0 sabah development corridor 2008-2025 briefing eu economics & commercial counsellors ids...
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Sabah Development Corridor Sabah Development Corridor 2008-20252008-2025
BriefingEU Economics & Commercial
CounsellorsIDS Conference Room
14th May 2009
1. Key development challenges:• High cost of doing business – poor infrastructure and high freight costs• Shortage of critical mass of human capital• Highest incidence of households living in poverty
2. High cost of doing business mainly due to high shipping costs and poor infrastructure• Shipping costs: low originating cargo, low ship call frequency and double handling • Unreliable electricity supply and shortage of water supply• Poor road and rail connectivity leading to high transportation costs
3. Shortage of talents in strategic sectors; and heavy dependence on foreign labour
4. Largely rural, with a poverty rate of 23% (6.5% hardcore poor).
5. Gross Domestic Product: Sabah’s GDP of RM15.1 Bn is 7th largest in Malaysia
6. GDP per capita in 2005: RM5,100 ; Malaysian average: RM9,800
7. Monthly household income in 2004: RM2,487; Malaysian average: RM3,249
8. Unemployment is currently at 5.8%; Current workforce is 1.198 million (2006),
9. Population: 3.1 million (2006)
10. Education: 79% of persons aged 6 and over attended school (national av: 90%)
• Narrow-base of national export: too dependent on electronics, oil & gas and palm oil
• Relatively weak resource-based industries
• Widening income inequality
• Employment growth lagging behind economic growth
• Relatively weak linkage between economic growth and poverty incidence
• Lack of human capital in strategic sectors
• Heavy dependence on foreign labour in agriculture and construction
Sabah Development Corridor 2008-Sabah Development Corridor 2008-2025: 2025:
The National Context: Issues and BenefitsThe National Context: Issues and Benefits
KLSE COMPOSITE INDEX: JANUARY-DECEMBER 2008KLSE COMPOSITE INDEX: JANUARY-DECEMBER 2008
39% Decline over the period
The United Nations says “the world economy faces its worst downturn since the Great Depression... [and] expects world economic output to shrink by as much as 0.4% in 2009, due to a slump among developed countries - particularly the US and in Europe. …
“This would mark the world economy's first year of contraction since the 1930’s”
(Source: the BBC)“The eurozone economy will shrink 1.9% in 2009 and grow by only 0.4% in 2010….” (the European Commission, 2009)
WORLD ECONOMY ‘WEAKEST SINCE 30’s:
the United Nations
-
Sabah Development Corridor 2008-2025
The vision for Sabah is to be a vibrant, The vision for Sabah is to be a vibrant, economically successful and liveable stateeconomically successful and liveable state
SDC is underpinned by 3 key principles
• Capture higher value economic activities
• Promote balanced economic growth with distribution
• Ensure sustainable growth via environmental conservation
Catalysing future growth via Catalysing future growth via infrastructure as well as high infrastructure as well as high economic impact and poverty economic impact and poverty eradication projectseradication projects
Phase 1 (2008-2010)Building the foundation
for growth
Phase 2 (2011-015) Accelerating
economic growth
Higher order value-add Higher order value-add activities, the presence of global activities, the presence of global companies and a strong base of companies and a strong base of local SMEslocal SMEs
An attractive destination for An attractive destination for FDIs with strong supporting FDIs with strong supporting infrastructure, global infrastructure, global companies and knowledge companies and knowledge workforceworkforce
Phase 3 (2016-2025) Expansion
Sabah Development Corridor 29 January 2008
