Economic Change in East Malaysia

ECONOMIC CHANGE IN EAST MALAYSIA
STUDIES IN THE ECONOMIES OF EAST AND SOUTH-EAST ASIA
General Editors: Peter Nolan, Sinyi Professor of Chinese Management,

Judge Institute of Management Studies, University of Cambridge, and
Fellow of Jesus College, Cambridge, England; and Malcolm Falkus,
Professor of Economic History, University of New England, Armidale,
NSW, Australia
In the last decades of the twentieth century the small and medium-sized
nations of East and South-East Asia have begun a process of potentially
enormous political and economic transformation. Explosive growth has
occurred already in many parts of the region and the more slowly
growing countries are attempting to emulate this vanguard group. The
impact of the region upon the world economy has increased rapidly and
is likely to continue to do so in the future.
In order to understand better economic developments within this vast and

diverse region, this series publishes books on both contemporary and
historical issues. It includes works both by Western scholars and by
economists from countries within the region.
Economic Change
in East Malaysia
Sabah and Sarawak since 1850
Amarjit Kaur
Associate Professor and Head
Department of Economic History
University of New England
Armidale, New South Wales
Australia
tt
t& First published in Great Britain 1998 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
A catalogue record for this book is available from the British Library.
ISBN 0-333-59713-3
First published in the United States of America 1998 by

to ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
ISBN 0-312-21 159-7
Library of Congress Cataloging-in-Publication Data
Kaur, Amarjit.
Economic change in East Malaysia : Sabah and Sarawak since 1850 /
Amarjit Kaur.
p. cm. — (Studies in the economies of East and South-East
Asia)
Includes bibliographical references and index.
ISBN 0-312-21 159-7 (cloth)
1. Sabah—Economic conditions. 2. Sarawak—Economic conditions.
I. Title. II. Series.
HC445.5.Z7S2247 1997
330.9595'3—dc21 97-34872
CIP
©Amarjit Kaur 1998
All rights reserved. No reproduction, copy or transmission of this publication may be made
without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with

written permission or in accordance with the provisions of the Copyright, Designs and
Patents Act 1988, or under the terms of any licence permitting limited copying issued by
the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The author has asserted her right to be identified as the author of this work in accordance
with the Copyright, Designs and Patents Act 1988.
This book is printed on paper suitable for recycling and made from fully managed and
sustained forest sources.
10 9 8 7 6 5 4 3 2 1
07 06 05 04 03 02 01 00 99 98
Printed and bound in Great Britain by
Antony Rowe Ltd, Chippenham, Wiltshire
Jor
9ari, Noreen Amrita and David Amar
Contents
Preface ix
Acknowledgments xi
Preliminary Note xi i i
Maps and Figures xiv
Tables xv
Introduction xviii
Part I Themes and Beginnings (c.1850-1940) 1
1 The Historical Setting 3
Administration and Government 9
2 Patterns of Settlement and Production 13
The Demographic Background 15
3 Formation of an Export Economy 20
Mineral Resource Utilisation 20
Agricultural Development 30
Forests and Forest Resource Utilisation 56
Commerce and the State 68
4 Economic Frameworks, Policies and the
State 75
Transport Development 75
The Organisation of Labour 93
Economic and Social Transformation 111
Part II The Colonial State, Development Planning
and Economic Change, 1946-63 115
5 Britain, Sabah and Sarawak, 1946-63 117
The Japanese Interregnum, and the Cession of
Sarawak and Sabah to Britain 117
Reconstruction and Development 118
Administrative Reforms 119
Economic Reforms 121
Mineral Resource Exploitation 125
Agricultural Resource Expansion 131
Forests and Forest Resource Utilisation 140
Transport Development 149
The Organisation of Labour 159
Foundations for Federation 166
Vlll Contents
Part III Sabah and Sarawak in Malaysia: Continuity,

Change and Development since 1963 167
6 Independence and Federation 169
Politics and the Economy 170
7 Managing Development 177
The State, Development Planning and Ideology 177
Minerals and Mineral Fuels 180
Agriculture and Land Settlement Schemes 183
Forests and Forest Resources 188
Transport 198
Whither Change and Development? 201
Appendices 207
Sarawak: Forest Policy and Legislation 207
Sabah: Forest Policy and Legislation 214
Sabah and Sarawak: Special Guarantees 215
Sabah: Key Political Figures and Parties,
1963-1990 220
Sarawak: Key Political Figures and Parties,
1963-1990 226
Notes 230
Bibliography 260
Glossary 284
Index 286
Preface
Sarawak and British North Borneo. The very words have conjured images
of headhunters prowling along jungle paths looking for their next victims
or white rajahs lording it over the natives and bringing civilisation to
them. These two states were faraway lands on the island of Borneo, which
was itself off the beaten track. But once in a while, travellers' tales excited
western imagination about the fabulous wealth to be had there. It was
only in the nineteenth century that a new breed of adventurers set sail for
these places lured by their forest products, their promise as new markets
and out of scientific curiosity. James Brooke was the most successful of
these adventurers and his story has been well recounted by historians and
novelists. Others were not so successful. However, since the 1960s the
Dipterocarp forests of Borneo have become one of the principal sources of
tropical hardwood timber entering world trade. As a consequence of
economic change and the transformation of the rainforest environment
these remote outposts have suddenly been thrust into the limelight as
conflicts arose between different land use, interest and ethnic groups for
allocation of land and rights to utilise resources. This has generated debate
among scholars, international conservation and environmental
organisations and local pressure groups about the nature of and
consequences of development, not only for Sabah and Sarawak, but for the
Southeast Asian region generally.
My first reason for writing this book is to examine and compare the
pace of economic and social change in Sabah and Sarawak, taking a long-
term view of their economic growth. The book concentrates on economic
development and the role of the state during the first four decades of the
twentieth century, but also links the pre- and post- World War II periods.
The book's major focus on economic change fills a gap as relatively little
has been written on economic development, although a substantial
literature exists on the administration of the white rajahs or the British
North Borneo Chartered Company. In addition, there are several
anthropological and ethnological works on the indigenous groups of the
island and their individual economies, and on the Chinese in these states.
This book therefore attempts to make Sabah and Sarawak's post-1969
economic development more explicable by considering it in the light of
previous growth during the pre 1940 and the 1946-1963/9 periods.
My second reason for writing this book is my interest in the
environmental impact of the timber trade, land development schemes and
dam construction, all issues of current topicality.
I initially started out with transport and economic change in these
states but was persuaded by Malcolm Falkus, one of the editors of the
series under which this book appears, to write a book on general
economic development. Consequently some of the material on the current
IX
X Preface
economic structure is derivative. It was also difficult to decide what to

include and what to leave out. There are large gaps in our knowledge of
economic development in Sabah and Sarawak, but on some topics and
issues, there is an abundance of material. This book has been very much
guided by my own interests and knowledge and reflects the availability of
sources. Indeed, some readers may feel that a detailed history of every
sector has not been provided. It is hoped that omission has not led to
misinterpretation. My study is written in the hope that it will stimulate
further research on the subject.
Acknowledgments
A number of people and institutions made this work possible. The Toyota
Foundation funded my initial research work in Sabah, Sarawak and the
United Kingdom for the period 1989-1990, while I was employed at the
University of Malaya. Subsequent research was funded by a grant from the
Australian Research Council and internal research grants awarded by the
Faculty of Economics, Business and Law, University of New England,
which I joined in late 1990.
I am most grateful to the following institutions for archival access:
Arkib Negara Malaysia; Arkib Negeri Sabah; Sarawak Museum;
University of Malaya Library; Institute of Development Studies, Sabah;
Public Records Office (London); Institute of Commonwealth Studies
(London); School of Oriental and African Studies Library; Rhodes House
Library (Oxford); Cambridge University Library; United Nations Library;
National Library of Australia; and Dixson Library, University of New
England.
I would like especially to record my grateful thanks to Malcolm Falkus
for his support and helpful comments.
I would also like to thank my former colleagues at the University of
Malaya, especially Khoo Kay Kim, Ranjit Singh and Abdullah Azmi
Khalid; in Sabah, James Ongkili, Maximus Ongkili (formerly Director,
Institute of Development Studies), and Agatha Matayun (formerly
archivist at Arkib Negeri Sabah); and in Sarawak, Hew Cheng Sim, Peter
Kedit and Loh Chee Yin (Sarawak Museum). I have also benefited from
comments from friends and colleagues working on aspects of Borneo
history, especially Robert Cramb, Vincent Houben and Nicholas Tarling.
John Drabble was an important source of information and he also gave me
helpful comments. My thanks also go to Madeline Entaban Stauffer and
Peter Stauffer, and former colonial officials who served in Sabah and
Sarawak, especially Neville Haile and Bill Roberts for providing me with
colourful insights into the period. To the many colleagues, like
Tony Reid, Peter Carey, Colin Barlow, Pang Teck Wai, Michael Leigh
and Peter Boomgaard, who attended my seminars on various aspects of the
book and made suggestions which helped clarify my ideas and arguments,
a heartfelt thanks. I am also grateful to Gerda van Houtert who typed the
original draft and Fay Hardingham who prepared the book for publication.
Finally, I acknowledge my indebtedness to my husband Ian Metcalfe
who gave critical comments and drew the maps. My children, though too
young to assist directly, gave me support and love while waiting
anxiously for the book's completion.
xi
xii Economic Change in East Malaysia
MYANMAR J "'
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VIETNAM PHILIPPINES
CAMBODIA PACIFIC
SOUTH
CHINA OCEAN
Mindanao
PENINSULAR
MALAYSIA EAST
° MALAYSIA
Sarawak
Kalimantan
Sumatra Celebes
INDONESIA
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LS Timo
INDIAN OCEAN
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AUSTRALIA
Map 1 Southeast Asia

Preliminary Note
The term Sabah is used in the text to refer to the modern state of Sabah.
Prior to 1963, the state was known as British North Borneo. Although
the current practice is to refer to East Malaysia as Sabah and Sarawak, the
term East Malaysia is used here in its geographical sense to refer to the
two Borneo territories.
The new spelling system adopted by Indonesia and Malaysia has been
followed for Malay words; for example pengiran. The spelling of place
names and rivers follows current practice; for example, Kuching and
Rajang.
All dollar figures quoted (unless otherwise stated) are in Straits (later
Malayan/Malaysian) dollars or ringgit. In the nineteenth century the value
of the Straits dollar fluctuated, but in 1904 it was pegged to sterling at the
rate of M$1.00 to 2s 4d (about US $0.40-0.60 in pre World War II
terms). From 1947 to 1974 M$1.00 was equal to about US$0.33. Since
1973, when Malaysia opted out of the sterling area and floated the ringgit
against the US dollar and the British pound, the ringgit has appreciated.
Xlll
Maps and Figures
Figure 3.1 Sarawak: Net Exports of Rubber, 1916-1941 49
Map 1 Southeast Asia xii
Map 2 States of Malaysia xix
Map 3 Sarawak and Brunei showing successive boundaries,
1841-1946 5
Map 4
Sabah: Chartered Company acquisitions, 1877-1901 7
Map 5
Sabah: Distribution of Rubber, 1940 47
Map 6
The Borneo Company in Sarawak 70
Map 7
Sarawak: Major Rivers and Shipping Routes 79
Map 8
Sabah: Relief and Main Rivers 84
Map 9
Sabah: Rail and Shipping Links 88
Map 10
Sarawak, Brunei and Sabah, 1946 120
Map 11
Sarawak: Distribution of Mineral Resources 128
Map 12
Sabah: Distribution of Mineral Resources 132
Map 13
Sarawak: Road Network, 1963 152
Map 14
Sabah: Road Network, 1963 156
XIV
Tables
Table 2.1 Population Growth in Sabah and Sarawak, 1911-47 19
Table 3.1 Sarawak: Mineral Production, 1868-1948 23
Table 3.2 Sadong Coal Mine Account, 1881-99 25
Table 3.3 Oil Production in Sarawak, 1911-24 27
Table 3.4 Sabah: Acreage under Main Crops, 1937-39 and
1950 35
Table 3.5 The Tobacco Industry and its Impact on Sabah's
Finances, 1881-96 40
Table 3.6 Expansion of the Rubber Industry in Sabah, 1902-40 43
Table 3.7 Sabah: Exports by Residency, 1909-26 45
Table 3.8 Sabah: Estimated Acreages of Principal Crops, 45
Table 3.9 A Comparison of the Exports of Sarawak in 1870 and
1940 51
Table 3.10
Sarawak: Export Trade in Forest Products, 1873 and
1883 58
Table 3.11
Sarawak: Quantity and Value of Gutta Exports, 1870-
Table 3.12 1940 59
Sarawak: Exports of Other Forest Products, 1870—
Table 3.13 1940 60
Sabah: Cumulative reported export value and relative
Table 3.14 importance of forest products, 1881-1915 61
Sarawak: Exports by Value, 1900-29 72
Table 3.15
Sabah: Exports by Value, 1890-1929 72
Table 3.16
Sarawak and Sabah: Import and Export Values,
Table 3.17 1870-1915 73
Sarawak and Sabah: Export and Import Values,
1919-39 74
Table 4.1
Road Mileage in Sarawak, 1939 81
Table 4.2
Road Mileage in Sabah, 1927-1940 92
Table 4.3
Prisoners Employed Annually by the Public Works
Table 4.4 Department, Kuching, 1890-1901 96
Sarawak: Employment by Occupation and Ethnic
Table 4.5 Group, 1935 101
Number of Coolies Registered in Sabah, 1891-1940 109
xv
XVI Tables
Table 4.6 Sabah and Sarawak: Revenue and Expenditure up to

1940 113
Table 5.1 Sabah: Analysis of Revenue Headings, 1938 and
1951 123
Table 5.2 Sarawak: Analysis of Revenue Headings, 1938 and
1951 124
Table 5.3
Sarawak and Sabah: Development Plans, 1947-63 126
Table 5.4
Value of Mineral Production in Sarawak, 1952-61 130
Table 5.5
Sabah: Acreage of Major Crops, 1940-63 138
Table 5.6
Sarawak: Exports and Value of Principal Products,
1940-62 139
Table 5.7
Sarawak: Timber Exports, 1920-60 146
Table 5.8
Sabah: Timber Exports, 1938-53 147
Table 5.9
Sabah: Timber Exports, 1955-63 148
Table 5.10
Sabah: Motor Vehicle Statistics, 1933-63 157
Table 5.11
Sabah: Economically Active Population by Gender,
Community and Industry, 1960 162
Table 5.12 Sarawak: Economically Active Population by Gender,
Community and Industry, 1960 163
Table 5.12 Continued 164
Table 6.1 Sabah and Sarawak: Population by Ethnic Group,
1960-91 171
Table 6.1 Continued 172
Table 7.1 Sabah: Exports of Oil and Copper, 1975-87 183
Table 7.2 Sabah, Sarawak and Peninsular Malaysia: Agricultural
Production and Estate Yields, 1990 187
Table 7.3 Sabah: Export Values for Logs, Sawn Timber and
Plywood, 1971-84 191
Table 7.4 Sabah: Utilisation of the tropical forest estate:
deforestation due to shifting cultivation; area utilised
for logging, end 1985 192
Table 7.5 Sarawak: Forest utilisation and deforestation 195
Table 7.6 Sarawak: Export values for logs and processed
products, 1971-84 195
Table 7.7 Sabah, Sarawak and Peninsular Malaysia: Road
Mileage and Density, 1990 200
Tables xvn
Table 7.8 Sabah, Sarawak and Peninsular Malaysia: Gross

