1.0 Introduction 1.1 Food and Beverage (F&B), Handicraft and Homestay Sectors in Sarawak: An Overview 1.1.1 Food and Beverage Sector 1.1.2 Handicraft Sector 1.1.3 Homestay Sector 1.2 The Drivers of SMEs Development in Sarawak 1.2.1 Economic Growth and Performance 1.2.2 Labour Force and Human Capital 1.2.3 Natural Resources 1.2.4 People and Culture 1.2.5 Sarawak Corridor of Renewable Energy (SCORE) 1.2.6 Tanjung Manis Halal Hub (TMHH) 1.2.7 Cottage Industry 1.2.8 Women’s Participation in Entrepreneurship 1.2.9 Sarawak Branding: SARAWAK BEST 1.3 Summary CHAPTER 1 SUSTAINABLE DEVELOPMENT OF SMEs IN SARAWAK : AN OVERVIEW 2 Table 1.0 below shows the performance of the Malaysian economy by sector in 2012 and 2013. Despite global economic uncertainty, most sectors are forecasted to grow at a moderate rate.Though the construction sector is forecasted to show a slight reduction in 2013, it is projected that the sector will have a stronger growth due to physical development and infrastructure projects coming up in line. Table 1.0 : Gross Domestic Product by Kind of Economic Activity at Constant 2005 Prices (RM million), 2012 and 2013 Sector 2012 2013 Agriculture 54,614 (0.6) 55,919 (2.4) Mining and quarrying 63,299 (1.5) 65,012 (2.7) Manufacturing 185,822 (4.2) 194,890 (4.9) Construction 24,690 (15.5) 27,462 (11.2) Services 405,486 (5.5) 428,106 (5.6) (+) Import duties 9,632 (11.3) 9,596 (-0.4) Real Gross Domestic Product (GDP) 743,543 (4.5 ~ 5.0) 780,983 (4.5 ~ 5.5) 1. Estimate 2. Forecast Note : Figures in parentheses are annual percentage changes. Source : Ministry of Finance Malaysia Undoubtedly, SMEs are regarded as the driving force behind economic growth. Efforts have been made by the government to encourage the development of SMEs in the country. The National SME Development Council (NSDC) established in 2004, serves as the highest policy- making body that sets the strategic direction for government policies on SMEs. It oversees policies and programmes across 15 ministries and 60 agencies.The Small and Medium Enterprise Corporation Malaysia (SME Malaysia has achieved great strides in economic and social development over the past 57 years and has been among the best-performing economies in the world. Despite heightened uncertainties in the global economy, Malaysia has weathered the storm quite well, leading towards positive economic growth. The Malaysian economy remains resilient with its Gross Domestic Products (GDP) growth forecasted to be around 4.5 per cent to 5.5 per cent in 2013. The growth is driven by strong domestic demand. Private and public consumption, which is the largest component of real GDP, is anticipated to expand further by 4.2 per cent in 2013 and remains the main driver of domestic demand. This favourable growth is due to careful planning of the Tenth Malaysia Plan (2011 - 2015), which aims at making Malaysia a more productive, innovative and diversified economy. Under the New Economic Model (NEM) unveiled on 30 March 2010, Malaysia is envisioned to become a developed high-income country by the year 2020. Several strategies have been put in place to help the Government realise this vision and ensure substantial economic growth for the country, including the establishment of economic corridor regions, and the Economic Transformation Programme (ETP). Launched on September 21, 2010, the ETP constitutes a key pillar in the New Economic Model, which will propel Malaysia to be an advanced nation, in line with the goals set forth in Vision 2020. It targets to lift the country’s gross national income (GNI) per capita from US$6,700 (RM23,700) in 2009 to more than US$15,000 (RM48,000) in 2020. 1.0 INTRODUCTION 3 Realising this importance, federal and state agencies, particularly in Sarawak, have been playing a pivotal role in propelling the SMEs towards making significant contributions to the State’s economic growth. The Sarawak State Government has continuously encouraged public and private sectors to nurture and support the growth of SME entrepreneurs as well as to develop a vibrant Bumiputera Commercial Industrial Community (BCIC) among the Sarawakians. Based on the Census of Manufacturing Establishments and Enterprises Malaysia 2011 (as shown in Table 1.1 and Figure 1.1), a strong participation of 43,830 SMEs is recorded in Sarawak. This presents an increase of 32.6 per cent from that of 2005. From the total, 92.6 per cent are in the service sector, followed by 4.5 per cent in manufacturing, 2.1 per cent in construction, 0.7 per cent in agriculture and only 0.04 per cent in the mining sector. Sarawak contributes about 6.8 per cent of the total number of SMEs in Malaysia. Though the number has increased significantly, the performance of SMEs in Sarawak, especially among the Bumiputeras, is still relatively weak. The majority of the entrepreneurs in Sarawak i.e., about 80 per cent lead companies are still classified as micro- sized enterprises (as shown in Figure 1.2). Corporation) is the specialised