By Brendon Beliku
Brendon Beliku is a Regional Corporate Mobility Coordinator for an international corporate immigrationfirm specializing in East Malaysian immigration regulatory compliance. He is also an independent publicpolicy analyst
KOTA KINABALU: As Sabah embarks on the implementation phase of the Thirteenth Malaysia Plan (RMK13), the scale of ambition is difficult to ignore.
The state has secured a record development ceiling ofRM12.02 billion to finance 1,173 programmes and projects, the largest development allocation in Sabah’s history.
However, the Chief Minister’s accompanying message was equally significant. The allocation, he stressed, should not be measured merely by the amount spent, but by its ‘implementation, impact and ability to deliver’ meaningful outcomes to the people.
That observation deserves greater attention because it captures an important shift in how governments should think about economic competitiveness.
For decades, infrastructure was regarded as the primary engine of investment. Roads connected markets. Ports facilitated trade.Airports expanded tourism and logistics. Industrial parks attracted manufacturers.
Theassumption was straight forward, namely that better infrastructure naturally translated into greater investment.
Today, that assumption is becoming increasingly incomplete. Across ASEAN, governments are investing aggressively in physical infrastructure as they compete for the same pool of international capital.
Consequently, highways, logistics corridors,deep water ports and industrial estates are no longer unique competitive advantages.
They have become baseline expectations. Investors now assume that serious investmentdestinations will provide adequate physical infrastructure. The question has therefore evolved beyond what governments build towards how governments govern.
This distinction may appear subtle, yet it fundamentally changes the nature of competition. A multinational corporation rarely experiences government through policy speeches, economic blueprints or development plans. Instead, it encounters the government through licensing procedures, regulatory approvals, compliance requirements and administrative decision making,i.e., the everyday interactions that determine whether an investment progresses with certainty orbecomes entangled in delay.
Every duplicated submission, conflicting interpretation between agencies and unnecessary procedural layer increases the cost of doing business without necessarily improving regulatory outcomes. Individually these may appear to be administrative inconveniences. Collectively, they become economic barriers.Economists have long referred to such burdens as “transaction costs”.
From a governance perspective, however, they represent something more consequential, namely institutional friction. Unlike financial costs, institutional friction is often invisible within public accounts because it is absorbed by businesses through delayed market entry, prolonged approvals, duplicated compliance obligations and regulatory uncertainty. Rather, these hidden costs
influence investment decisions every bit as much as taxation, labour costs or infrastructure availability. This is why governance should increasingly be recognised as a form of ‘economic infrastructure’. Roads enable goods to move. Ports enable trade to expand. Airports facilitate connectivity Governance perspective , by contrast, enables decisions to move. It determines whether institutions coordinate effectively, whether regulations are interpreted consistently and whether investors possess sufficient confidence to commit capital over the long term.
Without capable institutions, even world class infrastructure risks operating below its intended economic potential.International evidence increasingly supports this proposition.
The World Bank’s new BusinessReady (B-READY) framework, which replaces the former Doing Business indicators, placesgreater emphasis on regulatory quality, public service delivery and the practical implementation of business regulations rather than simply measuring the existence of laws.
Similarly, theThirteenth Malaysia Plan identifies improvements in governance, business environment, institutional coordination and ESG adoption as necessary conditions for attracting higher quality investment and advancing economic complexity. In other words, competitiveness is no longer measured solely by physical assets, but equally by institutional capability.The world’s most competitive economies illustrate this reality.
In particular, Singapore’sreputation has never rested exclusively upon Changi Airport or the Port of Singapore, impressive though they are. Its enduring advantage lies equally in regulatory predictability, administrative consistency and institutional coordination. Estonia, despite its relatively smalleconomy, transformed public administration through digital interoperability, allowing government agencies to exchange information securely instead of repeatedly requesting identical documents from businesses and citizens.
The United Arab Emirates has likewise pursuedadaptive regulatory reforms, recognising that legislation must evolve alongside innovation ifgovernments intend to remain globally competitive.
These jurisdictions differ politically, constitutionally and economically. Yet they share a common philosophy, namely that governance itself constitutes strategic infrastructure.Sabah should not seek to replicate these models wholesale because governance cannot simply be imported.
Every jurisdiction operates within its own constitutional, political and administrative realities. Nevertheless, the underlying principle remains directly applicable.
Infrastructure can befinanced. Incentives can be replicated. Institutional credibility, however, is accumulated gradually through consistent governance, transparent decision making and regulatory certainty.
This observation becomes particularly relevant as Sabah positions itself as a strategic gatewayvwithin the Brunei Darussalam, Indonesia, Malaysia and Philippines East ASEAN Growth Area(BIMP-EAGA), while simultaneously advancing initiatives in the blue economy, manufacturing, logistics and downstream industrial development. The state’s geographic advantages are considerable. Its investment ambitions are increasingly clear.
The remaining question is whether its institutions can evolve with equal pace.That evolution should not be misunderstood as a call for weaker regulation or reduced compliance. Quite the opposite.
As investment becomes increasingly influenced by Environmental, Social and Governance (ESG) considerations, governments themselves are beginning to face the same expectations they have long imposed upon businesses, namely transparency, accountability, consistency and institutional integrity.
Sabah therefore has anopportunity to rethink compliance not as an administrative obligation, but as a source ofcompetitive advantage.
The next phase of Sabah’s investment story will therefore depend less upon how many projectsare approved and more upon how effectively those projects are governed.
In the emerging global economy, infrastructure may continue to attract investment, but governance increasingly determines whether that investment arrives with confidence, expands sustainably and remainsfor the long term.
‘That is where Sabah’s new investment race truly begins’.
