From timber to tech: Sibu’s spotty transition to joining Sarawak’s booming economy

SIBU, Sarawak – On the hour-long cruise along Sibu’s waterfront, a recorded audio commentary boasts that the town once had more millionaires than anywhere else in Borneo, thanks to the post-war timber boom.

It seems an unlikely story, because the town on the banks of the Rajang, Malaysia’s longest river, does not exude the glitz and glamour one would expect from a tycoon’s playground. Rustic traditional structures sit incongruously next to modern shophouses two- to three-storeys tall, with the odd skyscraper towering over them.

The entire Sibu district in East Malaysia’s Sarawak state is triple the size of Singapore but is home to just a quarter of a million people.

The townscape reflects the start-stop nature of efforts to industrialise this central outpost in Sarawak, leaving Sibu to fall behind other cities in the state and the rest of Malaysia, and in danger of becoming a forgotten town.

“The enterprising people that made Sibu – their children are being encouraged not to come back because there’s nothing, no opportunities here,” Sarawak Chamber of Commerce and Industry’s vice-president for the Sibu region Jason Tai Hee told The Straits Times.

He added that for “a place like Sibu”, which has been in the doldrums since its prime years in the 1970s and 1980s, you “need a very strong catalyst” to reverse its fortunes.

No less than the head of Sarawak’s government concurs. In a visit in August 2023, Premier Abang Johari Openg was reported as saying that Sibu has been dependent on timber for too long, and with climate change making forest conservation a priority, the district now “has no anchor economic activities”.

The state government is in the early stages of a decade-long plan to revitalise the outpost and, along with it, the entire central region of Malaysia’s largest state. Plans are for Sibu to be the third town to achieve city status in Sarawak, after state capital Kuching and Miri.

This will enable the state’s economic development to be spread more evenly, instead of being concentrated in the south-west region surrounding the state capital, and the oil-rich north-east.

Sarawak’s treasury now receives an annual income of over RM12 billion (S$3.65 billion) a year, which exceeds that of the 11 Peninsular Malaysia states combined. This is in part due to a sales tax on its petroleum products, which was introduced in 2019, and adds RM4 billion to its coffers annually.

The south-western region surrounding Kuching is the commercial and industrial hub and home to a quarter of Sarawak’s 2.9 million population. Meanwhile, the north-east, where Miri and Bintulu are located, has seen an oil and gas boom in the past five decades.

Since its heyday in the second half of the 20th century, when the Rajang was awash with mud from heavy logging and timber rafts floating downriver, Sibu has slipped from being Sarawak’s second-largest district by population to third. Now it is in danger of dropping to fourth place, behind Bintulu, whose population has grown from 5,000 in 1970 to 230,000 in 2020.

But according to Deputy Premier Sim Kui Hian, plans are afoot to transition Sibu’s economy to technology and tourism, from timber, its former mainstay industry.

The technology push will focus mainly on building dams that will supply green hydroelectric, as well as solar, energy to data centres.

Malaysia is experiencing a surge in data centre investments, with a whopping 11 gigawatts of electricity supply applications received by national power company Tenaga Nasional as at June. And with environmental, social and governance (ESG) concerns emerging as a stronger investment criteria, Sarawak is becoming an increasingly attractive prospect, with three-quarters of its energy mix coming from flowing water.

At least two new dams are being planned in the central region. This means Sibu’s hinterland can seamlessly provide data centres with renewable energy from hydropower and floating solar farms, vast land banks, water supply, as well as licences and permits to operate.

“In Sarawak, there is just one approving body – the state government,” Datuk Dr Sim told ST, referring to how the various utility companies are also controlled by the state administration that is by law in charge of land and local business permits. In Peninsular Malaysia, investors have to get federal, state and private-sector approvals to proceed.

The township itself is set for redevelopment, with an ambitious urban renewal of the 200ha Bukit Assek area in central Sibu that is set to kick off in 2026. This was inspired by Tan Sri Johari’s visit to Singapore’s Bishan-Ang Mo Kio Park in 2022, and aims to increase Sibu’s liveability and attractiveness to visitors.

Sarawak has earmarked RM1 billion for the first phase of the three-stage project, with Danish firm Ramboll – which designed the Bishan-Ang Mo Kio Park – appointed to draw up the masterplan.

“It will be a major game changer. Those whose homes are up to 1.5m below the river level (and prone to flooding) will be relocated, and the town will have a business district capable of serving a wider (area) beyond Bukit Assek,” said Sibu Municipal Council chairman Clarence Ting, whose role is akin to that of a mayor.

But not all Sibu residents are convinced of the project’s merits.

Those like Datuk Tai, who is a state-appointed community leader for the district’s ethnic Chinese, who make up the majority of Sibu town’s residents, are concerned that the Bukit Assek renewal is “an urban redevelopment plan, not an economic redevelopment plan”.

Sibu MP Oscar Ling notes that so far, timber has given way only to palm oil plantations, which largely offer low-paying jobs.

“There are a lot of infrastructure projects, but we haven’t seen clear plans for new economic activity,” the lawmaker from the Democratic Action Party, who sits on the opposition bench in the state legislature, told ST.

As an example, he cited how Sarawak has been marketing new destinations such as Sibu to tourists. Malaysia’s Tourism Minister Tiong King Sing – who hails from the eastern state – has been actively working to bring in more big-spending Chinese tourists, who now enjoy visa-free entry to Malaysia.

Yet, while Malaysia welcomed nearly 1.5 million tourists from China in the first half of 2024, tripling arrivals from the same period in 2023, Sarawak’s share was only 34,000 visitors, from around 17,000 in the previous year.

Dr Sim attributed this to poor flight connectivity between China and Sarawak and believes the state’s “nation-building era” will be more successful with more autonomy from Malaysia’s federal government. “That’s why we need our own airlines, our own bank and ports,” he said.