A very good morning and welcome to the Annual Media Conference of the Ministry of Industrial Development (MID) and its agencies.
The objective of this conference is to inform of the (i) achievements of MID in 2009 (ii) its programs and activities for 2010 (iii) its development approach for the 10th Malaysia Plan and (iv) to present the industrial reporting awards to winning journalists.
OVERALL PERFORMANCE OF THE MANUFACTURING SECTOR
Manufacturing is a targeted growth sector in Sabah's economy. The value of manufactured products exported from Sabah during the first 10 months of 2009 (Jan-Oct) was valued at RM15.06 billion (50.93% share to total exports or RM29.58 billion). For the same corresponding period in 2008, the value of manufactured products exported from Sabah was valued at RM21.85 billion (51.86% share to total exports or RM42.13 billion).
ACHIEVEMENTS OF MID AND ITS AGENCIES - 2009
MINISTRY OF INDUSTRIAL DEVELOPMENT (MID)
Together with SIRIM Berhad, MID also undertakes a three (3) year special program from year 2008 until 2010 namely the "Industri Berteraskan Teknologi Negeri Sabah" to promote development of small and medium industries (SMI). The 9th Malaysia Plan development expenditure for this program, amounting to RM10.0 million, is fully financed by the Federal Government through SIRIM Berhad and RM4.9 million financed by the State Government through MID for operational expenditure. The main objective of the above program is to develop new industries and to value-add existing industries. These include the cosmetics and foundry industries as well as the introduction of mechanization. Currently, forty-four (44) participants has been chosen to undertake courses and training in foundry, machining and the masking of glass and crystal products, cosmetics, handicrafts and food fritters.
MID, in collaboration with UMS Link Holdings Sdn Bhd and the Tropical Biology Institute, is also involved in developing the orchid industry in the Kota Kinabalu Industrial Park (KKIP). The State Economic Planning Unit (UPEN) had approved an allocation of RM 155,000 for a study and preparation of the Orchid Industry Development Plan in Sabah. The study has been undertaken by UMS Link Holdings Sdn Bhd and was completed in June 2009.
In addition, MID had organized the 2nd Women Entrepreneur Convention in October 2009. It is a semi-annual program to intensify the involvement of women entrepreneurs in business/entrepreneurship.
MID is also actively involved in seven (7) projects and activities under the Sabah Development Corridor (SDC), whereby project ceiling amounting to RM356.0 million has been allocated in the 9th Malaysia Plan to implement the following projects:-
Deep Water Oil & Gas support services hub in Kudat
One District One Product (SDSI)
Oil & Gas Industries.
Social Development Bumiputera Commerce Industrial Community (BCIC)
POIC Lahad Datu Phase 3
DEPARTMENT OF INDUSTRIAL DEVELOPMENT & RESEARCH (DIDR)
Manufacturing Project Approvals
Despite the acute deterioration in the global economic and financial environment, Sabah continued to remain a competitive destination for FDI inflows in the manufacturing sector in 2009. This is evident by the increase in the investment value approved in manufacturing sector which amounted to RM5.99 billion in 2009 compared with RM1.05 billion in 2008 an increase of 468.9%. Investments in 2009 were the highest recorded to-date. The big increase was a result of an application approved by the government to Hong Kong based company investing in the solar glass manufacturing at KKIP. The proposed investment is valued at RM 5.199 billion with 1,177 potential employment to be created. If not for this single project, figures for 2009 fell compared to 2008 due to the global economic recession.
In terms of number of approvals, only 37 manufacturing projects were approved in 2009 compared with 55 in 2008 or down by 32.7%. Job opportunities to be created by the 37 approved projects is around 3,231 compared with 2,820 in 2008, an increase of 12.3%. Domestic investment only accounted for RM420.6 million or 7.1% of the total investment compared with foreign investment amounted to RM5.21 billion or 86.9% and other sources amounted to RM359.9 million or 6.0%.