agency that plays an important role in the coordination and management of SME development in the country. Figure 1.0 below shows the percentage distribution of SMEs in the country by size and sector for the year 2011. Majority of the registered entrepreneurs, have their companies classified as micro- sized enterprises (77 per cent), followed by small-sized enterprises (20 per cent) and medium-sized enterprises (three per cent). Definition on types of SMEs in Malaysia is provided in Appendix 1.0. Distribution (%) of SMEs by Size and Sector Figure 1.0 : Distribution (%) of SMEs by Size and Sector, Malaysia (2011) Source : http://www.smecorp.gov.my/v4/node/2681 Services Manufacturing Agriculture Construction Mining & Quarrying Overall Status Micro Small Medium 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 77.0 20.0 3.0 2.1 18.3 79.6 6.1 36.8 57.1 14.8 28.9 56.3 20.6 34.9 44.5 38.8 42.1 19.1 4 Table 1.1 : Distribution of SMEs by Sector in State (2011) State Services Manufacturing Agriculture Mining and Quarrying Construction Total SMEs Selangor 110,714 8,314 834 23 6,019 125,904 WP Kuala Lumpur* 78,448 4,201 5 2 2,023 84,679 Johor 60,618 4,828 994 27 2,407 68,874 Perak 53,322 3,833 962 84 1,827 60,028 Sarawak 40,608 1,977 322 19 904 43,830 Sabah 37,612 1,382 812 24 1,054 40,884 Pulau Pinang 36,899 2,614 269 7 1,035 40,824 Kelantan 35,372 1,814 326 30 281 37,823 Kedah 33,123 2,809 603 17 540 37,092 Pahang 26,815 1,305 630 13 699 29,462 Negeri Sembilan 21,633 1,495 435 11 968 24,542 Terengganu 19,882 1,782 196 37 617 22,514 Melaka 19,694 1,107 252 4 618 21,675 Perlis 4,484 291 63 1 214 5,053 WP Labuan 1,761 109 5 0 77 1,952 Total SMEs 580,985 37,861 6,708 299 17,283 645,135 *Includes WP Putrajaya Source: SME Corporation Malaysia Figure 1.1 : Distribution of SMEs by Sector in Sarawak, 2011 Source: SME Corp. Sarawak Figure 1.2 : Percentage of SMEs by Categories in Sarawak, 2011 Source: Census of Establishment and Enterprises, 2011 by Department of Statistics, Malaysia Services, 92.60% Construction, 2.10% Agriculture, 0.70% Manufacturing 4.50% Mining, 0.04% Micro 80% Small 17% Medium 3% 5 Many of the micro-enterprise Bumiputeras are found to be involved in food and beverage (F&B), handicrafts and homestay sectors.Though there is no exact number of entrepreneurs in each of the sector characterised by the size or categories, the development of SMEs and entrepreneurs especially in F&B, handicrafts and homestay sectors are critical to the well-being of the State’s economy in the medium and long term. Hence, both Federal and State Government agencies have been continuously giving support to nurture the development of entrepreneurs in these three sectors through proper provision of infrastructure, facilities, financial support and funding. Incentives in the forms of grants and soft loans are provided by various Ministries and their agencies.The details of some of the loans and grants offered by those Ministries and agencies can be retrieved at http://www. smecorp.gov.my/v4/node/93. Undoubtedly, the government has seriously taken cognizance of this and has realised the need to continually maintain concerted efforts by all related players, vis-à-vis government agencies and the private sector. The focus is on facilitating the ability of Bumiputera entrepreneurs to make a quantum leap into national and international arenas. A concrete development plan must, therefore, be put in place to ensure that Bumiputera entrepreneurs in these three sectors have the capacity and capability to remain competitive and sustainable in both domestic and international markets. In view of the above, this study is undertaken to prepare a strategic development plan for product development and marketing that will support the development of potential Sarawak-originated products and services that will be successfully saleable in national and international markets. Ultimately, the strategic programmes recommended will produce innovative, creative, knowledgeable, and competitive market-oriented entrepreneurs within the SMEs in Sarawak, particularly, among micro-enterprise Bumiputeras in F&B, handicrafts and homestay sectors.The strategic plans and action plans for these three sectors are formulated based on the findings from various approaches and methods. Those approaches and methods are explained in BOX 1.0. Section 1.1 of this chapter explains briefly the three sectors under study. Section 1.2 highlights some of the contributing factors to the development of SMEs in Sarawak. 