SARAWAK is embarking on an ambitious economic transformation, driven by mega-projects such as the launch of AirBorneo, the development of Petros, and the rollout of a hydrogen-powered Autonomous Rapid Transit (ART) system.
These initiatives form part of the state’s Post Covid-19 Development Strategy (PCDS) 2030, which envisions Sarawak as a thriving society propelled by data and innovation, with a focus on economic prosperity, social inclusivity and environmental sustainability.
As these large-scale projects unfold, however, questions are emerging about the state’s readiness, fiscal resilience and strategic direction.
Sarawak Tribune spoke with Universiti Malaysia Sarawak (UNIMAS) senior lecturer Dzul Hadzwan Husaini to explore the economic rationale, assess the associated risks and explore the structural challenges ahead.
SARAWAK TRIBUNE: How should Sarawak view the perceived shortage of skilled labour for mega-projects such as AirBorneo and Petros?
DZUL: The perceived risk regarding the shortage of skilled labour for Sarawak’s mega-projects such as AirBorneo and Petros must be viewed within the correct strategic framework.
In global practice, reliance on outsourced expertise during the early phase of industrialisation is not only common but essential. Outsourcing at this stage represents a crucial opportunity for Sarawak to accelerate knowledge transfer, technology absorption, and the building of dynamic capabilities within the local workforce. Rather than viewing this as a weakness, it should be understood as an essential phase of our economic upgrading.
Furthermore, the economic value derived from mega-projects is not confined to direct employment. Sarawak will benefit significantly from positive externalities, including the strengthening of local supply chains, SME integration, professional services development, and the broader multiplier effects on regional economies.
Nevertheless, I must respectfully express disagreement with the proposal that AirBorneo should adopt a non-profit orientation. Instead, Sarawak should view AirBorneo as a strategic commercial asset, modelled after successful precedents such as Singapore Airlines and Qatar Airways. Both entities serve not only as transportation providers but as substantial contributors to their respective sovereign wealth funds and economic resilience strategies. AirBorneo should be positioned to achieve profitability, international reputation, and strategic leverage, ultimately reinforcing Sarawak’s broader economic sovereignty and reducing dependency on traditional revenue sources. A well-capitalised, globally competitive airline can serve as a catalyst for tourism, investment, trade, and regional integration, ensuring long-term returns for the people of Sarawak.
Is Sarawak’s work permit requirement for non-Sarawakian Malaysians an obstacle to economic growth?
The requirement for non-Sarawakian Malaysians to obtain a work permit under Sarawak’s immigration autonomy, guaranteed by the Malaysia Agreement 1963 (MA63), must be understood in both its historical and economic context.
Sarawak has successfully maintained a steady economic trajectory despite this regulatory framework. Far from being a restrictive policy, this mechanism enables Sarawak to regulate labour market conditions intelligently, ensuring that local employment opportunities are protected while still allowing for selective entry of critical talent when needed.
Moreover, immigration autonomy allows Sarawak to mitigate risks of labour market saturation, social displacement, and wage suppression — challenges that many fast-developing regions often face. Should labour market dynamics change substantially in the future, the Sarawak government retains full regulatory flexibility to recalibrate immigration requirements, responding to economic imperatives without sacrificing sovereign rights. Pragmatism and strategic judgment will guide such reforms, as has historically been the Sarawakian approach. Viewing immigration protocols purely as barriers is an immature and superficial perspective; instead, they should be seen as instruments of balanced economic governance.
How do you address concerns that expanding Sarawak’s airport capacity could lead to underutilisation and wasted investment?
Infrastructure investment, particularly in aviation, must be evaluated through the lens of long-horizon growth and strategic economic planning. Building a new airport or expanding existing capacity cannot be compared to short-term projects such as residential housing; it involves complex long-term projections on trade, mobility, and regional integration. The proposed airport expansion aligns directly with Sarawak’s PCDS 2030 and the broader vision for economic integration across Borneo.
If Sarawak were to build reactively, waiting until capacity was exhausted, we would risk severe infrastructural bottlenecks, undermining our competitiveness in attracting investment, tourism, and trade.
Furthermore, Sarawak’s historical reliance on transshipment points in Peninsular Malaysia — where goods and passengers are funneled through Port Klang or Kuala Lumpur before reaching Sarawak — has consistently delayed economic activities and increased logistical costs. An expanded airport capacity will be a critical node in building a self-sufficient and globally connected Sarawakian economy. This strategic infrastructure enables us to leapfrog the bureaucratic inefficiencies that have historically constrained our development. In economic terms, infrastructure-led growth catalyses broader ecosystem development, creating a positive feedback loop that justifies early capacity expansion well ahead of current utilisation figures.
Given the high costs, is Sarawak’s investment in a hydrogen-powered ART system justified?
The hydrogen-powered ART system must be understood as a foundational investment in Sarawak’s carbon-neutrality transition strategy. Achieving deep decarbonisation in urban transport cannot rely merely on behavioural mandates; it requires the provision of accessible, reliable, and green alternatives. ART serves precisely this role, offering a clean, efficient, and scalable mobility system to reduce private vehicle dependency and associated emissions.
While concerns about high infrastructure costs and maintenance burdens are valid, Sarawak’s financial approach to green megaprojects is notably sophisticated. The government has adopted a diversified fiscal strategy, enhancing revenue streams through strategic equity investments such as the acquisition of a majority stake in Affin Bank, the establishment of a sovereign wealth fund to manage future oil and gas earnings prudently, and proactive attraction of foreign direct investment (FDI) into green sectors, particularly hydrogen technologies from South Korea and Japan.