Trade and Investment Promotion
In line with the State Government's effort to promote trade and investment for Sabah, MID, through its department (DIDR) organised the state's manufacturers' participation in expositions at state, national and international levels. State expositions participated in included the Borneo International Trade Fair and the Buy Sabah-Made Products in Keningau. National expositions participated in included the 6th Malaysia International Halal Showcase (MIHAS), SMIDEX 2009, the 10th Malaysian International Food & Beverage Trade Fair and the Halal Food And Beverage Expo in Johor. International exhibitions participated in included the 105th Canton Fair in Guangzhou, China and the 6th China-ASEAN Expo in Nanning, China.
Sabah's participation in expositions in Kuala Lumpur recorded counter sales of RM97,260 and potential sales of RM1.143 million. The State's participation in the 2 expositions in China resulted in total counter sales of RM356,000 and potential sales of more RM13.6 million. The biggest success story of DIDR's effort in promoting Sabah made products to international market was the signing of a contract worth RM2 million a year, between a local skincare produce company with a Japanese company. The first order of products had been shipped to Japan in October 2009. The investment seminar in Kuala Lumpur stirred interests from 17 companies who made enquiries to invest in Sabah particularly in the Lahad Datu Palm Oil Industrial Cluster.
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, organised activities under the "Satu Daerah Satu Industri (SDSI)" programs. The state level SDSI showcase was organised in June 2009 which saw the participation of 71 entrepreneurs from all districts in Sabah. The showcase resulted in total counter sales of RM21,392.00.
Sabah also participated at the national SDSI showcase held in Melaka in December 2009. Eighteen (18) entrepreneurs from various districts in Sabah participated in this National SDSI Showcase. From this showcase, 1 product viz. the handicraft products from Keningau managed to gain 1st placing in the national showcase respectively. Sabah's participation in this showcase recorded counter sales of RM RM32,392.50.
MID undertook a study to address the problem of high cost of logistics expenses in Sabah, which was completed in December 2009. The study shed light on various factors contributing to the problem of high logistics cost and importantly, recommended measures to address the high logistics problems, including complete liberalisation of the cabotage policy and the implementation of the freight equalisation scheme for Sabah.
Resulting from this study MID had taken up the recommendations to the Prime Minister and the State and Federal Economic Planning Units. It is hoped that these recommendations would be looked at favorably by the Federal Government.
SABAH ECONOMIC DEVELOPMENT CORPORATION (SEDCO)
Despite the global economic downturn in 2009, SEDCO Group managed to record a turnover of RM685.0 million for the year 2009, an increase of 5.7% and 1.2% as compared to the forecast of 2009 and the turnover of 2008, respectively. Main contributors to the Group Turnover are Cement Industries (Sabah) Sdn Bhd, Perkasa Trading Sdn Bhd and Lahad Datu Flour Mill Sdn Bhd. The Group Pre-Tax Profit for the same period was also higher at RM50.5 million, promoting a growth of 26.5% and 13.7% against 2009 forecast and 2008 pre-tax profit, respectively. Main contributors to Group Pre-Tax Profit are Cement Industries (Sabah) Sdn Bhd, Sabah Urban Development Corporation Sdn Bhd and Nippon Paint (Sabah) Sdn Bhd.
The year 2009 saw a number of major development within the Group. In the manufacturing sector, the RM45 million-Bulk Cement Terminal of Cement Industries (S) Sdn Bhd (CIS) in Lahad Datu has commenced commercial operation since April 2009. The terminal with an annual capacity of 400,000 MT will assure a more reliable, consistent, efficient and accessible supply of quality cement for the East Coast market. This combined with the existing CIS grinding plant in Sepangar will supply around 1.3 million MT of cement a year to meet the State's demand.
In the services (hospitality) sector, SEDCO's majority owned subsidiary, Kinabalu International Hotel Sdn Bhd had completed the first phase of the renovation project of its hotel, Hyatt Regency Kinabalu. It involved guests rooms on the 10th to the 14th floor, the Regency ClubTM Lounge, the Presidential Suite, Regency Club rooms and suites.
In the property sector, the opening of Eastern Plaza Complex and Promenade Hotel Tawau in mid 2009 marked the total completion of the integrated Kuhara Point project in Tawau. The project by SEDCO's wholly-owned Sabah Urban Development Corporation Sdn Bhd is poised to bring about significant economic and social impacts in terms of increased tourism and business activities, as well as more job opportunities for the locals.
