Sarawak surged – socio-economic slags

18th September 2022

1 INTRODUCTIONSarawak, a state in Borneo, exhibits slower development but rapid environmental degradation. The World Bank Monitor June 2022 Report “Catching Up: Inclusive Recovery & Growth for Lagging States”, points to 5 states, namely Kedah, Perlis, Kelantan, Sabah, and Sarawak, with the lowest average income and highest incidences of poverty.One of the priorities under the 12th Malaysia Plan was to multiply the growth of less developed states to reduce the regional development gap.Sarawak is attempting her economic development programs sustaining ahead with a better performance.

2 ECONOMIC SURGES

Sarawak’s economy recorded a positive 2.9 percent in 2021 – an improvement from a negative growth of -6.8 per cent in 2020 – with an economic value of RM$131.2 billion.In 2021, Sarawak retained its position as one of the top six contributors to Malaysia’s overall national gross domestic product (GDP) growth.According to the Department of Statistics Malaysia (DOSM), Sarawak contributed 9.5 per cent to Malaysia’s total GDP growth. Selangor lead of the national economy with a contribution of 24.8 per cent.The Service Sector is the largest contributor to Sarawak’s economy with a contribution of 35.9 per cent followed by the the manufacturing sector which contributes 28.4 per cent and the mining & quarrying sector with a contribution of 21.1 per cent. The agriculture sector and the construction sector respectively contributed only as much as 11 and 3.4 per cent.

For the GDP per capita, the 13 states and two federal territories in Malaysia registered an increase in the GDP per capita value compared to 2020, with seven states recording a GDP per capita value above the national level of RM$47,324, namely the Federal Territory (FT) of Kuala Lumpur (RM$124,232) and FT of Labuan (RM$78,032), Penang (RM$58,527), and Sarawak (RM$57,635).Further, upon improving trade performance, Sarawak registered double-digit growth in year 2021 as compared to the previous year.

This growth was driven by robust external demand and higher commodity prices – valued at RM$150.9 billion – where total trade increased by 27.8 per cent with a surplus of RM$52.7 billion, an increase of 45.1 per cent.Products wise, the surge in exports was contributed mainly by liquefied natural gas (RM$6.3 billion, 21.8 per cent), palm oil (RM$3.9 billion, 35.5 per cent), crude petroleum (RM$3.3 billion, 45.5 per cent), aluminium (RM$2.7 billion, 53.1 per cent) and condensate & other petroleum oil (RM$2 billion, 64.3 per cent).

3 ECONOMIC CLIENTELSHIP At a time when there are 84 “sick projects” identified in Sarawak; and that there are plans to rescue contractors, concessionaires and capital clientels with proposals that these projects would be re-tendered – only point to ulterior and fortunous opportunities for these clientel-players to replenish once again their capital accumulation. Some of the ongoing mega construction projects embrace the Pan Borneo Highway, Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) of the Kasawari Gas Development Project, the Baleh Hydroelectric project, the EPCIC of Jerun Development Project, the construction of the Sarawak Coastal Road Package. There are other proposed constructions, including the completion of Muara Lassa Bridge, Mukah, and the Sawarak Water Grid Programme phase 2 in Miri.All these big-ticket projects are for the comprador capitalists as the ruling regime in Sarawak has already committed RM$64bil for various efforts to further develop basic infrastructure with allocated state budget.In June 2022, the state government had said that 7,530km of new roads would be built to connect all rural areas, while 3,487km of roads must be upgraded or rehabilitated.It needs to be said that CMS is the sole cement manufacturer in the state while KKB, an associate company of CMS, is involved in civil construction and steel-related manufacturing. The Sarawak Economic Development Corp (SEDC) holds 10.7% in KKB through a private placement in December 2021.These corporate inter-linkages are one aspect of ethnocapital still in dominance in Sarawak’s economy; not surprisingly, many of these entities are involved in the Pan-Borneo Highway project (read: STORM, Taken for a Ride), and related state development projects.

