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Sabah Economy 2026 — RM88.8B GDP & Key Industries

Q: What is Sabah's GDP ranking among Malaysian states?

Sabah ranks 7th by absolute GDP at RM88.8 billion in 2025 (constant 2015 prices), behind Selangor, Kuala Lumpur, Johor, Sarawak, Penang and Perak — Perak overtook it in 2024. Per capita GDP is RM31,125 (2025, current prices), roughly 53% of the national average of RM59,167, reflecting a large population relative to economic output.

Q: What is the biggest employer in Sabah?

The services sector is the largest part of the economy (52.1% of GDP in 2025, DOSM), and government, retail and wholesale trade, tourism and hospitality are major employers within it. Agriculture , mainly palm oil plantations and smallholder farms, is the other big employer, and much plantation and construction work is done by foreign workers: 130,391 were registered in Sabah in early 2026. See Sabah employment figures .

Q: Is Sabah attracting foreign direct investment (FDI)?

The biggest recent investments are in oil and gas (the ZLNG floating LNG project and Shell's deepwater fields) and in downstream processing such as palm oil refining and the SAMUR urea plant. SEDIA (Sabah Economic Development & Investment Authority) offers incentives for priority sectors in the Sabah Development Corridor. Higher logistics costs and the small local market are the usual obstacles cited by investors.

Q: How is Sabah's economy transforming?

The state is pursuing economic diversification away from commodities: (1) Tourism is the growth star — RM13.7B in tourism value added in 2024, up 4.2% year-on-year; (2) Downstream industries — palm oil refining, petrochemical production (SAMUR urea plant); (3) Aquaculture — seafood processing and aquaculture development; (4) Digital economy — e-commerce, logistics hubs. However, progress is slow and capital-intensive.

Q: How badly did COVID-19 hit Sabah's economy?

Sabah was hit harder than Malaysia overall . GDP contracted 9.1% in 2020 (national: −5.5%) as tourism collapsed, palm oil prices fell, and oil & gas projects were delayed. The recovery was slow, not V-shaped : growth was just 1.5% in 2021, and output only rose back above its 2019 level in 2025. Tourism arrivals (3.79 million in 2025) also remain below their 2019 peak of 4.2 million.

Q: What is Sabah's economic outlook for 2025–2030?

Sabah delivered 5.1% growth in 2025 , its strongest year since 2017. Medium-term drivers: (1) PFLNG 3 commissioning (2H 2027) — major upstream investment; (2) tourism growth — targeting 4+ million arrivals annually; (3) infrastructure rollout — Pan Borneo Highway completion; (4) agriculture — the state aims to raise rice self-sufficiency from about 22.8%. Main downside risks: commodity price volatility and geopolitical tensions affecting shipping.

Last updated: 28 September 2026

Aerial view of commercial district in Kota Kinabalu with Southeast Asian professionals

ℹ️ The quick answer

Sabah’s economy produced RM88.8 billion in GDP in 2025 (constant 2015 prices), making it Malaysia’s 7th-largest state economy, about 5% of national GDP. Growth was 5.1%, close to the national rate of 5.2% and a sharp improvement on 2024’s 1.2%. Per capita GDP is RM31,125 (current prices), about 53% of the national average. The economy is driven by services (52.1% of GDP), with mining & quarrying (22.0%) and agriculture (~14%) next.

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RM88.8B

GDP 2025

constant 2015 prices

👥

RM31,125

GDP per capita

53% of national average, 2025

📈

5.1%

Growth rate 2025

national rate was 5.2%

🇲🇾

~5%

Contribution to Malaysia

7th-largest state economy

📊

17.7%

Poverty rate

highest in Malaysia (2024)

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5.7%

Unemployment

highest in Malaysia (Q3 2025)

Sabah GDP Trend, 2016–2025

Sabah’s GDP fell 9.1% in 2020 and recovered slowly — output only rose back above its 2019 level in 2025, when growth reached 5.1%.

Source: DOSM GDP by State releases (constant 2015 prices), via OpenDOSM

Economic overview

Sabah’s economy is the 7th largest in Malaysia by absolute GDP, but when measured per capita, it lags significantly behind wealthier states like Selangor, Penang, and even Sarawak. This disparity reflects Sabah’s economic structure: it is rich in natural resources but faces structural challenges that limit wealth per person — commodity export-dependence, infrastructure gaps, an underdeveloped manufacturing base, and the loss of skilled workers to Peninsular Malaysia.

The economy contracted sharply during COVID-19 (down 9.1% in 2020) and, unlike Malaysia as a whole, recovered slowly — growth was just 1.5% in 2021 and 1.2% in 2024. Output only rose back above its pre-pandemic level in 2025, when GDP reached RM88.8 billion on growth of 5.1%. The services sector, driven partly by tourism recovery, is now the primary growth engine.

