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Sabah Economic Development and Investment Authority SDC CELEBRATES 10 YEARS JOURNEY 'SURGING TOWARDS EXCELLENCE' 4 TABLE OF CONTENTS CHAIRMAN’S STATEMENT 10 CHIEF EXECUTIVE’S ANNUAL REVIEW 12 CHAPTER SABAH DEVELOPMENT CORRIDOR 14 1 1.1 BACKGROUND OF SDC 16 1.2 THE VISION OF SDC 17 1.2.1 Capturing High Value Economic Activities 17 1.2.2 Promoting Balanced Economic Growth and Distribution 17 1.2.3 Ensuring Sustainable Growth via Environmental Conservation 17 1.2.4 The Five Attributes in the SDC Vision 18 1.3 THE MISSION OF SDC 18 1.4 SDC ALIGNMENT THROUGH THE REGIONAL CITIES AND 19 CORRIDORS PROGRAMME 1.5 STRATEGIC DEVELOPMENT AREAS UNDER SDC 20 CHAPTER THE GOVERNANCE OF SEDIA 22 2 2.1 SEDIA AS THE ONE-STOP AUTHORITY 24 2.1.1 Objectives of SEDIA 24 2.1.2 Membership of the Authority 25 2.1.3 Establishment of Committees 25 2.2 MEMBERS OF SEDIA 26 2.3 SEDIA COMMITTEES 27 2.3.1 Implementation Co-ordination Committee 27 2.3.2 Finance and Investment Committee 28 2.3.3 Development Planning Committee 29 2.3.4 Nomination, Establishment and Remuneration Committee 30 2.3.5 Audit Committee 30 2.3.6 Consultative Panel and Focus Group Committee 31 2.4 THE CHIEF EXECUTIVE 32 2.5 SABAH ECONOMIC DEVELOPMENT AND INVESTMENT 33 AUTHORITY FUND 6 CHAPTER SEDIA CORPORATE PROFILE AND ACTIVITIES 34 3 3.1 FUNCTIONS OF SEDIA 36 3.2 CORPORATE VISION, MISSION AND STRATEGIES 37 3.3 ORGANISATION CHART 39 3.4 DIVISIONS AND DEPARTMENTS OF SEDIA 40 3.4.1 Chief Executive’s Office 40 3.4.2 Development Planning, Co-ordination and Evaluation Division 42 Featured Division Activity: SEDIA Participation in Town Hall 43 and Dialogue Session 3.4.3 Marketing and Corporate Communications Division 46 Featured Division Activity: SDC 10th Year Anniversary 47 Carnival 3.4.4 Knowledge and Technology Management Division 48 Featured Division Activity: Research, Development and 49 Commercialisation Studies Conducted During 2018 3.4.5 Investment and Business Development Division 51 Featured Division Activity: SAIP SME Incubation and BizLink 51 Programmes 3.4.6 Project Management Department 52 3.4.7 Accounting and Finance Department 52 3.4.8 Administration and Corporate Services Department 52 3.5 CALENDAR OF NOTABLE EVENTS 54 3.6 HIGHLIGHTS OF SEDIA ACTIVITIES 68 3.6.1 National Conference to Commemorate 10-Year Anniversary 68 of SDC 3.6.2 SEDIA Welcomes Discussion with new Minister of Agriculture 69 and Food Industries 3.6.3 SEDIA Provides Input on Technical and Vocational Education 70 and Training Masterplan Study by the Ministry of Human Resources 3.6.4 SEDIA Welcomes Keen Interest by the Malaysia Nuclear 72 Agency and Mutiara Jaya Venture to Participate in SDC 3.6.5 SEDIA Showcases SDC SME Products at SIFBF 2018 74 3.6.6 Talk on SEDIA’s role in Facilitating SMEs 75 3.6.7 SEDIA Briefs Malaysia Special Branch on SDC Programme 76 and Initiatives 3.6.8 SEDIA Connects with Graduates through Kembara Kerjaya 77 Roadshow 3.6.9 SEDIA Receives Visit at SAIP by Assistant Minister in 77 Chief Minister’s Office 3.6.10 China-ASEAN Exposition 78 7 3.6.11 Investors from Thailand Keen to Explore Opportunities in the 80 Oil Palm and Timber Sectors in SDC 3.6.12 SEDIA to Collaborate with MITI to Turn Sabah into a Regional 81 Powerhouse 3.6.13 SEDIA Discusses Collaboration with Nuclear Malaysia 83 3.6.14 SEDIA Receives Courtesy Visit by Polish Foreign Trade Office 84 Chief 3.6.15 SEDIA Continues Collaboration on SMART Mushroom House 85 with MESTECC 3.6.16 SEDIA Supports Local SMEs Through Promotional Activities 87 3.6.17 SEDIA Encourages Interaction with Education Institutions and 88 Students 3.6.18 Trade and Investment Mission to Japan and Korea 90 3.6.19 Ukraine Embassy Pays Courtesy Visit to SEDIA 91 CHAPTER SDC PERFORMANCE REVIEW 92 4 4.1 SDC PERFORMANCE REVIEW 94 4.2 ECONOMIC PERFORMANCE 94 4.2.1 Sabah GDP Growth 94 4.2.2 Annual Cargo and Container Throughput 96 4.2.3 Tourism Sector Performance 97 4.2.4 Employment Trends and Unemployment Rate 98 4.2.5 Incidence of Poverty 99 4.3 INVESTMENT PERFORMANCE 102 4.4 DEVELOPMENT PERFORMANCE OF PHYSICAL PROJECTS 104 4.4.1 Keningau Integrated Livestock Centre 107 4.4.2 Sabah Agro-Industrial Precinct 108 4.4.3 Palm Oil Industrial Cluster (Lahad Datu) 110 4.5 HUMAN CAPITAL AND ENTREPRENEURSHIP DEVELOPMENT 111 4.5.1 Agro-SAIP Traning Programme 111 4.5.2 SME Incubation and Accelerator Programmes 113 Featured SDC SME Incubation Participants 114 4.5.3 TERAJU@SDC Programme 116 4.5.4 SEDIA Student Internship Opportunities 118 4.6 CONCLUSION 120 8 CHAPTER FINANCIAL REPORT 122 5 5.1 STATEMENT OF CORPORATE GOVERNANCE 124 5.2 THE AUTHORITY 124 5.3 AUTHORITY MEETINGS 125 5.4 SEDIA COMMITTEES 126 5.5 ACCOUNTING AND AUDIT 