Welcome to the Annual Press Conference of the Ministry of Industrial Development and its agencies. The objective of this conference is to inform the public (with the help of the media) on the activities of MID and its agencies in 2010 and some of their plans for 2011. One important yearly activity which MID organizes is the MID Industrial Journalism Award. This activity is aimed at developing closer relationship between MID and the Media as well as to enhance public knowledge on the current happenings in industrial development, issues and future directions of the manufacturing sector in Sabah. It is also aimed to stir interests and attract investments in the manufacturing sector.
Sabah's industrial sector has seen steady growth and progress over the 9th Malaysia Plan. Our aspiration is to transform the industrial sector into an important and prime contributor to the State's economic growth. With this in mind our focus has been in making our industrial sector competitive, promote industrial deepening and accelerate key industrial sub-sectors.
Manufacturing is a targeted growth sector in Sabah's economy under Halatuju, which is our development roadmap. The value of manufactured products exported from Sabah during the first 10 months of 2010 was valued at RM18.28 billion, which is about 51% of total export. This is an improvement over the figures for the corresponding period in 2009 during which RM15 billion of manufactured goods were exported, and constituted 50.8% of the total.
I will now give you a brief report on the major milestones achieved by MID and its agencies under the 9th Malaysia Plan, and also give you glimpses of some of their major plans under the 10th Malaysia Plan.
MINISTRY OF INDUSTRIAL DEVELOPMENT (MID)†††
Under the 9th Malaysian Plan between 2006 to 2010, a total of slightly over RM98 million was allocated by the State government to MID for projects implemented by Sabah Economics Development Corporation (SEDCO); K.K.I.P. Sdn Bhd, POIC Sabah Sdn. Bhd. and Sandakan Bulkers Sdn. Bhd.
Among the projects that benefited from this funding are the Lahad Datu palm oil industrial cluster ( or POIC Lahad Datu) which received about RM8.5 million; KKIP which received RM39 million; Sawit POIC Sandakan with an RM10.5 million and RM42.5 million for SEDCO for its Bumiputera entrepreneur development programmes.
MID also received federal funding under the 9th Malaysia Plan. A total of about RM358,5 million was received, part of it loans, and part of it were grants. Of this allocation, RM130 million was to develop the industrial zones in KKIP; RM153 million to develop POIC Lahad Datu Phases I & II and the balance was for SEDCO's industrial estates development and Pusat Rehat dan Rekreasi project.
The Palm Oil Industrial Clusters in Lahad Datu and Sandakan were allocated RM428 million under the Sabah Development Corridor (SDC). I am happy to report that this allocation has been fully utilized in the development of both POICs. This is the result of effective planning and sound project management.
For the first two-year Rolling Plan under the 10th Malaysia plan, the state government allocated a total of RM41 million to MID for development projects. Of that amount, RM12.5 million was allocated to KKIP Sdn. Bhd., RM4.80 million to Sandakan Bulkers Sdn. Bhd., RM14.5 million to POIC Sabah Sdn. Bhd. and RM9.4 million to SEDCO.
In addition, the Sabah Economic Development & Investment Authority (SEDIA) also received RM101 million under the same 2-year rolling plan. This allocation is specifically for infrastructure development in POIC Lahad Datu (which received RM96 million, and Sawit POIC Sandakan which received RM5 million.
In 2010, MID presented the Sabah Industry Excellence Awards to three winners, which were Cement Industries Sabah (CIS) Sdn Bhd for the annual sales above RM100 million category, Aulis Auto Sdn Bhd for the above RM25 million annual sales category, and Kina Roof Industries (Sabah) Sdn Bhd for companies with annual sales less than RM10 million. This is an annual event to recognize manufacturers and manufacturing-related services operating within Sabah to encourage business excellence and quality. This is also to spur the production of high quality goods so that Sabah-made products are able to compete in the global market.
DEPARTMENT OF INDUSTRIAL DEVELOPMENT & RESEARCH (DIDR)†††
A total of 64 manufacturing projects were approved in 2010 of which 25 were under the State Government Approvals (SGA) and 39 under the Federal Manufacturing License (FML). The total potential employment opportunities created were 4,019. The total capital investment proposed from these projects were RM1.55 billion. About 70% came from domestic investments, and the remainder from foreign direct investments.
