After centuries as a pawn in various Southeast Asian power games, Sabah was neatly carved up by enterprising British business in the late 19th century, when it was known as North Borneo and administered by the British North Borneo Company. After WWII Sabah and Sarawak were handed over to the British government, and both decided to merge with the peninsular states to form the new nation of Malaysia in 1963.
However, Sabah’s natural wealth attracted other prospectors and its existence as a state was disputed by two powerful neighbours – Indonesia and the Philippines. There are still close cultural ties between the people of Sabah and the Filipinos of the nearby Sulu Archipelago and Mindanao, through not always manifested positively: several small islands to the north of Sabah are disputed by the Philippines, there’s a busy smuggling trade, Muslim rebels often retreat down towards Sabah when pursued by government forces, and pirates based in the Sulu Sea continue to raid parts of Sabah’s coast.
After independence, Sabah was governed for a time by Tun Mustapha, who ran the state almost as a private fiefdom and was often at odds with the federal government in Kuala Lumpur (KL). Even when the Parti Bersatu Sabah (PBS; Sabah United Party, controlled by the Kadazan indigenous group) came to power in 1985 and joined Barisan National (BN), Malaysia’s ruling coalition party, tensions with the federal government were rife. In 1990 the PBS pulled out of the alliance with BN just days before the general election. The PBS claimed that the federal government was not equitably returning the wealth that the state generated, and in 1993 it banned the export of logs from Sabah, largely to reinforce this point. The federal government used its powers to overturn the ban, and despite ongoing discussions, to this day nothing has changed – only a small percent of revenue trickles back into state coffers.
As a result of this imbalance and its bad relations with the federal government, Sabah is the poorest of Malaysia’s states, with an unemployment rate twice the national average (which is around 3.5%). Although the state is rich in natural resources, 16% of the population lives below the poverty line. Part of the problem is a bizarre rotation system that forces a change of political administration every two years.
To compound the economic difficulties, Sabah has experienced an extraordinary population boom over the last couple of decades – in 1970 the total number of inhabitants was under 650,000, whereas now it’s nearing 3.5 million. The government attributes this to illegal immigrants, claiming that there are around 1.5 million foreigners in the state, but whatever the truth, a solution will need to be found in the next few years for Sabah’s stretched resources.