Sarawak making strides with FDIs
29 Jan 2023
WITH the reopening of borders as well as the resumption of the global economy, investments into the country have started to improve gradually.
Sarawak is no exception as it sees investments trickling back into the state at a rate that is starting to reach pre-pandemic levels.
Early last year, according to Sarawak’s Ministry of International Trade, Industry and Investment (Mintred) stated that Sarawak managed to attract RM23.17 billion worth of investments for 117 projects despite the challenging global situation due to the Covid-19 pandemic.
Sarawak Minister of International Trade, Industries and Investments Datuk Amar Awang Tengah Ali Hasan said, “Investors have remained confident in Sarawak’s political leadership for managing the state economy well, even during these difficult times. Initial efforts to minimise the disruption to the essential economic sectors have proven to be effective.”
In 2021, RM4.2 billion was committed to investing in electrical and electronic products, chemical and chemical products (RM1.4 billion), basic metal products (RM938 million), logistics and warehousing services (RM93 million) and non-metallic mineral products (RM86 million).
Awang Tengah, who is also Sarawak’s Deputy Premier, said two new expansion projects worth RM2.1 billion in Sama Jaya Free Industrial Zone were approved this year and the companies commenced construction for manufacturing plants for electric and electrical products.
In addition, 16 projects worth RM75 million were approved, which among others, involved the production of beverage products, logistics and warehousing services, wood and wood-based products and basic metal products.
“These investments are expected to create more than 2,100 employment opportunities in the state,” he added.
To further facilitate more investments into Sarawak, Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg announced a new entity under Mintred called Invest Sarawak to assist parties who are keen to invest in Sarawak.
According to Mintred, ‘InvestSARAWAK’ is a platform meant to facilitate applications of investments through the provision of all the necessary information required by investors regarding industries promoted by Sarawak.
Late last year, the Sarawak Premier further announced a slew of initiatives under the state budget’s strategic thrusts to transform the state into a competitive economy.
“At the international level, the state government also endeavours to attract foregin investment and tourists through the establishment of foreign trade and tourism offices,” he was quoted as saying by Bernama when tabling the budget at the state assembly last year.
Under the budget, RM7 million has been allocated to Invest Sarawak to promote Sarawak globally to attract more foreign direct investments.
“The state government remains committed to creating an ideal climate for investment through attractive policies and initiatives to shore up the confidence of local and foreign investors,” he was quoted as saying.
Master plan to boost foreign direct investments into Sarawak
WHEN it comes to deciding where to invest, Mintred strives to have Sarawak continue to be the preferred investment destination.
In an interview with The Borneo Post in conjunction with Gabungan Parti Sarawak (GPS) 100-day in office last year, Deputy Premier Datuk Amar Awang Tengah Ali Hasan said his focus is set on landing a potential investment worth of RM62.2 billion for the state, encouraging entrepreneurship and digital economy, and also exploring opportunities for home investors.
With that, Mintred has commissioned the ‘Sarawak Development of Industrial Terminals Master Plan’ to boost the state economy and creation of jobs via the development of value-added downstream petrochemical industries.
“Upon completion in March 2023, the master plan would enable Sarawak plan and develop the petrochemical downstream industries in a more holistic manner,” said Awang Tengah.
In 2021, Sarawak approved RM7.1 billion worth of investments, but not inclusive of two major expansion projects in Samajaya Industrial Park in Kuching totalling RM2.1 billion, where the works are now progressing.
“Sarawak has succeeded in becoming a top national investment destination, despite the challenges of Covid-19 having badly affected the world economy over the past two years,” said Awang Tengah, who is also Sarawak Committee chairman of the Brunei, Indonesia, Malaysia, Philippines-East Asean Growth Area (BIMP-EAGA) and head of Malaysia Agreement 1963 (MA63) Sarawak Socio-economy Committee.
Efforts are also underway towards promoting regional economic cooperation, apart from exploring opportunities arising from Indonesia’s preparations to relocate its capital from Jakarta to Kalimantan.
“Our focus is on expediting the applications by investors, because for them, time means money,” said Awang Tengah.
“For Sarawak to achieve high-income economy status, industrialisation is the way forward, and for this to be successful, Sarawak needs to work hard in attracting both FDIs (foreign direct investments) and DDIs (domestic direct investments),” he added.
The industrialisation drive would hinge on Sarawak’s success in attracting investments, with private sector-driven manufacturing being among the key sectors earmarked in PCDS 2030.
So far, Mintred has conducted several physical meetings with serious potential investors from Singapore, South Korea, China and Australia, as far as potential realised investments are concerned.
The key points of these meeting include a proposed US$7 billion (RM29.47 billion) investment from Singapore in metal (manufacturing) project, where the application has been received, a proposed US$300 million (RM1.263 billion) investment from South Korea for chemical project, with the necessary applications submitted, a proposed US$5.2 billion (RM 21.896 billion) investment from China for integrated oil refinery project, with the team now planning to conduct site investigation, and a proposed US$1.2 billion (RM 5.056 billion) investment from Australia for green energy project, with the team having conducted detailed discussions with the relevant authorities.
At the same time, there are also proposals for A$300 million (RM948.06 billion) investment from Australia in basic metal (manufacturing) project, where the prospective investor has planned to visit Sarawak soon; a US$1.5 billion (RM6.31 billion) investment from Hong Kong in electric vehicle (EV) batteries; and a proposed RM300 million investment from the US in biomedical project.
Discussion is still at preliminary stage, but the team has indicated strong interest to visit Sarawak soon.
All of these combined could have a massive multiplier impact on Sarawak’s economy should they materialise.
Power up for more foreign investments
SARAWAK’S effort in growing its renewable energy (RE) sector has also attracted various foreign investors including, more recently, major companies from South Korea.
As Malaysia’s largest renewable energy provider, Sarawak can play a key role in accelerating the region’s energy transition.
Recognising this, Samsung Engineering with SEDC Energy (a wholly owned subsidiary of Sarawak Economic Development Corporation) and Sarawak Energy Bhd, LOTTE CHEMICAL, and POSCO Holdings jointly announced the signing of a Memorandum of Understanding (MoU) to study the potential of suppling at least 900MW of hydro-based renewable power for the H2biscus Green Hydrogen/Ammonia project (H2biscus project) in Sarawak, Malaysia.
Under the MoU signed, the five companies will jointly study the power supply capacity and facilities such as substations and transmission infrastructure that would be required to supply the project.
In addition, the completion of the H2biscus project feasibility study is anticipated within this year and the goal of commercial production is set by the end of year 2027.
According to a joint statement, should it be confirmed to be commercial and technically feasible, the H2biscus project is expected to greatly contribute to the achievement of the Korean carbon neutrality goal and vitalisation of the hydrogen economy.
Of the products to be produced in this project, all blue and green ammonia and blue methanol, except for a portion of green hydrogen which will be used locally in Sarawak, will be imported to Korea and used by Korean companies.
Samsung Engineering, Lotte Chemical, and POSCO Holdings plan to take the lead in introducing clean hydrogen in Korea by developing overseas clean hydrogen projects in cooperation with major overseas clients.
Meanwhile, Samsung Engineering will further strengthen its strategic partnership with Sarawak by discussing further business development and local economic cooperation plans.
Further, Samsung Engineering is currently successfully carrying out the Sarawak Methanol project, and is expanding its position as an optimal business development partner for Sarawak by winning the Shell OGP (Onshore Gas Plant for Rosmari Marjoram) project in July last year.
In addition, Samsung Engineering plans to contribute to the revitalisation of the local economy in Sarawak through this project and serve as an economic bridge between Korea and Malaysia.
Malaysian state-owned energy company Petronas with several Korean companies including Samsung Engineering, Lotte Chemical, signed a business agreement on joint cooperation in the development of the Shepherd CCS Project, an international project between Korea and Malaysia, Asia’s first carbon capture, transportation, and storage business.
With the successful development of the H2biscus project, it is expected that it will contribute to the expansion of local employment in Sarawak.
The Sarawak H2biscus Green Hydrogen/Ammonia Project will be sponsored and developed by a consortium comprising POSCO, Lotte Chemical, Sarawak Economic Development Corporation (SEDC) through its subsidiary SEDC Energy, and Samsung Engineering.
