High utility costs keep investors away — Tangau
UTILITY costs is among major setbacks in attracting investors, according to Trade and Industries Minister Datuk Seri Panglima Wilfred Madius Tangau.
He said many investors expressed interest in investing in Sabah but did not follow through because of the high cost of utilities here, compared to Sarawak.
“In terms of investors’ interest, it has increased significantly. But we still face many challenges.
“As for electricity, Sarawak can offer as low as nine sen per kilowatt per hour or 15 sen at most. But in Sabah, the lowest is 34 sen and that is after government subsidy.
“This is why the manufacturing sector in Sarawak contributes almost 20 per cent to gross domestic product, whereas for Sabah it’s only about 7.5 per cent.
“This is quite a critical situation because investors, including those from China, are requesting for around 10 or 15 sen per kilowatt per hour, or the highest at 20 sen.
“The issue of water and electricity supply must be emphasised, as well as logistics,” he said during question and answer session at yesterday’s State Assembly sitting.
Madius further said the State had received many investment suggestions from foreign investors in the last five months to be more involved in processing, including liquefied gas.
However, he reiterated that they were hindered by utility costs even after expressing interest.
“Despite tax incentives, we are still unable to attract as many investors we want because investors look at capital outlay which is more important to them than incentives.
“Matters such as high utility costs would cause their overall costs to increase, which would mean their cost to build their business would be high, coupled with logistics,” he said.
Another setback in attracting investors is low volume of production in Sabah, said Madius, where the State only has approximately 300 twentyfoot equivalent units (TEUs).
“Investors said they would only come to Sabah if we have some 500,000 TEUs. Ships that currently come to Sabah bring imported goods but are as good as empty when they leave.
“We need to increase production and do a lot of down streaming and processing activities if we want to increase foreign investment,” he said.