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Unlocking the potential of the value chain to make Sabah a maritime hub
Nazery KhalidHonorary Secretary, Association of Marine Industries of Malaysia (AMIM)
Sabah Port Forum, Kota Kinabalu, Sabah - 16-17 February 2017
Presentation outline
1. Sabah’s economic highlights
2. Major economic initiatives in Sabah
3. Value chain in Sabah’s economy
4. Sabah : A potential maritime hub
5. Key maritime infrastructures in Sabah
6. Unlocking the value chain
7. Putting it all together
1. Sabah’s economic highlights (I)• The state’s economy centers around extraction and processing of
primary commodities, namely palm oil, cocoa, rubber, timber and minerals. Tourism contributed 10% to GDP in 2014 while fisheries share was 2.8%. Services also contribute significantly to the economy.
• 2014 statistics : - GDP per capita of RM19,672 (3rd lowest in Malaysia)- export value : RM45.3 billion (mainly crude oil and palm oil)- import value : RM36.5 billion (mainly machineries,
transportation equipment, fuel, mineral lubricants) • There is a strategic plan, namely Sabah Development Corridor, to
accelerate the state’s economic growth aimed at enhancing the quality of life of Sabahans and helping Sabah attain developed status by 2025.
1. Sabah’s economic highlights (II)• There is a strategic plan (Sabah Development Corridor) to
accelerate the state’s economic growth aimed at enhancing the quality of life of Sabahans and helping Sabah attain developed status by 2025.
• State agencies such as Ministry of Industrial Development, Ministry of Infrastructure Development, Sabah Economic Development and Investment Authority (SEDIA) and POIC Sabah Sdn Bhd, and MITI, MIDA, MATRADE and UPEN work together to formulate and implement economic plans and promote investment and economic activities in the state.
• Availability of infrastructures such as industrial parks, power plants, ports, airports, roads and utilities that facilitate main economic activities and export.
41%
25%
22%
9%
3%
SABAH GDP SHARE BY SECTOR (2014)Services Agriculture Mining & Quarrying Manufacturing Construction
2. Major economic initiatives in Sabah
Sabah Development
Corridor
Source : MPRC
Malaysia as an oil & gas hub in the
Asia Pacific –with Sabah & Sarawak at the center
Sources : Petronas, Borneo Post
Sabah Oil & Gas Terminal
• Part of the Sabah-Sarawak Integrated Oil & Gas Project.
• Terminal owned by state govt located in Kimanis, handling production of oil and gas from the West Coast Field in South China Sea.
• Can handle up to 300,000 barrels of crude oil per day and 1.0 billion standard cubic feet of gas per day.
• Stores oil before it is transported by tanker. Connected to a terminal in Sarawak via SSGP.
Source : Petronas, Malaysiakini
Sabah-Sarawak Gas Pipeline
• 500 km pipeline transporting gas from the SOGT in Kimanisto Bintulu, Sarawak for processing into liquefied natural gas (LNG) at the Petronas LNG Complex for export.
• The pipeline system also has provisions for future domestic consumption in Sabah and Sarawak.
Source : POIC
Palm Oil International Corridor
• Located in Lahad Datu, featuring 1,150 acres of infrastructures and utilities, including a liquid bulk and dry bulk terminal which can cater to vessels of up to 100,000 DWT.
• Offers opportunities for investment in downstream palm oil industries such as oleochemicals, nutraceuticals, phytonutrients, transfat-free food products, biomass ship repairs, logistics, oil & gas, petrochemicals, furniture, machinery, halal products, food and SMEs.
3. Value chain in Sabah’s economy• In the context of this presentation, value chain refers to the whole
series of primary and supporting activities in Sabah’s economy that create and build value at every step.
• The total value delivered by the state’s economy is the sum total of the value built up throughout the economy.
• The value chain concept separates useful activities (which allow the state as a whole to gain competitive advantage) from wasteful activities (which hinder the state from gaining competitive advantage or market share).
• Focusing on activities that create value could give the state advantages such as charging higher prices for its exports and services, reduce cost of manufacturing, create positive branding and attain flexibility to adjust to external conditions.
4. Sabah : A potential maritime hubSabah has what it takes to be a maritime hub housing key maritime infrastructures, shipping services and support services on account of its :- strategic location in the BIMP-EAGA region and facing the busy shipping
lanes of the South China Sea which provides access to East Asian economies
- good seaports which are well connected to economic hinterlands and feature good infrastructures
- good connectivity with Peninsular Malaysian and regional ports via domestic and international shipping services handling domestic and transshipment cargos
- availability of shipyards to cater to shipowners and oil and gas industry- availability of ancillary services which provide support to shipping,
shipbuilding/repairing & port operations- huge potential to generate gateway cargos & attract mainline operators
5. Key maritime infrastructures in SabahSeaports
- Equipped with good facilities and equipment and with physical features to handle considerably large vessels and throughput volumes.
