Sarawak state government hopes to relocate the marine engineering industry to a new township at Tanjung Manis

The new township of Tanjung Manis, occupying a central location within the Sarawak Corridor of Renewable Energy (SCORE) and possessing a natural deep-water port, is earmarked for development as a strategic hub for the state’s timber, palm oil and halal food processing industries, as well as to become the new base for the marine engineering industry. The state-owned Sarawak Timber Industry Development Corporation (STIDC) has been tasked with overseeing the growth of the node and the firm is planning to spend about RM5bn ($1.5bn) to upgrade the area’s infrastructure. So far RM2bn ($608.4m) has been spent on road networks and bridges, while a further RM800m ($243.4m) is going towards a water supply project.

The port, upon expansion, is expected to able to handle 12.9m tonnes of liquid and 400,000 twenty-foot equivalent units of dry bulk and general cargo. The development, still somewhat in its infancy, has received some pioneer investments. Yet the long-term ambitions are lofty, prompting some concerns as to whether the industries being targeted are commercially viable, optimally match the areas’ strengths, and avoid running the risk of competing with and potentially cannibalising established commercial areas.

MARINE ENGINEERING: Sarawak’s location on major shipping lanes and proximity to offshore oil and gas resources have led to growth in shipbuilding and repair activities, as well as marine engineering contract services, most of which has been centred in and around the city of Sibu. state planners anticipate shipping traffic and offshore exploration and production to expand and believe that companies s in the region will be exploring alternative bases to Singapore.

In line with the drive to shift economic activity to lesser-developed areas, state planners are looking to leverage the large land bank, waterway connectivity and natural deep port anchorage that Tanjung Manis offers to slowly migrate the marine engineering industry away from Sibu. If all goes to plan, by 2030 5000 new jobs will be created in the field, with the industry contributing $170m to GDP. “Tanjung Manis should be able to better service supertanker construction, as Sibu’s river is too shallow. Singapore became a shipping nation because of large grants and training support from its government. Sarawak can do something similar,” Captain Goh Chin Guan, director of the Sarawak Maritime Academy, told OBG.

FORESTS & PLANTATIONS: Sarawak makes up 44% of Malaysia’s logable forest area and 93% of what is logged is exported in unprocessed form as plywood, logs and sawn timber. Cognisant of the need to ramp up value-added activity, the Tanjung Manis timber processing zone is seeking to receive investments in the downstream manufacture of timber products, such as paper, furniture and mouldings, that could create 110,000 new jobs and potentially contribution $4.5bn to state GDP by 2030. Malaysia is responsible for around 40% of the global supply of palm oil, 70% of which comes from the eastern states of Sabah and Sarawak. Similar to timber, most (roughly 70%) of Sarawak’s palm oil is being exported in raw form, and Tanjung Manis and Bintulu are earmarked to become centres for processing efforts, like crushing and refining that support the manufacture of oleochemicals, biomass, bio-diesel and palm oil by-products, such as compost and fibre.

The objective is for the industry to create 70,000 jobs and $3.6bn worth of GDP for the state by 2030. In December 2014 the Sarz Al Yahya Corporation announced that it will be investing RM3bn ($912.6m) to RM5bn ($1.5bn) over the next five years to develop a large-scale nipa plantation and Nipa Sap Processing Industry Complex in Tanjung Manis. Nipa palm is native to mangrove forests of Asia and Oceania and according to the company it is also more economical to harvest than palm oil or rubber. The sap can be used to produce sugar, vinegar and ethanol.

HALAL: The value of the global halal food market is estimated at $347bn. Currently Malaysia produces around $10bn worth of halal products per annum, and the Tanjung Manis Halal Hub (TMHH) is intended to raise the country’s global share by becoming the largest centre for downstream halal food production and manufacturing in the world. The TMHH, with an allocation of 77,000 ha of land, offers investors a large land bank for agriculture and aquaculture cultivation, and the STIDC has been afforded RM135m ($41m) for infrastructure. Taiwan-based Sea Party International has committed RM2bn ($608.4m) to the hub that it said will go to breeding halal seafood, and according to the chief minister’s Halal Hub Unit, several Japanese and Middle East companies have expressed interest in establishing operations and five Malaysian firms have signed up for RM2.1bn ($638.8m) of investments.

Given that Tanjung Manis is a relatively isolated township with a small infrastructure base, some observers question the extent to which a halal hub could be commercially viable and whether the strategic slots designated for the TMHH could better serve other industries. With only two of the 12 deepwater berths at the port going to shipbuilding, there are concerns that this will not be sufficient if the state wants the shipbuilding industry to relocate from Sibu. Malaysia already has several halal hubs and more are in the development pipeline, leading some to question whether the country can absorb this many. The Rajang River Delta in which Tanjung Manus is situated offers local aquaculture prospects. However, some two-thirds of the state’s meat production is in poultry, rather than livestock, and 90% of the poultry production takes place around Kuching, a 465- km drive from the TMHH.

“The state’s food and beverage industry is in Kuching and it makes economic sense to keep it there. However, SCORE is not just about economics but political aspirations, and even though it will be costly to put up new infrastructure in Tanjung Manis, the government is doing all that it can to assist the central region in catching up with the rest of the state,” Abdul Karim Tun Abang Haji Openg, the president of the Sarawak Chamber of Commerce and Industry, told OBG.