ACCORDING to the 12th Malaysia Plan (12MP), Sabah and Sarawak recorded the lowest gross domestic product (GDP) growth compared with other Malaysian states at one and 0.9 per cent per annum between 2016 and last year.
The economic performance of both states during the past five years is lower than the national average of 2.7 per cent per annum.
Besides the pandemic, low prices of crude oil, palm oil and rubber are among the factors leading to slower economic growth in Sabah and Sarawak, translating to a higher poverty rate of 25.3 and 12.9 per cent last year.
As most Sabahans and Sarawakians are involved in low-skilled jobs, this contributes to low median household income in the rural areas of both states, at RM3,172 for Sabah and RM3,195 for Sarawak in 2019, compared with the national average of RM3,828.
Due to underdeveloped infrastructures, Sabah and Sarawak continued to face challenges in attracting investment for industrial development.
A lack of a supportive ecosystem (i.e. the availability of local technology, skilled talent, efficient supply chain and attractive incentives), lower production, together with lower investment and consumption would result in lower GDP growth and higher unemployment.
In turn, Sabah continues to record the highest unemployment rate in the country from 5.8 per cent in 2019 to 8 per cent in 2020. For Sarawak, the rate increased from 3.1 per cent in 2019 to 4.3 per cent in 2020.
Youth unemployment has become an issue among East Malaysian youths. In 2020, 17.3 and 12.3 per cent of Sabah and Sarawak youths were unemployed, higher than the national average of 12 per cent.
Therefore, to narrow the socioeconomic gap between East Malaysia and the peninsula, EMIR Research proposes to federal and state governments to look into these areas.
• Regularly conduct periodic reviews (i.e. once in three months) for all short-, medium- and long-term development strategies, ensuring all plans can be implemented within the specific time frame.
• State government agencies have to work closely with the private sectors in rural areas to attract higher value investment, promote rural tourism activities and agrotourism, enable the product to be sold via digital applications as well as enhance employability through knowledge enhancement and skills training;
• Both states have to increase crop diversification and produce high-quality agricultural products to diversify the revenue stream.
• Besides reducing dependence on palm oil production, Sabah and Sarawak potentially could develop as Borneo food hubs to fulfil increasing demands from major markets such as China, Singapore and Brunei.
• Federal Agricultural Marketing Authority and related government agencies could assist rural farmers in both states in transporting agricultural products to major cities within both states or export, which in turn could help poor districts in Sabah out of poverty.
• The federal government needs to expand fibre optic networks, together with commercial development of communication infrastructure in rural areas of Sabah and Sarawak, bringing connectivity to more households and entrepreneurs on top of bridging the digital divide between urban and rural areas.
• The federal government needs to work closely with the Malaysian Communications and Multimedia Commission, as well as local authorities and state governments to ensure there is no variation in quality and cost of building digital infrastructure in Sabah and Sarawak.
• Both states have to improve the coverage of primary healthcare in the remote areas with the provision of mobile clinics and flying doctors' services.
It is good that Sabah and Sarawak will continue receiving 15 and 18 per cent annually of the total basic development allocation to improve infrastructure and basic facilities under the 12MP.
However, to realise the goal of increasing Sabah and Sarawak's annual GDP growth to 6.5 and 5.3 per cent, it is time for both to enhance the development potential of cities and towns in the next four years.
For instance, Keningau, Kota Marudu, Lahad Datu, Sandakan and Tawau in Sabah, as well as Bintulu, Kapit, Miri and Sibu in Sarawak have their respective strengths to generate more economic activities.
In a nutshell, relatively equitable distribution of socioeconomic benefits across income groups, ethnicities and states would provide the opportunity for Sabahans and Sarawakians to sustain their economic livelihoods, thus generating socioeconomic development in both states.
The writer is Research Analyst at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research
