Sarawak poised to reap SCORE rewards

Heightened activity in the Sarawak Corridor of Renewable Energy (SCORE) has brought positive appraisals from industry analysts, signalling a vote of confidence in the development’s economic future as further projects are unveiled.

Funding allocated to Sarawak via the national budget is expected to strengthen the development corridor and bring improvements, in particular, to transport infrastructure and connectivity. However, a lack of human capital risks restricting the pace of growth across SCORE’s key projects, highlighting the need to increase the focus on skills and technology transfer.

Building momentum

Set to be the state’s “primary economic powerhouse” within two decades, SCORE is the most prominent development project in Sarawak, and is expected to be the main driver for investment in the state. SCORE seeks to leverage one of Sarawak’s most competitive advantages – its hydropower potential, to drive growth in a range of sectors, particularly heavy industries in industrial parks on the coast in the initial stages.

Analysts at Maybank Research said in September that significant progress had been made at SCORE thanks to the roll-out of several construction projects, including a major power plant in Balingian, while more plans are being unveiled.

 “We were positively surprised with the significant progress in terms of physical ground works, growing investments and more detailed development plans for all growth nodes,” said the bank.

SCORE was instrumental in helping Sarawak seal the top spot among Malaysia’s states for FDI inflows this year. The state attracted RM7.5bn ($2.24bn) in FDI in the first five months of the year, with Japanese companies alone contributing around RM5.1bn ($1.5bn) of total investment.

The State’s Chief Minister Datuk Patinggi Tan Sri Haji Adenan Bin Haji Satem noted recently that 19 SCORE projects – worth more than RM32bn ($9.5bn) in FDI – had been approved.  He added that 15 projects, with a total investment of more than RM27.0bn ($7.8bn), have been approved in the Samalaju Industrial Park. The remaining four projects, with investment worth more than RM5.0bn ($1.5bn), are located in Mukah, Tanjung Manis and Kidurong. The projects combined are expected to create more than 16,000 direct job opportunities, he added.

Powering the corridor

Sarawak Energy announced in October it had chosen Shanghai Electric to build a RM1.5bn ($448m) coal-fired power plant in Balingian, near Mukah. A 40-month RM493m ($147m) power-engineering contract was awarded to Sarawak Cable by the Chinese firm.  The plant is expected to be completed within 36 months, the Borneo Post reported.

According to officials, the deal underlines the increasing demand for power in the state due to growing investment from energy-intensive industries in SCORE. Sarawak’s Second Resource Planning and Environment Minister Datuk Amar Awang Tengah Ali Hassan said the indigenous hydro, coal and gas energy resources gives Sarawak: “a comparative advantage to produce bulk power at competitive prices in efforts to woo investments”.

He added that power demand may climb to 5,000 megawatt (MW) over six years, while SCORE has been recording a steady increase in demand of 3%-4% annually.

The state’s potential hydroelectric capacity is currently estimated at 20,000 MW and, along with coal and other energy sources, the total potential generating capacity is estimated to be as high as 28,000 MW.

Workforce focus

As expected, October’s budget produced no direct funding for SCORE’s infrastructure. However, both Sarawak and Sabah were allocated some RM30bn ($8.96bn) for development, with a RM27bn ($8.08bn) upgrade of the 1,663km Pan Borneo Highway announced.

Sarawak was also allocated RM2.6bn ($776m) for rural development, RM1.1bn ($329m) for electricity installation, RM160m ($47.8m) for rural air travel and RM70m ($20.9m) as a new hill paddy subsidy.

The upgrade of the road network, which connects Sabah and Sarawak with Brunei, was broadly well received thanks to its potential contribution to rural development, and contracts expected for local construction companies. However, as SCORE’s growth remains under the spotlight, concern is rising that a lack of human resources could weigh on the state’s ability to secure large-scale contracts.

There are a number of factors at play, including a relatively small population, the “brain drain” of skilled workers to Peninsular Malaysia and other countries, and the fact that some jobs in labour-intensive sectors, including plantations and lower-skilled positions in industry, do not pay salaries that are attractive to native Sarawakians.

In early October, the Chief Minister told visitors at the opening of the Centre of Technical Excellence (CTE) in Jalan Sultan Tengah that Sarawak faced a challenge in producing a critical mass of highly-skilled technical workers to man the industries under the massive programme.

“Eventually, after the process of technology transfer … Sarawakians themselves will have to take over from foreign manpower in order for the industrialisation programme to actually benefit us,” he said. SCORE is expected to create over 300,000 work opportunities by 2030 said officials speaking at the event.