4 ECONOMIC DEFICIENCIESA] The Education sector, like in Sabah, has been in attainment deficiency:A higher proportion of young generation do not have a certificate or obtain a primary schooling, and worst, many of the youngsters (age: 5-19) just do not attend schooling – not dissimilar to the situations in her neighboring state of Sabah.Since Education is knowledge, and skills that should be fully utilised, to their current work. However, owing to the lack of schooling facilitates, a majority of “employed graduates” are in the semi-skilled category which accounted for 32.9 per cent (1.50 million persons). They were largely employed as Clerical support workers (14.4%), followed by Service and sales workers (10.8%) and Craft and related trades workers (4.2%).

B] A study by Assistant Professor of Communication at Northern State University in Aberdeen, South Dakota, Dr Nuurrianti Jalli, has found dissatisfaction among 67.1 per cent or 385 users over Internet access in East Malaysia due to weak, slow, and unstable connectivity – with some being unable to log in at all; read 18-year-old Veveonah Mosibin internet-surfing challenging episode in STORM, A Digital Knight.“Telecommunication Tower” in a village near Miri

C] Infrastructure – simple basics like electricity and water are not easily available, especially in the highland interiors. Also, not unlike in Sabah, there is community-sharing in the use of generators where diesel fuel to operate them are expensive to ferry across turbulent river currents.A research on Indigenous community preferences for electricity services: Evidence from a choice experiment in Sarawak, Malaysia has indicated that the most value was placed on the operator-model underpinning the provision of electricity services and that there was a strong preference for a community-based model over a utility-based model. Interestingly, the researched results suggest that the preference for a community-based operator model may be related to the experience of using electricity for productive uses. The study has demonstrated the importance of social and institutional challenges in providing electricity services to indigenous communities, and highlight the need for the state utility to engage with indigenous communities to overcome these challenges.5 ECONOMIC NATIONALISMOutstanding issues pertaining to eradicate Sarawak economic underdevelopment, in summary:

i) overall restructuring the education system in the state not only in repairing and modifying dilapidated rural schools, and provision of adequate teaching staff therein – to be funded by oil and timber extraction premiums to provide scholarships and loans to students pursuing their tertiary education so that human resources are geared towards the Industrial Revolution 4.0 and the digital and cyber analytics workplace environment in marketspace of the future.Higher Education Ministry had stated that nation-wide there were 197,000 unemployed graduates in 2021, the highest numbers having degrees in social sciences, business and law, with the DoSM Labour Market Review for the first quarter 2022 showing a skill-related under-employment of 37% mismatch between occupations and qualifications, (thesun, 15/09/2022).

Malaysia’s politico-economic – and Sabah with Sarawak economic underdevelopment – must be rectified so that wealth will be shared more equitably by the bumiputera and every citizen regardless of race and religion, and encouraged to embrace – and to include the Orang Asal of the country’s First People – towards our wholesome economic nationalism development together as One People, One Nation, One Progress.

ii) United Nations Declaration on the Rights of Indigenous Peoples, United Nations, 2008 declaration identifies an “urgent need to respect and promote the inherent rights of indigenous peoples which derive from their political, economic and social structures and from their cultures, spiritual traditions, histories and philosophies, especially their rights to their lands, territories and resources.”

Specifically,

Article 28 addresses how indigenous peoples are entitled to restitution or compensation with respect to “confiscated, taken, occupied, used, or damaged” customary land.

Additionally, Article 10 explicitly bans the forced removal of indigenous populations from their land, recognizing that relocation can only occur with free, prior, and informed consent and equitable compensation or compensation with respect to “confiscated, taken, occupied, used, or damaged” customary land.

