It has been an eventful year for Sabah, characterised by growing streams of investment flowing into the state, enhanced economic cooperation, improved trade relations and several significant offshore oil discoveries, including one announced in November by the national oil corporation, Petronas.
Discovering oil in waters off Sabah’s west coast, 100 kilometres (km) from Kota Kinabalu, Petronas announced that it expected in-place reserves of more than 227 million barrels of oil equivalent (boe).
This was viewed as a harbinger for the next growth industry in Sabah, with oil and gas taking the place of oil palm and timber as the state’s major export commodities.
One spin-off from offshore discoveries earlier like the one in November has been calls to review the five per cent fixed oil royalty the state currently receives from the federal government.
Petronas has also been proceeding with several upstream and downstream oil and gas projects, including the Sabah Oil Gas Terminal (SOGT), the Sabah Ammonia and Urea Project (Samur) and the Sabah-Sarawak gas pipeline (SSGP). Together, these were expected to bolster value-added capabilities in the sector.
SOGT’s importance as a depot for most of Sabah’s offshore oil and gas was highlighted by an announcement that a new offshore gas field with pipeline links to SOGT is being developed. The Kebabangan field would be linked via pipeline to SOGT, under construction at Kimanis.
Elsewhere, an announcement in January buoyed investor confidence in the Palm Oil Industrial Cluster (POIC) in Lahad Datu. News that the cluster had secured a long-term supply of wet empty fruit bunches was seen as an important step towards making Sabah the centre of Malaysia’s oil palm biomass industry.
The Lahad Datu area also drew public attention when, in February, the Chief Minister announced plans to build a controversial coal-fired plant there had been scrapped.
Meanwhile, the government announced that the Sabah Development Corridor (SDC) had entered its second phase in 2011. The Chief Minister announced cumulative planned investment in the SDC had reached RM57 billion (US$17.9 billion) — almost four times the target value set in 2010.
During this phase, which will run until 2015, the SDC would pursue an ambitious list of development projects to generate employment and income for Sabahans and to help jump-start sustainable economic growth.
There was some gloomy news in 2011, mainly in the transportation sector. The much-anticipated Firefly services to Kuala Lumpur, and the MAS direct flight from Sandakan to Kuala Lumpur were both cancelled. This caused worry both for tourism officials and those concerned with national integration.
Furthermore, calls for liberalisation of the federal cabotage policy — under which all goods imported into the state are allowed to be transported only by local shipping companies — had yet to reach a final conclusion.
Many Sabahans felt that the policy hit the state’s businesses and consumers hard, with customers in Sabah paying much higher prices for imported goods than fellow Malaysians in the peninsula. On a brighter note, programmes intended to spur industrial development by leveraging investments in the state’s manufacturing sector were seen to be bearing fruit.
Meanwhile, Sabah continued to position itself as a main contender in becoming a gateway for regional investments, especially in the Brunei Darussalam, Indonesia, Malaysia, Philippines-East ASEAN Growth Area (BIMP-EAGA).
While a lot of work still remains to be done on issues such as raising the state’s educational standards, bridging urban-rural technological and income divides and boosting value-added capabilities for the state’s natural resources, Sabah appears to be in fighting form as 2012 arrives.