Sabah has the capability for rapid development with the progress it has undergone in recent years, Prime Minister Dr Mahathir Mohamad said today.

Mahathir said he was impressed with the landscape after arriving in Kota Kinabalu yesterday for the Malaysia Day celebration, and that he believes it has great potential to be a developed state.

“I have not been to Sabah for a long, long time...the town is now quite clean.

“What I think should be done (to develop Sabah further) is to identify assets which can be exploited. You have land, mountain, seas, beaches and low temperatures, which may be good for vegetable-growing,” he told reporters after having breakfast with Sabah Chief Minister Mohd Shafie Apdal and federal and state cabinet ministers.

Mahathir also expressed concern for the high cost of living that the people in Sabah had to bear due to the alleged corruption of the previous administration, but did not deny that there were other contributing factors, such as the cabotage policy

He also suggested Sabah could establish an automotive industry where car makers could assemble their products in the state.

“Industries can come here because in the future, Sabah is going to be a petrochemical producer as deepwater production will begin any time soon,” he said.

Asked for a timeframe for the federal government to decide on Sabah’s oil and gas royalty being increased from five to 20 percent, Mahathir said there was a need to maintain Petronas' strength first before deciding to pay out higher royalties.

“We don’t want to kill Petronas. Petronas is a unique company in the world because it is the only national company that goes into exploration, development, production and petrochemical, and people all over the world are asking Petronas to do work in their country.

“So, (if) we reduce Petronas to just collecting royalty, then, we will lose a lot of things (opportunities),” he said.

However, Mahathir said the federal government also felt that there was a need to reexamine the current royalty rate given to Sabah.

Regarding the government’s assurance on returning equal partner status to Sabah and Sarawak, the Prime Minister said a discussion on the matter would be done as soon as possible, but that an approval might take some time.

Yesterday, Mahathir assured that the Pakatan Harapan government would return equal partner status to Sabah and Sarawak as enshrined in the Malaysia Agreement 1963 (MA63).

He said that the status of Sabah and Sarawak, which changed from equal partners (with Malaya) to states within the federation (of Malaysia), would be reverted to the original position once a study on MA63 was completed.

- Bernama