Moreover, Sarawak is exploring green finance instruments such as climate bonds, ESG-linked loans, and public-private partnerships to offload part of the financial burden while maintaining ownership control. This diversified, forward-looking funding strategy mitigates the risk of overreliance on public budgets. It is through such holistic ecosystem-building — combining physical infrastructure, financial resilience, and behavioural change mechanisms — that Sarawak can successfully transition to a green economy without undermining its fiscal sustainability.
Should Sarawak be concerned about relying on outsourcing and foreign expertise in the early stages of major projects?
Outsourcing during the inception phase of major infrastructure or industrial projects should not be misconstrued as economic dependency. Rather, it is an intelligent strategy for comparative advantage transfer. By integrating foreign expertise and technology at the foundational stage, Sarawak accelerates its capacity-building trajectory, enabling faster catch-up with global best practices.
If Sarawak remained tied to legacy operational models dominated by external entities such as Petronas, the resulting bureaucratic inertia and asymmetric information disadvantages would significantly slow development. The goal must be strategic autonomy — the ability to chart Sarawak’s economic destiny aligned with local needs, values, and comparative advantages. Outsourcing is thus not the end, but a means to achieve local mastery, technological independence, and ultimately the strengthening of indigenous economic institutions.
What are the main economic challenges Sarawak faces as it scales its green and infrastructure transitions?
Like many emerging economies in Asia, Sarawak faces three primary challenges in scaling its green and infrastructure transitions — access to affordable capital, the depth of human capital, and the availability of critical resources such as rare earth minerals essential for clean technologies. However, Sarawak’s relative fiscal strength, derived from prudent debt management and diversified natural resource revenues, places it in a superior position to manage these constraints.
The key to success lies in strategic sequencing, which means identifying sectors that offer the highest returns to productivity and national resilience, and allocating scarce resources accordingly. Misallocation or premature over-extension into frontier technologies without fiscal safeguards could expose Sarawak to long-term risks, including debt distress and project abandonment. By contrast, a disciplined approach, focusing on staged green transition investments, international collaboration, and building domestic absorptive capacity, will enable Sarawak to navigate these challenges successfully.
Are Sarawak’s growth projections for hydrogen, solar energy and hydropower realistic?
Sarawak’s growth projections, particularly in hydropower and solar energy, are grounded in strong empirical foundations. The state’s existing energy mix is already predominantly renewable, with approximately 70 per cent of electricity generated from hydropower. This establishes Sarawak as a regional leader in clean energy deployment and validates the capability of local institutions and industries to manage large-scale renewable infrastructure.
Solar energy deployment is both necessary and feasible to meet Sarawak’s 2030 GDP target of RM280 billion. The anticipated increase in energy demand correlates tightly with the state’s industrialisation and digital economy agendas.
Current projects under execution demonstrate that scaling solar capacity is both economically and technically realistic.
Hydrogen, however, presents different challenges. Globally, end-use hydrogen energy markets remain underdeveloped, and even advanced economies are struggling with cost barriers and distribution infrastructure gaps. Sarawak’s hydrogen strategy wisely focuses on production for export rather than premature domestic consumption, leveraging partnerships with technologically advanced countries like South Korea and Japan. Through carefully negotiated joint ventures and strict knowledge transfer agreements, Sarawak can secure both economic returns and indigenous technological capability development. Hydrogen must, however, be treated as a strategic bet — a high-risk, high-reward sector — and balanced with investments in more foundational economic sectors such as education, healthcare, and income equality programmes.
What external risks could derail Sarawak’s mega-projects, and how can they be mitigated?
Sarawak’s major mega-projects face significant external risks, most notably geopolitical instability, global economic policy volatility, and commodity price fluctuations. Each of these factors could derail investment assumptions, causing delays, cost overruns, or project cancellations.
For instance, experiences during the 1997 Asian Financial Crisis demonstrated how rapidly economic shocks could transform viable mega-projects into financial liabilities. Learning from history, Sarawak must build fiscal resilience through diversified revenue generation, maintain substantial fiscal buffers, and deepen its domestic capital markets to reduce reliance on volatile international flows.
Additionally, embedding robust risk management protocols, including scenario planning, project insurance, hedging strategies, and careful sovereign exposure management, will be vital. Mitigating asymmetric risks early enhances project bankability and sustains investor confidence throughout the development cycle.
How can Sarawak ensure the benefits of these mega-projects are equitably distributed across society?
Ensuring equitable distribution of mega-project benefits requires deliberate institutional design and governance excellence. Transparent procurement processes, community engagement frameworks, and rural inclusion strategies must be embedded in project architecture from inception, not treated as afterthoughts.
Sarawak must prioritise recruiting leaders and technocrats capable of managing complex, high-stakes projects beyond narrow political patronage considerations. In parallel, decentralising economic participation by enabling local SMEs, indigenous entrepreneurs, and rural communities to access supply chain opportunities will deepen inclusivity. Ultimately, political stability, administrative competence, and governance reforms are the bedrock upon which equitable and sustainable development will rest.
What additional steps should Sarawak take to secure long-term economic sustainability, particularly regarding education and fiscal policy?
While offering free education for selected fields is socially commendable, Sarawak must complement this policy with a bold, strategic vision: building globally competitive universities capable of generating education exports. The case of the National University of Singapore, which transformed Singapore into a global education hub, offers a powerful model.
Substantial investments must be channeled towards research excellence, international academic partnerships, and campus infrastructure to elevate Sarawak’s universities to global top-tier status.
By doing so, Sarawak will not only retain local talent but also attract international students, creating an additional revenue stream that supports local public education without over-reliance on finite oil and gas resources.
This strategy exemplifies sustainable fiscal policy, securing Sarawak’s long-term economic resilience while enhancing human capital which is the most critical determinant of future national competitiveness.
