Sarawak construction companies: from rent-seekers to world-beaters?

Abstract

Since the advent of the New Economic Policy in 1970, numerous companies in Sarawak benefitted from state rents in the infrastructure and construction industry. Ostensibly, this was to help develop the state and to ensure that its population enjoyed a modern lifestyle devoid of poverty and inequality. While some scholars view rent-seeking as essentially directly unproductive profit-seeking behaviour (Bhagwati 1982), rent-seeking can sometimes have differential benefits (Khan and Jomo 2000) and possibly even lead to long-term developmental benefits (Gomez and Jomo 1997; Searle 1998). Rent-seeking can enhance entrepreneurialism, increase investments that assist productivity growth, induce industrial research and development, and increase learning-by-doing opportunities. However, such results largely depend on the capacity of the State to impose incentive-driven and disciplinary measures upon politically-connected businesses so as to push business to achieve set developmental targets (Amsden 1989; Wade 1990; Rasiah 1996; 2001 ). Since their establishment, many of these Sarawak companies have grown and some have expanded into becoming companies operating at national and even international levels. But are these companies world-beaters? Have they got what it takes to compete with the best in the world? This paper examines these questions.