Trade and Investment Promotion
In line with the State Government's effort to promote trade and investment, DIDR organized Sabah manufacturers' participation in expositions at state, national and international levels. The expositions included the 6th Sabah International Expo, the 8th Malaysia International Halal Showcase, 11th International Food and Beverage Trade Fair, BIMP EAGA Business Expo, the Australian International Furniture Fair 2010, the 108th Canton Fair in China, the Brunei International Halal Products Expo and the 7th China-ASEAN Expo in Nanning, China. DIDR also organized a seminar on investment opportunities in palm oil industries and exhibition (PALMEX 2010) in Kota Kinabalu in July 2010. Our participation in these expos yielded multi-million ringgit in counter sales and more in terms of trade inquiries.
For 2011, DIDR would organize seminars and trade and investment missions to Peninsular Malaysia and overseas. These include a visit to Tokyo to promote bio-tech industry and a seminar in Singapore to attract investors to POIC Lahad Datu.
Another highlight in 2011 will be the "Sabah Investment and Products Showcase" in Kuala Lumpur aimed at promoting Sabah-made products. DIDR will also be involved in the organizing of the BIMP-EAGA Expo 2011 in March 2011. DIDR would also continue to participate in expositions to be held in Peninsular Malaysia. These include the 8th Malaysia International Halal Showcase (MIHAS) in April and the 11th Malaysia International Food and Beverage Trade Fair in July. As for the promotion of Sabah products to international market, apart from the 109th China Import and Export Fair in May and the 8th China-Asean Expo in Nanning, China in October, DIDR would also organize Sabah's participation in other international expositions including the Brunei Consumer Fair in May.
Development of Small and Medium Industries (SMI)
In line with its function to promote the development of small and medium industries (SMI), MID through DIDR, organized activities under the "Satu Daerah Satu Industri (SDSI)" programs.
The regional level SDSI showcase was organized in Kuching, Sarawak in June 2010 which saw the participation of 10 entrepreneurs from various districts in Sabah. Sabah also participated at the national SDSI showcase held in Melaka in December 2010. Twenty (20) entrepreneurs from Sabah participated. Sabah SMIs also participated in the Malaysian Halal Showcase 2010 in Kuala Lumpur.
Biomass Policy For Sabah
MID through DIDR completed a study entitled 'Study To Formulate A Biomass Policy For Sabah' in December 2010. The main objective of the study is to recommend a policy for the long-term development of activities utilising biomass and to position Sabah as an environmental-friendly state. The policy covers topics including maximum and systematic utilization of biomass; sustainable development; creation of new business opportunities, pricing mechanism and incentives as well as the regulatory framework for biomass collection and utilization. DIDR is in the process of analysing the recommendations of the study and the result of the analyses would be submitted to the State Cabinet for decision whether to adopt the recommendations as the official biomass policy of the State.
Other studies completed by DICR under the 9th Malaysian Plan included "The Study on the Development of Non-Metallic Mineral Based Industry In Sabah", "Study on the Development of Shipbuilding and Ship Repair In Sabah" and "Study to Address the Problems of High Cost Of Logistics Expenses in Sabah".
As for 2011, DIDR would carry out a Business Confidence Index Study in collaboration with Malaysian Institute of Economic Research, or MIER. This index is very crucial to gauge and monitor the business and investment climate in Sabah annually.
SABAH ECONOMIC DEVELOPMENT CORPORATION (SEDCO)†††
SEDCO Group recorded a turnover of RM749.6 million for the year 2010 which was 12% better than the forecast, and 16.8% better than 2009. The main contributors to the good performance were Cement Industries (Sabah) Sdn Bhd, Perkasa Trading Sdn Bhd and Sabah Urban Development Corporation Sdn Bhd.
In 2010, SEDCO undertook three major projects: They are:-
The renovation of the Hyatt Regency Kinabalu involving 288 rooms and suits. As well as its swimming pool
Setting up SEDCO Communications Sdn. Bhd, which is a telecommunication facilities and services company. It secured a contract to build 14 telecommunications towers for Malaysian Communications and Multimedia Commission (MCMC). It also obtained the Network Facilities and Network Services licenses from MCMC in May 2010.
Setting up SEDCO Travel & Tour Sdn Bhd to capture the hajj and umrah market in Sabah; and
Converting SEDCO's old premises at Kg Air, Kota Kinabalu into a budget hotel to cater to the growing demand for affordable accommodation in the City.
Bumiputera Commercial & Industrial Community Program (BCIC)
For the year 2010, SEDCO received RM27.20 million from the Federal Government fund to implement 18 projects which consisted of 9 projects to develop small premises, 1 project for shop house, 1 project for Kiosk Serbaguna, 3 projects of Rest & Recreation centers and 4 projects to develop industrial premises including 2 for Institut Latihan Kemahiran Perindustrian (ILKP). Of the 18 projects, 12 have been completed while 6 are on-going.
