Impact of Opening Up of Border in Serudong, Malaysia on Output: Input-Output Table Analysis

Abstract

The relocation of Indonesian capital city from Jakarta to East Kalimantan is expected to give big impact on economic development in Borneo island, specifically Kalimantan. The effects are even greater when the Malaysian government announced that there is a plan to have road connectivity with North Kalimantan. This has the potential to cause the demand for goods and services to rise, investment inflow to be substantial in amount, cross border trade to increase and infrastructure development to move faster among others. From Malaysia’s perspective, many are optimistic that Sabah and Sarawak will have greater economic interaction with neighbouring provinces in Kalimantan. Bilateral trade will increase, tourists movement will be much bigger and the demand for services in certain strategic areas will go up such as in education and health sector. While many have given their views with regard to the costs and benefits of opening new border entry point, limited studies have attempted to estimate the impact of opening up border in terms of magnitude on output at least for Serudong. This study attempts to estimate the impact of increase in final demand of products on output in Sabah using the Input-Output Table Analysis.