Making Sarawak the centre of investments and trade
The state is committed to pursue inclusive economic growth, which is attested by a higher allocation budgeted for development purposes of RM9,038 million as compared to RM4,563 million for operating purposes next year.
— Datuk Patinggi Tan Sri Abang Johari Tun Openg, Sarawak Premier
SARAWAK is on the fast lane of growth.
Driven by goals under the Post Covid-19 Development Strategy 2030 (PCDS 2030), Malaysia’s largest state has now reached the ranks of a high-income state, according to latest data from the World Bank.
Last year, World Bank lead economist Apurva Sanghisaid Sarawak has qualified as a high income state as it has a gross national income (GNI) per capita of more than US$13,205 (RM61,442).
Sarawak now joins the ranks of Penang and federal territories, Labuan and Kuala Lumpur.
Furthermore, in 2023, in a historic milestone, Sarawak achieved a revenue of RM13.3 billion.
Sarawak’s Governor Pehin Sri Tun Wan Junaidi Tuanku Jaafar in his Chinese New Year 2024 last month highlighted that Sarawak’s GDP was at four to five per cent in 2023, reaching RM146 billion compared with 6.5 per cent growth amounting to RM140.1 billion in 2022.
This growth reflects the effectiveness of the Sarawak government’s policies and strategies in driving economic progress, he added.
For 2024, the outlook remains promising as Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg expected Sarawak to achieve an economic growth of between five and six per cent next year.
Abang Johari also said the proposed development-biased 2024 State Budget has allocated RM9 billion for development purposes, comprising 66 per cent of the total proposed expenditure for 2024.
“The state is committed to pursue inclusive economic growth, which is attested by a higher allocation budgeted for development purposes of RM9,038 million as compared to RM4,563 million for operating purposes next year,” he said when presenting the 2024 State Budget at the State Legislative Assembly (DUN) last year.
The 2024 State Budget had also highlighted several major projects including RM550 million for the implementation of the People’s Projects, RM420 million for Rural Transformation Projects (RTP), RM200 million for Regional Development Agencies, and RM260 million for Minor Rural Projects (MRP).
These projects are expected to generate significant economic multipliers for the state, create additional employment prospects for the local people and revitalise the construction and service sectors.
Abang Johari added, “Under the 2024 Budget, emphasis will continue to be given to providing basic infrastructure and services, to improve rural connectivity and accessibility that will drive economic growth and development in this area.”
An allocation of RM662 million will also be allocated for the implementation of various roads and bridges projects while the coastal road network and second trunk road projects costing RM11 billion under alternative funding initiative and the projects are at various stages of implementation.
Meanwhile, Sarawak’s massive capital injection is also expected to propel its economic growth.
According to researchers at RHB Investment Bank Bhd (RHB IB) in its ‘Sarawak: Transitioning Into An Economic Powerhouse’ economic report, Sarawak is expected to see more than RM100 billion in injection of capital into the state’s economy in the next six years, as it moves towards becoming a developed state by 2030.
The planned injection augurs well with the state’s PCDS 2030 which highlights infrastructure, utilities, transport, manufacturing and renewable energy as the key enablers among others.
Of note, core objectives of the PCDS 2030 include to change the economic structure, to modernise and increase efficiency, to increase household income to gross domestic product (GDP) share and to place environmental sustainability in the state’s recovery efforts and long-term economic growth.
PCDS 2030 comes with seven strategic thrusts, and is anchored on six economic sectors as the main engines of growth, which will be supported by seven enablers.
“In a nutshell, such plans by the State Government indicate that there could be more infrastructure opportunities up for grabs, not just from hydrogen/methanol-related jobs but also infrastructure works.
“This could bode well for Sarawak’s economy moving forward, which grew 6.5 per cent y-o-y in 2021 after recording a 3.1 per cent y-o-y expansion in the preceding year.
“Looking ahead, Sarawak is expected to chart economic growth of between five and six per cent in 2024 as compared to an estimated four to five per cent in 2023,” it noted.
It pointed out that such economic growth would be underpinned by higher development expenditure (DE) not just allocated by the Sarawak Government but also the Federal Government.
It said, the DE allocated by the Federal Government to Sarawak is the highest ever at RM5.8 billion in 2024 while the Sarawak Government’s RM7.8 billion DE is the largest in five years.
“In light of the higher DE allocated for Sarawak – not just at the federal, but state level, we view that catalytic infrastructure enhancement will take place.
“This is further backed by the state’s PCDS 2030, which aims to reach a GDP of RM282 billion by 2030 vs the estimated RM146 billion for 2023 based on the projection by Sarawak’s Economic Planning Unit,” the research team said.
Meanwhile, it noted that Sarawak’s construction sector GDP growth reached four per cent in 2022 (2021: 10.2 per cent) amid a high base effect.
Nonetheless, it said, the aforementioned stronger DE earmarked for Sarawak could likely boost the growth seen for the state’s construction sector by virtue of having a higher rollout of infrastructure projects benefitting contractors.
“In 2023, Sarawak was the state with the fifth largest value of projects awarded at RM9.9 billion after Selangor (RM25.4 billion), Johor (RM20.5 billion), Kuala Lumpur (RM15.5 billion) and Pulau Pinang (RM12.7 billion),” it highlighted.
The anticipated awards related to projects such as the STR and Phase 2 of the Sabah-Sarawak Link Road in addition to the other types of construction projects may likely boost the value of projects awarded in Sarawak in the next two to three years.
“Value of construction work done in Sarawak has been continuously increasing since 2017 except in 2020 when the sector was hit by the pandemic.
“Sarawak recorded RM14.6 billion worth in terms of value of construction work done in 2023 (the fourth largest after Selangor, Federal Territory and Johor 2epresenting a six-year CAGR of 4.5 per cent, which is commendable in comparison to other states which in fact saw a decline.
“On further scrutiny, the quarterly value of construction work done in Sarawak reached the highest ever in 4Q23 at RM4 billion 3ignalling that construction activities remain resilient despite the dearth of new big ticket infrastructure projects,” RHB IB said.