01/08/2011 (Daily News) - State Industrial Development Minister Datuk Raymond Tan Shu Kiah said Sabah missed the golden opportunity to expand its timber industry but will not make the same mistake with oil palm.

He said the spin-offs from timber in the Kinabatangan Basin made the district a bustling town awash with cash in the 1960s up to the early 1990s.

Along with the industries and services associated with timber, he said Sandakan also earned the dubious reputation as the town with the most nightclubs.

"Forests were logged in a frenzy to supply the insatiable demand for timber overseas," he said at the Palmex Malaysia 2011, here, Wednesday.

At that time, he said timber was exported mostly in unprocessed log form.

He said there was more nightclubs than timber processing factories during the period and that unfortunately the situation has remained so.

Even until today, he said value-added processing of timber is still minimal adding that the Seguntor industrial area that at one time was designated as an integrated timber complex did not quite materialise.

Today, the area is partially occupied by the Palm Oil Industrial Cluster (POIC) being developed by Sawit Kinabalu Berhad.

"In short, Sabah missed a golden opportunity to grow the timber industry.

We missed the boat. But we are not about to make the same mistake with oil palm," he said, adding conferences and exhibitions such as the Palmex is timely.

Over the years, he said vast tracts of logged over areas in Kinabatangan district have been converted to oil palm plantations.

In fact, a lot of the most productive oil palm estates in Sabah are found in the Kinabatangan Basin.

Apart from Sawit POIC, there is also the Lahad Datu POIC being developed by POIC Sabah Sdn Bhd.

These POICs in the last six years have attracted about RM3 billion in investments most notably in Lahad Datu where about 30 investors are in different stages of implementation.

Because of that, he said Palmex is part of the State Government's efforts to further expand the oil palm value-adding sector, a move to further enhance the oil palm industry in Sabah's economy.

He said the oil palm industry has for many years been a major contributor to Malaysia's gross domestic product (GDP).

"It will continue to be as the oil palm sector is targeted to grow exponentially in the Tenth Malaysia Plan (10MP) and the Economic Transformation Programme (ETP)," he said.

Previously, he said most people think that investment in downstream industries are in the tens if not hundreds of millions ringgit.

However, Tan said today's technological advancements in some areas have substantially reduce investment cost so as to make it affordable by small and medium enterprises (SMEs).

The arrival of major investors is also bound to create supporting industries and give birth to industries further downstream, he said.

He said the State Government is full of optimism about its palm oil industry.

Thanks to Malaysia Palm Oil Board (MPOB), Malaysia Palm Oil Association (MPOA), institutions of higher learning and private investors who believe in the POIC concept, he said the government is confident about being able to optimise this resource.

"We are also confident that we will be a meaningful part-taker in the move towards sustainability," he said.

On oil palm plantations in Sabah being 80 per cent owned by companies outside the State, he said as the downstream sector grows, there would be many construction contracts to be had.

"I hope that the construction companies registered for this conference are local companies who sees business opportunities arising from an expansion to the oil palm industry," he said.