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Forest Industry In Sabah
The timber industry in Sabah remains relevant as it continues to be one of the major contributors to State revenue and socio-economic development, notwithstanding the significant decline in log production in recent years. In 2025, log production from natural forests amounted to 840,392.58 m³, while production from forest plantations totalled 234,889.05 m³. The total forest revenue collected for the year stood at RM164 million.
Historically, the forestry sector contributed more than 50% of the State’s total revenue from all sources. Although this proportion has declined over time, the sector continues to play an important economic role. In 2025, Sabah’s foreign export earnings from the timber industry were recorded at RM0.94 billion, and the sector generated employment for approximately 6,256 workers.
It has been the policy of the State Government of Sabah to promote the development of the wood-based industry towards greater value-added processing, in line with the Sabah Industrial Master Plan (SIAP), the Sabah Maju Jaya (SMJ) Development Plan, and the Sabah Forest Policy 2018. This policy direction is further reinforced under the Forest Plantation Development Action Plan (2022–2036), which emphasises downstream transformation, diversification of timber products, and sustainable forest resource management to enhance competitiveness and long-term economic contribution.
Despite these policy initiatives, the development of value-added processing in the State has progressed slowly. The wood-based industry remains largely dominated by primary processing activities, particularly sawmilling and plywood manufacturing. Compared to the 1990s, the number of active wood processing mills has declined significantly due to the reduced supply of logs from natural forests.
Comparative figures between 2024 and 2025 indicate that the total number of registered licensees in 2025 was 113, of which only 85 mills were active, compared to 2024 where 122 licensees were registered with 98 active mills. The number of operational mills is expected to decline further unless substantial volumes of timber are imported to supplement domestic raw material requirements.
In 2025, domestic mills consumed 4,967.76 m³ of imported logs, flitches/sawn timber and veneer, compared to 8,858.58 m³ in 2024, reflecting a decrease in imported raw material utilisation.
The total installed input capacity of wood processing mills in Sabah in 2025 stood at approximately 1.58 million m³, comprising 0.6 million m³ for sawmills, 0.8 million m³ for veneer and plywood mills, 0.1 million m³ for wood chips mills and 0.08 million m3 for Briquettes and Wood Pellets. However, due to constraints in log supply, the industry is currently operating at roughly half of its installed capacity.
Moving forward, the timber industry is expected to experience reduced activity as a result of declining raw material supply from natural forests. Supplementary raw material sources from forest plantations and imports are anticipated to become increasingly important in addressing domestic supply deficits and sustaining the industry’s long-term viability. Continued restructuring towards higher value-added processing and sustainable forest management will therefore be critical to the future resilience of Sabah’s timber sector.