Bumiputera Commercial & Industrial Community Program (BCIC)
For the year 2009, SEDCO was allocated with a total of RM26.70 million from the Federal Government to fund 12 projects which include 4 projects of small premises, 1 project of Kiosk Serbaguna, 2 projects of R&R and 4 projects of industrial premises including 2 for Institut Latihan Kemahiran Perindustrian (ILKP). Another RM18.40 million was allocated by the State Government to fund the development of 9 shophouses projects and to organize several entrepreneur development programs including Young Entrepreneurs Program (PUM), Graduate Entrepreneur Development Scheme (SPUS), loan scheme for women entrepreneurs, Bumiputera entrepreneurs and Advances for purchasing machinery scheme. Of the 12 projects funded by the Federal Government, 1 have been completed, 11 are on-going.
In 2009, a total of 1,762 participants had taken part in various training programs organized by SEDCO through its subsidiary, Sedcovest Holdings Sdn Bhd. The Young Entrepreneurs Program (PUM) which aims to promote entrepreneurship amongst students continued in 2009 involving 1,125 students and 45 schools. This year saw the fifth intake of the Graduate Entrepreneur Development Scheme (SPUS) with another 12 aspirants. Nine of them with viable business plans have been recommended to carry out their respective business ventures.
K. K. I. P. SDN BHD (KKIPSB)
As of 31 December 2009, KKIPSB has recorded a total of 316 sales transactions of land and buildings, which generated revenue of RM404.37 million. Status of the 316 sales transactions are as follows:-
Operational: 206 entities and factories are operational, generating an investment value of RM1.71 billion and providing 6,189 workers.
Completed: 19 factories are completed but are not operational yet. New investment to be generated is estimated to be RM11.16 million, and these factories are expected to create 260 additional workers.
Under construction: 45 factories and entities comprising of 7 factories in various industrial sectors, 36 ready-built factories, 1 power plant and 2 R&D buildings. When operational, added investment to be generated is RM134.75 million and 909 new jobs to be created.
To-date, the following 9 training institutions and R&D centres are operational in KKIP:
SIRIM - quality certification and providing technical skills for 800 trainees yearly.
Biotech Centre for Malaysian Cocoa Board - R&D in cocoa and agricultural products.
Yanmar R&D Centre - research in biodiesel.
Institut Kemahiran Mara - training institute for business and technical courses; 2,000 trainees yearly.
MARDI - R&D in agriculture.
MTIB - providing skills for carpentry and wood works, 1,000 per year.
Institut Latihan Perindustrian - 2,700 trainees per year.
K.K. Polytechnic - providing technical skills for 5,000 trainees yearly
Industry linkages is further enhanced with the completion and operation of Sepangar Bay Containerised Port. Located less than 5 kilometers from the KKIP, the port provides logistic facilities and further enhance the positioning of Sabah as an investment destination.
POIC SABAH SDN BHD (POICSB)
POIC Sabah's growth in 2009 was reasonable in the face of the worldwide economic crisis. To date a total of 24 investors have purchased 318 acres of land at POIC Lahad Datu. In operation are two biodiesel plants and two transport logistics service providers. The other investors are in various stages of planning and implementation. The total investment value of all the investors is more than RM1.8 billion
SAWIT POIC SANDAKAN
Sawit POIC is catered for resource-based manufacturing activities in the palm oil value chain. The development concept of SAWIT POIC Sandakan is focused on the integration of all palm oil related industries in one common complex to share the common infrastructure, utilities and amenities including handling facilities for export and import. The development area is located approximately 14km from the Sandakan city centre and 8km from the existing Sandakan Port. The size of Sawit POIC earmarked for this project is about 2,800 acres.
Currently, the development for Phase 1 that includes the external and internal infrastructure is well in progress. The Phase 1 is now at 55% completion and targeted to be fully developed by first quarter of year 2011. Out of the total Phase 1 area, 500 acres have been allocated for investors with an estimated total capital investment of RM3 billion. For easy export & import handling, the existing Mowtas liquid jetty will be upgraded to cater for the needs in Sawit POIC Phase 1.
