KOTA KINABALU: Industrial Development and Entrepreneurship Minister Datuk Phoong Jin Zhe said Sabah will pursue its ambitious programme to develop downstream activities in particular in the agriculture and seafood sectors but its plan is limited because some key industries like petroleum and gas are controlled by the federal government.
"Not all raw materials in Sabah, such as petroleum, gas, and crude palm oil, fall under the jurisdiction of the state government due to federal legislations, including the Petroleum Development Act 1974 and the Malaysian Palm Oil Board Act 1998," he said during his winding-up speech on the 2025 State Budget yesterday.
"(But) the ministry will continue attracting investments in downstream sectors involving agriculture, seafood, and minerals, Phoong added.
Phoong was responding to Sabah opposition chief Datuk Seri Mohd Shafie Apdal's suggestion to have more downstreaming services instead of importing those raw materials.
Sabah, the second-largest state by land area on Malaysia's Borneo island. It is the third most populous state and accounted for 5.5 percent of national GDP last year. Blessed with an abundance of resources, the economy has been mainly driven by the agriculture, oil and gas and tourism sectors.
Phoong, meanwhile said Sabah has rolled out a string of initiatives to woo investments in downstream palm oil industries, particularly in oleochemicals but the lack of sufficient raw materials were major hurdles, as many raw material producers have long term contracts to export them.
"We will however continue to engage with industry players to allocate some of these materials for downstream development in Sabah," he said.
On the timber industry, a major employment and income earner for the state, Phoong said that six percent of the allowable 20 percent timber export quota was utilised this year.
For silica sand, he said it is currently being used by Kibing Group in solar glass manufacturing, with efforts underway to attract more investments to enhance the solar panel production ecosystem.
"The ministry will continue attracting investments in downstream sectors involving agriculture, seafood, and minerals, while focusing on blue economy initiatives and food security in new industrial parks," Phoong added.