Sabah-Kalimantan Road Connectivity: The Effect of Common Border on Export

In an effort to explore new economic window, there was a suggestion to further integrate the economies in Borneo island by improving connectivity. Road connectivity with Kalimantan has been proposed as having the potential to further stimulate Sabah’s economic growth. One of the suggestions was to have road from Serudong to Simanggaris from Malaysia’s side of Sabah. In the context of Sabah, several questions arise: how does this benefit the state? Should there be additional efforts to connect Sabah and Kalimantan via road? Should Sabah spend money to improve logistical connectivity with Kalimantan? This chapter discusses briefly the latest proposal in recent years to establish a road connectivity with North Kalimantan, by estimating the effect of common border when having good road on export. Generally, there are limited studies assesses the impact of Sabah-Kalimantan Road Connectivity from Sabah’s perspective. The study uses gravity model. The regression results indicate that common border is positively linked to trade of Malaysia for the period under investigation. Similarly, it is expected that the road connectivity with Kalimantan is projected to increase Malaysia's and Sabah's export. This study shall give an overview and fill in the literature gap by providing an estimation of the common border effect through road connectivity in the context of Sabah-Kalimantan further economic integration.