28/06/2011 (Bernama) - Sabah can be a natural choice for many industries and is a contender for the sub-regional capital status due to its location and resources, the Oxford Business Group (OBG) says.

Regional editor of the global publishing and consultancy company, Paulius Kuncinas, said the state had a huge potential for economic expansion as well as in the development of new sectors such as oil and gas.

This belief, he said, had led to OBG to publish "The Report: Sabah 2011" which was launched by Sabah Chief Minister Datuk Seri Musa Aman here Monday.

"It is worth stating that the reason our publishing group decided to come here was because we discovered there are attractive investment opportunities for both domestic and foreign investors, some of which are overlooked by mainstream investors.

"Sabah is well positioned to benefit from recent growth in Asean and is well located in the Borneo region to attract foreign direct investment in the next five to 10 years," he said.

Kuncinas said OBG believed Sabah would increase its overall share in Malaysia's gross domestic product (GDP) from six per cent to 10 per cent in the next five years as it would grow faster than the more saturated Peninsular Malaysia.

He said growth in the service sector, one of the growth drivers, would likely push the total GDP to US$12 billion with an average annual growth of above five per cent.

He also said Sabah might need to try to reduce dependency on commodities and the tourism sector which had continued to dominate economic activities in the state.

He said one of the key growth areas was likely to be the service-related sectors that offered support services to establish plantations and agriculture, energy and manufacturing industries.

"It is our firm belief that to achieve sustainable growth and the advanced economy status included in Malaysia's 2020 vision, Sabah needs to focus on creating alternative sources of growth by focusing its efforts on education, research and innovation," he said.

Kuncinas was also of the opinion that retaining young talent within the state would be the key to further productivity growth and advancing the economy beyond natural resources.

Meanwhile, the report stated that Sabah's exports this year would continue to be dominated by palm oil, palm kernel oil, rubber, crude petroleum and processed woods, which would continue to provide income momentum in the next five to 10 years.

Also stated was a high share of processed fuels, lubricants and minerals which accounted for 18.3 per cent of the total in 2011.

"This confirms our view there is still huge investment opportunities in the downstream segments, especially in oil and gas sectors with Sabah in a good position to become one of the leading downstream processing centres in Borneo," said Kuncinas.

He also said there was an upside in the logistics sector with Sabah well positioned to cater for remote regions of East Asia with the Sepanggar Bay Container Port well placed to become one of the leading trans-shipment centres of the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA).