Timber export was the main resource of Sabah’s economy, but with efforts to save forests and its flora and fauna, palm oil trade has emerged as an alternative trade. Other agricultural products that Sabah trades in, includes rubber and cacao along with fisheries and vegetables. With time, tourism industry has turned out to be the second largest contributor to economy.
In the 70’s Sabah was one of the richest states in the Malaysian Federation next to Selangor, but with time, today it is Malaysia’s poorest states. It hasn’t been able to make full use of its natural resources. It has one of the lowest average incomes and ironically highest cost of living in Malaysia. The poverty level is at 16%, three times more than national average. The reason is the inequitable distribution of wealth by the Federal Government; prejudice towards Sabah and illegal immigration from other countries such East Timor, Indonesia and Philippines.
Situation is improving, with funds assigned to the state being increased and concentration diverted to developing rural areas, transportation, infrastructure, and sectors which contribute to its economy: agriculture, manufacturing and tourism.