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 logistics and transport industry continued to be key to Malaysia’s economy in 2024, building on the strong foundation established in previous years. This sector demonstrated remarkable resilience and growth, significantly contributing to the nation’s GDP and facilitating trade across various sectors.
Economic Performance and Contribution
In 2024, Malaysia’s economy showed improved performance, with GDP expanding by 4.2% in the first quarter compared to 2.9% in the previous quarter. The transportation and storage sub-sector demonstrated remarkable resilience, recording a strong growth of 11%, only slightly lower than the 12.8% growth seen in Q4 2023.
This robust performance highlights the sector’s vital role in driving economic recovery and growth. The Malaysian freight and logistics market continued its upward movement in 2024, surpassing earlier projections. By the end of the year, the market size reached approximately RM131.5 billion (USD 28.88 billion), setting a strong foundation for future growth.
Updated forecasts now suggest that the market could expand to RM174.2 billion (USD 38.28 billion) by 2030, with a compound annual growth rate (CAGR) of 5.28% during the 2024-2030 period.
Driving Factors
Several key factors contributed to the sector’s growth in 2024:
- E-commerce Expansion: The e-commerce sector in Malaysia continued its robust growth, registering a CAGR of 13.26% in 2024, fuelled by rising internet and smartphone usage.
- Government Initiatives: The implementation of strategic policies, such as the National Transport Policy (2019-2030) and the Logistics and Trade Facilitation Masterplan, continued to enhance the sector’s competitiveness.
- Infrastructure Development: Ongoing projects like the Pan Borneo Highway and the East Coast Rail Link (ECRL) made significant progress, improving connectivity and reducing transportation costs.
- Technological Advancements: The adoption of automation, digitisation, and data analytics in logistics operations continued to drive efficiency and innovation in the sector.
Sabah’s Economic Landscape and Performance
Sabah maintained its position as one of the top contributors to Malaysia’s GDP in 2024, with its unique economic structure showing signs of diversification. The state contributed 5.5% to Malaysia’s overall GDP, ranking among the top six states.
Sabah’s logistics ecosystem saw notable improvements in 2024, particularly with the progress of the Sapangar Bay Container Port (SBCP) expansion project. A significant development was the partnership between DP World and Sabah Ports Sdn. Bhd to manage SBCP, aiming to increase its annual handling capacity from 500,000 TEUs to 1.25 million TEUs by 2025. This collaboration is expected to optimise terminal workflows, accelerate digitalisation for greater operational efficiency, and increase the port’s connectivity.
The Sabah Logistics Council (SLC) played a crucial role in addressing the state’s fragmented logistics landscape, focusing on resolving issues under one roof. The SLC is prioritising in bridging connectivity gaps, enabling seamless cargo transport, reducing transit times, and lowering costs.
In terms of infrastructure development, the Malaysian government, through the Rural and Regional Development Ministry (KKDW), allocated RM1.06 billion to develop 224 infrastructure projects in Sabah in 2024. These projects included rural roads, bridges, water supply, electricity supply, and area development projects, aimed at improving connectivity and supporting economic growth in the state.
Sabah’s manufacturing sector continued its positive trend from 2023, when it grew by 4.4%, surpassing the national average growth of 0.8%. The tourism sector also remained a significant contributor to the state’s economy, having contributed 11.7% in 2023.
Challenges and Future Outlook
Despite the progress, Sabah still faces challenges in aligning its economic structure with the national average. The state’s reliance on primary sectors (agriculture and mining constitute about 40% of Sabah’s GDP) and the lower contribution of its services and manufacturing sectors compared to national averages present ongoing challenges.
Looking ahead, the logistics and transport industry in Malaysia, including Sabah, remains poised for further growth. The sector’s adaptability, coupled with ongoing government support and infrastructure development, positions it well for continued expansion and increased contribution to the national economy. The focus on digitalisation, as evidenced by initiatives like the Pelan Strategik Pendigitalan Sektor Awam (PSPSA), is expected to further enhance the sector’s efficiency and competitiveness.
While Malaysia’s logistics and transport industry, including Sabah, demonstrated strong performance and resilience in 2024, there is still room for growth and improvement, particularly in addressing regional disparities and fully leveraging technological advancements.
A Transport Masterplan Impact on Economic Outlook
A transport masterplan for Sabah could significantly impact its economic outlook and help address the challenges in aligning its economic structure with the national average. A masterplan could influence Sabah’s future in the following ways:
Infrastructure Development
A comprehensive transport masterplan would likely focus on improving Sabah’s infrastructure, including enhancing road networks, particularly the Pan Borneo Highway, which would improve connectivity within Sabah, Sarawak and potentially Kalimantan, Indonesia.
Upgrading ports, such as the ongoing Sapangar Bay Container Port expansion project, to increase cargo handling capacity and attract more international trade.
Improving airport facilities to boost tourism and business travel is also on the pipeline.
These infrastructure improvements would help reduce transportation costs, making Sabah’s products more competitive and attracting more investments in various sectors.
Economic Diversification
By improving connectivity and reducing logistical barriers, a transport masterplan could facilitate the growth of non-primary sectors where better transportation links could attract more manufacturing investments, helping to increase the sector’s contribution beyond its current 10% of Sabah’s GDP. Enhanced connectivity could boost the services sector, particularly in areas like logistics, finance, and business services, helping to close the gap with the national average of 59.2%.
Tourism Growth:
Improved transportation infrastructure would make Sabah more accessible to tourists, potentially increasing the tourism sector’s contribution beyond its current 11.7% to the state’s economy.
E-commerce and Digital Economy: A robust transport network would enhance the growth of e-commerce in Sabah, aligning with national trends and potentially reducing the state’s reliance on primary sectors.
Regional Hub Potential:
Strategic development of Sabah’s ports and airports could position the state as a regional logistics hub, leveraging its strategic location in Southeast Asia.
Challenges and Considerations
While a transport masterplan offers significant potential, Sabah must address several challenges in balancing development with environmental conservation, given the state’s rich natural resources. There is a need to ensure that infrastructure development benefits rural areas, not just urban centres. Developing skilled workforce to support the growth of new economic sectors is of primary importance.
In conclusion, Malaysia’s logistics and transport industry demonstrated remarkable resilience and growth in 2024, playing a crucial role in the nation’s economic recovery and expansion. The sector’s strong performance, driven by e-commerce growth, government initiatives, infrastructure developments, and technological advancements, has positioned Malaysia as an attractive logistics hub in the Asia-Pacific region. Sabah, as a key contributor to Malaysia’s GDP, has shown promising developments in its logistics ecosystem, particularly with the expansion of the Sapangar Bay Container Port and the formation of the Sabah Logistics Council.
Looking ahead, while challenges remain in aligning Sabah’s economic structure with the national average and addressing regional disparities, the proposed transport masterplan offers potential solutions. As Malaysia navigates global economic uncertainties, the logistics and transport industry’s adaptability, ongoing digital transformation, and focus on sustainability and regional connectivity will be crucial. These factors, coupled with strategic government support and infrastructure development, position the sector well for continued growth and increased contribution to the national economy, playing a pivotal role in shaping Malaysia’s economic future.
