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. Thus, SEDIA recognised the opportune time for an anniversary event to share with all stakeholders, especially members of the public, about all the projects, programmes and initiatives that have been implemented thus far through the SDC programme. As the SDC programme reached its 10-year milestone on January 29, 2018, SEDIA commemorated the momentous date by organising the National Conference on Economic Corridors: Challenges and Prospects, as well as 10th Year SDC Anniversary Carnival.
SEDIA is ready to undertake a thorough evaluation of SDC performance, targets, roles and priorities, to ensure that the development of the Sabah Region is on track towards achieving its objectives, in line with the new emphases, focus, objectives and aspirations of the ruling Federal and State governments. The review of the SDC Blueprint, and the preparation of the SDC Blueprint v2.0, will take into consideration not only the new emphases and priorities of the current State and Federal Governments, it will also take into accounts the performance and outcomes of SDC, as well as the feedback provided by various stakeholders. SEDIA will also ensure that the revised Blueprint takes into account of the global economic prospects, State and Federal government development plans, as well as the socio-economic needs and aspirations of the people.
SEDIA had received a total of RM2.38 billion by the end of 2018 from the Federal Government for SDC projects under the Ninth, Tenth and Eleventh Malaysia Plans. A total of RM2.34 billion, or 98.24 percent of these allocations had been disbursed by SEDIA. Measures implemented under SDC thus far have succeeded in drawing investments into Sabah. By December 2018, RM166.84 billion of cumulative committed investments had been recorded since the launch of SDC, of which RM81 billion has been realised.
The State Government, through the 2019 State Budget, had outlined the plan to roll out new measures to drive the manufacturing sector by promoting resource-based industries such as furniture, rubber-based industries, oil and gas, palm oil downstream processing, as well as
12 SEDIA Chief Executive Datuk Dr. Mohd Yaakub Hj. Johari presenting on SDC during the National Conference on Economic Corridors: Challenges and Prospects
new industries such as aerospace and automotive industries in Sabah. In order to enhance seamless movement of air passenger and cargo, the Federal government through SEDIA had also commissioned an Air Freights and Aviation Hub Masterplan Study. The Air Freights and Aviation Hub could also provide support for various aviation businesses and services such as logistics support for e-commerce, premium outlets, Fixed-based Operation for private jets and charter, Maintenance, Repair and Overhaul (MRO) services, and aerospace manufacturing industries. SEDIA is also in the process of upgrading Sapangar Bay Container Port to allow efficient movement of goods and cargoes.
The economic drivers, viz agriculture, manufacturing, tourism, logistics, and human capital will continue to be emphasised, while new emerging sectors in Sabah such as aerospace and automotive industries would be seriously considered in the SDC Blueprint v.2.0, especially with the application of Industry 4.0 through the national Industry4WRD policy.
To conclude, I extend my appreciation to our Chairman, members of the Authority and various SEDIA committees for their support and guidance, as well as management and staff of SEDIA for their commitment and dedication, and thereby allowing efficient implementation of SDC programmes and initiatives.
DATUK DR. MOHD YAAKUB HJ. JOHARI, J.P. President / Chief Executive of SEDIA
13 CHAPTER 1
SABAH DEVELOPMENT CORRIDOR
1.1 BACKGROUND OF SDC 1.2 THE VISION OF SDC 1.2.1 Capturing High Value Economic Activities 1.2.2 Promoting Balanced Economic Growth and Distribution 1.2.3 Ensuring Sustainable Growth via Environmental Conservation 1.2.4 The Five Attributes in the SDC Vision 1.3 THE MISSION OF SDC 1.4 SDC ALIGNMENT THROUGH THE REGIONAL CITIES AND CORRIDORS PROGRAMME 1.5 STRATEGIC DEVELOPMENT AREAS UNDER SDC
14 The Jesselton Point Ferry Terminal is a gateway to a group of islands known as Sabah’s Tunku Abdul Rahman Park
15 1.1 BACKGROUND OF SDC
The Sabah Development Corridor (SDC) was launched on January 29, 2008 to enhance the quality of life of the people by accelerating the growth of Sabah’s economy, promoting regional balance and bridging the rural-urban divide while ensuring sustainable management of the state’s resources. It is part of the five economic corridors inspired by the former Prime Minister Tun Datuk Seri Panglima Abdullah Haji Ahmad Badawi. It is in line with the key thrusts and objectives of the Halatuju Pembangunan dan Kemajuan Negeri Sabah (Halatuju), launched in 2004, which outlines the direction of the state’s development.
The theme for SDC is “Harnessing Unity in Diversity for Wealth Creation and Social Well- Being”. SDC programmes are underpinned by the three key principles that will guide development in Sabah, namely the need to: • Capture higher value economic activities; • Promote balanced economic growth with distribution; and • Ensure sustainable growth via environmental conservation.
The various initiatives under the Eleventh Malaysia Plan to introduce an economic model driven by creativity, innovation and high value is clearly consistent with the principles underpinning the SDC programmes. Under the SDC initiative, sub-regions and growth centres will be planned systematically to ensure optimum resources utilisation, and development efforts are well-coordinated and sustainable.
The initial focus had been on enhancing Sabah’s liveability index and making it a business- friendly location via targeted infrastructure upgrading, and by lowering the cost of doing business.
By 2025, the SDC initiative aims to triple Sabah’s Gross Domestic Product (GDP) per capita and increase its GDP by four times through the implementation of prioritised programmes. In total, more than 900,000 new jobs are expected to be generated during the SDC implementation period.
The state capital Kota Kinabalu has experienced rapid growth and modernisation in the last decade, concurrent with SDC programmes and initiatives
16 1.2 THE VISION OF SDC
The 18-year development programme (2008–2025), with a goal of expediting the transformation of Sabah’s economy into a dynamic economy, is guided by three key principles: to capture high value economic activities, to promote balanced economic growth with distribution, and to ensure sustainable growth via environment conservation.
1.2.1 CAPTURING HIGH VALUE ECONOMIC ACTIVITIES While Sabah is resource-rich, it needs to capture the synergy of value-added activities. To do so, the aim through SDC is to capitalise on Sabah’s geographical location by transforming it into a gateway for regional trade, especially for transshipment and value-added cargo services.
1.2.2 PROMOTING BALANCED ECONOMIC GROWTH AND DISTRIBUTION Sabah needs better infrastructure and income distribution, especially in rural areas. To achieve this, various programmes help boost the productivity of food-centric agriculture. Apart from providing the right infrastructure, there has also been the need to develop the necessary human capital, especially in tourism, agriculture, and manufacturing. Through SDC, the target is to increase the number of skilled workers, as well as improve workers’ competency level to facilitate the transition from a production-based to knowledge-based economy.
1.2.3 ENSURING SUSTAINABLE GROWTH VIA ENVIRONMENTAL CONSERVATION
Sabah is also abundantly blessed with biodiversity, boasting some of the world’s most impressive diving sites and tropical rainforests, home to unique and precious wildlife including the world’s largest flower, the rafflesia, and the famous orangutan. While it is important for Sabah to be developed, SDC was designed to ensure that the state’s economic development is in tandem with environmental conservation. Various initiatives were taken into account to enable sustainable growth in industries. Attention is focused on systematic planning to guard against future loss of biodiversity in the state, including its forests and mangroves.
Among the key principles of SDC is to ensure sustainable growth via environmental conservation
17 1.2.4 THE FIVE ATTRIBUTES IN THE SDC VISION
Further to these guiding principles and having a unique value proposition, the SDC vision is to turn Sabah into a vibrant, economically successful and liveable state by articulating a set of five unique attributes that will shape the future of Sabah: 1. A preferred gateway for trade, investment and leisure for leading businesses and talents from around the world in key areas; 2. A happy and cohesive community that lives in harmony and prosperity regardless of race, language or religion; 3. A tech-savvy state that uses and showcases technology in enhancing the quality of daily life; 4. A place of opportunity where residents and foreign talents find rewarding employment opportunities; and 5. Among the most liveable places in Asia with culture, heritage, quality of life and clean environment.
1.3 THE MISSION OF SDC
In line with the state’s development agenda and the National Mission announced by the Prime Minister of Malaysia, the mission for SDC is to support Sabah in achieving this vision by: • Moving up the economic value chain; • Raising the capacity for knowledge and innovation, and nurturing ‘first class mentality’; • Addressing persistent socio-economic inequalities constructively and positively; • Improving the standard and sustainability of quality of life; and • Strengthening the institutional and implementation capacity.
Development in Sabah is guided to align with the state’s conservation efforts
18 1.4 SDC ALIGNMENT THROUGH THE REGIONAL CITIES AND CORRIDORS PROGRAMME
19 1.5 STRATEGIC DEVELOPMENT AREAS UNDER SDC
20 21 CHAPTER 2
THE GOVERNANCE OF SEDIA
2.1 SEDIA AS THE ONE-STOP AUTHORITY 2.1.1 Objectives of SEDIA 2.1.2 Membership of the Authority 2.1.3 Establishment of Committees 2.2 MEMBERS OF SEDIA 2.3 SEDIA COMMITTEES 2.3.1 Implementation Co-ordination Committee 2.3.2 Finance and Investment Committee 2.3.3 Development Planning Committee 2.3.4 Nomination, Establishment and Remuneration Committee 2.3.5 Audit Committee 2.3.6 Consultative Panel and Focus Group Committee 2.4 THE CHIEF EXECUTIVE 2.5 SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY FUND
22 Kota Kinabalu’s unique environment perfectly encapsulates SDC ‘s investment tagline “a preferred desti- nation for business, culture and nature”
23 2.1 SEDIA AS THE ONE-STOP AUTHORITY
The Sabah Economic Development and Investment Authority (SEDIA) has been entrusted as the One-Stop Authority to drive the Sabah Development Corridor (SDC), with the primary responsibility to plan, coordinate, promote and accelerate the development of SDC.
Initial development allocations had been approved for implementation under SDC via the Mid- Term Review of the Ninth Malaysia Plan. The SDC Development Fund would be channelled through the Sabah Economic Development and Investment Authority, or SEDIA.
In order to expedite the implementation of SDC, the Sabah State Legislative Assembly had approved the instrument for the establishment of SEDIA via the adoption of Sabah Economic Development and Investment Authority Enactment 2009 on January 15, 2009. The Enactment was assented by Tuan Yang Terutama Yang Di-Pertua Negeri Sabah on February 23, and gazetted on February 26, 2009.
2.1.1 OBJECTIVES OF SEDIA
The objectives of SEDIA are:
• To promote and accelerate the development of Sabah Development Corridor into a leading economic region and a choice destination for investment, work and living; and
• To ensure that social development and sustainable development are kept as priorities whilst driving economic growth in the Sabah Development Corridor.
Visitors during the SDC 10th Year Anniversary Carnival were welcome to approach SEDIA staff at the SEDIA booth for their enquiries
24 2.1.2 MEMBERSHIP OF THE AUTHORITY
The Sabah Economic Development and Investment Authority 2009 Enactment under Section 8 stipulates that: 1. The Authority shall consist of the following members:
a) a Chairman, who shall be the Chief Minister; b) two Deputy Chairmen, who shall be appointed by the Minister; c) State Secretary; d) Secretary General of the Federal Ministry of Finance or his representative; e) Permanent Secretary of the State Ministry of Finance; f) Director General of the Federal Economic Planning Unit or his representative g) Director of the State Economic Planning Unit; and h) not more than five other members to be appointed by the Minister;
2. The Chief Executive shall be the Secretary to the Authority; 3. The provisions of the First Schedule shall apply to the Authority; and 4. The Authority may, from time to time, by order published in the Gazette, amend the First Schedule.
2.1.3 ESTABLISHMENT OF COMMITTEES
Under Section 9, the Authority may establish committees deemed necessary subject to the following provisions:
1. The Authority may, from time to time, establish such committees on such terms as it considers necessary or expedient to assist the Authority in the performance of its functions and duties under this Enactment; 2. The Authority may elect any of its members to be the chairman of any committee; 3. The Authority may appoint any person to be a member of any committee; 4. Membership of a committee established under subsection (1) may include one or more individuals from the private sector; 5. The provisions of the Second Schedule shall apply to a committee; and 6. The Authority may, from time to time, by order published in the Gazette, amend the Second Schedule relating to a committee.
25 2.2 MEMBERS OF SEDIA
Chairman: Y.A.B. Datuk Seri Panglima Haji Mohd. Shafie bin Haji Apdal, Chief Minister cum Minister of Finance, Sabah.
Members: Y.B. Datuk Seri Panglima Hashim Paijan, Sabah State Secretary;
Y.Bhg. Tan Sri Datuk Seri Panglima Dr. Wan Abdul Aziz bin Wan Abdullah, Chairman, Sime Darby Berhad;
Y.Bhg. Datuk Ahmad Badri Mohd Zahir, Secretary General to the Treasury, Ministry of Finance Malaysia;
Y.Bhg. Dato’ Ahmad Husni Hussain, Director General, Unit Kerjasama Awam Swasta (UKAS);
Y.Bhg. Dato’ Saiful Anuar bin Lebai Hussen, Secretary General, Ministry of Economic Affairs;
Y.Bhg. Datuk Pg. Hassanel B. Datuk Pg. Hj Mohd Tahir, Permanent Secretary, Ministry of Finance, Sabah;
Y.Brs. Gwendolen Vu Fui Khin, Director, State Economic Planning Unit (UPEN);
Secretary: Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA.
The Members of Authority had convened for one meeting in 2018, as follows: • 26th Meeting of the Members of Authority: March 20, 2018
SEDIA Chairman cum Sabah Chief Minister and Minister of Finance Datuk Seri Panglima Haji Mohd Shafie bin Haji Apdal chairing a meeting with the SEDIA Management
26 2.3 SEDIA COMMITTEES
2.3.1 IMPLEMENTATION CO-ORDINATION COMMITTEE
Chairman: Y.B. Datuk Seri Panglima Hashim Paijan, Sabah State Secretary.
Members: Y.Bhg. Dato’ Ahmad Husni Hussain, Director General, Unit Kerjasama Awam Swasta (UKAS);
Y.Bhg. Datuk Nor Rizan bin Mohd Thani, Sabah Federal Secretary;
Y.Bhg. Datuk Madiyem Layapan, Permanent Secretary, Ministry of Trade and Industry;
Y.Brs. Encik Abu Bakar Hj Abdul Latip, Permanent Secretary, Ministry of Rural Development;
Y.Brs. Puan Mariana Tinggal, Permanent Secretary, Ministry of Agriculture and Food Industry;
Y.Bhg. Datuk Datu Rosmadi bin Datu Sulai, Permanent Secretary, Ministry of Tourism, Culture and Environment; Y.Bhg. Datuk Ginun Yangus, Permanent Secretary; Ministry of Local Government and Housing; Y.Bhg. Dato’ Hj Ruji Bin Hj Ubi, State Development Officer; Sabah State Development Office;
Y.Brs. Puan Gwendolen Vu Fui Khin, Director, State Economic Planning Unit (UPEN); Y.Bhg. Datuk Hj Safar Bin Untong, Director, Land and Survey Department; Y.Brs. Encik Mursidi Haji Sapie, Director, Department of Urban and Regional Planning Sabah; Y.Brs. Ir. Richard Jomjil Kinsil, Director, Public Works Department; Y.Bhg. Datuk Hj Nordin Siman, Mayor, Kota Kinabalu City Hall; Chief Executive Officer, Institute for Development Studies, Sabah (IDS); Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA.
• The committee did not convene in 2018.
27 2.3.2 FINANCE AND INVESTMENT COMMITTEE
Chairman: Y.Bhg. Tan Sri Datuk Seri Panglima Dr. Wan Abdul Aziz bin Wan Abdullah, Chairman, Sime Darby Berhad;
Members: Y.Bhg. Dato’ Ahmad Husni Hussain, Director General, Unit Kerjasama Awam Swasta (UKAS).
Y.Bhg. Datuk Nor Rizan bin Mohd Thani, Sabah Federal Secretary;
Y.Bhg. Datuk Pg. Hassanel B. Datuk Pg. Hj Mohd Tahir, Permanent Secretary, Ministry of Finance, Sabah; Y.Brs. Puan Mariana Tinggal, Permanent Secretary, Ministry of Agriculture and Food Industry;
Y.Bhg. Datuk Madiyem Layapan, Permanent Secretary, Ministry of Trade and Industry; Y.Bhg. Datu' Rosmadi bin Datu' Sulai, Permanent Secretary, Ministry of Tourism, Culture and Environment; Y.Brs. Puan Gwendolen Vu Fui Khin, Director, State Economic Planning Unit (UPEN); Y.Brs. Puan Habibah Enok, Director, Malaysia Investment Development Authority, Sabah; Chief Executive Officer, Institute for Development Studies, Sabah (IDS); Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA.
The committee had convened for one meeting in 2018, as follows: • 28th Meeting of the Finance and Investment Committee; April 16, 2018
In his capacity as SEDIA Chief Executive, Datuk Dr. Mohd Yaakub Hj Johari actively communicates with relevant stakeholders and potential investors
28 2.3.3 DEVELOPMENT PLANNING COMMITTEE
Chairman: Y.Bhg. Dato’ Ahmad Husni Hussain, Director General, Unit Kerjasama Awam Swasta (UKAS). Members: Y.Bhg. Dato’ Nik Azman bin Nik Abdul Majid, Director General, Economic Planning Unit; Y.Brs. Puan Ainul Radziah Binti Zamhuri, Director of Corridor Development, Unit Kerjasama Awam Swasta (UKAS); Y.Bhg. Datuk Nor Rizan bin Mohd Thani, Sabah Federal Secretary; Y.Brs. Puan Mariana Tinggal, Permanent Secretary, Ministry of Agriculture and Food Industry; Y.Bhg. Datuk Madiyem Layapan, Permanent Secretary, Ministry of Trade and Industry; Y.Bhg. Datuk Ginun Yangus, Permanent Secretary; Ministry of Local Government and Housing; Y.Brs. Encik Abu Bakar Hj Abdul Latip, Permanent Secretary; Ministry of Rural Development; Y.Bhg. Dato’ Hj Ruji bin Hj Ubi, State Development Officer; Sabah State Development Office; Y.Brs. Puan Gwendolen Vu Fui Khin, Director, State Economic Planning Unit (UPEN); Chief Executive Officer, Institute for Development Studies, Sabah (IDS); Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA; Y.Bhg. Datuk Dyg Sadiah Abg Bohan, Deputy Director General of Corridor Development, Unit Kerjasama Awam Swasta.
• The committee did not convene in 2018.
SDC programmes and initiatives encompass various aspects of improving the state’s liveability and growth
29 2.3.4 NOMINATION, ESTABLISHMENT AND REMUNERATION COMMITTEE
Members: Y.Bhg. Datuk Pg. Hassanel B. Datuk Pg. Hj Mohd Tahir, Permanent Secretary, Ministry of Finance of Sabah;
Y.Brs. Puan Gwendolen Vu Fui Khin, Director, State Economic Planning Unit (UPEN);
Chief Executive Officer, Institute for Development Studies, Sabah (IDS);
Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA.
The committee had convened for one meeting in 2018, as follows: 16th Meeting of the Nomination, Establishment and Remuneration Committee: January 16, 2018
2.3.5 AUDIT COMMITTEE
Members: Y.Bhg. Datuk Pg. Hassanel B. Datuk Pg. Hj Mohd Tahir, Permanent Secretary, Ministry of Finance of Sabah;
Y.Bhg. Datu' Hj Ruji Hj Ubi, State Development Officer, Sabah State Development Office;
Y.Brs. Puan Gwendolen Vu Fui Khin, Director, State Economic Planning Unit (UPEN); Y.Brs. Chui Nget Ngo, Sabah State Treasurer, State Treasury Department, Ministry of Finance; Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA.
The committee had convened for one meeting in 2018, as follows: 24th Meeting of the Audit Committee: March 22, 2018
30 SAIP serves as an enabler and platform for the development of the agro-based industry, focusing on food and specialty crops as well as natural products
2.3.6 CONSULTATIVE PANEL AND FOCUS GROUP COMMITTEE
Chairman: Y.Bhg. Datuk Dr. Mohd Yaakub Hj Johari, J.P., Chief Executive of SEDIA.
Members: Chief Executive Officer, Institute for Development Studies, Sabah (IDS);
Y.Brs. Professor Dr. Mohd Harun Abdullah, Vice Chancellor, Universiti Malaysia Sabah; Y.Bhg. Datuk Dr. Haji Abdul Kadir Haji Rosline, Campus Director, Universiti Teknologi MARA (UiTM); Y.Bhg. Datuk Bonipasius Bianis, Deputy President, Kadazan Chambers of Commerce and Industry; Y.Bhg. Datuk Michael Lui Yen Sang, President, Tionghua Chambers of Commerce and Industry; Y.Bhg. Datuk Abdul Razak Datuk Hj Walli, Secretary-General, Dewan Perniagaan Bumiputera Sabah.
The committee did not convene in 2018.
31 2.4 THE CHIEF EXECUTIVE
The Chief Executive is appointed by the Authority, and has been entrusted with the following responsibilities:
• The general conduct, administration and management of the functions, activities and day-to-day affairs of the Authority; • The performance of such functions and exercise of such duties as delegated by the Authority; and • The carrying out of the decisions of the Authority.
The Chief Executive shall also perform such other duties as the Authority may, from time to time, direct and shall act under the general direction of the Authority in discharging his duties. The Chief Executive shall have general control of the officers and staff of the Authority.
The Chief Executive reported for duty on March 2, 2009. The appointment of the Chief Executive was ratified during the Inaugural Meeting of the Authority on May 14, 2009. The Inaugural Meeting also approved the 2009 budget for SEDIA, and the organisation structure of the Authority.
