SAPP Economic Plan for Sabah

PREAMBLE

SABAH PROGRESSIVE PARTY (SAPP) subscribes strongly to human potential, dignity and the rights of all Sabahans, regardless of race and religion. SAPP reaffirms its mission "to establish a trustworthy government and a progressive, just and harmonious society" and to rejuvenate Sabah's position in Malaysia.

SAPP is determined to restore and preserve our solidarity and unity to protect the economic interests of all Sabahans. The economic disfranchisement of Sabahans has become a lot more serious. Today, Sabah is the poorest state in Malaysia with the third lowest Gross Domestic Product (GDP) per capita. Sarawak, where UMNO is not present, has the second highest GDP per capita. It is not surprising that Sabahans' stakes in the state economy has become insignificant. Sabah is the largest oil palm state in Malaysia but Sabahans own less than 15% of the plantations. We also see the same trend in the wholesale and the retail trades, automobile, workshop, manufacturing, housing and food sectors. There is ignominious sign that Sabahans can expect little business opportunities and well-paid jobs. Ten of thousands have left the State to seek jobs outside Sabah.

Realizing that many Sabahans become "economic refugees" in our own state, SAPP Government will introduce and implement an economic plan that will directly benefit Sabahans. SAPP Government will pay special attention to ensure the present and future generations of Sabahans will have the opportunities to partake actively in the mainstream development of the state and national economies.

The heightened role by Sabahans in the growth of our economy does not have to be at the expense of other Malaysians and foreign investors.

SAPP Government will implement the policy of greater economic ownership by Sabahans on a mutually beneficial framework by expanding and accelerating economic growth and improving the Government delivery system. The culture of corruption must be flushed out and eliminated.

SAPP Government is confident that Sabahans, other Malaysians and foreign investors can find attractive financial returns to invest in Sabah.

The economic direction that SAPP aspires is designed to spearhead a dynamic and sustainable transformation of the state economic outlook that will benefit the entire spectrum of society. SAPP is the Government for Malaysians in Sabah, committed to voicing vehemently to the Federal Government in no uncertain terms with regards to Sabah's rightful stake in Sabah's oil and gas resources in the state's continental shelf.

SAPP Government believes that Sabah's competitive advantage can be realized through a market-driven economy.

SAPP will work towards uplifting the economic pride of Sabah by implementing the following:

A. DELIVERY SYSTEM

SAPP Government will ensure that the system of award of Government contracts for all business related activities are implemented fairly. Approvals will be given within specific time frame if the terms and conditions are fulfilled.

B. HUMAN RESOURCES

SAPP Government will invest intensively in the development of human capital. Sabah needs more knowledgeable, competent and confident human capital to propel the growth of our economy at a sustainable rate.
SAPP Government will offer more scholarships, study loans and bursaries to address the needs of skilled and qualified human resource for the various segments of our industries.

C. DYNAMIC INVESTMENT ENVIRONMENT

SAPP Government will review and streamline various laws and policies to minimize bureaucratic obstacles towards expediting the process of investment applications.

The proposed Sand Monopoly and Scrap Metal Monopoly will be abolished.

SAPP Government will strengthen the Sabah ONE-STOP INVESTMENT CENTRE to ensure an efficient, smooth and transparent, easy-to-understand process and speedy approval of investment application by local and foreign investors.
SAPP Government will establish a Special Investment Steering Panel with members comprising relevant ministers, officials and representatives from private sector. It will implement economic policies and monitor the pace of investment inflow and projects as well as the spinoff benefits that can be reaped by Sabahans.

D. LOCAL ENTREPRENEURS

SAPP Government will formulate programs to identify and nurture promising and dynamic Sabah entrepreneurs. Sabahans of all races will be groomed to become successful businessmen/women in their own rights.

SAPP Government will provide the technical and financial assistance to enable local entrepreneurs to exploit new economic opportunities in all fields of endeavour.

E. CABOTAGE POLICY

This issue is the root cause for the higher prices of goods in Sabah compared to West Malaysia. The policy contributes to higher shipping costs that are passed on to consumers. The inflated cost also hikes the prices of raw materials that are imported for property development, manufacturing and other industrial enterprises.