6 STUDY APPROACH AND METHODOLOGY The methods adopted to undertake the study involved the supply (entrepreneurs) and demand (consumer) sides. The study is cross-sectional in nature wherein the data is collected at a specific period. Both primary and secondary data are collected. Approaches to Study Entrepreneurs A combination of approaches is used to gather information on the state of the industry sector and the challenges facing entrepreneurs in the respective sector. Stage 1. Desk Research This stage is mostly confined to collecting data from secondary sources. The available report on the respective sectors are identified and reviewed. The information gathered serves as a background information on the status of the respective sectors. The findings are reported and discussed on a separate document. Stage 2. Collecting Primary Data This stage is concerned with gathering information on the entrepreneurs. This stage can be divided into 2 phases – the development of face-to-face interview instrument and the implementation of primary data collection. The development of the interview guide is guided by the objective of the study as stated in the TOR. A semi- structured instrument (questions includes both closed and open-ended statements) was used to guide the interview. The objective of face-to-face interview is to get the first hand information from the business operators on the operational and marketing issues and challenges, their expansion plan, the types assistance required to upgrade and improve their business ventures. Respondents This study relied on the UPUB’s data base and from other government agencies such as MID, MOA, MHDC, STB and others. As of 2011, there were about 5,000 entrepreneurs registered in UPUB’s database. From the list, efforts were made to identify business operators whose statuses were manufacturers or service providers. Ministry of Industrial Development (MID) was also approached to provide the list of beverage entrepreneurs. After the screening process, it was observed that many of those listed were mainly distributors. Due to the lack of comprehensive database, a non-probability sampling method was adopted. In addition, a snowballing method was also used to identify potential respondents. Data collection The primary data collection began in March till September 2012. Field enumerators were engaged and training was conducted on February 12. The sector leader was entrusted to oversee the field work. The sector leaders as well the research team members were also involved in the interview sessions. Data analysis The data are keyed and analysed using SSPS Package. Descriptive statistics are generated. The results of data analyses are presented in separate document. Stage 3. Focus Group Discussion (FGD) The study required active participation and inputs from key stakeholders; the business community, the key government agencies, and the consumers. Thus a Focus Group Discussion (FGD) was held on August 10th. 2012 at Wisma Bapa Malaysia. The FGD was divided into two workshops: Workshop 1 involved the representatives from the key government agencies. Workshop 2 involved the representatives from the business community. Stage 4 Benchmarking In an effort to benchmark with competing products/service providers, visits were made to the following places: 1) Sepang – crisps. 2) Perlis and Kedah – beverages and crisps. 3) Melaka – Homestay. 4) Thailand – Bangkok, Chiangmai and Hat Yai – handicrafts, crisps, homestay. The key personnel at each of the site visited were interviewed. The findings from Stages 2, 3 and 4 are incorporated in various chapters of the main report. 1.2.2 Approaches to Study Consumer In addition to business operators, consumers views were also solicited through surveys and interviews. The semi-structured instrument solicits information on their perceptions towards products and services covered under the scope of this study. Different survey instrument was developed for each of the products/service. The survey instruments are available in data analyses document. Respondents The main target groups were the young consumers. Students studying at the following universities were approached to participate in the study – • Universiti Malaysia Sarawak • Universiti Sains Malaysia • Universiti Utara Malaysia • Universiti Malaysia Perlis • Universiti Malaysia Terenganu Through this approach, it was hoped that the respondents from various states in Malaysia would be represented in this study. Justification for using students currently enrolled at higher educational institutions: 1.Young consumers in Asia are the prime target of commercial marketing activities and form an independent market segments. 2. Group of 16 to 30 years old constitutes almost 30 per cent of total population of Malaysia and this provides a huge business potential. As of 2010, the number of students studied in Institutes of Higher Learning (IHL) in Malaysia was at 1,050,726. 