Domestic Product by Industrial Origin, 1970, 1980
and 1990 202
Table 7.9 Distribution of Gross value of petroleum by
percentage 203
Table 7.10 Sabah and Sarawak: State Government Revenue from
Forestry and Petroleum, 1963-90 205
Table 7.11 Sabah, Sarawak and Peninsular Malaysia: Incidence of
Poverty by Stratum, 1976, 1984, 1987 and 1990 206
Introduction
Malaysia is currently approaching Newly-Industrialised Country (NIC)
status. In 1990, nearly 27 per cent of GDP was from manufacturing
industry. It is evident though that the extent of industrialisation is very
different between Peninsular Malaysia and Sabah and Sarawak with the
process much more advanced in Peninsular Malaysia. Geographically,
culturally, and ethnically, Sabah and Sarawak are far away from the
mainland and reap little visible benefit from the peninsula's economic
success. The key to understanding uneven development in the Malaysian
federation lies in its historical and recent past and to do justice to the
complexities and history of Malaysia would far exceed the purpose and
format of this book. However, it is necessary to relate at least a few of the
facts which may convey some of the complexities and current issues of
Malaysia today.
The modern state of Malaysia was formed in 1963 by the union of the
Federation of Malaya, which had achieved independence from Britain in
August 1957, the island of Singapore, which had been given internal self-
government by Britain in 1958, and the territories of Sabah and Sarawak,
which had been British crown colonies from July 1946. On 9 August
1965, Singapore was expelled from the new Federation and became a
separate independent state. Hence since August 1965, Malaysia has
comprised the eleven states of what was then known as West Malaysia
and the two Borneo states of East Malaysia (See Map 2). In the early
1970s the term West Malaysia was officially changed to Peninsular
Malaysia while East Malaysia was changed to Sabah and Sarawak,
allegedly after the secession of Bangladesh from Pakistan.
Geographic Location
Peninsular Malaysia forms part of the southern projection from the Asian
mainland, with Thailand immediately to its north and the island of
Singapore to the south. It has an area of 131 794 square kilometres and
consists of eleven states: Perlis, Kedah, Penang, Perak, Selangor (with
the Federal Capital Territory of Kuala Lumpur), Melaka, Johor, Negeri
Sembilan, Pahang, Trengganu and Kelantan.
Sabah and Sarawak occupy the northern and northwestern coast of the
island of Borneo. Sabah lies approximately between latitude 4° and 7°
North and longitude 115° and 119° East. Sarawak lies between latitude
0°50' and 5° North and longitude 109°36' and 115°40' East. Together they
occupy an area of 198,149 sq km (Sabah - 73 700; Sarawak - 124 449) in
comparison to their neighbours, Brunei Darussalam (5765) and
Kalimantan, Indonesia (539 460).
xvm
STATES OF MALAYSIA
CAMBODIA HOE
MYANMAR/f 1. PERLIS 8. PAHANG
/V 2. KEDAH 9. NEGERI SEMBILAN
3. PULAU PINANG 10. MELAKA
ION 4. PERAK 11.J0H0R
5. KELANTAN 12. SABAH
0 200 km 6. TRENGGANU 13. SARAWAK
I I 7. SELANGOR
\ OQ> P. Banggi
JVP. L a n g k a w ^ > EAST KudatA
x^ AI or Star? 2 / ^jT MALAYSIA
SOUTH CHINA SEA Kota Kinabali| Sandakar
<*« 3 oh/ "/ 5 v fc, Kuala Trengganu P. LabuanQ^
^PENINSULAR BRUNEL-
MALAYSIA MiriiTv' V (
Kuantan \J Natuna V Tawau
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Map 2 States of Malaysia
XX Introduction
Climate and Rainfall
Both Peninsular and East Malaysia have a uniformly warm and humid
climate with temperatures ranging from 25.5°C to 33°C, except at high
altitudes where the nights are considerably cooler. Seasonal changes are
marked not by variations in temperature but by changes in rainfall, which
in turn are related to the cycle of the monsoonal winds. The northeast
monsoon, which sweeps down across theSouth China Sea, is the
dominating air stream during November to January. It then gradually
decreases in force with a transitional period in April to May followed by
the southwest monsoon. Another transitional period occurs in October to
November and the whole cycle then repeats. Throughout most of
Malaysia the rainfall ranges from 2000mm to 4000mm per annum,
although there is considerable variation between different regions.
Nowhere is there a true dry season, but most areas receive more rainfall
during certain periods in the year, the wettest season coinciding with the
northeast monsoon.
The Physical Environment
The landform of both the peninsula and Borneo is characterised by coastal

plains giving way to a rugged mountainous interior. The spine of the
peninsula is the Main Range, and there is a further block of highland
covering most of upper Kelantan, inland Trengganu and Pahang. The
peninsula's highest peak is Gunung Tahan (2207 metres). The interior
mountains have always posed a formidable barrier to trans-peninsular
movement and the focus of settlement has been the coastal lowlands.
From early times, political centres were established on the rivers which
have their headwaters in the inland ranges. Most peninsular states derive
their name from the principal rivers. In Borneo, the lowlands, often
swampy alluvial plains, also form a belt along the coast. Behind these
plains are the foothills leading inland up to a mountainous mass through
which runs the border between Malaysian and Indonesian Borneo. The
highest mountain in Borneo, and also in Southeast Asia, is Mount
Kinabalu (4500 metres). The great rivers of Borneo, like those on the
peninsula, were the original sites of settlement. The heavy rainfall and
warm temperatures have resulted in East Malaysia being covered by
equatorial forests. Indeed, Borneo possesses one of the richest and most
diverse flora and fauna on earth, and the trade in tropical timber represents
a major export earner for Sabah and Sarawak. Along the plains most of
the original forest cover has been removed to make way for settlements,
physical infrastructure, commercial agriculture and industries.
Introduction xxi
Population
Ethnic considerations and religious affiliations are another sphere of

Malaysian diversity. In 1991, Malaysia's population was an estimated
18.4 million of which about 14.8 million live on the peninsula, while
Sabah's population totalled 1.8 million and Sarawak's 1.7 million. In
Peninsular Malaysia, the dominant ethnic group is the Malays. In Sabah,
the dominant group is of Kadazan origin, while in Sarawak the Dayaks
predominate. The categorisation of the local peoples in East Malaysia has
been a difficult task and the resulting classification conceals considerable
variation in language and life style. Both Peninsular and East Malaysia
were land-abundant, labour-scarce economies and consequently
immigration has been an important factor underlying population growth
in the nineteenth and early twentieth centuries. In East Malaysia,
immigration from China and the Netherlands East Indies was a major
driving force in pushing total population growth rates.
Political Patterns
The British colonial authorities fostered the incorporation of the

independent Borneo territories with Malaya and Singapore to form the
Malaysian Federation. Initially, there was considerable apprehension in
Sabah and Sarawak resulting in the formation of a number of political
parties structured along communal lines. Nevertheless, early opposition to
the Federation by East Malaysian leaders soon faded, largely because
Malaya was prepared to make a number of important concessions and also
because Sabah and Sarawak were concerned over the aggressive stance
adopted towards them by Indonesia and the Philippines. Over the years
there has been an underlying tension in this relations between the federal
government in Kuala Lumpur and the state governments of Sabah and
Sarawak. In essence this tension has derived from the notably lower level
of economic development and political sophistication in Sabah and
Sarawak. On the whole, smooth federal-state relations have been
guaranteed because the federal government has continued to ensure the
supremacy of those political leaders who co-operate fully with it.
What does all this mean for Sabah and Sarawak? The leaders of these
two states are preoccupied with trying to catch up to the social and economic
progress of West Malaysia. Their economic goals as a whole have fostered
general attitudes to the environment which are seen as inimical to
conservation by conservationists. Thus current strategies for parcelling
out land for settlement for expansion of commercial agriculture and for
logging have largely been carried out in the name of development and
these leaders have shown a greater tendency to discourage environmental
criticism of their policies than to incorporate conservation into their
development agenda.
XX11 Introduction
This book's main theme is a long-term view of East Malaysia's

economic growth. While its focus is on economic development during the
first four decades, it also links the post-World War II period (1946-63)
with the national period (1963 onwards). In other words, the contexts in
which economic change will be analysed will be both historical and
comparative. The virtue of this approach is twofold. Firstly, an historical
orientation will supply a necessary corrective to the impression that
export-oriented development (especially in Sarawak) is a recent
phenomenon and represents a sharp departure from the past. Secondly, a
comparative investigation can highlight patterns of development and
experience that is not easily discernible in single country studies.
A second theme relates to the role of the state. Was the role of the
Chartered Company and the Brooke Administration in relation to
economic growth only a limited one in comparison to the British role in
the Malay peninsula? Furthermore, one might think there would be a
striking contrast between a state governed benevolently by the Brookes on
the one hand, and by a chartered company seeking profits on the other.
My study shows that despite being different 'states', the result in terms of
policies was actually very similar.
Another theme is the integration of the two economies not only into
the international economy but into Malaysia. Despite initially lacking
comparable locational and infrastructional facilities to attract major
investment, the two Borneo states had, from at least the First World War,
become complementary in terms of their raw materials rather than
competitive with Singapore/Malaya. After the Second World War, the
colonial government completed the process so that at the time of
Independence the economies of the two states were much closer to that of
West Malaysia.
The book is structured in three parts. The first and main section
focuses on economic development in Sabah and Sarawak during the period
1850-1940.* It is argued that the foundations of an export-oriented
economy were laid during this period. The second part analyses economic
change during the colonial period (1946-1963). It is argued here that
colonial development policies were designed to promote territorial unity
in North Borneo and to integrate Sabah and Sarawak in the Malayan-
Singaporean economy and the wider Southeast Asian trading network. The
third part deals with the post-independence period when federal policies
were seen as a central force making for integration of economic activity in
the Malaysian federation.
It is not proposed here to deal specifically with the brief Japanese

Occupation period (1942-45) since there was no significant departure
from previous economic trends.
Part I
Themes and Beginnings (c.1850-1940)

1
The Historical Setting

Since the first traveller's account in the sixteenth century, Borneo has held
a particular mystique for westerners. This island of head-hunters and noble
savages promised wealth, adventure and later missionary challenge to an
array of Europeans. It lay off the beaten track, however, for most
European adventurers and it was only in the early nineteenth century that
interest in the island was rekindled. Two factors were responsible for this
reawakened interest. The first was the increased importance of trade with
China, especially after the ending of the opium wars, and the
establishment of Singapore and later Hong Kong, which helped channel
trade and shipping along the South China seaways. The strategic
significance of the north-west coast of Borneo was not lost on the British
and the Dutch. The second factor was the declining power and influence of
Brunei which had been the paramount power on the island. Brunei's
decline (and the decline of the indigenous powers) presented opportunities
for independent adventurers and traders on the lookout for new trading
ventures and the strategically placed ports which could serve the new
English trade with China.1 After the 1840s, Borneo was also seen as a
source of valuable minerals and as a promising market for manufactured
goods. The adventurers who ventured into the power vacuum created a
scramble for Borneo which led to the creation of two new political entities
on the island, Sabah and Sarawak, which developed completely
independently of each other.
Sarawak originally fell within the domain of the Sultan of Brunei. In
the first half of the nineteenth century, this territory was of interest to the
British government and the English East India Company because of its
location along the China trade routes and the fact that it was not
recognised as lying within the Dutch sphere of influence. Apart from its
attraction as a harbourage, it was reputed to have substantial coal deposits
just when the demand for coal was growing with the increasing use of
steamships. The discovery of antimony ore in the early nineteenth century
and its importance in the international economy aroused Brunei's interest
and Pengiran Makhota, a Brunei prince and noble, took up residence in the
Sarawak River basin in the second decade. He coerced the Land Dayaks to
mine the ore, paying them in beads and brass. The ore was sold to
merchants in Singapore and the profits shared between Pengiran Makhota
and the Brunei Sultan. The exactions and taxation demands provoked
resistance from the local Malays and the Land Dayaks and disrupted trade
in the state. Subsequently, Pengiran Makhota was replaced by the Brunei
Sultan's uncle and Prime Minister, Pengiran Muda Hashim. The fighting
3
4 Economic Change in East Malaysia
continued until the arrival of James Brooke, an English adventurer, in

1839.2 Brooke, who was influenced by the Rafflesian idea of a strong
British presence in the Indonesian archipelago, had sailed to Sarawak after
having learned that the Brunei prince was favourably disposed to the
British and that the district had valuable antimony ore. He helped Hashim
suppress the uprising and in return for this assistance, and a modest
annual payment, was bestowed the title of Rajah of Sarawak in 1841. He
established his capital at Kuching in the Sarawak River basin. After
consolidating his authority, he rapidly moved to extend the territory under
his control, going still further to areas nominally under the authority of
Brunei. (See Map 3). He tried to establish a British colonial presence in
the region but was unsuccessful. Nonetheless, he survived the initial
military campaigns against him and the political intrigues principally
because of British naval support, his co-optation of the local Malay elite
and his use of voluntary Iban (Sea Dayak) warriors to quieten opposition.
In the 1850s and 1860s the weak Brunei sultanate accepted, in return for
further annual payments, major Brooke annexations into the principal
Iban-occupied districts.
James Brooke died in 1868, leaving an expanded state to his nephew
Charles. Charles continued the expansion of Sarawak territory and by
1890 Sarawak occupied the largest area in northwest Borneo. In the
meantime, in 1888 Sarawak had acquired protectorate status from the
British government whereby it remained an independent state with
absolute rights of self-government but agreed to conduct foreign relations
only through the British government. Charles was succeeded by his son
Vyner Brooke in 1917. Vyner continued his father's policies until 1941
when Sarawak surrendered to the Japanese. After the Pacific War, political
and economic changes in the region resulted in the cession of Sarawak to
Britain. It was ruled as a crown colony until 1963 when it became part of
the Malaysian Federation.
The state of Sabah emerged later. The territory comprised a number of
tribal societies which, while not existing in total isolation, did not
develop a form of political organisation like the political structures that
emerged in Peninsular Malaysia. It appears to have come under the
suzerainty of first Brunei and then Sulu and as a consequence was
effectively divided into three zones: the coastal belt between Kimanis to
Pandasan, the Brunei sphere of de facto control; the coastal belt between
Marudu Bay to the Sebuku river, the Sulu sphere of control; while the
rest remained independent territory, either under indigenous tribes or under
the jurisdiction of Malay nobles or chieftains known as Sherif. (See
Map 4).
By the middle of the nineteenth century, European interest in Borneo
was revived by Dutch, Spanish and English trading visits and in a few
locations by attempts at settlement. There was an early British trading
settlement on Labuan island under the 'governorship' of James Brooke,
Approximate frontier of Raj of Sarawak as granted to James Brooke in 1841 m
Approximate frontier of territory acquired in 1853 &>
Approximate frontier of territory acquired in 1861
Approximate frontier of territory acquired in 1905 C&s
Frontier of Sultanate of Brunei, 1946 Vk
Boundaries of Divisions, 1946 \jA\*
_ong Aka
200KM
SECOND DIVISION
Map 3 Sarawak and Brunei showing successive boundaries, 1841 - 1946

following the ratification of a treaty with the Sultan of Brunei in 1846.

