FRESH IM­PE­TUS

New Straits Times - - Opinion - The writer is chair­man of the Malaysian In­sti­tute of Eco­nomic Re­search (MIER)

the lo­cal econ­omy can move for­ward on a sus­tained ba­sis, or “on its own steam”, so to speak.

This study was done in the United States. If it holds true for Labuan, cer­tainly its cur­rent pop­u­la­tion of about 90,000 may not be ad­e­quate to grow on its own im­pulse.

Hence, clear poli­cies may be needed to gen­er­ate op­por­tu­ni­ties to at­tract more eco­nomic ac­tiv­i­ties as well as bring more work­ers, set­tlers and their fam­i­lies to the is­land.

The ini­tial im­pe­tus of fi­nancere­lated ac­tiv­i­ties may have be­come sat­u­rated, and this is per­haps more be­cause of the na­ture of new fi­nan­cial in­dus­tries that are highly de­pen­dent on information tech­nol­ogy and ag­glom­er­a­tion of eco­nomic ac­tiv­i­ties, for which Labuan may not have the den­sity as yet.

A study to ex­am­ine the over­all achieve­ments of Labuan as the off­shore fi­nan­cial cen­tre of the coun­try is worth un­der­tak­ing now, given the many sig­nif­i­cant changes in mone­tary and fis­cal devel­op­ment of the coun­try, which may have im­pacted the at­trac­tive­ness of Labuan as an off­shore fi­nan­cial cen­tre.

The study should also aim to iden­tify the eco­nomic con­straints of the is­land.

There cer­tainly is a strong case for en­cour­ag­ing the growth of the real econ­omy and other ser­vices, such as tourism, ed­u­ca­tion, sport­ing events and re­lated gov­ern­ment ser­vices in Labuan.

These ac­tiv­i­ties will sup­port the is­land’s fi­nan­cial in­dus­try and at­tract more work­ers and vis­i­tors not only from Sabah, Sarawak and Brunei, but also from Sin­ga­pore and Penin­su­lar Malaysia.

In fact, one good pro­posal is to build a bridge to con­nect Labuan to its near­est point in Sabah. This can en­cour­age greater con­nec­tiv­ity and en­able freer move­ment of peo­ple and re­sources be­tween the is­land and nearby states.

It ap­pears that, in mov­ing for­ward, the au­thor­i­ties in Labuan may have to be in­no­va­tive and cre­ative to at­tract more pri­vate in­vest­ments. This is crit­i­cal as the is­land can­not go on re­ly­ing on gov­ern­ment al­lo­ca­tions.

As we re­view the 11th Malaysia Plan and pre­pare for the next bud­get, this pro­posed bridge is worth con­sid­er­ing as another source of do­mes­tic eco­nomic growth and as a strat­egy to en­er­gise the po­ten­tial for sus­tained growth in out­put and em­ploy­ment. In this cal­cu­la­tion, the is­sue of project fi­nanc­ing will take cen­tre stage.

How­ever, with an in­no­va­tive pub­lic-pri­vate part­ner­ship model sup­ported by an ad­e­quate con­ces­sion pe­riod, the idea of the bridge can be ex­plored.

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