Budget 2027 Expected Value Added Economic Potential in Sabah and Sarawak

MIRI, 7 Oct: Increased development allocations for Sabah and Sarawak should be pursued as a strategy to strengthen the value-added economy in order to ensure growth benefits can be felt by communities in both regions.

Chief Economist of Muamalat Bank Malaysia Bhd, Dr Mohd Afzanizam Abdul Rashid said that economic development in Sabah and Sarawak needs to move from upward activity to a more complex displacement sector to generate higher economic value.

"Not only are we putting a lot or a high allocation but again the outcome that we want to achieve is a more complex economy that ultimately brings in high productivity and income", he said in an interview with TVS today.

He argued that more complex economic concepts could be applied in key sectors such as oil and gas, which should not be focused on upstream activities such as exploration and production alone.

He said that reinforcement of displacement activity could open up more space for economic activity, thus increasing the value that can be created from existing resources.

"As far as upstream goes, we're exploring and producing. But economic activity at the downstream level is not enhanced, so we will lose those economic benefits", he added.

The same approach, he said, can be applied in the agrotechnology sector by extending the value chain from planting activities to processing products with higher value.

He argued that the transition from upward activity to downward requires technology, skills and a highly skilled workforce, in addition to entrepreneurial involvement in developing related industries.

In addition, infrastructure development needs to move along with efforts to strengthen local economic capacity so that growth in Sabah and Sarawak is more balanced.

"The focus on high value-added industries can also help both regions increase quality employment opportunities as well as expand the involvement of local companies in supply chains", he said. - TVS