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Kota Kinabalu: The establishment of the Indian Consulate in Kota Kinabalu holds the potential to be a catalyst for the State’s economic growth, even though its impact is expected to be gradual.

Senior lecturer at the Faculty of Business and Management, Universiti Teknologi Mara Sabah, Dr Jain Yassin, said although India is not currently Sabah’s main trading partner, the opening of the consulate could strengthen bilateral relations, potentially lowering transaction costs and boosting investor confidence.

“The direct impact may not be immediately significant, as India is not Sabah’s ‘top partner’. However, it could serve as a catalyst for economic growth by fostering a strong bilateral relationship, which can reduce transaction costs (in investment and trade) and boost investor confidence.

“This could also expand through trade and investment networks with Indian partners. In addition, it is expected to boost the confidence of foreign investors,” he said.

He said the opening of the consulate could also encourage greater foreign direct investment (FDI) from India to Sabah by facilitating a more structured and efficient investment ecosystem.

“The consulate can act as an enabler for a more systematic and faster investment ecosystem. Its presence will give investors a better understanding of Sabah’s economy and opportunities, helping to attract more FDI,” he said.

On the sectors expected to benefit earliest, Jain said tourism and hospitality could see immediate gains from the anticipated rise in Indian visitors through direct tourism promotion efforts.

He added that from a trade standpoint, Sabah has a comparative edge in tapping into the Indian market, particularly for agricultural and marine products, as well as palm oil and related downstream products.

Jain also said the Sabah-India economic relationship has the potential to add value to the Sabah Maju Jaya (SMJ) 2.0 development plan, especially in the blue economy sector.

Meanwhile, Sabah Development Studies Institute (IDS) Chief Executive Officer Prof Datuk Dr Ramzah Dambul emphasised that the consulate does not provide unrestricted entry for foreign citizens but serves as an official channel to manage documentation, trade, investment and tourism matters more systematically.

He said the consulate’s presence could help streamline the management of human movement and improve monitoring through legal channels, countering concerns over potential security risks.

“We need to understand the role of a consulate. Its function is similar to a mini embassy, facilitating documentation and various other formal matters. This consulate can also help organise the movement of people in and out in a more systematic way,” he said.

Ramzah said the consulate played an important role in promoting Sabah to the Indian market, pointing out that although the number of tourists from India to Malaysia was high, only a small percentage visited Sabah.

He said Malaysia welcomed 1.13 million Indian tourists in 2024, yet only a small portion chose Sabah, resulting in limited economic benefits for the State.

“The Indian consulate in Kota Kinabalu is expected to increase tourist numbers by five percent, which could bring 30,000 to 45,000 visitors annually and contribute RM100 million to the local economic cycle,” he said.

Ramzah said the opening of the Indian consulate also carried great symbolic significance, reflecting international recognition of Sabah’s strategic position as a key node in Borneo and the eastern Asean region.

Last Sunday, Prime Minister Datuk Seri Anwar Ibrahim said during a press conference with Indian Prime Minister Narendra Modi that he supported India’s decision to open a new consulate in Kota Kinabalu, underscoring the growing depth of Malaysia-India relations.

Both leaders said that the new diplomatic mission would further strengthen people-to-people ties, enhance economic cooperation, and improve consular services, particularly in East Malaysia.

The establishment of the consulate is expected to facilitate closer engagement in trade, investment, tourism, education and cultural exchanges, while also enhancing support for the Indian community and businesses operating in Sabah and the surrounding region.