Manufacturing: Sabah leads with RM7.3 billion investors
Published on: Sat, Jun 21, 2025
By: Sisca Humphrey Text Size: Phoong said SMEs must shift towards becoming small and medium industries (SMIs) that produce export-ready goods. Kota Kinabalu: Sabah recorded RM7.3 billion in manufacturing investments in the first quarter this year, making it Malaysia's top destination for the sector. State Industrial Development and Entrepreneurship Minister Datuk Phoong Jin Zhe said Sabah also ranked third overall in total investments across all sectors, adding that the next step is to empower local SMEs to industrialise and compete globally. 'This is a positive sign that Sabah is gaining traction, but we cannot just rely on external investment. Our local businesses must participate in this growth and move beyond being just small,' he said, when officiating the SME Sabah Conference 2025, Friday. Phoong said SMEs must shift towards becoming small and medium industries (SMIs) that produce export-ready goods. 'We must create, not just consume. We need more products made in Sabah, exported from Sabah,' he said. To support this, he said the State Government has allocated RM15 million this year to help small businesses acquire machinery, adopt automation and scale up operations.
Advertisement 'This budget is meant to support our smallest players, to help them upgrade and grow,' he said. He also noted that Sabah's export volume rose by 11 per cent up to May, indicating an increasingly stronger industrial base. 'This shows that when we build capacity, Sabah can move toward becoming an export-driven economy. We cannot depend on imports forever,' he said. The conference was officially recognised by the Institution of Engineers Malaysia (IEM), which he said affirms the quality and technical relevance of the discussions held. 'To our engineers and technical experts, your knowledge is vital in strengthening Sabah's industrial ecosystem,' Phoong said. He announced the development of a 100-megawatt Battery Energy Storage System (BESS) in Lahad Datu, the largest in Southeast Asia. 'The project will help stabilise Sabah's power grid and meet the rising demands of an expanding industrial sector,' He also welcomed AirAsia's new Kota Kinabalu-Taipei-Fukuoka route, saying it would benefit both the tourism and investment sectors. 'It's not just about tourists. More direct connectivity means more investors and business travellers can easily access Sabah,' he added. However, he voiced concern over upcoming federal policies that could increase costs for SMEs, including the rationalisation of RON95 and diesel subsidies, SST expansion and the Sabah Labour Ordinance set to take effect July 1. 'We should not implement all these policies simultaneously. Each must be carefully reviewed to determine which should move forward, which should be postponed and which need to be re-evaluated,' he said. Phoong said he had raised these concerns during a national SME consultation chaired by Datuk Ewon Benedick and welcomed Prime Minister Datuk Seri Anwar Ibrahim's openness to policy reviews. He said Sabah's unemployment rate had dropped to 6.7 per cent in the first quarter, down from 8 per cent last year, and noted that companies such as ConocoPhillips have reaffirmed investment in the State. 'This tells us the economy is moving forward and investor confidence is returning,' he said. Phoong concluded on a light note, saying employers are now looking for the right people and so are voters. 'I've done my best and I'm ready to renew my contract,' he said. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available.
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