[Letter to the Editor] Sarawak’s high-income status: A closer look beyond numbers

A file photo of an aerial view of Sarawak Legislative Assembly (DUN) Complex.

Letter to the Editor

By Dr Muhammad Khusairy Bakri

On July 4, 2024, the announcement that Sarawak has maintained its high-income status for 2023, as recognised by the World Bank, stirred significant discussions. The State recorded a Gross National Income (GNI) per capita of USD16,560, placing it among Malaysia’s top five high-income states alongside Kuala Lumpur, Labuan, Penang, and Selangor. This achievement is undoubtedly commendable, yet it opens a broader conversation about what high-income status truly signifies and the challenges that lie ahead for Sarawak and Malaysia in their pursuit of sustainable and inclusive economic growth.

While the GNI per capita is a critical economic indicator, it doesn’t fully capture the complexities of a region’s economic health and social well-being. For instance, despite Sarawak’s high-income status, it recorded a poverty rate of 10.8 per cent in 2022. This statistic starkly contrasts with the perception that a high GNI per capita directly translates into widespread prosperity. In comparison, Perlis, which has not achieved high-income status, boasts a significantly lower poverty rate of four per cent. This discrepancy highlights the critical need for policies that address income inequality and ensure that economic growth benefits all segments of the population.

Sarawak’s economic landscape is marked by significant disparities. The State’s wealth is concentrated in urban centres like Kuching, while rural areas lag far behind. Many of Sarawak’s rural communities still lack basic infrastructure and access to quality education, healthcare, and employment opportunities. This urban-rural divide exacerbates income inequality and limits the overall economic potential of the State.

The Gini coefficient, a measure of income inequality, further illustrates this issue. While specific data for Sarawak is scarce, Malaysia’s national Gini coefficient of 0.407 in 2019 indicates a high level of income inequality, with Sarawak likely reflecting similar or worse trends given its unique socio-economic challenges. Addressing these disparities requires targeted policies that promote rural development, improve infrastructure, and provide equitable access to essential services.

One of the critical issues undermining Sarawak’s economic progress is the migration of local talent abroad. Skilled professionals leave in search of better opportunities, creating a brain drain that weakens the State’s human capital and hampers its ability to innovate and grow. According to the World Bank, Malaysia saw an estimated one million of its citizens living and working abroad as of 2020, a significant portion of whom are highly educated individuals from states like Sarawak.

This brain drain impacts various sectors, particularly those requiring specialised skills such as healthcare, engineering, and information technology. To counter this trend, Sarawak needs to create an environment that attracts and retains talent by offering competitive salaries, professional development opportunities, and a high quality of life. Additionally, collaboration between the government, educational institutions, and the private sector is essential to develop a robust talent pipeline that can meet the State’s evolving economic needs.

Achieving high-income status is not merely about increasing GNI per capita but also about ensuring sustainable development. Sarawak’s economic activities, particularly in industries such as logging and palm oil, have significant environmental impacts. Deforestation, loss of biodiversity, and pollution are pressing issues that threaten the state’s natural resources and long-term sustainability.

The Sarawak government has made commitments to sustainable development, but implementation and enforcement remain challenges. For instance, the State’s timber industry, while economically important, has faced criticism for unsustainable practices. Transitioning to more sustainable practices requires stringent regulations, effective enforcement, and collaboration with industry stakeholders to balance economic growth with environmental preservation.

Healthcare and education are fundamental to achieving sustainable development and improving the quality of life for all citizens. In Sarawak, access to quality healthcare and education remains uneven, particularly in rural areas. The State’s healthcare infrastructure is often inadequate, with a shortage of medical professionals and facilities in remote regions. This disparity leads to poorer health outcomes for rural populations and exacerbates existing inequalities.

