Click here for S.Rajaratnam Endowment Dialogue pdf files.

 

KEYNOTE ADDRESS

DATUK PATINGGI TAN SRI (DR) ABANG HAJI ABDUL RAHMAN ZOHARI TUN DATUK ABANG HAJI OPENG, THE PREMIER OF SARAWAK
 
FOR

“ECONOMIC DEVELOPMENTS IN ASIA AND THE WORLD”

AT

S. RAJARATNAM ENDOWNMENT DIALOGUE (SRED)

26^th April 2022 (Tuesday)

Salutation

Mr. Eric Schmidt, Co-founder of Schmidt Futures

Mr Ng Boon Heong, CEO Temasek Foundation

Mr Warren Fernandez, Editor-in-Chief Singapore Media Trust

Fellows of International Strategy Forum

Distinguished guests

Ladies and Gentlemen

Good evening.

A sincere thanks to Temasek Foundation for inviting me to speak at the S. Rajaratnam Endowment Dialogue Dinner.  It is a great honour for me to share with you my views on the economic developments in Asia and the world, and in particular the development in Sarawak.

 

Ladies and gentlemen,

Introduction

The world is changing faster than ever before. The last two years are evidence that the world is experiencing a shift with no turning back to the way things were but to move with the trend.

After experiencing a robust economic recovery in 2021, with an estimated global growth of 5.9%, growth momentum is disrupted entering 2022 as Omicron COVID-19 variant spreads and some countries reimposed mobility restrictions.

The global economic turbulence is yet to be over. 

While the fight against COVID-19 is yet to end, geopolitical tensions with Russia’s invasion of Ukraine, has led to greater uncertainty that carries a huge threat to the currently fragile global economic recovery process.

Commodity prices especially for energy and food skyrocketed, which will push up inflation, raise business operating cost and affect consumer spending, thus weaken economic growth.

While impact of the war varies across regions, commodities importing countries such as the European countries, China, Korea and Japan will be among those that are vulnerable.

Whereas commodity exporting countries like Malaysia, including Sarawak will benefit from the soaring commodity prices that contribute to higher export earnings. The price of Brent crude oil has escalated by close to 1.5 times from January (US$86.51 per barrel) to March (US$117.25 per barrel) this year.

The costly energy prices however, will put pressure on fiscal cost for subsidies on fuel price caps.

Considering Sarawak has limited trade link with Russia and Ukraine, the direct impact from the conflict is expected to be subtle. However, the spill over effect due to moderation in economic development of affected countries may weigh on demand if the war prolongs. To a certain extent, visitor arrivals may not grow as fast, dampening the growth of tourism sector.

That being said, Sarawak is on its path to recovery from the pandemic induced crisis, which brought to a contracted growth of 7.1% in 2020. Nonetheless, the aid provided by Sarawak Government through special assistance package (BKSS) worth RM5.7 billion, has partly cushioned the impact of COVID-19 especially on the operations of businesses, smallholders, and welfare of the impoverished group, thus expediting economic recovery in the State.

Ladies and gentlemen,

Sarawak Post COVID-19 Development Strategy 2030

I see new opportunities in every downturn. 

Although the pandemic has caused many upsets and challenges to the socio-economic norms, it presented and unlock new growth prospects such as in healthcare and digital industry.

To ensure Sarawak emerge as a stronger region and embark on a full-fledged transformation capitalising on mega-trends around the world, my team has formulated and is implementing the Sarawak Post COVID-19 Development Strategy 2030 (PCDS 2030).

Sarawak Government envisions that by 2030, Sarawak will be a thriving society driven by data and innovation where everyone enjoys economic prosperity, social inclusivity and sustainable environment.

Forging ahead, Sarawak places great focus on changing our economic structure from solely depending on primary commodities as source of revenue into a well-diversified high value downstream industries, with higher export-oriented activities. This will be carried out through digital economy and renewable energy development.

The focus is on developing six economic sectors as drivers of growth for Sarawak, namely manufacturing, agriculture, tourism, forestry, mining and social services.

To support sustainable growth of these economic sectors on a commercial scale, both upstream and downstream, the emphasis is greatly on the development of infrastructure and other enablers.

 

Ladies and Gentlemen,

Sarawak New Initiatives

I will share with you the initiatives we are currently embarking on namely Digital Economy, Green Economy, Hydrogen Economy, Autonomous Rapid Transit (ART) international schools, Sarawak Science Centre and commercial agriculture.

