Kuching attracts big retail players
John Teo 
DESPITE the currently rather depressed economic outlook nationally and in particular in a retail sector bearing the brunt of the negative impact of the goods and services tax and rising costs related at least in part to a weak ringgit, Kuching appears to be still catching the eye of nationally-known retail brands.

Before the year is out, Japanese supermarket chain AEON and Australian furniture and white-goods chain Harvey Norman are expected to make a splash on the local scene. It will be the first foray onto the Borneo shore for both establishments, already well-known to shoppers in the peninsula.

AEON’s new flagship Borneo store will occupy a purpose-built multi-storey mall still under construction in the Sarawak capital. It enters a local market currently dominated by a handful of home-grown chains and the likes of national chains Giant and Mydin. The competition, already heating up, will be stiff for a rather saturated market.

Harvey Norman’s Borneo debut looks to be more interesting as it will be the first internationally-known furniture and electronics store to enter a market that until now is the preserve of standalone and small local players, with the possible exception of credit-based discount chain, Courts, offering a very limited furniture-based range.

Regional economic hub

Both retail chains’ entry into Sarawak and Sabah by way of making Kuching its beachhead out east is significant for several reasons. Foremost, it re-affirms the Sarawak capital’s still unassailable position as the regional economic hub and therefore the most logical first entry point for economic players looking at expansion eastwards.

The strategic and economic imperatives for big commercial establishments – especially those involved in the moving of bulky consumer items – to make Kuching its entry point for a Borneo debut should not be lost on Sarawak’s economic planners.

As the recent brouhaha over shipping cabotage reveals, logistics remains the most serious challenge towards creating a seamless and efficient national economy spanning both sides of the South China Sea that divides the country into two geographically distinct regions.

But that will be overcomed, albeit a bit too slowly for most of those living in Sarawak and Sabah. How best to overcome it may become increasingly problematic politically, going forward.

Ironically, assertions by both Sarawak and Sabah of each state’s own autonomy rights may only complicate matters, to the ultimate detriment of ordinary consumers, of course. This primarily has to do with competition by both states to be the distribution hubs for both states and, with that, ultimately the hubs for possibly the entire island of Borneo.

In that regard, it is worth noting that both the federally-owned Bintulu Port and the one at Sepanggar Bay near Kota Kinabalu – each the most important deepsea port for either state – are undergoing billion-ringgit expansions. Both are, without a doubt, girding to win the ultimate battle to be the hub port for not just their own state but for both states and even beyond.

Based on cursory analysis, Bintulu looks to be the more strategic of the two in terms of location straddling both states while Sepanggar Bay may well edge out Bintulu based on sheer immediate population and therefore economic base. So there may be everything to play for, for both ports and the respective states hosting one or the other.

That is why Kuching and its immediate economic hinterland may play the decisive role in this brewing competition. The Sarawak capital, at least for the time being, remains the undisputed main city for the whole of Borneo, as AEON’s and Harvey Norman’s decisions to branch out east with their respective first stores attest.

Kuching also happens to be the nearest major port in Borneo to Port Klang where presumably most if not all of the two retail chains’ wares destined for Kuching will be loaded.

It behoves the Sarawak government therefore to take full advantage of Kuching’s still unbeatable economic edge by proactively encouraging major goods distributors and logistics players to consider making the city the main distribution hub for both Sarawak and Sabah and perhaps even for Brunei and later, Kalimantan.

For that to happen, though, the port in Kuching needs to upgrade its efficiency and capacity so that it can better compete against Bintulu’s and Sepanggar Bay’s deepwater harbours. This is perhaps the opportune moment for the state to expedite plans to build and operate its first major deepwater port at Tanjung Po, at the western-most tip of Borneo.

Fortuitously, the new Pan-Borneo Highway now under construction begins at Sematan, the beachside township near Tanjung Po. The Sematan to Kuching leg of the highway will be among the first, if not the first, stretch slated for completion.

The full completion of the highway eventually will drastically cut down the length of time taken to traverse the entire length of Sarawak, all the way to Sabah. It will be time then for the state to consider shifting entirely to land-based transportation for the delivery of cargo throughout the state and thus phasing out entirely the use of its network of riverine ports whose legendary inefficiency is only compounded by the fact that they all require hugely expensive and regular dredging of the approaching river beds to these ports.

Planning for the big shift from a riverine-based to land-based transportation network must already begin in earnest even now.

If anything, the completion of the Pan-Borneo Highway should provide Kuching with just the right impetus to make it being the main distribution hub for much of the entire Borneo a wholly realistic possibility, despite it being tucked away towards the western-most extremity of the island.

The state government must summon the requisite foresight and imagination so that all the needed economic and infrastructure components may come into place seamlessly.

Failure by the state to think strategically and plan accordingly on such a critical economic matter may only mean that Kuching’s current unassailable status as the prime economic hub in Borneo will be slowly eroded and eventually perhaps even lost altogether.

It is high time the powers-that-be in the state get their act together and push such an all-important agenda forward.

John Teo is based in Kuching. Comments:

This article first appeared in Focus Malaysia Issue 241.