The Management of SEDIA during a courtesy visit to SEDIA Chairman cum Chief Minister Datuk Seri Panglima Haji Mohd. Shafie bin Haji Apdal (fourth from right) 32 2.5 SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY FUND
The authority to commit any financial obligation or otherwise, solely, partially or directly on the account of the Authority lies wholly with the Authority subject to policies, procedures and guidelines approved by the Authority, the Sabah State and the Federal Government.
Section 14 (1) of the Enactment provides for the establishment of a fund to be known as the “Sabah Economic Development and Investment Authority Fund” to be administered and controlled by the Authority.
Section 15 of the Enactment specifies that the Fund shall be expended for the following purposes:
• Disbursing funds received from the Government or the Federal Government to the relevant implementing Government Entities for Sabah Development Corridor; • Performing or discharging the functions and duties of the Authority; • Paying for the remuneration, allowances or other expenses of members, the Chief Executive, officers and servants of the Authority; • Undertakes approved and lawful investments, and acquisitions of shares or interests in companies or property movable or immovable for the purposes of the Enactment; and • Paying any other expenses lawfully incurred in the discharge or performances of its functions and duties under this Enactment.
The Management of SEDIA during a courtesy visit to SEDIA Chairman cum Chief Minister Datuk Seri Panglima Haji Mohd. Shafie bin Haji Apdal (fourth from right) 33 CHAPTER 3 SEDIA CORPORATE PROFILE AND ACTIVITIES CHAPTER 3 3.1 FUNCTIONS OF SEDIA 3.2 CORPORATE VISION,SEDIA MISSION CORPORATE AND STRATEGIES PROFILE 3.3 ORGANISATION CHART 3.4 DIVISIONS AND DEPARTMENTS OF SEDIA 3.4.1 Chief Executive’s Office 3.4.2 Development Planning, Co-ordination and Evaluation Division Featured Division Activity: SEDIA Participation in Town Hall and Dialogue Session 3.4.3 Marketing and Corporate Communications Division Featured Division Activity: SDC 10th Year Anniversary Carnival 3.4.4 Knowledge and Technology Management Division Featured Division Activity: Research, Development and Commercialisation Studies Conducted During 2018 3.4.5 Investment and Business Development Division Featured Division Activity: SAIP SME Incubation and BizLink programmes 3.4.6 Project Management Department 3.4.7 Accounting and Finance Department 3.4.8 Administration and Corporate Services Department 3.5 CALENDAR OF NOTABLE EVENTS
34 3.6 HIGHLIGHTS OF SEDIA ACTIVITIES 3.6.1 National Conference to Commemorate 10-Year Anniversary of SDC 3.6.2 SEDIA Welcomes Discussion with new Minister of Agriculture and Food Industries 3.6.3 SEDIA Provides Input on Technical and Vocational Education and Training Masterplan Study by the Ministry of Human Resources 3.6.4 SEDIA Welcomes Keen Interest by the Malaysia Nuclear Agency and Mutiara Jaya Venture to Participate in SDC 3.6.5 SEDIA Showcases SDC SME Products at SIFBF 2018 3.6.6 Talk on SEDIA’s role in Facilitating SMEs 3.6.7 SEDIA Briefs Malaysia Special Branch on SDC Programme and Initiatives 3.6.8 SEDIA Connects with Graduates through Kembara Kerjaya Roadshow 3.6.9 SEDIA Receives Visit at SAIP by Assistant Minister in Chief Minister’s Office 3.6.10 China-ASEAN Exposition 3.6.11 Investors from Thailand Keen to Explore Opportunities in the Oil Palm and Timber Sectors in SDC 3.6.12 SEDIA to Collaborate with MITI to Turn Sabah into a Regional Powerhouse 3.6.13 SEDIA Discusses Collaboration with Nuclear Malaysia 3.6.14 SEDIA Receives Courtesy Visit by Polish Foreign Trade Office Chief 3.6.15 SEDIA Continues Collaboration on SMART Mushroom House with MESTECC 3.6.16 SEDIA Supports Local SMEs Through Promotional Activities 3.6.17 SEDIA Encourages Interaction with Education Institutions and Students 3.6.18 Trade and Investment Mission to Japan and Korea 3.6.19 Ukraine Embassy Pays Courtesy Visit to SEDIA
Kota Kinabalu had been ranked among the top liveable cities in Asia in the 2017 “Annual Overseas Retirement Index”
35 3.1 FUNCTIONS OF SEDIA
The SEDIA Enactment lists the functions of the Sabah Economic Development and Investment Authority (SEDIA) as follows:
• To recommend to the Government of the Federal Government on all projects of potential economic growth and opportunities to be included in Sabah Development Corridor (SDC); • To disburse funds received from the Government or the Federal Government for Sabah Development Corridor to the relevant implementing Government Entities; • To co-ordinate the expeditious implementation of all projects in Sabah Development Corridor by performing the functions of a one-stop centre; • To monitor and report to the Government and the Federal Government the status of all projects in Sabah Development Corridor;
• To promote and market Sabah Development Corridor as an attractive business and investment location; • To recommend to the Government and the Federal Government incentives for Sabah Development Corridor; • To recommend to the Government or the Federal Government on policy reforms and other initiatives for Sabah Development Corridor;
• To source funds for Sabah Development Corridor; and
• To do all things as are expedient, advantageous or necessary for, or incidental, supplemental or consequential to, the performance of the functions of the Authority and the better carrying out of the purposes of the Sabah Economic Development and Investment Authority enactment.
SEDIA has overseen the operations and management of KILC since 2014, and has seen to the consistent increase of dairy milk production
36 3.2 CORPORATE VISION, MISSION AND STRATEGIES
VISION
SEDIA’s corporate vision is to be a responsive, effective, efficient and accountable one-stop authority to realise the objectives of SDC, in active partnerships with key stakeholders.
MISSION
• To provide strategic direction, roadmap, planning integration, implementation co- ordination, monitoring and evaluation on the implementation of SDC;
• To promote SDC as a preferred investment destination for business, culture and nature; • To ensure that SDC initiatives reach the target groups, especially the poor and disadvantaged, alleviate regional imbalance, enhance the quality of life, and promote economic growth and sustainable development;
• To facilitate and serve as a solution provider and partner to realise the objectives of SDC; and
• To enhance stakeholders’ value propositions, confidence and acceptance through optimum engagement, information dissemination and accountability.
SEDIA promotes Sabah to potential investors on its unique cultural wealth and biodiversity
37 STRATEGIES
• Attract investments and business initiatives in targeted areas to unlock the SDC’s regional value creation potential through road shows and trade fairs, and by offering business support to fast-track approvals and customised incentives; • Develop innovative business models and pioneering initiatives to drive long-term, sustainable value creation for the SDC, especially in innovative and strategic industries such as in Information Communications Technology (ICT), biotech and nanotechnology; • Create strategic development areas comprising green field clusters in tourism, agriculture and manufacturing driven by creativity, knowledge convergence and eco- sensitive lifestyle; • Enhance capacity building for Small and Medium Enterprises (SMEs), the poor and disadvantaged groups to benefit from the SDC initiatives; • Strengthen growth centres, as well as sub-regional and inter-sectoral linkages to provide optimum cluster synergy, enhancing supply chain competitiveness and transmitting stronger development impulses to the lagging areas; • Promote active tripartite partnership involving the government, the private sector and the civil society to eradicate poverty, enhance the quality of life, promote economic growth, and ensuring balanced, equitable and sustainable development; and • Respond rapidly to opportunities and challenges to support the SDC initiatives.
The corporate strategies shall be carried out by SEDIA through the various committees, operating divisions and departments within SEDIA. In view of the fact that the SEDIA committees are primarily decision-making body to assist SEDIA, the main day-to-day operations shall be principally carried out by the various operating divisions and departments under the overall supervision of the Chief Executive.
The National Conference on Economic Corridors: Challenges and Prospects saw representatives of each Economic Corridor present on their respective experiences in attracting economic growth
38 3.3 ORGANISATION CHART
39 3.4 DIVISIONS AND DEPARTMENTS OF SEDIA
3.4.1 Chief Executive’s Office
The function of the Chief Executive’s office is generally to assist the Chief Executive in co- ordinating the execution of the following tasks: • Strategic planning, and performance and risk assessment;
• Budget allocation and internal audit; • Government liaising, protocol, and media relations; and
• Administration, secretarial and legal matters involving the Members of Authority and the management committee.
These functions are translated into the responsibilities of co-ordinating the Chief Executive’s engagements, appointments and meetings, monitoring the execution of decisions by the Members of Authority, Chief Executive and management, co-ordinating internal and external communication of the Chief Executive, and compiling relevant information pertaining to project development, investment performance and financial performance.
The staffs of the Chief Executive’s office perform tasks aligned with the objectives of ensuring a seamless decision-making process within SEDIA, helping to build up the SEDIA corporate image and relations, keeping track of SEDIA’s overall performance, and advising on legal and procedural compliance.
In furtherance of the objectives and effective performance of the functions of SEDIA, the Chief Executive shall be assisted in executing his responsibilities and duties by officers and servants of the Authority. Towards this end, SEDIA has been organised along four divisions and three departments.
40 SEDIA Chief Executive Datuk Dr. Mohd Yaakub Hj Johari meeting with representatives of the Ministry of Human Resources
The Chief Executive of SEDIA receives input from various stakeholders involved in SDC programmes and initiatives
41 3.4.2 Development Planning, Co-ordination and Evaluation Division
• To identify and recommend strategic development projects and economic clusters with growth potential; • To identify strategic soft and hard infrastructure to support the economic clusters identified; • To co-ordinate the integration of the various sectoral development plans into a coherent socio-economic and physical development planning framework; • To assess the socio-economic, environmental and regional impacts of these projects; and • To evaluate SDC milestones in term of key performance indicators.
SEDIA Vice President Dr. Chong Vun Leong welcomed a group of participants from the National Conference on Economic Corridors to the Keningau Integrated Livestock Centre (KILC)
42 Featured Division Activity: SEDIA Participation in Town Hall and Dialogue Session
SEDIA participated in a Town Hall and Dialogue session on September 7, 2018, organised by the Polytechnic Education Department of the Federal Ministry of Higher Education at Kota Kinabalu Polytechnic. The objective of the session was to obtain feedback from relevant stakeholders, which included the Technical and Vocational Education and Training (TVET) providers, industry players and local communities relating to current TVET issues.
The session, which was themed ‘Memperkasa TVET Membina Negara’ (Empowering TVET in Building the Nation) was chaired by Permatang Pauh Member of Parliamant Nurul Izzah Anwar, who was appointed by the Education Ministry to head the TVET Empowerment Committee. The newly set-up committee was tasked to look into TVET programmes and prepare a report to strengthen and improve the nation’s TVET.
Chairman of the TVET Supervisory Committee and moderator during the Town Hall and Dialogue session Nurul Izzah Anwar (seated far left) with the invited panel members, including SEDIA Assistant Vice President Janet Lee (seated, third from left)
43 Member of Parliament Nurul Izzah Anwar seen speaking with participants of the Town Hall and Dialogue session
The process of empowering TVET would undergo various phases, with the first phase involving meeting with relevant parties. There were five locations planned to meet with TVET stakeholders, and Sabah was the first destination for Nurul Izzah and her committee. Nurul also mentioned to include SEDIA, the regional development corridor agency for Sabah, citing the Northern Corridor Investment Authority as an example, to play an active role as a one- stop centre in TVET empowerment. Issues discussed during the session included TVET current development in Sabah, development from related local industries in Sabah, TVET contribution to the state, and other skills required by Sabah youths.
It was a good discussion platform to listen and gain feedback from stakeholders relating to not only issues and challenges in implementing TVET, but also to discuss further on how to elevate understanding of all parties to move forward towards empowering TVET. SEDIA, as the One-Stop Authority to drive SDC, with the primary responsibility to plan, coordinate, promote and accelerate the development of SDC, and also having implemented numerous measures to address the human capital requirements of SDC and Sabah in general, was invited to provide input and assist in the session.
TVET collaboration with SEDIA started with a meeting held on February 6, 2015 attended by Education Performance and Delivery Unit (PADU) under the Ministry of Education Malaysia, Department of Polytechnic Education, Vocational Technical Education Division and Community College Education Department. As a result, various programmes have been organised in collaboration with the TVET institutions in Sabah. Programmes such as Industry Players
44 Engagement Sessions and Karnival Kerjaya 2015–2017 with Politeknik Kota Kinabalu, rural skills development programmes with Community Colleges in Beaufort and Tambunan as well as with Keningau Vocational College. Aside from that, SEDIA also collaborates with training providers from the private sectors, whom are members under the Persatuan Pusat Latihan Kemahiran SLDN Sabah dan Wilayah Persekutuan Labuan in organising Skills Development Programme for the housewives and single mothers in the rural areas.
SEDIA Chief Executive Datuk Dr. Mohd. Yaakub Hj. Johari welcomes the opportunity to serve as TVET’s One Stop Centre in SDC. As a matter of fact, SEDIA has been actively involved in supporting TVET programmes in Sabah. SEDIA acts as a one-stop centre linking industry players (demand) and TVET institutions (supply), playing the facilitating/coordinating role in the human capital development arena. Apart from serving as a mentor of CEO Faculty of Kota Kinabalu Polytechnic, SEDIA is also represented at the National Skills Development Council.
The session panel members, including SEDIA Assistant Vice President Janet Lee (fifth from right), gathering for a group photograph with Chairman of the TVET Supervisory Committee Nurul Izzah Anwar
45 3.4.3 Marketing and Corporate Communications Division
• To promote and market SDC as an attractive business and investment location;
• To undertake market intelligence;
• To identify potential investors; • To compile and disseminate information regarding SDC’s programmes and projects as well as SEDIA’s activities to stakeholders; • To obtain information and feedback regarding the response and outcome of SDC programmes and projects; and • To support CSR activities and engagement with stakeholders.
The Marketing and Corporate Communications Division routinely participate in roadshows, exhibitions and conventions in order to promote SDC programmes and initiatives, while gathering feedback
Members of the public thronged to the Anniversary Carnival, to listen to the various talks on entrepreneurship and business development
46 Featured Division Activity: SDC 10th Year Anniversary Carnival
In conjunction with the National Conference on Economic Corridors: Challenges and Prospects that was held to commemorate the 10-year anniversary of the SDC programme, SEDIA also held the 10th Year SDC Anniversary Carnival on March 15–18, 2018 at Oceanus Mall. The carnival featured a business seminar on various entrepreneurship and business development topics, as well as covering agriculture, tourism and creative industries, among others. Participation in the seminar was open to the general public. The business seminar featured sessions that covered topics such as: • Entrepreneurship opportunities and support services; • Entrepreneurship opportunities in the agro- and marine-based industries; • Business opportunities in tourism and creative industries; and • Skills training and business opportunities; and • Financial facilities available for businesses/SMEs/Start-ups.
The talks during the seminar saw speakers from various public and private organisations, which included SME Corp, TERAJU, Yayasan Sabah, UCSF, KKIP Sdn Bhd, Sabah Ports Sdn Bhd, as well as the State Department of Agriculture, Ministry of Industrial Development and SEDIA, to name a few.
Apart from the business seminar, public attendees were drawn in by key event highlights such as the exhibition and bazaar, local SME products, trade and investment promotions, financial advisory services, investment incentives, start-up and incubator registration, SDC BizLink and e-commerce, and a skill training and education fair. In addition, supporting activities during the carnival comprised of business facilities and services, product development, prototyping and proof of concept, promotional opportunities, marketing and product demonstration, business matching and networking, sales pitching, and walk-in job interviews.
Additionally, on showcase during both events were the various SDC projects and programmes, of which some had been completed over the past 10 years, involving the government, government-linked companies and members of the private sector. The carnival also provided for business opportunities and serve as a trading platform for investors, Small and Medium Enterprises (SMEs) and Start-ups, allowing them to showcase their products and services.
47 3.4.4 Knowledge and Technology Management Division
• To establish and manage the SDC databank; • To monitor and support knowledge creation activities; • To disseminate and promote new technology applications and scientific knowledge; • To facilitate science-industry linkages; • To promote innovation and commercialisation of R&D; and • To promote new growth sectors driven by the convergence of technology.
The Knowledge and Technology Management Division welcome visitors to the Sabah Agro- Industrial Precinct, to see their latest efforts developing new technology applications and scientific knowledge
48 Featured Division Activity: Research, Development and Commercialisation Studies Conducted During 2018
SEDIA supports initiatives at the Sabah Agro-Industrial Precinct (SAIP) to technically empower local entrepreneurs in Sabah, by conducting product and research studies through the Research, Development, Commercialisation and Innovation (RDCI-SAIP) programme. It is for this purpose that several officers from various fields of science have been stationed at SAIP. This programme is also one of the initiatives to create a new source of growth, especially in the agri-biotech sub- sector.
In 2018, the Knowledge and Technology Management Division (KTMD) of SEDIA had successfully conducted four studies. These studies were chosen to be conducted as the results were directly applicable to the current activities at SAIP. These studies are the:
1. Comparative study of Grey Oyster mushroom (Pleurotus sajor caju) cultivation on different substrates, and its nutrient analysis; 2. Formulation and evaluation of shampoo containing tea tree (Melaleuca alternifolia) oil and virgin coconut (Cocos nucifera) oil; 3. Preservation of mature and bitter tasting lettuce (Lactuca sativa) through the process of fermentation; and 4. Spray drying of goat milk with soy lecithin added using a pilot scale AG-10 spray dryer.
One of the samples for the cultivation A fermentation process was used to produce lettuce of Grey Oyster mushrooms “kimchi”, which removed the bitter taste from mature lettuce The first study was conducted to investigate the cultivation of Grey Oyster mushrooms (Pleurotus sajor caju) on different substrates, and its nutrient analysis. It was observed that sawdust substrate provides the shortest period to complete the spawn running (41 days), followed by maize leaves (42 days), and coco peat (49 days). For nutritional analysis, the protein content using coco peat substrate is the highest (26.62%) as compared to maize leaves (22.77) and sawdust (14.10%). The carbohydrate content in mushrooms cultivated using coco peat, maize leaves and sawdust substrates are 55.30 percent, 52.71 percent and 67.08 percent respectively. The substrates which
49 produced the highest yield of oyster mushrooms were selected as future guidelines for the cultivation of grey oyster mushroom in the SAIP SMART mushroom house.
The second study was the formulation and evaluation of shampoo containing tea tree (Melaleuca alternifolia) oil and virgin coconut (Cocos nucifera) oil. The shampoo formulation containing different percentages of tea tree oil and virgin coconut oil were evaluated by physical properties, anti-microbial properties and effects on human hair. The study performed had shown that the various shampoo formulations containing tea tree oil and virgin coconut oil have desirable effects for achieving healthy hair and scalp. The research paper was also presented during the Seminar on Science and Technology 2018, which was organised by Universiti Malaysia Sabah (UMS).
Mature and bitter tasting lettuce (Lactuca sativa) usually has no market attributes. To add value and marketability, a study has been conducted to preserve mature and bitter tasting lettuce through the process of fermentation. This research produced a product sample which was “kimchi” fermented lettuce, with results showing that the fermentation process had succeeded in eliminating the bitterness in mature lettuce. In addition, the nutritional analysis shows the product to be low in calories and has high nutritional value. Thus, results from the study had shown that “kimchi” lettuce is marketable, which can lend insight towards preserving, and eliminating wastage in, the mass production of lettuce.
The fourth study, which aimed to produce a Standard Operation Procedure (SOP) for goat milk powder production through Pilot Scale Spray Dryer in SAIP, found that the milk powder obtained from spray drying 20 kilograms of raw goat milk is 607.18g with recovery rates of 3.04 percent. They were two types of milk powders produced from the spray dry machine, which are Grade B and Grade C. Both powders were analysed for nutritional composition. The results had shown that Grade B milk powder had higher carbohydrate and protein content compared to Grade C milk powder, however, the fat content of Grade C milk powder is higher than the Grade B samples. In addition, after 12 months of observation, both grade B and C goat milk powders had longer shelf life in both the cold room and at room temperature.
KTMD staff at SAIP seen operating the spray dryer on the goat’s milk sample
50 3.4.5 Investment and Business Development Division
• To provide one-stop services to business enterprises and SMEs/SMIs; • To fast-track priority and strategic industries; • To provide business-matching assistance; • To provide investment advisory services; • To facilitate in obtaining planning approval, customising incentive packages, and securing licenses and permits; and • To recommend policy reforms, incentives or other initiatives to attract investments
Featured Division Activity: SAIP SME Incubation and BizLink programmes
A crucial component of SDC SME initiatives is the SDC SME Incubator programme, whereby the programme is conducted over a two-year period through two types of setups based on location, namely In-Situ (on-site) and Ex-Situ (off-site) Incubation. In-Situ Incubation is hosted at SAIP, supported by the shared basic facilities. The incubatees will get access to technical and business advisory services from business development and technical officers stationed in SAIP. These services are available to participants of the Incubator programme on a pro-bono basis during the two-year period, however non-participants can access these services at an attractive fee.
A core component in the incubator initiative is the BizLink programme, meant to assist aspiring entrepreneurs initiate businesses revolved around downstream agri-products, especially those that utilise science- and technology-based advancements. Through the SDC, the BizLink development programme functions by assisting new entrepreneurs and start-ups, unlocking the potential in SMEs to further accelerate their growth, as well as linking businesses to the SDC economic clusters. The programme also provides a HotDesk service, whereby ready staffs are available to provide hands-on assistance to facilitate and mentor entrepreneurs through discussion, entrepreneurial training and brainstorming sessions. Several workshops and seminars were held through BizLink at SAIP during 2018, and were open to both In-Situ and Ex-Situ SDC SME incubatees.
A business pitching session was held in SEDIA office, giving new and potential entrepreneurs the opportunity in the SDC SME Incubation programme
51 3.4.6 Project Management Department
• To co-ordinate and monitor the physical implementation of all SDC projects; • To audit and compile reports on the status of these projects; • To determine tender and procurement strategy; • To liaise with project consultants; • To provide technical advice; and • To recommend project closure and payment.
The Project Management Department is tasked with monitoring the physical implementation of SDC projects 3.4.7 Accounting and Finance Department
• To prepare corporate/business plans for SEDIA; • To plan and prepare annual budgets for SDC; • To disburse payment and SDC allocations to implementing agencies; • To maintain proper accounting and procurement record; • To prepare feasibility studies and financial modelling for SDC projects; • To explore potential in value creations; and • To source funding for SDC projects. The Accounting and Finance Department ensure that claims are processed in a smooth, efficient manner
3.4.8 Administration and Corporate Services Department
• To provide in-house administrative and secretarial support; • To assist in record-keeping and documentation; • To maintain inventories of office supplies and assets; • To manage human resources, outsourcing activities and risk exposure; • To prepare feasibility studies and financial modelling for SDC projects; and • To provide general corporate services. The Administration and Corporate Services Department regularly assign SEDIA staff to attend courses so as to enhance their skills
52 The Sabah Agro-Industrial Precinct houses various machinery available for use by participants of the SDC SME Incubation programme
53 3.5 CALENDER OF NOTABLE EVENTS
54 55 56 57 58 59 In accordance with its theme "Surging towards excellence", the 10-year SDC Anniversary Carnival showcased various SDC programmes and initiatives, provided attendees with advisory and supporting services, and saw local SMEs and Start-ups promoting their products and services
60 61 62 63 64 65 66 67 3.6 HIGHLIGHTS OF SEDIA ACTIVITIES
3.6.1 National Conference to Commemorate 10-Year Anniversary of SDC
The SDC initiative is now midway through its implementation cycle that will complete in 2025, as well as in its third and final phase. Hence, SEDIA recognised an opportune time for an anniversary event to share with all stakeholders, especially members of the public, about all the projects, programmes and initiatives that have been implemented thus far through the SDC programme. As the SDC programme reached its 10-year milestone on January 29, 2018, SEDIA commemorated the momentous date by organising the National Conference on Economic Corridors: Challenges and Prospects, as well as 10th Year SDC Anniversary Carnival. The conference was held during January 29–30, 2018, at a hotel centrally located in Kota Kinabalu, while the carnival ran during March 15–18, 2018 at Oceanus Mall.
The conference was co-organised by SEDIA, the Institute for Development Studies, Sabah (IDS) and Universiti Malaysia Sabah (UMS). The opening of the conference and commemoration of the anniversary included the launch of The Journey — 10 Years of SDC publication, which highlights the SDC projects, programmes and initiatives that have been implemented during the last 10 years, as well as outcome and performance thus far. The five sessions held during the conference were: • Session 1: The Nation Building Agenda and the Economic Corridors; • Session 2: A Decade of Economic Corridors: Progress and Prospects; • Session 3: Enhancing Regional and Global Competitiveness; • Session 4: Capacity Building; and • Session 5: Business, Trade and Investment Prospects.
Speakers during the conference included representatives from each of the five economic corridor authorities, IDS, UMS, the Economic Planning Unit of the Prime Minister’s Department, the Public-Private Partnership Unit, the Malaysian Investment Development Authority, and the Australian Trade and Investment Commission, to name a few.
SEDIA received widespread interest by various stakeholders to attend the National Conference, which covered various topics relating to Economic Corridor initiatives
68 3.6.2 SEDIA Welcomes Discussion with new Minister of Agriculture and Food Industries
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari Hj Johari (fifth from left) presenting Datuk Junz Wong (sixth from left) with a copy of The Journey: Ten Years of SDC publication
On June 22, 2018, SEDIA received a courtesy visit from Minister of Agriculture and Food Industries Datuk Junz Wong, at the Wisma SEDIA office. The minister was met by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Hj Johari, with other senior officers of SEDIA.
Datuk Junz Wong, a two-term assemblyman who won the Tanjung Aru state seat during the 14th general elections, stated upon his arrival that he understands that SDC has several initiatives relating to the agriculture and food industries, and would like to have a clearer view of the development in the state. Datuk Dr. Mohd Yaakub welcomed the delegation and briefed them on the SDC programme, and the projects and initiatives under its banner. On agriculture, the minister was briefed, in particular, on the Keningau Integrated Livestock Centre (KILC), and Sabah Agro-Industrial Precinct (SAIP).
The delegation was also briefed on future strategies and targets under the SDC. During the Eleventh Malaysia Plan (11MP), SEDIA will accord greater emphasis on enhancing the state’s global connectivity to ensure seamless movement of people, goods and services. Efforts will be directed especially towards enhancing the efficiency of the logistics sector by improving the relevant infrastructure and the integration of land, sea, and air services.
Following the discussion, Junz acknowledged that a lot of the efforts under SDC aligns with efforts under his ministry to develop downstream activities in the agriculture industry. He remarked that moving forward, there is a need for collaboration between SEDIA and the Ministry of Agriculture and Food Industries, in order to plan ahead as well as enhance agriculture initiatives.
69 3.6.3 SEDIA Provides Input on Technical and Vocational Education and Training Masterplan Study by the Ministry of Human Resources
SEDIA briefed a delegation from the Ministry of Human Resources (MoHR) on June 28, 2018, which was led by Baharuddin Bin Mamat, Principal Assistant Director at the Institute of Labour Market Information and Analaysis (ILMIA) under MoHR, and included a representative of PricewaterhouseCoopers (PwC), with a Ministry of Education and Innovation officer also invited to attend the discussion. The delegation was met by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Hj Johari, with other senior officers of SEDIA.
Kartina Abdul Latif, a partner at PwC, explained that PwC is serving as consultant to the masterplan development study on Technical and Vocational Education and Training (TVET) in Malaysia, undertaken by MoHR. The masterplan, known as “Kajian Pembangunan Pelan Induk Kebangsaan Latihan Teknikal dan Vokasional Ke Arah Negara Maju dan Halatuju Sehingga Tahun 2050”, will cover several aspects, namely: • evaluation and improvement of public and selected TVET programmes; • evaluation of industry engagements; • analyse economic supply and demand; and • compile economic supply and demand projections spanning the 2017–2050 period.
SEDIA has been proactive in Sabah’s human capital development agenda, with one of the initiatives involving collaboration with TVET institutions in Sabah to help produce quality skilled workforce for Sabah. As the agency overseeing the SDC programme, SEDIA serves as the facilitator and coordinator in linking relevant stakeholders involved in the human capital development arena in Sabah. As such, SEDIA’s input will allow for the masterplan to better identify industry needs in regards to TVET development.
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari Hj Johari (fourth from left) presenting ILMIA Principal Assistant Director Baharudin Bin Mamat with a momento
70 During the discussion, Kartina informed that, “if the report is properly structured, it will assist the government in properly outlining the structure of TVET for the nation”. The study will look into how to implement modern learning methods into TVET, as many TVET institutions still rely heavily on traditional methods and will benefit immensely from the study’s findings. PwC thus seeks to capture relevant and accurate information to ensure that the study’s findings will benefit all relevant stakeholders.
On how SEDIA can contribute to the masterplan, Kartina said “we are keen to look into how the Corridors can identify and assist industries in ensuring that the necessary human capital is provided. Therefore, we seek SEDIA’s input on how to incentivise the industries into playing a greater role in developing TVET institutions”.
Datuk Dr. Mohd Yaakub informed the visiting delegation that the focus is accorded to specific sectors under SDC. In line with the government emphasis on TVET towards producing quality skilled workforce for Malaysia to achieve the aspiration of becoming a high-income and developed nation, SEDIA is taking up the role as facilitator/coordinator, linking together relevant stakeholders who are involved in the human capital development arena, such as industry players with higher learning/skills training institutions in the state of Sabah. SEDIA believes that smart partnerships between industry players and higher learning/training institutions are crucial to ensure an efficient and sustainable human capital development for the state. The human capital development initiatives under SDC are aligned with the efforts of the State government. Among the 13 main cores of the state agenda is establishing a State Ministry of Education and Innovation, to “help existing vocational and skill training institutions to produce more skilful young generations, in developing Sabah to fulfil demand and needs of industry players”.
Human capital development thrusts under SDC encompass higher academic studies, private skills training, and pre-school education. SEDIA has leveraged on national human capital development programmes such as the National Talent Enhancement Programme (NTEP), Semi-Skills fund, Graduates and Workforce Upskilling fund, and programmes under TalentCorp to support the human capital requirements of SDC.
SEDIA has implemented numerous measures to address the human capital requirements of SDC, and Sabah in general. These include:
71 • Establishment of the Sandakan Education Hub (SEH) which will be complemented by the Interior Education Hub; • Implementation of the Creative Animation Programme by University College Sabah Foundation; • Implementation of the incubator and training programmes at the Sabah Agro-Industrial Precinct (SAIP); • Development of Bumiputera entrepreneurs; and • Collaboration between SEDIA and TVET institutions.
The importance of developing TVET is also in view of the emerging Industry 4.0 and its emphasis on communications technology, whereby industries heavily reliant on labour may benefit from the mechanisation of certain activities. This is especially so in the agriculture sector where it can realise enhanced productivity, particularly for Sabah as the main producer of palm oil, as the mechanisation of collecting oil palm fruits can increase its productivity.
3.6.4 SEDIA Welcomes Keen Interest by the Malaysia Nuclear Agency and Mutiara Jaya Venture to Participate in SDC
SEDIA received a courtesy visit on July 20, 2018, by the Malaysia Nuclear Agency (MNA) and Mutiara Jaya Viventure (MJV) at Wisma SEDIA. The delegation was received by a SEDIA team led by Chief Executive Datuk Dr. Mohd Yaakub Hj. Johari,
SEDIA Chief Executive Datuk Dr. Mohd. Yaakub Hj. Johari (fifth from left) presenting Dato’ Dr. Zulkifli Bin Mohamed Hashim (sixth from left) with a momento, while SEDIA staff and the visiting delegation look on
72 Dato' Dr. Zulkifli bin Mohamed Hashim, the Senior Director of the Commercialisation Program and Technology Planning from MNA, explained that MNA is a government R&D organisation in the field of science and nuclear technology. Their function is to execute and manage nuclear affairs at both national and international levels, and act as a liaison for the International Atomic Energy Agency (IAEA), the international authority for the Comprehensive Nuclear Test Ban Treaty (CTBT). Additionally, the agency carries out R&D, training and provides services in the field of nuclear technology for the nation’s development, as well as advocating the use, transfer of, and commercialisation of nuclear technology.
The group stated their plan to have a potential collaboration between SEDIA, MNA and MJV. The Executive Director of MJV present during the meeting highlighted that they are focused on providing professional training, and internationally-recognised certification programmes. In addition, the group have expressed their intention to help communities in Sabah to provide practical knowledge on creating highly skilled professionals, particularly in sectors such as oil and gas, manufacturing, plantation, construction development, engineering and the medical field.
The group indicated they had seen how SEDIA has been proactive in Sabah’s human capital development agenda especially in TVET, particularly how SEDIA took up the role as facilitator and coordinator in linking relevant stakeholders who are involved in human capital development areas, such as industry players from higher learning/training institutions. Dato' Dr. Zulkifli said that it is part of the group’s agenda to team up with organisations and agencies such as SEDIA, to share their mission to provide education training and services in the upskilling of Sabah’s future workforce especially in the technical and medical field. MNA, an establishment under the Ministry of Energy, Technology Science, Climate Change and Environment, (previously known as Ministry of Science and Technology), would like to promote sustainable education in non-destructive testing, and to create more awareness in both rural and urban areas of Sabah through SDC. Expertise from MNA can help to provide technical courses emphasising on non-destructive testing programmes and medical radiation safety programmes, which also includes gamma irradiation and radiography that may be of interest to majority of industry players in Sabah, such as in oil and gas, agriculture, manufacturing and construction development. One of the SDC projects that may have possibilities of applying nuclear technology offered by MNA, would be the Sabah Agro-Industrial Precinct (SAIP).
As a final point, Datuk Dr. Mohd Yaakub also took the opportunity to thank the delegation for their visit and hopes that the meeting would enhance the relationship between the three agencies and that it will transpire into future collaboration.
73 3.6.5 SEDIA Showcases SDC SME Products at SIFBF 2018
During the Sabah International Food and Beverage Fair 2018 (SIFBF 2018) held at Suria Sabah shopping mall on August 3–5, 2018, SEDIA had showcased products developed by entrepreneurs from its SME development programmes. With over 50 booths, SIFBF 2018 featured many products from throughout Malaysia as well as from Brunei, Indonesia and the Philippines. The opportunity to showcase a variety of local SME products was made possible through an invitation for SEDIA to participate in the event that was extended by SIFBF 2018 organiser, the Federation of Sabah Industries.
These entrepreneurs had developed their products and businesses through participation in SDC SME development programmes, and were showcasing their products during SIFBF 2018
The entrepreneur products showcased at the SEDIA booth are the result of Small and Medium Enterprises (SMEs) that had undergone Sabah Development Corridor (SDC) SME development programmes. SEDIA collaborated closely with TERAJU and SME Corp to introduce these programmes to local entrepreneurs and start-ups. Through these programmes, SEDIA assists entrepreneurs in various capacities including but not limited to business licensing, product packaging, skills development, networking, and product certification. SME products available at the SEDIA booth, along with their corresponding entrepreneurs, are as follows: • Sambal Tahai (DM Scrumptious) • Chocolate-based foods (Coklat’s Enterprise) • Ice cream (Cikmia Co.) • Soursop drink (Hanyaaku Sdn. Bhd.) • Lactation cookies (Millionbytes Marketing) • Fruit cordial (Zayd Food and Beverage) • Virgin coconut oil (Zaimrahim) • Herbal health products (MS Herbal Sdn Bhd) • Coconut-based foods (CT Food Industrial) These SDC SME products were showcased at the SEDIA booth during SIFBF 2018
74 • Stingless bee honey-based products (Sabatrigona Industries Sdn Bhd) • Dried noodles (Wawasan Nordawiyah Jaya) • Chocolates (RY Enterprise) • Sambal MENAQ (Rina Resources) • Cooking pastes (Qyra Anugera) • Sambal sauce and cooking paste (Jaki Juta Jaya Trading) • Coconut-based products (Sabah nature industries) • Fruit jams (Rania Enterprise) One of the SDC entrepreneurs seen received her certificate of participation during the Sabah • Kedondong juice (Prescilla Enterprise) International Food and Beverage Fair 2018 • Homemade mooncakes (JulieRich Enterprise)
3.6.6 Talk on SEDIA’s role in Facilitating SMEs
SEDIA was invited to provide a talk during a seminar organised by the state Ministry of Trade and Industry on August 7, 2018. The event was the eighth edition of the Sabah Entrepreneur Transformation Programme (Program Transformasi Usahawan Sabah), and saw 25 local entrepreneurs given the latest information on entrepreneurship from various related agencies. The seminar participants were also briefed and updated on SEDIA’s role in facilitating SMEs, particularly in the state.
SME development has been an encouraging force of late, with many entrepreneurship initiatives carried out by various ministries and agencies helping entrepreneurs throughout Malaysia. According to SMECorp statistics, as at the end of 2016, 98.5 percent of business establishments in Malaysia are SMEs, which contributed 36.6 percent to the national GDP while 65.3 percent of the national employment is created through SMEs.
SEDIA Deputy Vice President Jesi Jolumis Majungki (seated, second from right) and Mary Malangking (seated second from left), Head of Research and Tourism Development Division from the Ministry of Tourism, Culture and Environment during a group photo with Sabah local entrepreneurs participating in the seminar
75 SEDIA facilitates SME development in the state by organising SME programmes, consistent with one of SDC’s three key principles, that is capturing economic value activities. Starting during the Second Phase of SDC (2011–2015), the SME programmes were aimed at building a critical mass of SMEs to serve the created downstream manufacturing companies, to expedite the growth in the new industries in Sabah, and to encourage society to be more involved in business and entrepreneurship. The initiatives became more vibrant as SDC entered into its Third Phase in 2016. This augurs well in accelerating economic growth, by having a strong base of local SMEs.
3.6.7 SEDIA Briefs Malaysia Special Branch on SDC Programme and Initiatives
SEDIA had the opportunity on August 20, 2018, to provide the Malaysian Special Branch with a briefing on the SDC. The SEDIA delegation was invited to provide the briefing at the Police Training Institute, which covered topics such as current SDC performance, and updates for ongoing SDC initiatives. The SEDIA delegation was led by Chief Executive Datuk Dr. Mohd Yaakub Johari, who provided the briefing.
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari (seated, second from left) and Head of Special Branch Sabah, Senior Assistant Commissioner Datuk Suhaimi Bin Deraman (seated, centre) with Sabah members of the Special Branch, after the briefing on Sabah investment policies and economic prospects through SDC
The Special Branch is an intelligence agency attached to the Royal Malaysia Police, tasked with acquiring and developing intelligence on internal and external threats to the nation, subversive activities, extremist activities, and activities of sabotage and espionage. It is also empowered to analyse and advise on the necessary course of action to the various departments and agencies both within the police department and other related agencies. With such an important role in maintaining peace and stability in the nation, SEDIA welcomed the efforts of the Special Branch in providing its members with the latest information available on economic initiatives implemented in Sabah through SDC. The members of the Special Branch were briefed on future strategies and targets under SDC. The Head of Special Branch Sabah, Senior Assistant Commissioner Datuk Suhaimi Bin Deraman, said that the briefing was important so as to allow the Special Branch to identify areas where they can focus safety and security efforts.
76 3.6.8 SEDIA Connects with Graduates through Kembara Kerjaya Roadshow
SEDIA participated in the Sabah Kembara Kerjaya Programme 2018, which was organised by the Sabah Labour Department (JTK). The career roadshow which was held during September 2–6, 2018 covered the districts of Kota Kinabalu, Kudat, Kota Marudu, Ranau, and Keningau. The roadshow comprised of exhibits from government and private agencies offering job opportunities to jobseekers keen to enter the fields of business, oil and gas, hospitality, tourism, spa therapy, health, retail, and automotive, to name a few. Apart from that, Technical and Vocational Education and Training (TVET) courses were also offered to students and school leavers that provide certificate, diploma, and postgraduate skills training to meet the challenges of skills-related industries in Sabah. Many activities were also conducted during the fair including career talks by employers from various organisations.
A SEDIA representative is seen providing information on SDC employment initiatives during the Kudat stop of the Kembara Kerjaya roadshow
3.6.9 SEDIA Receives a Visit at SAIP by Assistant Minister in Chief Minister’s Office
SEDIA received a courtesy visit on September 8, 2018, at the Sabah Agro-Industrial Precinct (SAIP) from Assistant Minister to the Chief Minister, Arifin Asgali. The Assistant Minister was given a briefing on the SAIP project and the programmes and initiatives available.
Arifin had visited SAIP along with a group of local entrepreneurs, and the delegation was keen to know about the machinery and services that SEDIA offers to local SMEs and start- ups. The delegation was brought on a tour of SAIP, and had the opportunity to see the various machineries at the production line facility that had been fully in place since 2017. The Assistant Minister was also glad to be informed that SAIP staff comprised of officers from different fields of sciences that are able to assist entrepreneurs in various capacities.
77 Meanwhile, the group of entrepreneurs were also keen to learn more about the entrepreneur assistance programmes available at SAIP.
Realising the potential of SME contribution to the state economy, SEDIA had developed initiatives and have been actively involved in, SME development in Sabah commencing during the Second Phase of SDC (2011–2015) and into the current Third and final Phase of SDC (2016–2025). The SME programmes are also in line with one of the three principles of SDC, which is capturing economic value activities. The SDC SME programmes are to help entrepreneurs, start-ups and companies to discover business ideas, validate as well as scale up their ventures.
Assistant Minister in the Chief Minister’s Office, Arifin Asgali (sixth from right) receiving a momento from Justin Janim, Principal Senior Executive at the Sabah Agro-Industrial Precinct
3.6.10 China-ASEAN Exposition
The People’s Republic of China (China) Ministry of Commerce, as one of the co-sponsors of the China-ASEAN Exposition (CAEXPO), had invited SEDIA to participate in the ‘Roundtable Meeting on Investment Cooperation’ and the ‘Promotion Conference on ASEAN Industrial Parks’ in conjunction with the 15th CAEXPO. Continuous initiatives and efforts in promoting SDC to investors domestically and globally is one of SEDIA’s key foci. SEDIA accepted the invitation with Chief Executive Datuk Dr. Mohd Yaakub Johari leading a delegation to participate in the event.
The first CAEXPO was held in November 2004, and Nanning has since become the permanent host city for the annual event, as well as a hub for bilateral exchanges between China and ASEAN. The CAEXPO 2018 is the third year of SEDIA participation in CAEXPO. In sequence of all participating ASEAN countries, Cambodia was the Country of Honour
78 for CAEXPO 2018. Held on September 12-15, 2018, the theme and slogan of CAEXPO — ‘Jointly Building the 21st Century Maritime Silk Road, Forging the China-ASEAN Community of Innovation’ and ‘Celebrating 15 Years of China-ASEAN Expo — A Win-Win Platform of Strategic Cooperation’ — were respectively adopted.
Apart from the ‘Roundtable Meeting on Investment Cooperation’ and the ‘Promotion Conference on ASEAN Industrial Park’ events, SEDIA had also participated in the ‘Seminar on investment opportunities in Malaysia’ which was a sideline event held on September 13, 2018. The seminar was organised by MIDA Guangzhou led by Director Nazuki Abdullah.
