Resource-rich Sarawak develops value-added industries

Sarawak is one of the two states comprising East Malaysia along with neighbouring state Sabah to its north-east and the federal territory of Labuan situated off the north coast of Borneo. The state has long held a unique place within the Malaysian political sphere and the national economy, due both to its geographic location and its long history.

The State's History & Recent Past

Sarawak spent much of its history from the 15th to the 19th centuries under either the direct rule or the indirect influence of the Bruneian Empire. By the mid19th century, Borneo had been exposed to European contact, first through Portuguese naval expeditions to the island and later by way of the arrival of the British Empire to the region.

In 1841 the English adventurer James Brooke established a dynasty of “White Rajahs” of Sarawak that ruled the territory for over a century with his descendants ruling the Kingdom of Sarawak until the year 1946. During this time, Sarawak was governed largely under a system of paternalism which was intended to preserve the local population of Sarawak and to minimise foreign influence and exploitation of the indigenous population.

In 1941 the Japanese occupied Sarawak along with large swathes of the rest of the island of Borneo during the Second World War. This occupation lasted until 1945, after which Sarawak was officially proclaimed a British Crown colony following a brief British military administration of the territory.

Sarawak gained its independence from Britain on July 22, 1963 and, less than two months later, became a forming member of the federation of Malaysia along with the former British territories of Malaya (comprising the modern-day states of peninsular Malaysia), North Borneo (comprising the modernday state of Sabah) and Singapore, which was later expulsed from the federation on August 9, 1965.

Sarawak is now one of the 13 constituent states of Malaysia, along with three federal territories.

The state remains unique both within Malaysia and within the global context due to its mix of rugged mountains and thick jungle alongside numerous cosmopolitan cities and centres of commerce, along with its diverse demographics.

Geography & Climate

Sarawak occupies 124,450 sq km on the north coast of Borneo along the South China Sea, accounting for around 37.5% of the entire landmass of Malaysia.

The state is bordered by Sabah as well as the independent Sultanate of Brunei Darussalam to the north-east, which is in fact bound by the Sarawakian administrative divisions of Miri and Limbang. To the south, Sarawak shares a long border with the Indonesian provinces of West, East and North Kalimantan. The southern portion of the South China Sea runs along the north coast of the state.

Geographically, Sarawak is made up of coastal plains, a hilly inland and a mountainous interior. The flat coastal plain in the vicinity of the state capital Kuching includes mangrove swamps and peat land, as well as bays along the South China Sea and coastal mountains including the 810-metre Mount Santubong which is located 35 km north of the capital and dominates much of its skyline.

The hilly inland zone contains many of the state’s large cities which have been built along the two major waterways, the Rajang and Baram rivers. The mountainous deep interior of Sarawak runs along its border with Kalimantan, the Indonesian portion of the island of Borneo. This area is sparsely populated and contains heavy forest and it is dotted with riverside settlements.

Due to its location with the equator running along its southern border, Sarawak has a tropical climate with hot and wet weather year-round. Kuching has a tropical rainforest climate, with an annual average temperature of 23.1 °C and an average high of 31.7 °C. The temperature is consistent year-round, diverging by less than 1 °C throughout the year.

Kuching, and Sarawak state as a whole, receive substantial rainfall throughout the year, with an annual average of 4116.7 mm of rainfall and an average of 247 rainy days per year, making it the wettest highly populated area within the entire nation of Malaysia. The wettest months of the year range from November to February, with January recording an average of 684.1 mm of rainfall, which is caused by the North-east Monsoon.

Divisions & Demographics

Sarawak is divided into 11 administrative divisions. To the south-west lie the administrative divisions of Kuching, Samarahan, Sri Aman, Betong, Sarikei, Sibu and Mukah, running both along the South China Sea and the state’s southern border with Kalimantan. The administrative divisions of Miri and Limbang make up the state’s north-east, while the largest administrative division of Kapit lies in the inland south of the coastal division of Bintulu. Each administrative division is divided into districts, numbering 31 across the entire state, which are further divided into sub-districts. As of the 2010 census, the population of Sarawak was 2,420,009, making it the fourth most populous state of Malaysia but also the least densely populated. The state’s population is dominated by four large cities and towns, namely the state capital Kuching with a population of around 700,000, the northeastern coastal city of Miri with a population of around 350,000, the inland city of Sibu located along the Rajang and Igan rivers with a population of around 257,000, and the coastal town of Bintulu with a population of around 200,000.

Sarawak has a very diverse population consisting of numerous ethnicities, languages and religions. The Iban, a branch of the Dayak native population of Borneo, are the largest ethnic group, comprising around 29% of Sarawak’s total population. Chinese and ethnic Malays make up 24% and 23% of the state’s population, respectively.

The many indigenous ethnic groups living within Sarawak make up the remainder of the state’s population, with the notable groups of the Bidayuh, Melanau and Orang Ulu comprising 8%, 6% and 5%, respectively. Other groups include the Kedayan, Javanese, Bugis, Murut and Indian.

