Sarawak on track to enter new phase of growth

The Star

3 days ago

PETALING JAYA: Sarawak is gearing up for a new growth phase underpinned by its clean-energy ambitions, infrastructure projects and industrial development, with the upcoming state election expected to bring further investor interest, analysts say.
In a research note following a visit to the state, CIMB Research said: 'We expect renewed investor interest in Sarawak-linked names ahead of its state election, which must be held no later than April 10, 2027.'
The state's transformation strategy is guided by the post-Covid-19 Development Strategy 2030 (PCDS 2030), which targets gross domestic product (GDP) of RM282bil by 2030 and a median household income of RM15,000.
According to the research house, this implies 'a compound annual growth rate of 8% from a base of RM136bil in 2019'.
Last year, Sarawak notably attracted RM16.1bil in approved investments.
For 2025, the state government tabled a record RM15.8bil budget, with 70% allocated to development and infrastructure expansion being a top priority.
'We sense a renewed urgency to roll out critical infrastructure to support the PCDS 2030 blueprint,' said CIMB Research, citing projects such as new airports, seaports, 10 industrial parks, and water infrastructure upgrades.
A cornerstone of Sarawak's development is its clean-energy agenda, with the state planning to quadruple its generation capacity to 15GW by 2035 and strengthen cross-border energy exports via the Asean Power Grid, the research house said.
'Sarawak is positioning itself as a regional leader in clean energy,' CIMB Research said, adding that there has been a shift from mega dams to cascading hydropower, floating solar, and pumped hydro storage.
The state is actively pursuing a green hydrogen economy, leveraging its abundant hydropower resources to produce and export clean hydrogen
The research house said two flagship hydrogen projects – H2ornbill and H2biscus – are also central to Sarawak's hydrogen-economy aspirations.
The projects are aiming to produce over 240,000 tonnes of hydrogen annually for export to Japan and South Korea by 2029.
'Sarawak is making great strides in championing its vision of a hydrogen-based economy,' said CIMB Research, adding that the total value of ongoing hydrogen-related projects is estimated at RM20bil.
At the same time, to facilitate industrialisation, major zones like Samalaju Industrial Park (SIP) and Petchem Industrial Park Kidurong are being expanded.
SIP alone has secured RM57bil in investments, with just 12% of land left for development.
Meanwhile, the Kuching Urban Transportation System that will feature hydrogen-powered autonomous rapid transit vehicles is also progressing, with CIMB Research expecting the first phase to be operational by 2028.
Among listed beneficiaries that are poised to benefit from the growth phase in Sarawak, CIMB Research highlighted Gamuda Bhd , which it said is well-positioned to secure road contracts worth up to RM1bil, and IJM Corp Bhd , which is rebuilding its presence through two contracts under the Sarawak tram project.
In addition, Ibraco Bhd , which is expanding into water pipe and asphalt production, also stands to gain from the state's infrastructure expansion, while Cahya Mata Sarawak Bhd offers diversified exposure to Sarawak's resource-rich economy.
The research house said Solarvest Holdings Bhd also continues to be a key enabler in the state's solar and hydrogen transition.
With infrastructure-led growth expected to lift incomes, CIMB Research said it believes consumer-oriented stocks are also set to benefit.
The research house highlighted CCK Consolidated Holdings Bhd and Supreme Consolidated Resources Bhd as proxies to rising food and beverage demand in the state.
'CCK is widely regarded as Sarawak's largest vertically integrated poultry supplier, operating a broad retail network of 79 outlets across Sabah and Sarawak, including 69 Fresh Mart stores, four supermarkets, and six wholesale outlets,' the research house said.
Supreme, meanwhile, is a fully integrated fast-moving consumer goods company focused on the distribution of food products across Sabah and Sarawak, it added.
Despite the optimism, CIMB Research warned that investors should be mindful of several risks such as external economic and geopolitical headwinds, challenges in bridging the talent gap and securing funding for mega projects, rising competition from foreign contractors and unlisted local players, as well as limited listed proxies for the hydrogen theme.