CAEXPO 2018 was organised by the People’s Government of Guangxi Zhuang Autonomous Region with the World Trade Organization (WTO), International Trade Center (ITC), and Hong Kong Trade Development Council (HKTDC) as supporting organisers. The event co-sponsors comprised of the China Ministry of Commerce, Brunei Darussalam Ministry of Foreign Affairs and Trade, Kingdom of Cambodia Ministry of Commerce, Republic of Indonesia Ministry of Trade, Lao People’s Democratic Republic Ministry of Industry and Commerce, Malaysia Ministry of International Trade and Industry, Republic Union of Myanmar Ministry of Commerce, Republic of the Philippines Department of Trade and Industry, Republic of Singapore Ministry of Trade and Industry, Kingdom of Thailand Ministry of Commerce, Socialist Republic of Vietnam Ministry of Industry and Trade, and the ASEAN Secretariat.
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari (second from right) and Deputy Vice President Jesi Jolumis Majungki (far right) with the Sabah delegation during the Malaysian Investment Promotion Seminar
79 3.6.11 Investors from Thailand Keen to Explore Opportunities in the Oil Palm and Timber Sectors in SDC
On September 18, 2018, SEDIA received a courtesy visit at Wisma SEDIA by the Thailand Board of Investment (TBOI). The delegation, led by TBOI Director in the Thai Overseas Investment Promotion Division Orapin Swadpanich, was welcomed by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari, and was given a briefing on SDC programmes and initiatives.
The visit to SEDIA, which also included several investors from Thailand, is part of a broader mission to explore opportunities along the route of the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA). TBOI is responsible for promoting investment into Thailand, as well as introducing Thai investors to potential investment locations in the region. The discussion between the delegation and SEDIA covered the investment climate and prospects in Sabah, as well as investment opportunities, facilities and incentives available.
One of the Thai investors was keen to participate in palm oil activities, to which Datuk Dr. Mohd Yaakub Johari informed the delegation of Sabah’s two palm oil industrial clusters, located in Lahad Datu and Sandakan. An investor that was interested in timber activities was also introduced to the idea of establishing timber downstream products within the Kota Kinabalu Industrial Park, with its ideal location close to the Sapangar Bay Container Port. Additionally, the delegation were eager to know of the tax incentive packages available for specific regions as specified under SDC Strategic Development Areas, whereby investors are eligible for 100 percent tax exemption for a period up to ten years.
This had been the first visit to Sabah for TBOI Director Swadpanich, and she expressed her eagerness for continued and more in-depth discussion with SEDIA. Orapin Swadpanich
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari (fourth from left) presents a momento to the head of the Thailand Board of Investment delegation, Orapin Swadpanich, who is the Director in the Thai Overseas Investment Promotion Division
80 suggested that Sabah could gain from direct connectivity with Thailand, and that further discussions could encourage freer flow of human traffic between Sabah and Thailand. The TBOI Director also mentioned the possibility of introducing Thailand’s preserved fruit products into Sabah.
Over the past years, SEDIA has received several delegations from Thailand, the earliest being Ambassador H.E. Thana Duangratana in 2010. His Excellency had also led another delegation to Wisma SEDIA in 2012, which was also attended by Minister Songsak Saicheua, Deputy Head of Mission; and Mr Montry Nathananan, First Secretary for Economic Affairs.
3.6.12 SEDIA to Collaborate with MITI to Turn Sabah into a Regional Powerhouse
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari (third from right) presenting a momento to MITI Minister Darell Leiking (second from left)
SEDIA paid a courtesy visit to Datuk Darell Leiking, the Minister of International Trade and Industry (MITI) on September 19, 2018. The Penampang Member of Parliament received the delegation led by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari and was given a briefing on SDC programmes and initiatives. Datuk Dr. Yaakub informed the minister that SEDIA is ready to foster closer collaboration with agencies under MITI, such as the Malaysian Investment Development Authority (MIDA) and Malaysia External Trade Development Corporation (MATRADE), to turn Sabah into a regional economic powerhouse within BIMP-EAGA.
Over the past years, SEDIA has been participating in a series of exhibitions and expositions both locally and internationally, working closely with MITI as well as MIDA and other investment promotion agencies in investment promotion activities. These efforts include overseas trade and investment missions, welcoming courtesy visits by representatives and business delegations of foreign countries, attending meetings and promotion-related
81 events at the national and international level, and to explore and attract the many forms of investments from around the globe. With the commencement of the Second Phase of SDC in 2011, SEDIA has been aggressively promoting investment into SDC. SEDIA has also adopted a more focused and targeted approach in attracting quality investments in new growth areas, especially in service-based, innovation-led and knowledge-intensive industries including in Industry 4.0.
During the Eleventh Malaysia Plan, SEDIA has been according greater emphasis on improving the state’s economic competitiveness by enhancing the state’s global connectivity to ensure seamless movement of people, goods and services. Efforts would be directed especially towards enhancing the efficiency of the logistics sector by improving the relevant infrastructure and the integration of land, sea, and air services. In the long run, this will help in reducing the cost of living and doing business.
SEDIA noted that, during his recent visit to Sabah for the Malaysia Day celebration, Prime Minister Tun Dr Mahathir Mohamed commented that Sabah has the capability for rapid development, having gone through much progress over the years; he was impressed with Sabah’s landscape and believed the state had strong potential to be a developed state.
Datuk Seri Panglima Haji Mohd Shafie bin Haji Apdal and Tun Dr. Mahathir bin Mohamad arriving for the 2018 Malaysia day celebrations held in Kota Kinabalu, Sabah
To develop Sabah further, the Prime Minister suggested identifying assets of Sabah which can be exploited, such as land, mountains, seas, beaches and low temperatures. He was however concerned for the high cost of living that the people in Sabah had to bear. He further suggested Sabah could establish an automotive industry where carmakers could assemble their products in the state. Industries can come here because in the future, Sabah is going to be a petrochemical producer with deep-water production due to begin soon. In this regard, the Third National Car Project could be sited at KKIP. This possibility should be seriously considered in view of the strategic geographical location of Sabah in the East ASEAN region. The proposed upgrading of Sapangar Bay Container Port into a transhipment hub under SDC is timely. SEDIA is also looking into a study to establish a free economic zone in KKIP.
82 SEDIA also welcomed the announcement by the MITI minister to establish an aerospace industry in Sabah. In order to enhance seamless movement of air passenger and cargo, the Federal government through SEDIA had also commissioned an Air Freights and Aviation Hub Masterplan Study. The location, once finalised, could also provide support for various aviation businesses and services such as logistics support for e-commerce, premium outlets, Fixed-based Operation for private jets and charter, Maintenance, Repair and Overhaul (MRO) services, and aerospace manufacturing industries.
3.6.13 SEDIA Discusses Collaboration with Nuclear Malaysia
A delegation from SEDIA, led by Chief Executive Datuk Dr. Mohd Yaakub Johari, met with the Malaysia Nuclear Agency (Nuclear Malaysia) at their office on September 20, 2018. The delegation was received by Dato’ Dr. Zulkifli bin Mohamed Hashim, the Nuclear Malaysia Deputy Director General in the Research and Technology Development Programme.
During a discussion between the visiting SEDIA delegation and representatives of Nuclear Malaysia, it was proposed that the two agencies collaborate to jointly organise a seminar on application of nuclear technology in Sabah with a special focus on the agro industry. It had been recognised that the two agencies can synergise and leverage each others’ strengths in the agro industry; SEDIA has implemented various initiatives to encourage downstream agro- activities, while Nuclear Malaysia offers several unique nuclear-related services that benefit agriculture products. SEDIA had been actively promoting the development of the agro-industry, particularly through initiatives at the Sabah Agro-Industrial Precinct (SAIP). A Memorandum of Understanding (MoU) between SEDIA and Nuclear Malaysia was to be prepared for the purpose of this collaboration following the meeting.
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari (seated second from right) with Malaysia Nuclear Agency Deputy Director General Dato’ Dr. Zulkifli bin Mohamed Hashim (seated, centre) and other representatives of both agencies
83 Following the discussion, the SEDIA delegation was given a tour of the Nuclear Malaysia facilities. The tour included a visit to the TRIGA PUSPATI (RTP) nuclear research reactor, the only one of its kind in Malaysia, as well as the SINAGAMA irradiation plant. RTP is a pool-type reactor that was designed to effectively implement the various fields of basic nuclear science and education, incorporating facilities for advanced neutron and gamma radiation studies as well as for application. Initially designed as a multi-purpose pilot facility for research and development purposes, SINAGAMA diversified from just plant activities to later offer services to the public for the sterilisation of medical products and packaging materials, decontamination of food, pharmaceuticals, herbs and animal feeds, and the disinfestations of insects in agricultural commodities, including for quarantine purposes. The plant also provides tissue and bone sterilisation services by gamma radiation for tissue banking purposes to relevant authorities such as hospitals and National Tissue Bank.
3.6.14 SEDIA Receives Courtesy Visit by Polish Foreign Trade Office Chief
SEDIA received a courtesy visit at Wisma SEDIA on September 21, 2018, by the Chief of Poland Trade Office in Kuala Lumpur Przemysław Zaręba. Representing the Polish Investment and Trade Agency (PITA), Zaręba was welcomed by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari, and was given a briefing on SDC programmes and initiatives.
Datuk Dr. Mohd Yaakub Johari (left) presenting a momento to Przemysław Zaręba, PITA Bureau Chief for Myanmar and Malaysia (centre)
PITA is a governmental trade promotion agency, reporting directly to the Polish Development Fund as well as the Ministry of Entrepreneurship and Technology of the Republic of Poland. The goal for PITA is to develop mutual Polish-Malaysian business and trade cooperation. The Foreign Trade Office in Kuala Lumpur was established in June 2018, and Zaręba identified potential for cooperation between PITA and SEDIA. The courtesy visit also served to introduce the new Foreign Trade Office to SEDIA, being a prominent organisation in efforts relating to regional economic development.
84 During the discussion, Zaręba was introduced to the regional approach for investment incentives as offered under SDC, which differ from the sectoral tax incentives generally offered throughout Malaysia. Under SDC, investors are eligible for 100 percent tax exemption for a period of up to ten years, available for specific regions as specified under SDC Strategic Development Areas (SDAs). He was made aware of SDAs such as the Palm Oil Industrial Clusters for palm oil activities, as well as Kinabalu Gold Coast Enclave for tourism. Additionally, when enquiring about how Polish investors could enter Sabah, Datuk Dr. Yaakub explained on SEDIA’s role as a One-Stop Authority for SDC that can assist by linking potential investors with the relevant local agencies as well as possible local partners.
Zaręba noted that Malaysia can appeal to investors due to being more structured as compared to their ASEAN counterparts, while still offering cost competitiveness not found in matured economies. He also expressed that he was keen for Sabah businesses to engage with their Polish counterparts, with the possibility of PITA organising a seminar in Poland and inviting Sabah industry players, or for Polish industry players coming to Sabah to attend a seminar organised here.
3.6.15 SEDIA Continues Collaboration on SMART Mushroom House with MESTECC SEDIA received a visit at the Sabah Agro-Industrial Precinct (SAIP) on September 22, 2018, by officials of the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC). The visit by MESTECC involved one of its agencies, the National Institute of Biotechnology Malaysia (NIBM), and is a first in a series of visits by the MOSTI Social Innovation (MSI) fund monitoring team.
MESTECC Deputy Secretary Mohammad Yusof Radzuan Bin Saad (fifth from right) and SEDIA Vice President Mary Sintoh (sixth from right) at the SMART mushroom house in SAIP, along with other SEDIA and NIBM staffs
85 The MSI fund is a grant by the previous Ministry of Science, Technology and Innovation (MOSTI), which has been succeeded by MESTECC, with the objective of improving the well-being of society through the implementation of projects and services, capacity and skill building, or innovation output using existing technology that can be implemented sustainably. The MSI fund monitoring team ensures that recipients of the grant manage to implement the programmes smoothly. The purpose of their visit today was focused on monitoring the infrastructure and functionality of the mushroom house system, mushroom cultivation, and the learning and technology transfer for local technopreneurs in the industry through SMART mushroom house practices.
The MSI-funded project at SAIP is the “Rural Entrepreneur Development through Grey Mushroom Cultivation” programme (MSI 16045), which realised the development of a mushroom house with SMART system functionality. The installation of sensors to control temperature and humidity parameters through the water flow adjustment, as well as an automatic fan system, ensure the production of high quality mushrooms. The main objective for developing the SMART mushroom house facility is to provide current and potential entrepreneurs with a training centre on grey oyster mushroom cultivation, particularly consistent production using sensor systems. Entrepreneurs were first given exposure to these processes through a workshop organised by SEDIA. The first phase of the workshop, “Developing rural entrepreneurs in mushroom cultivation”, was held on December 16, 2016, and was followed by “Workshop Phase 2: Grey Oyster mushroom cultivation using SMART mushroom house” which was held on May 16, 2017. The second phase was held in conjunction with a handover ceremony, transferring the SMART mushroom house from the Agro-Biotechnology Institute Malaysia (ABI) under NIBM, to SEDIA.
ABI had provided 11,650 blocks of grey oyster mushrooms for the SMART mushroom house programme. SAIP has been implementing “Quality Evaluation of Drying Methods and Nutritional Analysis of Pleurotus sajor caju powder” for the purposed of research, development and commercialisation. Additionally, a comparative study of grey oyster mushrooms (Pleurotus sajor caju) on different substrates and its nutrient analysis was also conducted in SAIP. Now SEDIA has begun an initiative to produce and cultivate its own mushroom blocks for self- sufficiency and maintenance of its SMART mushroom house.
86 3.6.16 SEDIA Supports Local SMEs Through Promotional Activities
Sabah Minister of Tourism, Culture and Environment Christina Liew (centre) looks at local products by Jelidah Enterprise, an SME in the SDC SME Incubation programme, while accompanied by SEDIA Chief Executive Datuk Dr. Mohd. Yaakub (left, upfront) during the Annual State Statutory Bodies and Government Agencies exhibition
In supporting the development of local entrepreneurs, SEDIA regularly provides Small and Medium Enterprises (SMEs) with avenues to showcase their locally-developed products. In line with this, various entrepreneurs were given promotion space at two separate exhibition events: the Annual State Statutory Bodies and Government Agencies exhibition held at Suria Sabah shopping centre during September 29–30, 2018; and the state-level Farmers, Breeders and Fishermen Day Innovation and Sales Exhibition of Agriculture Products held at Tawau Municipal Council Field during September 28–30, 2018.
At the event held at Suria Sabah, SEDIA provided booth space for 20 entrepreneurs, while at the Tawau event there were as many as eight entrepreneurs promoting their products at the SEDIA booth. The local products promoted during both exhibitions range from local food and beverage products, supplement and health products, essential oils, and cosmetic products for body and skin care.
The initiatives by SEDIA support, and are aligned with, the State and Federal governments’ efforts and initiatives to develop local and bumiputera SMEs, so as to increase the number of locally developed businesses, products and services. SEDIA continues to work closely with government agencies at the State and Federal level over the past years, and has been participating in exhibitions and expositions both locally and internationally, working closely with MITI as well as MIDA and MATRADE in investment promotion activities.
The entrepreneur products showcased at the SEDIA booths are the result of SMEs that had undergone the Sabah Development Corridor (SDC) SME Incubation programme. Through
87 this programme, SEDIA assists entrepreneurs in various capacities including but not limited to business licensing, product packaging, skills development, networking, and product certification. SEDIA also established the SDC Entrepreneurs Business Portal or SDC Bizlink, with the objective to help promote and sell SDC entrepreneurs’ products. SEDIA continues to encourage SDC entrepreneurs to market their product via SDC Bizlink, and currently over 20 ‘Made in Sabah’ products are available at www.sdcsabah.com.
3.6.17 SEDIA Encourages Interaction with Education Institutions and Students
SEDIA is open towards tertiary education institutions in general, as well as its students in particular, seeking engagement with the statutory body. The One-Stop Authority for SDC has provided briefings and presentations in recent years to various groups from schools, colleges and universities, which have sought out information on its role and responsibilities in developing the state of Sabah.
SEDIA had welcomed a group of 147 students from SMK Bahang under their Integrated Special Education Programme to SAIP on October 10, 2018. The visitors from SMK Bahang also comprised of 21 special education teachers and six teaching assistants, led by the Programme Senior Assistant Mohamad Sufri Bin Salim. Sufri informed that the objective of their visit is to provide the students with exposure on the prospects, courses and job opportunities available in the agriculture sector, as well as allow these students to gain hands-on experience of the facilities available at SAIP. The visiting group were attended to by Principal Senior Executive Justin Janim, who provided a briefing and also led them on a tour of SAIP facilities.
A group photo comprising of SEDIA staff at SAIP along with visiting students and teachers from SMK Bahang
The month of November saw SEDIA welcoming students from the Computer Electronics Engineering programme at Universiti Malaysia Sabah (UMS) to the Sabah Agro-Industrial Precinct (SAIP), specifically on November 28, 2018. The visiting group from UMS was welcomed by SEDIA staff from the Knowledge and Technology Management Division (KTMD), led by SEDIA Principal Senior Executive Justin Janim, who presented a briefing on SAIP facilities, programmes and initiatives.
88 The group of 52 fourth-year students were led by UMS lecturer Dr. Aroland Kiring, and sought to gain exposure on the use of machinery and technology in the agriculture sector. The students were particularly interested in the controlled environment facilities (CEF) available at SAIP and its applications through Industry 4.0, whereby the parameters can be controlled remotely through smart applications. The briefing was followed by a tour of SAIP and the available facilities.
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari with SEDIA staff and the visiting students from the UMS (right) and graduate students from UKM (left) On November 30, 2018, SEDIA then welcomed students of the Business, Economics and Accountancy faculty at UMS to Wisma SEDIA. The students, hailing from various academic backgrounds such as banking and finance, entrepreneurship, hospitality, marketing, and tourism, had sought an open discussion with SEDIA to ask about Sabah economics and investment statistics.
The UMS students were welcomed by a team led by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari, and briefed by SEDIA Deputy Vice President Jesi Majungki on SDC programmes and initiatives. Following the briefing, the discussion also covered on economic and industry potential through incorporating Industry 4.0-related technologies, global connectivity, artificial intelligence and 3D printing, to name a few. The students were also encouraged to play an active role as the next generation of Sabah’s human capital, as well as to look into entrepreneurial ventures.
This was followed up on December 1, 2018, when Datuk Dr. Mohd Yaakub Johari gave a talk on leadership and entrepreneurship to a class of MBA students from Universiti Kebangsaan Malaysia (UKM) at the University College Sabah Foundation. Lecturers from the UKM Graduate School had extended the invitation to the SEDIA Chief Executive to share his experience and thoughts on the subject matter, and during the session students were keen to ask about various themes relating to Sabah’s economic development. In his talk, Datuk Dr. Mohd Yaakub Johari also encouraged the graduate students to enhance their leadership and entrepreneurial skills, so as to play a larger role in uplifting the state economy.
89 3.6.18 Trade and Investment Mission to Japan and Korea
MIDA organised their yearly trade and investment mission to Korea and Japan on October 15–19, 2018, and this mission was memorable as the first TIM to Japan and Korea led by new Minister of International Trade and Industry Datuk Darell Leiking. SEDIA had the opportunity to participate in this mission, which covered the cities of Tokyo, Osaka and Seoul.
Promoting SDC as the destination of choice for business, culture and nature, the SEDIA delegation led by Chief Executive Datuk Dr. Mohd Yaakub Johari met several potential investors during the business matching session, keen to know more about the business opportunities that Sabah has to offer. A large number of participants from various companies in Japan and Korea attended the seminars and business matching session, ranging from the property industry to the automotive, logistics, food manufacturing, and palm oil industries, to name a few.
Differing from previous years, a series of panel discussions entitled “Malaysia: A Regional Hub of Opportunity”, and “Malaysia: A Vibrant Hub of Opportunities” were organised in addition to the individual business meetings between the Malaysian delegation and Japan and Korean companies.
During this year’s mission, the Malaysian delegation also had the opportunity to visit Sony Square Centre in Tokyo, which was organised by MIDA Japan. The facility showcases Sony products based on cutting edge technology in various applications, particularly in real life entertainment — music recording, games, high resolution audio and visual equipment, robotic toys/pets, etc.
SEDIA participated in a trade and investment mission in Japan and Korea to promote SDC initiatives to encourage investment into Sabah
90 3.6.19 Ukraine Embassy Pays Courtesy Visit to SEDIA
SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari (centre) presenting Ukraine embassy officer Yevhenia Shynkarenko (right) with a momento during her courtesy visit to Wisma SEDIA
SEDIA received a courtesy visit on December 18, 2018, by Trade and Commerce Officer Yevhenia Shynkarenko from the Embassy of Ukraine in Malaysia. The embassy representative was received by SEDIA Chief Executive Datuk Dr. Mohd Yaakub Johari and Deputy Vice President Jesi Majungki, and together held a discussion on potential collaboration towards enhancing the Sabah and Ukraine economies.
Yevheiva shared that Ukraine’s strength is in the aerospace industry, which may be a possible match for enhancing relations with Sabah. The existing aviation industry in Ukraine includes large plane manufacturing activities as well as pilot training academies. She also elaborated that Ukraine has a mature shipbuilding industry, in addition to efforts towards producing environmentally friendly automotive vehicles. The Ukraine embassy officer also explained that Ukraine is keen to promote collaboration on a regional basis, to which Datuk Dr. Yaakub suggested that Ukraine may look at Malaysia as a regional hub within ASEAN for promoting its trade.
The possible economic collaboration with Ukraine would align well with current efforts in the SDC. In order to enhance seamless movement of air passenger and cargo, the Federal government had commissioned through SEDIA an Air Freights and Aviation Hub Masterplan Study. The location, once finalised, could also provide support for various aviation businesses and services such as logistics support for e-commerce, premium outlets, Fixed-based Operation for private jets and charter, Maintenance, Repair and Overhaul (MRO) services, and aerospace manufacturing industries.