The settlement was established for three reasons: the island's geographical
location as a convenient stop-over for China-bound ships; its coal
deposits which provided the fuel for the new generation of steamships; and
rivalry among the European powers in the area. This rivalry led to the
first and only abortive American attempt at settlement at the mouth of the
Kimanis river in 1865. The small settlement, named 'Ellena' was the
capital of the 'State of Benoni and Kimanis' and the headquarters of 'The
American Trading Company of Borneo'. It was abandoned in 1866. 3
In 1877, an Englishman, Alfred Dent advanced capital enabling the
Austrian Consul-General in Hong Kong, Baron von Overbeck, to
purchase the unexploited American concessions soon due to expire in
North Borneo with the active support of William Treacher, the acting-
governor of the British colony of Labuan. Overbeck negotiated a new
cession of 17 252 000 hectares from the Sultan of Brunei for an annual
payment of $15 000. A significant feature of the agreement was that
North Borneo would be in all essential respects independent of Brunei.
Shortly afterwards, followed by Treacher, Overbeck went to Jolo where
the Sultan of Sulu also ceded his rights in North Borneo for an annual
rent of $15 000 and made Overbeck 'supreme and independent'. Under
Treacher's supervision, a treaty was drafted with the Sultan stipulating
that the territory could not be alienated to any other nation without
Britain's acquiescence. In February 1878, a Resident was appointed to the
port of Sandakan. Other representatives of the Dent-Overbeck partnership
were subsequently landed along the west coast. In Malay style, the
territories now ceded to Overbeck and the Dents (Alfred and his brother)
were perceived as water systems and were thus denoted by river names. 4
In 1881 a company known as the British North Borneo Chartered
Company (hereafter referred to as the Company) was established as a
provisional association to govern the territories obtained in Borneo. The
prime mover in the Company was Alfred Dent, Overbeck having
withdrawn entirely from the venture. The Company was required to
remain 'British in character', to relinquish foreign relations to Britain, and
to submit the names of proposed governors for London's approval. The
British government officially granted the Company a Charter on 1
November 1881 (it was formally established in May 1882) and it took
over all the possessions and activities of the provisional association by
July 1882. In 1888, protectorate status was negotiated with the British
government whereby British North Borneo (hereafter referred to as Sabah)
surrendered to the British government responsibility for foreign policy and
was in turn guaranteed protection from the threat of outside attack.
Crucially, Alfred Dent transferred his rights to the Company but
remained, as managing director, the most important figure in the
administration based in London. The Company was financed by the sale
of shares and the Council of Directors in London was composed of well-
15E 116E wiAr 118E 119E
7N Final boundary of Chartered 7N-

• "™ Company territory with
Sarawak and Dutch Borneo 50 km
SOUTH
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PANDASAN x
CHINA
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PAPER-KIMANIS1K77 J^pSl ></$
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TERRITORY CEDED ^
(as far South as the i^J" Q.*^ <vOc^r
Sebuku River) BY BRUNEI ***U>aW^ £j~ \
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PADASKUAS AND SULU, 1877-8 <bV
5N 5N-
Y
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BRUNEI BORDER ACR CELEBES SEA
(SUSEQUENTLY *- WITH DUTCH, 18*2
SARAWAK) «H| / 1 / \ \ ;*>>
TERRITORY * £ * >» * ~ ^ V * «-» * * * \ - - " « * *
1 «_• V* *^
fÎ)~8'E"
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115E H6E (KALIMANTAN) 117E\f0 ^ t S " ^ 119E
-J
Map 4 Sabah: Chartered Company acquisitions, 1877 - 1906
known and influential men. Its capital was also substantial (£2 million).
William Treacher, who had supervised the original cession, was appointed
as the first governor. The initial policy was that the Company would
remain a purely administrative organisation and not participate directly in
trade. This policy was later modified and the government became actively
involved in the state's economy by investing in selected local enterprises.
Generally, the stipulations of the charter required a policy of respect for
indigenous customs and laws, and the need of the Company for extreme
economy meant that the administrative machinery remained tiny and
interference in local life was kept to a minimum.5
From the start the Company was eager to expand its territories
principally because the large land areas acquired from Brunei were not all
coterminous. In some districts Company concessions were separated by
rivers controlled by independent chiefs who were regarded as sources of
irritation and inconvenience. More importantly, these areas represented
additional sources of revenue in the form of taxes, trade, land sales and
mineral and agricultural utilisation. Thus from 1883 onwards until the end
of the nineteenth century the company gradually annexed the independent
rivers which formed enclaves in Company territory. By 1901 Company
territory included most of the modern state of Sabah.
Although separate states, both administrations in Sabah and Sarawak
expanded their territories at Brunei's expense and negotiated protectorate
status with the British government which guaranteed protection from the
threat of outside attack. This security arrangement was symbolised in the
person of the Governor of the Straits Settlements (also High
Commissioner of the Federated Malay States) and Consul-General for the
Borneo States. Agreements between Britain and the Netherlands also
settled disputed border claims on the island and boundary demarcations.
Crucially, all these connections linked Sabah and Sarawak to the Malay
States and the Straits Settlements and to wider British interests.
As in Sarawak, the Company had to contend with resistance from the
indigenous groups, some of it a direct outcome of economic and social
change initiated by the Company and Company rule brought few tangible
benefits to the indigenous population. It also attempted to adapt elements
of the former administrative system, albeit not too successfully. In
January 1942, Sabah was invaded by Japanese naval and military forces
and remained under Japanese occupation until June 1945. Upon its
liberation, the Company decided that the territory's rehabilitation was
beyond its resources and decided to cede the state to the British Crown.
Sabah became a Crown Colony in July 1946 and Labuan was incorporated
into the new colony. In 1963, the state was incorporated into the wider
Malaysian federation.
The Historical Setting 9
Administration and Government
The keynote of administration in both Sabah and Sarawak was

pacification which accorded control over natural resources such as land and
the utilisation of these resources to promote economic development in the
two territories. Nevertheless, the geographical reach of administration and
government was always limited by financial and management
considerations. As a private colony, Sarawak had a unique 'colonial'
history. James Brooke quickly established his military supremacy and a
tenuous political control by introducing his own laws and code of justice.
He secured the assistance of the Royal Navy by opening Kuching as a free
port, keeping only for himself a monopoly in the trade of antimony ore.
He made the coast safe through bloody expeditions against the
inhabitants, his forces comprising Royal Navy sailors, reinforced by
Malay and Dayak subjects who took advantage of these punitive
expeditions to loot and collect heads.6 In the extension of Sarawak's
territory James and Charles established small forts in tribal territory, from
which the rule of force was gradually replaced by the rule of law. These
forts were permanent structures built at the river mouths and helped keep
the peace so that the Brookes could establish a virtual trading monopoly
over their realm. The forts also permitted the stationing of European
officers in safety to dangerous outlying districts, enabling the collection
of duties on riverine trade and of taxes on the local populace.
For administrative purposes, Sarawak was divided initially into three
Divisions - the First Division, which extended from Tanjung Datu to the
Sadong River; the Second Division, from the Sadong River to the Rajang
River; and the Third Division extended from the Rajang River to Tanjung
Kendurong (see Map 3). The Fourth and Fifth Divisions were created in
1885 and 1912 respectively from later cessions.7 From the time of James
Brooke, senior administrators were recruited from Britain. Where the
indigenous people were concerned, the Brookes either adopted and
reinforced existing chieftaincies (as in the case of the Malays) or created
new political authorities as in the case of the Dayaks. There thus arose
two parallel systems of administration both obedient to the Rajah's
authority. On the one hand, a hierarchical ranking of government-
appointed indigenous chieftains whose duties were to administer
traditional law and levy tax for the Rajah; and on the other hand, a system
of 'district officers', regional residents and so on, recruited in Britain,
whose duty was to administer the introduced western systems of justice,
land ownership and labour and to intervene in native affairs when it was
considered necessary.
Additionally, for administrative convenience the three major groups in
the country, the Malays, the Iban or Sea Dayak and the Chinese, were
assigned and played roles perceived appropriate to their cultural attributes.
The Malay role was political, the Chinese role economic and the Iban role
military. Intermingling on a social level among the three main groups

was forbidden. Chinese traders were confined to the bazaars in the towns,
Malay kampong were located in the towns, while the Iban were forbidden
to travel outside their districts in the interior without a pass from the
Resident. In 1926, every Iban longhouse in the Third Division had to be
at least ten family rooms ('doors') in length. This measure was designed
to facilitate migration control and administration generally by making it
as easy as possible for an official in charge of a vast area to ensure that
everyone remained in his appointed place.8
The economic policy pursued by James and Charles had three major
elements: mineral and forest resource utilisation, the encouragement of
commercial agriculture (both large and small-scale), and the subsistence
production of foodstuffs. The mineral resources were exploited as a
monopoly either by the Brookes or by the Borneo Company (a private
commercial concern) while forest resource utilisation was turned over to
the Borneo Company and other western interests. Large-scale (plantation)
agriculture was perceived as a western-capital intensive activity while
small-scale cash crop farming was promoted through the encouragement
of Chinese immigration and settlement. Subsistence food crop production
was also encouraged through Chinese settlement and the settlement of
indigenous groups. Few development initiatives were undertaken; foreign
(including Chinese) entrepreneurs were expected to develop Sarawak's
resources and provide the revenue for administration, and there was no
intention of revolutionising the territory. Indeed, it is doubtful whether
either James or Charles envisaged any developmental policy in an
integrated sense; it was only during the reign of the last rajah, Vyner
Brooke, that economic development was perceived as a necessary goal by
the Brooke administration. Consequently, while the Brooke administration
precipitated considerable change, it was to be only a small degree of
planned change.
In Sabah, the Company initially decided (as noted earlier) that it would
function as an administrative company only. The commercial
development of the territory's main resources - timber, reputed minerals
and land - was to be left to other private interests who were to be enticed
by liberal terms for land and the development of a modern transport
system. By the early twentieth century, due to its inability to attract large-
scale investment, the Company moved to investing directly in mineral,
agricultural and forest resource utilisation through the setting up of
subsidiary companies in partnership with other western interests. In terms
of administration, the Company's sixty-year 'reign' divides into five
periods: 1881-7; 1888-95; 1895-1910; 1910-1920 and 1920-41.
The first period saw the Company with a very small group of
European administrators (18 in 1887) who possessed very little knowledge
of the various tribal groups in the interior and yet attempted to build
revenue foundations and identify profitable possibilities for investment.
The Historical Setting 11
These years have been described as ones of 'gambling' or 'makeshift'

government.9 Government was headed by a governor acting under the
authority of the Court of Directors in London. He was assisted by a
government secretary and a civil service. The Company adopted the
Residency and District system of local administration used in other British
protectorates and colonies. For administrative purposes, the territory was
divided into two Residencies; an East Coast Residency with headquarters
at Sandakan, and a West Coast Residency based at Jesselton.10 Since the
residences were too large to be governed effectively, they were divided into
provinces named after prominent Company officials.11 Initially, the
provinces were administered by magistrates-in-charge until they were
replaced by District Officers.12 The first governor, William Treacher,
borrowed extensively from other territories for the legal framework of
administration. Only tentative attempts were made initially to grapple
with issues such as slavery (see section in labour) and the demarcation of
land. The Company, like the Brooke Administration, relied on native
administration in the interior regions. These 'Company chiefs', who were
paid small honorariums, were not necessarily from the same group over
which they had authority. Their main role appears to have been largely to
ensure the effective implementation of Company policy.13 In practice the
Company had little control over the interior, thus allowing others,
notably traders (Malays, Chinese, Kadazans) to proceed unchecked, yet
claiming rights over the territory's forest and other natural resources.
The second period coincided with the governorship of C.V. Creagh,
seconded from Malaya. Since the Company was in serious financial
difficulties, there were moves to sell the entire Sabah interest to Charles
Brooke. This came to nothing. Creagh tried to systematise some aspects
of the administration, such as land tenure, by introducing the Torrens
system of land registration in 1894 with safeguards for indigenous rights.
However, this period saw a short-lived tobacco boom, which was
fortuitous where revenue was concerned, but which led to tensions over
the conflict between the large concessions granted for tobacco plantations
and native customary lands. These tensions culminated with the outbreak
of the Mat Salleh revolt in 1895. Essentially, financial constraints and the
lack of resources meant that Creagh was unable to proceed with settlement
of such issues.14
The third period saw a marked shift in the division of authority
between London and Sabah. Hitherto, the Court of Directors had accorded
wide discretionary power to the governor, but with the election of
W.C. Cowie to the Board in 1894, most initiatives, especially in matters
relating to economic projects, were taken over by him. The period also
saw the development of a railway system in the territory and the laying of
a telegraph line to link the east and west coasts. Cowie was influenced by
developmental initiatives undertaken in Malaya and was determined to
introduce them in Sabah, although this resulted in increased costs for the
Company.15
The fourth period coincided with Cowie's death in 1910 which removed
a constraint on the administration at the same time that trade and revenue
picked up with the rubber boom. More discretionary power was handed
back to the governor and several new initiatives were undertaken in the
area of health and education. During the last period, economic growth
gathered momentum and pulled policy along. New initiatives were
undertaken in road transport; the Company, in association with other
western interests, formed the British Borneo Timber Company to exploit
Sabah's timber resources; and administrative innovations resulted in
greater liaison between the district officers and the central administration.
Separate though they were, the two states shared the experience of
western rule and both the Brooke and Company administrations created
institutional frameworks to facilitate the utilisation of the economic
resources of their respective territories. Nevertheless, the reality of control
differed. In Sabah, tribal and ethnic divisions were exacerbated by the
multitude of indigenous groups divided by language, culture, and lifestyle.
The Company consequently had less success than Sarawak in fostering a
general recognition of a white overlord. In Sarawak, the more 'personal'
approach of the Brookes, the relatively fewer indigenous groups and the
fact that the state was run as a 'private' colony, facilitated greater co-
operation with local indigenous leaders. Both administrations cultivated
different groups, depending on strategic necessity and governmental need,
and both encountered resistance against revenue collection. Both
governments reacted by sending expeditions to 'rebellious' areas and by
the early twentieth century were more willing to negotiate with
indigenous groups. Thus, despite the fact that the two administrations
differed in style and nature, the result in terms of policies was actually
very similar.
2
Patterns of Settlement and Production
The history of settlement in East Malaysia can best be understood within
the framework of the physical environment of the region. The heavy and
uniform rainfall gave rise to a multiplicity of rivers which in turn set the
original pattern of settlement in the country. The large rivers are vital
arteries of communication and their watersheds represent tribal and
economic boundaries. Sabah has an extensive system of rivers which can
be divided into three main groups. The first group comprises the long east
coast rivers which flow from the interior into the Sulu sea; the second
group consists of short west coast rivers that flow into the South China
Sea with sources in the Crocker Range and the third group includes the
short streams of the south-east coast which flow into the Celebes Sea.
The major rivers are the Kinabatangan, Segama, Sugut, Paitan and Labuk
and their tributaries. The Kinabatangan was navigable for steam launches
drawing up to 2 metres as far as the mouth of the Lokan tributary some
193 km from the sea and for smaller launches as far as Tangkulang. The
west coast rivers are short, swift, mainly unnavigable and therefore less
important as channels of communication. The Papar River, though
navigable for boats for about 48 km, is obstructed at its mouth by a bar.
The Padas is the longest river on the west coast and the most important,
being navigable for small launches as far as Beaufort, 96.5 km from the
sea. Rivers in the south-eastern part of the state are likewise short. The
important rivers here are the Kalabakang and Serundong. Penetration into
the interior is further hampered by the presence of rapids, which have
restricted settlement to the coastal fringes, leaving the interior largely
uninhabited.
In Sarawak, two main groups of rivers drain the territory: firstly, the
larger rivers which flow from the mountain ranges on the Sarawak-
Kalimantan border; and secondly, the short but mature coastal rivers with
less defined divides in the mid-Sarawak lowlands. Of the larger rivers, the
Rajang, the Batang Lupar and the Baram are navigable far inland. The
shorter river systems close to Kuching, which include the Sarawak,
Lundu, Sadong and Samarahan, do not penetrate the interior for great
distances but have been important arteries nonetheless. The Sarawak, for
example, was navigable as far as Kuching for ships up to 2500 tonnes.
A common Borneo cliche is that 'water unites but land divides' and
helps explain a physical environment characterised by a mountainous
forested interior, inland rivers and a long shallow swampy coastline. There
are three broad ecological zones - the coastal and estuarine belt, the inland
rivers and the interior. The first zone, the coastal and estuarine belt, was
historically the most important in terms of settlement and economy, a
13
pattern which still persists today. The premier cities, Kuching, Kota
Kinabalu and Sandakan, are all coastal settlements, their past shaped by
both indigenous and colonial imprints. They are also estuarine and from
earliest times provided scope for settlement, farming and trading
opportunities afforded by their location between the interior and the coast.
The second ecological zone developed as settlement, trade and economic
development traditionally found their way inland along the river valleys.
For many groups, riverine localities were the favoured settlement sites,
taking advantage of the fishing and trading opportunities the waters
provided and the commercial possibilities of the surrounding forest.
Patterns of longhouse settlement were also strongly influenced by the
river networks. Further inland were the true upland zones. As noted by
Harrisson, the upper navigable limit for rivers constituted a crucial
cultural divide between lowland and upland cultures. These comparatively
isolated areas resulted in different ways of life, exemplified by nomadic
tribes living in a hunter-gatherer economy.1 Crucially in the broad
economic zones, settlements were scattered, though river transport played
an important role in deciding location.
Drainage basins were the most important territorial units in both
territories. They defined and demarcated tribal areas, determined spheres of
political and social influence and channelled patterns of population
migration and trade. Indeed, the inhabitants identified themselves as people
of a certain river and when the Chartered Company and the Brookes
obtained concessions, these concessions were cessions of rivers or river
systems. The steady encroachment on the river systems of Brunei
effectively reduced Brunei's influence and power on the island.
The indigenous economic systems were broadly similar in both
territories. In Sarawak the inhabitants adapted their economies and
societies to meet a variety of different conditions. Along the swampy
coasts, societies like the Melanau developed a way of life based mainly on
fishing and the collection of swamp sago. In the interior the dominant
form of land use was swidden agriculture, originally of root crops
supplemented by forest sago and later the adoption of hill padi. The steep
upland forests with their poor soils made permanent cultivation
unsustainable and the inhabitants developed a way of life based on shifting
agriculture complemented by hunting and gathering. In areas where the
soil and the aspect provided better conditions of permanent agriculture,
wet rice cultivation on well constructed fields also developed. The Malays,
who were later arrivals, settled on the coastal areas and took over parts of
the immediate hinterland to develop wet rice cultivation along the banks
of the lower reaches of some of the major rivers. Yet in other areas,
people like the Penan eschewed agriculture altogether, adopting instead a
mobile existence based exclusively on hunting and gathering. For the
most part, these groups were independent and self-sufficient. However,
they were neither isolated from one another, nor from the outside world
Patterns of Settlement and Production 15
and shared common language attributes. Trade, war, and occasional inter-
marriage linked the various tribes throughout the territory and head
hunting was common.
In Sabah, the three zones were identified, with firstly, the gathering of
sea produce from the shoals and reefs off-shore the coastal regions;
secondly, the cultivation of wet rice on the western lowlands; and thirdly,
the swidden cultivation (dry/hill padi, maize, and root crops) of the
interior highlands. The general pattern of the three zones, the coastal and
estuarine belt; the river valley; and the interior; not only underpinned the
human ecology of Sabah and Sarawak but also formed the dividing line
between the different groups, based on habitat, language and belief
system.
Most of the observations of the indigenous economic systems come
from the accounts of western observers in the late nineteenth and early
twentieth centuries and it is therefore difficult to determine how such
practices developed historically. It is possible that wet rice cultivation in
both territories was stimulated by the existence of a market among Malay
traders and coastal gatherers of sea produce.
There is scant evidence on practices relating to landholding. A high
proportion of the peoples of the interior followed a shifting lifestyle.
Consequently, the earliest form of land tenure seems to have been based
on usufructure established by clearing and cultivating vacant land.
However, many tribes had a mobile existence and the typical pattern
appears to have been a build-up of population in a particular area and then
an exodus to find new land. The practice of shifting cultivation is
discussed in greater detail in Chapter 3. Nonetheless, where indigenous
management of natural resources and land usage is concerned, it is clear
their traditional systems were sustainable only under some very rigid
conditions and the most important of these conditions was a sufficiently
low person-land ratio.2
The Demographic Background
A brief overview of the indigenous groups of East Malaysia presents

