A vision for logistics (Part 2)
KOTA KINABALU: The success of Sabah’s logistics and transportation vision hinges on its ability to foster robust governance frameworks, dynamic collaboration, and inclusive stakeholder engagement.
These elements are not mere administrative formalities but the bedrock upon which economic potential is unlocked, infrastructure projects are sustainably delivered, and public trust is maintained. For Sabah, a state grappling with fragmented coordination and competing priorities, addressing these dimensions with urgency and precision will determine whether it emerges as a regional logistics powerhouse or remains constrained by systemic inefficiencies.
Catalysing coordination in a fragmented landscape
The establishment of the Sabah Logistics Council (SLC) marks a watershed moment in addressing the state’s historically disjointed logistics ecosystem. Prior to its formation, stakeholders—from port operators to freight forwarders—navigated bureaucratic mazes independently, resulting in duplicated efforts, delayed resolutions, and inconsistent policies. The SLC’s mandate to act as a “single roof” for problem-solving has already yielded tangible progress, such as its intervention in resolving congestion at Sapangar Bay Container Port (SBCP) through coordinated dialogue with shipping lines and port authorities. By streamlining decision-making and aligning infrastructure upgrades with industrial needs—such as synchronising road expansions near the Kota Kinabalu Industrial Park (KKIP, such coordination is expected to improve efficiency and reduce costs.
However, the council’s effectiveness depends on empowering its technical working groups with authority to enforce compliance across federal and state agencies. The recent Labuan-Kota Kinabalu ferry debacle, where federal announcements bypassed state input, underscores the risks of weak intergovernmental collaboration. To prevent such missteps, the SLC must institutionalise protocols requiring federal agencies to consult state stakeholders during project conceptualisation, ensuring alignment with Sabah’s Transport Masterplan.
Public-private partnerships: Mobilising capital and expertise
Sabah’s infrastructure gap—estimated at RM15 billion for port, road, and rail upgrades—demands innovative financing models. Public-private partnerships (PPPs) have proven transformative in Peninsular Malaysia, where projects like the North-South Expressway and Kuala Lumpur International Airport (KLIA) leveraged private sector efficiency to deliver nation-building assets. In Sabah, DP World’s partnership with Sabah Ports to expand SBCP’s capacity from 500,000 to 1.25 million TEUs by 2025 exemplifies the potential of PPPs to modernise critical nodes. This collaboration integrates DP World’s global terminal management expertise with local operational insights, optimising workflows and attracting transhipment traffic from the BIMP-EAGA region.
To replicate this success, Sabah must
Establish a PPP Unit under the SLC to vet proposals, manage risk-sharing mechanisms, and ensure transparency.
Offer incentives such as tax breaks for greenfield projects in rural areas, aligning with the state’s sustainability goals.
Adopt hybrid models like build-lease-maintain-transfer (BLMT) for rural road networks, reducing upfront public expenditure while ensuring quality maintenance.
Cross-Border Collaboration: Positioning Sabah as BIMP-EAGA’s Gateway
Sabah’s strategic location within the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) offers unparalleled opportunities to serve as a regional logistics nexus. The subregion’s roadmap for multimodal connectivity—emphasising roll-on/roll-off (Ro-Ro) networks, harmonised customs protocols, and integrated transport corridors—aligns perfectly with Sabah’s vision.
For instance, the proposed ASEAN Ro-Ro network could slash shipping costs between Tawau and Sulawesi, unlocking new markets for Sabah’s agricultural exports. Similarly, the ASEAN Travel Exchange 2025 in Kota Kinabalu highlights the symbiotic relationship between tourism and logistics, with Protocol 5’s “own stopover rights” expected to boost intra-ASEAN air cargo volume. To capitalise on these synergies, Sabah must:
Champion the BIMP-EAGA Joint Transport Working Group, advocating for faster implementation of the 2012–2016 Implementation Blueprint’s unfinished projects, such as the West Borneo Economic Corridor highway.
Leverage DP World’s regional networks to integrate SBCP with industrial parks and inland container depots across Borneo, creating a seamless supply chain ecosystem.
Align with ASEAN’s Connectivity Masterplan by prioritising projects like the Singapore-Kunming Rail Link, which could eventually extend to Sabah, linking its ports to mainland Southeast Asia.
Community engagement: Building ownership and equity
Infrastructure projects often falter when local communities are excluded from planning. The Sabah Logistics Forum’s (SLF) opposition to the proposed 6% service tax on logistics services illustrates the consequences of top-down policymaking. The tax, perceived as exacerbating inflationary pressures, was challenged through a stakeholder coalition comprising port operators, freight forwarders, and industry associations. This episode underscores the necessity of embedding community feedback into governance—a lesson reinforced by global best practices where participatory decision-making reduces project delays.
For rural Sabah, engagement is even more critical. The hinterland communities play a vital role in Sabah’s agricultural sector, where according to the latest available figures, agriculture contributes approximately 15.2% to Sabah’s overall GDP (RM12.4 billion), but the specific contribution of hinterland communities is not quantified in official reports. Post-harvest losses are a recognized issue and rural road infrastructure is widely acknowledged as inadequate contributing to significant economic losses
Initiatives like mobile stakeholder clinics and digital platforms for grievance redressal can ensure rural voices shape infrastructure priorities. Additionally, a proposed Social Impact Assessment Framework—mandating consultations for projects affecting indigenous lands—would foster inclusivity while mitigating conflicts.
Sabah’s governance framework must contend with entrenched challenges:
Bureaucratic Silos: Legacy systems and overlapping jurisdictions between JPJ (Road Transport Department) and federal agencies often stall projects. Centralising data through a State Logistics Data Hub—as advocated by experts—would enable real-time monitoring of cargo flows and infrastructure utilisation, identifying inefficiencies like the 25% empty container return rate at SBCP.
Funding Gaps: The state’s reliance on federal allocations limits its autonomy. Replicating Selangor’s road maintenance PPPs, where private contractors fund upgrades in exchange for toll concessions, could address RM2 billion in deferred road repairs.
Climate Vulnerability: Rising sea levels threaten 60% of Sabah’s coastal infrastructure. Mainstreaming climate resilience into the SLC’s criteria—such as elevating port infrastructure and adopting green breakwaters—is non-negotiable.
A call to action for authorities
For Sabah’s leadership, the path forward demands:
Legislating the SLC’s Authority: Transforming the council into a statutory body with enforcement powers, ensuring compliance across federal and state entities.
Fast-Tracking the Transport Masterplan: Allocating RM50 million for Phase 1 implementation, focusing on high-impact projects like the SBCP-KKIP rail link.
Establishing a Sabah Logistics Innovation Fund: Offering grants for SMEs adopting automation and IoT solutions, bridging the technology gap with Peninsular Malaysia.
The stakes are high: failure to act risks Sabah missing its window to become ASEAN’s next logistics hub. Conversely, decisive governance and collaborative zeal could elevate the state’s GDP growth by 2.5% annually, creating 50,000 jobs by 2030. The time for siloed thinking is over; only through unity of purpose can Sabah’s logistics potential be fully realised.
Sabah, linking its ports to mainland Southeast Asia.