A total of RM17.80 million was allocated by the State Government to fund the development of 12 shophouses projects and to conduct several specific entrepreneur development programs/schemes including Young Entrepreneurs Program (PUM), Graduate Entrepreneur Development Scheme (SPUS), women entrepreneurs program and advanced scheme for machinery purchase.
In addition, SEDCO also received funds amounting to RM1.9 million under Sabah Development Corridor (SDC) to conduct various training activities for 4,725 participants.
Programmes for 2011
In the property development sector, the Bandar Titingan Tawau project is expected to take off with the imminent conclusion of the joint venture agreement. Initial site survey and earth works for the integrated urban-renewal project is scheduled to begin in the second quarter of the year.
SEDCO Travel & Tour Sdn Bhd is currently finalizing its partnership with an established operator and is in the process of acquiring the necessary license from the Tourism Ministry.
For socio-economic activities, SEDCO had been allocated a total of RM9.314 million by the State Government to implement its BCIC programs. The fund will be utilized to implement 4 shophouse projects, 2 entrepreneurs scheme and 2 loan schemes for Small Medium Industries (SMI) and women entrepreneurs.
K. K. I. P. SDN BHD (KKIPSB)†††
The year 2010 had been a fruitful and productive year for KKIP as all the projects planned were successfully implemented and sold out.
Its multi-purpose Ready Built Factory Phase 3 (RBF-3) consisting of 36 units of detached and semi-detached buildings for showroom, office and warehouse were completely sold out. 80 acres of prepared land at Industrial in Zone 7 for purpose-built factories were sold out before the work is completed. Similarly, 87 acres of industrial land at another section of the Park are mostly booked before launching.
KKIPSB also launched 3 residential schemes during the year. The V19 Phase 3 Salut Perdana Housing Scheme, the implementation of which was carried out in a joint-venture with the Sabah Credit Corporation, saw all the link-detached units snapped up by buyers; and more than half of the terrace units were sold out.
KKIPSB also successfully launched its V23 Malawa Ria Apartment and V24 Malawa Tropicana, a mixed development of Terrace and Town Houses.
On the drawing board is the Malawa Hill Development which promises a high quality living environment, featuring mid- to high-end landed houses, apartments and condominiums to cater to the growing affluent population segment in the northern corridor of the Kota Kinabalu City.
Year 2010 was a significant year for KKIP as it attained results marking it as an integrated new growth centre in Sabah.
We in MID are confident that the Park will continue to grow and benefit its investors and the surrounding population. With the completion of commercial, residential, industrial and educational infrastructure and amenities, KKIP is progressively growing into a new township, and living up to its tag of being a place where the people can work, live, raise a family and enjoy a green, healthy environment.
KKIP is also poised to emerge as a regional distribution hub with the setting up of its Asia Pacific Regional distribution centre at KKIP by Fetal Precursor Stem Cells', one of the world's largest providers of stem cells. This operator is owned by Swiss-based Lab Dom AVMM (Suisse) Inc.
Currently, there are already more than 30 logistic companies located at KKIP. Some of these logistics companies have already been using their facilities in KKIP to break-bulk and distribute goods to the BIMP-EAGA region, including re-exporting to Peninsular Malaysia.
In addition, KKIPSB also saw the construction and completion of more collection, processing and distribution facilities at KKIP by major players such as FAMA, FFM Berhad, Cooldec, Glimex, DSF Furniture Sdn. Bhd., Prosper Intake Sdn. Bhd., Hypercold Logistics Sdn. Bhd., Multi Client Trading Sdn. Bhd. and Dai Lieng Machinery Sdn. Bhd.
This year, KKIPSB anticipates to generate several hundred millions of domestic direct investments from the development of new clusters in automotive, biotechnology and halal hub. At the same time, KKIPSB are also in the midst of finalising a plan to expand its wood and rubber clusters. these projects are expected to generate several thousand new jobs.
POIC SABAH SDN BHD (POICSB)†††
The Lahad Datu Palm oil Industrial cluster (or POIC Lahad Datu) is expected to achieve rapid expansion in investments boosted by the various ambitious objectives under the national key economic areas (NKEAs).
As one of the 12 national NKEAs identified in the Economic Transformation programmes, the oil palm sector is expected to triple its contribution to the gross national income through various initiatives. Of direct relevance to POIC Lahad Datu is the pursuit to create five oleo hubs in the country of which POIC Lahad Datu is one. The oleo hubs seek to attract investments in producing high value oleo derivatives, pharmaceutical and nutritional products.