Nicholas has recommended a shift in the mindset of JAKOA and politicians to actively advocate for the Orang Asal communities, remove prejudicial practices, and re-educate the public on Orang Asal issues.Given that many of the Orang Asal’s prevailing challenges stem from their lack of customary land ownership, systemic change must come at legislative level to implement a truly land reform movement for marginalised natives with titled land for all, (read: STORM, 2020, The Development of Underdevelopment).

iii) There is a need to transform and innovate the healthcare system, with better healthcare delivery – including coverage for outlaying native communities – and accountability systems, with consideration the impact of globalisation has changed the epidemiology of emerging and epidemic-prone diseases. Created to be is an unified system of clinics connected to the family doctor-nurse teams serving at community-base level

iv) Implementation therein, and the acceleration thereof, in infrastructure provisions (clean water, continuous electricity, accessible land and riverine routes) so that the balance growth of Sarawak economies are integrated in bridging the rural-urban divide

v) From a post-independence neo-colonial economy to a DASHarvard’s managed monopoly-capital economy sustaining the continuance of a neo-liberal economic development, we are witnessing the development of underdevelopment in Malaysia today between unequal economies in peninsula Malaysia and the client states of Sabah and Sarawak.It was only in the late 1965 that the country asserted an economic nationalism posture with a Dawn Raid on the British agency houses, but unfortunately this corporatisation take-over inevitably became part of an ethnocratic economic realignment to the New Economic Policy positioning with all its negative ramifications. Now it is the turn of Sarawak and Sabah to take a midnight raid to reclaim the rights in the MA63 Malaysia Agreement 1963 so that in a truly developmental effort by a new generation of progressive leaders attuned to equal sharing of community resources for the due distributed benefits for every rakyat2 in their owned homeland.

SABAH economic development – a state underdeveloped

collective on geoeconomics

16th September 2022

1 INTRODUCTION

Oil was discovered in Sabah much earlier than Terengganu in peninsula Malaysia, yet Sabah does not have an oil refinery like Terengganu.

Sabah only has petrol stations.

For every 100 barrels of oil produced by Sabah, only the value of five barrels returns back to Sabah while the balance is siphoned off to the controlling political masters in Putrajaya; this practice has been ongoing since 1976.

In 1970, the average income in Sabah was about 18 percent higher than the national average and the third highest among all states.

However, by 2019, the state’s average real income stood at only 50 percent of the nation-wide average, the third lowest of all states.

2 ECONOMIC ACTIVITIES

As Malaysia hurled to an impressive economic transformation, Sabah went from a leading to a lagging state, (World Bank, June 2022).

The lag in Sabah’s economic activities relative to Malaysia as a whole was, historically, due to lack of a dynamic manufacturing sector, and its spread-effect boom.

Then, Sabah’s rural-agricultural shift was almost entirely towards the services sector that contributed limited increments to average income.

Thirdly, the lack in development of human capital has been a major factor in retarding sustained economic growth and poverty reduction.

Sabah has a low Human Capital Index (HCI) achievement threshold.

3 ECONOMIC PERFORMANCE

Owing to the above deficiencies, Sabah economic potentialities were underperformed.

i) The poverty rate in Sabah in 2020 was the highest in the nation – more than three times the national average. The real fact is that 36 percent of all those living in poverty in Malaysia are located in Sabah.

Indeed, in 2019, only one district in the state had a poverty rate below the national average, with some districts having poverty rates in excess of 50 percent.

As an instance, the poverty rate in Tongod stood at about 57 percent in 2019, around 10 times the national average.

ii) Contributing to Sabah’s high poverty rate is a persistently higher-than-average unemployment rate. In 2019, the state’s unemployment rate stood at almost 6 percent, almost twice as high as the average national rate of 3 percent.

Sabah’s unemployment rate is not just higher than the national average, it is also higher than that of the other lagging (poor) states like Kelantan, Perlis, Kedah and Sarawak.

It has to be duly stated that a higher unemployment rate often is translated into lower household income which directly leads to a higher incidence of poverty in the state.

iii) Sabah’s lag in average income growth can be said to partly attributable to the fact that its aggregate GDP growth is lagging behind Malaysia’s overall national level.