3. The industry leaders also recommend that it is timely that a market study on the behaviour of young consumers be seriously looked at. BOX 1.0 1.1 FOOD AND BEVERAGE (F&B), HANDICRAFT AND HOMESTAY SECTORS IN SARAWAK : AN OVERVIEW 1.1.1 Food and Beverage Sector Sarawak has various ethnic groups that still proudly hold fast to their respective distinct language, culture and lifestyle. Due to the colourful blend and moulding of different cultures, Sarawak takes pride in the delightful collection of their signature cuisines and exceptional tastes. Table 1.2 shows a few potential Sarawak food derived from various bases. Table 1.2 : Types of Food in Sarawak Food Base Product Gula Apong, Garam Apong and Sagu Tebaloi, Kuih Sepit Lemantak, Sagu Medong Seafood Sesar Unjur (Smoked Shrimp) Flour Layered Cake Fruit / Vegetables Banana Crisps, Cassava Crisps,Yam Crisps, Pineapples crisps (and juice). Source : Ministry of Modernisation of Agriculture The food products of Sarawak have great taste and much potential to be commercialised. With their extraordinary tastes, they are gaining fast popularity and demands from various countries. A few products have been identified and highlighted to have the potential to be marketed widely. Those food items are various types of agro- based crisps, Tebaloi, Kuih Sepit Lemantak, Layered Cake and Sesar Unjur (Smoked Shrimp). 7 This report gives greater emphasis and attention on agro-based crisps production due to the greater acceptance of the consumers on this type of food product relative to others. Furthermore, the Sarawak Government through Unit Pembangunan Usahawan Bumiputera (UPUB) made its first attempt to export a 20-foot container of tapioca crisps/ chips to United Kingdom in 2009. However, consequent shipments were never materialised due to insufficient supply of the products. This shows that there is indeed a strong demand for Sarawak agro- based crisps from the outside world. Thus, strategic actions should be taken to meet the demand and to make sure that there will be a consistent supply of the products as well as the raw materials in order to sustain the business. The selection of agro-based crisps as the potential food to be promoted at a higher level can be substantiated by data produced in The Women Entrepreneurs Directory 2006 – 2010 (Direktori Usahawan Wanita, 2006 - 2010) published by the Department of Agriculture Sarawak. The directory reveals that female snack producers who are under the supervision of the Food and Agro- based Industry Division of Sarawak form the majority of Sarawak’s agro-based crisp producers. Thus, it is pertinent to take initiatives to bring them together, to develop and groom them as the main producer of Sarawak crisps. On the other hand, the development of the beverage sector in Sarawak is mostly centred on medium sized industries. Most of the identified and registered local beverage establishments are in the service industries such as cafes and restaurants, franchises and distributors. Products manufactured by the beverage industry in Sarawak include bottled water, juice, syrups, cordials, ready-to-drink beverages and regular teas and coffees, dairy drinks, energy drinks, sports drinks, fruit powders, and alcoholic drinks such as tuak (rice wine). Some major beverage brands in Sarawak are Yeo’s, Drinho and F&N. According to the Sarawak Bumiputera Chamber of Entrepreneurs or known as Dewan Usahawan Bumiputera Sarawak (DUBS), the local beverage industry has a lot of potential to be developed and promoted in the national and international markets, given the vast range of herbs and fruits which can be exploited to fill in the natural beverage market demands. These natural beverages, made without preservatives or additives, are leading the healthy juice market. Companies are adapting to consumer demands by using organic ingredients and fortifying their products with ingredients such as fibres, vitamins and minerals. 8 1.1.2 Handicraft Sector From the biennial census conducted by the Malaysian Handicraft Development Corporation (MHDC), it was reported that in 2011, there were about 7,461 registered artisans in Malaysia and 19.7 per cent of them were craftsmen registered in Sarawak. There was an increase of 20 per cent in the number of artisans at both national and state levels when compared to 2009.To keep the number of registered craftsmen growing, systematic and proper training programmes must be put in place especially to the new and young generation. Figure 1.3 shows the breakdown of the number of artisans registered with MHDC from 2004 to 2011.The existing artisans in Sarawak are mostly aging and they produce craftworks on a part-time basis rather than on a full-time basis. Majority of them produce forest-based craftworks such as rattan, bamboo, wood, nipah and bemban. The distribution of registered craftsmen in each product type according to the primary materials used is shown in Table 1.3. Figure 1.3 : Number of Registered Craftsmen in Malaysia and Sarawak (2004 – 2011) Source : Malaysia Handicraft Development Corporation Table 1.3 : Distribution of Artisans by Types of Craftworks in Sarawak Year 2004 2007 2009 2011 Textiles 60 359 312 343 Forest based products 101 569 810 890 Ceramic based products 0 4 19 21 Metal based products 0 43 83 91 Others 4 116 113 125 Source : Malaysia Handicraft Development Corporation In comparison to the total population of Sarawak, which was reported to be over 2.4 million in 2010, less than 0.061 per cent of the population