Sabah vs Sarawak: How Far Apart Are the Two Economies, and Why?

How big is the gap?

Sources: DOSM GDP by State 2025 and OpenDOSM datasets; state budgets from Bernama. GDP values are at constant 2015 prices, as DOSM reports them. GDP per capita is from DOSM's Table 1 (current prices); the Malaysian figure is RM59,167.

Has the gap grown?

• GDP: Sarawak's economy was 1.65 times Sabah's in 2015 and 1.73 times in 2025. Over those ten years Sabah's real GDP grew 20% and Sarawak's 26%. Sabah fell harder in 2020 (−9.1% against −6.7%).
• Household income: the two were almost level in DOSM's 2014 and 2016 surveys (2016: Sabah RM4,110, Sarawak RM4,163). The gap opened after that: RM309 in 2019, RM401 in 2022 and RM614 in 2024.
• Population: in 1980 Sarawak had more people (1.35 million to Sabah's 1.06 million). By 1991 Sabah had more people than Sarawak, and it now has about 1.2 million more, which spreads its smaller GDP across more people.

Where does the difference come from?

No single official study explains the gap. These are the differences on record.

Manufacturing

Source: OpenDOSM, GDP by state and sector, constant 2015 prices (import duties make up the remaining 0.4%).

Both states earn a similar share of GDP from oil and gas. The big difference is manufacturing. Sarawak's Samalaju Industrial Park near Bintulu has attracted RM111.73 billion of approved investment since 2008 (New Straits Times, March 2024). Sabah's largest park, KKIP, reports RM11.2 billion of investment since 1994 (MIDA, November 2024). The two figures are not measured the same way: Samalaju's is approved investment, while MIDA does not say whether KKIP's is approved or realised. The federal New Industrial Master Plan 2030 names Sabah among the three states contributing least to manufacturing; see Sabah in NETR and NIMP 2030.

Oil and gas sales tax

Both states charge a 5% sales tax on petroleum products. Sarawak collected RM19.55 billion from 2019 to 2024 (Deputy Premier Douglas Uggah Embas). Sabah, which started in 2020, collected RM7.36 billion to March 2025 (state Finance Minister Masidi Manjun).

State budgets

Sarawak's 2026 budget is RM12.91 billion on projected revenue of RM13.05 billion, with RM7.3 billion for development. Sabah's is RM6.40 billion on projected revenue of RM6.43 billion, with RM1.865 billion of development expenditure.

Power

Sarawak now sells electricity to Sabah: up to 50 MW through the Lawas–Mengalong link since December 2025. See power from Sarawak and why Sabah's power cuts.

Is cabotage the reason?

Cabotage, the rule that cargo between Malaysian ports must travel on Malaysian ships, is often blamed. But since 1 June 2017 cargo between Peninsular Malaysia and Sabah, Sarawak and Labuan has been exempt. Both states have had the same exemption, and in June 2024 the federal government reinstated cabotage for Sarawak at the Sarawak government's request. So cabotage alone does not account for the difference between the two states.

Frequently asked questions