Sabah and Sarawak – our Borneo heartland – sit at a powerful crossroads. Rich in culture, natural resources, and community values, both states are now on an accelerated journey towards digital, sustainable and high-value economies. Human capital is at the centre of this transformation.

Sarawak’s Post-COVID-19 Development Strategy (PCDS) 2030 and Digital Economy Blueprint 2030 placehuman capital and digital skills as key pillars to doubling the state’s economy and creating a digitally literate society.

Sabah, through the Sabah Maju Jaya (SMJ) Development Plan 1.0 and 2.0, has already channelled more than RM1.33 billion into education and human capital programmes, with specific allocations for talent development, TVET and technology-related skills

Against this backdrop, HR transformation in Sabah and Sarawak is not a“nice to have”. It is a strategic necessity.

1. Borneo’s Moment: Why HR Transformation Cannot Wait.

Sabah and Sarawak are no longer just resource-based economies. Oil & gas, plantations, timber and basic tourism remain important, but new growth engines are emerging rapidly:

• Digital and knowledge economies – driven by Sarawak’s digitalisation agenda and Sabah’s move to embed technology and innovation across sectors.
• Green and renewable energy – including hydropower and emerging hydrogen initiatives in Sarawak, alongside broader sustainability agendas.
• High-value tourism and services– eco-tourism, MICE, hospitality, and niche cultural experiences across Borneo.
• Manufacturing, logistics and downstream industries – increasingly demanding technologically savvy and multi-skilled workers. But growth is only as strong as the people who drive it. Both states face:
• – Skills gaps in digital, technical and leadership capabilities.
• – Limited pipelines of job-ready graduates in certain rural and remote districts.
• – Brain drain, as talents move to Peninsular Malaysia or overseas for better opportunities.

The good news: both state governments openly recognize that developing human capital is non-negotiable. Sarawak leaders have repeatedly emphasized that human capital is a key pillar for achieving PCDS 2030. Sabah’s Chief Minister has stressed that investments in education, TVET and talent development are central to building a resilient and competitive Sabah

This is the context in which HR transformation must be understood: not just upgrading HR processes in organisations, but reshaping how we attract, develop, engage and retain Borneo’s people for a new era.

2. Sabah & Sarawak: A Land of Focused Cultures and People

One of Borneo’s greatest strengths is its cultural depth. Sarawak alone has more than 30 ethnic groups including Iban, Bidayuh, Orang Ulu, Melanau, Malay and Chinese communities, each with rich traditions and distinct identities.

Sabah’s social fabric is equally diverse, with Kadazan-Dusun, Bajau, Murut and many other communities, creating a complex but powerful multicultural environment.

For HR, this diversity is not a challenge to manage; it is a strategic asset if approached correctly:

• Multilingual, multicultural teams can engage regional and global markets more effectively.
• Community-oriented values – such as gotong-royong, respect for elders, and strong village or kampung ties – can translate into loyalty, resilience and team cohesion.
• Indigenous knowledge and local wisdom can inform sustainable practices in forestry, tourism, agriculture and environmental management.

However, this “land of focused cultures and people” requires HR models that are sensitive, inclusive and locally grounded. A copy-paste HR strategy from Kuala Lumpur or Singapore will not automatically work in Kota Kinabalu, Kuching, Miri or Sandakan.

HR transformation in Sabah and Sarawak must therefore balance global standards with local soul.

3. The New HR Agenda in Borneo: From Administration to Strategic Partner

Across Malaysia, HRD Corp is pushing for more strategic human capital development, offering employers access to structured training grants, industry-focused programmes and skills frameworks.

In Sabah and Sarawak, this national agenda intersects with state-level roadmaps like SMJ and PCDS 2030. The result is a new HR agenda that goes far beyond payroll and leave management.

Key shifts required:

1. From transactional HR to strategic workforce planning Forecasting future skill needs in sectors like renewable energy, digital services, advanced manufacturing and high-end tourism. Aligning recruitment, training and succession planning with the state’s long-term development strategies, not just annual budgets.
2. From ad-hoc training to structured capability building Leveraging HRD Corp claimable courses, SME skills funds and digital learning platforms to build systematic upskilling pathways Partnering with accredited training providers within Sabah and Sarawak to ensure contextualised, locally relevant programmes – not generic slides.
3. From paper-based HR to data-driven people analytics Implementing HRIS and basic people analytics to track turnover, training ROI, performance trends and future leadership pipelines. Using data to justify investments in training and to support state-level KPIs linked to human capital growth.
4. From compliance mindset to growth mindset Compliance with labour laws, minimum wage and safety standards remains fundamental. But HR must also champion innovation, continuous learning and digital adoption among employees

4. Critical Areas of HR Transformation in Sabah & Sarawak

A. Closing the Skills Gap Through TVET, Digital & Green Skills

Both states are doubling down on TVET and skills training. Sabah’s SMJ plan highlights TVET and human capital development as key thrusts, supported by substantial budget allocations. Sarawak is simultaneously investing in digital literacy, STEM education and advanced skills to support its digital economy and energy transition.

HR leaders should:

• Map current workforce skills against future state and industry roadmaps.
• Build partnerships with local polytechnics, universities, skills centres and industry players to co-design relevant curricula.
• Encourage employees to leverage HRD Corp’s e-learning and certification opportunities.

B. Developing Local Leaders for a Borneo-Centric Future

Leadership pipelines in Sabah and Sarawak must reflect the region’s unique character:

• Leaders who understand rural-urban dynamics and the reality of managing teams across remote plantations, coastal towns and growing city hubs.
• Leaders who can bridge traditional community norms with high-performance expectations and global business standards.
• Leaders who are comfortable with digital tools, data and sustainability agendas, not just operational firefighting.

