Strong federal-state ties key to Sabah’s progress, says economist

 

Economist Firdausi Suffian says Sabah, despite its growth, faces several challenges such as high poverty rates and unemployment. (Wikipedia pic)

KUALA LUMPUR: Strong federal-state collaboration lies behind the significant economic progress made by Sabah since Hajiji Noor became the chief minister, says an economist.

Hajiji formed an alliance between his coalition, Gabungan Rakyat Sabah, and Pakatan Harapan, and this alignment with the federal government was crucial due to the concentration of power at the central level, said Sabah UiTM lecturer Firdausi Suffian.

“The government’s decision to allow Sabah and Sarawak to decide on the implementation of any infrastructure projects under RM50 million in their respective state is a sign of gradual decentralisation,” Firdausi told FMT.

However, he said, despite Sabah’s impressive revenue collection, the state still faced significant challenges such as high poverty rates and unemployment, recording the highest unemployment rate in the country.

“This situation is a paradox given the state’s abundant resources and contributions to the nation,” he said.

As a way forward, Firdausi said, Sabah’s focus should be on advancing human capital development. “Enhance skill levels, produce a larger pool of competent workers and, subsequently, shift the focus towards downstream industries that demand skilled and semi-skilled workers.”

Political analyst Oh Ei Sun said Sabah’s government has a history of aligning itself with the federal government, which has contributed to its economic growth.

Oh said Sabah should start investing in infrastructure improvements to build on its record revenues, and also consider expediting business processes and approvals.

According to a Daily Express report, Sabah’s revenue has been steadily increasing since Hajiji took office in 2020. As of August this year, the state has generated RM4.69 billion in revenue, reaching 89% of the projected revenue of RM5.268 billion for 2023.

This impressive growth is due to higher royalties from petroleum, state sales taxes on petroleum products, taxes on crude palm oil, federal government grants, revenue from the state’s lands and surveys department, and Sabah’s special grant.

Despite facing several challenges in the past, including a drop in revenue in 2020 due to falling petroleum prices, Sabah rebounded in 2021 with the introduction of taxes on petroleum products.

The state also saw substantial revenue increases in 2021 and 2022 under the “Hala Tuju Sabah Maju Jaya” development plan.

According to the report, the establishment of SMJ Sdn Bhd, Sabah’s own oil and gas company through a collaboration with Petronas, played a pivotal role in collecting outstanding taxes and introducing new revenue sources. - FMT