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KUCHING: Infrastructure and construction are pegged to be the major drivers for Sarawak and with the state bucking the trend in development expenditure, this will definitely contribute to the development potential for the state.
During a panel session yesterday touching on the economic outlook for Malaysia and Sarawak, Esther Lai, head of Sovereign Ratings under RAM Rating Services Bhd (RAM) said for the state, the construction sector has been forecasted to grow at 6.2 per cent for this year, higher than the 5.9 per cent that was achieved last year.
“We do think there is going to be a fair bit of upside to that as well given the momentum that we see,” Lai said during her panel at the Bank Pembangunan Infrastructure Forum.
The panel session was moderated by Bank Pembangunan Malaysia Bhd’s executive vice president/ ead, Business and Investment Banking Zainul Hashim and featured other panellists Lt. Kol Robert Rizal Abdullah, Lebuhraya Borneo Utara Sdn Bhd chief executive officer Ir Safuani Abdul Hamid and CIMB group chief economist Arup Raha.
Lai added that having the basic infrastructure will definitely facilitate productivity and growth in the state.
“Definitely, construction for the state will be a definite bright spot because they observe a lot of commitment by the state to mobilise its ample reserves to put in, in terms of the right spending and productive spending.”
Earlier on, Lai pointed out that specifically for Sarawak, there is no lack of equity, adding her belief that there is plenty of development potential here.
“In fact, I would like to highlight that Sarawak actually bucked the trend. Usually, it is very common to see governments cutting development expenditure, especially when they are faced with revenue pressures.
“But this is not the case for Sarawak, and this is something which is unique and would definitely contribute to the development potential for the state,” she stressed on.
Lai went on to point out that going by the development budget for this year, RM5.9 billion has been allocated for development spending and that this is actually a very high 65 per cent growth year on year.
“And within that, the rural development portion is RM2.6 billion which is again another double digit 13 per cent growth,” she said. “So, this would be instrumental in terms of transformation of the rural economy.”
In RAM’s Sarawak Focus report, she noted that given the state’s dependence on resource industries, weak commodity prices have significantly affected Sarawak’s mining activities in the last two years.
She however noted that the slowdown has been cushioned by large infrastructure and power projects, not to mention the 11th Malaysia Plan, which focuses on rural development and identifies Kuching as one of four cities that will undergo special development.
According Lai, Sarawak is very refreshing from the angle that despite severe revenue pressures and looking at 2015 Sarawak figures, there was a very steep contraction to revenue, as good as 22 per cent.
“But yet, that year, due to well managed budgetary management, the state ended up with RM970 million surplus. And you would expect revenue pressures to continue into this year and even then, the expectation is for the state to still have a surplus, smaller nonetheless. But, it’s still a surplus of an expected RM175 million,” she said.
“So, the angle that I would like to contrast here is that the Sarawak state has a lot of fiscal space to provide that fiscal stimulus to encourage a lot more development spending which would be very good for the development of the state, moving forward,” she said.
She went on to note that in terms of fiscal space, there is definitely fiscal space to accelerate the spending on development purposes.
“What is more important is to spend on what really matters in terms of facilitating economic development and I see a lot of that when I go through the budget disclosures.
“In fact, I see a lot more focus in terms of social infrastructure, like schools and clinics. I see a lot more allocation in that regard, I think that is so important as well.”
August 25, 2016, Thursday Sharon Kong, sharonkong@theborneopost.com
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