KOTA KINABALU: The Sabah Small and Medium Enterprises (SME) Association has reiterated its call for a free trade zone (FTZ) to be created in the state’s west coast in addition to the proposed one in the Lahad Datu east coast district.
This is after Chief Minister Datuk Seri Hajiji Noor had earlier this month said the Sabah government has, in principle, agreed to support a FTZ in the Lahad Datu Industrial Park as among five initiatives to spur economic growth in the east coast.
Sabah SME Association president Foo Ngee Kee (pic) said a feasibility study for a FTZ status for the industrial park should also be extended to cover the same zone in the west coast.
He said the association had in March last year sought the assistance of Senior Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali to expedite the establishment of a FTZ in Sepanggar near here and in the Palm Oil Industrial Cluster in Lahad Datu (POIC) to enhance exports from Sabah.
“It is hoped that the Federal Government can approve in the 2023 budget funds for the setting up of a FTZ in Sepanggar Bay or other suitable areas in the west coast,” he said, in a statement here on Monday (Sept 12).
“This is in addition to a FTZ in POIC Lahad Datu due to the two ports in Kota Kinabalu (Sepanggar Bay) and Lahad Datu being well equipped and can be upgraded to cater for the FTZ and customs, immigration and quarantine (CIQ) centre,” he added.
Among the FTZ benefits to SME companies in Sabah, Foo said, included the establishment of more SMEs and creation of job opportunities, adding this would in turn help to reduce the high unemployment rate in the state.
He said there will also be an increase in the manufacturing sector’s percentage of contribution to the state’s Gross Domestic Product (GDP) and per capita income.
He added this will run parallel with the Sabah government’s goal of moving the contribution of the sector to RM10bil by 2025 and RM15bil by 2030 respectively.
“Packaging and food processing factories set up within the FTZ will provide better quality jobs for locals which is in line with the Sabah Maju Jaya’s plan of human capital development,” he said.
With the FTZs, Foo said, Sabah could also then leverage on its neighbour, Kalimantan, which in future will house Nusantara, Indonesia’s new capital, and other countries in the Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) to meet the export demands.
He said currently, due to the small population of Sabah of 3.9 million people, the state’s production volumes of agro-based products could not fulfill importers’ requirements on a regular basis.
“The lack of plantation workers can also be addressed when Sabahans and Malaysians were to invest in Kalimantan, which has an ample supply of land and workers.
“These agricultural produce can then be brought out of Kalimantan to the FTZ in POIC Lahad Datu for processing into export grades for export to the overseas market like China, Japan and Korea," he said.
Foo said without sufficient economies of scale, the prices for Sabah’s exports will become uncompetitive, especially when the high shipping charges have been factored in.
“In this way even though Sabah is blessed with bountiful natural resources, rich fertile soil and a great tropical climate, it can’t contribute much to Sabah’s GDP (gross domestic product) and economy.
“The FTZs will further support Sabah’s position as a primary gateway for trade with other countries within the BIMP-EAGA,” he said, adding that Sabah was strategically located in the centre of the BIMP-EAGA.
He added the state was well poised to benefit from the FTZs due to the direct connections Sabah has with key overseas markets like China and Korea.