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• A preferred gateway for trade, investment and leisure for leading businesses and talent from around the world in key areas
• A happy and cohesive community that lives in harmony and prosperity regardless of race, language or religion
• A tech-savvy state that uses and showcases technology in enhancing quality of daily life
• A place of opportunity where residents and foreign talents find rewarding employment opportunities
• Amongst the most liveable place in Asia with culture, heritage, quality of life and clean environment
The vision for Sabah is to be a vibrant, economically successful and The vision for Sabah is to be a vibrant, economically successful and
liveable state by creating and articulating a set of 5 unique attributes liveable state by creating and articulating a set of 5 unique attributes
that will mould the future of Sabah:that will mould the future of Sabah:
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Sabah is blessed with excellent Location, Resources and Sabah is blessed with excellent Location, Resources and Bio-diversity which it can build on…Bio-diversity which it can build on…
LocationLocation
Cultural and Cultural and Bio-diversityBio-diversity
ResourcesResources
• Gateway for regional trade• Ideal for transhipment and value add for
cargo between Kalimantan–South Philippines and North Asia (China, Japan, Korea)
• Capitalise on market deregulation of AFTA
• Rich in natural resources (oil & gas, fertile agriculture land, minerals, forestry)
• Capture high value add downstream activities such as oleo chemicals, gas processing plant, oil refineries and wood based products
• Position Sabah as centre of excellence for agriculture
• Rich bio-diversity (flora-fauna and marine life)• 32 ethnic groups spawning diverse cultural
backgrounds• Capture knowledge from international
researchers • Stimulate biotech activities
Vision & Sectoral Focus
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SDC VISION To be a leading economic region
in Asia by being the preferred gateway for trade, investment and leisure
Physical infrastructure
AgricultureAgriculture:: ServicesServices:: ManufacturingManufacturing::
Sector-specific visions
Harmonious and Cohesive society
SocialSocial
EnvironmentEnvironment
Structured infrastructure
development in transportation,
utilities and communication to
enhance living standards and
enable commercial activities
Soft Infrastructure
Systematic skills upgrading of
existing workforce in key industries,
retain talented Sabahans and
targeted import of foreign talent in professional and
managerial positions
Pristine and well conserved
Confident and Independent
Highly productive
Food self-sufficiency
High value jobs
High value add
downstream
Successful pool of SMEs
Premier eco-tourism
Second home
Low cost of business
Sustainable and safe
Renowned worldwide
No Hardcore Poverty
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Characteristics of Sabah Development CorridorCharacteristics of Sabah Development Corridor
• SDC is made up of 3 sub-regions
– Western Sub-region: Kudat, Kota Belud, Tuaran, Kota Kinabalu, Penampang, Papar, Beaufort, Kuala Penyu, Sipitang
– Central Sub-region: Pitas, Kota Marudu, Ranau, Tambunan, Keningau, Tenom, Nabawan
– Eastern Sub-region: Sandakan, Beluran, Kota Kinabatangan, Tongod, Lahad Datu, Kunak, Kalabakan, Semporna, Tawau
• Sabah consists of 5 administrative divisions*, subdivided into 24 sub-divisions (or districts)
• 32 officially recognised ethnic groups
• Area = 73,997 km2 (22.4% of Malaysia); Population = 3.1 million**
