Present Status
Available Data
Major Issues

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Sandakan was the commercial hub during the timber boom in the 1960s. After the slow down of logging activities, most of the timberland was gradually converted to oil palm plantation. The pace of development in the industrial sector has been slow compared to Kota Kinabalu. However, there is a great growth potential in the palm oil and timber related down stream industry.



The industry in Sandakan is guided and regulated within the specific zones as indicated in the draft Sandakan Local Plan 1990. The classification of the Industrial Zones in Sandakan falls within these categories which are in the followings:

(Reference Draft Sandakan Local Plan 1990)

The details of all these locations is identified in an extract map of draft Sandakan Local Plan 1990 Fig 10.1 and 10.2

The industrial areas in Sandakan are scattered in 4 areas. The Southern area is the Karamunting area that predominately occupied by the oil activities is classified within the Petroleum/Vegetable Oil Storage Industrial Zone and the land area is 48 acres. Then there is the Batu Sapi area with an estimated area of 328.6 hectares located within the General Industrial Zone. In the Batu Sapi Zone, the activities are mostly confined to sawn timber, veneer, plywood, blockboard, laminated board moulding, chips particle board, there is an estimated total of 15 factories. Adjoining the end of the Batu Sapi Area, there is a new area coming up known as the Mowtas Special Industrial Zone. In this area, oil palm refineries and associated activities will be the predominant activities. A huge area has been developed by IOI, a jetty is also built to facilitate the efficient transportation of the oil palm products to the mills. Another two big companies are also moving into this area. The whole Special Industrial Zone consists of areas of about 466 acres of land.

Moving up along the North Road, there is the BDC Industrial area along Mile 1.5 to Mile 4 North Road, which is mainly classified as within the General/Light Industrial Zone. This long stretch of industrial land has been utilised for purpose not found in the south western part of Sandakan. The industries are confined to vehicle related activities such as workshop, service centre, repair, wholesale of accessories, bakeries, wholesale for other items such as rice, tyre, spare parts, motorbikes, air-conditioning services for vehicle etc.

Another area, which is classified as General/Light Industrial areas, is found along the Fook Kim Road. The land put aside for such development consists of IN(L) 62 acres, IN(G) 269.3 acres. This area is not well developed as the above areas. There is a mixture of development such as warehouse or storage for plywood, electrical factory, stone processing site, vehicle related activities etc. This is the potential area for industrial expansion in the future.

Moving further up along the Labuk Road, a new growth industrial area under the draft Seguntor Planning Scheme consisting of General Industrial Zone with 932 hectares of land and Special Industrial Zone, within which is designed an Integrated Timber Complex with 1025 hectares supposedly to confine to wood processing value added type of industries. The activities here are similar to the Batu Sapi Zone. It was partly due to the restriction of suitable land for such activities in the Batu Sapi area that another suitable area has to be identified.

There were 17 palm oil mills in operation in 1997 in the Sandakan region. This number is expected to increase to 22 in 1998, 26 in 1999, 28 in 2000 and 30 in 2001. The annual crude palm oil production from these mills was 670,000 MT in 1997. The production is expected to increase to 710,000 MT in 1998, 800,000 MT in 1999, 900,000 MT in 2000 and 1,000,000 MT in year 2001.

The palm oil mills are generally sited at the oil palm plantation estates outside the industrial zones mentioned above. There are two edible oil refineries in the Batu Sapi industrial zone, namely Sandakan Edible Oil Sdn. Bhd. and IOI Edible Oil Sdn Bhd.

Presently there are 183 factories employing 25,500 workers. The largest number being the food manufacturing industry with 55 factories employing 14,560 workers and wood & wood products industry with 69 factories employing 9,530 workers. Details shown in Table 10.1.

Figure 10.1: Draft Industrial Areas in Sandakan Local Plan 1990 (Amended)
Source: Town & Regional Planning Department
Figure 10.2: Draft Seguntor Scheme
Source: Town & Regional Planning Department
Table 10.1: Factories in operation according to Sub-Sector in Sandakan
Sub-Sector Total Factories Total Employees
Basic & Fabricated Metal Products 4 72
Beverage Industries 3 40
Chemical Industries 7 247
Electrical & Electronic Products 0 0
Food Manufacturing 55 14561
Furniture & Fixtures 8 55
Non-Metallic Mineral Products 8 227
Paper/Printing/Publishing 6 153
Petroleum Products 1 110
Plastic Products 6 105
Rubber Products 3 96
Textile & Textile Products 0 0
Transport Equipment 11 315
Wood & Wood Products 69 9529
Miscellaneous 1 3
TOTAL 183 25513
Source: Ministry of Industrial Development

10.2.2 IMPORT

Sandakan relies primarily on sea transportation for import and less by land and air transport. This is mainly due to the easily accessible port of Sandakan from major port of entry. Other reason is that it is probably cheaper for a large bulk of goods that are imported into Sandakan to be transported by sea than air transportation.

