KOTA KINABALU – Sabah’s economy is expected to be driven further downhill by the Covid-19 pandemic, with economic growth expected to contract around 15% to 19% this year.
To meet this contraction, the state government has a five-year-plan – Sabah Maju Jaya – to revive the economy with details to be revealed early next year.
The state unveiled a surplus state budget for 2021 amounting to RM4.303 billion on December 18.
However, while Sabah’s economy was negatively impacted this year, it recorded a total investment of RM11,727.0 million by mid-2020, contributed by the transfer of floating liquefied natural gas (LNG), the Petronas Floating LNG Facility (PFLNG 1), Petroliam Nasional Bhd (Petronas) from the Kumang cluster farm off the coast of Sarawak, to the Kebabangan cluster farm off the coast of Sabah.
This year, dependency on palm oil and crude oil also continued to influence the overall economic growth of Sabah.
The growth of the agricultural sector is supported by palm oil as its sub-sector, also the biggest contributor to Sabah's agricultural gross domestic product.
By mid-2020, crude palm oil production in Sabah reached 2.26 million metric tonnes. This number showed a decrease of 11.4% compared with the same period in the previous year.
However, being Malaysia’s largest producer of the commodity at some 25%, Sabah had some hope when the crude palm oil price started escalating beginning mid-year, now at its highest at RM3,701.50 per tonne (at December 23).
Although the government has allowed flexibility for operators to meet market demand, revenues for the companies involved are still affected due to closure of operations during the movement control order’s implementation
From January to June 2020, the total crude palm oil exported was 2.15 million metric tonnes with a generated export revenue of RM5.7 billion.
Tourism, the largest contributor to Sabah’s GDP before the pandemic, is the worst affected sector in the state.
In March, 26% of workers in the tourism industry lost their jobs following the travel ban, according to a survey by the Sabah Institute of Development Studies.
The number of international visitor arrivals recorded a declining rate of 75.1% in January to June 2020 compared with the same period in year 2019, while the total number of domestic arrivals also recorded a declining rate of 57.2%.
Following the Covid-19 pandemic situation in China, Sabah was the first state government to suspend all scheduled and chartered flights from China to Sabah on January 30.
Beginning February 8, foreigners and non-residents of Sabah with travel history to China for the past two weeks were banned from entering the state.
In June, Sandakan saw two major hotels shut down for good – the only four-star hotel in Sandakan, Four Points by Sheraton Hotel, and Sandakan’s oldest hotel, Nak Hotel.
In May this year, several budget hotels rated three stars and below in Kota Kinabalu were up for sale with prices ranging from RM10 million to RM35 million. One of them is Courtyard Hotel at 1Borneo Hypermall.
Even before the pandemic hit the country, Sabah was already the poorest state in Malaysia.
It recorded the second highest unemployment rate in the country in 2019, at 112,000 people.
It also recorded a 19.5% poverty rate in 2019, high unemployment at 5.8%, and 14% youth unemployment rate last year.
The Statistics Department forecast that more than 284,000 Sabahan youths will be unemployed by the end of this year.
A report by Emir Research, an independent think-tank, estimates that youth unemployment rate in Sabah could rise to at least 20%.
Other industries in Sabah were also badly affected by the pandemic.
For example, in Sandakan, Elopura assemblyman Calvin Chong said that there had been an average of 50 cancellation of trading licenses with the Sandakan Municipal Council each month since April.
The mining and quarrying sector was also affected with a decrease in total export value of crude petroleum and refined petroleum products from January to June this year by 35.7% and 25.9% respectively compared with the same period in the previous year.
The pandemic also impacted the construction sector involving residential and non-residential buildings, as well as civil engineering activities, as they were not able to operate during the MCO.
Imports of building materials such as iron and steel in the first half of year 2020 had decreased by 50.1% compared with the same period in the previous year, a decrease from 68,986 metric tonnes to 34,430 metric tonnes
Sabah’s inflation rate was lower at -3.1% in mid-2020 compared to 0.5% in mid-2019 due to a reduction in consumer spending during the MCO and lack of consumer confidence.
Problematic internet connectivity
While the pandemic caused struggles to Sabah’s economy, it also highlighted the lack of public infrastructure in Sabah, including its poor internet connectivity.
Poor internet connectivity has been a long-standing problem in the state, but as the pandemic forced schools’ teaching and learning sessions to be conducted online, the problem resurfaced and gained public attention.
In June, Universiti Malaysia Sabah student Veveonah Mosibin, from Kg Sepatalang in Pitas, made the headlines after she posted a video of her having climbed a tree to get better internet connection for an online examination.
On November 23, three pupils in Kg Gusi, Ranau, were injured after they fell 15m from a suspension bridge – the only place they could get internet access – when the crossing snapped.
However, Sabah was promised better internet connection by 2022 after Prime Minister Tan Sri Muhyiddin Yassin announced the National Digital Network initiative, and Sabah being the biggest allocation recipient at RM2.45 billion.
Under the initiative, Sabah will have 419 new telecommunication towers and 1,972 of its existing transmitters will be upgraded to 4G.
Devastating floods
Amid the pandemic, Sabah’s west coast was hit with serious flash floods twice this year.
It happens every year during heavy rainfall, and this year was no different.
In June, 16 families were evacuated from a village in Kota Belud, while 12 villages in Penampang were flooded. Seven villages in Kota Marudu and two villages in Putatan, and roads in Kudat and Tamparuli were temporarily disconnected due to floods.
In October, Sabah’s west coast was hit with serious flash floods twice.
The first wave affected Tuaran, Kota Belud and Penampang on October 5. Penampang, Telipok and Tuaran were flooded only a week after. – The Vibes, December 30, 2020
