversation thanks to this Task Force, which is made up of key state and federal ministries, departments, and organisations.

Dr. Joachim in a group photo with the MID Permanent Secretary Datuk Thomas Logijin, Kibing’s management officers and others during a site visit to Kibing Solar company at KKIP.

A focused Task Force is also assisting and facilitating another high impact Chinese foreign investment. It has been demonstrated that a focused Task Force can expedite investment so that it can start up at a realistic scheduled time.

He asserted that the Ministry would keep helping and facilitating investors using this strategy, including both domestic and overseas investors as well as high impact projects.

The Ministry looks into applications that will further improve industrial area facilities in addition to enhancing and improving the basic necessities of the industrial area.

Industrial parks managed by the Ministry are among the initiatives being undertaken. These parks are well-equipped with the necessities, including natural gas, water, electricity, roads, fibre optics, streetlights, and drainage.

In addition to meeting the most basic demands, the Ministry and its agencies are also investigating Free Economic Zones (FEZ), Special Economic Zones (SEZ), incorporating Green Technology, I.R. 4.0 applications, and other related topics.

Recently, POIC Lahad Datu and the Sabah Port Authority signed a concession deal, turning POIC Lahad Datu into a public port. This accomplishment will advance POIC Lahad Datu’s economic activities and industrialise the district of Lahad Datu itself.

Dr. Joachim noted the water supply issues KKIP communities are experiencing and said the State Water Department and his Ministry are working together to find a solution through the KKIP Sdn Bhd.

Included in this are enhancement projects for the Telibong II Urgent Water Supply System (UWSS) and the Existing Water Reservoir (R17A), both of which have capacity requirements of 10 MLD and a completion date of December 2022, January 2023, and December 2022, respectively.

Research on the provision of industrial water to the ministry’s industrial parks, KKIP, POIC Lahad Datu, and SOGIP, has also been undertaken.

The Ministry has also taken up efforts to help micro and small entrepreneurs to increase their capacity to become entrepreneurs in the manufacturing sector. 

Among initiatives taken is the Bantuan Industri Kecil dan Sederhana that aims to increase small and medium entrepreneur’s capacity and productivity in Sabah by providing the entrepreneurs with the necessary machinery or equipment assistance, improving packaging quality, business digitalization and franchising. 

This programme helps to increase the production capacity of SME entrepreneurs and to produce quality products.

Another initiative taken is the establishment of the Pusat Produk IKS Sabah which aims to provide a space to gather, exhibit, promote and sell local products from all over Sabah, including the products made by Informal Entrepreneurs. Four (4) Pusat Produk IKS Sabah were established in Kota Kinabalu, Beaufort, Ranau and Papar as of 2022. Four (4) more Pusat Produk IKS Sabah will be established in Keningau, Tuaran, Kota Marudu and Kota Kinabalu.

Early this year, preparations for carrying out the marketing programmeme for Peninsular were made. The opening of an IKS Mart outlet in GM Klang Wholesale city has advanced efforts to market Sabah items in Peninsular Malaysia.

The process of registering SME business owners under this initiative is now underway. More than 60 businesses with 128 SKUs have enrolled for the programmeme. The opening of the IKS Mart store is anticipated for December 2022.

Throughout the upcoming year, DIDR intends to investigate and work with supermarkets in Peninsula Malaysia. To do this, the Ministry is concentrating on helping business owners complete specific courses that would qualify them for certifications like Mesti and Halal in order to satisfy the standards of supermarkets in Peninsular Malaysia. 

With regards to the Cabotage Policy, he said the Malaysian government began enforcing the Cabotage Policy on January 1st, 1980. The regulation limits the use of Malaysian vessels only for the transportation of cargo and people (including the rendering of services) within Malaysian territorial seas and the Exclusive Economic Zone (FEZ).

The rule prohibits foreign ships from transporting domestic cargo between domestic ports. The restriction does not prevent foreign ships from making direct calls at Malaysian ports, such as those in Sabah. It is not required that ships call Port Klang first before calling ports in Sabah. Ships delivering commodities including clinker, fertiliser, palm oil, and timber have consistently made direct calls to Sabah Ports.

Due to the low volume of cargo destined for Sabah, ships choose to transship foreign commodities at Port Klang rather than sailing to Sabah. However, since a decade ago, there have been frequent direct container ship calls between Sapangar Bay Container Port and the Far East (China, Hong Kong, and Taiwan) (SBCP)

69% of Sabah’s container cargo imports in 2021 passed through the ports of Port Klang, Penang, and Johore because these are products that are made in Semenanjung Malaysia.

The cabotage policy has undergone numerous liberalizations over the years. On June 1, 2017, the last liberalisation took place. With this, there is no longer a prohibition on domestic cargo being transported between Sabah Ports and Ports in Semenanjung Malaysia by foreign vessels.

In the instance of SK Nexilis, the equipment cargo was transferred directly from South Korea to SBCP. So far, there have been three shipments.

To fulfil the state’s growing demand for cement in the building industry, a new integrated cement factory in Sabah will undoubtedly expand cement supplies. Cement Industries (Sabah) Sdn. Bhd. (CIS), the sole supplier of cement in Sabah, now meets the state’s annual demand for cement of 1.1 million tonnes. In five years, the demand is expected to rise to 1.3 million tonnes. The CIS factory has storage and distribution capabilities for up to 1.0 million tonnes of imported bulk cement annually, and its designed annual capacity is 900,000 tonnes.

The opening of the new cement mill would intensify competition in the cement industry. As a result, the state building industry benefits from lower costs and better services.

Additionally, it will promote the growth of the cement industry in Sabah as well as allied sectors like quarrying, shipping, and transportation while also giving local Sabahans job possibilities.


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