By Ts Dr. Hj Ramli Amir, former President of the Chartered Institute of Logistics and Transport (CILT) Malaysia and Vice-President of CILT International for Southeast Asia
KOTA KINABALU: The proposed Kudat-Palawan ferry service represents a significant development in Sabah’s regional connectivity, with the potential to reshape trade routes, stimulate economic diversification, and foster enhanced cultural exchange across the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).
As a burgeoning node in Southeast Asian maritime networks, Kudat stands poised to evolve from a quiet coastal district into a bustling gateway of international trade, tourism, and economic interaction. This strategic initiative marks an important milestone in Sabah’s journey toward economic growth, resilience, and increased integration within the region.
Service Overview and Strategic Importance
The Kudat-Palawan ferry service will operate high-speed catamaran ferries capable of accommodating 35 cars, 15-20 lorries, and up to 300 passengers per trip, marking a major infrastructure investment for Sabah. A trial run is set for the near future, with full operations anticipated by early next year. This service is in line with BIMP-EAGA’s broader vision of fostering increased connectivity and collaboration among its member nations. The direct ferry link between Kudat and Palawan will establish a streamlined trade corridor, offering businesses an efficient and reliable route for the movement of goods and people across borders.
At the heart of this initiative is Kudat’s potential to become a key maritime gateway.
This new connection will not only strengthen Kudat’s position as an entry point to Malaysia but also bolster Sabah’s standing within the BIMP-EAGA framework. By promoting closer economic ties with neighbouring countries, the Kudat-Palawan route embodies Sabah’s vision of becoming a pivotal player in ASEAN maritime trade. Significant upgrades to port infrastructure, including the installation of customs, immigration, quarantine, and security (CIQS) checkpoints, will ensure that Kudat port meets international standards for handling a steady flow of cross-border traffic, further enhancing its gateway status.
Economic Diversification and Revitalisation
One of the primary goals of the Kudat-Palawan ferry service is to stimulate economic growth and diversify Kudat’s economy. Currently reliant on limited tourist activity and small-scale local trade, Kudat’s economy could see a substantial transformation as the ferry service brings in a steady flow of goods, services, and visitors from Palawan.
By establishing a new trade link, the ferry service is expected to reinvigorate the traditional practice of barter trade, fostering a more vibrant local economy. This revival will provide local businesses with new opportunities, allowing them to expand their offerings and tap into previously inaccessible markets.
The ferry service will likely attract various sectors, including logistics, retail, and hospitality, to Kudat. For instance, logistics companies may find Kudat an appealing node for the distribution of goods, given the convenience of a direct sea route to Palawan. With the rise in trade activity, Kudat’s small- and medium-sized enterprises (SMEs) could experience growth, particularly those involved in agriculture, fisheries, and artisanal crafts. Furthermore, by diversifying beyond tourism, Kudat will enhance its economic resilience, making it less susceptible to seasonal tourism fluctuations and external economic pressures.
This economic revitalisation represents an important step in establishing Kudat as a regional trade and logistics hub, providing a foundation for sustainable long-term growth.
Boost to Tourism and Cultural Exchange
The Kudat-Palawan ferry service promises to catalyse the local tourism sector, with an anticipated influx of visitors from Palawan eager to explore Kudat’s unique offerings. The region is rich in Rungus culture, known for its vibrant traditions, intricate beadwork, and impressive longhouses. The ferry service opens new avenues for tourists to experience Kudat’s natural beauty, including pristine beaches, scenic landscapes, and the rich biodiversity of its surrounding marine areas.
This exposure can lead to a surge in demand for cultural experiences and local handicrafts, offering local artisans and cultural enterprises opportunities to expand their businesses.
An increase in tourist arrivals could also lead to heightened activity in local markets such as Tamu Kudat, where visitors can purchase fresh produce, traditional snacks, and handicrafts. Additionally, the establishment of Kudat as a cultural destination may attract investment in cultural preservation and tourism infrastructure, such as eco-lodges, guided cultural tours, and museums.
The increased interaction between the Rungus people of Kudat and the indigenous communities of Palawan will provide a rich platform for cultural exchange, allowing each community to share languages, customs, and culinary traditions. Over time, such exchanges will deepen the cultural ties within BIMP-EAGA, enriching the region’s social fabric and promoting mutual understanding.
