Sabah — known for its golden beaches and towering mountains — has long captivated visitors with its natural beauty. The sunsets of Tanjung Aru, the coral gardens of Semporna, and the majestic Mount Kinabalu are the postcard images most Malaysians know.
But behind the picture-perfect scenery lies the real engine of Sabah’s economy — the oil beneath its soil and the vast oil palm plantations that stretch across its countryside.
According to the Department of Statistics Malaysia, Sabah’s total trade exceeded RM100 billion in 2024, with crude oil, palm oil and liquefied natural gas contributing about 70% of the total. As one of Malaysia’s most resource-rich states, Sabah’s next challenge is clear: to move from a resource-based economy to one that is driven by industrial growth.
From Raw Resources to Industrial Strength
“The palm oil sector in Sabah is actually one of the most mature agricultural ecosystems in the country,” said Deputy Minister of Plantation and Commodities, Datuk Chan Foong Hin. Sabah currently has about 1.5 million hectares of oil palm plantations — more than a quarter of Malaysia’s total — with 85% managed by major listed companies. Yet, he noted, geography and infrastructure still limit Sabah’s refining and downstream industries.
“In Peninsular Malaysia, it’s economical to transport raw palm oil 100 kilometres to a refinery. But on Sabah’s east coast, the lack of port facilities drives up logistics costs,” he explained.
Beyond the export of cash crops, Chan believes food security must become a new priority. “Rice, vegetables and fruits need to be farmed on a larger scale. Smallholders are too scattered — it’s hard to improve efficiency. Land is the scarcest agricultural resource, and whoever controls land controls the scale of the industry,” he said.
As agricultural land gives way to housing and industrial development, Chan sees technology and youth participation as the way forward. “We must bring in young people with new ideas and technologies. That’s the key to keeping agriculture alive.”
New Seeds of Change
While traditional farming struggles to modernise, a new generation of Sabahans is returning home — bringing innovation, social purpose and entrepreneurship. One of them is Tan Chiew Lee, founder of Hong Sin Food Industries Sdn Bhd. After a decade working in West Malaysia, she returned to Sabah to care for her father.
“Coming home, I realised the pace of life here is slower, but the space for development is much bigger,” she said.
During the pandemic, a farmer approached her — their village had a surplus of red rice but no buyers. Tan spent six months developing the world’s first Red Rice Tempeh Snack, purchasing rice directly from farmers at market price, without haggling or credit terms. She also hired local youth and single mothers for production, building a community-driven supply chain that ensures fair income for all.
“Many people say Chinese entrepreneurs struggle to get government support, but if you create value and jobs, the government is always ready to help,” she shared.
Tan credits both the state and federal agencies for their support — from trade exhibitions and marketing to financial aid programmes — all of which have helped her business grow.
From Selling Water to Educating with Water
The story of Liew Hsien Guang, Managing Director of Life Spring Group, reflects another form of transformation. He started 23 years ago in Sandakan selling bottled water. “At first, it was just a business,” he recalled. “But as I saw rivers getting more polluted, I began to ask — could we help workers in remote plantations get access to clean water?”
That question changed his path. His company began developing water filtration systems and promoting environmental education in schools. Today, Life Spring Group runs four factories across Sabah, employs 600 people and operates in Kota Kinabalu, Keningau, Lahad Datu and Tawau.
“Plastic is often blamed as the villain,” he said. “But it’s actually one of the most efficient and versatile materials. The key is in how we use it.”
His team visits rural schools monthly to teach students about environmental protection and responsible water use. With support from MATRADE and the Sabah Ministry of Industrial Development and Entrepreneurship (DIDR), Life Spring has also represented Sabah SMEs at international trade fairs in Thailand, Indonesia and Japan. “The government has been encouraging local companies to go global — to let the world see what Sabah can produce,” he added.
The Turning Point of Industrialisation
Building upon its resource wealth and light industries, Sabah is now turning a new page — industrialisation is becoming the key driver of its next growth phase.
Sabah’s Minister of Industrial Development and Entrepreneurship, Datuk Phoong Jin Zhe, said the state’s rich natural resources and Malaysia’s longest coastline give it a natural edge to develop the “Blue Economy.”
“The oil and gas sector has increased state revenue and created many local jobs,” he said. “But for years, Sabah focused too much on exporting raw materials — and lost value along the way.”
He added that the state government is now determined to build downstream industries to capture higher value. “We’re no longer content with exporting crude palm oil. We want to produce high value-added products such as Super Vitamin E (Tocotrienols) and use biomass to develop green energy, copper foil, green steel and solar-related industries,” Phoong explained.
He calls this transformation both realistic and people-centred. “I often say, ‘When factories come in, talent comes home, and Sabah becomes prosperous.’ That’s not just a slogan — that’s our direction,” he said. He added, “There’s a Chinese saying — no industry, no wealth. Industrialisation creates prosperity, jobs, and hope for Sabah’s young people.”
A Decade to Define the Future
A decade ago, Sabah’s industrial sector contributed less than 6% to its GDP. By 2025, the figure has risen to 7.2%, small but significant progress. With steady investment, infrastructure upgrades and talent returning home, Sabah’s image as a “tourism paradise” is evolving into that of a “manufacturing powerhouse.” Phoong remains optimistic. “Rome wasn’t built in a day. But if we stay the course on industrialisation, Sabah’s future will be wealthier and brighter for generations to come.”
VOICE OF ASIA Editorial Note
At VOICE OF ASIA, we believe in amplifying the real voices of the people – especially those too often overlooked in national discourse. This translated article, originally published by Sin Chew, highlights a perspective from Sabah that resonates with our editorial mission: to go beyond headlines and politics, and shine a light on what truly matters to everyday Malaysians.
The original version can be found here.
