Kota Kinabalu: Sabah’s future economic success will depend as much on governance and leadership as investment and market forces, said Financial Advisor to the Sabah Government, Tan Sri Andrew Sheng.
Drawing lessons from past financial crises, Sheng said many economic problems are rooted in political and governance issues rather than weaknesses in markets alone.
He said policymakers often overlook the role that leadership, policy decisions and institutional strength play in shaping economic outcomes.
Reflecting on research he conducted during his time at the World Bank, Sheng said he found that more than half of banking crises worldwide were linked to political factors.
“I wrote a book on it. I made eight case studies and my conclusion was more than half of the banking problems were political problems,” he said during the Daily Express Sabah Matters podcast.
Sheng said the lesson for Sabah is that attracting investment alone is not enough if issues involving infrastructure, public services and policy implementation are not addressed effectively.
He noted that investors ultimately look for stability, reliable institutions and consistent policies when deciding where to invest.
Using the 1997 Asian Financial Crisis as an example, Sheng said political uncertainty and governance weaknesses often exacerbate economic challenges and undermine business and investor confidence.
“What nobody focused on was that it really was a political transition crisis,” he said, referring to Indonesia’s experience during the regional financial turmoil.
For Sabah, he said strengthening governance, improving decision-making and ensuring long-term policy consistency are essential to addressing infrastructure gaps, electricity reliability, water supply and broader economic development.
“It goes to show that economics cannot be separated from politics,” he said.
Sheng added that as Sabah seeks to attract higher-value industries and new investment opportunities, strong institutions and effective governance will be just as important as financial incentives.
“As societies become more complex, the quality of decision-making and governance becomes increasingly important,” he said.
