The timber industry in Sabah is still relevant as it continues to be one of the major contributors to the State revenue for socio-economic development, even though of late log production has declined to a much lower volume. Log production from the natural forest in the year 2021 was 1.13 million m3 while production from plantation forest on the other hand was recorded at 238,157.75 m3. The total forest revenue collected for the year 2021 was RM170.4 million. In the past, contribution from the forestry sector to the State’s coffer was more than 50% of the State’s total collection of revenue from all sources. In 2021, Sabah’s foreign export earnings from the timber industry was recorded at RM1.17 billion, while some 17,106 jobs were generated by this sector.

It has been the policy of the State Government to further develop the wood-based industry in Sabah towards more value-added processing as outlined in the Sabah Industrial Master Plan (SIAP). In spite of this, the development of value-added processing in the State has been quite slow and the wood-based industry remains dominated by primary processing activities namely the sawmilling and plywood sectors. As compared to the nineties, the total active wood processing mills in Sabah has shown a decline due to dwindling supply of logs. 

Comparative figures for 2020 and 2021 shows that the total number of licensed mills in 2020 was 99, of which only 95 were active as compared to 2021, which recorded 94 active mills. The number of wood processing mills in the future is anticipated to be further decreased unless substantial volume of timber is imported by the local processing mills to supplement their raw material requirement. The number of wood processing mills in the future is anticipated to be further decreased unless substantial volume of timber is imported by the local processing mills to supplement their raw material requirement. In 2021, the consumption of imported logs, flitches/sawn timber and veneer by domestic mills was at 10,888.688 m3 compared to year 2020 was 28,054.11 m3.

The installed input capacity of the wood processing mills in Sabah for the year 2021 stands at 3 million m3 with sawmills at 0.8 million m3, veneer and plywood mills at 1.2 million m3 and pulp and paper at 0.8 million m3. In view of the log supply constraint, the wood processing mills in Sabah is only operating at approximately half of their installed input capacity. The future of the timber industry will witness a much-reduced activity arising from the declining raw material supply from the natural forest while supplementary supply of raw materials from imports and plantation forests is anticipated to become more important in the future to meet the deficit in the domestic demand.