Sabah’s Economy in Brief

Traditionally, Sabah’s economy has been predominantly export-oriented and dominated largely by primary commodities such as agriculture, forestry and petroleum. Rubber and copra were the principal export commodities in the 1950s but after 1960, timber emerged as the main thrust of economic growth in the State. By the 1980s, crude petroleum surpassed timber as the most important export item in terms of revenue. However, in the wake of dwindling natural resources, the State has in recent years, adopted aggressive development strategies to transform its economy into a more diversified, knowledge-driven and industrial-based. Manufacturing and services have been heralded as the new growth sectors for Sabah and the creation of high value-added and knowledge-intensive industries is the current emphasis of the State government.

Sabah’s economic development has performed credibly in the last decade attributed by the expansion in exports particularly of saw logs and crude petroleum as well as the dynamic investment from both the government and private sectors. Real gross domestic product (GDP) expanded by an average rate of slightly below 6.0 percent during the period 1985-1994. In 1995, real growth is estimated to reach 6.3 percent spearheaded by manufacturing, agriculture and tourism.

Natural Resources and Crops

Sabah’s abundance natural resource endowments is the State’s distinctive comparative advantage. Although these natural resources are fast depleting in recent times, they still have a major role in shaping the State’s economy. For example, forestry and mining comprised more than 20.0 percent of Sabah’s total real GDP in 1994.

Export of timber (in the form of saw logs) was banned by the State government in 1994 in part due to the shortage of raw materials in the wood processing industry such as sawn timber, plywood and veneer. The wood processing industry has grown substantially over the years and has been the main reason behind the expansion of the State’s manufacturing sector.

Oil palm is the most important estate crop in Sabah. It was first introduced to the State in the early 1960s and in the last three decades, the oil palm industry has contributed significantly to the State’s economy.