During the Eleventh Malaysia Plan, SEDIA has been according greater emphasis on improving the state’s economic competitiveness by enhancing the state’s global connectivity to ensure seamless movement of people, goods and services. Efforts would be directed especially towards enhancing the efficiency of the logistics sector by improving the relevant infrastructure and the integration of land, sea, and air.
91 CHAPTER 4 SDC PERFORMANCE REVIEW
4.1 SDC PERFORMANCE REVIEW 4.2 ECONOMIC PERFORMANCE 4.2.1 Sabah GDP Growth 4.2.2 Annual Cargo and Container Throughput 4.2.3 Tourism Sector Performance 4.2.4 Employment Trends and Unemployment Rate 4.2.5 Incidence of Poverty 4.3 INVESTMENT PERFORMANCE 4.4 DEVELOPMENT PERFORMANCE OF PHYSICAL PROJECTS 4.4.1 Keningau Integrated Livestock Centre 4.4.2 Sabah Agro-Industrial Precinct 4.4.3 Palm Oil Industrial Cluster (Lahad Datu) 4.5 HUMAN CAPITAL AND ENTREPRENEURSHIP DEVELOPMENT 4.5.1 Agro-SAIP Training Programme 4.5.2 SME Incubation and Accelerator Programmes Feature: SDC SME Incubation Participants 4.5.3 TERAJU @ SDC Programme 4.5.4 SEDIA Student Internship Opportunities 4.6 CONCLUSION
92 SDC initiatives focus on developing local industries while ensuring Sabah’s natural resources are maintained for future generations
93 4.1 SDC PERFORMANCE REVIEW
The Sabah Economic Development and Investment Authority (SEDIA) has steered the Sabah Development Corridor (SDC) through the third year of the Third Phase of SDC (2016–2025), as well as the Eleventh Malaysia Plan (11MP) (2016–2020). To this end, the SDC initiative has established a strong foundation for Sabah towards becoming a developed state, especially in SDC focus areas such as tourism, agriculture, oil and gas, logistics, and human capital development.
4.2 ECONOMIC PERFORMANCE
4.2.1 Sabah GDP Growth
Following a change to measuring gross domestic product (GDP) growth in Malaysia based on constant 2015 prices, a direct comparison with global GDP is not yet available as global GDP is still measured against 2010 prices. Due to a challenging economic environment during 2018, the Sabah economy registered slower growth of 1.5 percent in year 2018, as compared to strong growth of 8.0 percent in the previous year. The slower economic growth was due to a decline in the production of crude oil and natural gas, as well as the reduction in planned oil production which further negatively affected the growth in both the mining and quarrying, and agriculture sectors. However, an increase in the growth of the services sector to 5.6 percent, and the rebound in the construction sector to double-digit growth of 24.1 percent, supported the overall economic momentum in 2018.
Because of its wide swaths of nature, Kota Kinabalu is often referred to as the ‘rainforest city’
94 CHART 4.1: WORLD, MALAYSIA AND SABAH GDP (2011-2018)
Source: Department of Statistics, Malaysia, and International Monetary Fund, 2019
Sabah’s GDP per capita is generally below the nation’s average, as there are a high proportion of non-Malaysian citizens who tend to have low wages. GDP per capita, however, has been on a consistently upward trend, expanding from RM19,830 in 2015 to RM25,861 in 2018, at current prices (see CHART 4.2).
CHART 4.2: SABAH GDP PER CAPITA (2010-2018)
Source: Department of Statistics, Malaysia, 2019
95 It is pertinent to also note that one of the key targets under SDC is to realise GDP of RM63.2 billion, and GDP per capita of RM14,478 for Sabah by the year 2025. This had already been surpassed as at 2015, with the state registering RM66.3 billion GDP, and RM19,734 GDP per capita. By 2018, the state’s GDP had reached RM85 billion (at constant 2015 prices), with GDP per capita at RM25,861. Although the target setting and outcomes were determined using different base years, this however is only of academic interest and therefore a moot point. This is due to the fact that inflation rates between 2008 and 2016 was only hovering between a high of 2.9 percent in 2011, to the lowest at 0.7 percent in 2016.
4.2.2 Annual Cargo and Container Throughput
Based on the data from Sabah Ports Sdn. Bhd., total container throughput experienced an overall increase since the start of SDC, from 292,688 in 2008 to a peak of 398,800 in 2014. Although there was a slight decline in the following three years after, in 2018 the state registered an increase to 386,786 total TEUs in 2018. Even with the drop in container throughput, the volume of cargo handled in all ports in Sabah experienced an increase of 30.9 percent during that period, which was from 27,844,210 tonnes in 2015 to 36,455,000 tonnes in 2018. This was due to the increase in total cargo handled at anchor (see CHART 4.3).
CHART 4.3: SABAH PORTS ANNUAL CARGO AND CONTAINER THROUGHPUT (2008-2018)
Source: Sabah Ports Sdn. Bhd., 2019
96 4.2.3 Tourism Sector Performance
The tourism sector is among the major contributors to the nation and specifically Sabah, in regards to revenue and economic development. From CHART 4.4, it can be seen that tourist arrivals in Sabah has generally increased since 2008, with slight momentary drops in 2011, 2014 and 2015. Despite the slight decline during these years, the state saw an increase in tourism arrivals in the following years with each year since 2016 setting record peaks. Revenue from the sector also increased from RM6.52 billion in 2015 to RM8.34 billion in 2018, reflecting on the good progress in tourism development.
CHART 4.4: SABAH TOURIST ARRIVALS AND TOURISM RECEIPTS (2008-2018)
Source: Sabah Tourism Board, 2019
Domestic arrivals recorded the largest contribution to the state’s overall tourist arrivals at 65 percent, an increase by 2.8 percent in year 2018. International arrivals meanwhile has grown strongly at 10.2 percent. Tourists from China, South Korea and Indonesia were the main contributors to total international arrivals, accounting for 76.4 percent or 1,040,494 visitors. Overall, Sabah’s tourism is presently experiencing tremendous growth and is expected to continue with strong performance, as Sabah is now connected to 26 international destinations by 12 foreign carriers, and currently has 444 flights connecting Peninsular Malaysia, Sarawak and Labuan to Sabah with a seat capacity of close to 75,000 weekly.
97 4.2.4 Employment Trends and Unemployment Rate
Sabah recorded a 33.8 thousand person increase to the labour force in 2018, registering a year-on-year increase of 1.6 percent in total employed persons. The number of employed persons rose to 1,825.5 million in 2018, from 1.23 million in 2008 (see TABLE 4.1). This means 595,000 jobs had been created over the ten year period, giving an average increase of 59,500 jobs created per year. The target for SDC is to create 900,000 jobs by 2025, giving an average target per year of 50,000, therefore the SDC annual target had been exceeded. The various projects implemented during the First Phase of SDC (2008–2010) contributed to the direct creation of job opportunities for locals, especially in the construction sector. This was further boosted by the SDC projects implemented during the Second Phase (2011–2015), with focus on encouraging investment in the targeted sectors in Sabah.
TABLE 4.1: EMPLOYMENT INDICATORS FOR SABAH LABOUR FORCE, EMPLOYED AND UNEMPLOYED, AND THE UNEMPLOYMENT RATE (2008-2018)
Employment 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Labour force 1.29 1.35 1.48 1.54 1.58 1.67 1.70 1.86 1.93 1.90 1.94 (million) Employed 1.23 1.27 1.40 1.45 1.49 1.58 1.62 1.77 1.82 1.80 1.83 (million) Unemployed 63.8 74.6 82.1 86.1 85.3 86 79.5 92.3 103.3 107.5 112.2 (‘000) Unemployment 4.9 5.5 5.5 5.6 5.4 5.2 4.7 5.0 5.4 5.6 5.8 rate (%) Labour force 64.5 65.1 65.9 67 67.4 69.9 70 69.5 70.8 68.4 68.2 participation rate (%)
Source: Sabah Ports Sdn. Bhd., 2019
Since recording 4.9 percent at the beginning of SDC, unemployment rates declined to a low of 4.7 percent in 2014, as compared to its peak of 5.6 percent in 2011 (see CHART 4.5). However, the State’s unemployment rate had increased slightly by 0.2 percent from 5.6 percent in 2017, to 5.8 percent in year 2018. This can be attributed to a mismatch of qualifications and skills with the available job opportunities. Nevertheless, SEDIA is committed to providing more employment opportunities by matching them with company or employers who have registered under the SDC Jobseekers. Moreover, SEDIA is currently actively encouraging locals to engage in Small and Medium Enterprises, by exposing them to entrepreneurial courses and mentoring them through incubation programmes. Indirectly, this will reduce the number of unemployed actively searching for opportunities, while concurrently increasing available job opportunities for others. This may therefore reduce the unemployment rate in Sabah in coming years.
98 CHART 4.5: SABAH EMPLOYMENT TRENDS (2008-2018)
Source: Department of Statistics, Malaysia, 2019
4.2.5 Incidence of Poverty
The incidence of poverty in Sabah has continued to decline in spite of global economic challenges. According to the Department of Statistics, Malaysia, the incidence of poverty in Sabah was recorded at four percent in 2014, however by the end of 2016, incidence of poverty declined further to 2.9 percent (see CHART 4.6). The improvements of mean monthly household income undoubtedly influenced the direction of poverty incidence. The poverty rate which was registered at 19.7 percent in 2009 had drastically declined to 8.1 percent in 2012. This is the highest reduction in the poverty rate in Sabah. Under the SDC Blueprint, the poverty incidence for Sabah should be less than five percent by 2020, and negligible by 2025 The Gini coefficient has indicated a marked reduction in income inequality at 0.428, in comparison to 0.45 in 2007 (see TABLE 4.2).
99 CHART 4.6: INCIDENCE OF POVERTY, SABAH (2009-2016)
Incidence of Poverty rate (%) poverty (%)
35.0 32.8 25.0
30.0 19.7 20.0 25.0
15.0 20.0
15.0 12.7 10.0 9.8 10.0 8.1 4.0 7.4 5.3 5.3 5.0 5.0 1.9 1.6 2.9 Source: 0.0 0.0 Department 2009 2012 2014 2016 of Statistics, Urban areas Rural areas Poverty rate Malaysia, 2017
TABLE 4.2: SABAH MEAN MONTHLY HOUSEHOLD INCOME, INCIDENCE OF HARDCORE POVERTY, AND GINI COEFFICIENT (2007-2018)
Mean household income Year Poverty rate (%) Gini coefficient per month (RM)
2007 2,866 19.5 0.450
2009 3,102 19.7 0.453
2012 4,013 8.1 0.428
2014 4,879 4.0 0.387 Source: Department of Statistics, 2016 5,354 2.9 0.402 Malaysia, 2017
100 Among the states, Sabah had recorded the highest poverty rate in 2007, which was at 19.5 percent. Poverty is about not having enough money to fulfil basic needs, including food, clothing and shelter (housing). The World Bank Organization defines poverty as involving hunger and lack of shelter, not being able to see a doctor, not having access to school and not having a job. Poverty can be measured by looking into social indicators such as education, health, access to services, vulnerability and social exclusion. The SDC initiative has clearly achieved the objective of reducing poverty to less than five percent by 2025, ahead of schedule.
During the past six years, it is undeniable that SDC projects in high-impact sectors of Sabah had been having a significant impact on the state’s economic growth, realised improvement in social well-being, created more job opportunities, reduced poverty and the unemployment rate, and increased household income. Poverty eradication makes up one of the main objectives of the SDC initiative, and the approach taken is different from most other poverty alleviation initiatives established earlier. Through SDC, poverty reduction efforts have a greater focus on regional economic development, while integrating elements of investment and entrepreneurship.
The Keningau Integrated Livestock Centre had introduced job opportunities in the promising livestock industry for rural folk located in the interior of Sabah
101 4.3 INVESTMENT PERFORMANCE
In terms of investment, SEDIA has implemented proactive measures during the Second Phase to encourage both domestic and foreign investment, as well as developing Small and Medium industries (SMIs) in SDC-focused sectors. This has continued during the Third Phase of SDC (2016–2025) which is the expansion phase. Cumulative committed investment in SDC as at December 2018, as shown in TABLE 4.3 and CHART 4.7, amounted to RM166.84 billion, while realised investment amounted to RM81 billion.
TABLE 4.3: SDC CUMULATIVE COMMITTED AND REALISED INVESTMENT (2008-2018)
Committed Realised
Year Cumulative Cumulative Investment Investment investment investment (RM billion) (RM billion) (RM billion) (RM billion) 2008 11.87 11.87 0.92 0.92
2009 7.68 19.55 0.49 1.41
2010 21.81 41.36 4.54 5.95
2011 77.41 118.77 1.55 7.5
2012 4.46 123.23 10.63 18.13
2013 4.75 127.98 7.73 25.86
2014 10.13 138.11 24.89 50.76
2015 15.36 153.45 4.56 55.31
2016 5.77 159.22 5.01 60.32
2017 5.78 165.00 5.77 66.09 Source: 2018 1.84 166.84 14.91 81.00 SEDIA, 2018
Under the SDC Blueprint, the investment target was set at RM77.5 billion by 2020. While the Cumulative Committed Investment target has been achieved ahead of schedule, the Cumulative Realised Investment in 2018 at RM81 billion had already surpassed the investment target.
102 CHART 4.7: SDC CUMULATIVE INVESTMENT (2008-2018)
Source: SEDIA, 2018
Courses in agro-downstream activities are regularly held at the Sabah Agro-Industrial Precinct, and registration is open to all Malaysians residing in Sabah
103 4.4 DEVELOPMENT PERFORMANCE OF PHYSICAL PROJECTS
Sabah Development Corridor projects comprise of several publicly funded flagship projects secured through development allocation, as well as high-impact projects by the private sector, including under Public-Private Partnerships (PPPs).
In terms of development expenditure performance, SEDIA had expended 98.44 percent of the total allocation received cumulatively during the Ninth (9MP), Tenth (10MP) and 11MP, as at December 31, 2018. This expenditure has no doubt added further momentum to the overall economic growth through spillover effects from the implemented projects (refer to TABLE 4.4) (see also TABLE 4.5 for the list of Federal government-funded SDC projects).
TABLE 4.4: SDC PROJECTS FINANCIAL PERFORMANCE UNDER THE MALAYSIA PLANS (MPs) AS AT DECEMBER 31, 2018
Allocations Expenditure Remaining % MP Year (RM)
9MP 2010 919,000,000 919,000,000 0 100%
2011 263,950,000 258,190,673 5,759,327 97.82%
2012 230,408,500 224,518,060 5,890,440 97.44%
10MP 2013 186,900,000 172,199,561 13,479,640 92.13%
2014 115,500,000 100,500,000 15,000,000 87.01%
2015 173,420,992 168,002,589 2,220,595 96.88%
2016 159,186,096 137,397,057 2,997,693 86.31% 11MP 2017 241,100,000 153,772,231 25,429,042 63.78%
2018 92,034,263 125,666,374 (33,632,111) 136.54% Source: SEDIA, Total 2,381,499,851 2,344,355,225 37,144,626 98.44% 2018
From TABLE 4.5, it can be seen that most of the feasibility studies, research and training projects had been carried out and completed. In terms of development projects, all of 9MP projects had been completed. Some 10MP projects had been rolled over into 11MP.
SDC projects under 11MP include “Upgrading Sapangar Bay Container Port”, “Free Economic Zone Masterplan Study”, “Air Freight Logistics and Aviation Hub Masterplan Study”, “Construction of Palm Oil Jetty at POIC Sandakan”, "Construction of Tuaran Sungai Damit Bridge”, Phase 2 of “Creative Content Incubator Projects” and Phase 4 of Sabah Agro- Industrial Precinct.
104 TABLE 4.5: FEDERAL GOVERNMENT-FUNDED PROJECTS UNDER SDC AS AT DECEMBER 31, 2018
Sector Type of project Name of project Status (Completed/ In progress) Tourism Feasibility studies, Impact assessment of palm oil plantations Completed research and training and mills on quality of rivers projects Kajian kemungkinan pembinaan Jalan Completed Serusop-Kelawat, Kota Belud Kajian pelan pengurusan lokaliti stesen dan Completed hub-stesen di Taman Banjaran Crocker Kajian pelan induk pelancongan bagi Completed kawasan persisiran pantai dari Tuaran ke Kota Belud Kajian pelan pengurusan Taman Pulau Completed Penyu Kajian alternatif bekalan tenaga elektrik ke Completed Taman Tunku Abdul Rahman Kajian alternatif bekalan air bersih ke Taman Completed Tunku Abdul Rahman Kajian peningkatan air panas di Poring Hot Completed Springs, Ranau Kajian pembentukan “Wildlife Corridor” Completed menghubungkan Taman Kinabalu dan Taman Banjaran Crocker Kajian pengurusan Taman Pulau Tiga Completed Physical projects Rekreasi hutan dan eko pelancongan – Completed Menaiktaraf/Penyelenggaran/Balikpulih kawasan pelancongan di Hutan Simpan Kebun Cina Projek peningkatan kemudahan Completed pelancongan (Tenom, Tambunan, Nabawan dan Keningau) Pembangunan Pusat hub repository Completed maklumat koleksi budaya dan saintifik Muzium Sabah Penaikan taraf pameran tetap muzium Completed Sabah SDC – Cadangan perumahan rakyat di Kg. Design Completed Gusi, Kinarut Agriculture Feasibility studies, Taman Kekal Pengeluaran Makanan Sg. Completed research and training Koyah, Kinabatangan projects Taman Kekal Pengeluaran Makanan Completed Mandalipau, Papar Taman Kekal Pengeluaran Makanan Sg. Completed Lokan, Kinabatangan Taman Kekal Pengeluaran Makanan Completed Langkawit, Papar Biomass policy Completed Physical projects Projek khas tanam baru dengan getah Completed di kawasan termundur Semenanjung Bengkoka, Pitas
105 CONTINUED
Sector Type of project Name of project Status (Completed/ In progress) Tanam baru getah berkelompok dengan Completed klon lateks balak Pembinaan jalan pertanian di beberapa Completed daerah (21 sub-projek) Projek Agropolitan Pitas In progress Projek Agropolitan Kemabong Completed Keningau Integrated Livestock Centre Completed (KILC) Projek Agropolitan Beluran Completed Projek Agropolitan Tongod Completed Projek Mini Estet Sejahtera (MESEJ) Completed Sabah Agro-Industrial Precinct (SAIP) In progress Manufacturing Feasibility studies, SDC – Pembesaran pelabuhan kontena In progress and logistics research and training Sapangar (1.25 juta TEU/tahun) projects SDC – Kajian pelan induk untuk hab Completed penerbangan dan logistic fret udara di Sabah Physical projects Projek Kelompok Industri Berasaskan Completed Kelapa Sawit (Lahad Datu), Fasa 2 Projek Kelompok Industri Berasaskan In progress Kelapa Sawit (Sandakan) Kompleks mini Ko-Nelayan, Kuala Penyu Terminated Menaiktaraf kawasan persekitaran Pusat In progress Bandaraya Kota Kinabalu Pengorekan dasar laut – Laluan masuk ke Completed kawasan pelabuhan, jeti minyak dan POIC Sandakan Pembinaan Jalan Tongod-Pinangah Completed Menaiktaraf Jalan Labuk, dari KM15 ke Completed KM26 (11 km), Sandakan Pembinaan jalan dua hala dari UiTM ke Completed Sapangar Bay Container Terminal (3 km), Kota Kinabalu SDC – Pembinaan jeti minyak sawit di POIC In progress Sandakan SDC – Pembesaran Pelabuhan Kontena In progress Teluk Sapangar SDC – Projek pembinaan jambatan pekan In progress Tuaran-Sungai Damit, Jalan Pekan Tuaran, Tamparuli, Tuaran
106 CONTINUED
Sector Type of project Name of project Status (Completed/ In progress) Research and Hutan Bukan Kayu – Penyelidikan dan Completed training projects pembangunan (R&D) Social development BCIC (Bumiputera Completed Commercial and Industrial Community) Physical projects Perhutanan masyarakat Completed Penyediaan infrastruktur bagi projek Completed Sandakan Education Hub Projek pembiakan Badak Sumatra di negeri Completed Sabah Pusat inkubator pembangunan kandungan Completed kreatif
Source: SEDIA, 2018
4.4.1 Keningau Integrated Livestock Centre
In the hinterland, the Keningau Integrated Livestock Centre (KILC) is a State Government initiative to establish an integrated livestock production area, with the main objective of producing sufficient beef, fresh milk as well as dairy and meat products to meet domestic demand, with the long-term objective of exporting surplus produce, in the form of frozen meat, milk or processed products.
SEDIA has overseen the operations and management of KILC since taking over operations from Sawit Kinabalu in 2014, and has seen to the consistent increase in dairy milk production (as shown in CHART 4.8). Milk production further increased with the addition of 200 New Zealand Holstein dairy breeds in January 2016. As at December 31, 2018, the cattle population comprised of 636 cows, of which 67.5 percent are producing milk. The average milk production per cow reached over 15.9 litres daily, with KILC producing a daily total at over 6,800 litres. The project is currently the second largest milk production farm in Sabah, and SEDIA continues to manage the KILC and ensure all requirements and needs are met in order to achieve the target quality and results.
107 CHART 4.8: KENINGAU INTEGRATED LIVESTOCK CENTRE COW AND MILK STATISTICS
Source: SEDIA, 2018
4.4.2 Sabah Agro-Industrial Precinct
Located in Kimanis, in the district of Papar, the Sabah Agro-Industrial Precinct (SAIP) is one of the SDC flagship projects that will develop new sources of economic growth within the agriculture sector, especially in the agri-biotech sub-sector. The technology precinct serves as an enabler and platform for the development of the agro-based industry, focusing on food and specialty crops as well as natural products. It also provides incubator support facilities for the creation of local agri-entrepreneurs, and is one of the key elements in enabling rural communities to move into a high-income economy.
