KUALA LUMPUR: The Trans-Borneo Highway, which is expected to be completed in the next 10 years, is likely to create spillover effects over a 15-20 year period for industries in Sabah and Sarawak, the Malaysian Institute of Economic Research (MIER) said.

Executive director Emeritus Professor Dr Zakariah Abdul Rashid saw the transportation network project as the backbone of the area, creating diverse spillover effects ranging from industries like logistics, tourism, wholesale and retail trade to new township development.

“When we look at the alignment of the highways, it is very comprehensive, as it covers the whole length of the coastal area of Sarawak and many parts of Sabah. I believe this will have a very good economic impact on the two states,” he said.

The project connects the 1,060 km Pan Borneo Highway in Sarawak, the 786.41 km Pan Borneo Highway in Sabah, the 425 km Sarawak-Sabah Link Road (SSLR) and the 40 km highway between Kalabakan and Serundong in Sabah.

The highway would also be connected to Simanggaris in Kalimantan (Indonesia) with the 3,901 km Trans-Kalimantan Highway Southern Route and eventually loop the entire island of Borneo, connecting almost every coastal town and city in the three countries that make up the island of Borneo – Malaysia’s Sabah and Sarawak, Indonesia and Brunei.

Zakariah said the proposed relocation of Indonesia’s capital to Kalimantan from Jakarta in 2024 would speed up the impact and bring a multiplier effect of about two to three times on Sabah and Sarawak’s economic growth.

“I expect maybe two to nearly three times of the multiplier effect will be seen from the project, even though the development level in both Sabah and Sarawak is currently at a relatively low degree and quite backward compared with that of states in Peninsular Malaysia,” he said.

He, however, dismissed claims that the projects could create an eight-time multiplier effect on the economy of both states and felt that the expectations were exaggerated.

Nevertheless, he said, the impact from the Trans-Borneo Highway is anticipated to be much higher than that of the North-South Expressway, operated by PLUS Malaysia Bhd, which runs from Bukit Kayu Hitam, Kedah (near the Malaysia-Thailand border) to Johor Bahru, the southern part of Peninsular Malaysia.

“The impact will be much higher than that contributed by PLUS (the North–South Expressway) … This is mainly due to the fact that the current state of development in Sabah and Sarawak is far slower than other states in the country.

“When the development level of a country or state is low, any investment will have a huge impact at the initial stage before the growth gradually slow down over time,” he pointed out.

Zakariah said to ensure constant growth generated from the highways, money has to be spent for maintenance.

“Maintenance expenditure is also considered as an investment, meaning that you can’t only have a one-off investment and not doing anything afterwards, (instead) you have to subsequently put in more money for the maintenance of the highways,” he added.

He opined that the government might have to collect toll fees for maintenance purposes despite having given an assurance previously that the highways would remain toll-free.

“If the government does not want to collect toll fees, some monies have to be put aside for maintenance purposes,” he said.

However, he declined to predict the amount of expenditure needed to be allotted without toll collection.

“Nobody knows (the amount) as of now, because we have yet to know the nature of the highways, and what would be the expenditure needed to maintain them,” he added.

The Pan Borneo Highway project was announced in April 2013 and was officially launched in March 2015 with an initial cost estimated at RM29 bil, linking the interiors of Sabah and Sarawak.

The highway construction in Sarawak started in 2015 and was expected to be completed in mid-2022, while that of Sabah began in 2016 and was slated to be completed by 2023.

With the appointment of Sarawak’s Baru Bian as Works Minister following Pakatan Harapan’s (PH) victory in the 14th general election, a review was conducted on the Pan Borneo Highways and the Cabinet agreed to terminate the Project Delivery Partners (PDP) for both the Sarawak and Sabah Pan Borneo Highways as a cost savings initiative.

It was also decided put on hold the initial alignment for the Pan Borneo Highway to link Sarawak and Sabah via Brunei, requiring travellers to go through Malaysia and Brunei’s border customs and immigration checks eight times.

Instead, a new alignment, consisting of the Sarawak-Sabah Link Road (SSLR), connecting Sarawak and Sabah without going through Brunei proposed by the Works Ministry was carried through by the Cabinet.

The project, with an estimated cost of RM5.2 bil, is expected to be completed by 2030.

Following the announcement by Indonesia that it would be shifting its capital to Kalimantan, the Works Ministry has also looked into capitalising on the new development that could spur economic growth for the country.

At the tabling of the 2020 Budget in Parliament last year, Finance Minister Lim Guan Eng said the government is allocating RM600 mil for the construction of a new 40 km highway from Kalabakan to Serudong in Sabah.

This would include building a customs, immigration, quarantine and security complex in Serundong, Sabah just across the border from Simanggaris in Kalimantan.

Earlier this year, Baru said the tendering process for the 40 km highway project is expected to be conducted this year.

Meanwhile, on Sept 20 last year, the Works Ministry issued a notice of termination to Lebuhraya Borneo Utara Sdn Bhd, the project delivery partner (PDP) for the Pan Borneo Highway Sarawak, effective Feb 20 this year.

On Feb 7 this year, Lim said the termination resulted in a RM3.1 bil savings, or 14% of the total cost, making the overall cost of the Pan Borneo Highway Sarawak project reduced to RM18.8 bil from RM21.9 bil under the PDP method.

Subsequently, Lim said the Sarawak portion of the project would be implemented conventionally without the involvement of a PDP.

However, some parties have questioned Lim’s claim by alleging that the original cost was not RM21.9 bil but RM16.5 bil. However, Lim explained, this is without taking into consideration other costs such as PDP payment fees amounting to 5.5% of the construction cost and reimbursable payments to the PDP.

Hence, Baru said, he would be revealing the details, including the actual costs of the Pan Borneo Highway Sarawak, on Thursday. – Feb 18, 2020, Bernama

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