By Datuk 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: Kota Kinabalu Industrial Park (KKIP) is well placed to become a stronger engine of industrialisation for Sabah.
However, its next stage of development should not depend solely on supplying industrial land, attracting tenants or expanding physical infrastructure.
It should be driven by a clear, logistics-led industrial competitiveness
strategy—one that enables firms in KKIP to move inputs, products, information and
services more reliably, quickly and cost-effectively.
KKIP is a Sabah State Government development located north of Kota Kinabalu, covering approximately 8,320 acres within Sabah’s Knowledge Corridor. Its proximity to higher education and training institutions, together with access to industrial land and regional markets, provides a strong foundation for industrial growth.
The park has already attracted RM11.2 billion in investment, hosts 341 operating companies, and has created
14,608 full-time jobs, underscoring its importance to Sabah’s industrial economy.
From industrial estate to platform
The traditional role of an industrial park is to provide serviced land, utility connections,
roads and factory sites.
While these remain essential, industrial competitiveness increasingly depends on what happens beyond the factory gate.
Manufacturers and distributors need reliable access to raw materials, components,
packaging, storage, transport services, port facilities, customs processes, skilled labour
and end markets.
A firm may have a modern factory and a capable workforce, but it will still lose competitiveness if it faces high freight costs, irregular shipping schedules, slow
cargo handling, inadequate warehouse space or unreliable delivery lead times.
For KKIP, the strategic question is therefore not only “How can more investors be
attracted?” but also “How can existing and future tenants operate more efficiently from
KKIP?”
The answer lies in positioning logistics as a shared industrial service and a source of
competitive advantage.
KKIP should offer investors more than a production location; it should provide a reliable operating ecosystem that reduces supply-chain risk and improves market access.
The logistics proposition A logistics-led strategy should connect KKIP’s tenants to Sabah’s major gateways, domestic markets and regional trade corridors. Its location north of Kota Kinabalu, together with access to the Sapangar Bay Container Port Terminal and the wider Kota Kinabalu economic area, provides a foundation for this role. KKIP itself identifies logistics and location as key attributes to support investors in Sabah, BIMP-EAGA, and beyond.
The strategy should focus on five mutually reinforcing components:
Efficient gateway connectivity. KKIP requires predictable, cost-effective cargo
movements between factories, warehouses, Sapangar Bay Container Port, Kota Kinabalu
International Airport and key consumption centres.
Improving road access, truck flow
management, freight scheduling, and cargo visibility would reduce delays and empty
running.
Shared logistics infrastructure. Rather than requiring every tenant to establish separate
warehouses, yards and handling capacity, KKIP could facilitate common-user logistics
facilities.
These may include multi-user warehouses, container yards, cross-docking
facilities, cold-chain capacity, dangerous-goods storage where appropriate, and valueadded services such as packing, labelling, kitting and light assembly.
Digital logistics integration. A KKIP logistics platform or control tower could link tenants,
freight forwarders, transport operators, warehouse providers, port operators and relevant government agencies.
It could provide shipment tracking, cargo-booking visibility, warehouse availability, vehicle scheduling and performance data.
This would make logistics more transparent and allow park management to identify recurring bottlenecks.
Industry-specific service clusters. Logistics facilities should align with the
requirements of target industries. Food and halal-product producers may require
temperature-controlled storage, traceability and consolidation services. Electrical and
electronics firms may need secure storage, inventory control and time-sensitive inbound
logistics. Renewable-energy, advanced-manufacturing and aerospace-related industries
may require specialised handling, high-value cargo security and technical support.
Regional market connectivity. KKIP should be positioned as a consolidation and
distribution platform for Sabah, Sarawak, Brunei, Kalimantan and the wider BIMP-EAGA market.
BIMP-EAGA’s transport agenda explicitly aims to strengthen multimodal air, land
and sea connectivity to improve cross-border trade, investment and logistics.
This makes KKIP’s logistics capabilities relevant not only to local manufacturers but also to regional distribution, export-oriented production and cross-border supply chains.
