Sabah, the second-largest state by land area and the third most populous, accounts for 6.2% of national GDP. Blessed with an abundance of resources, the economy has been mainly driven by the agriculture, oil and gas (O&G) and tourism sectors. Nevertheless, Sabah has in recent years pledged to focus on economic diversification strategies to ensure more sustainable and equitable development. The strategies include the creation of high value-added and knowledge-intensive manufacturing.

Sabah is one of the very few states that is fiscally sustainable. Over the years, it has consistently generated surpluses even during major crises. Thanks to earnings from the O&G sector, Sabah’s revenue position is also impressive. Its median revenue as a percentage of GDP over the 2014-2018 period came in at 4.3%, far exceeding that of all states (1.4%).