Sabah minister rebuts Elopura rep over steel investment status

Summary

• Sabah minister Phoong Jin Zhe rebuts claims by Elopura assemblyperson Calvin Chong on delays in the Esteel investment project.

• Chong previously questioned the timing of the project launch, citing a previous agreement indicating commencement in Q4 2023 and completion by Q4 2025.

• Phoong clarifies adjustments to the investment figure and schedule were due to factors like federal moratorium, gas supply negotiations, and updated cost projections.

Sabah Industrial Development and Entrepreneurship Minister Phoong Jin Zhe has dismissed accusations by Elopura assemblyperson Calvin Chong over an alleged delay in the Esteel Enterprise Sabah Sdn Bhd steel investment project at the Sipitang Oil and Gas Industrial Park (Sogip).

In a statement today, Phoong (above) said the Sabah government has always upheld the principles of transparency and accountability to ensure that all incoming investments benefit the state and its people.

“Esteel’s investment will bring significant economic benefits, including job creation for locals and business opportunities,” he said.

On May 30, Chief Minister Hajiji Noor, with Prime Minister Anwar Ibrahim in attendance, launched the RM6.4 billion first phase of the Esteel project.

However, Chong questioned the timing of the launch, citing a Nov 30, 2022, media statement issued during the signing of a Land Lease Agreement between Sogip and Esteel – also witnessed by Hajiji – which stated the project would begin in the fourth quarter of 2023 and be completed by the fourth quarter of 2025.

He said the chairperson of Sogip at the time had announced that the project would generate substantial economic spillover, including the creation of between 10,000 and 15,000 jobs during the construction stage and 1,752 jobs in its operational phase.

An additional 8,000 direct employment opportunities were also projected.

“As we approach the fourth quarter of 2025, the project should already be nearing operational readiness.

“It is shocking that the so-called ‘first phase launch’ was only held yesterday (May 30).

“Does this mean the Gabungan Rakyat Sabah state government’s commitment back then - that the first phase would commence in Q4 2023 - was a lie?” Chong asked.

‘Cheap publicity’

Phoong, in response, described Chong’s remarks as irresponsible and accused him of seeking “cheap publicity by spreading falsehoods”.

He explained that the initial project schedule was based on the assumption that all regulatory approvals would be secured without delay.

“However, the project faced constraints, including a two-year federal moratorium on manufacturing licences (FML) for the steel industry - a point also raised by the prime minister during the launch.

“Special approval for the FML was only granted on Jan 24, 2025, which impacted the original project schedule and required subsequent realignment,” said Phoong.

He added that negotiations involving the supply of natural gas – a critical requirement for the plant’s operation – also caused delays.

“This process was successfully completed this year, with a formal agreement signed between Petronas, Sabah Energy Corporation (SEC), and Esteel on Feb 28,” he said.

‘Normal adjustments’

Phoong further clarified that the revised investment figure of RM31 billion across three phases – up from the initial RM19.6 billion – reflected updated cost projections and technical planning by the company.

“Such adjustments are normal in phased investment projects once technical designs, scope of work, and current cost structures are finalised.

“These also factor in currency exchange rates, building material prices, and rising technology costs,” he said.

He said Esteel had taken a responsible approach by conducting in-depth reviews of the plant design and technical requirements before obtaining approval from local authorities.

“This included assessments of safety, environmental sustainability, and existing utility suitability.

“Therefore, while the physical implementation may appear slow, the project is progressing systematically based on compliance and technical feasibility,” Phoong added.

He urged all parties to preserve Sabah’s reputation as a reliable investment destination.

“Let’s strive together to develop our state, not destroy the spirit of cooperation needed for Sabah’s progress by spreading baseless claims for political gain,” he said.

Phoong added that his ministry will continue to support efforts to fast-track the project for the benefit of Sabah’s economy and its people.

Previously, the Sabah Oil and Gas Development Corporation said the steel project was poised to position the state as a major regional industrial and energy hub, with positive implications for jobs, education, and long-term economic growth.

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