difficulties in the way of generalisation because of the demographic
complexity of its constituent communities. The subject has attracted the
attention of many social anthropologists and ethnographers and all
acknowledge the difficulty of applying basically western conceptual
frameworks to societies which present a very wide range of variations.
Researchers have noted that while Borneo societies share similarities in
physique, material culture and languages of the Malayo-Polynesian
groups, the former societies are characterised by instability and
impermanence in social groups. Some of the major problems are the
'tribal' or group names and the fact that these societies are of the
'cognatic' or 'bilateral' type in which descent may be traced equally

through the male or female line. Consequently location of residence, such
as the Skrang or Saribas river region was often a more decisive criteria.
Little evidence has been found of corporate descent groups. Societies in
interior central Borneo (for example, the Kenyah in Sarawak) tended
towards a stratified organisation, while those towards the coast (for
example, the Iban or the Selako Dayaks of Sarawak) had more egalitarian
structures.3
Essentially there are certain broad categories and associated ethnic
nomenclatures which have been used to classify the indigenes of East
Malaysia. Those considered to be the native inhabitants are usually
referred to collectively as 'Dayak'; alternative forms are 'Dyak', 'Daya' or
'Dya'. According to one explanation, 'Dayak' means 'interior' or 'upriver'
people in some Borneo languages. Although this term may obscure
specific differences between the various groups, nonetheless, it is a useful
one because it recognises certain common features among these groups.
These include similar broad physical characteristics, a language that can be
categorised together as 'Malayo-Polynesian' and some similarities in
material culture such as in agricultural and domestic tools and other
equipment, and in longhouse domicile. Additionally, these groups share
characteristic customary practices and associated beliefs, such as, for
example, the taking of omens from the bird and animal kingdoms and
head hunting. The term Dayak covers a diverse collection of tribal
groupings such as the Iban, Kayan, Bidayuh, Kedayan, Maloh or Taman,
Lun Bawang and others, with their own distinctive languages and cultures,
and is used specifically to designate the non-Muslim, non-Malay natives.4
Some writers make a distinction between the settled agriculturists (Dayak)
and the hunter-gatherers (Penan). Here the Penan are included in the
general category Dayak.
Generally the Dayak live in the interior, though there are communities
found close to the coasts. The term 'Dayak' is usually contrasted with
'Malay'. One of the most important distinctions is between those who are
Muslim and those who are not. Islam is the main defining characteristic
of Malayness but Malays are also distinguished by their language and
certain customary practices. The Malay population includes Malays from
Peninsular Malaysia and Indonesia together with Islamised indigenes such
as the Melanau. The Malays are coastal people or live in the main trading
and market centres. Their chief activities are wet rice cultivation, fishing,
commercial agriculture and trade.
There are variations in size and classification of indigenous groups in
Sabah and Sarawak. In Sarawak, the classification in use is Iban (Sea
Dayak), Bidayuh (Land Dayak), Melanau, other indigenous and Malay.
The Iban form the largest indigenous group. They practise mainly swidden
agriculture and originally inhabited the Second and Third Divisions where
their strongholds were the Lupar, Saribas and Rajang River systems.
Their characteristic form of settlement remains the longhouse. These

contain several 'doors' or bilik, each of which represents an economically
self-sufficient, essentially autonomous unit. Their society is classless and
egalitarian. The Iban were notorious headhunters who were 'persuaded' to
part with their old ways, settle down and grow wet padi. The Bidayah
(Land Dayak) originally moved northwards from the south-west corner of
Borneo and were concentrated in the area which originally formed the core
of the Sarawak raj. They occupy the higher reaches of the various
branches of the Kayan, Sarawak, Sadong and Samarhan Rivers. They are
longhouse dwellers and primarily shifting cultivators and have an
elaborate system of labour exchange in working their land. They also have
a complex system of land inheritance.5 The Melanau are primarily a
people of the low lying coastal plains, concentrated on the lower reaches
of the Igan, Oya, Mukah, and Balingian, Tatau and Kemena Rivers. The
coastal and riverine swamps have been their traditional strongholds where
they produced sago for export and also engaged in the collection of jungle
produce as a minor source of income. The category 'other indigenous
people' includes many small groups: the Kenyah, Kayan, Kedayan,
Murut, Kelabit, Bisaya and the Penan. The Penan are a small nomadic and
non-cultivating group. In general they subsist on wild sago and bush meat
but also collect jungle products which they barter with their neighbours.
The Malays are located along the length of the Sarawak coast and their
major stronghold is the Kuching district. They also inhabit the districts
that border Brunei, the traditional focus of Malay settlement in north-west
Borneo. Their main activities are wet rice cultivation, fishing and trading.
Many Malays turned to rubber cultivation soon after its introduction in
the early twentieth century. During the Brooke era, the Malays were
absorbed into administrative service and rose in political ascendancy.
The main ethnic groups in Sabah are the Kadazan (formerly known as
the Dusun), the Bajau, the Murut and the Kedayan. The Kadazan, who
form the largest ethnic group, were traditionally located on the west coast
and the plains of Tambunan and Ranau in the interior. Their main activity
was (and is) rice cultivation, both sawah and hill padi. The Bajau, who are
Muslims, are found on both the east and west coast. They, together with
the Sulu, the Illanun, and kindred groups are the descendants of pirates
who roamed the local waters. Their main activities are fishing, rice
cultivation and cattle-farming. The Murut historically inhabited the
interior and practiced swidden agriculture based on a seven-year cycle.
Their chief crops are hill padi and root crops such as tapioca. They also
relied on the collection of forest products and casual work which drew
them into the monetised economy. The other indigenous communities
comprising the Kedayan were essentially rice planters and fishermen and
inhabited the west coast.
Population growth in both territories was highly localised and uneven
over time. Expanding state boundaries also affected population statistics.
For example, when James Brooke acquired Sarawak in 1841, there were an
estimated 10 500 people in the state.6 Limited attempts at enumeration
were made in 1871, 1877, and 1909 as the Brooke raj expanded, giving
totals of 14 000, 222 000 and 398 000 respectively.7 At the same time as
the territory expanded, there was continual migration within and between
British and Dutch Borneo. Of the indigenous groups, the Sea Dayak (Iban)
were the most numerous, followed by the Land Dayak (Bidayuh) and the
other interior groups (Kenyah, Kayan, etc). In Sabah the largest
indigenous group was the Dusun (Kadazan) who numbered 33 456 in the
census of 1901, followed by the Murut (12 230) and the Bajau (10 885)
and a few hundred for smaller groups.8
This broad ethnic map was modified by Chinese migration into the
two states. Both the Brooke and Chartered Company administrations
believed that the economic development of the two territories would be
dependent on Chinese land settlement. In Sabah, Chinese migrants
developed tobacco plantations in the eastern part of the state from the
1880s. Chinese settlers of Hakka descent were also brought into the area
north of Kudat in 1883 to grow vegetables and cash crops. Subsequently,
when the railway line was built on the west coast, Chinese settlement
was encouraged to 'colonise' the land adjacent to the line and also to
maintain the railway track.9 In 1871 there were an estimated 7156
Chinese in the state and the number had risen to 27 801 by 1911.10 In an
attempt to promote Chinese land settlement in Sarawak, Charles Brooke
offered more attractive terms than either Malaya or Singapore. Chinese
settlers were encouraged to plant padi and cash crops and a sizeable colony
of Foochow settlers established themselves in the vicinity of Sibu in the
lower Rajang area. Indeed by the early 1900s the Chinese accounted for
approximately 75-85 per cent of all passenger traffic into and out of
Kuching. 11 By 1909, there were an estimated 45 000 Chinese in the
state.12
Statistics on population growth in Sabah and Sarawak from 1911 to
1947 are provided in Table 2.1 below.
The statistics provided above should be treated with caution primarily
because census data were incomplete. Nevertheless, up to 1947, the two
states were relatively sparsely populated, and the population of Sabah was
far less than Sarawak's. In both states, the common feature was the active
encouragement of Chinese immigration into the states, particularly to
engage in agricultural pursuits. This led to the creation of a significant
Chinese minority in both territories and the Chinese used their
entrepreneurial skills to further their economic advantages. During the
colonial period they consolidated their economic position which enabled
them to play a pivotal role in politics in the post-independence period.
Table 2.1 Population Growth in Sabah and Sarawak, 1911-1947 ('000)
Year Sabah Sarawak

1911 208 421
1921 263 444
1931 277 469
1947 33J 546
Source: Sabah: 1911, 1921, 1931 Census Reports; 1947 UN
Demographic Yearbook; Sarawak: Figures calculated by Pierre
van der Eng (personal communication); 1947 - Sarawak
Population Census 1947 (1950) p. 3.
In summary therefore, the basic structure of the indigenous economy
was modified in two main ways in the late nineteenth century. The first
was through increased trading contacts and greater integration into the
world economy. Previously, commercial activities had revolved around the
collection and sale of forest and sea products, and commodities such as
sago, and the purchase and distribution of necessities such as salt, cloth,
metal goods, porcelain jars and the like. The indigenous people engaged in
trade primarily to obtain imported items. For the ruling elite, trade meant
revenue which could be used to maintain and extend their power while for
the foreign merchants, trade was a source of profit. Thus a wide range of
people were engaged in trade, the pattern and content of which was
gradually modified by a western commercial culture. The second was
through the migration of Chinese and other groups that changed the
demographic structure of the two territories and can be attributed to four
main factors. These were, first, the establishment of law and order in the
two territories which helped establish the peace so that stable conditions
existed for a rise in growth rates for the indigenous groups and also
encouraged immigration to take place. The second was improved health
and sanitary facilities which, though very uneven, meant that allocation
was made for public health facilities. The third was the expanding
employment opportunities in the mining, agricultural and transport
sectors which also opened up new trade possibilities. Finally urbanisation
(together with internal migration) also played a major role in population
growth. These modifications to the indigenous economy exercised a
considerable influence both on its structure and the ethnic balance in
Sabah and Sarawak.
3
Formation of an Export Economy

As noted previously, the establishment of specialised politico-
administrative units, Sabah and Sarawak, whose existence was
underpinned ultimately by the power of Britain, linked them with the
expanding colonial empire and integrated them into the world trading
system. Both these territories had precisely delineated boundaries (obtained
either through war or by treaty) together with institutional structures to
oversee various aspects of government, including law and order, land,
taxation, currency, trade and so on. The economic rationale underlying the
acquisition of the territories was very important and hinged upon the
exploitation of three main resources - minerals, land and forest products -
and their role in the trade of the region.
The late nineteenth and early twentieth centuries saw the Borneo
territories acquiring many of the basic characteristics of the present
economy: commercialised mineral and agricultural production, a wage
labour force, an institutionalised bureaucracy, an infrastructure and
governments oriented towards the promotion of material progress. In this
formation of an export economy, the main elements, capital,
entrepreneurship, and wage labour had an external origin and were
concentrated in enclaves. As a matter of fact, in the interior regions,
foreign involvement was relatively limited. Nevertheless, by the second
decade of the twentieth century especially with the introduction of rubber,
the indigenous people came to play a part in the productive system of the
country.
Mineral Resource Utilisation
Prior to the Second World War, the mining sector played a relatively
small part in Sabah but in Sarawak it accounted for a major proportion of
the total export earnings. In both states, the growth of large scale western
enterprises operating alongside small scale Chinese concerns has often
been interpreted as evidence of a 'dualistic' economy. It is certainly
possible to see some elements of this in the mining industry where
western interests were granted better terms in comparison to Chinese
interests. In terms of technology too, Chinese and indigenous methods
included panning and sluicing while western interests imported modern
methods of extraction. The latter also had greater access to the western and
Singapore mercantile economy.
20
Formation of an Export Economy 21
In Sarawak five minerals predominated - gold, mercury, antimony,

coal and petroleum and each of these 'presided' at different times. Until the
mid 1880s, antimony was the leading mineral product though mercury had
a short-lived boom in the 1870s. Coal then became important in the last
two decades of the nineteenth century. Gold, which had been mined since
the early nineteenth century at least, became the most important mineral
export at the turn of the century. It was supplanted by petroleum in the
third decade of the twentieth century.
From the outset James Brooke adopted a policy of monopolisation of
the mineral resources of Sarawak. He reserved for himself a monopoly in
the trade of antimony ore and as Governor of Labuan, kept western
interests out of Bintulu and obtained for himself exclusive rights to mine
coal along the whole of the northwest coast of Borneo.1 His main rivals
were Chinese miners who had been mining gold near Pangkalan Tebang
in Sarawak just north of the Indonesian border since the early nineteenth
century. Later, they moved to Bau and through their kongsi or business
partnerships pioneered gold and antimony production there. Initially,
Brooke was reluctant to disturb the Chinese miners who had established
mining settlements complete with market gardens and shops and built a
network of roads in the area. The kongsi had work and profit-sharing
arrangements well-suited for mining activity on a small scale, enjoyed
political autonomy and conducted trade with Sambas in Kalimantan and
not with Kuching the capital of Sarawak. This autonomous existence was
ultimately challenged by James Brooke. Since opium was a government
monopoly James levied a 'tax' on the opium bought for consumption by
the kongsi. This was in the form of an annual payment of 60 tahil of gold
on the miners based on a given population size. When the quantity of
opium recorded as consumed failed to keep up with the expanding
population, James concluded that the Chinese were engaged in opium
smuggling. He raised the 'tax', which was opposed by the Chinese and
this led to the Chinese uprising of 1857.2 This uprising is significant for
several reasons. Firstly, it led to the collapse of the Chinese mining
industry in Sarawak; secondly it resulted in strengthening Brooke's
positions and finally, it led to the taking over of mineral exploitation in
the state by a western concern - the Borneo Company. The Borneo
Company was later to emerge as the most powerful monopolistic
organisation in Sarawak.
Prior to the establishment of the Borneo Company, James and his ally
Henry Wise had mooted the formation of a private company, known as
the Eastern Archipelago Company, to develop Sarawak's resources. James
fell out with Wise, the plan came to naught and James became wary of
big capital.3 Subsequently, on the advice of a close associate, he changed
his mind and gave mining and trading concessions to the Borneo
Company, which was characterised by a scale and mode of operations that
seldom brought it into conflict with his own ideas. He believed that the
successful exploitation of Sarawak's mineral resources required heavy