I am confident that the implementation of these new initiatives will change the socioeconomic landscape of Sarawak in the medium to long run, ensuring economic resilience to external shocks and developing a more competitive and preferred destination for investors.

But I acknowledged that these initiatives require big funding. The usual method of funding through annual budget allocation are far from sufficient to support our development agenda.

For this reason, I have set up Development Bank of Sarawak (DBoS) to facilitate and provide fiscal flexibility to fund especially major infrastructure projects.

Sarawak Government has also imposed 5% State Sales Tax (SST) on petroleum products from 1^st January 2019, which provided us additional revenue to fund more development initiatives.

Ladies and Gentlemen,

I will continue with our revenue re-engineering effort.

I assure you all these approaches have gone through robust juristic procedures and processes to ensure good governance.

Sarawak is also rated annually by international rating agencies such as Standard and Poor and Moody’s Investors Services on our economic performance, financial stability, governance and Environmental, Social and Governance (ESG).

Moody’s awarded us A3 rating and A- from Standard and Poor.

Ladies and Gentlemen,

Digital Economy

When I took over as the Chief Minister on 13^th January 2017, it was clear to me that Sarawak needed a paradigm shift in our development strategy. The world has been focusing on emerging technologies such as gaming and animation, big data, cloud computing, blockchains and artificial intelligence.  I realised the need to enter the digital world so that Sarawak will have a chance to enjoy high income, with greater productivity and efficiencies.

Since then, Sarawak has embarked on cashless mobile payment solution. This, for us, is the first step in promoting the adoption of digital economy and moving towards a cashless society.

 
Ladies and Gentlemen,

Sarawak is the first State in Malaysia to have our own e-wallet, I call it S Pay Global.

The e-wallet started with a small wallet size of RM200 and limited functions before it is expanded to RM3,000. Now, the e-wallet is providing more functions, including purchasing and renewing of insurance, loan repayments, donations, food, and payment for parking.  Our e-wallet is also collaborating with Union Pay International to reinforce our presence in the global market.

The number of e-wallet users has increased by more than tenfold from 50,000 when it first started, to over 611,000 users and 87,000 merchants, with transactions worth over RM2 billion. 

The COVID-19 pandemic has accelerated the process of digital transformation in Sarawak. The e-wallet made it more efficient for us to channel the BKSS financial aid to eligible Sarawakians during the pandemic.

To fully embrace digitalisation, Sarawak Government aims to win Malaysian digital banking license to support our Digital Economy Strategy and banking industry.

Moving forward, Sarawak will improve our internet connectivity and attract new industries focusing on international standard data centres, digital content creation and boosting digital innovation and entrepreneurship for digital start-ups.

I am confident we will be able to improve many of our business ecosystem, reduce bureaucratic inefficiencies and ensure Sarawak is connected to the world digitally through industry collaboration.

For example, through PP Telecommunication Sdn. Bhd. (PPTEL), Sarawak is developing the first Tier-IV Data Centre at Santubong, Kuching which is directly connected to the regional telco hub of Singapore via Batam, using high capacity, low-latency Batam Sarawak Internet Cable System (BaSICS). Coupled with an International cross-border terrestrial fiber network, Sarawak is able to serve any cities in Borneo or Indonesia in collaboration with their strategic partners.

The subsea fibre provided by PPTEL will further add connectivity to key international hubs in the region and a terrestrial backbone within Sarawak to dramatically improve broadband speeds and performance in the region.

I welcome participation of more private sectors and investors to help drive Sarawak’s digital transformation.

Ladies and Gentlemen,

Green Economy

As Sarawak moves to achieve high-income economy by 2030, we are mindful of our moral and social responsibility to safeguard our environment. The ultimate environmental goal is to have a good environment, with the highest quality and respect for all life. Maintaining the quality of the environment is essential for sustainable development.

During the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow, Malaysia is committed to reducing its greenhouse gas emission intensity by 45% by 2030 from 2005 levels and reaching net zero by 2050.

Sarawak too, is committed to reduce greenhouse gas emission in the region. I have set up a new Ministry of Energy and Environmental Sustainability, similar to the Ministry of Sustainability and Environment in Singapore.  The new Ministry will plan, coordinate and provide direction for the development of green growth, renewable energy, sustainability and climate change.

Stronger cooperation amongst countries is imperative to work closely on green economy and to address climate change. I believe both Singapore and Sarawak share similar perspective on these challenges. Therefore, we can forge partnership as we move towards low-carbon and green technologies.