Economic sectors

Sabah’s economy is composed of five main sectors, each with distinct characteristics and growth trajectories:

Services (52.1% of GDP, 2025)

The largest sector, encompassing government, retail and wholesale trade, hospitality and tourism, finance, transport, and telecommunications. Within this, tourism is the growth star — tourism industries added RM13.7 billion in value in 2024, up 4.2% year-on-year, and 12% of state GDP. Government services remain large but stable. Retail trade has grown with urbanisation and rising incomes.

Agriculture (~14% of GDP)

Dominated by palm oil: Sabah produced 4.41 million tonnes of crude palm oil in 2025 (MPOB). Other subsectors include rubber, fisheries and aquaculture, timber, paddy (Sabah grows about 22.8% of the rice it eats, Chief Minister, May 2025) and a now very small cocoa crop. Agricultural output recovered 0.9% in 2025 after a 3.2% contraction in 2024, the year Sabah's crude palm oil output fell 5.2% (MPOB). See Sabah agriculture figures.

Manufacturing

Modest but growing. Includes palm oil processing mills, wood-based products (plywood, furniture), food and beverage processing, and non-metallic minerals. Manufacturing grew 5.0% in 2025 (2024: 1.2%). The sector is constrained by logistics costs and limited skilled labour.

Mining & Quarrying (22.0% of GDP, 2025)

Dominated by offshore oil and natural gas extraction. Malaysia does not publish current oil output by state; Sabah produced about 8% of the country's natural gas in 2018 (state energy plan, SE-RAMP 2040). See Sabah petroleum figures. The sector contracted 4.9% in 2024 before rebounding 4.9% in 2025 as project cycles turned, and major projects like PFLNG 3 (targeting 2H 2027) and Shell’s deepwater developments will support future growth.

Construction

A volatile sector that surged 28.3% in 2025 (2024: 21.5%), driven by infrastructure projects (Pan Borneo Highway, port expansions) and property development. Growth is cyclical and often project-dependent rather than structural.

Sabah versus other Malaysian states

Sabah ranks 7th by absolute GDP and lower still by per capita measures. The comparison below shows the gap between Malaysia’s largest economies and Sabah:

GDP Comparison: Sabah vs Other Malaysian States (2025)

Selangor’s economy is roughly five times Sabah’s. Sarawak, with similar natural resources, has a much larger economy despite a smaller population.

Source: DOSM GDP by State 2025

What the 13th Malaysia Plan targets for Sabah

The federal plan for 2026–2030 sets Sabah's economy to grow 5.8% a year, up from an average of 3.1% in 2021–2025. At constant 2015 prices, that takes Sabah's GDP from RM84.3 billion in 2024 to RM120.1 billion in 2030. The Sabah region's 5.8% is the highest growth target of any region in the plan.

Sector	12th Plan average growth, 2021–2025	13th Plan target, 2026–2030
Services	5.6%	7.1% a year
Manufacturing	3.1%	5.9% a year
Mining and quarrying	−0.9%	5.4% a year
Construction	7.2%	3.8% a year
Agriculture	0.4%	1.2% a year
Total GDP	3.1%	5.8% a year

Source: 13th Malaysia Plan, Appendix Table 5 (p.A-9), at constant 2015 prices. The 2021–2025 averages include a Ministry of Economy estimate for 2025.

The plan also aims to narrow the gap with the Central Region (Selangor, Kuala Lumpur, Putrajaya, Negeri Sembilan and Melaka), whose GDP per capita was 2.4 times Sabah's in 2024, to 2.1 times by 2030 (p.3-25). Separately, the New Industrial Master Plan 2030 says Kelantan, Perlis and Sabah contributed the least to Malaysia's manufacturing value-added, and wants Sabah's oil and gas, timber, minerals and palm oil processed at home (Sabah in NETR and NIMP 2030).

Status as of September 2026: these are plan targets. For comparison, DOSM reported Sabah's growth at 5.1% in 2025.

Key economic challenges

Despite natural wealth, Sabah faces structural headwinds that suppress per capita income and growth:

Commodity dependence: Crude petroleum and palm oil made up about 59% of Sabah's exports in 2025, or 67% counting LNG (DOSM). Price volatility creates boom-bust cycles: growth slowed to 1.7% in 2023 as commodity prices fell.
Limited value-added processing: Most palm oil is exported crude; oil and gas extraction is capital-intensive with limited local employment. Manufacturing is underdeveloped.
Infrastructure gaps: Roads, ports, and utilities lag Peninsular Malaysia, raising business costs. The Pan Borneo Highway is addressing this but completion is still years away.
Cabotage policy: Malaysia's cabotage rule requires cargo between Malaysian ports to travel on Malaysian-registered ships. Since 1 June 2017, cargo between Peninsular Malaysia and Sabah, Sarawak and Labuan has been exempt (Conventus Law). The policy was reinstated for Sarawak in June 2024 at that state's request (Bernama); we have not found a similar change for Sabah.