initial outlays and expertise which could only be provided by western
capital and entrepreneurship having connections with London.
The Borneo Company was set up in London in 1856 with a capital of
£60000 and was authorised to 'take over and work Mines, Ores, Veins, or
Seams of all descriptions of Minerals in the Island of Borneo and to barter
or sell the produce of such working'.4 Since the gold resources were being
worked by the Chinese, the Borneo Company's monopoly over mineral
exploitation initially excluded gold,5 and it made regular purchases of the
mineral from the Chinese mining community. After the insurrection, the
Bau mining area came directly under the political control of Kuching and
the Borneo Company extended its operations to include gold mining.
Subsequently, the leaders of the reconstituted kongsi, who had trickled
back to Bau, established a working relationship with the Rajah and the
Borneo Company. By 1884 the Borneo Company had bought out the
largest and last of the Chinese syndicates and in 1898 it introduced new
technology in gold extraction using cyanide. With its superior technology
and capital, and by virtue of its special relationship with the Brookes, the
Borneo Company took over gold mining in Sarawak. Prior to 1895, the
Borneo Company paid no royalty on gold under the terms of its 1879
prospecting rights. A royalty of five percent per annum was levied only
from 1896. Between 1899 to 1921 inclusive, the gold output from the
Bau and later, Bidi mines totalled 983 255 Troy ounces. It was valued at
$25 995 222 and yielded a royalty of $1 466 462 and represented eighty-
one percent of the recorded gold production of Sarawak from 1865 to
1954. It was obtained during a period of twenty-two years.6 The Borneo
Company only surrendered its monopoly rights over minerals in Sarawak
in 1921 when most of the minerals were worked out and it was no longer
profitable to work the mines.7 Incidentally, when the gold-mining
industry was revived in the 1930s by Chinese miners, the Brooke
administration imposed more stringent conditions on them. They were
required to take out mining leases, had to pay a royalty of ten percent, and
were not allowed to take out exclusive prospecting licences.8 Despite
these conditions, the Chinese migrants had almost complete freedom of
movement and the opportunity to build up kin-based trading networks.
Antimony and cinnabar were the Borneo Company's two most
important mineral monopolies. Most of the antimony in Sarawak was
located in the same mineralised belt of country that included the gold
workings at Jambusan and Buso while cinnabar (mercury sulphide) was
worked at Tegora, Gading and Gambang. The antimony was largely
worked out by the early twentieth century while cinnabar/quicksilver was
abandoned at the end of the nineteenth century. The profits that accrued to
the Borneo Company were enormous. In the case of antimony, between
1870 to 1916, the Borneo Company's antimony exports were valued at
$1 905 031. Where cinnabar/quicksilver was concerned, between 1870 and
1899, the Borneo Company exported quicksilver with a total aggregate

value of $1 159 966. 9 In return for these concessions, the Borneo
Company paid the Brookes royalty amounting to £1000 (approximately
$8000) for the cinnabar and £2000 (approximately $16 000) for the
antimony annually. 10 Sarawak also became the leading exporter of
antimony and quicksilver to the European market during the period under
discussion.
Table 3.1 Sarawak: Mineral Production, 1868-1948
Mineral
Royalties Remarks
Percentage Paid to (Mineral
Value of of Mineral the exports in their
Sarawak Value of Exports to Sarawak order of value:
Produce Mineral Export of Govern- the most
Exported Exports Sarawak ment valuable export
Year $ $ Produce $ is shown first)
1868 n.a. 38001 - n.a. Antimony,
quicksilver,
gold, diamonds
1878 809 325 83 086 10 13333 Antimony,
quicksilver,
gold, diamonds
1888 1 322 325 118 09 8 889 Antimony,
coal, quick-
silver, gold
1898 3089017 323 230 10 10 177 Coal, antimony,
gold, quicksilver
1908 5 732 723 1 177 255 21 77 367 Gold, coal,
antimony,
quicksilver
1918 9211459 N.A. - 98 109 Gold, oil, coal
1928 53 302 340 39 302 340 74 770 835 Oil
1938 23 244 666 12482 134 54 387 636 Oil, gold, silver
1948 166 023615 111 820 069 67 67 320+ Oil, gold,
antimony
Notes: All values given in Sarawak/Straits dollars,

n.a. = not available.
+ = Estimated oil royalty and mining rents and fees; most
of the oil exported in 1948 was produced in Brunei.
Source: Handbook of the State of Sarawak, 1949, p. 125.
As indicated in Table 3.1, the percentage value of these mineral exports

to the total exports of Sarawak produce between 1878 to 1908 varied from
9 to 21 percent. Certainly where the three main minerals were concerned,
private enterprise, government policy and natural resource endowment
dovetailed neatly with the stimuli from the international economy. In the
initial pioneering phase, Chinese capital and enterprise dominated, but
after Brooke's position became politically more secure, western capital in
the form of the Borneo Company moved in, monopolised the state's
mineral resources, and internationalised this sector.
These three minerals were followed by coal in the 1880s. As stated
earlier, James Brooke had obtained for himself exclusive rights to mine
coal along the whole of the northwest coast of Borneo. These reserves
were to be exploited during Charles Brooke's period of administration.
Charles authorised coal exploration at Silantek and along the Sadong river
in 1872. Initial surveys showed that there were substantial reserves and he
sought to attract investors from Singapore by offering a free return trip on
the government steamer for 'anyone who was genuinely interested in the
coal' and these reserves could 'be worked by an individual or company on
a payment of ten cents a ton brought to grass'.11 Subsequently, towards
the end of 1872, Charles endeavoured to float a limited liability company,
known as the Lingga Coal Mining Company, with himself as chairman
and the board, based in Kuching. The Company was prepared to issue a
scrip for 1500 shares at $100 each. Unfortunately for Charles, there were
no takers. He then turned to an old ally - the Borneo Company, to work
the coal at Simunjan on the Sadong river. By 1874, sufficient supplies of
coal were being mined to supply the government's own coastal vessels
and steam launches. In addition, the Borneo Company and the Sarawak
government also contracted to supply the Peninsular and Oriental Steam
Navigation Company at Singapore. Chinese labour was recruited from
Singapore to work the mines.12 The actual profit made by the Sadong
Mine for the period 1881 to 1899 is shown in Table 3.2 below.
It is evident from Table 3.2 above that the Sadong mines enjoyed a
period of prosperity from 1897 to 1898, but this was shortlived. Despite
supportive government policies, and the availability of appropriate
technology, known reserves were not extensive in Sadong.
Apart from Sadong, coal was also mined on the island of Muara located
just inside Brunei Bay. Here it was worked by the firm of C.C. Cowie
and Sons (Cowie was to figure later in the history of Sabah) which had
obtained sole concession rights from the Sultan of Brunei. In 1888, the
Sarawak government purchased Cowie's concession and transferred it to
the Rajah, who subsequently renamed the island Brooketon.13 While most
of Sadong's coal was used locally or exported to Singapore, Brooketon
produced bunker coal for the steamers.
From 1873 to 1931 (inclusive), 876 345 tons of coal were produced at
the Sadong mine, while 582 412 tons were mined at Brooketon (1888-
Table 3.2 Sadong Coal Mine Account, 1881-1899 (in Straits $)
Excess of Expenditure Excess of Revenue

Year over Revenue over Expenditure
1881 4 030.57 -
1882 8 059.38 -
1883 24.85 -
1884 - 909.89
1885 - 4 377.93
1886 - 5 147.51
1887 - 6 273.55
1888 11 805.98 -
1889 5 505.08 _
1890 - 4 049.05
1891 4418.68 -
1892 _ 5 527.55
1893 510.17 -
1894 _ 8217.66
1895 5 082.40 -
1896 - 4 760.35
1897 - 41 789.80
1898 - 44337.19
1899 - 991.59
Total for 19 years 39437.11 126 382.07
Surplus of Revenue _ 86 944.96
Source: Sarawak Gazette, 2 July 1900.
1924). These production figures are exclusive of coal consumed on the
mines (which in some years amounted to 5000 tons for each mine).
Thus,between 1874 and 1931 (when the last mine closed down), a total of
1 458 757 tons of coal was sold by the Sarawak government. While
mostof the coal produced was consumed locally, approximately one-fifth
(302 899 tons) was sold in markets outside the country, mostly in
Singapore, Manila and Hong Kong.14 For a government that reputedly
discouraged commercial enterprise, the Brookes did remarkably well in
monopolising both the production and distribution of coal.
In the second decade of the twentieth century, Sarawak's mineral
production underwent further expansion with the discovery of petroleum
and it is in petroleum exploitation that the magnitude of foreign
investment in Sarawak is to be fully appreciated. Oil, oozing from
seepages in the ground, had long been known to the inhabitants of the
Miri district. The oil, known locally as minyak tanah (earth oil) was used
with resin to caulk boats and with open wicks for lighting fires. The
earliest reference to oil in Sarawak is in a report dated July 1882 by
Claude Champion de Crespigny, then Resident of Baram district.
Subsequently Charles Hose, a Brooke official who succeeded de Crespigny
to the Residency, investigated occurrences of oil both at Miri and other
areas of the Baram district. In 1907 he obtained Charles Brooke's
permission to enter into negotiations with the Anglo-Saxon Petroleum
Company (one of the Royal Dutch/Shell group of Companies). After
conducting its own investigations, the Anglo-Saxon Petroleum Company
obtained a concession to explore for petroleum and other mineral products
in the area for a term of seventy-five years and undertook to pay a royalty
of 1 shilling for every ton extracted.15 Since the concession impinged on
the Borneo Company's monopoly rights, the Borneo Company 'passed
over its rights ... in return for a marketing concession and on the
understanding that any mineral deposits be disclosed to the Borneo
Company Limited'. 1 6 In 1921, Sarawak Oilfields Limited was
incorporated in Kuching to take over the oil interest previously
administered by the Anglo-Saxon Petroleum Company Limited.17
At the time of the 'spudding-in' of well No. 1 in 1910, the Miri
kampung consisted of about twenty scattered houses and two Chinese
shops. Its trade was mostly in jelutong (wild rubber), brassware and
preserved fish. The only shipping connection between this area and
Singapore was a fortnightly service along the coast via Kuching. In 1910
the kampung was overpowered by the arrival of Chinese construction
workers and their British supervisors who arrived there to erect oil
installations. The oil company, its management, and its Chinese workers
put their stamp on the town from the very start. Two decades later, Miri
was transformed into a 'foreign' enclave with oil derricks, refineries,
electric stations, machine shops, telephone wireless and sawmills. A
refinery was built at Lutong, midway between the Baram and Miri rivers.
In fact, Miri was virtually owned and run by the Sarawak Oilfields
Company and its autonomous existence was to all practical purposes
independent of the Brooke administration at Kuching. While the mining
of other minerals was concentrated entirely west of the Batang Lupar
River, an area which represented the most densely populated and most
developed part of the state, petroleum exploitation was centred on Miri,
east of the Rajang River which was a sparsely populated and least
developed region. The petroleum industry was therefore a prime example
of an exclave activity with virtually no linkages to the domestic economy
centred on Kuching.
The first shipment of oil from Miri was about some 500 tons in 1913
and it was taken in drums by lighters out to tankers lying off-shore since
no deep harbour facilities were available. From 1914 onwards, submarine
pipelines were laid to an anchorage some 2.5-3 miles offshore and tankers
were loaded there. Annual production had risen to 64 510 tons by 1914
and no less than 287 000 tons of oil was supplied to ships of the British
and allied navies during the First World War. A small refinery to treat oil
from the Miri field was built in 1917 near the shore end of the recently
launched sea-line at Lutong. The refinery was gradually enlarged until in
1941 it was processing about 1 250 000 tons of oil a year.18
By the second decade of the twentieth century, oil had become the
second most important mineral export in terms of value. It then moved to
first place (see Table 3.1). As indicated in Table 3.3 below, total output
of crude oil expanded in the decade immediately following the First World
War.
Table 3.3 Oil Production in Sarawak, 1911-1924
Year Production in tons

1911 260
1915 66846
1920 35
1924 589953
Source: Compiled from the Sarawak Gazette, 16 March 1917; 1 April

1921; 1 June 1923; 3 January 1928.
In terms of barrel production (1 barrel = 42 gallons), from about an
initial daily average of 90 barrels, 2200 barrels per day were produced at
the Miri oilfields by 1920. By 1926, production was maintained at 2000
barrels per day. This was principally because supply outstripped demand
on the international market and as oil prices dropped, the Company
decided to restrict production. The peak production was 15,000 barrels per
day in 1929 (approximately 5.5 million barrels for the year). After that,
production steadily declined. By 1941, production averaged 3000 barrels
per day and in September 1941 all production was shut down and
equipment immobilised.19
In terms of export values, in 1914, oil revenues totalled $377 537 and
rose to $11472 193 in 1940.20 Sarawak oilfields delivered substantial
royalties which comprised more than fifty percent of Sarawak's revenue in
the period 1928-1948. Charles Brooke's letters reveal that this enterprise
was close to his heart. He concerned himself with the construction of port
facilities, obtained permission for pipe and telephone lines through Brunei
territory and even negotiated the rental for these utilities.21 The Borneo
Company also reaped enormous profits as the marketing agent for
Sarawak Oilfields.
As economic specialisation took hold, a wage labour market appeared.
Both western and Chinese enterprise depended largely on Chinese wage
workers whilst the indigenous people also ventured on a small-scale for

short-term, casual employment. In terms of economic change therefore,
the expansion of the mining sector in Sarawak marked an important phase
in the state's economic development as evidenced in terms of both value
and quantity of exports.
The mining sector played a relatively small role in Sabah's economy.
The Company had assumed that the territory was awash with gold and
diamonds and hired trained mineralogists to investigate the mineral
possibilities of the state. However, only three minerals - gold, coal and
manganese - proved to be of any importance. In the case of gold, initial
exploitation was carried out by Chinese miners in the tributaries of the
Upper Segama River. Europeans then arrived on the scene, hoping to
spearhead a gold rush. However, no significant deposits were discovered
and in 1887, the state's governor issued a proclamation forbidding entry
into Sabah to any Europeans arriving without any means of support. By
1887, only five out of the 400 Chinese miners remained in the area and
gold's future was uncertain. Subsequently, four western companies were
formed in London to mine for gold. These were the British North Borneo
Gold Company, the Segama Gold Company, the British Borneo Gold
Syndicate (which even brought in a dredger that subsequently got stuck on
the rapids of the Segama River) and the British Borneo Exploration
Company. The last company, which was formed in 1905, was granted a
monopoly over the exploration and exploitation of all minerals in the
territory. In return for this monopoly it had to spend an annual amount of
£10 000 on mineral resource exploitation. The company was
unsuccessful, despite engaging the services of a consultant geologist who
investigated the geological formation of the territory from 1909 to 1912.
Subsequent attempts to 'discover gold seams' were made in 1928 and
1933 by independent prospectors but despite the discovery of gold traces
in river sands, no commercial production of gold occurred in Sabah.22
Coal deposits were found on Labuan island and on the east coast around
the Sandakan Bay area. The Labuan deposits were worked from 1851 to
1911 when the mine was closed due to flooding. A total of 0.5 million
tonnes of coal were produced during this period, providing fuel for
steamships plying the Europe-Australia and Europe-Hong Kong routes.23
The Labuan coal mine relied mainly on immigrant Chinese labour. In the
Sandakan Bay area, a large coal field of considerable commercial
importance was discovered at the turn of the century near the Silimpopon
River, and the Chartered Company, in conjunction with the agency house
of Harrisons and Crosfield, formed the Cowie Harbour Coal Company to
work the coal. The coal company's lease covered an area of 3 000 000
acres and coal was taken from a seam three to eight feet thick. A three and
a half mile railway was built from the headquarters at Silimpopon to the
loading station at the river. The coal was transferred onto lighters and
towed five and a half miles down the river and across the bay to Sebatik
Island, where it was loaded onto ship bunkers. Sebatik Island emerged as a
regular coaling station especially for ships plying between Japan, Hong
Kong, the Philippines and Borneo. Coal exports averaged 54 000 tons
annually in the first three decades of the twentieth century. The Company
did not use mechanisation but relied on manual labour and on average
employed around 700 men on piece rate work. The colliery was operated
from 1909 to 1929 and produced a total of 1.5 million tonnes during the
period. It was shut down principally because of heavy production costs,
falling prices and a declining demand for coal as ships switched to oil.24
The only other mineral of importance was manganese, which was
discovered in Marudu Bay in 1902. It was initially worked by the British
Borneo Syndicate until 1905 when the British Borneo Exploration
Company took over rights to the mineral and obtaining a monopoly over
all minerals in the territory. The venture was short-lived - the mine closed
in 1908.25
Mining of other minerals was also short-lived, episodic and largely
unsuccessful. In 1916, the British Borneo Exploration Company was
liquidated and its monopoly rights over minerals lapsed. The Chartered
Company reacquired these mineral rights in 1927 and subsequently
introduced a mining ordinance covering the prospecting rights for all
minerals, excluding coal, oil and precious stones. These three minerals
were dealt with by special concessions granted to selected companies. As
noted earlier, the coal concession was granted to a Chartered Company
subsidiary which went into partnership with an agency house. The British
Borneo Exploration Company, which had acquired rights over all
minerals, was reassured by the success of oil in Sarawak, and transferred
its oil rights to a subsidiary prior its demise.26 Its subsidiary company
investigated reports of oil seepages in the Kudat peninsula but without
success. Although various oil companies showed an interest, early
attempts at oil exploration in the state came to naught. In 1934, the
Chartered Company granted exclusive rights to the Anglo-Saxon
Company, a Shell Oil subsidiary, to search for and work oil for seventy
five years in Sabah.27 This Company was also unsuccessful and the full
realisation of Sabah's oil potential came only after independence.
In summary, where mineral exploitation was concerned, Sarawak had
more success than Sabah, and the former's initial revenue was dependent
on five minerals - gold, antimony, cinnabar/quicksilver, coal and oil. In
Sabah, only coal played an important role in state revenues. In the
organisation of mining, there was virtually no difference between
Sarawak, a 'private colony' and Sabah, a chartered company territory.
Both administrations monopolised mineral resources but while the Brooke
administration transferred these rights to its chief financial backer, the
Borneo Company, the Chartered Company went into mineral resource
exploitation itself in partnership with other western interests. With the
exception of oil, there were no dramatic developments, although the
Borneo Company did bring in new techniques of gold extraction. In coal,

