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Yang Amat Berhormat Datuk Seri Panglima Haji Mohd Shafie Bin Haji Apdal,
Chief Minister of Sabah

Yang Berbahagia Datuk Dr. Mohd Yaakub Haji Johari
Chief Executive Officer, Sabah Economic Development and Investment Authority (SEDIA)  

Yang Berusaha Tuan Mohd Yunus bin Charlie Charington,
Sabah Federal Financial Officer, Perbendaharaan Malaysia Sabah

Respected guests,

Senior officers from the Federal Government and the Sabah State Government

Ladies and Gentlemen,

Selamat Pagi, Salam Sejahtera, dan Salam Hari Malaysia,


1. For the first time ever, under my leadership as Minister of Finance, we are holding Focus Group sessions to receive views and proposals from industries and the general public for the preparation of the Annual Budget. This session is the twelfth session so far. The input received today will act as guidance in the preparation of Budget 2020 which will be presented in the Dewan Rakyat on 11 October 2019.

2. Let me first convey my gratitude to Yang Amat Berhormat Chief Minister of Sabah and SEDIA who have worked tirelessly to make this Focus Group session a success. In addition to the Focus Group sessions, the Ministry of Finance has also set up a web portal, namely Portal Belanjawan 2020, to receive views and proposals from all Malaysians. I encourage you all to spread it to your friends and colleagues who were unable to attend today, and to give their views through that channel. 

3. This change in approach was adopted so that the Annual National Budget would be more collaborative and inclusive, and hence experience Shared Prosperity as we head into the Year 2020. This is in line with the “Shared Prosperity” agenda which has been emphasised by YAB Prime Minister Tun Dr. Mahathir Mohamed. The aspiration of this agenda is for all Malaysians to collectively enjoy a better and more comfortable standard of living through economic growth that is both sustainable and inclusive come 2030.

4. The theme for today’s discussion is the promotion of the tourism sector and other strategic sectors in Sabah.

The Tourism Sector

5. Overall, the tourism sector has contributed 15% to the nation’s economy, amounting to RM84 billion in 2018, compared to RM82.2 billion in 2017. According to Tourism Malaysia’s figures, the total number of tourist arrivals in 2018 was 25.8 million, and for the first half of 2019 has already reached 13.3 million tourists. In Sabah alone, an estimated 155,000 (DOSM, 2016) work in the tourism sector. Not to mention the fact that Kota Kinabalu is consistently lauded by international agencies as the most attractive destination in the world as a retirement destination (SEDIA, 2019). I would like to congratulate YAB Chief Minister of Sabah on these efforts.

6. In order to support states’ efforts to grow tourist activity, in Budget 2019 the Government had agreed to contribute back to the State Governments 50% of the tourism tax proceeds of the respective state. As of March 2019, out of the RM67.7 million which was distributed to all State Governments, the State of Sabah received the highest amount, RM12.7 million. This sharing of proceeds will continue with the aim of contributing to the upkeep of tourist facilities.

7. Through Budget 2019, the Government also launched a Tourism Fund of RM500 million. These loans, which are managed by SME Bank, can be used for tourism projects which are promoted by the government, upgrading historical buildings, the construction of resorts, and providing tourism-based products. To further benefit tourism businesses, especially in Sabah, the scope of the fund has been widened to include money for the handicraft and homestay businesses.

8. In addition, the Government has also set up the Tourism Infrastructure Fund worth RM1 billion. This fund is managed by Bank Pembangunan Malaysia Berhad (BPMB). The Government subsidises 2% of the interest rate, thus enabling borrowing at a lower rate, between 4% to 5.5%. The Government through the Ministry of Finance will strive to reduce these interest rates further. This fund has been set up to support entrepreneurs in the tourism industry who develop tourism infrastructure, especially hotels, theme parks, and convention centres.

9. The year 2020 is Visit Malaysia Year and the Government has targeted an increase in the number of tourist arrivals, to 30 million. I am confident that Sabah will contribute to achieving the growth in tourist numbers. The Federal Government is proposing an additional allocation for the 2020 Visit Malaysia Year Campaign and hopes that vendors and businesses in the tourism sector across the country, especially in Sabah, will send in good proposals to me through the channels mentioned earlier. The Government places importance on a joint venture approach and hence, in Budget 2019, a total of RM100 million had been provided for matching grants for international marketing and promotional programmes. Shared prosperity can only be achieved through our shared responsibility to improve the national economy generally, and tourism specifically.

Other strategic sectors (Agriculture, Manufacturing, Arts and Culture)

10. Joining us this morning are businessmen from other strategic sectors in Sabah. There are many incentives under SEDIA to encourage business and investment. As much as RM172.38 billion of investments have been approved since the incorporation of SEDIA in 2008. Of that amount, RM83.23 billion has been realised as of this year and the second quarter of 2019 alone. The Government expects this figure to rise further until the end of the year.

11. Sabah and Sarawak will continue receiving the biggest allocation in Budget 2020, the same as in Budget 2019. In order to accelerate the growth of Small and Medium Enterprises, under Budget 2019 the Government had announced a SME Fund worth RM4.5 billion with a 60% guarantee from Skim Jaminan Pembiayaan Perniagaan, including RM1 billion for Bumiputera entrepreneurs. The Government had also reduced the rate of corporate income tax from 18% to 17% for SMEs with a taxable income of up to RM500,000 and paid-up capital not exceeding RM2.5 million. A total of RM20 million was provided for the “Buy Malaysian First” campaign to assist local manufacturers and service providers to access many markets.

12. In order to encourage development at the same rate across the whole of Sabah, the Government has also provided the Less Developed Area tax incentive. This incentive has been introduced for areas which receive lower investment. Under this scheme, eligible companies which newly set up in less developed areas may be considered for a 100% tax exemption for up to 15 years.

13. A National Investment Committee co-chaired by the Minister of Finance and the Minister of International Trade and Industry was established and has held its first meeting. Through that meeting, the committee approved 3 investment projects worth RM2.2 billion, including a project in Sabah. This committee will function as a one-stop centre to speed up the process of approving investments and businesses, as part of our effort to attract more investors to invest in Malaysia.

14. The Government has always encouraged high-impact investments and a business environment which is able to generate new jobs and higher incomes for the people. I hope that this session will provide proposals to support our goals.

Thank you.