3. ECONOMY

3.1. Historical GDP and Employment Growth

Sabah’s economy is dominated by the primary sector - namely agriculture, forestry, mining and fishing. Nevertheless its contribution to the state GDP, 74.4% in 1980, decreased to 52.2% in 1990. This trend is expected to continue. In that period GDP contributions by the manufacturing and service sectors made significant gains. In 1990 contribution by these two sectors were 9.1% and 31.1% respectively. Essentially the state employment pattern/trend is reflective of the above economic structure.

3.1.1. Labour Force and GDP Description

Data is presented for 1980, 1991 and 1996 according to the official economic sub-sectors which can themselves be agglomerated into the 3 main sectors, notably Primary, Secondary (or manufacturing) and Tertiary (or Services). Each of the individual sub-sector’s contribution to overall State (GDP) is also shown for 1996. Gross Domestic Product (GDP) is defined as the total value of goods and services produced within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption on fixed capital. The labour force includes all persons aged 15-64 (working age population) who are either employed or actively or inactivity unemployed. It excludes those not at work, without jobs and not wanting work. The labour force participation rate is the percentage of the working age population, which is in the labour force.

3.1.2. Omissions

The 1991 Census includes detailed breakdowns of economic data by industry classification and by profession. We have included a summary of working age population, labour force participation rates, labour force, employment rate and persons employed for the state as a whole in 1991. This is sufficient for a rapid assessment of the employment structure but would need to be supplemented with selected data for a more detailed examination for planning purposes. Although the amount of employment for 1996 is included in the following tables, no analysis has been attempted for employment growth after 1991 given the discrepancies in the Department of Statistics Yearbook for 1997 as stated in Section 6.2 above. Projected 1996 employment rates look even more suspicious when compared to GDP per sub-sector. So although GDP from Manufacturing grew by 62% (1992-96) its employment grew 253%. Even in the Agriculture, Fisheries and Forestry grouping where GDP increased only 2.6% from 1992-96 (due to the decline in forestry), employment rose by 67%.

3.1.3. Data and Analysis

In term of total numbers shown in Table 5 , the Agriculture, Fisheries and Forestry sub-sector has generated the highest employment from 1980-91 (except for Community/social grouping) while at the same time contributing the highest share of GDP in 1996. However, the primary sector’s share of employment has declined from 57% to 43% over the same period. The Wholesale & Retail Trade grouping also grew significantly in terms of total numbers (43,000) or some 20% of total employment growth. Overall, employment in the Primary sectors grew by some 25% in 1980-91 whereas the Secondary sector (manufacturing) grew by 197% and the Tertiary sectors by 120%.

The GDP contribution from the Manufacturing sub-sector has been the most dynamic in the recent past (1992-96), growing from 769 to 1,246 M$ million (at 1978 prices). In total numbers this growth has been supported by Wholesale/Retail/Trade which has been growing more slowly and also by Mining/Quarrying which is in decline. The rapid growth sub-sectors have been Hotels and Restaurants (part of Wholesale/Retail/Trade) and Finance. The Agriculture, Fisheries and Forestry grouping has had a mixed recent past, with a decline in GDP from forestry, consistent growth in fishing and small annual increases in agriculture.

Table 5: Employment by Sub-Sector 1980-96 and GDP 1996

Sector

Sub-Sector

Employment

GDP 1)



1980

1991

1996

M$ million

Primary

Agriculture/Fisheries/Forestry

195,502

243,446

354,000

3,114.1

Primary

Mining/Quarrying

1,134

2,970

7,200

803.9

Secondary

Manufacturing

16,856

49,990

171,400

1,245.9

Tertiary

Services/Utilities

477

3,671

6,100

110.2

Tertiary 2)

Construction

11,073

34,473

76,600

332.2

Tertiary

Wholesale/retail/trade

27,182

70,349

154,300

1,117.7

Tertiary

Transport/communications

9,753

23,417

42,400

593.7

Tertiary

Finance

3,265

12,325

25,700

573.1

Tertiary

Community/social

65,740

113,943

192,200

70.9

Tertiary

Inadequate/unknown

11,898

10,180




Total 3)

342,880

564,764

1,029,900

8,309.4

Source: 1980 and 1991 Census and Yearbook of Statistics 1997, Statistics Department, Sabah.