Sarawak remains the sole state within Malaysia to have a religious majority of Christians, which make up 44% of the state’s population. Islam accounts for 30% and Buddhism for 13.5%, with several other religious beliefs accounting for the remainder.

Languages are equally varied within the state, with each ethnic group having their own distinct language, although Bahasa Malaysia remains the national official language.

Political Structure

March 1, 2014 saw the first transition of the head of the executive branch of the state government since 1981 as Adenan Satem was appointed the chief minister of Sarawak. The previous chief minister, Abdul Taib Mahmud, concurrently became the seventh Yang di-Pertuan Negeri Sarawak, the Sarawak head of state.

The main executive power in Sarawak lies with the state government, led by the chief minister of Sarawak. The chief minister is the leader of the largest party, or coalition of parties, in the unicameral state parliament, the State Legislative Assembly. The current Sarawak State Legislative Assembly is led by the Barisan Nasional coalition, made up of four parties: Parti Pesaka Bumiputera Bersatu, Sarawak United People’s Party, Parti Rakyat Sarawak and Sarawak Progressive Democratic Party.

The Barisan Nasional currently holds a majority of 45 of the 71 seats in the State Legislative Assembly. The major opposition coalition is the Pakatan Rakyat, holding 14 seats and comprised of the Democratic Action Party, Parti Keadilan Rakyat, Sarawak National Party and Pan-Malaysian Islamic Party.

The cabinet of Sarawak forms the executive branch of the state government, with ministers appointed by the chief minister of Sarawak. The state maintains its own ministries for finance, resource planning and environment, modernisation of agriculture, rural development, land development, social development, housing, tourism, local government and community, infrastructure development and communications, industrial development, public utilities, and welfare, women and family development, while the remaining ministerial functions remain under the purview of the federal ministries.

The judicial system is headed by the chief judge of Sabah and Sarawak, who oversees the courts; the Islamic, sharia judicial department; and the high, sessions and magistrate’s courts, which are based on the English legal system. In addition to the civil courts, there are the native courts and sharia courts which have jurisdiction over family and civil cases involving Muslims. The native courts apply to indigenous populations and enforce native customs called adat, and are administered by a chief registrar.

Economic Evolution

The state of Sarawak has long been among the key states of Malaysia notable for its high rate of economic growth and its contribution to the national GDP. The state places third among Malaysia’s 16 states and federal territories in gross state product, trailing only Selangor and the federal capital of Kuala Lumpur. Sarawak achieves the same ranking in terms of gross state product per capita, trailing only Kuala Lumpur and Penang in this category, both of which are territories with a significantly lower population that Sarawak itself.

Sarawak’s economy has successfully implemented a remarkable shift from being based heavily on primary resources a mere several decades ago to diversifying into heavy industry and services. Being a large but sparsely populated state with a varied geography, Sarawak has been able to capitalise on its natural resources to spur economic growth.

After its independence and union with the remaining states of Malaysia, Sarawak remained largely dependent on its primary resources and commodities, which made up nearly the entirety of the state economy. This overreliance on commodities resulted in high volatility in economic growth throughout the 1980s and 1990s.

Although the state was often able to achieve high levels of annual growth at times topping 10%, fluctuations in commodity prices in the international market rendered these growth rates highly unpredictable and no clear trajectory could be established for the state’s growth in the medium term.

Developing Industries

During the 1980s, as Sarawak rapidly urbanised, achieving a 36% urban population rate in 1991 as compared with just 15.5% in 1970, the state’s economy began shifting in tandem. While timber and forest products dominated much of the pre-1980s Sarawakian economy, oil palm increasingly gained prevalence during these years. These industries sustained the state through much of the decade but an imminent need to diversify away from commodities entirely soon took hold. As the population increasingly moved to urban centres and as education levels increased across the state, the new target was value-added industries which would attract reinvestment in the state.

With the inception of the Sarawak Corridor of Renewable Energy, a growth area running across much of central Sarawak, the state was able to successfully harness its naturally abundant source of energy in hydropower and spur investment in heavy industry. The plentiful availability of the power needed to feed such heavy industry has helped to shape Sarawak into an investment destination in its own right, as the state increasingly attracts foreign investment from the world over.

By the year 2010, Sarawak’s economic breakdown clearly reflects its path into value-added industries and services. Services currently make up approximately 32% of the state’s economy, followed by manufacturing at 25%. Natural resources continue to play a strong complementary role in the economy, with mining, agriculture and forestry contributing 25%, 12% and 3%, respectively, to the state’s GDP.

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The Report: Sarawak 2015

Country Profile chapter from The Report: Sarawak 2015

The Report: Sarawak 2015

The Report

This article is from the Country Profile chapter of The Report: Sarawak 2015. Explore other chapters from this report.