there was little or hardly any mechanisation in either territory; transport
lines built to serve the mines were short and had specific functions; and
the coal was mainly exported. Unlike Sarawak, where the petroleum
industry had resulted in a marked expansion in state revenues in terms of
quantity and value, Sabah had to wait for the expansion of its rubber
industry and land-based production to provide this change.
Agricultural Development
Both economies were basically agricultural although only a small

percentage of land was devoted to settled cultivation. Among the
indigenous groups, hill/dry padi farming on a bush/fallow system was
extensively practised. It is in this sector that both quantitative and
qualitative changes took place, particularly with the advent of rubber.
In terms of production, agricultural activities fell into two main types:
peasant (subsistence) farming based on padi (both wet and dry) and other
food crops for local consumption, and cash crop production (chiefly sago,
rubber, pepper, and tobacco). Change was varied with the most dramatic
occurring in the cash crop sphere. Rubber especially was able to attract
substantial participation by both foreign and indigenous, capitalistic and
non-capitalistic, producers. From the smallest holdings upwards, inputs of
capital, hired labour (initially share-croppers but increasingly wage
labourers further up the scale) increased steadily, accompanied by shifts in
the methods of finance, management and production towards the
plantation type. The structure and development of plantation farming and
its effects on indigenous societies and their farming systems was
remarkably similar in both territories, influencing labour supply,
population migration and the nature of property rights. Since the issue of
land and land use was of crucial consideration in the agricultural sector, it
is pertinent here to provide an outline of land tenure systems and land
legislation before focussing on agricultural production.
Patterns of Land Tenure and Land Legislation
Despite the fact that the traditional systems of land tenure among the
peoples of Sabah and Sarawak varied considerably, they shared many
characteristics which could be perceived as variations on a common
theme. Historically, though sovereign rights to land had rested ultimately
with the Sultan of Brunei, among the indigenous people land was held
communally and a community's communal land extended far beyond the
areas actually used for swidden agriculture. This extensive tract of land
included areas of swamp and virgin forest for hunting, the collecting of
forest products and reserves for future swidden sites. Typically, the
community's land was demarcated by natural features such as ridges and

streams. Within these communally-held tracts individual families of
longhouse communities established usufructuary rights to the lands they
cleared for gardens. Individuals retained rights to these plots not only for
the period of cultivation but also during the subsequent fallow. These
rights were also inheritable since the individual plots were only created
with the consent of the whole community; individuals forfeited their
usufructuary rights to farming land if they left the community. Thus,
despite movement of families and individuals, the communally-held
territory retained its coherence in indigenous society.28
With the establishment of Brooke and Chartered Company rule, control
of land became a key concern for purely commercial motives. Both
administrations moved rapidly to assert their sovereignty over all land in
their respective territories. The creation of a market in land was an
important prerequisite for attracting external investment and redistributing
land to European planters and Chinese colonists, whom it was hoped,
would secure the economic development of these territories. Land had to
be legally defined, alienated and sold by the administrations for the success
of agricultural enterprise. The land issue was complicated by the
prevalence of two features - systems of customary rights to land and
shifting agriculture. In the case of the former, since the usufruct of much
of the land was communally-held, the concept of private property and
private ownership was, with but few exceptions, absent. Where the latter
was concerned, the widespread practice of shifting agriculture made for
major difficulties for both administrations in defining what was and was
not uncultivated land, especially since it included land farmed on a long
fallow system. Added to this was the question of ownership of certain
valuable trees and plants. Consequently, land legislation had to take into
account the above considerations and permit the alienation and sale of
state land.
In Sabah, the commodification of land was especially crucial to
develop land-based production, since the territory's mineral resources were
limited. It is not surprising therefore that the Acting Governor, William
Crocker, in his report on Sabah dated 1887, remarked that 'The Company
in trying to attract population and capital had to compete with adjacent
countries where free trade prevailed ... [Consequently, in Sabah] land had
to be almost given away ... Tobacco planters were given land without a
quit-rent...'. 29 The first land laws were introduced in 1883 and formed the
basis of the Land Code in the state. By this Land Code and all subsequent
legislation (based on the model adopted in the Federated Malay States and
the Straits Settlements and ultimately reflecting Indian practice), all land
in the territory was vested in the Chartered Company. The Land
legislation provided for the establishment of a Land Register based on the
Torrens System of land registration (see below) whereby ownership
recorded in the Register constituted a guarantee of title. Essentially, the
legislation provided for the definition and demarcation of native land since
it was imperative that the indigenous population register its rights in land
on an individual basis and, in return for title, pay an annual quit-rent. If in
a three-year period land was left uncultivated and no quit-rent paid, the land
reverted to the state.30 Additionally, no land could be disposed of by any
native group or individual without authorisation from the Company.
In theory, while the intention of the administration was to 'protect' the
indigenous people, in practice the legislation provided for the
categorisation of land so that land could be alienated and sold to European
and other planters.31 Subsequently, in order to curb the practice of shifting
cultivation which was perceived to be 'destroying' the forest and
impacting on the timber industry, new legislation was introduced in the
form of the Ladang Ordinance of 1913. This piece of legislation had a dual
purpose: to bring shifting cultivation under government control, and to
accommodate the concerns of the Forestry department, (which was
especially hostile to the practice). An annual rent (or tax) was imposed on
shifting cultivation at the same unit area rate as that for permanent
cultivation. This legislation was also aimed at encouraging permanent
wet-rice cultivation and the speeding up of the process of land registration.
The tax on shifting cultivation was to be policed by indigenous
authorities working with the district officers.32 In the same year, a new
comprehensive set of land laws were issued, which required the
registration of native titles. Provision was made for communal titles and
clauses protecting indigenous lands from alienation by foreigners were
also included in the legislation.33 Interestingly though, the tobacco
plantations which were organised on a basis similar to shifting cultivation
and followed a pattern of land clearance, then planting and subsequent
abandonment, were not included in the category of shifting cultivation for
the purposes of the Ladang Ordinance. In summary, the demarcation of
lands and land registration was intended to ascertain what land was free of
indigenous claim and available for sale to western planters and Chinese
settlers. Thus, where land was concerned, the Chartered Company through
its land legislation specified property rights according to its own interests
and consequently, altered the traditional concepts of land ownership and
exploitation of forest lands.
In Sarawak, apologists for the Brooke administration have taken pains
to point out that the Brookes aimed to shield the natives from the full
force of European capitalist expansion and did not encourage large-scale
cultivation of export crops. This is not borne out by history. As noted
previously, Sarawak was rich in mineral resources, over which the Rajah
claimed sovereignty. Initially therefore, land-based production did not
figure prominently in James Brooke's plans. Although he claimed
sovereignty over all land, the indigenous people could claim ownership
over land on the basis of usufruct and native customary law. The first
major piece of legislation in the state was the Code of Laws which was
introduced in 1842. By this legislation, there was to be no interference

with native customary law and immigrant races were allowed to settle
only on land not occupied by indigenous groups.
Subsequently, legislation was introduced to secure firm government
control over native lands. The first legislation to control the use of land
was implemented in 1863, by which the Rajah asserted his personal
ownership over the whole of his domain, reserved all mineral rights to the
state and provided for road and river bank reserves. All 'waste' and
'unoccupied' land was classified as government property and could be
leased to others. This meant that the indigenous people could no longer
claim rights to land outside their existing domains and their access to land
was restricted. At the same time, the Brooke administration provided for
the leasing of land to others and established property rights in land.
Attempts to control internal migration and shifting cultivation were
motivated by the need to maintain political control and also because it
was believed (as in Sabah) that shifting cultivation was inefficient and led
to deforestation. The Land order of 1875 marked a first attempt at
restricting shifting cultivation by the introduction of a fine on land cleared
and subsequently abandoned. This was principally because Charles Brooke
urged the need to reserve virgin forest on hills 'with a view of
encouraging other cultures at a future day.' 34 Following this order, the
Fruit Trees/Order 1 of 1899 curtailed 'migratory' movement among the
indigenous people.35 It provided for grants of land on payment of fees or
for agricultural leases to be taken out for a term of 99 years. In 1933 the
land settlement order was introduced to provide for the gradual survey and
registration to title of land following the Torrens system of land
registration (see below). The creation of a Land Register and the Land
Settlement order meant that the Brooke state could now exercise
compulsory acquisition of native customary lands by notification and
native customary rights could be extinguished.36 As a consequence of this
legislation, a distinction was introduced between native areas and mixed
zones with Chinese and other 'non-native farms' being restricted to the
latter. Native rights to land, while recognised, were technically rights to
the use or lease of state lands. This legislation substantially weakened the
indigene's ability to resist land expropriation during the rubber boom and
especially after World War II, when pressure on interior land intensified.
The land regulations were also intended to eliminate the practice of
shifting cultivation and the administration tended to ignore rights to
fallow farming land and hunting territories.37 The full impact of land
legislation on the native economy and society was only felt when
commercial rubber cultivation rose in conjunction with exogenous market
signals and initiatives taken by indigenous, Chinese and European
planters.
In both these territories therefore, the system of land tenure that was
adopted was based broadly on the Torrens land tenure system38 used in
other parts of the British Empire whereby ownership recorded in the Land
Register constituted a guarantee of title. It reserved all land to the State
and allowed the alienation of land in smallholdings to the indigenous
people under native title, principally for the cultivation of food crops. (In
Sarawak, non-natives could also hold land under title in the 'mixed-zone'
land category.) State land could be held under lease by individuals and
companies, with rents determined by the type of holding. This permitted
the large scale alienation of land for export crop production. Although in
theory non-natives could not hold land under title in Sabah, in practice
many Chinese acquired land through their indigenous spouses or
companies acquired grants in perpetuity. Thus, in both territories, the
codification of land rights was a first priority in the opening up of these
territories to western investment and Chinese settlement. Both
administrations wished to prevent large areas of native customary land
from being sold or leased to foreigners, provided that this did not conflict
with attracting foreign capital. Nevertheless, the creation of a market in
land was a necessary first step in the larger scheme of 'development'.
Food Crop Production
In much of the discussion on the peasant sector in Southeast Asia a clear

distinction has been made between food crops and cash crops, the former
being consumed in the household and the latter produced for sale. Rice
was the chief food crop. Two types of rice cultivation were practised: hill
padi (normally grown with shifting cultivation systems) and sawah or wet
rice cultivation.
In Sabah, the main centres of wet rice cultivation were located on the
west coast, the most important districts being Kota Belud, Penampang
and Tuaran. The technology used was simple and the fields were ploughed
with the use of buffalo. The main producers were the Kadazans and
Chinese colonists. Hill padi was grown in the interior by the Murut and
other hill tribes. Here the locally manufactured hand-hoe was used in
conjunction with shifting cultivation. A strip of jungle was cleared and
burned off, and the rice planted on the ashes. When the soil was
exhausted, the cultivator moved on to a new area. Shifting cultivation has
been defined as a type of agriculture marked by the rotation of fields rather
than of crops. The size of the farm depended on the physical environment,
land availability and family size. Despite the generally held opinion that
shifting cultivation causes deforestation and serious land deterioration, it
is now widely acknowledged that it is a system which is dynamic and
flexible, has a fairly high level of productivity of labour and allows
fertility of the soil to recover provided a sufficiently long fallow period is
allowed.39
In Sarawak, wet rice cultivation was mainly confined to the delta areas
and to the banks of the main rivers. Large compact blocks and permanent
bunding for control of water supply was uncommon. Wet rice cultivation
was largely carried out by the Malays and the Chinese. As in Sabah, hill
padi was mainly grown in the interior by the Dayaks. It was cultivated
under a system of long bush fallows on steep hillsides whose slopes often
exceeded 45 degrees. The common practice after burning the jungle was to
dibble or broadcast the seeds. Here too the hand-hoe was a common
implement although buffaloes were often used for trampling the fields.
Despite the heavy dependence on rice farming, both territories imported
a considerable proportion of their domestic rice requirements. In Sabah,
the Chartered Company levied customs duties on the import and export of
rice in the late 1880s and early 1890s in an effort to raise domestic prices
and encourage local production.40 Average yields were low because the
Company did not invest in large-scale irrigation works nor did it offer any
technical or other assistance. Labour was also scarce. The total area under
cultivation for the periods 1937-39 and 1950 (estimated) is shown in
Table 3.4.
Table 3.4 Sabah: Acreage under Main Crops, 1937-39 and 1950
Crop Area (acres)

1937-39 1950
Rubber 128 200 119 000

Rice 87 100 82 000
Coconuts 53 000 46 000
Sago 14 000 9 000
Hemp 4 800 8 000 1
Estate Tobacco 400 2 000
All other crops n.a. 44 000 2
Total 287 500 3 310 000 3
Notes: 1 Not all in production.