*1. West Cost Division: Kota Belud, Kota Kinabalu, Papar, Penampang, Ranau, Tuaran; 7,588 km2, popn.=953,900. 2. Interior Division: Beaufort, Nabawan, Keningau, Kuala Penyu, Sipitang, Tambunan, Tenom; 18,298 km2, popn.=420,800. 3.Kudat Division: Kota Marudu, Kudat, Pitas; 4,623 km2, popn.=189,500. 4.Sandakan Division: Beluran, Kinabatangan, Sandakan, Tongod; 28,205, popn.=676,000. 5. Tawau Division: Kunak, Lahad Datu, Semporna, Tawau; 14,905km2, popn.=756,800**Department of Statistics Malaysia (2006)Source: IDS Concept Paper; Team analysis
Sabah Development Corridor is made up Sabah Development Corridor is made up of 3 sub-regions of 3 sub-regions
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Core Components of Sabah Development CorridorCore Components of Sabah Development Corridor
Sub-Regions
KOTA KINABALU (1):Regional Growth Centre
323,817
SANDAKAN (2): 268,821Secondary Regional Growth
Centre
TAWAU (3): 155,099Sub-Regional Growth Centre
CURRENT URBAN HIERARCHY AND CURRENT URBAN HIERARCHY AND LINKAGES FOR SABAHLINKAGES FOR SABAH
LAHAD DATU (5): 71,176
KUDAT (11): 27,443
KENINGAU (9): 32,754
SEMPORNA (7): 41,624
RANAU (12): 22,425
KOTA BELUD (10):31,001
TUARAN (8):35,499
PAPAR (6):42,598
Penampang (4):81,867
Sub-Regions
KOTA KINABALUCONURBATIONRegional Growth Centre
Secondary Regional Growth Centre
Sub-Regional Growth Centre
THE PROPOSED URBAN HIERARCHY AND THE PROPOSED URBAN HIERARCHY AND LINKAGES TO REDUCE SUB-REGIONAL AND LINKAGES TO REDUCE SUB-REGIONAL AND RURAL-URBAN GAPRURAL-URBAN GAP
Sub-Regional Growth Centre
Urban Growth Centre
Rural Growth Centre
Sub-Regions
ServicesTourism &Logistics
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TOURISM: Sabah’s beauty and rich cultural and bio diversity
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
Eco-Certification
One District One Product
Tropical Research Field Station
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
ECO-CERTIFIEDEcotourism
Tourism Skills Training Centre
Arts & Culture Development Fund
Tropical Research Centre of Excellence
Keningau Handicraft Production Village
Maliau Basin
Danum Valley
Poring Hot Spring Spa
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Four main strategies under the tourism sector...Four main strategies under the tourism sector...
Tourism StrategyTourism Strategy
Position Sabah as the premier eco-adventure destination
1
Develop new tourism products anchored by signature resorts
2
Market Sabah as the exclusive holiday home destination
3
Encourage rural participation through community-based tourism
4
RationaleRationale
• Leveraging on Sabah’s natural endowment• Tapping on fastest growing segment of tourism industry; eco-
tourism growth of 20% compared to 7% for overall tourism1
• Moving towards high-yield market• Leveraging off their marketing efforts and loyal customer base
1 The International Ecotourism Society, Ecotourism Fact Sheet (September 2005)
• Increasing demand for exclusivity among the rich and famous – Sabah is still largely undeveloped unlike Phuket and Bali
• Extending length of stay of high-end visitors
• Enhancing rural income• Encouraging entrepreneurship
Agriculture
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Keningau Integrated Livestock Centre
R&D Centre
Integrated Collection Centre
Permanent Food Crop Production Parks
Upgraded fishery landing sites
E
E Sandakan Education hub
Aquaculture zones
Agrifood production zones Agrifood industrial zones
Livestock cluster
Jelapang Padi Programme
(7,000 families)
Jatropha Pilot Site
Sabah Agro-Industrial Precinct
Jatropha Site
Seafood Terminal
Bengkoka Rubber Resettlement
(2,500 families)
Palm Biotech R&D Centre
National Marine Aquaculture Centre
AGRICULTURE: Focus on food sustainability, high value AGRICULTURE: Focus on food sustainability, high value export to North Asia and poverty eradicationexport to North Asia and poverty eradication
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Three main strategies for the agricultural sector...Three main strategies for the agricultural sector...
