INVESTING IN EXPANSION FINANCIAL SERVICES

OBG talks to Datuk Peter Lim Siong Eng, Managing Director, Sabah Development Bank

OBG : Is capital readily available form Sabah-based companies that wish to carry out expansion plans?

LIM: Sabah is very much open for business. Both the government and the private sector are eager to help new business enterprises launch here. The government is offering many new businesses pioneer status, which comes with a lot of financial benefits and support. While the banking sector is well equipped to offer the right types of products and services to support development.

Both the banking sector and the state are very much open to new concepts, ideas and enterprises which will aid the growth and development of the state and its economy. The key is that any new venture must be commercially viable and commercially driven. As long as these criteria are met.then there is no doubt that the right kind of financing is available in Sabah.

OBG : Which sectors will likely receive further investment capital to support growth and development?

LlM: There is huge potential for developmentand economic growth in Sabah in a multitude of sectors and industries. One of the keys to achieving this success is the upgrading of the state’s infrastructure, which will require major construction projects and for significant capital to be available to achieve these objectives. Due to the amount of capital needed forthese projects, they will·require the most attention.

However this is certainly not the only area where there is massive growth potential and the need for investment. If we take a look at the other end of the spectrum, Sabah has a healthy and rapidly growing SME segment which will need access to the right financial senvices to develop.

Though these are smaller-scale ventures, theyare no less important to the development of the state. The agricultural and tourism industries are two of the most important and fastest developing in Sabah. Agriculture has the potential to be of huge commercial value.

The key cash crop is palm oil, but there are many other·crops that can be produced and then processed in·commercially viable operations. Research and development, as well as an injection of capital, will be necessary to examine the potential for moving these products into downstream activities. Sabah's banking sector is very well suited to offer the right products and support forsuch enterprises, so we are more than |ikely to find a surge in this sector.

There are opportunities for downstream activities in many areas, from food preparation and canning to health care. The key to the successful development of these concepts lies in changing the mindset of the overall industry to look at the full scope of existing opportunities and exploiting them rather than viewing agriculture for only subsistence living. Profit margins in these areas are good and. comparatively speaking, especially with help from the state, the start-up costs are not that high.

Tourism, on the other hand, is already well established. Growth rates for tourism are expected to remain high for the foreseeable future and with more direct flights routes to and from Kota Kinabalu the outlook for the industry is very good. The sector will continue to be a major contributor to thelstate but does need more investment to maximise its potential.

OBG : What is the potential for the further development of sharia-compliant finance in Sabah?

LIM: The federal government is already promoting Malaysia as an Islamic finance hub in South-east Asia, if not for the whole continent, with long term plans to reach even further Sabah can definitely play its part in this objective, The core of Islamic finance has always been in the concept of shared risk, an idea which is becoming extremely popular at every level from within Sabah itself to nationally regionally and across the world. Islamic finance has evolved to become a complete and competitive form offinancial intermediation that continues to serve its traditional clients and has expanded to many other segments. of society, reaching individual consumers and businesses alike. Though it is a fairly recentradclition to the services available in Sabah, thesegment has great potential for rapid growth.

(Nota : Oxford Business Group is a global publishing and consultancy company producing annual investment and economic reports on more than 30 countries. Every business intelligence report is based on in-country research conducted over an average of six months by experienced analysts. To identify investment opportunities, we draw on more than 1,000 first-hand sources.)