are generating main income from craftworks. Hence, the handicrafts sector only contributed 0.02 per cent to the total national GDP in 2009. This value is equivalent to around RM10.61 million. The contribution was slightly higher than in 2007 when handicrafts contributed 0.01 per cent of the value, which in turn contributed RM2.6 million to the national GDP. In 2011, the handicraft sector accounted for approximately RM12 million, showing a slight increase as compared to the 2009 data. The statistics also revealed that the dominant contribution of Sarawak to national GDP was from the agricultural sector (19.6 per cent). If the management of these two sectors is aligned properly, the agricultural sector can serve as an input to the handicrafts sector by supplying raw materials planted under contract farming or replantation programmes. 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 No of Producers/Entrpreneurs 2004 2007 2009 2011 Number of craftsmen in Malaysia Total number of craftsmen in Sar awak 3,480 6,167 6,783 7,461 165 1,091 1,337 1,470 Year 9 1.1.3 HOMESTAY SECTOR In 2011, tourist arrivals in Sarawak were recorded at 3.8 million, a remarkable increase of 18 per cent as compared to 2010 (3.2 million). Of the total tourist arrivals, 62 per cent were international tourists, while 38 per cent were domestic visitors from Peninsular Malaysia and Sabah. The estimated revenue generated from tourism in 2011 was RM7 billion, contributing about 13.5 per cent to the State GDP. In the first quarter of 2012, Sarawak already showed a positive growth of 16 per cent, recording 998,557 visitor arrivals. During that period, tourists from Brunei marked the highest arrivals with 44.9 per cent, followed by guests from Peninsular Malaysia (19.4 per cent), Sabah (14.4 per cent), Indonesia (10 per cent), the Philippines (2.6 per cent), Singapore (1.3 per cent), China (1 per cent), Thailand (0.9 per cent), United Kingdom (0.8 per cent), and India (0.8 per cent). By the end of 2012, tourist arrivals in Sarawak already marked four millions. The Ministry of Tourism is targeting 6 million tourist arrivals to Sarawak during the Visit Malaysia Year (VMY) in 2014. With the existing advancements in today’s modes of transportation, tourists find travelling more interesting and convenient. Subsequently, they are on a search for extraordinary cultural experiences, including various types of accommodation. Thus, the ecotourism industry is expected to remain on the rise. Although hostels and guesthouses are still abundant and sought after by many young budget travellers, the demand for increased cultural awareness and the option of guaranteed interaction with locals will be the driving force behind the homestay sector. Homestay has become a popular option and is now available at most tourism boards. Specifically, this has spread beyond the traditional tourism destinations in Europe and North America to other countries, such as Africa. Some countries further segment this market by offering stays with indigenous tribes. Such schemes will raise the profile of homestay tourism (www.onecaribbean.org). Homestays have been proven to significantly and positively change community development through cross cultural understanding, improvement of infrastructure, and the quality of life of those involved. 10 1.2 THE DRIVERS OF SME DEVELOPMENT IN SARAWAK 1.2.1 Economic Growth and Performance Sarawak marked the third largest contributor to Malaysia’s Gross Domestic Products (GDP) with 19.4 per cent of the total country’s GDP in 2011. The State’s GDP grew by 4.5 per cent in 2011. The favourable growth was supported by the sustained expansion of domestic economic activities in the services, manufacturing and agricultural sectors, regional demand and high commodity prices, growth in public and private consumption, and increase in private investment. Sarawak’s economy is expected to grow at 5 per cent in 2013. This estimation is based on strong domestic demands and the economic activities generated by projects initiated under the Tenth Malaysia Plan (10MP) and SCORE (Sarawak Corridor of Renewable Energy). Notably, Sarawak has begun taking steps towards diversifying its economic structure and has started focusing on high-technology industries, modern agriculture, and the service sectors, other than the manufacturing sector, since the 1980s.With its strategic geographical location, top-notch facilities and systematic infrastructures, Sarawak has been able to develop competitive advantages that make her an extremely attractive destination for new investments. As of 2011, Sarawak has managed to attract new capital investment valued at RM8.17 billion. Most of these new capital investments are due to the SCORE initiatives. The following Table 1.4 shows the economic activities of Sarawak in 2008 through 2012. Sources : Yearbook of Statistics of Sarawak 2012, Department of Statistics Malaysia Sarawak, and State Planning Unit of Sarawak. (Monetary values are at