Sabah's distinct advantage for investors
Published on: Sun, May 18, 2025
By: Datuk Roger Chin Text Size: SABAH is a standout destination for both foreign and domestic direct investment, surpassing Sarawak and Peninsular Malaysia in various strategic, economic, and policy-driven metrics. The state's unique combination of natural resources, cost advantages, strategic geographic location, and forward-thinking governance makes it the clear choice for investors looking to expand in Southeast Asia.
Advertisement Below is a detailed comparative analysis of why Sabah outshines Sarawak and Peninsular Malaysia as an investment destination. Strategic Geographic Advantage Sabah's location at the northern tip of Borneo places it in the heart of the Asean region. It is geographically closer to key global markets such as China, Japan, South Korea, and the Philippines compared to Sarawak and Peninsular Malaysia. This proximity reduces shipping times and logistical costs for businesses targeting East Asia and Pacific trade routes.
Advertisement Advantage Over Sarawak - While both Sabah and Sarawak are located on Borneo, Sabah's ports are better positioned for direct international trade. The Sepanggar Bay Container Port in Kota Kinabalu serves as a deep-water transshipment hub, capable of handling large vessels for global shipping routes. Sarawak's ports, such as those in Kuching and Bintulu, cater primarily to domestic and regional trade, limiting their appeal for global exporters. Advantage Over Peninsular Malaysia - While Peninsular Malaysia enjoys proximity to the Strait of Malacca, it faces heavy congestion and competition in established ports like Port Klang and Tanjung Pelepas. Sabah, with its less congested and expanding port facilities, provides a cost-effective alternative for exporters and manufacturers seeking seamless access to international markets. Resource Diversity and Economic Stability Sabah boasts a broader range of natural resources than either Sarawak or Peninsular Malaysia. Its economy benefits from a diversified resource base that includes oil and gas, palm oil, fisheries, and forestry, alongside growing renewable energy potential. Advantage Over Sarawak - While Sarawak heavily depends on oil and gas exports and its SCORE (Sarawak Corridor of Renewable Energy) initiative, Sabah has successfully diversified its economy. The palm oil sector, supported by integrated downstream facilities such as the Palm Oil Industrial Cluster (POIC) in Lahad Datu, contributes significantly to Sabah's GDP. Additionally, Sabah's marine biodiversity positions it as a leader in fisheries and aquaculture, industries where Sarawak has limited activity. Advantage Over Peninsular Malaysia - Peninsular Malaysia's reliance on industrialisation and urban-centric growth makes its economy vulnerable to global trade fluctuations. Sabah, by contrast, balances natural resource exploitation with emerging industries like eco-tourism and green energy, providing economic stability even during global downturns. Competitive Cost Structure Sabah offers a significantly lower cost of doing business compared to Sarawak and Peninsular Malaysia. Labour costs, land acquisition prices, and utility rates are all more affordable, giving businesses a competitive edge. Labour Costs - Sabah's labour market is competitive, with lower wages for skilled and unskilled workers compared to Peninsular Malaysia. For example, industrial wages in Sabah are often 10–20% lower than in urban centres like Kuala Lumpur and Johor Bahru. Sarawak's wages are comparable but often constrained by a smaller talent pool due to its lower population density. Land Costs - Sabah's land acquisition costs for industrial, commercial, and agricultural purposes are significantly cheaper than Peninsular Malaysia's urbanised areas. In Sarawak, Native Customary Rights (NCR) land issues create additional legal and procedural hurdles, which Sabah's clear land policies under the Sabah Land Ordinance effectively avoid. Utility Costs - Sabah's water tariffs are among the lowest in Malaysia, and the state's renewable energy initiatives are driving down electricity costs, making it attractive for energy-intensive industries such as manufacturing and agriculture. Infrastructure and Connectivity Sabah's infrastructure is rapidly developing to support its growing economy, with investments in ports, airports, roads, and digital connectivity. Advantage Over Sarawak - While both states face challenges in rural infrastructure, Sabah has outpaced Sarawak in developing integrated logistics hubs such as the Kota Kinabalu Industrial Park (KKIP) and the Sepanggar Bay Container Port. Sarawak's SCORE initiative has primarily focused on