Our immediate effort is to undertake a study on Sarawak Climate Change Policy and Low Carbon Society Blueprint in Cities and Towns in Sarawak to formulate a State Policy on greenhouse gas and develop mitigation and adaptation action plans to address the impact of climate change and low carbon society.

Accordingly, Sarawak will continue with our initiatives to conserve, protect and manage our resources sustainably. Sarawak Government is committed to keep 60% of our landmass as forest cover. We are restoring 200,000 hectares of degraded forest and set aside 1 million hectares as Totally Protected Areas (TPA).

I anticipate RM150 million per year in new revenue stream will be generated from carbon trading project from 500,000 hectares of forest area and 2,500 jobs will be created.

I foresee our effort to conserve and promote biodiversity as a natural capital will pave the way for more investment inflow into Sarawak that will co-create solutions, generate more green jobs and business opportunities to drive our economy in a sustainable manner.

However I am aware, not all companies can change to low carbon overnight. Sarawak Government is helping traditional industries become more sustainable. Their products – steel, chemicals – are critical to green industry. Sarawak is eager to have them, where the Government can help them cut their emissions.

With concerted effort, real initiatives, and with Sarawak sending a clear message across the world: we want Sarawak to be the number one destination for clean, green investment. We want low carbon industries serviced by Sarawak supply chains.

There is no choice between protecting the environment and growing the economy. I cannot remember a time when consumers, industry players, and environmentalists had so much in common. Those of us who believe in a more sustainable future must ride on the opportunity now.

Additionally, our greening initiatives will be enhanced with decarbonisation of Sarawak’s energy system.

Hydropower will be an important capital for a sustainable energy for Sarawak. The State aims to maintain at least 60% of our power generation capacity mix from renewable sources by 2030.

Sarawak Government has also embarked on setting up floating solar farm at Batang Ai hydroelectric plant. Once commissioned, the 50MW solar farm will offset around 52 kilo tonnes of carbon emissions annually, thus further decarbonising Sarawak’s power system.

Sarawak was able to decarbonise our power system by more than 70% since 2010 to 2020 and share our renewable energy resources with our neighbouring countries such as West Kalimantan, Indonesia through interconnections since 2016. By end of 2023, we will commence power export to Sabah.

Leveraging on the low carbon opportunities in nature-based solutions coupled with technology, Sarawak is exploring to develop a hydrogen economy.

Ladies and Gentlemen,

Hydrogen Economy

Hydrogen is universal and has wide applications in our existing industries. Hydrogen can be exported in various forms and methods, and it plays a significant role in greening our industries, our transportation sectors as well as logistic and ultimately healthcare in the future.

Given favourable global demand condition and our resource condition, Sarawak will play its part to be a pioneer in future global supply value chain, just like how we have driven the frontiers of LNG businesses back in the 1980s.

To kick-start the transition towards a hydrogen economy, Sarawak Government, through Petroleum Sarawak Berhad (PETROS) is developing six multi-fuel stations in Sarawak.  Earlier this month, I have launched the first multi-fuelling station in Kuching, which caters to vehicles powered by standard fossil fuels, electricity, or hydrogen. 

Sarawak also partnered with global players from South Korea to develop environmentally friendly hydrogen and ammonia plant at Bintulu. Once completed, the plant will produce 630,000 metric tonnes of green ammonia, 600,000 metric tonnes of blue ammonia, 460,000 metric tonnes of green methanol and 7,000 metric tonnes of green hydrogen for our local industries and South Korea.

Recently, hydrogen modules have been introduced at universities in Sarawak to equip our future engineers to specialize in this industry, along with various research programmes and projects with the likes of Airbus and Japanese firms to test its applications in our day-to-day life.

I am sure, one day as scale expands, costs of hydrogen production will drop to possibly equivalent to LNG or less, and this will be a game changer for Sarawak’s economic landscape. It is an advantage for Sarawak to be a first-mover in the usage of hydrogen.

We must bolster resilience and scale up plans for emerging technologies, including Carbon Capture and Storage (CCS), hydropower, fusion as well as various forms of biofuels to accelerate low-carbon investments in the energy sector.

At the same time, Sarawak Government is exploring synergistic integration of algae production with bioenergy CCS technology that can absorb CO2 emissions and address global sustainability.

These are fundamentals in driving the Financial Sector especially for bonds raised to support Green Energy businesses in line with Global Financial movement towards ESG funding.

Sarawak will be leading the way in implementing two CCS projects namely Kasawari CCS in 2025 and Lang Lebah CCS in 2027.

