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CONTRACTORS working on the Pan Borneo Highway project in Sabah are now operating under closer government supervision, as the State seeks to prevent further delays and restore public confidence in the multi-billion ringgit infrastructure undertaking.

Deputy Chief Minister cum State Works Minister Datuk Shahelmey Yahya said a structured monitoring system has been implemented to ensure that contractors meet their obligations and that the project stays on course after repeated setbacks in earlier phases.

“We have enhanced our monitoring systems – this allows us to track progress more closely and flag any issues early before they become major problems,” he said.

Under the revised system, contractors falling behind by 5 per cent in scheduled progress will receive formal reminders, while delays of 20 per cent will prompt warning letters. 

In more serious breaches, termination of contract and blacklisting from future work packages will be considered.

“If any contractor breaches the contract, they will be issued a warning or, in the worst case, their contract will be terminated in accordance with the Conditions of Contract.”

He stressed that the government was no longer prepared to tolerate substandard performance at the expense of the public purse.

“These contractors will also be excluded from consideration for future work packages,” he added, noting that public interest and trust were paramount in the stewardship of state infrastructure funds.

As of April this year, 82.55 per cent of Phase 1A of the highway has been completed. The project, which spans approximately 706 kilometres in Sabah, is part of a broader Borneo-wide connectivity plan linking Sabah to Sarawak and ultimately Kalimantan.

Four work packages covering 41.7 kilometres have already been completed and opened to public use. 

The remainder of Phase 1A is scheduled for completion by 2026.

Phase 1B, which recently commenced, has recorded 3.70 per cent progress and is targeted for completion in 2028.

In the long term, the highway is envisioned to support cross-border movement and trade with Indonesia via Kalimantan. 

A portion linking Sindumin in Sarawak is expected to be completed by 2027.

A proposed Phase 3 is also in planning, involving a route from Tawau through Kalabakan, Keningau and Kimanis, completing a loop within Sabah and linking to the Kalabakan-Simanggaris road on the Kalimantan border.

To oversee the implementation and maintain transparency, the government has formed a high-level Steering Committee comprising senior Federal and State officials. 

According to Shahelmey, this body meets monthly to assess progress and resolve issues swiftly.

“The Steering Committee is co-chaired by the Federal Works Ministry and the Sabah Works Ministry secretaries, with input from utility agencies,” he said.

The committee’s monthly meetings serve as a control mechanism, offering a platform to identify bottlenecks and authorise corrective measures, including budget realignment, land acquisition acceleration, and disciplinary review of contractor performance.

“We are fully committed to resolving these matters as quickly as possible,” he said, adding that all decisions are now being made more efficiently due to the committee’s elevated mandate.

While project delays have long frustrated the public, the State Government has taken the stance that not all setbacks are within the contractors’ control. 

The main contributors to delays, said Shahelmey, are land acquisition and utility relocation.

“These two factors are not entirely within the contractor’s control, and imposing penalties in such circumstances could be counterproductive.”

He added that no financial penalties have been imposed on contractors so far, although enforcement actions are being considered in relevant cases.

“Every effort is made to resolve issues promptly to prevent any contract termination and avoid additional cost implications for the government,” he said.

Despite not enforcing penalties yet, Shahelmey made it clear that accountability remains a central policy tenet.

“The government remains committed to holding contractors accountable for their performance.”

On the financial loss to the government due to project delays or underperformance, Shahelmey said a full assessment can only be conducted after the completion of all phases.

“The total cost impact is still being evaluated and can only be fully determined through the assessment of loss and expenses claims and related cost implications,” he said.

He added that cost escalation due to material prices, workforce shortage, and site complications are also under review, and a post-project audit would determine whether losses stemmed from preventable lapses.

To ensure that only capable contractors are appointed for future phases, the government has restructured its prequalification tender process.

“We are improving our contractor selection process to make sure we appoint companies with a strong track record and the ability to deliver what they have committed to,” said Shahelmey.

This reform, he explained, is aimed at preventing the appointment of entities that lack the capacity or experience to manage large-scale, geographically challenging infrastructure works.