The year 2018 had seen a more intensified development and operations at SAIP. Phase four of SAIP development had commenced, and is expected to complete in July 2019. This phase involves the construction of a Cosmetics and Personal Care Manufacturing Facility which will have Good Manufacturing Practices (GMP) and Halal certification, 20 units of SME lots, a storage building, and net houses. The development of phase three of SAIP, which houses a multipurpose hall, an auditorium and office/exhibition areas, is ongoing as per schedule.
Throughout the year, testing and commissioning (T&C) of all installed machines and equipment had been successfully carried out, and KTMD staffs tasked with handling the machines have been given thorough training by equipment suppliers. Standard Operating Procedures (SOP) have been made available, and Safe Operating Procedure guidelines were also prepared, in compliance with the Occupational Safety and Health Act 1994.
108 In line with its purpose to serve as an incubator for the creation of local agri-entrepreneurs, priority is placed on assisting SAIP incubatees and government agencies with their products development including R&D. TABLE 4.6 outlines the types of services and facilities used by the entrepreneurs, while TABLE 4.7 tabulates the various product types submitted for analysis. SAIP has thus far benefited 268 local entrepreneurs in Sabah as at December 2018. Visitors from public and private sectors, including students, NGOs and interested individuals, are welcome to visit SAIP facilities, learn of the programmes and services offered, and also gain exposure on agro-processing technology. TABLE 4.8 outlines SAIP visitor statistics.
TABLE 4.6: UTILISATION OF SAIP LABORATORY SERVICES AND COMMON FACILITIES (AS AT DECEMBER 2018)
Type of services and facilities provided Usage requests
Quality control 16
Chemical analysis 40
Nutritional labelling 91
Plant tissue culture 13
Machinery and equipment use 63
Technical advice 45 Source: SEDIA, Total 268 2018
TABLE 4.7: TYPES OF PRODUCTS SUBMITTED FOR ANALYSIS (AS AT DECEMBER 2018)
Product types No. of submissions
Food products 91
Food additives -
Cosmetics and personal care products 23
Plant materials 24
Others 5 Source: SEDIA, Overall total 143 2018
109 TABLE: 4.8: SAIP VISITOR STATISTICS (DURING 2018)
Month Number of Visitors January 6 February 6 March 41 April 37 May 3 June 43 July 0
August 9 September 17 October 212
November 99
December 2 Source: SEDIA, Total 475 2018
4.4.3 Palm Oil Industrial Cluster (Lahad Datu)
Sabah’s strategic location and abundant supply of natural resources have made the state a major palm oil trading centre and the biggest palm oil producer in Malaysia today. Currently, most of Sabah’s palm oil exports are primary products such as crude palm oil (CPO) and palm kernel oil (PKO), which had been facing growing competition from other low-cost palm oil-exporting nations. Sabah must progress beyond exporting CPO and PKO, and venture into higher value-added activities. In line with this, the State government had introduced the palm oil industrial cluster (POIC) concept, based on industrial clustering where a set of inter-linked activities comprising industries, suppliers, critical support services, requisite infrastructure and institutions that are inter-dependent are located in a defined geographical space.
POIC Lahad Datu, which is managed by POIC Sabah Sdn. Bhd., is located in south-eastern Sabah. Along with Sawit POIC, it is a model project that entrenches Malaysia’s global status in the palm oil industry. Strategically located in the oil palm belt of Sabah, its proximity to major palm oil plantations in neighbouring Indonesia’s Kalimantan provinces (Malaysia and Indonesia) combine to produce some 80 percent of the global palm oil output), and lauric oil production areas in the Southern Philippines, potentially making it the international focal point for the vegetable oil-based industries.
A container jetty handling facility was completed on April 30, 2018, and was commissioned for operation in the fourth quarter of the year. As at 2018, RM3.459 billion in total investment had been generated through POIC Lahad Datu, and 2,390 jobs were created.
110 4.5 HUMAN CAPITAL AND ENTREPRENEURSHIP DEVELOPMENT
4.5.1 Agro-SAIP Training Programme
The Agro-SAIP training programme is aimed at providing for, and empowering agri- entrepreneurs by giving the necessary exposure and transfer of knowledge especially on the processing of agri-food and Specialty Natural Products (SNPs). Between 2012 and 2018 (refer to TABLE 4.9 and TABLE 4.10), SEDIA had organised a total of 36 courses with a cumulative total of 2,021 participants. The courses organised covered themes such as virgin coconut oil processing, CEF, fisheries and aquaculture, agri-food, essential oils, honey bee farming, and bird nest farming and processing, as well as business plan development and e-commerce. SEDIA cooperates with several agencies such as MARDI, SME Bank, the Sabah Department of Veterinary Services, and the Department of Agriculture in initiating these training programmes.
TABLE 4.9: SUMMARY OF COURSES UNDER THE AGRO-SAIP PROGRAMME (2012-2018)
Year Number of courses Number of participants
2012 6 463
2013 8 346
2014 5 312 2015 4 263 2016 4 144
2017 5 212 2018 4 281 Source: SEDIA, Total 36 2,021 2018
TABLE 4.10: LIST OF AGRO-SAIP COURSES AS AT DECEMBER 2018
Date Course Title No. of participants September 3, 2012 Pharmaceutical herbs industry 34
September 4, 2012 Business plan workshop (with SME Bank) 24
October 1–2, 2012 Swiftlet rearing and bird nest processing industry 155 October 3, 2012 Business plan workshop (with SME Bank) 41 December 3–4, 2012 Agro-food industry 102 December 5–6, 2012 Agro-organic industry 107 January 29, 2013 Bioscience and biotechnology industry 33 January 30, 2013 Business plan workshop (with SME Bank) 37
111 CONTINUED
May 21, 2013 Swiftlet rearing and bird nest processing industry (follow-up 36 course) June 25, 2013 Fisheries and aquaculture industries 72 August 27, 2013 Neutraceutical industry: Potential of soursop and watermelon 50 October 22, 2013 Essential oils and aromatic plants industry 51 October 29, 2013 Business plan workshop (with SEDIA IBDD) 38 October 30, 2013 Workshop on preparations for cash management and 29 bookkeeping (with SEDIA IBDD) March 11, 2014 Introduction and industry opportunities for controlled 65 environment farming (CEF) May 20, 2014 Introduction and industry opportunities for plant seed 68 production September 23, 2014 E-commerce business and marketing 49 September 30, 2014 Crop post-harvest handling technology 76 October 29, 2014 Outreach awareness/dialogue programme – Financing for 54 SMEs in SDC (with SEDIA IBDD) June 16, 2015 Commercial honey farming 66 August 26, 2015 Processing technology and applications for VCO 63 December 1, 2015 Packaging and labelling for agriculture and food production 71 December 2, 2015 Introduction and industry opportunities for controlled 63 environment farming (CEF) March 22, 2016 Establishing online shopping 6 November 29, 2016 Introduction and industry opportunities in agro-food 41 November 30, 2016 Introduction and industry opportunities in planting Saba 59 bananas, pineapple and ginger December 1, 2016 Introduction and industry opportunities for controlled 38 environment farming (CEF) October 17, 2017 Hands-on training on marketing through social media 30 October 19, 2017 Hands-on training on mushroom farming 31 October 31, 2017 Introduction and industry opportunities in the coconut 57 industry November 1, 2017 Introduction and industry opportunities in planting Saba 64 bananas, pineapple and ginger November 27, 2017 Entrepreneurial opportunities in livestock downstream 30 industries May 15–16, 2018 Introduction and industry opportunities in stingless bee 70 honey farming and processing August 8, 2018 Product packaging and labelling 78 September 12, 2018 Digital entrepreneur: Marketing and advertisement through 46 social media October 30–31, 2018 Introduction of Swiftlet farming and bird’s nest industry 87 opportunities Total Total 2,021
Source: SEDIA, 2018
112 4.5.2 SME Incubation and Accelerator programmes
In order to further develop entrepreneurs in the state, especially bumiputera entrepreneurs through SDC, SEDIA had offered local SMEs and start-ups the opportunity to register for SEDIA and TERAJU SME Incubation and Accelerator programmes as well as facilitation grants meant for bumiputera entrepreneurs. As at December, 2018, there have been 255 people from six regions registered in the SDC Incubation programme, of which 153 participants received approval for funding. For the Accelerator programme, four projects have been approved. CHART 4.9, CHART 4.10, CHART 4.11, CHART 4.12, and CHART 4.13 show the current SDC SME programmes performance.
CHART 4.9: GRANT ALLOCATION (COM- CHART 4.10: INCUBATION BY SECTOR MITTED AND DISBURSED) (RM MILLION)
CHART 4.12: INCUBATION APPROVAL CHART 4.11: INCUBATION PARTICIPATION AND DISBURSEMENT
CHART 4.13: JOB CREATION
Source for Chart 4.9, Chart 4.10, Chart 4.11, Chart 4.12, Chart 4.13: SEDIA, 2018
113 Feature: SDC SME Incubation Participants
Participants of the SDC SME Incubation programme are divided into groups from Kimanis, Sipitang, Sandakan, Kota Marudu, Tambunan and Tawau, based on the locations of their respective Gerak IKS SDC roadshow registration, while also ensuring that the various regions of Sabah are represented. Though participating entrepreneurs are teamed with fellow participants from the same region, each regional group has demonstrated a diverse range of entrepreneurial ideas across different industries.
With assistance from SDC SME development initiatives, entrepreneur Joardy Mardeko expand- ed his business from a makeshift roadside stall to several mobile food and beverage outlets
Joardy Mardeko is the founder of Anchor Unicorn Sdn Bhd, and has established a business that offers western-local fusion cuisine through his food truck. Having joined the SDC Ex-Situ Incubation programme registration at Sandakan in 2016, Joardy was able to pursue his goal of expanding his food and beverage (F&B) business. From running a makeshift roadside stall, he then began a mobile F&B outlet, and has operated in various locations throughout Sabah, from Kinabatangan to Sandakan and was even one of the food vendors during the 10th Year SDC Anniversary Carnival in Kota Kinabalu.
Meanwhile, Mohamad Rizki bin Nadda of Rizki Agrofarm Sdn Bhd had made use of the assistance available through the SDC SME Incubation programme to expand his duck farm and also begin salted egg production. Prior to his admission into the programme, Rizki reared a thousand ducks on a dirt plot measuring 30x100 feet. With the assistance from SEDIA, he was able to pave his farm area and install a fixed roof, while also doubling the amount of ducks he rears. The programme also afforded him access to expertise and machinery that led him to sell salted duck eggs.
114 From Kudat, entrepreneur Jalimah binti Majimil and her husband has been producing virgin coconut oil since 2009 but were unable to expand their business due to a lack of capital and know-how. Their business had actually already experienced moderate success, but support was sorely needed in order for them to keep up with the ever increasing demand. With the funding received through the incubation programme, Jalimah was able to upgrade her physical premises as well as augment her business with the necessary machinery. Where previously she was only able to produce 10–20 litres a day, that figure has now risen to 30–50 litres daily.
The successful local entrepreneurs produced through the incubation programme also includes Mohd Dirza bin Mohd Ramli. Through his company Ittihad Worldwide Resource Sdn Bhd, Dirza conducts open fertigation agriculture. Support from SEDIA had allowed this entrepreneur to start his business and prepare his land for the planting of various crops, starting with Bara birdseye chillies and cucumbers. As at December 2018, Dirza has planted 13,872 polybags of chillies and 1,632 polybags of cucumbers.
Successful applicants into the programme are not without young entrepreneurs, such as Choo Hou Xiean Michael Undang. In entering the programme, he had sought to develop his products which are snakegrass and pegaga teas, having grown both plants on a small scale since 2015. Apart from funding to acquire machinery and ingredients, and skilled advisory to develop his business like most other participants, this entrepreneur also made use of the Controlled Environment Farming available at SAIP, Kimanis to plant his crops.
Entrepreneur Choo Hou Xien Michael Undang pouring a sample of his snakegrass tea for Sabah Deputy Chief Minister Datuk Seri Panglima Wilfred Madius Tangau
115 4.5.3 TERAJU@SDC Programme
SEDIA also serves as the facilitator and co-ordinator for TERAJU programmes in SDC, which currently comprises of the Facilitation Fund and Program Syarikat Bumiputera Berprestasi Tinggi (TERAS). TERAJU was established, among others, to drive economic progress and encourage bumiputera entrepreneurs participation, introduced specialised programmes to provide bumiputera entrepreneurs with business opportunities and financing, with the TERAS programme as the main initiative.
A satellite office known as TERAJU@SDC is located at Wisma SEDIA, to facilitate reaching out to Sabah bumiputera entrepreneurs. As at December 2018, the Facilitation fund committee had approved 75 projects throughout the 2012-2018 period which included project development costs of up to RM1.553 billion with financing of RM187.12 million, as shown in TABLE 4.11.
TABLE 4.11: APPROVED FACILITATION FUND UNDER TERAJU@SDC (2012-2018)
Project Eligible project Project Approved Distribution Year development cost cost total (RM million) (RM million) (RM million) (RM million) 2012 2 70.21 61.86 9.19 -
2013 8 182.08 165.25 18.55 - 2014 18 433.19 374.38 51.94 3.61
2015 9 114.16 95.03 12.72 8.89
2016 18 355.66 331.44 44.68 12.04
2017 15 246.96 215.34 31.52 24.26
2018 5 150.94 127.50 18.52 15.42 Source: Total 75 1,553.20 1,370.80 187.12 64.22 SEDIA, 2018
From the distributed amount, property development, and oil and gas are the sectors that received the most funds with 19 beneficiaries each, followed by business services (11), and so on. CHART 4.14 shows the breakdown of the Facilitation fund distribution based on sectors. In terms of location (refer to CHART 4.15), recipients from Kota Kinabalu recorded the highest participation with 24 recipients, followed by 12 recipients from Tawau, nine recipients from Labuan, six from Penampang, five from Tuaran, and four from Semporna. Other localities each recorded one to two recipients.
116 CHART 4.14: FACILITATION FUNDS CHART 4.15: FACILITATION FUNDS DISTRIBUTION BASED ON SECTORS AS AT DISTRIBUTION BASED ON RECIPIENTS' DECEMBER 2018 LOCATION AS AT DECEMBER 2018
In addition, a total of 51 companies had been approved and given the TERAS Company status under the TERAS programme during the 2012–2017 period. CHART 4.16 shows the breakdown of companies that succeeded in receiving the TERAS status, based on sectors.
CHART 4.16: BREAKDOWN OF TERAS STATUS COMPANIES BASED ON SECTORS (2012-2018)
Source: SEDIA, 2018
Source for Chart 4.14, Chart 4.15, Chart 4.16: SEDIA, 2018
117 4.5.4 SEDIA Student Internship Opportunities
Internship programmes are among SEDIA’s ongoing initiatives to provide tertiary education students with opportunities for practical work environment exposure. The internship furnishes students with additional skills and knowledge, as well as increased competitiveness to survive and excel in their later careers. Internship programmes were initiated in 2010, a year after the establishment of SEDIA, and commenced with four interns from the Graduate Employability Management Scheme, later followed by students from universities and other education institutions.
As at December 2018, a total of 139 undergraduates from diverse disciplines and universities, polytechnics and colleges have undergone training at SEDIA. They have been exposed to and experienced various scopes of work, such as development planning, project management, human resources, business development and investment, marketing, entrepreneurship as well as technology related to agro-industries, pharmaceuticals, and even livestock and farming. TABLE 4.12 breaks down the internship figures by year and education institutions.
TABLE 4.12: STUDENT INTERNSHIP AT SEDIA (2010-2018)
Institutions 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total GEMS 4 3 3 10 KOLEJ 2 2 VOKASIONAL MICET 1 1 NIOSH 1 1 POLITEKNIK 1 12 13 TPM 1 1 UCSF 1 1 UKM 2 2 UMP 1 1 UMS 1 4 1 2 3 16 15 42 UMT 3 1 4 UNI. OF BATH 1 1 (UK) UNIMAS 2 3 2 7 UNITAR 1 3 5 1 2 2 14 UPM 1 8 9 UTHM 4 4 UTM 2 2 4 UUM 2 2 UiTM 5 2 4 6 17 Source: ZSU 3 3 SEDIA, Total 4 1 13 12 10 9 6 37 47 139 2018
118 The interns are placed at three different offices, which are Wisma SEDIA, the Sabah Agro- Industrial Precinct, and Keningau Integrated Livestock Centre. Their placements are based on their respective education background, related discipline, and the scope of work agreed between SEDIA and the supervisors prior to their registration.
Most of the students enrolled in the internship programmes are from the undergraduate degree level, but there are sizeable numbers from diploma and certificate programmes. The average duration of internship is around three months, but there have been occasions whereby SEDIA accepts six-month internships, depending on any given institution’s request.
In certain circumstances, the interns are permitted to further extend their training period by means of applying for and obtaining approval from the SEDIA management. Through the internship initiatives, SEDIA had later recruited several students to be absorbed into the SEDIA workforce, as they had shown suitability to their given roles as well as demonstrated excellent performance and commitment.
An intern is seen assisting at a SEDIA booth during an event
Source: SEDIA, 2018
119 4.6 CONCLUSION
The development of Sabah through initiatives in SDC had shown positive performance and is on the right track. The regional economic corridors will continue to play an important role in the growth and development of Malaysia, and given the changing domestic and global economic landscapes, the corridor authorities including SEDIA will seek to ensure that the direction, strategies and initiatives are in line with national socio-economic development goals as well as being responsive to global challenges.
Effective policies and initiatives implemented need 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 a balanced development in Malaysia as expressed in the Mid-Term Review of the Eleventh Malaysia Plan.
During the Third Phase of SDC, SEDIA places greater emphasis on efforts that can enhance global connectivity, business activity and entrepreneurship. Efforts will be directed towards enhancing the efficiency of the logistics sector by improving infrastructure and integrating land, sea and air services, as well as ICT communications.
The economic drivers, viz agriculture, manufacturing, tourism, logistics, and human capital, will continue to be emphasised, while new emerging sectors in Sabah such as aerospace and automotive industries would be seriously considered in the SDC Blueprint v.2.0, especially with the application of Industry 4.0 through the national Industry4WRD policy. Sabah too can play a role in realising Malaysia to be an entrepreneurial nation, as a strategic partner for smart manufacturing and related services in the Asia Pacific basin, which is fast becoming a primary destination for hi-tech industries and a total solutions provider for advanced technology.
With the right fundamental infrastructure development, economic development, as well as human capital and entrepreneurship development in place, the SDC initiatives will build upon the state’s holistic development to realise Sabah as a developed state in Malaysia by the year 2030, and achieve the targets as laid out in the SDC Blueprint by 2025.
120 The Mid Term Review of the Eleventh Malaysia Plan
The Sabah State Budget 2019
121 CHAPTER 5 FINANCIAL REPORT
5.1 STATEMENT OF CORPORATE GOVERNANCE 5.2 THE AUTHORITY 5.3 AUTHORITY MEETINGS 5.4 SEDIA COMMITTEES 5.5 ACCOUNTING AND AUDIT 5.6 INTERNAL AND EXTERNAL CONTROLS AND COMPLIANCE 5.7 ANNUAL FINANCIAL REVIEW 5.8 STATEMENT BY THE MEMBERS 5.9 STATUTORY DECLARATION BY THE OFFICERS PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT 5.10 STATEMENT OF FINANCIAL POSITION 5.11 STATEMENT OF COMPREHENSIVE INCOME 5.12 STATEMENT OF CHANGES IN EQUITY 5.13 STATEMENT OF CASH FLOWS 5.14 NOTES TO THE FINANCIAL STATEMENTS APPENDIX AUDITOR GENERAL'S REPORT ACCOUNTABILITY INDEX CERTIFICATE MS ISO CERTIFICATE ANNIVERSARY CONGRATULATORY MESSAGES
122 123 5.1 STATEMENT OF CORPORATE GOVERNANCE
The Statement of Corporate Governance sets out the framework and process through which Members of Sabah Economic Development and Investment Authority (“The Authority”) and the Management of Sabah Economic Development and Investment Authority (“SEDIA Management”) ensure that the operational policies and procedures are in accordance with the prevailing laws, rules, regulations and best practices.
Sabah Economic Development and Investment Authority (“SEDIA”) is entrusted as a One-Stop Authority to drive the Sabah Development Corridor (“SDC”), with the primary responsibility to plan, co-ordinate, promote and accelerate the development of SDC.
Section 4, the Sabah Economic Development and Investment Authority Enactment 2009 (“SEDIA Enactment”) stipulates that the Yang Di-Pertua Negeri may, from time to time, determine by notification in the gazette, the project or projects over which, the Authority shall perform its function under this Enactment and such projects shall be collectively known as the “Sabah Development Corridor”.
5.2 THE AUTHORITY
The Authority is the highest decision-making body of SEDIA. It is governed by its Members under the Chairmanship of the Chief Minister of Sabah cum Minister of Finance.
