A strategic thrust of the Post-COVID-19 Development Strategy (PCDS 2030) is improving ease of doing business to facilitate domestic investment, and ensuring Sarawak’s position as an investment destination of choice for foreign investors.
Both domestic (DDI) and foreign investment (FDI) are components of private investment, and sustaining it is necessary for a country to increase its productivity, exports and economic growth; diversify its industries; spur technological advancement; and produce high-paying jobs.
“Substantive research studies have validated the benefits of FDI, which amongst others include employment creation, the deepening of the industrial base through technology transfer and technical know-how, enhancing linkages with domestic firms, embracing better business practice management, establishing business networks and accessing international markets as well as supporting the domestic financial system and capital market.
“Sustaining high-quality domestic investment is equally important and must continue to be facilitated in driving Malaysia’s economy and expanding the industrial structure, especially the development of small- and medium-sized enterprises (SMEs),” writes Lee Heng Guie, executive director of Socio-Economic Research Centre Malaysia.
Sarawak has been one of Malaysia’s top investment destinations in recent years, even in spite of the impact and challenges brought about by the COVID-19 pandemic.
Statistics from the Malaysian Investment Development Authority (MIDA) revealed that in 2020, it received RM19.6 billion in total investments in the country – the third highest after Selangor (RM38.7 billion), Sabah (RM21.0 billion) and preceding Kuala Lumpur (RM17.1 billion) and Penang (RM16.0 billion). Combined, these five states accounted for over 68.5 percent of total approved investments.
Most investments to Sarawak in 2020 were for the manufacturing sector; at RM15.7 billion, Sarawak contributed the second highest total approved investments in the sector after Selangor (RM18.4 billion).
According to the Ministry of International Trade & Industry, Industrial Terminal and Entrepreneur Development Sarawak (MINTRED), Sarawak has successfully attracted around RM61.0 billion worth of investment in the sector from 2015 to 2020, creating more than 26,000 jobs for locals.
In a written response to RAKAN Sarawak, the ministry adds that this achievement has created business opportunities for local SMEs in support services including logistics, warehousing, maintenance services and catering, as well as boosted local economic activities.
To illustrate, Sama Jaya Free Industrial Zone in Kuching has exported over RM6.9 billion worth of electronic goods, created more than 13,500 job opportunities (99 percent of which have been taken by locals), generated labour income of RM600 million a year, and contributed RM570 million a year from spin-off effects of the local economy.
Such success can also be seen at Samalaju Industrial Park in Bintulu, where RM9.0 billion worth of basic metal goods have been exported, over 7,600 jobs have been created, RM340 million per annum worth of labour income have been generated, and RM6.0 billion per annum worth of spin-off effects to the local economy have been contributed.
Sarawak’s position as a top investment destination “is not by chance but a concerted effort by the Sarawak Government as the State recognises that it needs more FDI to propel Sarawak’s economy towards high income by 2030,” notes MINTRED.
In fact, Sarawak have a number of comparative advantages that have managed to attract many investors. They include:
- Sarawak’s strategic location, i.e. at the centre of the key growth area of Asia Pacific, with access to vast market opportunities, especially to two of the world’s populous nations, namely China and India;
- Political stability with business-friendly policies and efficient government machinery that provide confidence to investors;
- Highly skilled trainable workforce who are proficient in the English language;
- Availability to provide competitive water and electricity;
- Availability of industrial land with flexible terms of payments;
- Good local amenities and facilities such as affordable housing, educational and leisure facilities; and many others.
In line with Sarawak’s digital economy agenda, MINTRED as the ministry in charge of matters concerning the State’s international trade has been conducting investment promotional activities that focus on quality, high-value investments and the use of the latest digital technology such as Industry 4.0.
These activities also aim to aggressively attract more foreign investments to Sarawak by promoting its quality and stable electricity at competitive prices through its hydropower resources.
At present, Sarawak is open to investments capable of creating “mutual benefits”, states MINTRED, focusing on:
- High tech, i.e. those employing advance technologies and modern machineries such as biotechnology, manufacturing of medical devices, food technology, design and production of high-end furniture;
- Highly skilled workforce through transfer of technology, instead of labour-intensive, low-skill and low-paying jobs; and
Sustainable, green and environmentally friendly technologies.