Agriculture StrategyAgriculture Strategy
Enhance food-based agriculture sub-sectors
2
RationaleRationale
Position Sabah as the centre of excellence for oil palm
3• Sabah is the single largest contributor to the oil palm industry
in Malaysia• Sabah has high potential in downstream activities for palm oil
Develop high-value, high-potential products
1• To move towards high value markets• Leveraging off the natural biodiversity strengths of Sabah from
both sea and land• Potential enhancement via increased R&D and marketing
• To reduce Sabah’s food import requirement• To enhance involvement and income of rural community• Potential enhancement via increased technical and financial
support
Manufacturing
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Wood-Based Industry Cluster
Industrial Corridor
Sabah Oil and Gas Terminal
Energy Intensive Cluster
POIC Sandakan
POIC Lahad Datu
Minerals Based Industry
MANUFACTURING: Sabah will focus on leveraging its MANUFACTURING: Sabah will focus on leveraging its natural resources as feedstock to capture value in natural resources as feedstock to capture value in
downstream activitiesdownstream activities
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From landing site… …to an integrated gas or petrochemical complex, attracting investments and spawning high value jobs
MANUFACTURING: Integrated Petrochemical Complex at the Kimanis MANUFACTURING: Integrated Petrochemical Complex at the Kimanis landing site will generate RM5bn of private investments and create high landing site will generate RM5bn of private investments and create high
value jobsvalue jobs
Tank farm
Stabilisation unit
Slug catcher and gas conditioning
LPG bottling plant
Hydrogen peroxide
NPK plant
Ammonia/ urea
300MWPower plant
GPP Future
Export
Gas pipe to Bintulu LNG plant
Compressor station
Gas
Crude oil
Natural gas
Co
nd
en
sa
te
LPG
Off gas
Source: Interviews with Oil & Gas expert
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Three main strategies for manufacturing sector...Three main strategies for manufacturing sector...
Manufacturing StrategyManufacturing Strategy
Enhance basic infrastructure, focus on reducing cost of doing business
1
Invest in human capital for existing and new industries
2
Attract world class companies in high value add downstream activities
3
RationaleRationale
• Basic infrastructure is crucial to operational efficiencies of manufacturers
• Cost of doing business is fundamental to investors’ choice of location
• Skilled manpower is key to manufacturing competitiveness• Systematic approach to matching industry needs with supply
of human capital via fine-tuning current education and training courses
• Leverage Sabah’s natural resources as feedstock raw materials
• Elevate the standards of local SMEs supplying to world class companies
• Serve as a draw for talent and quality FDIs (management and technical knowhow) into Sabah
Infrastructure and Human Capital
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INFRASTRUCTUREINFRASTRUCTURESDC infrastructure visionSDC infrastructure vision Key targets by 2025Key targets by 2025
• 61% of all roads are still gravel & earth roads• 80% of all gravel roads to be sealed by 2025• Focus on enabling intercity connectivity and SDC
projects
1 CONNECT SABAHEnsure connectivity to enable productivity via roads, rail, sea and air
• Current coverage is 67%• 90% of population covered by 2010• Enhance rural electrification• Increase capacity and strengthen grid
2 POWER UP SABAHProvide sufficient & reliable electricity for Sabah
• Current broadband penetration is 4.9%• 65% of population connected by 2025• Enable businesses and move towards a knowledge
based economy
4 EMBRACE TECHNOLOGYEnhance data connectivity
• 3.95% of population with tertiary education in 2000• 15% of population with tertiary education by 2025• Using companies and MNCs to develop talent
5 INVEST IN SABAH’S TALENTBuild human capital to provide skilled talent pool
• Current demand outstrips supply by 23%• Supply to meet demand by 2010• Reduce NRW from current levels of 57% to 25% by
2025
QUENCH SABAH’S THIRSTProvide sufficient water to keep pace with demand
3
Environment
Mt. Kinabalu Mt. TambayukonMt. Trusmadi
Imbak Canyon
Maliau Basin ‘Sabah’s Lost World’
Crocker Range
Danum Valley
Nature at its Best Heart of Borneo
Adventure Experience… Adventure Experience… of Pristine Wilderness in Primeval Rain Forestsof Pristine Wilderness in Primeval Rain Forests
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ENVIRONMENT: Conservation is necessary to preserve our heritage, ENVIRONMENT: Conservation is necessary to preserve our heritage, boost tourism and export of agriculture related productsboost tourism and export of agriculture related products
Source: Team analysis
ForestsForests• Clearly demarcate boundaries and
regulate forest reserves• Restore degraded forests
BiodiversityBiodiversity• Preserve marine and
wildlife• Preserve flora and fauna• G2G agreements on
protection of highly migratory species
InfrastructureInfrastructure• Manage sewage and solid
waste• Protect settlements, river
systems, mangrove
Education and awarenessEducation and awareness• Educate public on recycling,
cleanliness, conservation of biodiversity, preservation of clean river system, etc.
