Sabah seeking three more FTZs
Published on: Sunday, October 01, 2023
By: James Sarda and Hayati Dzulkifli
Kota Kinabalu: The State Cabinet is seeking Federal approval to declare at least three more Sabah ports as Free Trade Zones (FTZs).
Besides the already announced POIC port in Lahad Datu, the others for which such status is sought are Kota Kinabalu, Sandakan and Tawau. Sabah is the only state in Malaysia to share borders with three nations – Philippines, Indonesia and Brunei – which make FTZ a welcome prospect.
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FTZs attract foreign investors, expedite economic growth and strengthen the State’s regional influence.
“FTZs are good and we have requested Federal for two or three more in Sabah,” said Chief Minister Datuk Seri Panglima Hajiji Noor, in an exclusive interview to mark his third year in office on Sept. 29.
Hajiji said he suggested the same to Tun Dr Mahathir when the latter was Prime Minister for a second time under the previous Pakatan Harapan government that lasted only two years.
“He agreed, in principle, but resigned as PM after two or three months of my suggestion (in the power struggle that saw the collapse of the first Pakatan Harapan federal government, famously referred to as Sheraton Move).
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“Now we have proposed it to the new unity federal government (under Prime Minister Datuk Seri Anwar Ibrahim). We will plan the type of business to be carried out in these places.”
FTZs are special economic zones where goods may be imported, stored, handled, processed and repacked, reconfigured and re-exported under special regulations and generally not subjected to Customs tariffs.
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The economies of Penang and Johore improved after FTZs were established.
When told that investors are worried over uninterrupted water and electricity supplies, Hajiji said these are among the problems going back to previous administrations that are now being addressed by his administration.
“We have plans for a combination of green energy, hydro, solar and other renewable energy.” He said the State Government is still finalising the deal to take back ownership of Sabah Electricity Sdn Bhd (SESB) through the Sabah Energy Commission by Jan. 1, 2024.
“If we take SESB which is a public listed company, we must pay and that’s the problem. The public is not aware of this.
“They say SESB is Sabah’s and must be reclaimed.
“But there is a way. We have a formula which includes the 40pc in tax revenue owed to the Sabah Government.” Hajiji sees foregoing the 40pc revenue for a few years as one option. Sabah needs to own more than 50pc equity in SESB to be considered state-owned. It now holds 18pc with Tenaga Nasional Berhad the other 82pc.
At the moment, the State has to fork out RM600m yearly in subsidies alone due to the IPPs (Independent Power Producers) because the IPPs charge SESB 60sen per Kw hour.
He said where water supply is concerned, the department is required to carry out spot checks and an extra 107 personnel have been recruited for enforcement and checking meters. He said water theft by squatters may account for only 8-10 per cent while it may be up to 50pc in factories.
“They (factories) may have meters but also there are illegal connections. A major percentage of water is going to factories and not consumers, which means much treated water is going to factories.”
As a solution, Hajiji has proposed providing factories untreated water which would be cheaper. While expensive treated water is channelled only to homes, etc.
There is also the 60pc Non Revenue Water leakage, which is the highest in the nation.
As for dams, Hajiji said the proposal for solving the water shortage problem is to build a dam in Upper Padas which would produce several million litres per day. A dam for Papar is still on the drawing board.
On calls by certain quarters for Labuan Federal Territory to be returned to Sabah, Haji said although he was in favour “it is not as simple as it sounds”.
“I will inform the Prime Minister about it but the process won’t be easy. Firstly, we have to find out if Federal is agreeable to the idea as this has to be brought to parliament,” he said.
Labuan was handed over for free to Federal which declared it a Federal Territory on Feb. 1, 1984. Unlike Kuala Lumpur for which the Selangor Government received RM4 billion for having it excised to become the first FT a decade earlier.
Anger over the handover was cited as among reasons the Berjaya State Government was toppled by a 45-day old Parti Bersatu Sabah (PBS) in the 1985 state election.
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