Job Creation and Enhanced Employment Opportunities
The Kudat-Palawan ferry service and the associated development of port facilities are expected to create a significant number of new jobs. Direct employment opportunities will emerge as a result of increased in port activities. Indirectly, the anticipated growth in tourism, trade, and transportation will stimulate job creation in a variety of ancillary sectors, including hospitality, retail, and local transportation.
Potential for Extension to Kota Kinabalu
The potential extension of the Kudat-Palawan route to Kota Kinabalu represents a promising next step. By creating a triangular sea connection between Palawan, Kudat, and Kota Kinabalu, the ferry service could significantly enhance Sabah’s regional connectivity and expand its trade routes. Kota Kinabalu, as Sabah’s capital city, boasts better infrastructure, more extensive facilities, and a wide array of attractions, making it an appealing destination for tourists from Palawan. An extension to Kota Kinabalu could also make Sabah more accessible to tourists interested in exploring the full range of attractions Sabah offers, from cultural sites to eco-tourism destinations.
Moreover, a triangular connection would facilitate more efficient movement of goods, allowing businesses to optimize supply chains and reduce transportation costs. This setup would support the development of Kota Kinabalu as a key logistics hub, bolstering Sabah’s position as a vital node in BIMP-EAGA. The increased connectivity would strengthen economic ties, promote investment, and diversify Sabah’s economic activities, adding value to the state’s trade and tourism sectors and fostering inclusive economic growth.
Impact on Existing Trade Routes: A New Transit Hub in Kudat
Kudat’s emergence as a new transit hub within the trade corridor connecting Labuan and Southern Mindanao could reshape existing trade dynamics. Currently, much of the trade traffic flows through Labuan, which has established itself as a transit hub for Southern Mindanao. However, with the introduction of the Kudat-Palawan route, trade patterns may begin to shift, with Kudat serving as a strategic midpoint that diversifies available routes and reduces dependency on any single path. By providing traders with additional options, the region’s trade networks could become more resilient, adaptable, and competitive, supporting robust regional economic stability.
This shift could also prompt Labuan and Kudat to improve their respective services and infrastructure to attract more trade traffic. By offering traders and businesses the choice of ports, competition could stimulate greater efficiency and service quality across the board, benefitting both traders and consumers. Additionally, the new route may increase the overall trade volume within the region, creating a cumulative economic impact that benefits multiple sectors and communities.
Challenges and Implementation Considerations
While the benefits of the Kudat-Palawan ferry service are clear, the initiative’s success will depend on effective management, ongoing government support, and proactive engagement with local communities. A crucial element of ensuring the service’s sustainability will be the careful regulation of trade including barter trade to maximize benefits for local Sabahans while complying with international trade regulations. The service must also adhere to International Maritime Organization (IMO) regulations to ensure maritime safety and security for all users. Given the potential environmental impacts, it will be important to conduct comprehensive environmental assessments to mitigate any negative effects on marine ecosystems and ensure that the initiative is environmentally sustainable.
Continued investment in infrastructure and human capital will be essential to maintain the service’s viability and ensure its contributions to Sabah’s economy over the long term. Efforts to engage local communities and businesses will foster a sense of ownership and partnership, contributing to the initiative’s long-term success.
A Transformative Opportunity for Sabah and the BIMP-EAGA Region
The proposed Kudat-Palawan ferry service, with a potential extension to Kota Kinabalu, represents an ambitious and forward-looking project that could reshape Sabah’s regional trade patterns and stimulate substantial economic growth. It may also reshape the current dynamics for the Labuan-South Mindanao linkage and provide a wider scenario for Kudat as a logistics hub.
By positioning Kudat as a gateway port and integrating Sabah more deeply into BIMP-EAGA, this initiative could unlock a wide array of opportunities for trade, tourism, and cultural exchange. The potential to create new jobs, enhance tourism, and build cultural bridges makes the ferry service a transformative asset for Kudat, Sabah, and the broader BIMP-EAGA region. With careful planning, management, and community support, the Kudat-Palawan ferry service could become a model of regional connectivity and economic development, setting a benchmark for future projects across Southeast Asia. There maybe a lot more to come from Kudat as it is strategically located fronting the South China Sea. Having deep drafted sea at Marudu Bay may just be the catalyst for a potential international transshipment hub in the future. Time will tell.
