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: On paper, Sabah looks like a success story. For three years in a row, the state has crossed the RM100 billion mark in total trade, hitting about RM107.8 billion in 2024 and recording a healthy trade surplus.
Ships load and unload at deep-water ports, trucks queue at depots, and export figures flash reassuringly in official reports. Yet beneath the headline numbers lies a harsher truth: Sabah has become a throughput economy, a place where goods move, but real value, profit, and decision-making power are captured elsewhere.
Most of what Sabah sells to the world is still crude petroleum, palm oil, and LNG. These are classic upstream commodities—bulky, valuable at scale, but modest in terms of local spillovers when they leave the state with minimal processing.
The trading desks that negotiate contracts, the financiers who structure deals, the companies that run advanced logistics, and the plants that perform higher-end processing are often located in Peninsular Malaysia, Singapore, or other regional hubs.
The result is a paradox: the more Sabah exports in this form, the more the world sees its importance, but the less its people feel the full benefits.
At the heart of this paradox is logistics—not just roads and ports, but the way the entire system is organised. Sabah is not poor in infrastructure.
It has Sapangar Bay as a strategic deepwater port, ongoing road and airport upgrades, and a geography that should position it as a natural hub within ASEAN and BIMPEAGA. Yet these assets operate in silos. Ports, roads, customs, special economic zones, and industrial parks are planned and managed with their own priorities and data systems.
No one is truly accountable for what matters to investors and producers: the total time and cost of moving a product from factory or farm to final market, and how reliably that journey can be repeated.
This fragmentation shows up in small but costly ways. A port can add berths and cranes, but if inland roads are congested, paperwork is inconsistent, or agencies insist on overlapping inspections, the gains evaporate.
Trucks can sit idle even when berths are free, not because of physical congestion at sea, but because documents do not match, systems do not “speak” to one another, or approvals are trapped in manual processes. Delays shift from ship to shore, and firms learn to live with uncertainty instead of efficiency.
For businesses, especially those considering higher-value operations, uncertainty has a price. Unpredictable clearance times force exporters to build in extra buffer days and hold more inventory than they would in a well-functioning logistics ecosystem.
That working capital—money tied up in stock, storage, and contingencies—is money not invested in better machinery, product development, or workforce training. For advanced manufacturing or time-sensitive assembly, where reliability is non-negotiable, Sabah’s current system often fails the test before any tax incentive can win the argument.
Small and medium enterprises bear the brunt of this. Agrifood producers and fisheries cooperatives that cannot guarantee delivery windows or consistent cold chain conditions are pushed to sell early in the value chain, often to intermediaries who control logistics from outside the state.
The intermediaries handle aggregation, transport, and market access; they also capture the margins that come with those capabilities. Sabah’s role is reduced to supplying raw material and basic handling, while the “brains” of the chain—planning, optimisation, and risk management—sit in offices far from the rural communities and ports that actually produce and move the goods.
The imbalance in transport modes reinforces this dynamic. Almost all cargo moves by sea at some point, but within Sabah, flows are overwhelmingly road-based, with few true multimodal options linking ports to inland logistics parks, dry ports, or rail corridors.
This makes freight more expensive and less predictable, especially from interior districts. It also narrows the set of industries that can viably locate in those areas. A company that might have considered setting up a processing facility closer to smallholders instead opts to centralise operations near a major port—or outside Sabah altogether—because the logistics risk inland is simply too high.
For rural communities, this is not just a technical issue; it is a question of participation and fairness. When moving goods from the interior is expensive and risky, any business model that depends on aggregating small volumes from scattered producers faces an uphill battle.
Agroprocessing plants, community-based export initiatives, and higher-value rural enterprises struggle to reach scale. The hinterland remains locked into a familiar pattern: sell raw, sell early, sell cheap.
Meanwhile, larger players who can navigate the complexity, pay for workarounds, and absorb long delays consolidate their position. Market power, and therefore income, migrates up the chain and out of the state.
The data problem deepens all of this. Without a centralised logistics data hub, Sabah is effectively operating in the dark
Policymakers do not see, in real time, where bottlenecks form, which routes are underused, or how capacity is evolving. Private operators cannot easily coordinate schedules, share loads, or design efficient shared services such as consolidated cold chains. In an era where global logistics leaders win through visibility and analytics, Sabah’s information gaps translate directly into missed opportunities and weaker bargaining power with carriers, investors, and large buyers.
This is why the answer is not “more projects” in isolation. Another port expansion, another highway, or another zone will help at the margins, but each new asset risks delivering diminishing returns if it plugs into the same fragmented, opaque system.
The real shift comes when Sabah treats logistics as a single, integrated system rather than a collection of projects. That means establishing a coordinating mechanism that owns end-to-end performance, sets clear targets for clearance times and reliability, and has the authority to align agencies and operators around those targets.
It also means embracing digital integration with seriousness. A state-level layer built on top of national trade platforms, coupled with a central logistics data hub, can reduce paperwork, enable risk-based inspections rather than blanket checks, and give both government and business a shared view of how the system is performing.
With better visibility, Sabah can design scheduled services, support specialised logistics providers, and make credible offers to investors who care less about slogans and more about whether their supply chains will actually work.
Finally, integration must be inclusive. Shared logistics solutions—such as common-user cold rooms, cooperatively managed transport services, and cluster-based logistics parks linked efficiently to ports—can give SMEs and rural producers a fighting chance to access high-value markets without being swallowed by transaction costs. When smaller players can plug into a reliable system, they move from being price takers at the farm gate to partners in value creation.
The central message is stark but hopeful: Sabah does not lack movement; it lacks capture. Goods already flow at scale, and the state has the geographical and infrastructural foundations to be much more than a waypoint.
The challenge is to redesign logistics so that every tonne that passes through its ports also deepens local capabilities, anchors highervalue activities, and broadens participation across districts. Until that happens, RM100 billion in trade will continue to impress in speeches—but feel, on the ground, like an illusion.