- Enjoy strategic location facing South China Sea which hosts busy international shipping traffic that provides Sabah access to regional and Far East economies.
- They also have reasonably good connectivity with other domestic and international ports, adequately served by local and foreign shipping lines.
Shipyards
- Able to build, repair and service a range of ships including cargo ships and offshore support vessels (OSVs), tugboats and anchor handlers.
The ports and shipyards are supported by companies and enterprises providing a range of ancillary activities such as manufacturing, surveying engineering, ship design etc.
Source : SPSB
Kota Kinabalu Port
Role as container port taken over by Sepangar Bay Terminal. Now handles non-containerized cargos such as general /
conventional cargos (non-containerized cargos) and dry bulk.
Source : SPSB
Kudat Port
Its proximity to the Philippines makes it a key maritime gateway to the archipelago. Handles mainly general cargos
and timber-related products.
Source : SPSB
Kunak Port
Serves as a dedicated crude palm oil port and being positioned to become the central hub for Sabah’s east coast
for the export of palm kernel expeller.
Source : POIC
Lahad Datu Port
Main port for Palm Oil Industrial Cluster. Poised to be a catalyst in the palm oil industry and oleochemical and biodiesel industry in
East Malaysia. Also set to be the central hub for the import of bulk fertilizer for Sabah’s East Coast.
Source : SPSB
Sapangar Bay Container Port
Positioned as the premier transhipment hub for BIMP-EAGAregion. Features state-of-the-art facilities to handle more
container volume and host mainline operators.
Source : SPSB
Sapangar Bay Oil Terminal
Dedicated terminal for refined petroleum and chemical products. Surrounded by major oil and gas facilities such as
Shell, Esso and Petronas. Expansion plan under way to accommodate larger tankers and bunker / water supply.
Source : SPSB
Sandakan Port
Second busiest port in Sabah by throughput volume, handling palm oil related products, containers, general cargo
and dry bulk.
Source : SPSB
Tawau Port
Multipurpose port handling of various cargo types including containerized cargos. A major port in the East coast by way
of throughput handled.
5. Unlocking the value chain (I)The argument in favor of unlocking the value chain in the state’s economy is compelling as it will help Sabah to :- meet the objectives of SDC to increase Sabah’s GDP four-fold by 2025 by
capturing high-end economic activities and promote balanced economic growth with distribution
- help the state realize its full economic potential- ensure optimal utilization of resources and well-coordinated development
efforts,- boost investment and businesses, upgrade infrastructures, reduce cost of
doing business and create employment- promote human capital development, esp. skilled workers- boost innovation, creativity, entrepreneurship & R&D- help fulfill the goal of New Economic Model of transforming Malaysia’s
economy via high income, value adding activities
5. Unlocking the value chain (II)Recommendations to unlock the value chain in Sabah’s economy :• Focus on developing downstream activities in plantation and mining to elevate the
state’s economy up the value chain.• Boost development of infrastructures such as ports, roads, warehouses, industrial
parks, • Attract investment and raise funding to spur economic activities and infrastructure
development.• Lure businesses and knowledge workers to the state.• Promote development of value adding services such as transportation, logistics,
supply chain management, ICT to support economic activities.• Step up efforts to develop productive, efficient, competitive human capital in
highly skilled, high income activities through education & training.• Improve telecommunications infrastructures & services, boost use of ICT.• Strengthen institutional capability to conceptualize, strategize, measure and
monitor economic initiatives via capacity building.
6. Putting it all togetherBy unlocking the value chain, Sabah’s economy will flourish and its ambition to become a maritime hub can be realized by way of :• Boosting cargo throughput – domestic and transshipment - at its ports by
generating more value adding economic activities.• Fostering port development and upgrading to enable them to handle
bigger ships and throughput volumes.• Promoting value adding services such as transportation, logistics, supply
chain management, ICT, finance that support the marine industry.• Encouraging the development of shipbuilding/ship repairing and
fabrication of offshore structures.• Promoting highly skilled, high income activities in the maritime sector
such as supply chain management, ship design, port design.• Enhancing productivity, efficiency and cost competitiveness of its ports
and marine industry.
