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: Sabah poised to harness the momentum of Malaysia’s national trade facilitation agenda to drive regional economic growth and integration.
As Malaysia advances its position as a regional logistics and trade powerhouse, Sabah’s strategic alignment with federal strategies, coupled with its own unique initiatives, is reshaping its economic landscape.
This scenario explores how Sabah, by consolidating national policies with local strengths and ambitions, can emerge as a dynamic regional trade hub, contributing robustly to Malaysia’s broader economic aspirations.
National Trade Facilitation: Malaysia’s Model
Malaysia’s approach to trade facilitation is rooted in comprehensive legislative frameworks, digital transformation, and infrastructure modernisation.
The federal government’s commitment is embodied in policies such as the Strategic Trade Act, the National Trade Blueprint, and the Logistics and Trade Facilitation Masterplan. These frameworks are designed to simplify, harmonise, and modernise trade processes, reduce barriers, and foster economic partnerships, ensuring Malaysia remains competitive in a rapidly evolving global landscape.
Central to this strategy is the National Single Window (NSW) system, a digital platform that streamlines customs processes, enables electronic submission of trade documents, and enhances operational efficiency across the country.
The NSW, alongside modernised port operations and a commitment to green logistics, has positioned Malaysia as a leader in regional trade facilitation, with major ports like Port Klang and Port of Tanjung Pelepas setting benchmarks in automation and capacity.
Sabah’s Strategic Position and Aspirations
Sabah’s location along major shipping routes, abundant natural resources, and proximity to burgeoning regional markets such as the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) endow it with significant economic potential. Industries such as agriculture, aquaculture, timber, oil and gas, and tourism form the backbone of Sabah’s export economy.
However, to fully realise this potential, Sabah must address logistical challenges and infrastructure gaps that have historically limited its competitiveness and integration with global supply chains.
Bridging Gaps: Infrastructure and Logistics Modernisation
A cornerstone of Sabah’s trade facilitation strategy is the modernisation of its logistics infrastructure. The expansion and transformation of the Sapangar Bay Container Port (SBCP), now managed in partnership with global logistics giant DP World, exemplifies this commitment.
This collaboration is set to more than double SBCP’s handling capacity, positioning Sabah as a premier regional trade hub within BIMP-EAGA and beyond.
The integration of advanced logistics and smart technologies will not only modernise port operations but also unlock new markets for Sabahan businesses, particularly small and medium-sized enterprises, empowering them to compete on a global scale.
The Sabah Logistics Council (SLC) plays a pivotal role in driving these reforms, advocating for investments in key infrastructure projects, improving road networks linking industrial zones to ports, and exploring rail connectivity.
The SLC’s efforts ensure that Sabah’s transport masterplan aligns with the National Transport Policy, securing federal support while contributing to Malaysia’s broader logistics goals.
Digital Transformation and Data Integration
Sabah’s embrace of digital transformation is central to its trade facilitation journey.
By adopting the National Single Window system, the state has streamlined customs clearance processes, enabled electronic submission of documentation and reduced costs and time for exporters and importers.
The development of a centralised logistics data centre, championed by the SLC, aims to facilitate real-time tracking of cargo movement, improve port operations, and enhance transparency across the supply chain.
Investments in digital infrastructure are also positioning Sabah to align with ASEAN’s digital economy initiatives. By building robust digital platforms and integrating with national and regional trade networks, Sabah is attracting technology investments and modernising local industries, paving the way for leadership in e-commerce and tech-driven sectors.
Policy Alignment and Federal-State Collaboration
Sabah’s trade facilitation efforts are closely aligned with federal legislation and frameworks. While the authority to negotiate international trade agreements rests with the federal government,
Sabah actively collaborates with federal agencies to maximise the benefits of frameworks such as the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and ASEAN integration.
The proposed Sabah Investment and Trade Office (SITO) is envisioned as a vehicle to promote investments, exports, and business partnerships, empowering Sabah’s engagement in regional markets within the boundaries of federal jurisdiction.
The establishment of Special Economic Zones (SEZs) and Free Trade Zones (FTZs) around strategic ports is another key initiative. While the designation of such zones requires federal approval for tax incentives and customs regulations, Sabah continues to advocate for these reforms to attract investment and diversify its economic base.
Sustainability and Green Logistics
As global trade shifts towards environmentally sustainable practices, Sabah is beginning to align its logistics sector with international ESG standards. The SLC is exploring green logistics solutions such as electric vehicles for last-mile delivery, renewable energy for port operations, and sustainable packaging for exports.