Development Status Phase 1
Developing an area of 722 acres completes with modern infrastructure, logistic facilities and supported with external infrastructure:-
Ph 1a: Site Clearing & Earthworks (300ac)
Ph 1b: Site Clearing & Earthworks (422ac).
Ph 1c: Internal Infra Works (Road, Drainage, Sewerage & Water Supply)
Ph 1d: Internal Infra Works (Electrical, Communication)
Ph 1e: Internal Infra Works (33KV Power Supply)
Earthworks for Phase 1a (300 acres) - 100% completed
Earthworks for Phase 1b (422 acres) - 86% completed (Targeted to complete by first quarter of 2010)
Internal Infrastructure Works for Phase 1c commenced in August 2009 - 16% completed (Targeted to complete by Jan 2011)
The master plan of phase 1 is parceled out to 6 zones. Centralize bulking facilities zone, processing zone, packaging and other related industries zone, utilities zone, service centre zone and green area zone. In phase 1, a total of 35 industrial lots will be available for sale. These include six types of downstream activities such as Palm Oil Refinery, Kernel Crushing Plants, Bio-diesel Plants, Oleo chemical Plants, Palm Oil Product Packaging Plants and Liquid Bulking Terminal.
As supporting activities to the major industries in SAWIT POIC, small medium industry is also included. Apart from that, an area of 2.351 hectares is allocated for commercial centre which will include food and beverages outlets, laundry, sundry shop etc. A truck centre with an area of 1.510 hectares will be developed complete with public facilities, eateries outlet as well as workshop for repair. Two petrol stations will be sited in SAWIT POIC strategically located for convenient and 20 meter wide buffer zone along the sea front area. Similarly, an area of 0.892 hectares is allocated for 2-bay fire station to meet the need for prompt fire fighting team within SAWIT POIC.
Since its establishment, Sawit POIC has received numerous inquiries from local and international potential investors. To-date, the company is currently undertaking preliminary discussions with potential investors to set up a refinery and bulking installation.
PROGRAMS AND ACTIVITIES FOR 2010
MINISTRY OF INDUSTRIAL DEVELOPMENT (MID)
For 2010, the State Government allocated MID a total of RM53.63 million for its operating expenditure and for the implementation of projects approved under the 9th Malaysia Plan. Of this total, RM10.59 million and RM43.03 million are allocated under MIDs supply and development budgets respectively. The supply budget is to finance MID's and its department's expenses on emoluments, operating and recurrent expenditure and investment and seminar programs. The development budget is mainly to finance continuation of projects undertaken by the Sabah Economic Development Corporation (SEDCO), K. K. I. P. Sdn Bhd and POIC Sabah Sdn Bhd.
DEPARTMENT OF INDUSTRIAL DEVELOPMENT & RESEARCH
Trade and Investment Promotion
For 2010, to continue Government's effort in promoting trade and investment to both local and foreign investors DIDR would organise seminars and trade and investment missions to Peninsular Malaysia and overseas. These include seminars on POIC Lahad Datu in Johor Bahru, China and Japan. Some of these trade missions would be held in conjunction with the Trade and Investment Mission led by the Minister of International Trade and Industry, Malaysia.
To further promote awareness of Sabah Made Products among local consumers, in 2010 DIDR plans to organise a "Buy Sabah Made Products" expo in Lahad Datu. DIDR will also be involved in the organising of the Sabah International Business Conference and the Sabah International Exhibition 2010 in October 2010. DIDR would also continue to participate in expositions to be held in Peninsular Malaysia. These include the 7th Malaysia International Halal Showcase (MIHAS) in May, the Small and Medium Industries Expo (SMIDEX 2010) in June, the 10th Malaysia International Food and Beverage Trade Fair in July, the and the Malaysia International Branding Showcase 2010. As for the promotion of Sabah products to international market, apart from the 107th China Import and Export Fair in April an the 7th China-Asean Expo in Nanning, China in October, DIDR would also organise Sabah's participation in other international expositions including the Gulf Food in February and the Indonesia International Expo in Jakarta.