At the national level, Malaysia’s economic growth had accelerated dramatically in the late 1980s, expanding continuously until the late 1990’s, when the Asian Financial Crisis (AFC98) hit the region. In the period from 1988 to 1996, Malaysia’s average growth rate increased from 4.3 percent to 10 percent. By contrast, Sabah’s average growth rate declined continuously in the period from 1985 to 1989, after which it began to accelerate, though at a lower rate than the national average. During the late 20th century era, by 1997, while the 10-year average growth rate stood at 9 percent at the national level, it was only 4 percent in Sabah.

From 2010 to 2013, Sabah had a higher growth rate than the national average, but the economic trend, however, subsequently reversed after 2017.

iv) The slag in Sabah’s economic performance relative to Malaysia as a whole owes to the mainland (peninsular) manufacturing sector dynamic performance that though transforming Malaysia’s overall national economy, it did not expand to the same extent as in Sabah.

Also, a very limited scale in the manufacturing sector compared to the national spatial expansion, the Sabah’s agricultural workers’ reallocation, and contribution to, the service sector were also only marginally.

v) Then, the educational sector as the human capital endowment though has improved over the past decade, however it is still regarded as lagging behind other states in Malaysia.

In fact, in 2010, 11 percent of rakyat2 in Sabah aged 15 to 64 had some form of post-secondary education. In 2017, though this share had increased to 14.3 percent, however, both the level and speed of the increase in the average level of educational attainment are still straying behind Malaysia as a whole.

Over the period in focus, while the share of working age Sabahans with at least a post-secondary education increased by about 0.5 percentage points per year, the average increase at the national level was higher ataround 0.8 percentage points per year, with the proportion increasing from 18.4 percent in 2010 to 24.0 percent in 2017.

When compared with the other states in Malaysia, it is clear that a larger proportion of people of working age in Sabah do not have any formal education, with the main constraining factor contributing to the dire education achievement to a lack of adequate infrastructure endowment as illuminated by the World Bank Report below:

Compounding Sabah’s ill-preparednessis also a national educational ecosystem bewilderment. Higher Education Ministry had stated that there were 197,000 unemployed graduates in 2021, the highest numbers having degrees in social sciences, business and law, with the DoSM Labour Market Review for the first quarter 2022 showing a skill-related under-employment of 37% mismatch between occupations and qualifications, (thesun, 15/09/2022).

Another contributing factor to be considered, too, are that Sabah interior hinterland districts are facing immense geographical barriers to access proper, and adequate, socio-economic amenities.

Typically, the inability in accessing proper education tend to be in relatively poor regions where there are districts with a higher proportion of poorer households, measured in terms of the absolute poverty rate as well as higher shares of households that are located more than 9 kilometers away from a government secondary school.

It is well-documented that poverty and geographic distance are both widely recognized as constraints on access to education ( see “Children Out of School: The Sabah Context.” Putrajaya: UNICEF, 2019).

The correlation between household poverty and low levels of school attendance is well established is also well established. In both in Sabah and elsewhere, it is real livelihood with children in poor households being expected to assist their family by earning additional income or by doing housework while their parents are working.

With the double burden of both poverty and geographical constraints, a high proportion of poorer households in the hinterland interior’s remote areas in Sabah may opt not to send their children to school, contributing to the weaker education outcomes in the state long-term.

vi) Therefore, reflecting on the lower levels of educational attainment, there is accordingly a relatively high proportion of youth between the ages 15 and 24 being engaged in the labour force when compared to the national level segment:

As an instance, for Sabahan males aged 20 to 24, the rate stood at 83 percent, compared to the national rate of 71.8 percent. Similarly, at 28.7 percent, the labour force participation rate (LFPR) for Sabahan female youths aged 15 to 19 is high compared to the national average of 13.1 percent, while for women aged 20 to 24, Sabah’s LFPR is 66.6 percent, compared to the national rate of 55 percent.

