Kota Kinabalu: Sabah cannot depend solely on free-market forces to drive economic growth and must be prepared to make strategic decisions on which industries and opportunities to support, according to economist Tan Sri Andrew Sheng.
Speaking at Daily Express Sabah Matters Podcast, Sheng challenged traditional economic theories that assume markets will automatically deliver the best outcomes if left alone.
He noted that the global economic landscape has changed significantly, with major powers such as the United States, China and Saudi Arabia actively supporting strategic industries through government intervention and subsidies.
“If America is doing this and China is willing to subsidise its companies, and Saudi Arabia is willing to subsidise its companies, Malaysia’s budget is limited. Where are we going to finance in this area?” he said.
According to Sheng, governments can no longer avoid making choices about where to direct resources, especially when competing for investment and economic opportunities in an increasingly competitive global environment.
He said development requires identifying sectors with strong potential and being willing to support them, rather than assuming the market will naturally produce successful industries.
Using the analogy of an oasis lacking salt, Sheng explained that societies must venture beyond their comfort zones and take calculated risks to secure resources and opportunities needed for long-term survival and growth.
“Ultimately, it is about picking winners. You cannot avoid taking risks,” he said.
Sheng added that Sabah should focus on sectors where it has natural strengths and competitive advantages, while recognising that every development strategy involves uncertainty.
He said governments, investors and businesses must be prepared to experiment and accept occasional failures in pursuit of new opportunities.
“There is no success without failure,” he said, stressing that innovation and economic transformation require a willingness to learn from mistakes.
Sheng’s remarks come as Sabah seeks new avenues for economic growth beyond its traditional dependence on natural resources, with increasing attention being given to sustainability, green investment, and technology and higher-value industries.
He said the challenge for Sabah is not simply attracting investment, but determining which sectors can create sustainable long-term benefits for the State and its people.