Development of Small and Medium Industries (SMI)
To further enhance development of SMI in Sabah, MID would establish a special unit within the Ministry to look after the affairs of SMI. This unit would work closely with SME Corp both at state and federal levels. Further, MID would also be setting up a SME Park. The concept details of this park is currently being prepared but it would it would provide such facilities as an incubation centre and common user facilities such as packaging and grinding centres.
A study to formulate a biomass policy for Sabah would be undertaken, expected to commence in April. Biomass, especially from the oil palm/palm oil industries are found to be useful raw materials to generate energy as well as to develop new industries. The issue of availability of supply and pricing is a problematic area and we need to address it by having a policy.
Two other studies which MID are requesting to be undertaken are the Sabah Freight Equalisation Scheme (SFES) and the Sabah Cost of Logistics Index (SCLI). The SFES and the SCLI are recommendations resulting from the study on High Cost of Logistics Expenses in Sabah. We believe that implementation of the SFES and the SCLI would go a long way to address the high cost of logistics expenses in Sabah.
SEDCO is pursuing the following projects :
Oil & Gas Services - SEDCO is conducting a study for the establishment of a Deep Water Oil and Gas Support Services Hub in Kudat. The proposed project will support the upstream and downstream activities of the oil and gas industry.
Telecommunication - In the final stage of implementation to provide communication solution to telecommunication carriers and Internet service providers. The project is expected to roll out this year as soon as the application for NSP and NFP licenses is granted.
Franchise - Finalizing arrangement to become a regional franchise holder of BBQ Chicken, a fast food franchise chain originated from Korea.
Halal Consulting - In the process of setting up a Consulting Company to assist manufacturing companies in managing Halal related activities.
Travel & Tour - In the process of applying license and registering a Tour and Travel Agency. SEDCO is currently commissioned as a local agent for Hajj and Umrah packages for Tiram Travel Sdn Bhd, a subsidiary of Johor Corporation.
Manufacturing - In the pre-implementation stage to set up a glass tempering plant in Kota Kinabalu, a joint venture with local entrepreneurs. SEDCO will also coordinate the extraction of sands throughout Sabah.
In the hospitality sector, the on-going major renovation of Hyatt Regency Kinabalu is expected to be completed by the last quarter of 2010.
For socio-economic activities, SEDCO has been allocated a total of RM27.201 million and RM18.063 million from the Federal Government and the State Government respectively, to implement its BCIC programs. The fund will be utilized to implement 10 projects of shop-houses, 9 infrastructure projects, 9 projects of small business premises, 3 projects of R&R and 4 projects of industrial premises. The loan scheme for Small Medium Industries (SMI) which was initially planned for release in 2009 would be available for our local entrepreneurs this year (2010).
POIC Sabah Sdn Bhd looks to the new year and the new decade with optimism due to the following reasons:
the world economy is coming out of the cyclical downturn and investors' confidence should be buoyant in the coming years
the outlook for palm oil in the world market is bright due to rising demand and sustainability practices in the oil palm industry becoming entrenched
interest in downstream value-adding expected to grow in intensity in partnership with the Port of Rotterdam Authority
the commitment of both the Federal and State governments towards supporting the development of the palm oil industrial cluster in Lahad Datu
the anticipated Biomass Policy will regulate raw material availability and encourage investments in biomass downstream industries, including renewable energy
Major moves in 2010 are:
Port of Rotterdam Authority - a framework of agreement was signed between POIC Sabah Sdn Bhd and the Port of Rotterdam Authority of The Netherlands in 2009. The two parties are finanlising a partnership agreement that will bring POR's port development and development expertise, as well as its global business connections, to help develop Lahad Datu into an international maritime hub not only for oil palm products, but also a transshipment port for the BIMP-EAGA region. POR's global status, its presence in the Middle East (through the Sohar Port) and future presence in Latin America (in Brazil) will enable Lahad Datu to be part of the axis of global shipping.
Oil jetty - oil racks linking the industrial lots to the oil jetty is scheduled for completion in 2010 during which full utilisation of the oil jetty will be a reality.
Fertilizer jetty - this RM250 million project comes with a conveyor belt system linking it to the fertilizer cluster where 7 fertilizer plants are in various stages of planning and implementation. These plants have a combined output of about one million tonnes.