Notes: 1) At 1978 prices. 2) Construction sometimes included in the secondary sector. 3) GDP also includes other inputs so the total does not add.

The following issues may have brought about this employment trend:

In the absence of detailed figures on some aspects of Labour force characteristics it should be noted that the number of employed as a percentage of the population declined from 37% in 1980 to nearly to 32.5% in 1991. So employment growth at 4.5% is slightly less than population at 5.7% per annum.

3.1.4. Using the Data

In addition to using the AAGR for employment projections there are several variables for inclusion in an analysis of labour forces and GDP. The calculations shown in Table 6 show the progression from total population to the employed labour force. In between these two figures analysis is possible on:

Table 6: Labour Force Characteristics 1991

Row

Item

Unit

1991

Calculation

1

Total Population

000

1,735

1991 Census

2

Working Age Pop.

000

1,004

Population aged 15-64

3

Labour Force Participation Rate

%

61.76

Excludes % not working

4

Labour Force

000

619

Row 2 x Row 3

5

Employment Rate

%

91.21

(Row 6 ÷ Row 4) * 100

6

Employed Labour Force

000

565

1991 Census

Source: 1991 Census, Statistics Department, Sabah.

3.1.5. Implications

As stated above, employment data has been compared for the last two Census years rather than as contained in the latest statistical publication. Figures for GDP are taken from that publication for years 1992 and 1996 in the absence of any other data. The following implications become apparent:

3.2. Employment Growth by Sub-Sector

A 2005 trend projection for sub-sector employment based on 1980-91 figures would give the results as shown in Table 7 . Despite major increases in the growth of manufacturing and service sector employment, the agriculture, fisheries and forestry sub-sector would remain the largest single sub-sector. Overall, "services" would be the largest sector and contain the fast growing sub-sectors of construction, trade and social employment. Manufacturing jobs would continue to grow strongly.

Table 7: Trend Employment by Sub-Sector (1991-2005)

Sub-Sector

1980

1991

AAGR

Change%

2005

Change%

Agriculture/Fisheries/Forestry

195,502

243,446

1.99

21.61

321,834

10.13

Mining/Quarrying

1,134

2,970

8.75

0.83

10,114

0.92

Manufacturing

16,856

49,990

9.88

14.93

199,422

19.30

Services/Utilities

477

3,671

18.55

1.44

49,290

5.89

Construction

11,073

34,473

10.32

10.55

146,287

14.44

Wholesale/retail/trade

27,182

70,349

8.64

19.45

235,974

21.39

Transport/communications

9,753

23,417

7.96

6.16

71,395

6.20

Finance

3,265

12,325

12.08

4.08

66,839

7.04

Community/social

65,740

113,943

5.00

21.72

229,450

14.92

Inadequate/unknown

11,898

10,180

-1.42

-0.77

8,347

-0.24

Total

342,880

564,764

4.54

100.00

1,338,953

100.00

Source: 1980 and 1991 Statistics Department, Sabah.

Note: Change shows increase/decrease as a percentage of the total change (1980-91) or (1991-2005).

3.3. Labour Force Characteristics & Employment Projection 2005

A trend projection of the Labour Force in 2005 can be made on a similar basis to that used for demographic purposes. A comparison of 1991 and 2005 figures which links Table 3 and Table 7 is shown in Table 8 .

