Ship building, repair tax incentive a boost to Sabah’s regional hub dreams

KOTA KINABALU: The government’s move to incentivise ship building and repair under Budget 2023 bodes well with Sabah’s aim to make its east coast as a logistics hub for the Southeast Asia region.

Palm Oil Industrial Cluster (POIC) Sabah chief executive officer Datuk Fredian Gan said Malaysia’s intention to become a regional hub for this sector has sweetened related investment opportunities in Sabah, especially in its east coast.

“This ties up nicely with our intention to use Sabah’s east coast, centred around the POIC Lahad Datu industrial park, to be the logistics hub for the Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) region,” he said, in a statement here on Wednesday (March 1).

POIC Sabah is the developer of POIC Lahad Datu.

In tabling Budget 2023 last Friday (Feb 24), Prime Minister Datuk Seri Anwar Ibrahim announced that under the initiative, companies investing in shipbuilding and repairs will be entitled to, among other benefits, a five-year tax incentive stretching up to Dec 31, 2027.

Although EAGA territories have economies largely influenced by a maritime environment, ship building, repair and related industries remain underdeveloped.

Buoyed by global interests in the myriad of resources in EAGA and that the POIC ports in Lahad Datu has a natural deep harbour with draft up to 25 metres, Gan said, POIC Sabah was looking to position itself to be a gateway to BIMP-EAGA.

He added that also on POIC Sabah’s drawing board are a proposed maritime academy in anticipation of growing manpower needs as its logistics hub vision becomes a reality as well as a marine transportation hub to connect goods and trade between the EAGA territories.

Gan added that POIC Lahad Datu has arguably the most competitive port in the EAGA with dedicated terminals for container, liquid and bulk cargo.

The terminals are located in the vicinity of a matured industrial park with more than RM3.5bil worth of investments, and expansive industrial and shore side land for port and industrial investments.

“This new initiative also pairs with Indonesia’s plan to build a new national capital in East Kalimantan; it was announced recently that prospecting for oil and gas in seas off the province has just been authorised by the Indonesian government,” said Gan.

Sabah businessman Tan Sri TC Goh also hailed the budget announcement to encourage shipbuilding and repair.

Speaking on behalf of the Federation of Sabah and Labuan Hokkien Association, Goh welcomed the move as well as the RM6.5bil development budget allocated to Sabah.

Towards this end, he called for the government to expedite the completion of the Pan Borneo Highway project as well as the Sabah-Sarawak link road, alluding to the importance of hinterland connection to overall logistics efficiency.

Goh is also a member of the Sabah Economic Advisory Council.