constant price at year 2000). (p= preliminary, f=forecast) Based on Table 1.4, there was a significant increase in Sarawak’s GDP by economic activity in the year 2012 in comparison to the previous year. The manufacturing sector made a remarkable growth from negative 5.9 per cent in 2009 to 6.4 per cent in 2012, while the construction sector improved from 6.4 per cent in 2011 to 7 per cent in 2012. The construction sector appeared buoyant, probably due to the support given by favourable economic growth and the implementation of various SCORE projects. Figure 1.4 below shows Sarawak’s GDP by economic activity for the year 2012 while Figure 1.5 shows Sarawak’s economic activities by division. ECONOMIC ACTIVITY 2008 2009 2010 2011p 2012f Agriculture 7,616 0.7 7,642 0.3 7,929 3.8 8,192 3.3 8,374 2.2 Mining and Quarrying 9,524 -6.2 8,857 -0.7 9,235 4.3 9,269 0.4 9,458 2.0 Manufacturing 13,806 -1.7 12,987 -5.9 13,468 3.7 14,244 5.8 15,159 6.4 Construction 1,041 -2.4 1,087 4.4 1,186 9.1 1,262 6.4 1,350 7.0 Services 17,110 7.5 17,833 4.2 18,729 5.0 19,641 4.9 20,557 4.7 Plus Import Duties 220 32.3 196 -11.1 259 32.0 - - - - TOTAL 49,317 0.8 48,602 -1.5 50,805 4.5 52,927 4.2 55,292 4.5 RM (Mil.) RM (Mil.) RM (Mil.) RM (Mil.) RM (Mil.) % Change % Change % Change % Change % Change 11 Figure 1.4 : Sarawak GDP Share (%) by Sector, 2012 Source : State Planning Unit, Chief Minister’s Department of Sarawak Sarawak Main Economic Activities By Division Figure 1.5 : Sarawak Main Economic Activities by Division Source : sarawakmonitor (2012) Manufacturing 27.40% Services 37.20% Construction 2.40% Agriculture 15.10% Mining & Quarrying 17.10% 12 1.2.2 Labour Force and Human Capital As of June 2011, 65.7 per cent of 2.5 million population of Sarawak were in the labour force, with the age group between 20 – 49 years old forming 85.4 per cent of the force.This large pool of productive- age labour force is an asset for the State to develop a competitive workforce and human resource that can contribute to its economic growth and development. In line with future development projects and in meeting with its high- income nation status by 2020, the State Government is increasing collaborative efforts with educational institutions. The contribution of education to growth is presumed to occur through its ability to increase the productivity of the existing labour force in various ways, including both technical training and general education. Highly developed high-income countries generally have a large proportion of its population possessing advanced level of education, and a labour force with a high degree of technical skills compared to less- developed, low-income countries. Shortage of skilled manpower is said to be one of the major constraints to economic growth especially in developing countries. Sarawak currently has 68.1 per cent of the labour force that has at least a secondary level of education. Of this figure, only 17.5 per cent has tertiary education. Realising the importance of education to economic growth and being proactive in shaping the future of the State’s workforce, a “Workforce Development Unit” was set up within the Chief Minister’s Department. This establishment is to ensure proper planning and development of the technical workforce and to increase the capacity and capability of local universities and training institutions to produce the needed technically qualified workforce for the development of the State. Another initiative taken by the Sarawak State Government involved the targeting of the younger generation to prepare the State with better quality workforce. The Tabung Ekonomi Gagasan Anak Bumiputera Sarawak (TEGAS) that was launched by the Chief Minister of Sarawak on 28 February 2012 is aimed to promote technical and vocational fields as the vocation of choice among Bumiputera youths. This is in line with the State’s goal to prepare for high-technology heavy industries in SCORE development and to become a developed and high-income state by 2015. Table 1.5 below shows Sarawak’s labour force in 2008 through 2012, while Table 1.6 presents Sarawak’s labour force by age group (2010). Table 1.7 shows the distribution of Sarawak’s labour force by education (2010). Table 1.5 : Labour Force in Sarawak (2008 – 2012) Principal Indicator 2008 2009 2010 2011 2012 Labour Force 973,000 1,024,200 1,057,100 1,090,600 1,173,800 Working Population 921,700 977,500 1,008,900 1,040,500 1,133,000 Unemployment Rate (%) 5.3 4.6 4.6 4.6 3.5 Labour Force Participation (%) 63.9 65.9 66.5 65.6 69.4 Source : Monthly Statistical Bulletin, Department of Statistics Malaysia, Sarawak and http://jtkswk.mohr.gov.my/images/StatistikPerburuhan/Jan-Jun2013/4.pdf 13 Table 1.6 : Percentage Distribution of Labour Force by Age Group in Sarawak (2010) Total Age Group % 52, 300 15 – 19 5.0 136, 900 20 – 24 13.0 153, 900 25 – 29 14.6 142, 200 30 – 34 13.5 133, 900 35 – 39 12.7 128, 500 40 – 44 12.2 115, 400 45 – 49 10.9 91, 800 50 – 54 8.7 64, 600 55 – 59 