POIC Sabah Sdn Bhd, the developer of POIC Lahad Datu, has already started the ball rolling by jointly organizing with the Malaysian Palm Oil Board a conference on ‚€œNew Business Opportunities in Oleochemicals, Biomass, Nutraceuticals Sector‚€™ in Kota Kinabalu on March 1, 2011.
In the third quarter of 2010, POIC Sabah also initiated a business of procuring empty fruit bunches in order to jump start the biomass downstream processing industry which, though full of potentials, was hampered by the absence of a supply and price mechanism. POIC Sabah has signed contracts with some oil palm mills to acquire up to 300,000 tons of empty fruit bunches a year.
The availability of the raw materials will spur the uptake of investments in Phase 3 of POIC Lahad Datu and see the emergence of a biomass cluster turning oil palm wastes to wealth.
Phase 3 will cover 3,000 acres when fully developed. Together with the 1,150 acres in Phase 1 & 2 where there are now over 30 investors with total investments of over RM2 billion, POIC Lahad Datu will eventually be a destination of major high-value, high-wage economic activities in Sabah.
Among the investors in Phase 1 & 2 are a cluster of palm oil refineries. One of them is Zurex Corporation. This company has British interests. Its 100,000 ton-a-year refinery began operations recently. Another refinery, owned by Singapore-base Mewah Oils, is expected to be operational in 2012. This 200,000 ton-a-year refinery is the biggest in POIC Lahad Datu so far. Two other refineries are in different stages of implementation.
A fertilizer cluster is taking shape in POIC Lahad Datu. A fertilizer jetty is being built (due for completion in 2012) to cater to the needs of seven fertilizer factories producing one million tons of fertilizers per year. This is the biggest cluster of its kind in Malaysia. Its production volume is close to Sabah‚€™s annual fertilizer needs. More investors have shown interest in view of the market potential in neighbouring territories where the plantation industry is experiencing an unprecedented boom. Among the major fertilizer players who have invested in POIC Lahad Datu are Behn Meyer, Taiko and CCM Fertilizers.
In 2010, POIC Sabah Sdn Bhd has also successfully obtained the HALMAS certificate for the proposed halal hub in POIC Lahad Datu. This certificate, issued by the Halal Development Corporation of Malaysia, is believed to be the first obtained by any agency in Sabah. POIC Sabah is now in the process of identifying partners with the suitable expertise to develop the hub with a view to capture the halal product market in the region.
SAWIT POIC SANDAKAN†††
Sawit POIC Sandakan is a palm oil industrial cluster being developed by Sawit Kinabalu Sdn Bhd. The project is divided into five phases from Phase 1A to Phase 1E. Earthworks for Phase 1A covering 300 acres have been completed.
For Phase 1B which covers 422 acres, earthworks is 92% complete. Phases 1C, 1D and 1E are in various stages of implementation and are due for completion between mid 2011 and early 2012.
Since its establishment, Sawit POIC has received numerous inquiries from local and international potential investors. To-date, the company has one (1) investor to set-up bulking facility in the area. Discussions with other potential investors are also in place to set-up a refinery and bulking installation.
MANUFACTURING SECTOR OUTLOOK 2011
The challenges confronting our economy in 2010 are expected to persist in 2011. Declining investment in the manufacturing sector in Sabah could be due to several factors, one of them is the dampened world economic growth and trade. Another is the increasing competition from the new emerging regional economies such as Vietnam.
A survey by UNCTAD's World Investment Prospects indicates renewed business optimism and stronger appetite of investors to pursue expansion in 2011 and 2012. Given the scenario, global FDI inflows into our country is expected to further increase in 2011 and beyond.
To position Sabah as a desired destination for investment, my ministry will continue with its efforts to attract investors in targeted industries such as downstream processing of palm oil, processing of oil palm/palm oil biomass and in the medium term, the processing of oil and gas as well as the services sector. The task ahead is very challenging, and therefore the coordinated effort of all the ministries, departments and the agencies in Sabah is necessary if Sabah is to maintain its competitiveness and continue to receive high levels of foreign and domestic investments.
YB Datuk Raymond Tan Shu Kiah
Minister of Industrial Development
Ministry of Industrial Development
9, 10 & 11th. Floor, Block C
Wisma Tun Fuad Stephens, Karamunsing
Kota Kinabalu, Sabah, Malaysia
08 March 2011