Table 8: Labour Force Characteristics 1991-2005

Item

Unit

1991

2005

Calculation

1. Total Population

000

1,735

3,941

From Population Studies ( Table 3 )

2. Working Age Pop.

000

1,004

2,280

Census 1991 & Projection

3. Labour Force Participation Rate

%

61.76

61.76

Census 1991 & Projection

4. Labour Force

000

619

1,408

= row 2 x row 3

5. Employment Rate

%

91.21

95.10

= row 6 divided by row 4 * 100

6. Projected Employed Labour Force

000

565

1,339

Trend Projection 2005 ( Table 7 )

It is possible that the above items will vary significantly from the trend projection. Much will depend on the composition of new migrants who are expected to make a large contribution to the increasing workforce. The following summary can be made of the above figures:

3.4. Pipeline Development Projects

Any plan takes some time before it can be adopted and actually implemented. It therefore makes sense to include all major projects that have been committed for completion within the short-term (1-2 years). These are projects that have a detailed budget (>$M 1 million to ensure a major planning impact), an implementing agency, a fixed project lifetime and a 99% certainty. It can then be assumed that such projects are in place when considering the need for future projects. They can also be assessed now to determine their impact upon the State’s development in the future. This is not an opportunity to list departmental “dreams” or wishes that may or may not occur. The list of projects according to Project Name; details; agency responsible; and expected completion date forms Table 9 .

Table 9: Pipeline Development Projects

Industrial Projects




No

Project Name

Project Details

Responsible Agency

Completion Due

1

Clinker Plant

Located at Sepangar Bay Industrial Area approximately 20 km from Kota Kinabalu. Involves sea reclamation at about 8.5 hectares for clinker plant development. The plant production is about 1.3 million metric tonne per year of clinker for cement production.

Padu Wangsa Sdn Bhd (SEDCO)

(State Government agency)

5 years period from the construction stage

2

Kota Kinabalu Industrial Park

Located 20 km north of Kota Kinabalu (Telipok area). The development covers and area approximately 7645.28 acres. The development consists of industrial zones, commercial zones, residential zones, tourism and nature park.

Kota Kinabalu Industrial Park Sdn Bhd (KKIP) (State Government company)

2015

3

Onshore Gas Terminal

Located in Kg. Gayang, Tuaran about 55 km from Kota Kinabalu. The project development covers an area approximately 40 ha of coastal land. The project will involve the construction and installation of gas receiving, treatment and metering facilities, construction of drainage system and internal road and other support.

Petronas Carigali Sdn Bhd (Malaysian government owned company)


Road Projects




No

Project Name

Project Details

Responsible Agency

Completion Due

1

Kota Kinabalu – Sulaman Coastal Highway

Construction of a coastal highway from Kota Kinabalu to Sulaman in Tuaran. Approximately 48.5 km. Road alignment will consist of improvement of existing road, upgrading of sealed road and construction of new alignment.

JKR

(Bina Puri-Bina Primas J.V)

1999

2

Beaufort - Sipitang Highway

Upgrading of highway from gravel to sealed road, part of Trans-Borneo Highway Project.

JKR


3

Beaufort - Menumbok

Very important link road from the mainland of Sabah to Labuan.

JPPS


4

Berungis to Kota Belud

Vital road leading to northern part of Sabah

JKR


Tourism Projects




No

Project Name

Project Details

Responsible Agency

Completion Due

1

Sutera Harbour Resort

Located approximately 1.5 km from Kota Kinabalu Town Centre. The development involves sea reclamation of 155.4 ha. The development consists of 27 golf course, hotel and resort, condominium, bungalow and marina.

Sutera Harbour Resort Sdn Bhd

2002

2

Lok Kawi Beach Resort

Located at Lok Kawi, Papar approximately 17 km from Kota Kinabalu. The development involves sea reclamation of 60.6 ha. The development consists of golf course, resort and hotel, marina, apartment and condominium.