Once commissioned by end 2025, Kasawari CCS will be one of the biggest offshore CCS project globally with the capability to store about 4 million tonnes of CO2 annually.

Sarawak expects its oil and gas vendors to start adopting ESG accounting in the coming years, and this will also gradually improve the processes of greening the whole value chain eventually.

 

Ladies and Gentlemen,

Autonomous Rapid Transit (ART)

Sarawak Government in collaboration with private sectors are now vigorously developing an efficient, inclusive, and eco-friendly public transportation system in Kuching City.

Riding on the move to decarbonise public transport system in Sarawak, the Kuching Urban Transport System (KUTS) will be automated intelligently using the Automated Rapid Transit (ART) and integrated with digital solutions to create seamless experience using hydrogen fuel cell.

With modern and eco-friendly integrated public transportation system, we expect carbon footprint from land transport in Kuching City will be significantly reduced by 15% by 2030. Traffic growth of 2% per annum will be subdued and we save on 36,000 hours of daily travel time.

The hydrogen powered ART and feeder buses will also provide us with opportunity to explore carbon offsets projects. As such, I welcome any interested parties to participate and contribute their expertise in carbon trading endeavour.

Ladies and Gentlemen,

Education – State Funded International Schools

Sarawak Government give due emphasis on quality education and developing the right ecosystem for human capital development.

But with our geographical area and scattered population, some of the schooling facilities are not in their best shape.

While the Sarawak Government is constantly working with the Federal Government to ensure we provide a safe and conducive learning and teaching environment, we have also taken a bold step to set up five State-funded international schools to provide quality education to Sarawakians, especially for the Bottom 40 group.

This investment is important as we want to provide equal opportunities for our children, particularly from rural areas that are smart, to be groomed and trained by qualified teachers and experienced school leaders to have global mindset.

We adopt the Cambridge International General Certificate of Secondary Education (IGCSE) curriculum, which I believe will help to develop their skills in creative thinking and problem solving. These children will be the new generation of leaders and thinkers who will grow and bring Sarawak to greater heights.

The learning approach will also provide maximum opportunities for character and leadership development through appropriate co-curriculum and extra-curricular activities, and well-equipped teaching-learning facilities and resources.

The first International School in Kuching has started operation in March this year. Each school will have a capacity of 500 students aged between 14 to 17 years old and entry is based on the appropriate criteria provided by Yayasan Sarawak.

Ladies and Gentlemen,

Sarawak Science Centre

In order to build innovative and competitive generation to support Sarawak's development agenda, we focused our educational initiatives on Science, Technology, Engineering and Mathematics (STEM). 

In 2017, I envisioned that Sarawak will have a science centre of its own, as what the Singapore Science Centre is to the people of Singapore. The Singapore Science Centre being one of the oldest, most established, and successful science centres in the region.

To bring this vision to fruition, Sarawak Government has engaged the Singapore Science Centre as the master planners for the Sarawak Science Centre. I hope that both science centres - Singapore and Sarawak, will forge a partnership to enhance the development of science and technology education in Sarawak, and in return offer Singaporeans an opportunity to experience the wonders of natural world and our rich biodiversity.

Ladies and Gentlemen,

Commercial Agriculture

Sarawak has huge potential for sustainable large scale production in agriculture and to become a net food exporter by 2030.

My Government will optimise on utilisation of our land to increase scale of production for commercial agriculture that will provide valuable feedstock for higher value-added downstream food processing and export market using technology.

Moving forward, Sarawak Government is developing Agroparks. It has a concept like industrial parks that enable anchor farmers and agropreneurs to lease and develop the land for commercial agriculture.

To date, Sarawak Government has approved six (6) areas for agroparks development with an estimated size ranging from 400 to 3,000 hectares.

Public-Private-Community Partnership is being aggressively promoted and private sectors are encouraged to play a prime role along the overall supply and value chains, namely in production, processing and marketing. 

I welcome global partners to collaborate with our local farmers to produce more activities and build on the agriculture supply and value chain.

Ladies and Gentlemen,

Conclusion

I foresee Sarawak to have a vibrant economy once all these new initiatives are put in place. 

Sarawak will leverage on our abundant resources sustainably to accelerate our economic growth while ensuring no one is left behind as we embark on the journey towards a high income economy by 2030.

Sarawak Government would certainly like to leverage on Singapore and other international expertise and experiences especially in the advancement of digital technology for a rapid and sustainable economic development for Sarawak.
 

Thank you.