energy-intensive industries, limiting broader industrial and logistical growth. Advantage Over Peninsular Malaysia - Peninsular Malaysia's infrastructure is advanced but often congested in urban centres like Kuala Lumpur and Johor Bahru. Sabah, by contrast, offers well-planned industrial zones and a more accessible environment for businesses looking to avoid the delays and inefficiencies associated with overburdened infrastructure. Tourism Industry Leadership Sabah has positioned itself as Malaysia's leader in eco-tourism and nature-based tourism, leveraging its unique biodiversity and cultural heritage. Advantage Over Sarawak - While Sarawak also has eco-tourism offerings, such as the Mulu Caves, Sabah has a more mature and globally recognised tourism sector. Iconic attractions like Mount Kinabalu, Sipadan Island, and the Danum Valley rainforest attract international visitors, driving robust tourism revenues. Sabah's tourism infrastructure, including luxury resorts and adventure activities, is more developed and diverse. Advantage Over Peninsular Malaysia - Peninsular Malaysia's tourism is urban-centric, focused on cities like Kuala Lumpur and Penang. Sabah, with its pristine natural environment, appeals to high-value eco-tourists seeking unique experiences. This differentiation positions Sabah as a leader in sustainable tourism, an increasingly lucrative market segment. Proactive Governance and Investor Support Sabah's government has been particularly proactive in fostering an investor-friendly environment, with streamlined processes, tax incentives, and targeted economic initiatives. Advantage Over Sarawak - Sarawak's investment environment can be hampered by bureaucratic delays and land ownership issues related to NCR land. Sabah's governance, under the Sabah Economic Development and Investment Authority (SEDIA), is focused on reducing red tape and ensuring transparency. The Sabah Development Corridor (SDC) offers tailored incentives, including tax exemptions and investment allowances, to attract investors in priority sectors. Advantage Over Peninsular Malaysia - Peninsular Malaysia, while offering a business-friendly environment, is often less flexible due to its size and centralised bureaucracy. Sabah's state-driven approach allows for quicker decision-making and customised solutions for investors. Social and Political Stability Sabah's diverse population and inclusive governance contribute to a stable socio-political environment, which is critical for long-term investments. Advantage Over Sarawak - Sabah's population is larger and more urbanised than Sarawak's, providing a more dynamic consumer base and labour force. Additionally, Sabah has faced fewer disputes over federal-state relations compared to Sarawak, where demands for greater autonomy can sometimes create uncertainty. Advantage Over Peninsular Malaysia - Sabah's political landscape is less polarised than Peninsular Malaysia's, where ethnic and regional divisions often influence governance and policy. This stability makes Sabah an appealing destination for businesses seeking consistency and predictability. Emerging Sectors and Future Potential Sabah is rapidly expanding its presence in emerging sectors, including renewable energy, halal industries, and the digital economy. Renewable Energy - Sabah's untapped potential in hydropower, biomass, and solar energy positions it as a leader in sustainable energy production, far ahead of Peninsular Malaysia's urban-constrained energy grid and Sarawak's SCORE, which is heavily tied to hydropower alone. Halal Industries - Sabah's proximity to Muslim-majority markets in Asean and the Middle East makes it an ideal hub for halal-certified products, including food, pharmaceuticals, and cosmetics. This industry is less developed in Sarawak and Peninsular Malaysia. Sabah as the Preferred Investment Destination Sabah offers a unique combination of advantages that make it the superior choice for investment compared to Sarawak and Peninsular Malaysia. Its strategic location, diversified economy, lower costs, robust infrastructure, and proactive governance create an ideal environment for businesses seeking growth and profitability. With its focus on sustainability, emerging industries, and inclusivity, Sabah is not just a destination for investment—it is a blueprint for Malaysia's future economic success. Investors seeking long-term opportunities in Southeast Asia will find Sabah to be the best decision they could make. The views expressed here are the views of the writer and do not necessarily reflect those of the Daily Express. If you have something to share, write to us at: [email protected]
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