2 Of which manioc (cassava) was estimated at 20 000 acres.
3 These totals may contain a certain amount of double-
counting in respect of interplanted tree crops.
Source: Great Britain, Colonial Office, An Economic Survey of the
Colonial Territories, Vol. 5 (London: HMSO, 1955) p. 118.
In summary, during the Chartered Company era only about 27 per cent
of the cultivated area was under rice. Sabah imported an average of 15 000
tons of rice annually between 1934 and 1939, which represented about 50
per cent of total rice consumption.41
Prior to Brooke rule, Sarawak was largely self-sufficient in its food
requirements. With increasing Chinese labour migration into the country
to work in the mining industry, the territory had to increase its rice
imports. Charles Brooke sought to redress the situation by encouraging
Chinese agricultural immigration and colonisation in the Lower Rajang
area. Additionally, when many of the Chinese settlers and indigenous
people turned to rubber planting, they were required to devote an equal
amount of land to food crops. Nonetheless, Sarawak continued to depend
heavily on imported food supplies. Rice shortages during the First World
War led to the government putting pressure on Chinese (Foochow)
immigrants to increase rice production. However both the Chinese and the
Dayaks only turned to padi when rubber prices fell and quickly reverted to
rubber when rubber prices recovered. Among the factors put forward to
explain this trend are soil, topographical and economic limitations.
Furthermore, rice could be obtained more cheaply from abroad, coupled
with the fact that although the Brookes encouraged rice cultivation, no
attempts were made to improve either the conditions of padi-lands
(through the provision of drainage and/or irrigation facilities) or traditional
methods of cultivating padi. Up to the time of the Second World War,
Sarawak was importing sixty per cent of its rice requirements or about
34 000 tons annually. The estimated area under rice cultivation was
500000 acres (hill/dry rice) and up to 200000 acres (wet/swamp rice) in
1953.42
Of the other food crops, sago was the most important. Its cultivation
for domestic purposes in Sabah was widespread among the Kadazans and it
was grown commercially on the Padas-Klias Peninsula. Prior to the
1880s, Chinese and Kadazan growers had trading links with Chinese
merchants in Labuan who exported it to Singapore. When the Padas-Klias
Peninsula came under Company rule, Labuan's sago trade dried up and
subsequently it was cultivated manly for domestic use.
In Sarawak too, sago was an important cash crop, associated
principally with the Melanau community. Cultivation was concentrated in
the Mukah, Oya and Dalat regions of the Third Division. Prior to the
establishment of Brooke rule, the Melanau exported sago and forest
products in return for commodities such as salt, iron, copper and stone.
The revenue from the sago trade was controlled by the Sultan of Brunei's
representatives who were stationed at the mouth of the more important
rivers, especially the Oya and the Mukah. By the 1850s, Singapore's
establishment as an international market led to fundamental changes in the
trade in sago. Earlier, sago had been exported as a food product in the form
of baked biscuits. Now the demand was for cheap industrial starch for the
expanding textile industries of Europe and America. This led to Chinese
traders establishing sago-processing mills in Kuching, and Kuching
Malay traders collecting some of the raw sago formerly taken from Mukah
and Oya to Singapore and transporting it to Kuching for processing. The
growing importance of sago and the rivalry among the competing groups
to control the trade prompted James Brooke in 1861 to take over the sago
producing districts.43 The Borneo Company then moved in, established
sago processing factories and began to corner the trade in sago. The
Company advanced money to 'numerous independent families' to grow
sago trees and supply its mills where the sago flour was refined for export
to the English market.44 By virtue of its monopoly in the marketing of
sago, the Company practically displaced the Malay and Chinese
middlemen who had built up the trade in sago.
Both James Brooke and the Borneo Company had similar objectives -
to control the export of sago, regulate its price, and profit from the
venture. As a first step, the Borneo Company and the Chinese mill
owners transferred their mills from Kuching to the Oya and Mukah rivers.
They also introduced new technology which led to a reduction in the
number of workers employed in the production of the first crude flour.45
Nevertheless the Borneo Company had large overheads and it gradually
withdrew from flour production to concentrate on exporting refined flour
bought from the Chinese mills. By 1900, the Chinese middlemen had
obtained an almost complete monopoly in the purchase of wet sago flour,
its refining and export, and they also cornered the retail trade in sago. The
Brooke state enforced the use of standard weights and measures and
attempted to regulate Chinese trade practices by requiring the Chinese to
live in centrally located bazaar settlements in an attempt to control their
activities.
The great expansion of sago cultivation resulted in Sarawak becoming
the leading exporter of sago flour and by the late 1880s Sarawak produced
more than half the world output of sago flour. The main markets were
Europe and the United States. Exports rose from 8700 tons in 1887 to
14 330 tons in 1897. Ten years later exports had risen to 20400 tons.46
The expansion in production led to marked changes in the social and
economic life of the Melanau community and by 1900, the Melanau had
virtually abandoned their former subsistence or semi-subsistence economy
for one based on a single export commodity - sago. Although sago was
later displaced by rubber as the main agricultural export, between 1935 to
1940 Sarawak exported an average of about 20 000 tons of sago flour
annually.47
Cash Crop Production
The spread of plantations was a major consequence of economic

penetration accompanying western rule. It involved inserting new cash
crops into the predominantly subsistence agricultural economies. In
common with the rest of Southeast Asia, this process took place at
varying rates and intensity in Sabah and Sarawak. Essentially, the

plantation system involved the planting of a tree or related crop planted
and cultivated systematically, either on estates or smallholdings, as
opposed to growing naturally on native lands. The main crops in Sabah
and Sarawak were coconut, rubber, tobacco, pepper, gambier, coffee,
sugarcane and later oil palm and cocoa. These crops made an important
contribution to the export revenues of these states though their
significance varied from state to state. Both administrations actively
encouraged cash crop production and established experimental gardens to
experiment with a whole range of crops and assess their commercial
significance. They also provided the political security for investors and
helped them to secure fertile lands and recruit immigrant labour.
Plantation agriculture coincided with industrial expansion in Europe and
the United States, the opening of the Suez Canal and widening markets
for agricultural and other commodities.
Of the older cash crops, coconut cultivation was essentially a
smallholder activity, with holdings averaging five to ten acres. In
Sarawak, the commercial cultivation of coconuts was concentrated on the
coastal and riverine flats of the First and Second Divisions and was largely
a Malay enterprise. In Sabah, the principal producing areas were around
Kudat in the north to Tawau on the southeastern coast. The local coconut
industry supplied the bulk of the domestic cooking oil requirements and
also provided for an export trade in copra and coconut oil. The oil was
produced in a number of 'primitive' hand presses in the villages. By the
1930s, exports of copra became more profitable in comparison to coconut
oil exports. The copra export trade was largely with Singapore. The local
industry also provided the residue after oil extraction (poonac) as pig feed
to pig farms located either near the holdings or the big towns.
Since the mineral potential of Sabah was limited, it was here that the
plantation system played a major role in the economy. The first major
export crop to take off was tobacco. The growth of the tobacco industry,
restricted by location to the river banks where soils were suitable for its
cultivation, was determined by water transport in the absence of other
forms of communication. Planters from Deli in Sumatra had visited the
territory in the early 1880s and commented favourably on its potential for
development. It is reported that it all started in 1884 when a few bales of
Sabah tobacco reached London and were pronounced to be equal to the best
in the world. Since Sabah was viewed as a geographical and commercial
backwater by most investors, the Chartered Company decided to offer
additional incentives to potential investors in order to divert their interest
from the more accessible and more 'attractive' colonies in Southeast Asia.
These incentives included liberal land grants (until 1887, the
administration was prepared to grant concessions of up to 16 400 ha at a
premium of 30 cents per acre (0.4 ha) free of quit rent for 999 years);48
the absence of an import duty on rice brought in for estate labour; and the
waiving of duties on equipment imported for or by the concessionaires.

Land in blocks of 4047 to 16 188 ha was taken up on almost every bay
and river on the east coast.49 By 1890, there were 61 plantations
concentrated mainly on the northeast and east coast around Marudu Bay
and far up the great rivers Labuk, Sugut, Kinabatangan and Segama and
around Lahad Datu, Tawau and Sandakan. The majority were under
corporate direction of Dutch and German companies, though there were a
number of individual proprietary owners. The three most important
companies, the London Borneo Tobacco Company, the Amsterdam
Tobacco Company and the Darvel Bay Tobacco Company, controlled
about 150 000 acres (around one-quarter) of the total concession area.
These were large, hierarchically organised companies with salaried
managements and hired workforces with integrated connections to external
markets. The bales of tobacco went almost entirely to the Amsterdam
market.
The tobacco industry was to prove significant to the Chartered
Company's finances. Export duty on estate tobacco, which had been
initially waived, was later charged at a maximum rate of one cent per 2.2
kg for a period of 20 years, computed from 5 years after the initial crop
was harvested. From 1888 onwards, the minimum premium was raised to
$1.00 per acre (0.4 ha). Land sales resulted in increased revenue50 while
the stimulus given to the economy as a whole led to an improvement in
the financial resources of the Chartered Company and it was able to pay
its first dividends to its shareholders. Additionally, increased employment
opportunities in the state led to Chinese (and Javanese) immigration
sponsored by the tobacco companies and this in turn served to increase
revenue from indirect taxes and in boosting the proceeds of the 'revenue
farms'. Exports and imports also increased and had a multiplier effect on
the economy as a whole. Table 3.5 below shows the impact of the
tobacco industry on Sabah's finances for the period 1881-1896.
The tobacco industry was almost entirely dependent on water transport
and tobacco plantations were little worlds of their own 'landward of the
mangrove and seaward of the foothills', often far from the main coastal
settlements. The plantations were widely scattered, their location restricted
to those valleys in which sites existed with suitable soil and topographic
conditions and where rivers served as their arteries. Thus, their presence
did not lead to the emergence of a clear-cut continuous belt of export-
oriented European commercial activity set within a framework of
continuing indigenous agriculture. Nonetheless, in these scattered
'enclaves' there were labourers' lines, an internal system of bridle paths,
sometimes a little railway, which led to the landing place on the river
bank from where the tobacco was shipped out. All the plantations owned
steam launches which maintained communication with the outside world.
The tobacco boom was short-lived. Increased competition on the world
market; the specialised nature of the Sabah product (its chief use was for
Table 3.5 The Tobacco Industry and its Impact on Sabah's Finances,
1881-1896
Total Total
Govern Govern Receipts
-ment -ment Value of from
Receipts Expend- Total Total Tobacco Land
Year iture Imports Exports Exports Sales
$ $ $ $
1881 20 208 108 295 160658 145 444
1882 38935 189223 269 597 133655
1883 50738 267531 428 919 159 127
1884 82 449 196 240 481 414 262 759
1885 110453 208 269 648 319 401 641 1 619 2 863
1886 127731 195 804 849 116 524 724 39 775 12035
1887 142 687 186 640 958 643 535 267 18879 14505
1888 148 287 195511 1 261 998 525 876 20 842 216457
1889 251 602 290 189 1 799 620 701 434 129483 256 652
1890* 358461 373 140 2018089 901 290 396 314 219652
1891 364428 359 280 1 936 547 1 238 278 667 473 10809
1892 357 823 349 399 1 355 864 1 762 246 1 040 674 34 702
1893 289221 280 050 1 116715 1 780 593 973 221 818
1894 315591 288188 1 329 067 1 698 544 875 083 478
1895 348 948 313097 1 663 907 2 130600 1 176 000 466
1896 407 208 313807 1 882189 2 473 753 1 372 277 4492
* Includes Labuan
Source: Comparative Statements of Trade and Comparative Statements
of Receipts and Expenditure (CO 874/88).
cigar wrappers); the imposition of tariffs on tobacco imports by the
United States (the chief buyer); and the advent of rubber where quick
profits could be made with a smaller skilled labour force contributed to
tobacco's decline. Crucially, the first World War and its economic
consequences, the vanishing of the old era of liberal trade policies and the
gold standard after 1915, stagnation in world trade in the 1920s followed
by the catastrophic world slump in 1929 had a profound impact on the
tobacco industry. In 1910, the number of tobacco plantations had fallen to
twelve. Production declined from 807 336 kg in 1915 to 443 318 kg in

1922. By 1929, production had dropped to 290 902 kg. In the same year
only one plantation company was left, the Darvel Bay Tobacco
Plantation. The industry showed some revival in 1934 when the Chartered
Company resurrected an estate at Lahad Datu. Subsequently, the Imperial
Tobacco Company of Great Britain and Ireland stepped in to inject capital
in the old Segania estate, although on a small scale. This plantation
served as a solitary reminder of a once flourishing industry in Sabah with
overall exports never exceeding $400 000 a year and remained in
production until 1960. Thereafter, tobacco became an exclusively
smallholder crop.51
The tobacco industry is important in Sabah for a number of reasons.
Firstly, it pioneered the way into the interior by way of the river systems
and promoted the development of the northeast and eastern coasts of
Sabah. The Chartered Company did not have to utilise its resources to
develop infrastructure in these areas. Secondly, the industry sustained the
territory in the critical years of its beginnings and indirectly contributed to
the opening up of the west coast. Revenues from the export trade were
utilised to start a rudimentary system of land transport especially in the
West Coast Residency and the Interior Residency. Thirdly, it led to
Chinese immigration and settlement in Sabah, which contributed to the
expansion of other export industries, and hence had a multiplier effect on
the economy.
The decline of the tobacco industry was fortuitously offset by the rise
of rubber cultivation, which also led to a geographical shift in the
location of the plantation industry from the east coast to the west. Indeed,
the rubber industry provided an upturn in production, combining elements
such as extensive commercialised production together with an
infrastructure (representing fixed capital), and a large wage labour force, all
of which ushered in a phase of rapid growth in per capita output as well as
an advance in population growth. Whereas the tobacco industry had been
localised, concentrated on the east coast and exhibited characteristics of
'shifting cultivation', rubber had a major structural input on the economy
of the indigenous people in establishing a more sedentary form of
agriculture and impinging on land rights.
The Chartered Company had as early as 1899 been engaged in
developing rubber seedlings on its experimental research station at
Sandakan and had promoted the merits of rubber production to potential
investors. This coupled with good prices, a buoyant demand stimulated by
the automobile industry in the United States, and considerable expertise
and investor confidence in rubber production elsewhere in the region,
especially in the Federated Malay States, resulted in rubber becoming the
new plantation crop. Initially, rubber production was slow to develop
because of two main factors - the high cost of labour and the lack of
investor confidence in a relatively 'remote' and difficult region. Here
again, as in tobacco, special concessions had to be introduced to attract

foreign investment. The main incentive lay in the granting of land. The
state granted large blocks of land on long-term leases with no more than
peppercorn rents (£5 an acre). Interestingly, rents were on average about
half those of the Federated Malay States and premiums on top quality land
were much lower. The rubber companies were also given exemption from
export duty on rubber for a period of fifty years.52 This exemption from
subsequent export duty continued as a regular condition for all alienations
for rubber, whether for large or small holdings until 1924.53 The
Company guaranteed a four per cent dividend on the paid-up crop for six
years (that is, during the non-productive period) to all companies.
Furthermore the Company embarked on a programme of railway
construction on the west coast to open up new areas for rubber
cultivation. As an additional inducement, the Department of Agriculture
cleared and prepared potentially suitable sites alongside the railway line.
The liberal land laws and related policies led to the formation of twelve
rubber companies initially, the first in 1905 and others in successive years
up to the 'boom' year of 1910. These twelve rubber companies had a
combined concession area of 103 000 acres and a capital value in excess of
one million pounds sterling. Rubber production thus started as foreign-
dominated and capitalistic and technical and managerial expertise were
provided largely by the Dutch and the Germans, as had been the case
earlier with the tobacco industry. Dutch and German managers also
managed the larger companies - the Manchester North Borneo Rubber
Company, the Langkon North Borneo Company, and the Sapong Estate.
Although there was not the same degree of physical continuity between
tobacco and rubber plantations as elsewhere in the region, institutional
continuity remained strong with the larger rubber and tobacco estates often
constituted under the same corporate umbrella. As with the mining
industry, the Chartered Company also went into rubber planting through
subsidiary companies.
The main expansion of the plantation sector took place before 1924.
Like the tobacco land leases, minimum planted areas were stipulated
primarily to prevent speculation in land. As noted earlier, the rubber
industry impacted on indigenous farming, and was of greater significance
to the domestic economy. After 1924, the planted acreage increased
considerably with both indigenous farmers and Chinese cultivators
entering the scene. In 1928, acreage under estate cultivation totalled
27 114 ha compared with 11 658 ha under smallholder cultivation. By that
year too, there were 30 rubber companies with an issued capital
approaching four million pounds sterling.54 Sabah was not a party to the
Stevenson Rubber Restriction Scheme (1922-1928) and the greater part of
smallholder cultivation in fact took place during the period when the
scheme was in place.55As economic specialisation took hold the wage
labour market expanded with western interests depending mainly on
Chinese and Javanese labour. The Chinese smallholders had their own
labour supply while indigenous farmers relied on their own families for
labour or had share-cropping arrangements. The indigenous people often
offered themselves for short-term casual employment on the plantations as
well. Thus rubber was the first major export community to attract
substantial participation by both foreign and indigenous, capitalistic and
non-capitalistic, producers.
The growth in rubber exports was spectacular, although not as dramatic
as in the Federated Malay States. Rubber became the mainstay of Sabah's
economy and prosperity, and accounted for between 60 and 70 percent of
the total value of the territory's exports. Statistics on production are
largely unavailable though acreage and export figures may be taken as
roughly indicative of the scale of production. In 1917 the Chartered
Company ended the 1905 tax-free concession of exemption from taxation
for 50 years and after 1924 all land was alienated subject to the condition
that rubber grown on it would be liable to payment of a royalty.56 The
expansion of the rubber industry during the period 1902-1940 is shown in
Table 3.6 below.
Table 3.6 Expansion of the Rubber Industry in Sabah, 1902-1940
Year Area (ha) Exports (tonn

1902 40.5 -
1907 1 306.0 2.26
1910 5971.0 24.75
1915 12 564.0 1 067.27
1920 20989.0 4 170.13
1925 28516.0 5511.09
1933 46 993.0 7 907.75
1939 53 169.0 12 054.00
1940 53 812.0 17988.00
Source: Handbook of the State of North Borneo, 1934, p. 52; State of

