PETALING JAYA: Sarawak could become the top three contributors to the country's economy in the next few years as Sarawak Corridor of Renewable Energy (Score) is expected to drive the state gross domestic products growth (GDP) up to 10% in 2015 from less than 5% last year, said Kenanga Research.
Currently, the biggest state in Malaysia contributes about 8% to Malaysia's overall real GDP growth.
Kenanga Investment Bank hosted an exclusive conference called “The Sarawak Growth Story” on Thursday where it introduced the upcoming segments and future prospects of Sarawak with a specific focus on Score and the state's infrastructure, oil and gas as well as plantation sectors.
Sarawak's GDP growth contribution was bested only by Selangor, Johor and Penang.
Being Malaysia's largest and possibly the richest state, Kenanga said in a report that Sarawak was moving in a right direction as it would soon hit the halfway mark of the five-year 10th Malaysian Plan (10MP) which began in 2010.
“Much of the budget allocation in the 10MP is being channelled towards improving infrastructure, particularly transportation, managing urbanisation and developing Sarawak as an energy development hub.
“With Score leading the growth trajectory, we believe that Sarawak could exceed current growth of 5% to 6% by 2015, possibly outpacing the projected average national growth of 6.0%.
“This is premised on the progressive development of Score phase projects, specifically the smooth implementation of RM1.8bil deep-sea port project in Samalaju,” it said.
To make Sarawak's long-term growth plan a reality, Kenanga said Score's aim was to harness some 20,000MV of potential hydroelectric power in Sarawak (mainly from Bakun hydroelectric), plus some 1.46 billion tonnes of coal, 1.3 billion barrels of oil and 40.9 trillion cu ft of natural gas located in the central region.
“At the same time, the project would cover some 70,709 sq km of territory (about half the size of Peninsular Malaysia) or home to nearly a million people.
“The Government projects 1.6 million jobs opportunities to be created under Score by its target completion date of 2030,” it said.
Some of the companies Kenanga believed offered investors the right insights and investment opportunities into the market were Cahya Mata Sarawak Bhd, Naim Holdings Bhd, Sarawak Cable Bhd, Hock Seng Lee Bhd, Sarawak Energy Bhd and Sarawak Oil Palm Bhd.
On challenges, Kenanga said apart from external shocks, the other main obstacle for Sarawak to achieve its higher growth potential would be the inability of the domestic economy to fully optimise the current development.
“With a population of just two million, Sarawak is under populated and is in real need to be in industries that are value-added and capital intensive.
“Meanwhile, income distribution within Sarawak has been an ongoing issue, mainly due to the historically uneven spread of the population between urban and rural areas. The relatively higher unemployment rate doesn't help either,” it said.