Reitegrating, the contributing factor for the relatively high rate of youth participation in the labour force in Sabah is the high level of poverty, which creates financial pressures for children and youth to assist their parents by earning additional income, (see Edmonds, E, and N Schady. 2012. “Poverty Alleviation and Child Labor”, American Economic Journal) 4 (4): 100-124; and UNICEF 2019, ibid).

vii) Linked to the education, poverty and other socio-economic issues, but not mentioned in the World Bank Monitor on Malaysia June 2022 report is the sizeable foreigners who were granted citizenships systematically in the 1980s and 1990s, which changed the state’s demographics and impacted upon adequate provision of social and economic amenities by the state government.

Sabah has the highest number of illegal immigrants (PATI) in the country as identified by the Institute for Development Studies. Of the 3.9 million population in Sabah, 1.2 million are foreigners with Tawau having the highest number at 180,000, followed by Sandakan and Kota Kinabalu, (nst 15/05/2020).

viii) Regarding basic infrastructure deployment, and the accessibility to it, it seems that a significant proportion of business firms in Sabah expressed the issues relating to transportation problems were significant in so far as being a big constraint on their operations. Therefore, even the completion of the Pan Borneo Highway, which spans about 2,239 km across Sabah and Sarawak, of which 1,236 km are in Sabah – a highway taken rakyat2 for a ride leading to monopoly- capitalised deforestation – may not ease some of the transportation bottlenecks that have been impeding logistics and business operations in the state.

Then, the System Average Interruptions Index (SAIDI) in the average electricity interruption (in minutes) in the state is still of an issue with businesses, and especially rakyat2 – out in the highland interiors – often having to share community electric generators.

ix) The basic human right of access to medical and health care in time of need is not only dependent on the level of economic development, but the will of national governance, too. Sabah is rich in resources, but succeeding ruling regimes had impoverished this state, and impair the healthy progress of the people.

On why healthcare never reaches the majority of Sabah populations, especially those in the highland interiors, and during the emergence of Covid19 – and the subsequent surges – one can only point out that this poor state needs to break with the underdevelopment of medical provision to be replaced with effective first-contact and preventative health care.

On Revolutionary Medicine, Dr. Ernesto “Che” Guevara’s 1960 speech has exemplified truism that “the best way of telling is doing” where doctors and supporting paramedics perform their utmost best “by their practice of solidarity and equality.” Cuba’s health policy emphasizes prevention, primary care, services in the community, and the active participation of citizens.

Consultancy recommendations from the World Bank do not often impact upon targeted communities with their socio-economic priorities. The Malaysian Healthcare system is a medicine-chest full of inadequacies and inequities. The result is an inappropriate healthcare protection and unacceptable differences in resources and health conditions related to income, race, and location.

x) Indeed, those recommendations by the World Bank and the International Monetary Fund are no more than loan-sharking along2 preying on unfortunate victims to the benefits of vulture capitalism. These institutions were designed under colonialism, and remained neo-colonialism in character.

4 DEVELOPMENT OF ECONOMIC UNDERDEVELOPMENT

Andre Gunder Frank’s article in the Monthly Review stated that development of underdevelopment is about developing countries being entrapped in dependence and dominance relationship with rich countries, and that these subordinate countries also suffer from colonial institutional and structural socio-economic constraints.

What is often not identified nor discussed widely is whereby upon gaining independence from a colonial administration, the new ruling regime – morphed into an ethnocapital dominance – practises kleptocracy, supported by national corporate capital that is connected to monopoly capitalism in the Global North, by assisting kleptocrates to dominate, own and control their client states like in the case state of Sabah.

A new Malaysian narrative must be presented from the post-independence neo-colonialism premise. On this landscape of financialised monopoly-capitalism entrapment, perpetuated with ethnocapital clientship where precarious workers are often caught in a labour arbitrage under a globalization environment, it is not only to fully comprehend the characteristics of Sabah economic underdevelopment, but to break away from it.

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