6.1 37, 600 60 – 64 3.6 1,057, 100 Total 100 Source :Yearbook of Statistics of Sarawak 2011, Department of Statistics Malaysia, Sarawak Table 1.7 : Distribution of Labour Force by Levels of Education in Sarawak - 2010 Education Level Total % No Formal Education 94, 000 8.9 Primary 242, 900 23.0 Secondary 534, 700 50.6 Tertiary 185, 500 17.5 TOTAL 1, 057, 100 100 Source : Yearbook of Statistics Sarawak 2011, Department of Statistic Malaysia, Sarawak “That is why we are emphasizing on the quality of people and investing more and more on education. We must develop more educational facilities and make conscientious efforts to help people to become more acquainted with the development of the country and focus their attention on acquiring education and trainings.This is what the future of Sarawak going to be.” YAB Pehin Sri Haji Abdul Taib Mahmud The Chief Minister of Sarawak May 22, 2012 http://www.cm.sarawak.gov.my 14 1.2.3 Natural Resources Sarawak has been recognised to possess some of the world’s most diverse forests. This fact is not surprising because about 80 per cent or about 10 million hectares of the State’s total area are covered by forests. The other 2.3 million hectares of land are used for housing, townships, and agriculture, including a portion of the area earmarked as being under native customary rights. Sarawak is also recognised for its mineral resources such as coal, bauxite, kaolin, clay, limestone, silica sand, sand and gravel, petrochemical and gas. It is also recognised for its timber, wood- based and agro-based products, biotechnical and aquaculture. With Sarawak being mostly covered by thriving forests, it is not surprising that it is one of the world’s largest exporters of tropical timber. Large reserves of natural resources present great openings and opportunities in the area of biotechnology, as many unidentified or unutilised forest wealth are yet to be discovered as a major source of new value and potential wealth. These available resources and indigenous scientific capabilities available in Sarawak have started attracting many foreign direct investments. “Sarawak as the biggest state is important to the economy. It is just a matter of putting all the resources together and turn it into economic success story”. Randolph Mank, the High Commissioner of Canada to Malaysia Borneopost May 8, 2011 15 1.2.4 People and Culture This lush flora-ridden state has a wide diverse culture still rooted in tradition, possessing an admirable range of great local food and treats. The people are creative and admirable craftsmen and craftswomen who are warm, friendly and welcoming. It is home to more than 40 sub-ethnic groups from a total of 2.4 million people. Table 1.8 shows the distribution of Sarawak’s population by major ethnic groups. Table 1.8 : Distribution of Sarawak Population by Ethnic Groups, 2010 ETHNIC GROUP NUMBER % Malay 568,113 24.1 Iban 713,421 30.3 Bidayuh 198,473 8.4 Melanau 123,410 5.2 Other Bumiputera 156,436 6.6 Chinese 577,646 24.5 Indian 7,411 0.3 Others 9,138 0.5 TOTAL 2,354,058 100.0 Source : http://www.statistics.gov.my The two largest religions in Sarawak are Christianity and Islam, with Christians making up 43 per cent of the population, while Muslims and Buddhists account for 30 per cent and 15 per cent of the population, respectively. The State comprises a population of over 2.4 million, with the highest count, 681,901 in number, living in Sarawak’s capital, Kuching. The people open themselves to tourists, who feel that they are safe; tourists normally have fears, for example, of being overcharged and other things. They are opening up and feel very happy to interact with the local people. They feel welcomed in shops, they can trust drivers and where ever they go they feel welcomed. These are the greatest assets for tourism but the assets are the naturalThe people open themselves to tourists, who feel that they are safe; tourists normally have fears, for example, of being overcharged and other things. They are opening up and feel very happy to interact with the local people. They feel welcomed in shops, they can trust drivers and where ever they go they feel welcomed. YAB Pehin Sri Haji Abdul Taib Mahmud The Chief Minister of Sarawak February 23, 2013 http://www.cm.sarawak.gov.my 16 1.2.5 Sarawak Corridor of Renewable Energy (SCORE) Sarawak’s own economic corridor, known as The Sarawak Corridor of Renewable Energy (SCORE), was established in 2008 by the State Government. It is aspired as a means to transform Sarawak into a developed state by the year 2020. The SCORE plan focuses particularly on ten priority industries, namely aluminium, steel, oil-based products, glass, palm oil, timber- based products, livestock, fishing and aquaculture, marine engineering and tourism. It is projected that SCORE would provide about 1.5 million jobs to the Sarawak people. SCORE aims to accelerate the State’s economic growth and development, as well as to improve the quality of life for the