126 5.6 INTERNAL AND EXTERNAL CONTROLS AND COMPLIANCE 126 5.7 ANNUAL FINANCIAL REVIEW 127 5.8 STATEMENT BY THE MEMBERS 129 5.9 STATUTORY DECLARATION BY THE OFFICERS PRIMARILY 130 RESPONSIBLE FOR THE FINANCIAL MANAGEMENT 5.10 STATEMENT OF FINANCIAL POSITION 131 5.11 STATEMENT OF COMPREHENSIVE INCOME 132 5.12 STATEMENT OF CHANGES IN EQUITY 132 5.13 STATEMENT OF CASH FLOWS 133 5.14 NOTES TO THE FINANCIAL STATEMENTS 134 APPENDIX 148 AUDITOR GENERAL'S REPORT 148 ACCOUNTABILITY INDEX CERTIFICATE 152 MS ISO CERTIFICATE 153 ANNIVERSARY CONGRATULATORY MESSAGES 154 9 The year 2018 has been a historic year for Malaysians, paving the way for a change of direction in the management of the country, including the state of Sabah. Nevertheless, the focus of the government, as well as the objectives of SDC through SEDIA, remains the betterment of its people and the development of the economy. The measures introduced by the State and Federal Governments to drive the economy have been outlined under the 2019 State and National Budgets as well as the Mid-Term Review of the Eleventh Malaysia Plan. On behalf of the State Government and the people of Sabah, I like to take this opportunity to thank the Federal Government for taking a serious concern of the aspirations of the State Government and the people of Sabah by acknowledging the need to promote a balanced development in line with the Malaysia Agreement 1963, as spelt out in the Mid-Term Review of the Eleventh Malaysia Plan, and also as expressed through the 2019 National Budget. Bank Negara had announced on November 8, 2018, that the Overnight Policy Rate will remain at 3.25 percent through 2019, signalling that the monetary policy remains accommodative and supportive of Malaysia’s economy. The national economy will remain resilient in the near term, supported by firm domestic demand and favourable external sectors. The services sector is projected to grow by 6.3 percent and 5.9 percent in 2018 and 2019 respectively, reflecting on the sector’s expansion and diversification in recent years, while gross exports are expected to grow at a rate of 3.9 percent in 2019, supported by continuous demand for manufactured goods as well as a rebound in commodity exports. Sabah contributed 4.5 percent to the country’s total exports in 2017, with 19 percent growth to RM41.8 billion from RM34.9 billion in 2016. The Federal government had allocated RM5 billion to Sabah, higher than what the state had received in the preceding years. Through the National Budget 2019, state governments will also receive 50 percent of the tourism tax revenue. These funds will be used to further develop Sabah’s growing tourism industry, with efforts to promote and develop rural tourism products and eco-tourism. The tourism industry remains a strong point for Sabah, as a total of 2.22 million 10 The new state administrative complex, Pusat Pentadbiran Negeri Sabah (PPNS) tourists visited Sabah during the first seven months of 2018, estimated to contribute RM4.81 billion in tourism receipts. The RM4.16 billion Sabah State Budget 2019 which I had tabled on November 9, 2018, will complement the Federal government’s efforts towards further developing Sabah. Effective policies and initiatives implemented require closer collaboration between the Federal and State governments involving the relevant ministries, departments and agencies, as well as GLCs and statutory bodies. SEDIA, as one of the Regional Corridor Authorities plays an essential role in facilitating closer State-Federal collaboration. SEDIA provides a seamless interface between the State and Federal agencies in promoting balanced development in Malaysia as expressed in the Mid-Term Review of the Eleventh Malaysia Plan. It is indeed timely for SEDIA as a One-Stop regional corridor authority to review the SDC Blueprint. This will allow SEDIA to take stock of its past performance as well as charting the roadmap for the coming years, especially in view of the changing priorities of the State and Federal governments. I would like to express my appreciation towards the management and staff of SEDIA for maintaining the momentum of SDC programmes and initiatives, in fulfilling the Authority’s role as the One- Stop Authority for the development corridor. On that note, I call upon all related stakeholders to continue rendering their support to SEDIA, towards achieving the shared goal of developing the Sabah economy for the benefit of our future generations. DATUK SERI PANGLIMA HAJI MOHD. SHAFIE BIN HAJI APDAL Chief Minister of Sabah 11 The SDC Blueprint, unveiled on January 29, 2008 at Sapangar Bay Container Port, is now midway of its implementation period of 18 years, completing in 2025.