Education is another critical area in which Sarawak faces challenges. While literacy rates and school enrolment have improved, the quality of education varies widely between urban and rural areas. Many rural schools lack qualified teachers, adequate facilities, and resources, which hampers students’ learning outcomes and limits their future opportunities. To address these issues, the government must invest in building and maintaining educational infrastructure, training and retaining qualified teachers, and ensuring that all students have access to high-quality education regardless of their location.

Infrastructure development is crucial for economic growth and improving the quality of life. In Sarawak, inadequate infrastructure, particularly in rural areas, poses significant challenges. Poor road networks, limited access to clean water and electricity, and insufficient digital connectivity hinder economic activities and reduce the quality of life for residents.

The Pan Borneo Highway project, aimed at improving road connectivity in Sarawak and Sabah, is a step in the right direction. However, the project has faced delays and budget constraints. Ensuring the timely completion and expansion of such infrastructure projects is essential to boost economic activities, attract investments, and improve access to essential services for rural populations.

Digital connectivity is another critical area where Sarawak lags. Limited access to high-speed internet, particularly in rural areas, restricts opportunities for education, business, and communication. Expanding digital infrastructure and promoting digital literacy is essential to bridging this gap and ensuring that all residents can participate in the digital economy.

Sarawak’s economy has traditionally relied on resource-based industries such as oil and gas, timber, and palm oil. While these industries have driven economic growth, they are also susceptible to global market fluctuations and environmental concerns. Economic diversification is essential to build a more resilient and sustainable economy.

The State has made efforts to diversify its economy by promoting sectors such as tourism, manufacturing, and renewable energy. For instance, the Sarawak Corridor of Renewable Energy (SCORE) aims to attract investments in energy-intensive industries, leveraging the State’s abundant hydroelectric resources. However, realising the full potential of these initiatives requires substantial investments, a supportive regulatory environment, and collaboration with private sector stakeholders.

Tourism is another promising sector for economic diversification. Sarawak’s rich cultural heritage, diverse wildlife, and natural beauty make it an attractive destination. However, developing the tourism industry requires investments in infrastructure, marketing, and human capital. Ensuring that tourism development is sustainable and benefits local communities is also crucial to avoid the negative impacts of over-tourism.

Achieving sustainable and inclusive development requires effective governance and institutional reforms. Corruption, bureaucratic inefficiencies, and weak governance structures undermine economic progress and public trust. Malaysia ranked 57th out of 180 countries in Transparency International’s Corruption Perceptions Index 2022, indicating that corruption remains a significant issue.

Strengthening governance and transparency is essential to create a conducive environment for economic growth and development. This includes improving public sector efficiency, enhancing the rule of law, and promoting accountability and transparency in government operations. Effective governance also requires active participation from civil society, the private sector, and other stakeholders to ensure that policies are inclusive and reflect the needs and aspirations of the population.

While Sarawak’s recognition as a high-income State is a significant milestone, it is not the end goal. The State faces numerous challenges that must be addressed to ensure sustainable and inclusive development. From addressing income inequality and retaining local talent to improving infrastructure and promoting sustainable practices, Sarawak has a long way to go.

The pursuit of high-income status for Malaysia by 2030 is equally challenging. It requires consistent economic growth, effective governance, and comprehensive reforms across various sectors. The marginal increase in Malaysia’s GNI per capita from USD11,830 in 2022 to USD11,970 in 2023 indicates that achieving this status will require substantial efforts and strategic investments.

Ultimately, the true measure of success lies not in income figures alone but in the well-being and prosperity of all citizens. Ensuring that economic growth translates into tangible improvements in the quality of life for all residents, particularly the most vulnerable, is the real challenge. Sarawak and Malaysia must work together to build a future where prosperity is shared and development is sustainable and inclusive.

Dr Muhammad Khusairy Bakri is a Postdoctoral Research Associate at the Composite Materials and Engineering Centre, Washington State University.

This is the personal opinion of the author and does not necessarily represent the views of DayakDaily. Letters to the Editor may be lightly edited for clarity.

— DayakDaily