Phase 3 - this 3,000-acre phase will be developed in stages to prepare sufficient land needed to attain the objectives of the state in palm oil downstream processing and overall expansion of industrialisation in the east coast of Sabah. The initial phase will cover 500 acres.
POIC Lahad Datu has become an integral part of the development of Lahad Datu. The Lahad Datu District Office has set up (committee name) and appointed POIC Sabah as the Secretariat in 2009. Even before this, POIC Sabah has conducted research and forwarded recommendations to the relevant authorities on the best approaches to the future development of Lahad Datu District. Researchers in POIC Sabah have also conducted analytical studies on numerous subjects such as Sabah's position in the global oil palm industry, potentials for various types of renewable energy in the Lahad Datu area.
K.K.I.P. SDN BHD
For the year 2010, it is expected that 226 operational entities and factories would generate an investment value of RM2.01 billion and provide 6,389 workers.
Through 2010 to 2012, a total of RM5.44 billion investments both from local and foreign investors is expected to flow in with total employment generation of 1850 workers. These investments range from Biotechnology, Silica-based in solar glass, Solar-based, Wood-based manufacturing, Rubber-based manufacturing and Other industries.
The development of Phase 2 of Sawit POIC is expected to commence in year 2013 with a new dedicated liquid jetty to further support the downstream businesses in Phase 2. Funding application has been submitted under the RMK10.
The marketing and sales team has started promoting Sawit POIC both to local and international investors through various means such as participating in various conferences, seminars and exhibitions.
To invite Sime Darby Group as an anchor tenant. Investment in bulking, refinery, oleo chemical through joint venture or full equity.
Homa Edible Oil Sdn Bhd interested in carry out bulking installation with a capacity of 40,000 tones for its refinery in Zhangzhou, Fujian Province.
Sawit Kinabalu Group to set up bulking installation on its own.
Explore the possibility of setting up a consortium amongst plantations companies both local & national.
Participate in Trade Mission through SEDIA, MIDA, MATRADE.
Application for funding to participate in Trade Missions for the purpose of marketing & promotion.
MID'S DEVELOPMENT APPROACH FOR THE 10TH MALAYSIA PLAN
To meet the challenges during the 10th Malaysia Plan, MID will emphasise on an outcome-based approach of undertaking its programmes and activities. This invariably means setting measurable targets and key performance indictors (KPIs).
For the 10th Malaysia Plan, MID had decided on 3 Key Results Areas (KRA), including:
Providing facilities and infrastructure for industrial areas;
Increase investment in the manufacturing and industry support sectors;
Creating a Bumiputera Commerce and Industrial Community.
From the basis of these KRAs, MID had committed itself to the following outcomes:
An Integrated Industrial Park environment that is conducive to investors;
Increase in job opportunities;
Increase in total investors, investments and business, including SME and the halal industry;
Increased participation and total Bumiputera entrepreneurs in the business and industrial sectors;
To implement the stated KRAs and outcomes, MID would adopt the following strategies:
To provide basic amenities and infrastructure through industrial estate development and to catalyse industrial transformation;
To stimulate investment promotion through programmes that attract domestic and foreign investors;
To widen up Bumiputera Community participation in the trade and industrial sectors.
MANUFACTURING SECTOR OUTLOOK 2010
Against the backdrop of brighter economic prospects globally, the State's economy is expected to remain stable supported and driven by the implementation of public funded projects in full gear and speed. Although investment in the manufacturing sector has not been encouraging, there is still much room for expansion as contribution of the manufacturing sector to the State's GDP is about 9.0%. It is hoped that manufacturing sector would pick up with the construction of Sabah Oil and Gas Terminal (SOGT). The manufacturing sector in the State could be further developed and expanded.
MID JOURNALISM AWARD 2009
An important yearly program which MID also organises is The MID Journalism Award. This program is aimed at developing closer relationship between MID and the Media as well as to enhance public knowledge on the current industrial development, issues and future directions of the manufacturing sector in Sabah, in particular. It is also aimed to steer interests among the local community to be more involved in the downstream processing industries.
I was made to understand that the number of articles submitted for 2009 was not very encouraging. The Ministry hopes that mass media could feature more write ups on industrial development in Sabah in the near future.
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 2010