KUALA LUMPUR: Sabah finance ministry expects an overall economic growth rate of about 4.0 per cent next year, supported by strong domestic consumption, increased investments and ongoing recovery of key sectors.
State finance minister Datuk Seri Panglima Masidi Manjun said he is bullish about 2024 as its economy continues to recover and grow.
"Despite a challenging 2023, where the state saw a significant contraction in its trade balance due to decreased export values of major commodities like petroleum, crude oil (CO) and crude palm oil (CPO), the overall economic indicators remain positive.
"The state's gross domestic product (GDP) and GDP per capita both showed increases in 2022, and the trend of growth is expected to persist. In addition, the state is also experiencing a strengthening labor market, with a decrease in the unemployment rate from 8.6 per cent in early 2022 to 7.5 per cent in the same period in 2023.
"This improvement is partly due to high-impact initiatives aimed at accelerating economic recovery," he told Business Times.
Inflation, another critical economic indicator, remains under control, with the state's rate slightly lower than the national average, Masidi added.
At the end of the third quarter (Q3) of 2023, Sabah's inflation was recorded at 1.8 per cent, slightly lower than the national rate of 1.9 per cent.
The state government will continue to implement various initiatives to control the increase in the price of goods and stabilise the inflation rate to further reduce the pressure and burden of the people's cost of living.
Masidi said the state government plans to continue implementing measures to stabilise the cost of living and maintain the momentum of economic growth, adding that Sabah has already surpassed its GDP growth estimates.
On the state's sales tax revenue, Masidi said it has been shaped by a series of strategic initiatives.
These include the implementation of a Special Voluntary Disclosure Programme to encourage tax compliance, enhanced collaboration with various agencies especially the Malaysian Anti Corruption Commission for better enforcement and reduction of revenue leakages, the adoption of cashless transaction methods to streamline revenue collection, exploration of new revenue sources to diversify income, and continued efforts to secure special grants from the federal government.
"These measures are part of a broader approach to ensure sustainable and efficient state revenue management, although specific details on the growth or decline in individual sectors were not provided.
"The anticipated revenue for the state in 2024 is projected to decrease due to the unstable geopolitical and economic environment, which affect the prices of CO and CPO commodities internationally.
"Consequently, the state government has adopted a cautious stance while formulating the 2024 Budget. This approach aims to ensure that the financial status of the state government remains robust," Masidi said.
Masidi said the investment environment in the state is undergoing a significant upsurge, particularly in the industrial sector.
This robust growth has elevated Sabah to the fifth position among Malaysian states in terms of attracting investment, encompassing both foreign and domestic sources.
"As of mid-2023, Sabah has successfully secured investments worth RM9 billion, predominantly in the manufacturing and services industries. In a strategic move to sustain and enhance this growth trajectory, the state government has committed RM124.06 million towards operational and development initiatives.
"Additionally, there is a strong emphasis on the oil and gas sector, recognising its potential as a key driver of the state's revenue and as a substantial source of employment opportunities," said Masidi.
The 2024 Budget's allocation of RM6.6 billion to Sabah, along with an additional RM100 million, underlines the Unity government's commitment to equitable development across the nation, including Sabah.
He said this financial support is part of the government's efforts to fulfill the Malaysia Agreement 1963 and is welcomed by Sabah.
"Policies such as focused investment in infrastructure, skills development and education, sustainable development practices, encouraging entrepreneurship and small and medium enterprises (SMEs) and attracting more foreign direct investments (FDIs) will improve Sabah's economic competitiveness and integrate it more closely with the national and global economy," Masidi said.
He said the state government has allocated RM2.63 billion of its budget towards infrastructure development, reflecting a strong commitment to enhancing basic infrastructure and public amenities.
The allocation is distributed between the Sabah Ministry of Works and its departments, receiving RM1.72 billion, and the Ministry of Finance along with other related departments, receiving RM886.55 million.
"This significant investment indicates a focus on stimulating economic growth and job creation. The funds are likely to support a range of major infrastructure projects, which include the development and improvement of roads, public facilities, and other vital infrastructure," Masidi said.