Current growth drivers

Tourism is the bright spot. Total arrivals reached 3,793,709 in 2025 — 1,498,709 of them international — against 4.2 million in 2019. Tourism value added reached RM13.7 billion in 2024, up from RM13.1 billion in 2023. This has created jobs in hotels, restaurants, transport, and guides, and is attracting infrastructure investment.

Oil & gas projects provide another medium-term boost. PETRONAS's ZLNG (PFLNG 3), a 2 million-tonne-a-year floating LNG facility at Sipitang in which the state holds 25%, is expected to begin operations in the second half of 2027 (see Sabah's gas and the LNG plans). Shell's Gumusut-Kakap Phase 4 started producing in March 2025 and is expected to average about 21,000 barrels of oil equivalent a day (Rigzone, 10 March 2025).

Infrastructure development — Pan Borneo Highway, port expansions, and utility upgrades — is creating construction jobs and lowering logistics costs, benefiting all sectors.

However, these gains remain modest relative to overall economic size, and are heavily dependent on commodity prices and external investment.

Frequently asked questions

Q What is Sabah's GDP ranking among Malaysian states?

Sabah ranks 7th by absolute GDP at RM88.8 billion in 2025 (constant 2015 prices), behind Selangor, Kuala Lumpur, Johor, Sarawak, Penang and Perak — Perak overtook it in 2024. Per capita GDP is RM31,125 (2025, current prices), roughly 53% of the national average of RM59,167, reflecting a large population relative to economic output.

Q Why is Sabah's GDP per capita so low despite natural resources?

Sabah has abundant natural resources (palm oil, petroleum, timber) but faces structural challenges: (1) unequal wealth distribution — resource extraction profits are concentrated in large corporations and federal entities; (2) export-dependent economy — commodity income flows out, with limited manufacturing or value-added processing; (3) low wages — the median monthly wage of formal-sector employees was RM2,000 in March 2025, against RM3,000 nationally (DOSM); (4) infrastructure gaps — higher costs for business and logistics reduce competitiveness.

Q What is the biggest employer in Sabah?

The services sector is the largest part of the economy (52.1% of GDP in 2025, DOSM), and government, retail and wholesale trade, tourism and hospitality are major employers within it. Agriculture, mainly palm oil plantations and smallholder farms, is the other big employer, and much plantation and construction work is done by foreign workers: 130,391 were registered in Sabah in early 2026. See Sabah employment figures.

Q Is Sabah attracting foreign direct investment (FDI)?

The biggest recent investments are in oil and gas (the ZLNG floating LNG project and Shell's deepwater fields) and in downstream processing such as palm oil refining and the SAMUR urea plant. SEDIA (Sabah Economic Development & Investment Authority) offers incentives for priority sectors in the Sabah Development Corridor. Higher logistics costs and the small local market are the usual obstacles cited by investors.

Q How is Sabah's economy transforming?

The state is pursuing economic diversification away from commodities: (1) Tourism is the growth star — RM13.7B in tourism value added in 2024, up 4.2% year-on-year; (2) Downstream industries — palm oil refining, petrochemical production (SAMUR urea plant); (3) Aquaculture — seafood processing and aquaculture development; (4) Digital economy — e-commerce, logistics hubs. However, progress is slow and capital-intensive.

Q How badly did COVID-19 hit Sabah's economy?

Sabah was hit harder than Malaysia overall. GDP contracted 9.1% in 2020 (national: −5.5%) as tourism collapsed, palm oil prices fell, and oil & gas projects were delayed. The recovery was slow, not V-shaped: growth was just 1.5% in 2021, and output only rose back above its 2019 level in 2025. Tourism arrivals (3.79 million in 2025) also remain below their 2019 peak of 4.2 million.

Q What is Sabah's economic outlook for 2025–2030?

Sabah delivered 5.1% growth in 2025, its strongest year since 2017. Medium-term drivers: (1) PFLNG 3 commissioning (2H 2027) — major upstream investment; (2) tourism growth — targeting 4+ million arrivals annually; (3) infrastructure rollout — Pan Borneo Highway completion; (4) agriculture — the state aims to raise rice self-sufficiency from about 22.8%. Main downside risks: commodity price volatility and geopolitical tensions affecting shipping.