SAPP will undertake a comprehensive review and oppose any monopolies that will weigh heavily against the economic interest of Sabah. The Federal government must be persuaded to abolish the Cabotage Policy which is to Sabah's disadvantage.

F. OIL AND GAS INDUSTRY

SAPP Government will introduce economic policies to provide Sabah a substantial stake in this critical sector in terms of royalties, and direct say in the utilisation of these resources. These policies will also be reflected in the direct participation of Sabahans in Oil & Gas based ventures as well as spinoff opportunities and employment.
Sabah must be compensated appropriately for our gas that will be piped to Bintulu for processing into Liquefied Natural Gas (LNG) for export.

G. PALM OIL INDUSTRY

SAPP Government will ensure that there will be more palm oil downstream processing for value-adding to the economy and to create more job opportunities.

SAPP Government will constantly monitor to ensure this industry will be able to compete efficiently in the global markets. SAPP will also explore additional ancillary opportunities whilst increasing Sabahans participation especially in line with the new Land reforms as presented on 8 November 2011.

H. TOURISM INDUSTRY

This is a mushrooming industry with huge revenue-generation capacity for Sabah. SAPP Government will work closely with the tourism operators to develop tourism to its optimal potential with creative packaging of inherent nature attractions complemented by quality service, matching global trends and consumer taste.

SAPP is committed to improve basic infrastructure in the tourism zones and also to uphold a high Sabahans participation in the industry as a whole.

SAPP Government will pursue an Open Air Policy with the relevant authorities.

I. TIMBER INDUSTRY

SAPP Government will design a policy to ensure the cycle of production at a sustainable rate, maintaining the timber resource as a key contributor to the state revenue over the long term. SAPP Government will make both qualitative and quantitative analysis between direct timber export and local processing for add-on value in terms of earnings derived and economic priorities to peg timber exports at the competitive market price.

J. BIMP–EAGA REGION

SAPP Government will explore the opportunities available and to take full advantage of Sabah's strategic location in this sub-region, particularly Kalimantan's prosperity due to massive surface coal exports and oil palm plantations and tourism potential.

SAPP Government will improve the sea ports and Barter Trade centres in Tawau and Sandakan to capitalise on this growth potential. New barter trade centres at Kudat, Semporna and Lahad Datu will be looked into seriously.

K. LAND AS AN ECONOMIC RESOURCE

SAPP Government will exploit the full utilization of land as the main denominator to generate income and accelerate the economic growth of Sabah. The objective is to be realized through the following strategies:

1. Paddy Industry
   SAPP Government will revive the Sabah Padi Board to embark on a massive plan in improving irrigation infrastructure without necessitating the construction of any costly mega dam. Subject to strict environmental conditions and local villages' interests, micro dam and mini dams for the triple purposes of irrigation, flood control and hydro power generation for local benefits will be considered.
   SAPP Government will review and aggressively pursue the goal to make Sabah self-sufficient in the production of rice.
   SAPP Government will negotiate the monopolistic policy given to BERNAS and to liberalize it to a competitive market.

2. Aquaculture Industry
   SAPP Government will exploit this industry to its full potential, covering the culture of fish, shrimp and oyster and alga culture such as seaweed farming.

3. Livestock and Poultry Industry
   SAPP Government will raise livestock breeding especially cattle, water buffalo and chicken to meet growing demand for meat and gradually reduce imports mainly from Australia and India.

4. Food Processing Industry
   SAPP Government will encourage the development of the Food Processing Industry by providing the necessary infrastructure.
   SAPP Government will set up "post harvest facilities" at strategic locations in the State to facilitate small and medium size farmers. This will encourage smallholders to venture into the planting of various cash crops and fruits on their land or even in homesteads to increase their earnings.

5. Dairy Farming
   SAPP Government will look into the development of Dairy Farming through joint venture investments with companies that could share their expertise and technology. SAPP will encourage the private sector to take part as joint-venture partners.

6. Rubber Industry
   SAPP Government will encourage the development of the Rubber Industry and will ensure the interests of the smallholders are looked after.
   SAPP Government will provide the necessary incentives to attract private investors with the technical knowhow to develop the downstream Rubber Industry.