KTS Sdn Bhd

2001

3

Pantai Paka Resort

Located in Tuaran. The development consist of chalet and resort facilities and marina

SEDCO (State Government Agency)

2001

4

Dumpil Bay Lagoon Resort

Located at Dumpil Bay (Dumpil Lagoon), Meruntum, Lok Kawi, Penampang. Development involves 162 ha of sea reclamation. Project component consists of resort and business hotel, golf course, yacht club and residential complex.

Sabah Urban Development Corporation Sdn Bhd

-

5

Kota Kinabalu Beach Resort

Located at Tanjung Aru, Kota Kinabalu. Development involves 126.60 acres of coastal land. Project component consists of a theme resort and hotels (5&3 star) service apartments and recreational facilities.

Kota Kinabalu Beach Resort Sdn Bhd

8 years period

6

Kimanis Beach Resort

Located at Kimanis, Papar. Development involves 82.65 acres of coastal land. Project component comprises of a water theme park, holiday apartment and resort hotel.

Kimanis Beach Resort Sdn Bhd

4 years period

7

Zoo and Botanical Garden

Covering 120 acres construction of basic infrastructure, animals’ enclosures, exhibits and moats. Also included an oriental-based zoo and botanical garden

State Government

8

University Malaysia Sabah (UMS)

Located approximately 6.5-km north-east of Kota Kinabalu Central Business District. It is cover an area of 368 ha of coast area facing Gaya Bay. The project will involve a university infrastructure development, resort/hotel and jetty.

Public Work Department Malaysia

Universiti Malaysia Sabah

2004

3.5. SWOT Assessment

A SWOT analysis assists the planner to determine the distinct Comparative Advantage of a region (or parts of a region) in relation to neighbouring regions or states by assessing its Strengths, Weaknesses, Opportunities and Threats (SWOT). This is done through an assessment of the present condition, characteristics and utilisation of the region’s natural, human and other resources. The SWOT matrix is used as a basis for evaluating where a region's strengths lie and thus serves as a guide in determining which development sector to pursue, and what weaknesses and threats must be overcome in order to take advantage of development opportunities.

Strengths refer to current environmental and ecological features or attributes that enhance or aid in the development of a region, e.g. rich soil for agriculture, mineral reserves for gold extraction, scenic views for tourism or pasture land for livestock. Other indicators of Strength can be accessibility to a major port, proximity to major growth centres, inexpensive power, irrigation system or a skilled labour force.

Weaknesses refer to present human, financial or physical attributes and natural resources that limit or inhibit economic progress or development, e.g. poor soil, lack of infrastructure support, lack of markets, presence of natural hazards, erosion prone areas or adherence to traditional farming practices. They can also relate to lack of health or education facilities and lack of a skilled labour force.

Opportunities refer to economic, social, political, technological and competitive trends and events that could significantly benefit a region in future. This relates to private sector projects, government line agency programmes (e.g. low-income housing, infrastructure, social-forestry programmes), grants for agro-industrial projects, declaration of a Tourist Zone, establishment of a major Industrial Estate or Duty Free Port. Passage of a new law or technological breakthrough that could benefit the region is opportunities as well.

Threats relate to economic, social, political, technological and competitive trends and events that are potentially harmful to a region’s present or future development or economic progress. These may include environmental degradation from existing or proposed manufacturing/processing facilities; ecological changes brought about by degradation of mangroves and swamps, extent of damage to flora & fauna; irreversible land degradation from mining or mineral exploitation; pollution of river systems from solid waste or siltation; depletion of coral reefs/fish sanctuaries; destruction of marine habitats or destruction of historical/human interest features.

Every region has some internal strengths and weaknesses and opportunities and threats (both internal & external). A region can use its internal strengths to take advantage of opportunities or to overcome threats. Alternatively, a region could pursue defensive-type strategies aimed at overcoming weaknesses and avoiding threats. The SWOT Matrix is an important strategy formulation matching tool that results in the development of four types of strategies: SO strategies, WO Strategies, ST Strategies, and WT Strategies. The purpose of each matching tool is to generate feasible alternative strategies, not to select or determine which strategies developed in the SWOT Matrix will be selected for implementation.