The project is expected to produce 7,000 tonnes per year of green hydrogen for Sarawak’s local use, 600,000 tonnes per year of blue ammonia, 630,000 tonnes per year of green ammonia, and 460,000 tonnes per year of green methanol.
Meanwhile, POSCO Holdings also signed a memorandum of understanding with POSCO International, POSCO E&C, and Petros on a carbon capture and storage project using depleted oil and gas fields.
The MoU was signed in December 2022 and under the memorandum of understanding, the two parties decided to conduct a feasibility analysis on the project to capture, transport, and store the CO2, being discharged from the operation of POSCO steelworks and from the production of blue hydrogen, at depleted, offshore oil and gas fields off the state of Sarawak.
According to a press statement by POSCO, the group and Petros plan to form a working group to discuss in detail everything from CO2 capture in Korea to CO2 transportation to Sarawak, Malaysia, CCS infrastructure facility construction, and CO2 injection and storage.
POSCO Holdings Hydrogen Business head Ju-ik Cho said, “POSCO International has experience in exploring and operating overseas mines and POSCO E&C has also completed an in-depth study on CO2 facilities.
“We will accelerate carbon neutrality through this cooperation. As close cooperation between the government and companies is important for the CCS project, we expect active support from the state government for cooperation with Petros, an oil and gas company under the Sarawak state government.”
Petros’ Sarawak Resource Management Division head Anyi Ngau explained, “The CCS project is a key driving force in Sarawak’s achievement of carbon neutrality by 2050 and has the potential to promote a world-class CCS project with the support of the state government.
Sarawak’s economic growth to support foreign investments
SARAWAK’S economy is expected to grow between five per cent and six per cent next year, says the Premier of Sarawak Datuk Patinggi Abang Johari Tun Openg.
Speaking at the special meeting on 2022 State Budget, he said this year’s economic growth is supported by external demand and improvement in domestic economic activities.
He said this is an improvement compared to the growth of three to four per cent projected this year.
“Sarawak has many of the essential building blocks it needs to be a competitive economy as well as an economic powerhouse in Malaysia.
“We have a strong base of commodities and minerals that are in demand globally, abundant sources of renewable energy, a growing population, and an open economy with talented workforce,” he said in his Budget 2023 speech last year.
Under the post-Covid-19 Development Strategy 2030 (PCDS 2030), the Sarawak government aims to make the state a thriving society where its people would enjoy economic prosperity driven by data and innovation.
Abang Johari said this outcome was based on the Action and Implementation Plan (AIP) of the PCDS 2030 which had laid down steps and actions to be taken to achieve the new development.
“We are accelerating our infrastructure development to improve the standard of living, grow our economy to provide business and job opportunities and train our people to be resourceful and increase their income level,” he said at the launch of the Action and Implementation Plan (AIP) of the PCDS 2030 here earlier this year.
Abang Johari said under the 12th Malaysia Plan, Sarawak had earmarked RM63 billion to implement people-centric initiatives under the first phase of the PCDS 2030 and this amount would be over and above the projects allocated by the federal government for the state.
“Therefore, we need to have an efficient implementation plan so that we can deliver the projects based on the funding, time and specifications. Many delayed projects were due to poor project management and had deprived the rakyat of enjoying the projects meant for them,” he said.
Abang Johari has also projected that Sarawak will have an estimated RM100 billion that will be injected into the economy by the year 2030.
He said this was following the numerous investments that will contribute to the state’s economic growth.
“Previously, I mentioned that we had estimated that the injection of capital into Sarawak’s economy will be roughly RM64 billion in order to achieve a (gross domestic product) growth rate between six and eight per cent per year for the state to achieve a developed economy with high income by 2030.
“As of now, I feel that the RM64 billion we estimated is conservative because we have companies such as Sarawak Energy which are going to inject RM40 billion up to the year 2026.
“That is not including the investments in our hydrogen plant from Sumitomo and Samsung which will be another few billion ringgit,” he said at the Memorandum of Understanding (MoU) signing ceremony between Sarawak Energy and Construction Industry Development Bhd (CIDB) at Borneo Convention Centre Kuching (BCCK) last year.
He added that Sarawak’s upcoming two gas separation plants are expected to attract further investments to the state.
Source: The Borneo Post