The federal government has agreed to open formal negotiations with Sarawak on a special economic zone for Sibu, covering its investment incentives, a one-stop investment facilitation centre and the strategic infrastructure it needs, Prime Minister Datuk Seri Anwar Ibrahim said when tabling Budget 2027 in the Dewan Rakyat on 9 October, Bernama reported. The state has already said it will put an initial RM1.5 billion behind the zone, a figure the Premier first announced in Sibu in July.

None of the terms has been settled yet. What exists so far is agreement in principle on both sides and a list of matters still to be negotiated.

What Putrajaya and Kuching have each committed to

The two announcements came three days apart.

  • 9 October, federal Budget 2027: Anwar said Sarawak's commitment to developing the zone had led the federal government to begin formal talks to finalise the incentive framework, the investment facilitation centre and the infrastructure requirements (Bernama).
  • 12 October, Sarawak Budget 2027: Premier Tan Sri Abang Johari Tun Openg, tabling the state budget at the State Legislative Assembly, thanked the federal government for agreeing to the state's proposal and said the work would involve the relevant federal ministries and agencies (Bernama).

Neither statement gives a timetable for the negotiations, a legal form for the zone or a list of the incentives on offer.

Where the RM1.5 billion figure comes from

Abang Johari announced the zone on 11 July while opening the Sibu stop of the Sarawakku Sayang programme. He said the state agreed in principle to set up a dedicated development agency for Sibu because the town's economic development was complex, and that he would include RM1.5 billion in the new state budget to start with.

Deputy Premier Datuk Amar Dr Sim Kui Hian described the zone in September as backed by an initial RM1.5 billion allocation. The Bernama reports of the 12 October budget speech do not state a line item for the zone, so whether the full sum sits in the 2027 state estimates is not confirmed in the sources we have read.

The name also varies. Officials have called it the Sibu Economic Zone and, in the budget speeches, the Sibu Special Economic Zone. Both are abbreviated to SEZ and refer to the same initiative.

What the zone is meant to bring to Sibu

In the state budget speech, Abang Johari said the zone would reposition Sibu as a growth hub for central Sarawak, with five focus areas (Bernama):

  • manufacturing at the higher-value end
  • logistics
  • agro-industry
  • downstream processing of raw materials
  • the green economy

He said it was expected to draw domestic and foreign investment, create skilled jobs and give local small and medium enterprises access to new supply chains. Dr Sim had earlier framed its focus as investment, the services sector and high-value job creation.

The local case for the zone has centred on people leaving. Datuk Dr Annuar Rapaee, the Nangka assemblyman and Deputy Minister for Education, Innovation and Talent Development, said its aims include more jobs, slowing the outflow of skilled workers and dealing with an ageing population, adding that the timber industry that built Sibu had reached maturity. He has also named food, logistics, healthcare and the digital economy as sectors he wants to see grow.

The infrastructure the zone depends on

Several projects have been tied to the zone in official statements:

  • Second Trunk Road: due in 2029, it is expected to cut the Kuching–Sibu journey to about two hours, which Abang Johari said would make Sibu more attractive to service industries such as finance and insurance (Bernama).
  • West Bank Bridge and Sibu Industrial Park: Dr Sim cited both, with the industrial park slated for completion in 2029.
  • Bukit Assek redevelopment: in-principle approval, described by Dr Sim as a long-term initiative (Bernama).
  • Sibu redevelopment master plan: Abang Johari said the zone complements a master plan to be carried out in phases over 15 to 20 years.

How it fits the two 2027 budgets

The federal budget raised Sarawak's allocation to RM16.2 billion for 2027, from RM15.1 billion this year, and set aside RM3.3 billion for road projects in Sabah and Sarawak, according to Bernama.

For readers in Kuching and the central region, the practical next step is the negotiated package itself: which incentives investors will be offered, where the facilitation centre will sit, and which infrastructure Putrajaya agrees to fund. None of those has yet been announced.

Sources