Kota Kinabalu: Sabah’s increased federal allocation under Budget 2027 presents an opportunity to strengthen the state’s business environment.
But its success will ultimately depend on how effectively the funding translates into lower operating costs, new business opportunities and greater participation by local small and medium-sized enterprises (SMEs).
Malaysia-China Chamber of Commerce (MCCC) Sabah Director of Commercial Affairs Brian Ho said infrastructure spending should be measured not merely by the number of projects completed, but also by the economic benefits delivered to businesses and the wider community.
He said infrastructure development should go hand in hand with efforts to strengthen local supply chains and create more opportunities for Sabah businesses to participate in economic growth.
When tabling Budget 2027, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced that Sabah would receive RM18.7 billion in federal allocations, up from RM17.6 billion this year. Sarawak’s allocation would increase to RM16.2 billion from RM15.1 billion.
The Government also allocated RM3.3 billion for road projects in both states.
Brian noted that transportation challenges often generated costs beyond fuel and freight charges. Unpredictable delivery times could force businesses to maintain larger inventories, incur additional warehousing expenses and face product spoilage or missed delivery schedules.
These pressures were particularly significant for businesses dealing in food, essential goods and perishable agricultural produce, where delays could affect product quality, stock availability and profit margins.
He said improved road connectivity between agricultural areas, processing facilities, industrial zones, warehouses and major markets could help businesses manage inventories more efficiently, reduce wastage and improve delivery reliability.
Rather than focusing exclusively on road mileage or construction scale, he suggested that infrastructure planning should also consider actual freight movement and identify bottlenecks with the greatest impact on business operations.
Regular consultations with chambers of commerce, industry associations and local businesses could help authorities identify these priorities before projects were finalised.
This would enable public investment to address practical commercial challenges rather than leave businesses to navigate gaps in connectivity and supporting facilities.
Brian also highlighted the potential for major infrastructure projects to generate business opportunities beyond the construction sector. Demand for building materials, machinery rental, transportation, equipment maintenance, catering and accommodation could create opportunities for local suppliers and service providers.
To help Sabah SMEs compete for these opportunities, he proposed that the relevant authorities provide earlier access to tender schedules, procurement requirements and supplier registration procedures.
With better visibility of upcoming projects, businesses would have more time to arrange financing, secure equipment and establish partnerships with experienced contractors.
Smaller companies not yet equipped to undertake major contracts could also participate through subcontracting arrangements or joint bids, allowing them to gain experience, strengthen their capabilities and gradually take on larger projects.
He stressed that expanding local participation should not come at the expense of quality or procurement standards. Instead, a more transparent and accessible procurement process would enable qualified Sabah businesses to compete fairly and retain a greater share of the economic activity generated by public investment.
Brian further proposed that the Government assess completed projects against practical indicators, including changes in freight costs, delivery times, local supplier participation and business activity in surrounding areas.
Such information would help determine whether infrastructure spending was delivering the intended economic benefits and guide decisions on future investments.
He said Sabah’s increased federal allocation should ultimately be judged by whether businesses became more competitive, supply chains operated more efficiently and local SMEs gained sustainable opportunities to grow.