Physical conservationPhysical conservation• Shoreline management• Conserve World Heritage
sites
Sustainable developmentSustainable development• Promote certification of agriculture
produce to comply with credible sustainable standards (s.a. RSPO)
By 2025, most
liveable place in Asia
Implementation & Expectation
Impactful programmesImpactful programmes
Targeted resource deliveryTargeted resource delivery
Balanced socio-economic Balanced socio-economic
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Key tenets need to be in place for SEDIA to have the best chance to Key tenets need to be in place for SEDIA to have the best chance to successfully deliver the programmes planned in the SDC Blueprintsuccessfully deliver the programmes planned in the SDC Blueprint
Measure of successful
implementation
Key tenets for SEDIAKey tenets for SEDIA
• The Sabah Economic Development The Sabah Economic Development and Investment Authority (SEDIA) and Investment Authority (SEDIA) Enactment 2009Enactment 2009
• Joint Working teamsJoint Working teams comprising of federal and state agencies to expedite approvals
• Commitment and obligationCommitment and obligation on all parties concerned to meet set service levels
• PermanencyPermanency to stay the course of the Blueprint
• Right management structure and management structure and enablersenablers
SDC INVESTORSSDC INVESTORS
SEDIASEDIA
Company Registration
Licence Approval
Work Permits
Land Matters
IncentivesPlanning Approvals
Utility Approvals
“The government will put in place policies to make it easier to
do business here ... We will not compromise on the environment
and our culture"- DATUK SERI PANGLIMA MUSA AMAN
Mega biodiversity, relatively unaffected by the Ice Age
Kinabalu Park – Malaysia’s first World Heritage Site (UNESCO: Dec, 2000)
Danum Valley Research Centre and Sepilok Orang Utan Rehabilitation Centre
Islands (esp. Sipadan), Maliau Basin, Tabin Wildlife, Caves (Gomantong & Madai)
Valuable ethnobotanical knowledge from the indigenous communities
Infrapro & Deramakot (since 1992,FSC cert.) carbon sequestration model
Multi-racial society with rich cultural heritage (Tingkayu Valley archeological sites
Largest oil palm plantation area in Malaysia; Fertile soil, adequate rainfall and conducive
climate Relatively clean and unpolluted natural
environment Livestocks free from foot and mouth
disease Access to deep water and sheltered ports
Moves the economy up the value chain and promotes economic growth by optimising the utilisation of Sabah’s factor endowments, locational advantages and competencies
Rationalises the spatial distribution of Sabah’s population and facilitates the integration of Sabah sub-regional economies, thereby reducing regional imbalance
Enhances human capital thereby improving the quality of life and thus reducing social imbalances
Attracts private investments, tourists, highly skilled workers as well as scientific researchers
Offers Sabah and Malaysia generally, to participate in the vibrant knowledge-based economy driven by S&T convergence
Reduces poverty by creating new business and employment opportunities
• RoadsRoads
• Replicate AgropolitanReplicate Agropolitan
• Sea PortSea Port
• POICs (Sandakan and Lahad Datu)POICs (Sandakan and Lahad Datu)
• Human Capital: Sandakan Education HubHuman Capital: Sandakan Education Hub
