Key initiatives, such as the proposed new international airport, a cutting-edge public transportation system, and the expansion of Sarawak’s gas industry, could all face significant challenges due to Trump tariffs and falling oil prices.
However, experts caution that local factors must also be carefully reassessed to ensure the long-term success of these projects.
Talent
Asrul Hadi Abdullah Sani, a partner at ADA Southeast Asia, told FMT the availability of talent was a key concern.
“One of the main risks associated with Sarawak’s mega-projects, such as Air Borneo and Petros, is the shortage of talent for key roles and the general workforce.
“Non-Sarawakian Malaysians have always been required to get a permit to work in Sarawak,” he said.
Asrul said human resource shortages could disrupt construction works, and pose significant challenges to operations and maintenance work over the longer term.
He said the state government would have to relax its immigration policies to make it easier for talented Malaysians from outside Sarawak to work in the state.
New airport may be underutilised
Low demand and underutilisation are also emerging as key concerns for Sarawak’s ambitious infrastructure projects, according to senior consultant Samirul Ariff Othman of Global Asia Consulting.
He said the proposed new airport, aimed at positioning Sarawak as a regional aviation hub, is being designed to accommodate up to 15 million passengers annually.
“This expansion is seen as a strategic move to boost tourism and business travel, enhancing Sarawak’s connectivity and economic growth,” said Samirul.
He acknowledged that an expansion is necessary after the Kuching International Airport neared its capacity limits by handling approximately seven million passengers last year.
However, with the Sarawak state government expected to allocate a combined sum of RM100 billion for the airport and a deep-sea port in Tanjung Embang, Samirul said care must be taken to ensure both are optimally utilised.
“But the proposed (new) capacity significantly exceeds current usage, raising questions about potential underutilisation,” said Samirul.
High costs of proposed ART
Concerns also plague the RM6 billion Kuching Autonomous Rapid Transport (ART), an ambitious new hydrogen-powered public transport system.
The ART system aims to cover a distance of 70km across three lines and 31 stations in its first phase, with operations expected to commence in the fourth quarter of this year.
“While hydrogen-powered transport is innovative, it poses challenges related to infrastructure, cost and maintenance,” said Samirul.
Sarawak state assemblyman Violet Yong had previously questioned the budgeted RM6 billion outlay—which includes RM2.5 billion for groundworks alone—citing the high cost of hydrogen fuel and the decommissioning of similar vehicles elsewhere due to lack of viability.
Speaking in the state assembly in November 2023, Yong said:
“The state is paying a China firm to manufacture the vehicles for Sarawak, but that firm had stopped production for their China market due to cost factors as hydrogen fuel is extremely expensive to produce, as is the case all over the world.”
Concerns over gas roadmap
The Sarawak Gas Roadmap 2030, another big-ticket state project, could also face viability issues if not executed properly.
Following an agreement with Putrajaya, the state will receive 1.2 billion cubic feet of natural gas daily from Petronas to power its local industries.
However, experts have cautioned that the gas expansion project would require massive capital investments in plants and pipelines, with RM65 billion needed to finance infrastructure and downstream industries.
“In the end, the Sarawak Gas Roadmap’s success depends on the appetite of potential foreign investors,” an industry analyst told FMT on condition of anonymity. “The state alone cannot support investment of that scale.”
Samirul warned that heavy investment in energy and infrastructure may be at the expense of other sectors, and may end up limiting broader economic diversification.
Project financing
Presently, the state and its government-linked companies are footing the bill for these mega projects as part of its long-term economic development plans.
“These projects enable the state to develop the necessary infrastructure to support its economic objectives and growth potential.
“However, although the current administration has ambitious economic goals, the state’s infrastructure has not yet aligned with these aspirations,” said Asrul.
He noted that economic prosperity is essential to advance Sarawak’s pursuit of political autonomy, particularly in light of the fragmented nature of the national political landscape.
“But the state should not take for granted that the outcomes of future general elections will mirror those of the previous election. Future election results may be less fractured, which could diminish Sarawak’s bargaining power,” he said.
Asrul said it is likely that Sarawak will be looking largely to oil and gas revenues to finance its mega projects.
As of 2024, national oil company Petronas had contributed RM96 billion to Sarawak’s coffers, excluding upstream investments and infrastructure development valued at RM280 billion.
That sum is expected to jump significantly with Putrajaya agreeing to appoint Petros as domestic gas aggregator.
In addition, the federal government has, in the spirit of the Malaysia Agreement 1963, extended a special grant of RM600 million to Sarawak.
It has also earmarked another RM5.9 billion in development funding under Budget 2025.
However, the federal territories ministry revealed in November last year that Sarawak had spent only 54.43% of the funds allocated to it under the 12th Malaysia Plan, below the national average of 65.83%.
