Timber export was the primary resource of Sabah's economy, but with efforts to save forests and flora and fauna, the palm oil trade emerged as an alternative trade. Other agricultural products that Sabah trades in includes rubber and cacao, along with fisheries and vegetables. With time, the tourism industry has turned out to be the second-largest contributor to the economy.
In the 70's Sabah was one of the wealthiest states in the Malaysian Federation next to Selangor, but today it is Malaysia's most poor state. 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 the national average. The reason is the inequitable distribution of wealth by the Federal Government, prejudice towards Sabah and illegal immigration from other countries such as East Timor, Indonesia and the Philippines.
With more funds being allotted to the state and concentration diverted to developing rural areas, transportation, infrastructure, and sectors that contribute to its economy, the situation is improving in Sabah.