Members of the Authority during the year are:
1. Y.A.B. Datuk Seri Panglima Haji Mohd Shafie bin Haji Apdal - Chairman (Chief Minister and Finance Minister of Sabah with effect from 12th May 2018) 2. Y.B. Tan Sri Datuk Sri Panglima Musa Haji Aman - Chairman (Retired from office as Chief Minister and Finance Minister of Sabah with effect from 11th May 2018) 3. Y.Bhg. Tan Sri Datuk Seri Panglima Joseph Pairin Kitingan – Deputy Chairman I (Resigned with effect from 24th April 2018) 4. Y.Bhg. Datuk Peter Pang Eng Yin – Deputy Chairman II (Resigned with effect from 27th May 2018) 5. Y.Bhg. Datuk Ahmad Badri bin Mohd Zahir - Member (Secretary General of Treasury, Ministry of Finance, Malaysia appointed with effect 1st December 2018) 6. Y.Bhg. Dato’ Saiful Anuar bin Lebai Hussein - Member (Secretary General of Ministry of Economic Affairs, Malaysia appointed with effect 1st December 2018) 7. Y.B. Datuk Seri Panglima Haji Hashim bin Paijan - Member (State Secretary of Sabah, appointed with effect 1st December 2018)
124 8. Y.Bhg. Tan Sri Datuk Seri Panglima Dr. Wan Abdul Aziz bin Wan Abdullah - Member (Non-Independent Non Executive Chairman of Sime Darby Berhad) 9. Y.Bhg. Datuk Pengiran Hassanel bin Datuk Pg. Hj. Mohd Tahir (Permanent Secretary, Ministry of Finance, Sabah retired with effect 31st December 2018) - Member 10. Y.Bhg. Dato’ Ahmad Husni bin Hussain - Member (Director General, Public Private Partnership Unit (UKAS), Ministry of Finance Malaysia) 11. Puan Gwendolen Vui Fui Khin - Member (Director, State Economic Planning Unit, Sabah appointed with effect 1st December 2018) 12. Y.Bhg. Tan Sri Datuk Seri Panglima Dr. Ali bin Hamsa - Member (Resigned with effect 1st July 2018) 13. Y.Bhg. Tan Sri Datuk Sri Panglima Haji Sukarti Wakiman - Member (Resigned with effect 8th July 2018) 14. Y.Bhg. Tan Sri Dr. Mohd Irwan Siregar bin Abdullah - Member (Resigned with effect 11th June 2018) 15. Y.Bhg. Dato’ Nik Azman bin Nik Abdul Majid - Member (Retired with effect October 2018) 16. Y.Bhg. Datuk Osman bin Haji Jamal - Member (Retired with effect 30th March 2018)
Y.Bhg. Datuk Dr. Mohd Yaakub bin Haji Johari (JP) is the Secretary to the Authority cum President and Chief Executive of the Authority.
The Authority is committed to ensure SEDIA practices the highest standards of corporate governance, in keeping with the Malaysian Code of Corporate Governance.
The Authority provides strategic directions, reviews and approves policies and decisions for the development and promotion of the Sabah Development Corridor, ensuring proper financial administration and administrative support as well as oversees the overall management of SEDIA.
5.3 AUTHORITY MEETINGS
During the review period, the Authority met only once. The Authority Meeting was held on March 20th, 2018. The agenda and full set of papers for deliberation were distributed in a timely manner before the meeting. This was to ensure that the Members had sufficient notices and thus, were well prepared for each meeting. The meetings included the consideration of the Authority’s long-term strategy, plan, budget, monitoring of SEDIA Management and the Authority’s performance review. All issues were deliberated and decisions made were accordingly minuted.
125 5.4 SEDIA COMMITTEES
To assist the Authority in the performance of its functions and duties, under section 9 of SEDIA Enactment, the following SEDIA Committees have been established:
1. Implementation Co-ordination Committee; 2. Nomination, Establishment and Remuneration Committee; 3. Finance and Investment Committee; 4. Audit Committee; 5. Development Planning Committee; 6. Consultative Panel and Focus Group Committee; and 7. Tender and Procurement Board.
5.5 ACCOUNTING AND AUDIT
The Authority is committed to ensure that it provides a clear, comprehensive, true and fair view of SEDIA’s financial management and performance in the financial year, primarily through the financial statements and annual report. The financial statement was internally prepared and audited by the Private Audit Firm (external auditor), under statutory purview of the National Audit Department within the provisions of Audit Act 1957 [Act 62] and in line with provisions under the Sabah Economic Development and Investment Authority Enactment 2009.
5.6 INTERNAL AND EXTERNAL CONTROLS AND COMPLIANCE
Management
In the day-to-day operations, SEDIA is managed by the Chief Executive. In furtherance of the objectives and effective performance of the functions of SEDIA, the Chief Executive is assisted by the Management Members. The Chief Executive, appointed by the Authority, has management control over all the officers and staff of SEDIA. All official management decisions, operational and financial transactions are deliberated, prepared and verified by the officers and require the Chief Executive’s approval prior to being executed and allowed for publications and distributions.
Operational and Financial
For all its administrations and financial procurements and approvals, SEDIA is guided by an internal guideline as laid down under A Summary of Operating Procedures Governing the Limits of Administrative and Financial Authority for Members, Committees, Chief Executive and Management Members of SEDIA (“SEDIA LOA”). Also for service and work procurements and approvals of development projects of the Sabah Development Corridor, SEDIA is guided by the provisions of the Treasury Instructions and decided by Tender and Procurement Board of SEDIA (“SEDIA TPB”).
In addition, SEDIA is also subjected to the Financial Procedure Act 1957 [Act 61] and all other financial procedures as laid down from time to time by the State of Sabah, Federal Ministry of Finance and the Prime Minister’s Department.
The internal and external control system is provided to safeguard SEDIA from fraud, loss or failure in its functions and operations.
126 5.7 ANNUAL FINANCIAL REVIEW
Statement of Comprehensive Income
Within the financial year, SEDIA received operating grants from the Federal Government to finance its operations and commitments. Grants received for the year ended December 31, 2018 amounted to RM8,850,000. Aside from utilising the government grants to finance the operation, the Authority has approved interest income derived from development grants of RM10,455,863 (2017 : RM12,120,000) to be recognised in the income statement in the financial year 2018. The total operating budget and capital management approved by the Authority in 2018 was RM12,870,000 (2017: RM12,080,000).
SEDIA also received other income comprises of generated profits from deposits in licensed banks in Malaysia as well as tender fees, book sales, and sponsorship. During the financial year ended December 31, 2018, SEDIA recorded other income of RM9,479 (2017: RM27,246) and RM155,805 (2017: RM50,317) respectively. An increase in other income mainly due to the sponsorships received from both Government-Linked and Private Companies during the 10 years Sabah Development Corridor (SDC) Anniversary Carnival.
In year 2018, SEDIA recorded a surplus of RM6,266,329 compared to RM7,117,487 for the financial year 2017. The decrease in surplus was mainly due to the drop in interest income generated from development grants that is recognised in income statement. A reduction in development grant allocation during the year has subsequently reduced the interest received during the financial year.
Operating Expenses
Operating expenses for the year ended December 31, 2018 are as follows:
• Staff costs have been recorded as RM7,985,738 (2017: RM9,265,570). Included in the staff costs are payment of incentive in the form of staffs’ contracts and employment obligation benefit expenses for year 2018. No performance bonus were distributed during the year therefore a reduction in staff costs.
The other main components of the operating costs are as follows:
• Promotional costs in 2018 was RM1,235,934 compared to the previous year’s RM490,022. The activities consisted of Strategic Media Campaigns, participation in Overseas Trade Missions, Conferences and Seminars, and Domestic Trade Expos and Exhibitions as well as other promotional and awareness events.
• SEDIA remains committed to carrying out its functions to monitor the status of all projects under the Sabah Development Corridor. In 2018, administrative and other operating costs amounted RM3,983,146 (2017: RM4,174,484).
127 Statement of Financial Position
The main components of the Statement of Financial Position are as follows:
I. In the year 2018, SEDIA has spent RM10,260 for the procurement of computers, printers and software, and office equipment.
II. Other receivables, deposits and prepayments balance as at year end 2018 was RM10,968,660 as compared of RM8,479,326 for the previous year. Increasing number of receivables, deposits and prepayment were attributed to the Keningau Integrated Livestock Centre (KILC) project costs which is fully financed by SEDIA operating grant. As of December 31, 2018, the cumulative of net financing of Keningau Integrated Livestock Centre (KILC) was RM8,854,123 (2017: RM6,014,264).
III. Cash and bank balances for the financial year ended December 31, 2018 amounted to RM115,317,281 (2017: RM237,644,524) and is reserved for its contractual obligations under the Ninth ,Tenth and Eleventh Malaysian Plan operating expenses and liabilities.
IV. SEDIA’s fund for development expenditure as at December 31, 2018 amounted to RM76,275,462 (2017: RM206,992,026) mostly devoted to contractual obligations projects under the Ninth and Tenth and Eleventh Malaysian Plan.
V. Special programme grant’s cash balance as at December 31, 2018 amounted to RM20,202,116 (2017: RM14,568,452) for SME Facilitation Fund Programme and National Talent Enhancement Programme (NTEP), Economic Development Grant between Sabah and North Kalimantan region expenditures and commitment. VI. Other payables and accruals as at December 31, 2018 of RM829,541 (2017: RM1,946,436) consisted of contractual obligations under the operating grant to be settled after the year end.
During the financial year, SEDIA continued to intensify its activities and programmes, pursuant to its objectives to promote the Sabah Development Corridor (SDC) and to further enhance its operational capacity, capability and competency. Strategic fund management and placement of its consolidated funds had been initiated as stipulated under section 5, section 7, section 14 and section 15 of SEDIA Enactment 2009.
128 5.8 STATEMENT BY THE MEMBERS
We, Datuk Seri Panglima Haji Mohd Shafie bin Haji Apdal and Datuk Bahari Haji Hassan being two of the Members of SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY state that, in the opinion of the Members of the Authority, the financial statements which comprise of statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes to the financial statements give a true and fair view of the financial position of SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY as at 31 December 2018 and of its operating results and cash flows for the year ended on that date.
On behalf of the members,
………………………………………………………………………………...... Name : Y.A.B. DATUK SERI PANGLIMA HAJI MOHD SHAFIE BIN HAJI APDAL Position : Chairman Date : 27 Jun 2019 Place : Kota Kinabalu
………………………………………………………………………………...... Name : Y.BHG. DATUK BAHARI HAJI HASSAN Position : Member Date : 27 Jun 2019 Place : Kota Kinabalu
129 5.9 STATUTORY DECLARATION BY THE OFFICERS PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT
We, Datuk Dr. Mohd Yaakub bin Haji Johari and Yunus Gastom Abdullah, the officers primarily responsible for the financial management of SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY, do solemnly and sincerely declare that the accompanying statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, to the best of our knowledge and belief, are correct and we make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named at KOTA KINABALU, Sabah this day 23 April 2019.
...... Datuk Dr. Mohd Yaakub bin Haji Johari Yunus Gastom Abdullah
Before me,
…………………………………… Commissioner for Oaths
130 5.10 STATEMENT OF FINANCIAL POSITION as at 31 December 2018
Note 2018 2017 RM RM
NON-CURRENT ASSETS Property, plant and equipment 3 182,596 281,106 182,596 281,106
CURRENT ASSETS Other receivables, deposits and prepayments 4 10,968,660 8,479,326 Cash and cash equivalents 5 115,317,281 237,644,524 126,285,941 246,123,850
TOTAL ASSETS 126,468,537 246,404,956
EQUITY Operating fund 27,731,411 21,465,082 27,731,411 21,465,082
NON-CURRENT LIABILITIES SDC development fund 6 76,275,462 206,992,026 Special programme grant 7 20,202,116 14,568,452 Employment benefit obligations 8 1,036,392 1,036,392 97,513,970 222,596,870
CURRENT LIABILITIES Other payables and accruals 9 829,541 1,946,436 Employment benefit obligations 8 393,615 396,568 1,223,156 2,343,004
TOTAL LIABILITIES 98,737,126 224,939,874
TOTAL EQUITY AND LIABILITIES 126,468,537 246,404,956
131 5.11 STATEMENT OF COMPREHENSIVE INCOME for the financial year ended 31 December 2018
Note 2018 2017 RM RM
Revenue Operating grants received 8,850,000 8,850,000 Other income 10 10,621,147 12,197,563 19,471,147 21,047,563 Expenses Operating expenses 11 [13,204,818] [13,930,076]
Surplus for the year 6,266,329 7,117,487
5.12 STATEMENT OF CHANGES IN EQUITY for the financial year ended 31 December 2018
Operating Funds RM
As at January 1, 2017 14,347,595 Surplus for the year 7,117,487 At 31 December 2017 / 1 January 2018 21,465,082
Surplus for the year 6,266,329 At 31 December 2018 27,731,411
132 5.13 STATEMENT OF CASH FLOWS for the financial year ended 31 December 2018
Note 2018 2017 RM RM
OPERATING ACTIVITIES Surplus for the financial year 6,266,329 7,117,487 Adjustment for:
Depreciation of property, plant and equipment 108,770 108,661
Employment benefit obligations 454,325 687,487 Unrealised gain of foreign exchange - [23,433] Interest income [10,465,342] [12,147,246] [Less]/ over provision of employment benefit for the year - [100,540] [Deficit] before working capital changes [3,635,918] [4,357,584]
[DECREASE]/ INCREASE IN: Other receivables and deposits [2,489,334] [2,008,087] Other payables and accruals [1,116,895] 699,280
Cash used in operating activities [7,242,147] [5,666,391]
Employee benefit plan payments [457,278] [173,264]
Net cash used in operating activities [7,699,425] [5,839,655]
INVESTING ACTIVITIES Interest received 10,465,342 12,147,246 Purchase of property, plant and equipment [10,260] [269,278] Net cash from investing activities 10,455,082 11,877,968
FINANCING ACTIVITIES
Net SDC development fund received/[utilised] [130,716,564] 16,810,406 Net special project grant received/ [utilised] 5,633,664 [8,201,823] Net cash used in financing activities [125,082,900] 8,608,583
Net changes in cash and cash equivalents [122,327,243] 14,646,896 Cash and cash equivalents at the beginning of year 237,644,524 222,997,628 Cash and cash equivalents at the end of year 5 115,317,281 237,644,524
133 5.14 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018
1. GENERAL INFORMATION
SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY (“SEDIA”) was established under the Sabah Economic Development and Investment Authority Enactment 2009. The Sabah State Legislative Assembly had approved the instrument for the establishment of SEDIA via the adoption of Sabah Economic Development and Investment Authority Enactment 2009 on January 15, 2009.
The Enactment was assented by Tuan Yang Terutama Negeri Sabah on February 23, 2009 and gazetted on February 26, 2009, thereafter officially commenced operations on March 2, 2009.
The main activities of SEDIA are to act as the single authority empowered to promote and accelerate the development of the Sabah Development Corridor (“SDC”) into a leading economic region and choice destination for investment, work and living and to ensure that social development and sustainable development are kept as priorities whilst driving economic growth in the Sabah Development Corridor.
The total number of employees as at 31 December 2018 was 105 persons (2017: 108).
The registered office and the principal place at which business is carried out are located at Wisma SEDIA, Lot 1 & 2, Off Jalan Pintas Penampang, 88873 Kota Kinabalu, Sabah.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with Malaysian Private Entities Reporting Standard (“MPERS”) issued by the Malaysian Accounting Standard Board (“MASB”) and the requirements of the Companies Act, 2016 (Act 777) in Malaysia.
Application of Amendments to MPERS
In October 2015, MASB issued amendments to MPERS which are effective for the annual periods beginning on or after 1 January 2017. The Authority has early adopted such amendments to the MPERS for the financial year ended 31 December 2016.
(a) Basis of accounting The financial statements of SEDIA are prepared based on the historical cost except as disclosed in the notes to the financial statements and in compliance with the provisions of the Sabah Economic Development and Investment Authority Enactment 2009 and applicable approved accounting standards for private entities in Malaysia.
(b) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the statement of comprehensive income.
134 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
2. Summary of significant accounting policies(continued)
Depreciation
Property, plant and equipment purchased at a cost of RM2,000 below are expensed as incurred. Depreciation of the property, plant and equipment is provided for on a straight-line basis to write- off the cost of each asset to its residual value over the estimated useful life at the following annual rates:
Motor Vehicles 25% Computers, Printers and Software 33⅓% Furniture, Fittings, Office Equipment and Renovation 20%
Residual values, useful lives and depreciation methods of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Impairment of assets
At each balance sheet date, the Authority reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, the impairment is measured by comparing the recoverable amount with the carrying amount of an asset and when the latter amount is higher, the asset is written down to the recoverable amount. The recoverable amount of an asset is the higher of its net selling price and its value in use, which is measured by reference to discounted future cash flows.
An impairment loss is charged to the comprehensive income statement immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset. Should the impairment loss of an asset exceed its revaluation surplus, the remaining impairment loss is charged to the comprehensive income statement.
Subsequent increase in the recoverable amount of an asset if carried at cost, is treated as a reversal of the accumulated impairment loss previously recognised in the comprehensive income statement but the reversal is limited to the accumulated impairment loss previously recognized, and if carried at revalued amount, is credited directly to revaluation surplus.
(c) Other receivables, deposits and prepayments Other receivables, deposits and prepayments are carried at anticipated realisable values. Bad debts are written off in the financial year in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the end of the financial year.
(d) Other payables and accruals Other payables and accruals are stated at the amounts, which the Authority is contracted or obligated to settle plus any incidental legal expenses.
135 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
2. Summary of significant accounting policies(continued)
(e) SDC development fund Development fund is managed on behalf of, and funded by the Federal Government under the Ninth Malaysia Plan (9MP), Tenth Malaysia Plan (10MP) and Eleventh Malaysia Plan (11MP) for various projects, and used for Sabah Development Corridor Programmes in Sabah. The fund will be recognised as a liability in the balance sheet when the rights to receive the funds are approved and the funds have been received.
All receipts will be credited and all expenditures will be debited to this fund. Unutilised fund as of the balance sheet is shown as balance of the fund.
(f) Special programme grant These represent grants received from TERAJU and PEMANDU for the SME facilitation funds, National Talent Enhancement Programme (NTEP) funds, Bumiputera Entrepreneur Development Program funds and Economic Development Grant between Sabah and North Kalimantan Region. The grant will be recognised as a liability in the balance sheet when the rights to receive the grants are approved and the grants have been received.
All receipts will be credited and all expenditures will be debited to this fund. Unutilised fund as of the balance sheet is shown as balance of the fund.
(g) Interest from development fund and special project grant Interest income generated from development fund, special project grant and special programme grant is recognised as addition to the fund on time apportion basis.
(h) Income Operating grant Operating grant is recognised in the comprehensive income statement when the rights to receive the grants are approved and the grants have been received.
Interest income Interest income generated from operating fund is accrued on a time apportion basis, by reference to the principal outstanding and at the interest rate applicable.
Interest income transferred to operating fund is recognised in the comprehensive income statement when there is approval obtained from Members of Authority.
Other income Other income mainly represents sale of tender documents that is recognised when transfer of risks and rewards has been completed.
(i) Interest expense All interest and other costs incurred in connection with borrowings are expensed as incurred.
136 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
2. Summary of significant accounting policies(continued) (j) Foreign currency The financial statements of SEDIA are presented in Ringgit Malaysia, the currency of the primary economic environment in which SEDIA operates (its functional currency).
Transactions in currencies other than in Ringgit Malaysia are converted to Ringgit Malaysia at the exchange rates prevailing at the transaction dates or, where settlements have not yet been made at the end of the financial year, the assets and liabilities are converted at the approximate exchange rates prevailing at the date. All foreign exchange gains and losses are taken up in the comprehensive income statement.
The principal closing rates used in the translation of foreign currency amount are as follows:
Currencies 2018 2017 RM RM 1 British Pound 5.2532 5.4856 1 US Dollar 4.1385 4.0592
(k) Employee benefits Short-term benefits Wages, salaries, allowances, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of SEDIA. Short-term accumulating compensated absences such as paid annual leaves are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognised when the absence occur.
Defined contribution plan SEDIA is required by law to make monthly contributions to the Employees Provident Fund (“EPF”), a statutory defined contribution plan for all its eligible employees based on certain prescribed rates of the employees’ salaries. SEDIA contributions to EPF are disclosed separately. The employee’s contributions to EPF are included in salaries and wages.
The said contributions are recognised as an expense when employees have rendered service entitling them to the contributions. SEDIA has no further payment obligations once these contributions have been paid.
Defined benefit plans (Retirement Gratuity Scheme) SEDIA operates an unfunded defined benefit plan for qualifying all its employees, both permanent and under contract. Under the plans, the employees are entitled to retirement benefits of one (1) month final salary for each year of service on attainment of the mandatory retirement age of 60 or early retirement on medical grounds or passed away before attaining the retirement age however must have worked for at least 10 years in SEDIA or have completed the duration specified in their employment contracts.
137 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
2. Summary of significant accounting policies(continued)
(l) Taxation Current tax is the expected amount of income taxes payable in respect of dividend income, pursuant to the tax exemption obtained from the Ministry of Finance mentioned in Note 13 which states that all income except for dividend income is exempted from tax. It is measured using the tax rates that have been enacted at the statement of financial position date.
(m) Cash flow statement SEDIA adopts the indirect method in the preparation of the cash flow statement. Cash equivalents are short-term in nature, highly liquid investment that is readily convertible to cash with insignificant risk of changes in value.
(n) Financial instruments A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement A financial asset or a financial liability (including derivative instruments) is recognised only when the Authority becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset or a financial liability is measured at the transaction price, including transaction costs. For a financial assets or a financial liability that is subsequently measured at fair value through profit or loss, transaction costs are expensed to comprehensive income statement when incurred.
An arrangement constitutes a financing transaction, if payment is deferred beyond normal business terms. Under a financing transaction, a financial asset or a financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument as determined at initial recognition.
Subsequent measurement Debt instruments are measured at amortised cost using the effective interest method. Debt instruments that are classified as current assets or current liabilities are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, unless the arrangement constitutes, in effect, a financing transaction.
Investments in non-convertible preference shares and non-puttable ordinary or preference shares, that are publicly traded or their fair value can otherwise be measured reliably without undue cost or effort, are measured at fair value with changes in fair value recognised in comprehensive income statement. All other such investments are measured at cost less impairment.