Targeted leadership development – combining soft skills, strategic thinking, digital fluency and cultural intelligence – is therefore a critical component of HR transformation.

C. Embedding Diversity, Equity & Inclusion (DEI) Based on Local Realities

DEI in Borneo is not a Western textbook concept. It is lived daily in multi-ethnic workplaces, longhouses, villages and cities where people of many cultures pray, eat and work side-by-side.

HR transformation must move beyond “festival-based” diversity (only celebrating Gawai or Kaamatan) to structural inclusion:

• Fair recruitment and promotion opportunities across ethnic groups, genders and age brackets.
• Respectful communication practices in multilingual environments.
• Inclusion of rural talent, persons with disabilities and under-represented communities in mainstream workforce planning.

D. Building Digital HR & Hybrid Work Capabilities

As digitalisation accelerates, HR in Sabah and Sarawak must also digitise:

• Online recruitment, onboarding and learning platforms to reach talents across Borneo’s vast geography.
• HR systems that enable hybrid or flexible work models, especially for knowledge workers and regional project teams.
• Use of AI-assisted tools for talent sourcing, skills mapping and learning analytics – while staying compliant with data privacy regulations

5. Challenges on the Ground – And How HR Can Respond

HR transformation in Borneo is inspiring, but it is not easy. Common pain points include:

1. Infrastructure and connectivity gaps Some rural areas still face limited internet connectivity, making digital learning and remote work difficult. HR must creatively blend online, offline and on-site training methods so that no employee is left behind.
2. Mismatch between education output and industry needs Employers often report that fresh graduates lack job-ready skills in communication, problem-solving and digital tools. HR can help by co-designing internship, apprenticeship and industry-project programmes with local institutions.
3. Retention and brain drain Talents leave for higher pay and perceived prestige in Peninsular Malaysia or overseas. HR must proactively design retention strategies: clear career paths, leadership opportunities, flexible work policies, and compelling employee value propositions rooted in the unique Borneo lifestyle.
4. Limited HR capabilities in SMEs Many SMEs still treat HR as purely administrative. Upskilling HR practitioners themselves – through HRD Corp programmes, professional certifications and communities of practice – is a foundational step.

6. The Role of Ecosystem Collaboration

HR transformation in Sabah and Sarawak cannot be achieved by individual organisations working in silos. It requires ecosystem-level collaboration:

• State Governments & Agencies Continue articulating clear human capital and digital roadmaps (as in SMJ, PCDS and Digital Sarawak) and aligning incentives to encourage skills development.
• HRD Corp & National Bodies Expand outreach and tailored programmes in Sabah and Sarawak, including more region-specific HR conferences, stakeholder engagements and signature programmes.
• Training Providers & Universities Co-create industry-driven curricula, micro-credential pathways and applied learning projects that reflect the real needs of Borneo’s employers.
• Employers & Industry Associations Share best practices, pool resources for large-scale training initiatives, and collectively shape policies that make sense for Borneo’s unique context.
• Community Leaders & NGOs Act as bridges to rural and indigenous communities, ensuring that HR transformation is inclusive, respectful and empowering.

When these stakeholders work together, human capital development becomes a shared mission rather than a cost center.

7. A Practical HR Transformation Roadmap for Borneo Organisations

For HR leaders and business owners in Sabah and Sarawak, transformation can begin with a simple, structured roadmap:

1. Diagnose : Conduct a rapid HR and skills audit aligned with your business strategy and relevant state roadmaps (SMJ, PCDS 2030, Digital Sarawak).
2. Prioritise : Identify 3–5 critical capabilities your organisation must build in the next 12–24 months (e.g., digital skills, supervisory leadership, customer experience, safety and compliance).
3. Design : Plan structured learning pathways, leveraging HRD Corp funding, TVET partnerships and local training providers. Build in on-the-job projects and mentoring, not just classroom sessions.
4. Digitalise HR : Implement or upgrade HR systems for payroll, leave, performance and learning management. Start basic people analytics to generate insights for decision-making.
5. Strengthen Culture & Leadership: Facilitate leadership programmes that integrate local cultural strengths – community orientation, humility, resilience – with modern leadership competencies. Encourage leaders to model learning, collaboration and DEI.
6. Measure & Communicate: Track key HR metrics (turnover, training hours, internal promotions, productivity indicators) and communicate success stories to employees, management and external stakeholders.

8. Conclusion: HR as the Bridge Between Tradition and Transformation

Sabah and Sarawak are standing at an inflection point. Massive investments in human capital, digital infrastructure and state-level development blueprints signal a clear message: Borneo is not waiting at the sidelines of Malaysia’s progress – it is stepping to the forefront.

But plans on paper become reality only through people.

This is where HR comes in – as the bridge between traditional strengths and future aspirations.

• By honouring the rich cultures and values of Borneo’s communities.
• By equipping workers – from coastal towns to highland villages – with future-ready skills.
• By nurturing leaders who can think globally, act locally and care deeply.

In a land of focused cultures and people, HR transformation is more than a corporate project. It is a commitment to unlock the full potential of Sabah and Sarawak’s sons and daughters – so that the story of Borneo’s development is written with its people, not just about them. If you are an HR professional, business owner, educator or policymaker in Sabah and Sarawak, the question is no longer “Should we transform HR?”

The real question is:

How quickly can we reimagine HR – so that every person in Borneo has the skills, opportunities and support to thrive in the next decade?