Building on current momentum
KKIP’s industrial base provides a credible foundation for a more ambitious logistics
agenda.
The park’s existing investment and employment contributions show that it has
moved beyond an early-stage development concept into a significant industrial
ecosystem.
Recent private-sector developments also demonstrate commercial demand for improved warehousing and distribution capacity.
A proposed integrated industrial hub at KKIP,
including a fast-moving consumer-goods distribution centre intended to serve Sabah,
Sarawak, Brunei and Indonesia, is expected to increase operational capacity by 40 per
cent and create at least 500 jobs.
Such investments can catalyse a wider shared-services model, provided that infrastructure, operating standards and tenant access are designed
for the broader industrial community.
At the same time, national and state policymakers have recognised that industrial
expansion in Sabah depends on resolving infrastructure and logistics constraints.
Malaysia’s Investment, Trade and Industry Minister has identified reliable electricity
supply and infrastructure as urgent issues for industrial investors in Sabah, while
affirming the need to improve logistics to support investment.
KKIP’s competitiveness strategy must therefore coordinate industrial park management with agencies responsible for roads, power, ports, customs, skills, and investment facilitation.
Priority initiatives KKIP can translate the strategy into action through a phased programme.
Phase 1: Diagnose and coordinate
The first step is to map the end-to-end logistics flows for major tenants. This should
identify where materials originate, how they enter Sabah, where delays occur, the cost of
transport and storage, the frequency of empty container or truck movements, and the reliability of outbound deliveries.
KKIP should establish a Logistics Competitiveness Task Force comprising park
management, major tenants, freight forwarders, truck operators, port representatives, customs-related agencies, utility providers and relevant Sabah government departments.
Its role should be to resolve operational barriers rather than merely discuss them.
Phase 2: Pilot shared services
KKIP can then introduce practical pilot projects, including a scheduled shuttle or a
coordinated trucking arrangement between KKIP and Sapangar Bay Container Port; a
truck appointment and staging system to reduce queuing and improve safety; a shared warehouse and consolidation facility for small and medium-sized tenants; a digital
booking and cargo-status platform for transport, warehouse and freight-forwarding
services; and a tenant logistics help desk to support new investors with customs, freight,
warehousing and distribution arrangements.
These projects would deliver measurable benefits quickly and demonstrate whether a
larger logistics hub is commercially viable.
Phase 3: Scale into a regional hub
Over the medium term, KKIP can develop an integrated logistics zone featuring multi-user
warehouses, specialised storage, container-handling areas, e-commerce fulfilment capabilities and value-added logistics services.
The objective should be to make KKIP the
preferred distribution hub for companies serving northern and western Sabah, while
progressively linking the park to BIMP-EAGA supply chains.
Measuring competitiveness
A strategy must be judged by results, not by the number of facilities constructed. KKIP
should establish a performance dashboard with clear baseline measures and annual
targets across Gateway performance, Transport efficiency, Cost competitiveness,
Warehouse performance, Trade development, Investor service, Sustainability, and Industrial impact assessment.
These indicators should be reviewed jointly with tenants and made central to
management accountability. The goal is not merely to move more vehicles, but to
reduce total supply chain costs, improve reliability, and enable industrial firms to grow.
A stronger value proposition
A logistics-led competitiveness strategy would help KKIP differentiate itself from
conventional industrial estates. Its value proposition would shift from “available
industrial land” to “a connected industrial platform for efficient production, distribution
and regional trade”.
This is particularly important for Sabah, where distance from Peninsular Malaysia and overseas markets can lead to higher freight costs and greater supply chain uncertainty.
By consolidating cargo, improving gateway links, sharing infrastructure and using digital
visibility tools, KKIP can mitigate these disadvantages for its tenants. The strategic
opportunity is clear. KKIP already has industrial-scale capacity, a growing investor base, and a location within Sabah’s main economic corridor.
Treating logistics as the growth engine can deepen tenant competitiveness, attract higher-value industries, strengthen
Sabah’s links with BIMP-EAGA, and create more resilient, better-paying industrial employment.
