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: In the global economic landscape, logistics has emerged as a decisive factor in attracting investments, shaping competitive industries, and facilitating seamless trade. Sabah, with its strategic geographical location in the heart of Southeast Asia and its proximity to major shipping lanes, is uniquely positioned to leverage its logistics capabilities as a cornerstone of its investment strategy. By aligning its infrastructure, policies, and digital transformation initiatives, Sabah can establish logistics as a pivotal enabler of economic growth, fostering investor confidence and attracting global capital.
Sabah’s Strategic Location: A Gateway to ASEAN and Beyond
Sabah’s geographical location offers a natural advantage as a logistics and trade hub. Situated along key shipping routes connecting the Pacific and Indian Oceans, Sabah is ideally placed to serve as a gateway to the ASEAN region and beyond. With over 670 million people in ASEAN and a combined GDP of approximately $3.6 trillion, the region represents one of the fastest-growing economic blocs in the world. Sabah’s ports, such as Sapangar Bay Container Port (SBCP), play a crucial role in facilitating trade with neighbouring countries like Brunei, Indonesia, and the Philippines.
In addition to regional trade, Sabah’s proximity to China, a leading global trade partner, enhances its strategic importance. The state’s ability to serve as a transshipment hub for Chinese goods entering Southeast Asia and beyond provides a compelling case for international logistics and manufacturing firms to invest in the region.
Modernising Infrastructure to Support Investments
To fully capitalise on its strategic location, Sabah must prioritise the modernisation of its logistics infrastructure. The planned expansion of the Sapangar Bay Container Port is a step in the right direction. Once completed, SBCP is expected to increase its handling capacity significantly, reducing dependency on ports in Peninsular Malaysia and enabling Sabah to accommodate larger cargo volumes.
Moreover, Sabah’s existing network of ports in Kota Kinabalu, Sandakan, and Lahad Datu must be upgraded to meet international standards. A parallel investment in multimodal connectivity—such as road, rail, and air transport—is equally essential.
For example, integrating rail links between the ports and inland industrial zones could streamline the movement of goods, reduce logistics costs, and create new economic opportunities.
POIC Lahad Datu port is yet to make its mark as a logistics hub with its deep seaport. This will be an interesting development to watch matched with a Maritime Academy built into it’s system.
Singapore’s success as a logistics hub offers a model for Sabah.
The Port of Singapore, consistently ranked as one of the world’s busiest ports, owes its success to sustained investments in infrastructure, technology, and connectivity. Sabah can emulate this by not only modernising its ports but also establishing dedicated free trade zones to attract logistics and manufacturing investments.
Embracing Digital Transformation in Logistics
In the era of Industry 4.0, digital transformation is a critical component of any successful logistics strategy. Sabah must embrace advanced technologies such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT) to optimise its logistics processes. These technologies can improve efficiency, enhance transparency, and reduce operational costs, making Sabah an attractive destination for investors.
Blockchain technology, for example, can be employed to ensure secure and transparent supply chain operations, reducing delays and disputes in trade transactions. Similarly, IoT-enabled sensors can provide real-time tracking of goods, improving inventory management and reducing waste. These innovations are already being implemented in global logistics hubs such as Rotterdam and Dubai, setting benchmarks that Sabah can aspire to achieve.
The establishment of a digital trade facilitation platform, similar to Singapore’s TradeNet, could revolutionise Sabah’s logistics sector. Such a platform would allow businesses to manage customs declarations, shipping documents, and trade permits through a single window, significantly reducing paperwork and processing times.
This initiative would not only benefit existing businesses but also serve as a major draw for new investors seeking efficiency and ease of operations.
Sustainability as a Key Value Proposition
As global investors increasingly prioritise environmental, social, and governance (ESG) criteria, Sabah must position itself as a leader in sustainable logistics. The state’s abundant natural resources provide an opportunity to integrate renewable energy solutions into its logistics infrastructure. For instance, solar-powered warehouses and hybrid fleets can reduce carbon emissions, while the use of electric vehicles for last-mile delivery can further demonstrate Sabah’s commitment to sustainability.
Hamburg’s port in Germany offers a compelling example of green logistics in action. The port has implemented shore-side electricity for vessels, reducing emissions while ships are docked. Similarly, Sabah could invest in such initiatives at its ports, showcasing its alignment with global sustainability trends and attracting environmentally conscious investors.
Policies and Incentives to Attract Investors
A robust policy framework is crucial for positioning logistics as an investment enabler. Sabah’s government must develop investor-friendly policies that prioritise ease of doing business, reduce bureaucratic hurdles, and offer attractive incentives. Tax exemptions, grants for logistics companies adopting green technologies, and subsidies for infrastructure development could play a pivotal role in attracting international firms.
Dubai’s Jebel Ali Free Zone (JAFZA) serves as a benchmark in this regard. With its tax-free zones, streamlined customs processes, and world-class logistics infrastructure, JAFZA has successfully attracted thousands of multinational companies. Sabah could replicate this model by creating dedicated logistics parks and free trade zones, tailored to the needs of industries such as manufacturing, e-commerce, and agriculture.
Enhancing Sabah’s Investment Ecosystem
To further solidify its position as an investment destination, Sabah must build a holistic ecosystem that supports the growth of its logistics sector. Collaboration with global logistics leaders such as Maersk or DP World could bring valuable expertise and best practices to Sabah. Additionally, partnerships with local universities and research institutions could foster innovation and develop a skilled workforce for the logistics industry.
The state’s focus should also extend to sectors that rely heavily on logistics, such as agribusiness and tourism. By integrating cold chain logistics for perishable goods, Sabah could boost its exports of seafood, palm oil, and other agricultural products. Similarly, seamless logistics solutions for tourism-related industries could enhance visitor experiences and support Sabah’s broader economic goals.
Logistics as the Backbone of Sabah’s Economic Future
Logistics is more than just the movement of goods; it is the backbone of a thriving economy and a critical enabler of investments. For Sabah, leveraging its strategic location, modernising infrastructure, embracing digital technologies, and prioritising sustainability can transform its logistics capabilities into a compelling value proposition for global investors.
By learning from successful initiatives in Singapore, Dubai, Hamburg, and Rotterdam, Sabah can establish itself as a logistics powerhouse in Southeast Asia. Through a combination of visionary leadership, strategic investments, and innovative policies, Sabah can position logistics as a central pillar of its economic development, ensuring long-term prosperity for the state and its people.