Between 1995 and 1997, there were ten goods that were imported into Sandakan in large quantities. These goods are fertiliser, fruits, plywood machinery, cement, onions, tamarind, used clothes, used lorries, petroleum products and vehicle service parts. Of these goods, petroleum products, used lorries, used clothes and cement showed an annual increase in import value. The import value of fertiliser and tamarind sharply declined by 1997. Import value for all the other goods shows high for 1996. The import value of plywood machinery in 1996 is almost doubled that of 1995 but declined sharply in 1997. The import value of cement in 1996 is four times that of 1995 and increased to almost double 1997, whereas petroleum products increased by 40% over the same period. Overall import value between 1995-1997 shows that import value increased greatly between 1995-1996 and decline only slightly by 1997. Detailed of the import value is shown in Table 10.2.

10.2.3 EXPORT

Between 1995-1997, there were 11 goods/products exported from Sandakan in large quantities. These goods are palm oil, sawn timber, plywood plain, veneer sheets, cocoa beans, frozen prawns, frozen fish, used clothes, scrap iron, footwear, and saw logs. Of these exported products, palm oil and timber products seem to dominate the export market in export value. The export of palm oil and veneer sheets show an annual increased in export value from 1995 to 1997 whereas export of sawn timber shows an annual decline for the same period. The export of plain plywood increased from 1995 to 1996 but declined in 1997. Saw logs were only exported in 1997.

Other export products that show an annual increase in export value from 1995 - 1997 are frozen fish and used clothes while cocoa beans, scrap iron and frozen prawns decline in export value from 1995 to 1996 but increase slightly in 1997. As with the import value, the overall export value for all the exported products from Sandakan show an increase from 1995 to 1996 but decline slightly in 1997. See Table 10.3 for goods exported from Sandakan.

Table 10.2 Import Value Statistics for Sandakan, 1995 –1997
Source: Jabatan Kastam & Eksais Di Raja Malaysia
Jabatan Perangkaan Malaysia (Cawangan Sabah)
Table 10.3: Export Value Statistics for Sandakan, 1995-1997
Source: Jabatan Kastam & Eksais Di Raja Malaysia
Jabatan Perangkaan Malaysia (Cawangan Sabah)


The data on import and export within the last 3 years are presented in Table 10.2 and 10.3. Data on cargo volume by land transport is not available. Figure 10.1 and 10.2 show the industrial areas in the Sandakan local plan.

Various organisations have been conducting their own data collection but are generally incomplete.

Information on of wood or wood related industries are obtainable from Jabatan Perhutanan Sabah or Sabah Timber Industries Association whereas palm oil industries can be obtained from Palm Oil Registration Licensing Authority (PORLA) or East Malaysia Planters Association. Table 10.4 and 10.5 show the sales revenue of wood products in 1997 and Jan to May 1998.

Names and locations of the factories in Sandakan are obtainable from the Ministry of Industrial Development. Table 10.6 shows the status of these factories. The current status of some of the factories might have been changed by the economic down turn.


Some of the issues facing the industrial sectors in Sandakan are inefficient transportation system to handle a large cargo volume, the frequent disruption of power and water supply and telecommunication services and the reliance on foreign workers.

Inefficient Power and Water Supply

The unreliable electricity power and water supplies coupled with frequent disruption to the telecommunication services have a strong retarding effect over the rate of growth in the industrial sector.

Reliance on Foreign Workers

The industry is currently relying heavily on foreign workers. This has created the much talked about illegal immigrants problem in Sandakan that has also created the mushrooming squatters problem in the district.

The current economic down turn has resulted in some factories to cease operation. This is evident by the sharp drop in sales revenue of wood products from 1997 to 1998, Table 10.4 and 10.5.

Lack of Waste Treatment Facilities

The majority of the factories in Sandakan do not have their own waste treatment facilities. The waste products generally find their way into the water course. They either partially choke up the drainage channels or, when discharged into the rivers or sea, pollute the water quality and affect the aquatic or marine lives. Typically the saw dust produced in the Batu Sapi and Seguntor industrial areas are found being discharged into the Sandakan Bay or the river close to the mills.

Laws and guide lines should be drafted up and special incentives to be given to the factories to prevent the direct discharge of the waste products into the water course by providing treatment facilities at the factories or collecting the waste products and transporting them to a centralised waste processing plant. Consideration should be given on setting up the down stream processing plants to manufacture goods from the waste products, such as chipboard, softboard etc.

Reference :

Ministry of Industrial Development Tel : 088-255055

Jabatan Kastam & Eksais DiRaja Malaysia Tel : 089-218153

Jabatan Perangkaan Malaysia (Cawangan Sabah) Tel : 089-668339

Jabatan Perhutanan Sabah Tel : 089-660811

Town & Regional Planning Department Tel : 089-667806

Sabah Timber Industries Association Tel : 089-612755

East Malaysia Planters Association

Palm Oil Registration Licensing Authority Tel : 089-614248

Sabah Ports Authority Tel : 089-612411

Table 10.4: Cumulative Summary Report by Wilayah/Products for January – December 1997
Source: Jabatan Perhutanan Sabah
Table 10.5: Cumulative Summary Report by Wilayah/Products for January – May 1998
Source: Jabatan Perhutanan Sabah
Table 10.6: Status of Factories in Sandakan
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