Derivative financial instruments (other than derivatives designated as a hedging instrument) are measured at fair value and changes in fair value recognised in comprehensive income statement.
All financial assets are subject to review for impairment, except for financial assets measured at fair value through profit or loss.
138 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
2. Summary of significant accounting policies(continued) (n) Financial instruments (continued) Impairment At the end of each reporting period, financial assets that are measured at cost or amortised cost are assessed as to whether there is objective evidence of impairment. If there is objective evidence of impairment, an impairment loss is recognised in comprehensive income statement immediately.
For a financial asset measured at amortised cost, the impairment loss is the difference between the asset’s carrying amount and the present value of estimated cash flows discounted at the asset’s original effective interest rate. If such a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For a financial asset measured at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.
If, in a subsequent period, the amount of an impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed in comprehensive income statement.
Derecognition A financial asset is derecognised only when (i) the contractual rights to receive the cash flows from the financial asset expire or are settled; or (ii) the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset, including circumstances when the entity acts only as a collecting agent of the transferee, and retains no significant risks and rewards of ownership of the financial asset or no continuing involvement in the control of the financial asset transferred.
A financial liability is derecognised only when it is extinguished, i.e. when the obligation specified in the contract is discharged, is cancelled or expired. A substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
139 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
3. PROPERTY, PLANT AND EQUIPMENT
Motor Vehicles Computers, Furniture, Total Printers and Fittings, Office Softwares Equipments and Renovation
RM RM RM RM COST At the beginning of year 1,073,880 207,405 2,029,491 3,310,776 Additions - 3,100 7,160 10,260 Disposals - - - - At the end of year 1,073,880 210,505 2,036,651 3,321,036 ACCUMULATED DEPRECIATION At the beginning of year 923,185 140,976 1,965,509 3,029,670 Charge for the year 54,436 31,934 22,400 108,770 Disposals - - - - At the end of year 977,621 172,910 1,987,909 3,138,440
NET CARRYING AMOUNT At 31 December 2018 96,259 37,595 48,742 182,596
At 31 December 2017 150,695 66,429 63,982 281,106
Depreciation charge for the year ended 31 December 2017 67,058 23,632 17,971 108,661
Included in property, plant and equipment are fully depreciated assets which are still in use, with a total cost of RM2,975,938 (2017 : RM2,705,699).
4. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
2018 2017 RM RM Other receivables and prepayments 10,823,523 8,320,723 Deposits 130,402 130,402 Advances 14,735 28,201 Total 10,968,660 8,479,326
140 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
4. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (continued) Included in other receivables and prepayments are prepayments made for Keningau Integrated Livestock Centre (KILC) project amounting to RM8,854,123 (2017: RM6,014,264) which is currently being financed by SEDIA’s operating grant.
2018 2017 RM RM Balance as at 1 January (6,014,264) (4,916,075)
Income 7,380,985 6,617,820 Capital expenditure 423,000 282,279 Inventory at cost 5,259,599 3,919,230 Operation costs 4,538,245 3,211,765 Others - 302,735 Deficit during the year [2,839,859] [1,098,189] Balance as at 31 December [8,854,123] [6,014,264]
The project will subsequently be awarded to a third party. As of 31 December 2018, the project has not been awarded to any third party.
5. CASH AND CASH EQUIVALENTS
2018 2017 RM RM Cash in banks 115,315,281 237,642,524 Cash at hand 2,000 2,000 Total 115,317,281 237,644,524
141 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
6. SDC DEVELOPMENT FUND
[Restated] 2018 2017 RM RM At the beginning of year 206,992,026 190,181,620 Add : Development fund received from Federal Government 92,034,263 241,100,000 299,026,289 431,281,620 Add : Interest income 3,336,836 6,000,809 302,363,125 437,282,429 Less: Utilisation of development fund for the year [215,631,800] [218,170,403] Less: Interest income transferred [10,455,863] [12,120,000] At the end of year 76,275,462 206,992,026
7. SPECIAL PROGRAMME GRANT
2018 2017 RM RM At the beginning of year 14,568,452 22,770,275 Add : Grant received from TERAJU@SDC 25,000,000 20,000,000 Add : Grant received from TERAJU@SDC-Mgt Fund - 40,000 Add : Grant received from Economic Development Grant - 300,000 Add : Grant received from NGO Bumiputera (Entrepreneur) 1,492,500 - 41,060,952 43,110,275 Add : Interest received 424,388 188,743 41,485,340 43,299,018 Less: Utilisation of special programme grant for the year [21,283,224] [28,701,977] Less : Utilisation of interest income - [28,589] At the end of year 20,202,116 14,568,452
Special project grants consist of four types namely National Talent Enhancement Programme (NTEP grant), SME Facilitation grant and Bumiputera Entrepreneur Programme, as well as Economic Development Grant between Sabah and North Kalimantan Region. The grants are channelled through the Performance Management and Delivery Unit (PEMANDU), Unit Peneraju Agenda Bumiputera (TERAJU) and Prime Minister’s Office (PMO).
8. PROVISION FOR EMPLOYMENT BENEFIT OBLIGATIONS This represents provision for retirement gratuity schemes for employees:
2018 2017 RM RM Provision for: Retirement gratuity scheme 1,430,007 1,432,960
142 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
8. PROVISION FOR EMPLOYMENT BENEFIT OBLIGATIONS (Continued)
The maturity structure of the provisions is as follows:
2018 2017 RM RM Within one year 393,615 396,568 2 to 5 years 1,036,392 1,036,392 1,430,007 1,432,960
The amount included in the balance sheet arising from the entity’s obligation in respect of its retirement gratuity scheme is as follows:
2018 2017 RM RM Present value of defined benefit obligations 1,430,007 1,432,960
Amount recognised in the income statement in respect of the retirement gratuity scheme is as follows:
2018 2017 RM RM Current service costs 487,271 703,676
Movement in the present value of the retirement gratuity scheme in the current year are as follows: 2018 2017 RM RM At the beginning of year 1,432,960 918,737 Additions 487,271 703,676 Adjustment [32,946] [16,189] Payments [457,278] [173,264] At the end of year 1,430,007 1,432,960
The most recent actuarial valuation of employee benefit liabilities or contingent was conducted on March 1, 2018 by Actuarial Partners Consulting Sdn. Bhd. The present value of employee benefit obligations and related current service cost is measured using the projected unit credit method. The principal assumptions used for the purposes of the valuation are as follows:
2018 2017 % % Discount rate: Corporate Bond worth AA 5.40 5.40 Expected rate of salary increases 5.00 5.00
143 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
8. PROVISION FOR EMPLOYMENT BENEFIT OBLIGATIONS (Continued) The mortality rate is based on the experience of assured lives in Malaysia from 1999 to 2013. The Standard MO9903 announced as used in the insurance industry. The defect rate is 10% of the death rate. Turnover rate corresponding to the average staff turnover rate is about 2% per year for permanent staff, while contract staff considered no withdrawal.
The management uses the best estimate of expected salary workers, the remaining years of service of the appropriate discount rate from January 1, 2018 to determine current service cost. All staff has been included in the estimated cost of the current cost.
SEDIA operate unfunded retirement gratuity scheme and provision is made for benefits that eligible employees have earned in return for their service in the current and prior periods. Under this scheme, eligible employees are entitled to retirement benefits of one month salary each year of services on attainment of the retirement age of 60 or early retirement on medical grounds or passed away before attaining the retirement age given that the said employee has provided service to the Authority of 10 years. The amounts recognised in the balance sheet are determined based on the present value of amount due.
Provision for employment benefits are recognised initially on the financial year ended 31 December 2018 to take into account the amount of SEDIA commitment when services are rendered by employees during the year. Provision is calculated based on the expectation that all staff providing services until the retirement age of 60 years. Rating actual expectations may change each year based on the highest salary achievable for the current position held and discount rates. The discount rate used is 5.40 %, the yield of Government Bonds issued by Bank Negara Malaysia (BNM). During the financial year ended 31 December 2018, the number of employees included in the obligation for employee benefits totalled 105 persons.
9. OTHER PAYABLES AND ACCRUALS
2018 2017 RM RM Other payables 454,219 1,081,448 Accruals 375,322 864,988 Total 829,541 1,946,436
10. OTHER INCOME
2018 [Restated] RM 2017 RM Interest income from SDC development fund 10,455,863 12,120,000 Interest income from operation fund 9,479 27,246 Other income 155,805 50,317 Total 10,621,147 12,197,563
144 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
11. OPERATING EXPENSES
The details of operating expenses are as follows:
2018 2017 RM RM Auditors’ Remuneration 21,363 21,362 Allowances for Members and Committees of the Authority 235,136 412,160 Salaries, Allowances and Benefits 7,171,151 8,338,519 EPF, SOCSO & Pension Contribution 814,587 927,051 Rental Expenses 335,119 306,231 Utilities Charges 248,626 275,260 Printing and Stationeries 151,168 154,572 Medical and Clinical Charges 269,199 271,036 Insurance 143,104 143,658 Entertainment and Hospitality 1,379 4,972 Training and Human Capital Development 346,524 357,371 Trade Missions and Investment Promotions 100,162 120,190 Exhibitions and Road Shows 584,818 43,812 Conference and Seminars 219,170 5,000 Corporate Branding and Marketing 319,434 231,419 Sponsorships 12,350 89,601 In-House Meeting Expenses 83,583 219,814 Publications, Multimedia and Advertisements 95,306 55,585 Postage and Courier Charges 8,602 5,021 Transportation, Leasing and Vehicle Maintenance 397,040 433,125 Airfares and Outstation Transport Charges 516,359 375,948 Subsistence Allowances 82,005 99,587 Lodging and Accommodations 116,265 79,116 Upkeep Of Office Equipment, Premise and Services 297,780 283,684 Depreciation 108,770 108,661 Subscription Fees, Technical Update and ICT Expenses 300,482 222,149 Legal, Professional, Research and Consultancy Charges 106,277 149,866 License, Registration and Assessment Fees 4,304 9,082 Bank Charges and Commission 3,373 2,059 Miscellaneous Expenses 23,233 39,372 GST expenses 88,149 144,793 TOTAL 13,204,818 13,930,076
145 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
12. STAFF COSTS
2018 2017 RM RM Operating Fund: Staff Costs 6,716,826 7,651,032 EPF and SOCSO 814,587 927,051 Employment benefit obligations 454,325 687,487 7,985,738 9,265,570
13. INCOME TAX
SEDIA has obtained tax exemption under Section 127 (3) of the Income Tax Act, 1967. All income, except for dividend income is exempted from tax beginning from year assessments 2010 until 2019.
14. OPERATING LEASE COMMITMENT
SEDIA leases certain assets such as premise and office equipment. These leases are non- cancellable and expire on various dates through 2021. Future minimum annual lease payments are as follows:-
Future Minimum Lease Payments 2018 2017 RM RM As of December 31: 2018 - 182,989 2019 188,340 87,878 2020 51,460 33,883 2021 5,015 3,375 Total 244,815 308,125
15. PROJECT DEVELOPMENT COMMITMENT During the year, total allocation approved and received under the Eleventh Malaysia Plan (11MP) for SDC projects are RM92,034,263 (2017: RM241,100,000).
146 NOTES TO THE FINANCIAL STATEMENTS - 31 December 2018 (Continued)
16. PRIOR YEAR ADJUSTMENTS The prior year's adjustment was due to corrections made in the period ended December 31, 2017, namely;
i) Total interest income derived from SDC development grant for the period ended December 31, 2017 was RM6,000,809 compared to the recorded amount of RM18,148,055. The total utilization of actual SDC development grants during the period amounted to RM218,170,403 compared to the previous amount, RM230,290,403. ii) Total interest income arising from SDC development grants recognized in the comprehensive income statement as at end December 31, 2017 exceeded a record of RM27,246. This adjustment makes the actual amount of interest income recognized in the comprehensive income statement to be RM12,120,000 compared to the previous amount of RM12,147,246.
iii) Total interest income on operational grant was under recorded by RM23,562. This adjustment resulted in interest income derived from operational grant has increased to RM27,246 compared to the previous amount recorded of RM3,684 for the year ended December 31,2017.
iv) Other income of RM46,633 was also reduced by a record of RM3,684. This adjustment also led to an increase in other income to RM50,317 for the period ended December 31, 2017.
v) Overall, these adjustments have no significant impact on the presentation of the financial statements for the year ended December 31, 2017. These adjustments include Note 6 [SDC Development Fund] and Note 10 [Other Income].
17. RESTATEMENT COMPARISONS The comparison of the revised figures is to reflect changes in the presentation of the financial statements for the year ended December 31, 2017 and the prior year adjustments as described in Note 16:
[Stated [Restated] previously] 2017 2017 RM RM Note 6 : SDC DEVELOPMENT FUND At the beginning of year 190,181,620 190,181,620 Add : Development fund received from Federal Government 241,100,000 241,100,000 431,281,620 431,281,620 Add : Interest income 6,000,809 18,148,055 437,282,429 449,429,675 Less: Utilisation of development fund for the year [218,170,403] [230,290,403] Less: Interest income transferred [12,120,000] [12,147,246] At the end of year 206,992,026 206,992,026
Note 10 : OTHER INCOME Interest income from SDC development fund 12,120,000 12,147,246 Interest income from operation fund 27,246 3,684 Other income 50,317 46,633 Total 12,197,563 12,197,563
147 APPENDIX
AUDITOR GENERAL’S REPORT
LAPORAN KETUA AUDIT NEGARA MENGENAI PENYATA KEWANGAN PIHAK BERKUASA PEMBANGUNAN EKONOMI DAN PELABURAN SABAH BAGI TAHUN BERAKHIR 31 DISEMBER 2018
Laporan Mengenai Penyata Kewangan
Pendapat
Penyata Kewangan Pihak Berkuasa Pembangunan Ekonomi Dan Pelaburan Sabah (SEDIA) telah diaudit oleh wakil saya yang merangkumi Penyata Kedudukan Kewangan pada 31 Disember 2018 dan Penyata Pendapatan Komprehensif, Penyata Perubahan Dalam Ekuiti serta Penyata Aliran Tunai bagi tahun berakhir pada tarikh tersebut, ringkasan polisi perakaunan yang signifikan dan nota kepada penyata kewangan seperti dinyatakan pada muka surat 16 hingga 35.
Pada pendapat saya, penyata kewangan ini memberikan gambaran yang benar dan saksama mengenai kedudukan kewangan SEDIA pada 31 Disember 2018 dan prestasi kewangan serta aliran tunainya bagi tahun berakhir pada tarikh tersebut selaras dengan piawaian pelaporan kewangan yang diluluskan di Malaysia dan Enakmen SEDIA 2009.
Asas Kepada Pendapat
Saya telah melaksanakan pengauditan berdasarkan Akta Audit 1957 dan The International Standards of Supreme Audit Institutions (ISSAI). Tanggungjawab saya dihuraikan selanjutnya di perenggan Tanggungjawab Juruaudit Terhadap Pengauditan Penyata Kewangan dalam laporan ini. Saya percaya bahawa bukti audit yang diperoleh adalah mencukupi dan bersesuaian untuk dijadikan asas kepada pendapat saya.
Kebebasan dan Tanggungjawab Etika Lain
Saya adalah bebas daripada SEDIA dan telah memenuhi tanggungjawab etika lain berdasarkan The International Standards of Supreme Audit Institutions (ISSAI).
148 Emphasis of Matter
Tanpa menjejaskan pendapat Audit, saya ingin menarik perhatian terhadap perkara berikut:
Berdasarkan Minit Mesyuarat Keempat Belas Anggota Pihak Berkuasa SEDIA bertarikh 26 November 2013 dimaklumkan bahawa SEDIA telah memulakan operasi projek ladang Pusat Penternakan Bersepadu Keningau (KILC) pada bulan Januari 2013 untuk tempoh sementara waktu dan kos operasi dibiayai melalui perbelanjaan mengurus SEDIA. Bagaimanapun pada tarikh laporan ini, operasi projek KILC masih diuruskan oleh SEDIA dan sehingga 31 Disember 2018, operasi projek KILC mencatatkan kerugian bersih berjumlah RM8.85 juta (2017: RM6.01 juta). Keadaan ini memberi kesan kepada aliran tunai SEDIA kerana perlu menanggung kos operasi projek KILC yang beroperasi dalam kerugian.
Maklumat Lain Selain Daripada Penyata Kewangan dan Laporan Juruaudit Mengenainya
Anggota Pihak Berkuasa bertanggungjawab terhadap maklumat lain dalam Laporan Tahunan. Pendapat saya terhadap penyata kewangan SEDIA tidak meliputi maklumat lain selain daripada Penyata Kewangan dan Laporan Juruaudit mengenainya dan saya tidak menyatakan sebarang bentuk kesimpulan jaminan mengenainya.
Tanggungjawab Anggota Pihak Berkuasa Terhadap Penyata Kewangan
Anggota Pihak Berkuasa bertanggungjawab terhadap penyediaan penyata kewangan SEDIA yang memberi gambaran benar dan saksama selaras dengan piawaian pelaporan kewangan yang diluluskan di Malaysia dan Enakmen SEDIA 2009. Anggota Pihak Berkuasa juga bertanggungjawab terhadap penetapan kawalan dalaman yang perlu bagi membolehkan penyediaan penyata kewangan SEDIA yang bebas daripada salah nyata yang ketara, sama ada disebabkan fraud atau kesilapan.
Semasa penyediaan penyata kewangan SEDIA, Anggota Pihak Berkuasa bertanggungjawab untuk menilai keupayaan SEDIA untuk beroperasi sebagai satu usaha berterusan, mendedahkannya jika berkaitan serta menggunakannya sebagai asas perakaunan.
149 Tanggungjawab Juruaudit Terhadap Pengauditan Penyata Kewangan
Objektif saya adalah untuk memperoleh keyakinan yang munasabah sama ada penyata kewangan SEDIA secara keseluruhannya adalah bebas daripada salah nyata yang ketara, sama ada disebabkan fraud atau kesilapan, dan mengeluarkan Laporan Juruaudit yang merangkumi pendapat saya. Jaminan yang munasabah adalah satu tahap jaminan yang tinggi, tetapi bukan satu jaminan bahawa audit yang dijalankan mengikut The International Standards of Supreme Audit Institutions akan sentiasa mengesan salah nyata yang ketara apabila ia wujud. Salah nyata boleh wujud daripada fraud atau kesilapan dan dianggap ketara sama ada secara individu atau agregat sekiranya boleh dijangkakan dengan munasabah untuk mempengaruhi keputusan ekonomi yang dibuat oleh pengguna berdasarkan penyata kewangan ini.
Sebagai sebahagian daripada pengauditan mengikut ISSAI, saya menggunakan pertimbangan professional dan mengekalkan keraguan profesional sepanjang pengauditan. Saya juga:
a. Mengenal pasti dan menilai risiko salah nyata ketara dalam penyata kewangan SEDIA, sama ada disebabkan fraud atau kesilapan, merangka dan melaksanakan prosedur audit terhadap risiko berkenaan, dan mendapatkan bukti audit yang mencukupi dan bersesuaian untuk memberikan asas kepada pendapat saya. Risiko untuk tidak mengesan salah nyata ketara akibat daripada fraud adalah lebih tinggi daripada kesilapan kerana fraud mungkin melibatkan pakatan, pemalsuan, ketinggalan yang disengajakan, gambaran yang salah, atau mengatasi kawalan dalaman.
b. Memahami kawalan dalaman yang relevan untuk merangka prosedur audit yang bersesuaian tetapi bukan untuk menyatakan pendapat mengenai keberkesanan kawalan dalaman SEDIA.
c. Menilai kesesuaian dasar perakaunan yang diguna pakai dan kemunasabahan anggaran perakaunan dan pendedahan yang berkaitan oleh Anggota Pihak Berkuasa.
d. Membuat kesimpulan terhadap kesesuaian asas perakaunan untuk usaha berterusan oleh Anggota Pihak Berkuasa, dan berdasarkan bukti audit yang diperoleh, sama ada wujudnya ketidakpastian ketara yang berkaitan dengan peristiwa atau keadaan yang mungkin menimbulkan keraguan yang signifikan terhadap keupayaan SEDIA sebagai satu usaha berterusan. Jika saya membuat kesimpulan bahawa ketidakpastian ketara wujud, saya perlu melaporkan dalam Laporan Juruaudit terhadap pendedahan yang berkaitan dalam penyata kewangan SEDIA atau, jika pendedahan tersebut tidak mencukupi, pendapat saya akan diubah. Kesimpulan saya dibuat berdasarkan bukti audit yang diperoleh sehingga tarikh Laporan Juruaudit.
150 e. Menilai sama ada keseluruhan persembahan termasuk pendedahan penyata kewangan SEDIA memberi gambaran yang saksama.
Laporan Mengenai Keperluan Perundangan dan Peraturan Lain
Berdasarkan keperluan Enakmen SEDIA Tahun 2009, saya juga melaporkan bahawa pada pendapat saya, rekod perakaunan dan rekod lain yang dikehendaki Enakmen untuk disimpan oleh SEDIA telah disimpan dengan sempurna menurut peruntukan Seksyen 17(1) Enakmen tersebut.
Hal-hal Lain
Laporan ini dibuat untuk Anggota Pihak Berkuasa dan bukan untuk tujuan lain. Saya tidak bertanggungjawab terhadap pihak lain bagi kandungan laporan ini.
HALIMUDDIN BIN CHONGGE b.p. KETUA AUDIT NEGARA MALAYSIA
KOTA KINABALU 14 OKTOBER 2019
151 ACCOUNTABILITY INDEX CERTIFICATE
152 MS ISO CERTIFICATE
153 ANNIVERSARY CONGRATULATORY MESSAGES
154 ANNIVERSARY CONGRATULATORY MESSAGES
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