SPEECH BY THE CHIEF MINISTER DATUK MUSA HAJI AMAN AT THE OFFICIAL OPENING OF POIC SABAH SDN BHD AND SEMINAR ON BIODIESEL TECHNOLOGIES, AT MINI THEATRE SABAH TRADE CENTRE KOTA KINABALU, 18 JULY 2006

I am indeed pleased to be here this morning to officiate the opening of the POIC Sabah Sdn. Bhd and would like to commend the Ministry of Industrial Development for initiating this auspicious occasion. Although it can be considered the newest government-linked company wholly owned by the State Government of Sabah, it is one company that carries a responsibility probably bigger than most other GLCs. When you consider the fact that this sector contributed some 38 per cent (or about 7 billion ringgit) of Sabah’s total export revenue in 2005, you can understand why the State Government is banking on the success of POIC Sabah Sdn Bhd to further develop the oil palm sector and the State’s economy, in general.

The concept of industrial clustering is not new. Advanced countries like the US, Japan and Europe have applied this concept which has helped their industries to become globally competitive. All rapidly growing Asian economies in the last 20 years and more recently China and India, possessed clear industrial clustering characteristics. Malaysia’s industrial development framework, the IMP2 is based on industrial clustering. In Sabah, the Kota Kinabalu Industrial Park was started based on such a concept, paving the way for the development of food, metal and timber clusters in KKIP. Last month, the Federal Ministry of Primary Industries announced plans to develop a wood furniture cluster in KKIP. Under the 9^th Malaysia Plan, it is also the Federal government’s plan to promote industrial clustering throughout the country.

In line with this objective, the idea of developing an industrial cluster to promote downstream palm oil industries in Sabah was mooted several years ago. Once the concept was thoroughly scrutinized and its viability assured, the State Government without hesitation established POIC Sabah Sdn Bhd to spearhead palm oil downstream development. I am pleased to know that since its incorporation just over a year ago, POIC Sabah Sdn Bhd has hasten its development plans and implementation.

The last I heard is that the site preparation works in Lahad Datu will be completed well ahead of schedule and potential invertors are lining up to buy the industrial land for palm-oil related investments running into hundreds of millions of ringgit. Some factory buildings are expected to be put up some time in 2007. In anticipation of the demand from investors and the bright prospects of the oil palm sector in general, POIC Sabah Sdn. Bhd. is considering expanding the industrial cluster to allow for more industries. Overall, the State Government is pleased with the progress of POIC Sabah Sdn Bhd.

POIC Sabah’s main focus is in developing the palm oil industrial cluster in Lahad Datu and the government sees a huge potential in this sector. It has therefore directed Sawit Kinabalu Bhd, which is also wholly-owned by the State Government, to implement a similar cluster in Sandakan. I am confident that POIC Lahad Datu will be a good model to be emulated at for the Sandakan POIC.

The development palm oil industrial clusters illustrate that the Government is pushing very aggressively in adding value to our palm oil. In this respect, we are grateful that the POIC concept in Sabah has received very encouraging responses from the Federal government and its leaders.

Additionally, the Federal Ministry of Plantation Industries and Commodities acknowledges the pioneering importance of POIC Lahad Datu and is fully supporting its development through funding and policies alignment. POIC Sabah Sdn Bhd has been an active participant in federal-level discussions and meetings on important policy issues related to the development of downstream palm oil industries in Malaysia. The setting up Malaysian Palm Oil Board’s research and training centre in Lahad Datu is also testimony to this support. This centre, called Pusat Latihan Sawit Malaysia, or PLASMA in short, is the first of its kind in Malaysia. With a capacity for 300 trainees at any one time. PLASMA is set to play an important role in supplying the manpower needs of the palm oil industry in Sabah in the coming years.

The Federal government’s enthusiasm about Lahad Datu and the cluster there has to do with the fact that Sabah is the biggest palm oil producer among Malaysian states. Moreover, Sabah’s geographical location makes it an ideal port through which to access more palm oil from Indonesian Kalimantan, and lauric oil (or coconut oil) from the Southern Philippines to support wider oil-based industries. The availability of more oils from the neighbouring countries will enhance Malaysia’s position as the current top palm oil producer in the world and enhances its position as a the premier destination for oil-based investments. For us in the State administration, the development of the Lahad Datu cluster, as well as other future clusters, has even wider and deeper significance.

An estimated 220,000 people join the labour force in Malaysia every year and 20 per cent of these job-seekers (that is about 44,000) would have tertiary education. Based on statistics, there are some 20,000 new job-seekers in the State every year, of which about 4,000 have university qualifications. It is a massive responsibility for the State Government to ensure that there are jobs available. We need to create jobs and create wealth not only to satisfy the present need of our people, but also to ensure that the State of Sabah progresses in tandem with the rest of Malaysia as we move towards the goals of Vision 2020.

The State Government is aware that most of the economic indicators put Sabah near the bottom of the development table of Malaysia demonstrated by the the highest incidences of poverty and unemployment. But things have been changing, and are still changing. One clear example is the fact that under the 9^th Malaysia Plans, the Federal Government’s development allocations for Sabah, at 16.9 billion ringgit, ranks third behind Federal Territory and Selangor. With better understanding and more Federal support through policy empowerment and funds, we are now in a position to move forward.

We are now well passed the stage where we only talked about our problems and our needs. We know the economic indicators and why they became what they were. We knew it had something to do with our failure to industrialize and add value to our precious commodities like timber and cocoa. We knew a long time ago that we needed to deepen those sectors in order to earn more revenue and create more jobs. We knew there have been very limited plough-back investments and the economic spinoffs of the oil palm sector on the State’s economy were limited. Although Sabah produces almost 30 per cent of the 15 million metric tonnes palm oil in Malaysia, our downstream activities are confined to milling and refining. Further value-adding such as oleochemical, biodiesel, energy production are unheard of.

All this will change and many of these changes will start with POIC Lahad Datu, which, incidentally, is up to now still the only sizable dedicated palm oil industrial cluster in the world. In this regard, I am that the response from investors have been extremely encouraging. I have been told that a number of investors already received their approval for biodiesel plants to be set up in Lahad Datu.

The palm oil industries in POIC Lahad Datu will also generate tremendous opportunities in the services sector, act as a catalyst for further development in the plantation and plantation technology sector, research and development, as well as spurring development in the shipping and port sectors.

The State Government is committed to POIC’s development simply because it sees the wealth-creation potentials and the bright future of palm oil in the world edible oil market. We were once known throughout the world for our high quality timber and cocoa beans. Today, we are in a premier position to seize this golden opportunity of being a global player in palm oil.

I urge every one, whether you are government officers in positions of making important decisions, or investors in the private sector, to remove any lingering doubts or inhibitions you might have on POIC Lahad Datu in particular, and the palm oil industrial cluster concept in general. The entire government machinery is committed to the success of this endeavour. We have never been more serious.

Before I conclude, let me congratulate YB Datuk Ewon Ebin and his fellow directors of POIC Sabah Sdn Bhd, CEO Dr Pang Teck Wai and his staff for your dedication and diligence. I look forward to seeing POIC Sabah Sdn Bhd move on to become an authority on downstream palm oil processing industries, and the people of Sabah are looking forward to seeing the success of the palm oil industrial cluster in Lahad Datu.

On that note, it gives me great plaseure to declare the POIC Sabah Sdn Bhd officially opened. Thank you.