people. Its economic plan includes improving physical infrastructure like roads, airports, ports and other facilities. In addition, it also aims to upgrade workforce skills, and increase the number of small and medium- sized entreprises (SMEs), as well as entrepreneurial competencies and capabilities. In other words, SCORE is not just meant for big businesses. Instead, it is also meant to help develop Sarawak and its people to become industrialised and be a high-income community in the years to come. The ultimate aim of SCORE is to bring benefits to the people of Sarawak through business, investment and job opportunities. It is envisaged that SCORE will facilitate the creation of more supporting and downstream industries which will spread through the whole spectrum of the value-chain. It will also develop high-income employment opportunities and contribute to Sarawak’s GDP growth. Thus, it is up to the people to take advantage of the numerous SCORE development programmes available, as well as to improve their standard of living by participating actively in the programmes. “SCORE will open up many economic opportunities for the Small and Medium Entreprises (SMEs) and Small and Medium Industries (SMIs), including those related to the agro-based industry”. Datuk Amar Awang Tengah Ali Hassan Second Minister of Resource Planning and Management of Sarawak “SCORE is not just for big investors but it is also for small and middle scale entrepreneurs to benefit for the next 20 years”. YAB Pehin Sri Haji Abdul Taib Mahmud The Chief Minister of Sarawak SCORE Areas Source: http://www.recoda.com.my/ 17 1.2.6 Tanjung Manis Halal Hub (TMHH) The number of Muslims worldwide today is estimated to be around 1.8 billion, with Asia having the most populous Muslim community. Approximately 62 per cent of the world’s Muslims are living here in Asia and this number shows the demand and potential for halal food. By definition, halal means that an item is permissible for Muslim consumption.According to Shariah Law, the market for halal products is no longer solely for Muslims. Today, the demand for halal products is getting wider, attracting even the non-Muslims. According to the Halal Development Corporation (HDC), it is estimated that the global value for both halal food and non-food sectors is approximately US$2.3 trillion. Figure 1.6 below shows the potential size of the global market by types of production for 2011. Figure 1.6 : Potential Size of the Global Halal Market (2011) Source : http://www.tanjungmanishalalhub.com The halal industry in Malaysia is valued at RM5.25 billion. The HDC has reported that at present, nearly 4,800 manufacturers, premises and abattoirs in Malaysia have been certified by the Jabatan Kemajuan Islam Malaysia (JAKIM), Jabatan Agama Islam Negeri (JAIN) and Majlis Agama Islam Negeri (MAIN). The report states that JAKIM has certified 1,839 companies by December 2010, with the majority coming from the food and beverage (F&B) industry at 61 per cent. What is more interesting is that out of this number of JAKIM halal-certified companies, 82 per cent comes from small and medium enterprises (SME), which are in effect the main engine of growth. The Malaysian halal logo represents high quality. Therefore, given the opportunity and advantage that Malaysia has, the Sarawak State Government should take full advantage of this situation. Among the efforts taken thus far include its initiatives that lead to the acquisition of HALMAS, which is an accreditation given to Halal Park operators who have successfully complied with the requirements and guidelines stipulated under the Halal Development Corporation (HDC).Tanjung Manis Halal Hub (TMHH), one of the areas under SCORE, has been set up for related purposes. TMHH has become the first central Halal Park in East Malaysia and is reported to be the largest halal hub in the world for upstream and downstream halal food and manufacturing activities. TMHH offers investors extraordinary possibilities and prospects to be a part of the increasing demand for halal products globally. Strategically located on the west coast of Sarawak,TMHH is the fastest growing and most vibrant area in Malaysia. One of the advantages HALAL PRODUCTS Bakery 12% Primary meat 10% Processed food and be verages 36% Cosmetics and Personal care 9% Pharmaceutical 22% Neutraceuticals 6% Confectionery 5% 18 of the TMHH is its fast-track approval for halal certification and endorsement.This allows for the smooth establishment of operations and the reduction of holding period, ensuring a hassle-free procedure in dealing with approved agencies. The goal of the Halal Parks is to improve economic performance of participating companies while minimising any related environmental impacts. Components of this approach include green design of park infrastructure, hygienic production, contamination prevention, availability and convenience of raw materials and components, as well as ease of associations for marketing outl