• Biodiversity Conservation: Heart of Borneo, wildlife, marine eco-systBiodiversity Conservation: Heart of Borneo, wildlife, marine eco-syst
• Agri-Business Accelerator: eg SAIP, Integrated Fisheries ComplAgri-Business Accelerator: eg SAIP, Integrated Fisheries Compl
• AgriExcel Outreach: Food Security and High Value CropsAgriExcel Outreach: Food Security and High Value Crops
• Direct assistance (hardcore)Direct assistance (hardcore)
• Tropical Biodiversity Research: Sabah Bio-X Tropical Biodiversity Research: Sabah Bio-X
• Mini Estet Sejahtera (MESEJ)Mini Estet Sejahtera (MESEJ)
“Big ticket” items for remaining 9MP*
1.1. Tourism targetsTourism targets• Increase average tourist spending from RM2,517 in 2006 to RM3,383 by 2012 and RM5,364 by 2025• Increase tourism receipts from RM2.88 billion in 2006 to RM8 billion by 2012 and RM48.5 billion by
2025• Increase rural community tourism receipts (handicrafts and homestay) from RM139 million in 2006
to RM 432 million by 2012 and RM4.5 billion by 2025
2.2. Agriculture targetsAgriculture targets• Multiply GDP contribution by 4.1 times from RM4.1 billion to RM 17 billion by 2025• Increase total value of exports from RM9.1 billion to RM60 billion • Reduce negative balance of trade of food by 60% from RM955 million to RM353 million
3.3. Manufacturing targetsManufacturing targets• Increase capital investments from RM208 million (2006) to RM2.96 billion by 2025• Enhance employment in manufacturing sector from 135,000 to 228,704 by 2025• Increase proportion of manufacturing workforce with tertiary education from under 10% (2005) to
45% by 2025
4.4. Infrastructure targetsInfrastructure targets• Roads: all major towns and rural collection centres are connected by sealed roads• Electricity: 90% of population is connected with SAIDI of 500 minutes (from 2,540 currently)• Water: Reduce NRW from 57% to 25% and increase capacity to meet supply• Data connectivity: Broadband penetration of 35 per 100 inhabitants from 4.9 currently• Talent: Skilled talent pool for all targeted industries in Sabah
Expected OutcomeExpected Outcome
Enhancing The Quality Of Life, And Reducing Regional Imbalance And Poverty Incidence In A Sustainable Manner
HUMANCAPITALDEVELOPMENT
PRODUCTION AREASFACTORENDOWMENT
CREATINGEMPLOYMENT OPPORTUNITIES
BUSINESS OPPORTUNITIESFORFARMERS
HIGHER QUALITY OF LIFE
REGIONALBALANCE
REDUCINGINCOME INEQUALITIES
SUSTAINABLE DEVELOPMENT
BASIC INFRA.UTILITIES & SERVICES
INCENTIVESCHEMES TO ATTRACT INVESTORS
IMPROVE RURAL-URBANLINKAGES
ENHANCE SUPPLYCHAIN EFFICIENCY
ATTRACT INVESTMENTS TO TARGETTED AREAS AND ECONOMICSECTORS
OPEN UP NEW ECONOMICOPPORTUNITIES:THE PRODUCTIONPOSSIBILITYFRONTIERS
BUSINESS OPPORTUNITIESFOR SMEs
BUSINESS OPPORTUNITIESFOR LARGE CORP & GLCs
REDUCE POVERTY
REDUCING RURAL-URBANGAP: REDUCINGRURAL-URBANMIGRATION
EXPEDITE ECONOMICGROWTH
37
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sabah GDP per Capita (1987 constant prices) (RM)
With SDC
9MP growth target
14,784
* ADB forecast a growth of 5.5% for Malaysia for 2006-2010. Constant growth is based on 6% in line with 9MP. SDC model in AppendixSource: Team analysis; Asian Development Outlook 2006
5,100
2.9x
15.1GDP (RM’bn)
21.9
20.3
45.7
36.3
63.2
48.6
32.0
27.1
11,363
Thank You
******INSTITUTE FOR DEVELOPMENT STUDIES SABAH ******