Yong: World’s biggest trade pact coming at the right time for Sabah’s economic recovery

Kota Kinabalu, Thursday, 12 November 2020

Sabah stands to benefit from the Regional Comprehensive Economic Partnership (RCEP) free trade agreement when it finally takes shape next year because Sabah is strategically positioned in the geographically central part of this new trade pact region. However, Sabah needs to prepare ourselves urgently because the RCEP agreement will be signed this Sunday.

The RCEP, which geographically is most of East Asia, involves China, Japan, Korea, Australia and New Zealand and the ten ASEAN member countries (Malaysia, Brunei, Philippines, Indonesia, Singapore, Laos, Vietnam, Cambodia, Thailand, Myanmar). This trade grouping is reportedly the largest in the world, consisting of one third (USD 25 trillion) of the global GDP and 30% (2.3 billion) of the world population.

As a start, Sabah should aggressively position ourselves to benefit from the fast growing economy at Kalimantan to the south and the prosperity of the Mindanao/Sulu to the East. The busy maritime shipping traffic from Australia/New Zealand currently travels along the Lombok-Makassar route northwards along the Kalimantan and Sabah coasts towards the Philippines and North East Asia (China/Japan/Korea). This huge maritime traffic literally passes by our door step at our ESSZONE. Hence, the immediate and long term benefits to maritime trade are too obvious to miss out.

What needs to be done urgently is to upgrade our logistical services, the ports and trading linkages and maritime security. The integration of the Australian and New Zealand economies into this East Asian super trading area will significantly benefit Sabah because of compatibilities in life style, language and legal systems.

Post-pandemic economic recovery preparations have to start now in a big way

While the country is putting maximum efforts to combat the pandemic, the government needs to prepare for post-pandemic economic recovery in a big way so that the economic health of the people can be restored without any further damage. This is because the economic livelihood of the people cannot survive another round of MCOs and lockdowns. It is evident in Malaysia, as in other countries, that continued economic depression can cause health and social problems such as crimes, trauma, mental illnesses and suicides.

Last year, even before the pandemic struck, Sabah’s GDP growth was only a meagre 0.5% compared to the national GDP growth of 5%.
The GDP of Sabah this year is projected to shrink by 20%, the deepest in Malaysia, and one of the worst in the world. Malaysia’s GDP is projected to shrink by 5%. The global economy is also projected to shrink by 5%. Europe (-10%), USA (-8%), India (-4.5%) and other major economies are expected to suffer similar fates. The only major economy that manages to stay afloat is China which is expected to enjoy a positive GDP growth rate of 1%.

For Sabah to regain our economic progress, we should target at least 5% GDP growth in 2021 and 8% in 2022. In comparison, the ASEAN economy is expected to grow by 6% in 2021 while most major economies will also expand. China (at 8% growth in 2021) will be the fastest growing economy. The projected expansion of major economies like the USA (4.5%), Europe (6%), India (6%) will help to propel the world economy to a respectable 5.4%.
(Data from International Monetary Fund)

Datuk Yong Teck Lee
SAPP President, Ex-Chief Minister, Assemblyman (nominated).

Author: Johnny Chin