These initiatives not only reduce the environmental footprint of logistics operations but also attract investors who prioritise sustainability.
Sabah’s focus on renewable energy, eco-tourism, and conservation further enhances its appeal to ESG-conscious investors. By championing sustainable development, the state is positioning itself as a destination for green technology, logistics, and advanced manufacturing.
Public-Private Partnerships and Investment Incentives
Collaboration with the private sector is a defining feature of Sabah’s trade facilitation approach. Public-private partnerships (PPPs) have facilitated investments in logistics infrastructure, such as warehouse facilities and cold storage for perishable goods.
These partnerships are crucial for attracting global logistics firms, fostering innovation, and expediting infrastructure projects that align with both state and federal priorities.
The Sabah Development Corridor (SDC) offers tax incentives and support programmes to attract both domestic and foreign investors, with a focus on logistics, manufacturing, and agro-industrial activities.
By leveraging PPPs and investment incentives, Sabah is accelerating its journey towards becoming a regional logistics hub.
Empowering Local Industry and SMEs
Trade facilitation measures in Sabah are designed to empower local industries and small and medium-sized enterprises (SMEs).
Simplifying export documentation, providing access to affordable logistics services, and supporting capacity building have enabled SMEs, including rural producers in cocoa and handicraft industries, to participate in global trade. Enhanced feeder vessel connectivity from smaller ports such as Tawau, Kudat, and Sandakan to SBCP allows goods from remote areas to access international markets efficiently, strengthening supply chains for key sectors like aquaculture and timber.
Capacity building and skills development are also prioritised, with training programmes to upskill the local workforce in digital logistics management, green logistics practices, and advanced supply chain analytics. These efforts ensure that Sabah’s workforce is equipped to support modern logistics operations and drive economic growth.
Regional Integration and Global Engagement
Sabah’s strategic location and expanding global networks position it to benefit from regional and international trade frameworks. By integrating into regional supply chains and aligning export capabilities with national policies, Sabah is leveraging opportunities presented by RCEP and CPTPP. Targeted engagement in high-value markets, such as Japan, Canada, and Australia, is enhancing the state’s focus on premium exports like sustainable seafood, organic agriculture, and eco-friendly timber.
China’s Belt and Road Initiative (BRI) offers further opportunities for infrastructure development, particularly in port expansions, highways, and digital networks. While large-scale projects may require federal approval, Sabah is actively pursuing state-level projects funded through PPPs, focusing on digital infrastructure and localised transport networks. By offering attractive conditions for BRI investments, Sabah is positioning itself as a regional logistics hub, enhancing its economic influence in the region.
Overcoming Challenges and Building Resilience
Despite significant progress, Sabah faces challenges that must be addressed to fully capitalise on trade facilitation opportunities. Inadequate port infrastructure, fragmented transport networks, data and coordination deficiencies, and sustainability gaps remain obstacles to be overcome.
Major infrastructure projects require federal funding and regulatory clearances, while broader legal reforms may need federal involvement.
Human capital development is critical, with investments in education and skills training, particularly in logistics, technology, and sustainable agriculture. Collaborations with international universities and research institutions can accelerate innovation and expertise, driving Sabah’s transition to a knowledge-based economy.
Vision for Sabah’s Future within the National Approach
Sabah’s integration with Malaysia’s national trade facilitation strategy is creating a scenario of immense promise. By consolidating national policies with local initiatives, Sabah is laying the groundwork for sustainable economic growth, regional integration, and global competitiveness.
The state’s transformation is driven by modern infrastructure, digitalisation, green practices, and strategic partnerships, enabling it to unlock its economic potential and establish itself as a vital logistics hub in the region.
The vision for Sabah’s logistics future is one of resilience, empowerment, and prosperity. Improved infrastructure, enhanced connectivity, and sustainable practices will enable the state to compete globally, attract foreign investment, and support regional trade integration. By embracing the initiatives of the Sabah Logistics Council, leveraging national successes, and fostering a culture of innovation and sustainability, Sabah is charting a course towards a thriving and inclusive economic future.
Conclusion
Sabah’s journey in trade facilitation exemplifies the power of strategic alignment between national and regional approaches. Through robust collaboration with the federal government, targeted investments in infrastructure and digital transformation, and a commitment to sustainability and public-private partnerships, Sabah is positioning itself as a key regional trade and investment hub.
This scenario underscores that Sabah’s success is not only integral to its own prosperity but also to Malaysia’s broader economic ambitions, ensuring that the state remains a vital participant in the nation’s growth story.
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