For the ICZM Spatial Plan exercise the Tourism, Manufacturing and Agricultural Sectors have been chosen for a SWOT Analysis. The matrices for these sectors are contained in Table 10 , Table 11 and Table 12 .

Table 10: Tourism (SWOT)

STRENGTHS

High diversity of high quality of natural attraction.

Highly trained professional staff.

Low exchange rate.

Excellence government support and good policy to investor.

Enough provision of regulation and control for tourism industry.

WEAKNESSES

Lack of promotion and marketing strategy.

Lack of co-ordination among parties involved in tourism industry.

Lack of enthusiasm/participation in eco-tourism from local community.

Lack of good infrastructure facilities such as road and public transportation.

OPPORTUNITIES

Creation of job opportunity to the local people.

Accelerate infrastructure development.

Establishment of new regulation to control and manage the tourism activities.

Establishment of new site of attraction in the region.

SO STRATEGIES

High diversity of high quality of natural attraction.

Excellence government support and good policy to investor.

WO STRATEGIES

Accelerate infrastructure development.

Establishment of new regulation to control and manage the tourism activities.

Establishment of new site of attraction in the region.

THREATS

Imbalance in ecological system due to pollution from tourism operational activities.

Destruction and disturbance of natural ecosystem due to the development of tourism facilities.

Exclusion of local community participation in tourism activities.

ST STRATEGIES

Excellence government support and good policy to investor.

Enough provision of regulation and control for tourism industry.

WT STRATEGIES

Strict environmental control on tourism development and operational activities.

Develop a good quality of basic infrastructure such as road.

Establish business opportunities program to the local community through education and development skill in business.

Table 11: Manufacturing (SWOT)


STRENGTHS

Strategic location-in the centre of major international route.

Excellence government support, control and good policies.

Availability of raw material.

Low labour cost.

WEAKNESSES

Availability of basic infrastructure facilities requirement such as ports, road, water and electricity is not enough.

OPPORTUNITIES

Creation of job opportunities to the local people.

Improve economic growth of the country.

Accelerate infrastructure development.

SO STRATEGIES

Low labour cost.

Excellence government support, control and good policy.

WO STRATEGIES

Improve economic growth of the country

Accelerate infrastructure development.

THREATS

Pollution to water and air due to discharge and emissions from the industrial.

Influx of illegal workers from neighbouring country.

Increase in criminal activities by illegal immigrant.

Sensitive area such as mangrove forest.

ST STRATEGIES

Excellence government support, control and good policy.

WT STRATEGIES

Strict environmental control on industrial development.

Industrial plan should be established.

Improve basic infrastructure to lure investor.

Strict control on foreign workers and illegal immigrants.

Table 12: Agriculture (SWOT)


STRENGTHS

Availability of very fertile soil.

Availability of cheap labour.

Excellence government support, control and good policy.

WEAKNESSES

Involving a large number of workers especially in the plantation.

Involving a large area of planting.

Lack of good basic infrastructure facilities such as road.

OPPORTUNITIES

Creation of job opportunity to the local people.

Economic growth improvement to the country.

Accelerate infrastructure development.

SO STRATEGIES

Availability of cheap labour.

Excellence government support, control and good policy.

WO STRATEGIES

Economic growth improvement to the country.

Accelerate infrastructure development

THREATS

Pollution to water system due to land clearing and pesticide application.

Influx of illegal workers from neighbouring country

Increase in criminal activities by immigrants.

Loss of bio-diversity due to destruction of a large area of forest

ST STRATEGIES

Excellence government support, control and good policy.

WT STRATEGIES

Strict environmental control on agriculture development.

Agriculture master plan should be established.

Improve basic infrastructure to lure investor. Strict control on foreign workers and illegal immigrants.