KOTA KINABALU: Sabah’s stable economic growth and solid investment figures have drawn praise for the state’s financial management.
A statement by the Oxford Business Group yesterday said the state’s focus would now shift to ensuring that budget programmes designed to build on those achievements were implemented properly.
Last month, Deputy Prime Minister Tan Sri Muhyiddin Yassin characterised Sabah’s financial performance as ‘extraordinary’ noting that from January to September this year, investment was at RM4.84 billion, the second highest total in the country after Selangor.
In addition, some RM114 billion worth of investment had been recorded in the state since the 2008 launch of the Sabah Development Corridor (SDC), which aimed to triple the state’s gross domestic product (GDP) per capita and increase total GDP four-fold by 2025.
Sabah Chief Minister Datuk Seri Musa Aman, who is also the State Finance Minister, also noted some US$20 billion worth of oil and gas projects had been implemented this year.
Earlier this month, an Investment Incentive Package for the SDC was approved and was expected to further increase investment activity in the state mainly in tourism, manufacturing, agriculture and major industries and in designated strategic development areas and projects such as the Kinabalu Gold Coast Enclave, Sabah Agro-Industrial Precinct (SAIP), Sandakan Education Hub, Sabah Oil and Gas Industrial Park, Interior Livestock Valley, Marine Integrated Cluster and the Lahad Datu Palm Oil Industrial Cluster (POIC).
Musa said the incentives would vary based on the focus areas, such as full tax exemption on statutory income for up to 10 years, investment tax allowance of 100 per cent on qualifying capital expenditure for five years, and full exemption on import duty and sales tax exemption, subject to current policy.
Major chemical and bio-organic operations have also been set up in the POIC including a RM4.5 billion fertiliser plant by Petroliam Nasional Bhd (Petronas), which is expected to almost double its fertiliser output from 1.4 million tonnes to 2.6 million tones annually.
Sabah was also regarded as the world’s third largest producer of palm oil with some 1.36 million hectares under cultivation and RM16.75 billion worth of palm oil exports for the first nine months of this year.
Meanwhile, the Malaysian Investment Development Authority (Mida) revealed in September that the state’s manufacturing sector received RM4.8 billion in investments during the first nine months of 2012 compared to RM921.4 million throughout 2011, making Sabah the country’s second most preferred investment destination for manufacturing activities.
Mida also offered Sabah enterprises a RM1 billion fund for research and development in the Kinabalu Gold Coast Enclave, SAIP, Lahad Datu POIC, Sabah Oil and Gas Terminal, Sandakan Education Hub and Marine Integrated Cluster, as well as training and acquisition of foreign and domestic technology.
In late October, the state revealed its largest ever budget totalling RM4.09 billion with some RM764 million allocated for the construction of roads, bridges, ports, harbours and rail service as well as plans for a public transport system in the state capital as part of the Federal Urban Transformation plans.
Musa also expected the state’s economic growth at between five to six per cent with increased state spending likely to lead to continued economic expansion.
The state’s fiscal responsibility also received favourable reviews with local agency RAM Ratings reaffirming the ‘AAA’ rating of the state government’s bonds for a fourth consecutive year.
The agency said the rating reflected Sabah’s rich natural wealth, which remained the key to spurring economic growth, the government’s strong revenue-adjustment capacity, its healthy fiscal position, and its supportive relationship with the Federal government, hence unlocking Sabah’s long-term development potential.
Sabah is also working to promote its potential into playing a key role in the Brunei, Indonesia, Malaysia, Philippines-East Asia Growth Area (BIMP-EAGA) initiative, with Musa noting in October that significant improvements in customs and trade procedures had been achieved among the members this year, and aims to focus on agriculture, tourism, manufacturing, and oil and gas in the initiative. — Bernama