L. SABAH ELECTRICTY SDN BHD (SESB)

SAPP Government intends to reverting SESB back to a state-owned entity, geared towards adequate generation and efficient distribution of electricity which is crucial to spur Sabah's economic growth. If SESCO owned by the Sarawak State Government is viable and successful, there is no valid reason that Sabah's own SESB cannot be similarly viable and successful.

M. SUGAR AND SALT FACTORY

SAPP Government will revive the proposed Sugar and Salt production in Kuala Penyu and Matunggung respectively to produce these essential condiments for state consumption and export.

N. FINANCIAL PRUDENCE

SAPP Government will affect comprehensive measures to ensure prudent management and utilisation of state funds within the purview of transparency and accountability. At the same time, SAPP Government will find ways to generate additional revenues from oil and gas and from land, taking into consideration that land is the paramount resource asset in any economic venture.

O. STATE BUDGET

SAPP realizes that since 1970s, 70% of State revenues were derived from timber royalties alone. However, in the last 30 years Sabah economy has been restructured that the sources of State revenues were diversified and timber is only one of the main contributors.

In the 1980s, Sabah State's annual revenues reached its RM 1 billion. In 1990s, revenues hovered at RM2 billion. By 2000s, State revenues touched RM 3 billion. The exponential in the State budget is rapid as reflected by the 2011and 2012 budget of RM3.6 to RM 4 billion.

The main sources of revenues currently are from palm oil sales taxes at RM 1 billion, petroleum royalties RM 800 million, land revenue RM 150 million forests RM 100 million, water sales RM 120 million, rents and returns on investments RM 800 million, revenue in lieu of export duties and excise on petroleum products RM 120 million and the federal capitation grant RM 50 million.

In comparison to the Sarawak's State budget of RM 5.7 billion in the fiscal year 2011, SAPP Government is confident that Sabah's State revenues can achieve RM 5 billion by the year 2015.

This budget will be able to sustain the momentum of Sabah's development and able to save for the future. The revenue is expected to be derived by way of:

1. Close monitoring of royalties on oil and gas, including those new, significant discoveries in shallow waters off Sabah producing an addition 7 billion standard cubic ft. per day.

2. Review of payment (revenue) in lieu of export duties and excise on petroleum products.

3. Exercise State right over land by requiring land taxes on the Petronas gas pipeline from Kimanis to Sarawak border, and other Pertonas installations in Sabah.

4. Reinstating public auction of prime urban commercial lands.

5. Allowing palm oil mills to convert their agricultural land status into industrial land status.

6. Revising timber royalties consistent with market prices.
   (This expected revenue of RM 5 billion does not take into account the probability of successfully claiming 20% in petroleum royalties, which at 20% would give Sabah additional revenue of RM 3 billion per annum based on the 2011 figure.)

The additional RM 1 billion in the annual revenue by 2015 SHALL be reinvested as follows:

1. RM 100 million per annum in Heritage Fund (instituted in 1997) for future generations.

2. RM 500 million for State Consolidated Fund for Sabah's development expenditure.

3. RM 100 million for Sabah Palm Oil Council, which will be set up to nurture, promote and protect the Sabah Palm Oil sector.

4. RM 200 million for Food Production and Security, including self-sufficiency in rice by 2018.

5. RM 100 million for human resource planning and training, in order to reduce Sabah's over dependence on foreign labour, and to raise the income and living wage based on the productivity of local employees and workers.

P. ECONOMIC GROWTH - GROSS DOMESTIC PRODUCT AND WEALTH CREATION

It is essential that Sabah's economy grow at a sufficient rate of at least 5% to 8% in order to expand the economic cake for all to share and to reduce poverty. Towards this end, trade liberalization, delivery system and transparent approvals are crucial to provide a favourable investment climate. SAPP feels that the 3.5% GDP growth rate in the current and recent years is grossly inadequate compared to the national GDP growth at 5.5%. Sabah has achieved, in the past, 7% to 9% growth.

SAPP Government shall endeavour to achieve 5% to 8% GDP growth per year by way of empowerment of the business sector and encouraging private sector investments, making it easier and healthier to do business in Sabah and providing the needed infrastructure for the economy to grow efficiently.

With the support of the people and a strong mandate for SAPP, SAPP Government will bring new hope and a better Sabah for all Malaysians living in our beloved State of Sabah.

SAPP – A NEW HOPE FOR SABAH!