He acknowledged that past leniencies in contract award processes had left room for inefficiencies, particularly among contractors unprepared for Sabah’s more demanding terrain.

Unlike in Sarawak, where larger road reserves have simplified construction, Sabah’s development has been hampered by compact road corridors and higher population density in affected areas.

“Sabah’s more compact road reserves and more densely populated areas have required more extensive coordination and negotiation with landowners,” said Shahelmey.

These factors have delayed both construction and utility relocation, often necessitating fresh rounds of community engagement, compensation settlements, and design revisions.

Nonetheless, coordination with local authorities has improved, to speed up these processes through targeted task forces and dedicated land acquisition units. The recent elevation of the Sabah Public Works Department (PWD) to a full technical department under the Malaysia Agreement 1963 (MA63) framework has further enhanced the project’s governance structure.

“This shift strengthens its technical expertise, allowing the department to be more efficient and effective in managing complex projects,” said Shahelmey.

He said this development has enabled the PWD to act with greater autonomy in approving designs, overseeing procurement, and addressing technical obstacles without repeated referrals to federal agencies.

Shahelmey said the State Government is also pushing for contractors to adopt modern technologies at construction sites to boost efficiency and reduce human error.

“We also encourage the contractor to adopt modern technologies to improve efficiency at construction sites, whether it is through better scheduling tools or automation of machinery.”

The integration of digital monitoring tools into construction planning is one such initiative, allowing project managers to track real-time progress and identify resource lags.

In addressing public concerns about delays and the apparent lack of terminations, Shahelmey said the government is prioritising completion over finger-pointing.

“The focus is ensuring completion and minimising further delays,” he said, while reiterating that consequences for non-performance remain on the table.

No contractors have been terminated to date, he added, but all are under active monitoring. 

The State’s zero-tolerance stance on repeat failures means any breach could lead to disqualification from future government projects.

Shahelmey stressed that the State Government’s approach is rooted in collaborative problem-solving rather than punitive escalation.

“The State Government prioritises collaborative solutions to address challenges before pursuing punitive measures that could stall overall progress,” he said.

Highway to remain toll-free

THE Sabah Pan Borneo Highway will remain toll-free, with the State Government maintaining its position that no tolls will be introduced for road users once the highway is fully completed.

Shahelmey said the decision to keep the Pan Borneo Highway toll-free reflects the critical role it plays in connecting inter-district areas throughout Sabah, where no viable alternative routes exist.

“Currently, there are no plans to impose tolls on the Pan Borneo Highway,” he said, adding that affordability and accessibility for all road users are key priorities.

He noted that keeping the highway free of tolls is vital to supporting both mobility and economic development across the State.

Shahelmey also confirmed that the original estimated total cost of the Sabah Pan Borneo Highway remains at RM26.6 billion and that this figure has not changed since the inception of the project.

However, he said the final cost can only be determined once the project is fully completed, as variations and extensions may alter the overall expenditure.

“The final cost will only be known upon completion of the project, as it may be subject to adjustments due to variation orders and extensions of time,” he explained.

Whether the project is the most expensive highway infrastructure undertaken in the country, Shahelmey said it may not necessarily be the case.

“While the Pan Borneo Highway is undoubtedly a major infrastructure investment, it may not be the most expensive highway project in Malaysia,” he said.

He pointed out that urban highway projects in the peninsula, especially those in areas with high land values or requiring complex tunnelling works, typically incur higher costs per kilometre.

Nonetheless, he acknowledged that the Sabah portion of the Pan Borneo Highway comes with its own cost pressures and engineering challenges.

“The difficult terrain, construction complexities, land compensation costs, and the need for utility relocation all contribute to a higher overall cost,” he said.

To date, RM1.294 billion has been allocated for land acquisition under Phase 1A of the project, a figure Shahelmey said is consistent with the original budget and compensates all affected landowners accordingly.

He added that land acquisition for Phase 1B is now underway, with an initial estimate of RM1.215 billion allocated for compensation to landowners.

“The process of offering compensation to landowners is currently in progress for Phase 1B,” he said.