OFFICIAL OPENING ADDRESS BY YAB DATUK SERI PANGLIMA MUSA HAJI AMAN, CHIEF MINISTER OF SABAH AT THE SABAH INVESTMENT & TRADE DIALOGUE AND SEMINAR ON OPPORTUNITIES IN MANUFACTURING AND SERVICES SECTOR, HELD ON 23 JUNE 2009 AT THE MAGELLAN

GRAND BALLROOM, SUTERA HARBOUR RESORT

It gives me great pleasure to be here and I would like to express my sincere thanks to YB Dato’ Jacob Dungau Sagan, Deputy Minister of International Trade and Industry for having invited me to officiate the opening of the Sabah Investment and Trade Dialogue and Seminar on the Manufacturing and Services Sectors on this auspicious morning. I also take this opportunity to extend a warm welcome to all seminar participants to Sabah, ‘The land below the wind’. The State Government welcomes the organizing of this seminar as it will provide exposure and interaction with team of expert speakers in their respective fields, who will be able to share their vast knowledge and experience in the industrial sector and international trade.

I understand that the objectives of this seminar is manifold, including namely to provide the latest updates on policies, incentives, facilities and support services available to the business community, to highlight the investment opportunities available to investors with focus on Sabah, to increase awareness on the functions of the various agencies under the Ministry of International Trade and Industry and to provide a forum for the business community to network with key Federal and State Government agencies.

I believe that today’s dialogue and seminar is very timely, coming at a time when our nation is facing a very challenging period. Unprecedented economic slow down has led to great global economic uncertainty as well as triggered inflationary pressures at the domestic front. We therefore hopeful that this seminar will serve to provide us with a better picture of what is to be expected in the economic front for our country and in particular for Sabah. We also need the assurance and confidence that our development programs would be able to weather the storm of this uncertain economic scenario. Looking at the objectives of the seminar, the papers to be presented and the dialogue, which will be conducted later I am confident that a lot of nagging questions would be discussed and answered.

With the present economic uncertainty, we find ourselves plunging into demanding times. The United States and the European Union’s battle in dealing with their financial institutions on guard, fuelling job losses and sending a huge tidal wave of economic uncertainty across the globe. Whilst the impact on the Asian financial sector is minimal, Malaysia or Sabah for that matter still has to deal with the impact of the financial crisis especially on its export sector.

Exports are also likely to be muted given that financial institutions are more cautious in lending to trade-related activities. Despite sound policies and somewhat insulated economy, the Sabah manufacturing sector is not completely sheltered from these global shocks. In light of this developments, the sector has to face challenges such as the rising cost of production, increased uncertainty due to market volatility, unpredicted trade practices as well as possible increased protectionist measures.

The State Government is directly involved in a number of projects and activities under the Sabah Development Corridor (SDC), including programs related to the One District One Industry (SDSI), the biomass industry and the oil and gas industries. Under the SDC, the vision for Sabah’s manufacturing sector is to be the location of choice in Asia for resource-based manufacturing by 2025. To achieve this vision, the State Government has identified a number of over three phases to stimulate growth of existing industries and attract private sector investment in targeted areas.

The first phase is about seeding and catalysing growth in existing and new industries. Initiatives will be focused on fixing the basic infrastructural gap, investing in human capital and putting in place a pro-business and pragmatic incentives to make it compelling for companies to shift to higher order value-added activities in Sabah.

The second phase builds on the foundation and focus will be on spawning local SMEs and linked to the supply chain of larger established firms. In building SMEs, incentives will be provided for companies undertaking R & D, design and technology transfer activities. Emphasis will be placed on creating local intellectual properties within the resource-based technology domain. A strong SME community will serve as a platform for Sabah to source for quality investment in global resource-based manufacturing businesses.

As Sabah enters the third phase, the manufacturing sector is expected to be a key contributor to Sabah’s GDP, by creating high-value employment and supporting a vibrant manufacturing base. By 2025, Sabah’s sophistication in terms of mix of skills base, companies and linkages to key affluent markets in North Asia will allow it to be the preferred location for investment in resource-based manufacturing and beyond.

Sabah’s manufacturing focus will be leveraging its natural endowments such as palm oil, rubber, cocoa, biodiversity, oil and gas, mineral and other resources. Among the major programs identified for the manufacturing sector under the Sabah Development Corridor include the continued development of the palm oil industrial clusters in Lahad Datu and Sandakan, the establishment of an Integrated Petrochemical Complex and the development of the biomass industry.

The State Government is taking every effort to address issues and problems which have been identified by the Sabah Industrial Action Plan, to make Sabah more conducive for business and investment. With the new approach in making Malaysia a hub for global trade through improving the nation’s competitiveness, New Package Deals for SMIs and investment promotion which focus on targeted international companies in the promoted sub sector, I believe Sabah would be able to attract more investment into the manufacturing sector and subsequently industrial development in the State will be enhanced into higher level.

Globalisation brings with it both opportunities and challenges for our State. On the one hand it has opened up international markets to tap into while on the other, we are faced with stiff competition world-wide. Fortunately, Sabah has some form of comparative advantages in the form of resource availability, its central location in South East Asia and social and political stability.

To augment these advantages so as to build up a competitive edge, the Sabah Government places emphasis on the creation of higher order factor of production, including development of advanced industrial infrastructure, promoting human resource development and R & D and promoting knowledge-based industries. The State Government also hopes that the private sector would enhance its entrepreneurial capacity, including the utilisation of ICT in their business operations. Finally, the Government would do its utmost to improve its delivery and infrastructure system to create an atmosphere conducive for doing business.

Once again, I would like to thank the organiser namely YB Dato’ Jacob for inviting me to officiate this meaningful occasion. To all the participants, I wish you a fruitful seminar and an enjoyable stay in Kota Kinabalu.

On that note, it gives me great pleasure, Ito declare this seminar officially opened.

Thank you.