North Borneo Administration Reports, 1929, 1934, 1936; For
1940, McFadzean's Report on North Borneo, 1947 encl. in CO
531/37/1 (#167817).
Although rubber production in Sabah was small compared to Malaya
and Indonesia, its history in the state followed a similar pattern. In the ten
years between 1915 and the end of 1925, rubber acreage more than doubled
and this expansion was stimulated by the high market prices prevailing
during the First World War. Furthermore, because Sabah was not a
signatory to the Stevenson Rubber Restriction scheme there was an
expansion in rubber cultivation in the state. Nonetheless, already by 1928
the slump in the price of rubber had set in and the value of rubber shipped
in 1932 was only £82 000 compared to £1 million in 1927. 57
Consequently, the Chartered Company bowed to the interests of western
capital in Malaya, and despite the fact that Sabah was a relatively
insignificant rubber producer, it became a signatory to the International
Rubber Regulation Agreement (IRRA) in 1934. By this Agreement, a
complete ban was imposed 'on extension of planting until 1939, when
new planting was permitted to the limited extent of five per cent of the
planted area existing at the end of 1938'. According to the North Borneo
Rubber Commission Enquiry however, 'From certain data available, it
appears that North Borneo [Sabah] took the opportunity fully to extend
the acreage of rubber' .58
The greater proportion of Sabah's rubber was exported to Singapore for
re-export, and because of the 'tyranny of distance', transport costs led to
considerable variation between the price received by the Sabah producer
and the price obtained in Singapore. The North Borneo Rubber
Commission estimated in 1949 that costs incurred before Sabah rubber
reached the market were between $8 and $12 per pikul (including $2.67
per pikul export duty). The main items in this cost were steamer freight
($2-$3 per pikul) and handling and landing charges at Singapore ($1.20-
$1.50 per pikul). The cost of inland rail or road transport was also an
important item for inland producing centres. In places such as Keningau,
this amounted to $3.40 per pikul.59
The rubber industry in Sabah ushered in both qualitative and
quantitative change in the agricultural sector. One important change was
in the composition of labour. Unlike the earlier phase of tobacco
cultivation which had led to Chinese immigration, rubber brought in both
Chinese and Javanese workers, altering the demographic composition of
the population. (This topic is discussed in greater detail under the section
on labour). Population distribution also underwent a change as the
indigenous people and the Chinese migrants moved inland and took up
land along the railway line to plant rubber. The occupational status of the
local population also saw changes as many peasants took to rubber
cultivation as smallholders, encouraged by the high prices. In 1928, for
example, smallholdings totalled 11 658 ha; by 1934, they totalled 23 359
ha. 60 As noted previously, the shift to rubber also marked a locational
shift in economic focus from the east to the west coast. (See Map 5 on
the distribution of rubber in Sabah). The Kudat region, once the economic
hub of Sabah, was overtaken by Jesselton on the west coast. Already by
1918, 51 per cent of Sabah's exports originated from the west coast, as
shown in Table 3.7.
Table 3.7 Sabah: Exports by Residency, 1909-1926

(as per cent of total exports)
Residency 1909 1918 1926

Sandakan 32 34 24
East Coast 21 9 14
Kudat 36 6 7
West Coast 9 51 53
Interior 2 0 2
Source: CO 684: 1-6, 11-14.

The Kudat region's share of exports fell from 36 per cent to 7 per cent
during the period 1909-1926, while the west coast's share of exports rose
from 9 per cent to 53 per cent during the same period.
The only other commercial crop of significance was abaca hemp. It
was grown on five Japanese estates near Mostyn on the east coast. Capital
came from Japan and the labour was either Chinese or Javanese in origin.
Exports before the Second World War averaged about 2000 tons per
annum.61
In summary therefore, prior to the Second World War a pattern of
specialisation had emerged in the agricultural sector in Sabah as shown in
Table 3.8 below.
Table 3.8 Sabah: Estimated Acreages of Principal Crops,

1900-1940
Crop / Year 1900 1910 1920 1930 1940

Rubber 80 20 000 53 000 115000 128 680
Tobacco 10 000 15 000 1 800 700 400
Coconut 5 000 10000 28 500 50 000 53 029
Wet Padi 15 000 20 000 27 000 3 000 46 153
Dry Padi 25 000 30 000 26 500 27 000 35 000
Sago 4 000 4 000 4 000 13 000 14 000
Source: P.S. Gudgeon, 'Economic Development in Sabah 1881-1981'

in Anwar Sullivan and Cecilia Leong (eds), Commemorative
History of Sabah 1881-1981 (Kota Kinabalu: Sabah State
Government Printer, 1981) p. 196.
By 1920, Rubber had become the most important cash crop followed
by coconuts and sago. Although tobacco had enjoyed a boom in the late
nineteenth century, by 1940 it had declined in importance. The acreage
under rice cultivation was about a quarter of the total area under
cultivation. Two trends are discernible in the formation of an export
economy. First, the Company's policy of granting special concessions to
foreign investors and providing the necessary physical infrastructure where
feasible meant that the economy was geared to the production of export
crops. Second, the dependence of these export crops on transportation
lines ensured that first the east coast was opened up and then the west,
thus creating a pattern of unequal development in the territory, a situation
that has persisted since that time. Notwithstanding this, the Company's
finances were put on an even keel and rubber became the mainstay of
Sabah's economy.
In Sarawak, a similar pattern of specialisation in a few export crops
emerged as sago gave way first to pepper and then to rubber. Records
indicate that Chinese agriculturalists had planted pepper and gambier in
west Sarawak prior to the 1870s. However, events took a decisive turn
when Charles Brooke succeeded James and gave official support to cash
crop expansion. He implemented liberal land and labour policies that
provided the impetus for these crops' expansion in the 1880s and 1890s.
In January 1876, a proclamation was issued offering gambier and pepper
planters 99 year leaseholds at nominal rentals and even guaranteeing free
shipping from Singapore for towkays and coolies. Charles also waived
export duty on pepper and gambier for a period of twelve years for
investors who brought their own capital to Sarawak. Government
regulations stipulated cultivation conditions that were aimed at preventing
speculation in land.62 Interestingly, the expansion of pepper and gambier
cultivation can also be attributed to the monopolistic policies of the
Borneo Company. As noted previously, when the Borneo Company took
over gold and antimony mining, it displaced many of the Chinese miners
who then turned to pepper and gambier cultivation. Some of these miners
were financed by the Chinese merchants in Kuching. When gambier began
to fetch high prices in the 1890s, the Borneo Company diversified into
agriculture, acquiring a 20 000 acre concession known as the Poak
concession near the mining districts of Bau and Buso. Subsequently, it
leased plots of land and advanced money to Chinese agriculturists to plant
pepper and gambier at the ratio of one acre of pepper to ten acres of
gambier. (The gambier leaves were used as manure for the pepper vines.)
The Borneo Company also recruited Chinese labour from Singapore to
work on its own plantations and by the turn of the century controlled both
mining and cash-cropping in the Bau district.63 Pepper cultivation
flourished and Sarawak became the second largest pepper producer after
Indonesia. Between 1890 and 1900 pepper production almost doubled
while gambier soon declined in importance. The recently arrived Foochow
RUBBER AREAS
Kudat
SOUTH CHINA SEA

SULU SEA
Jesselton Sandakan
Lahad
awau
V / KALIMANTAN
Map 5 Sabah: Distribution of Rubber, 1940

immigrants, whose settlement had been sponsored by Charles Brooke,

also began to plant pepper near Sibu in the early 1900s, and the extension
of Foochow settlement to Binatang and Sarikei saw the opening of new
gardens on the southern bank of the lower Rajang between the 1910s and
early 1930s. The Hakka Chinese controlled pepper cultivation in the
Kuching-Serian area of the First Division, and the Foochow and
Cantonese did likewise in the Sarikei-Binatang area of the Third Division,
a pattern which has persisted since that time. Between 1935 and 1939,
Sarawak produced an average of 2700 tons of pepper per annum.64
Although some indigenous farmers took up pepper cultivation it was on a
small-scale only and the crop remained largely a Chinese smallholder
activity.
With rubber, Sarawak v/as drawn more completely into the orbit of the
international economy. The Brooke administration had experimented with
rubber cultivation and had planted the first two or three seedlings in
Kuching during the last decade of the nineteenth century. However rubber
did not catch on with European investors until after the turn of the
century. Two persons are credited with its expansion in Sarawak. The first
was Ernest Hose (nephew of the then bishop of Sarawak and brother of
Charles Hose who had played a vital role in the development of the
petroleum industry), and the second was Charles Brooke. The former
pioneered rubber cultivation while the latter fostered smallholding
cultivation among the indigenes and Chinese smallholders.
Ernest Hose, who planted gambier and pepper for the Borneo Company
at its Poak concession persuaded the company to experiment with rubber.
In 1902 he started the Dahan Rubber Estate (2 500 acres) and five years
later planted the Sungei Tengah Estate. Both these estates were in the
Poak concession in the First Division. Subsequently, the Borneo
Company started a third estate at Lawas in the Fifth Division which was
managed by a former Borneo Company employee. These three Borneo
Company estates were later transferred to the company's subsidiaries, the
Sarawak Planting Company and Sarawak Rubber Estates Limited. Not
long afterwards, a certain Harold Hart Everett, a former Borneo Company
employee (who had previously owned a cutch factory, then moved on to
jelutong), entered the rubber scene after 1915 and started two small rubber
estates at Bongkissam to the south of Santubong.65 The earliest, and for a
long time the only large-scale rubber plantations in Sarawak therefore
belonged either to the Borneo Company or were acquired as
proprietorships by former Borneo Company employees, representing
investors who were familiar with Sarawak and who already had
considerable investment in the state. The Borneo Company naturally
controlled the marketing of rubber in the territory.
Figure 3.1 Sarawak: Net Exports of Rubber 1916 - 1941
36
32
28
co 2 4
?
a
^20 \;:i
•a
St S
i
§16
3
s
,2
l i i E7] rrî L . [™~i L J • •:

1916 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 '41
Years
Source: MacFadzean's Report on Sarawak: Details of economy, welfare and
development, end. in CO 938 1/6 # 167817
Segu and Satap. Some seeds from these plantations were sent to Sibu
where a new Chinese settlement was taking shape and some were
distributed among Chinese community leaders in Kuching and Matang for
sale to other Chinese smallholders. In addition to seed distribution, liberal
planting and land regulations (permitting the alienation of land under
casual permit) were introduced by Charles. Quit rent was waived on land,
and in lieu of rent a duty of five per cent ad valorem was imposed on
rubber exports on or after January 1910.66 By 1925, a large number of
holdings were held under the unsurveyed Occupation Tickets which were
provided for in the order of 1920 and which were legally replaceable by a
lease after survey.67
Unlike Sabah, the greater expansion in rubber in Sarawak took place
among the indigenous smallholder producers. The Malays in the
southwest of the country were quick to grasp the profitable opportunities
the new crop offered. They set up their rubber gardens with padi farms in
between and adjusted their time schedules to include work on the gardens.
The coastal Melanau also switched to rubber and the Dayak communities
followed suit. For all these communities a combination of subsistence
agriculture with new cash crops posed no major difficulties as
maintenance requirements were light and most of the tapping could be
done in the early morning before attending to other tasks. A large number
of the rubber gardens were operated on a family basis, and only
occasionally was employment offered on a sharecropping basis. By 1935,
it was estimated that the 'members of the pagan tribes, the great majority
of them Ibans, owned more than one-half the rubber smallholdings in
Sarawak.'68 But Dayak and Malay holdings were small, averaging 0.6 ha.
The average Chinese holding was 2.5 ha though 16 per cent of Chinese
holdings were more than 40 ha. However, many Dayaks owned more than
one holding. By 1940, a total of 97 000 ha was under rubber.69 Rubber
became the premier agricultural export and exports soared between 1916
and 1941 as shown in Figure 3.1 above.
Charles Brooke's legacy to Sarawak in terms of the changing
composition of exports is reflected in the comparative table of exports for
1870 and 1940, as shown in Table 3.9.
Over this long period therefore, major changes took place in the range,
quantity and value of the commodities exported from Sarawak.
Quicksilver and antimony, for example, vanished from the list and new
and important commodities were added to it in the shape of rubber,
petroleum and timber. Forest products lost their former prominence
principally because the indigenes no longer relied to the same extent as
they had done previously on these products for their livelihood. The table
also reflects the increasing peripheralisation of the economy.
Sarawak, like Sabah, experienced the effects of an expanding resource
frontier with the advent of rubber. The economy became increasingly
peripheralised within the global commodity market. Although no large
Table 3.9 A Comparison of the Exports of Sarawak in 1870 and 1940
Main Exports Value (in Straits dollars)

1870 1940
Betelnuts - 1 HI
Beeswax 13931 716
Edible birdsnests 40 498 19 209
Canes 599 18
Copra 70 629
Cutch 475 778
Damar 1 832 88 680
Fish, dried and salted 16054 79551
Gutta Jangkar 113476
Gutta Jelutong, raw 54086
Gutta Jelutong, refined 700 340
Gutta Jelutong, pressed 20783
Gutta Percha 826 903 32 342
Nipah sugar 16
Oil - Vegetable 473
Oil - Refined Petroleum 11 472 193
Pepper 1 681 362 569
Prawns, dried 669
Rattans 151 12237
Rubber, Plantation 26 167 140
Sago 144950 2 184 997
Timber 153 89 840
Treasure 236395
Tobacco, India Rubber, Vegetable Tallow, 48 924
Gambier, Camphor, Indigo, Coconuts and
Oil, Mangrove Bark
Antimony ore, Quicksilver, Cinnabar, 99 489
Gold, Diamonds, Pearls
Opium, Salt, Cloth, Sugar, Crockeryware, 62 681
Iron, Brassware, Rice and Paddy, Bezoar
stones, Sundries
Total Value of all Exports ;i 494 241 $45 770 407
Source: Annucd Report Sarawak, 1951, p. 5.
enclave sector developed in rubber, the new crop had significant effects on
indigenous society and local farming systems. As in Sabah, there was an
increasing shift towards more permanent agriculture among the Iban.
Earlier many Iban farmers had turned to pepper because the crop fitted in
well with a shifting cultivation lifestyle. Now many of the pepper gardens
were merged with rubber holdings. Far from Kuching the arrival of the
steamship at the many small Rajang River ports to collect rubber was
marked by an air of festivity. Furthermore, whatever might have been the
exact magnitude of profits, the signs of increasing affluence among the
indigenous people and the Chinese were evident in the trade figures. There
were increases in the importation of cigarettes and tobacco, silk, woollen
and cotton clothing and sarongs, gold-leaf, jewellery and silverware and
imported furniture. Practically every port having direct foreign
communication showed increases in the value of imports.70
Was the Brooke administration averse to foreign investment and in
favour of preserving local tradition? This is certainly not borne out where
the mining industry is concerned and nor does it hold true for the
agricultural sector. As the present study shows, Brooke rule was little
different from British rule on the Malay peninsula or Chartered Company
rule in Sabah in opening up the country to foreign capital, encouraging
the development of rubber, petroleum and timber exports and creating a
plural society in which ethnic identity was largely linked to
socioeconomic role.
Despite the occasional rejection of a western planting application, the
following extract from an editorial in the Sarawak Gazette, the official
government organ, says it all:
As the soil of Sarawak is well known for its great fertility
and the climate and temperature of the country are so
uniform, varying but little at any season of the year, being
thus most favourable for the operations of planters, it is a
matter of some surprise to us that European capital has not
as yet been employed in the promotion of planting
enterprise here ... The influx of western capital to work a
paying concern not only would benefit those who are
employing their money profitably but means wages with
increased prosperity for natives, hence gain to traders in the
bazaar, and increased trade causing a rise in the revenues of
the country ...
The facilities and advantages which are offered by the
Sarawak Government to planters are such as would not be
obtained in many other countries. The State gives free
passages to coolies immigrating from Singapore, and admits
the requisites of bona-fide planters at a greatly reduced excise
tariff. Land also is cheap and plentiful and labour suitable
for felling and clearing, roadmaking ... may be drawn in any

quantity from the ... Dayaks ...71
Again, according to a senior Brooke official:
It has been, and is still constantly said, that the Rajahs of
Sarawak have been adverse to the opening up of the Country
by European capital. Such a statement is absolutely untrue,
and has doubtless originated from those, who, in the past
have been disappointed in their hopes to exploit the country
to the detriment of the inhabitants, and the Government, and
in fact, everyone but themselves and their shareholders.72
In the international rubber stakes, Sarawak was a very small rubber
producer. Rubber production was also predominantly a smallholder
activity,73 was labour intensive, and the relationship between input and
output was very favourable. The globalisation of the economy brought
with it fluctuations in the trade cycle which had far-reaching effects, and
impinged directly on the peasants' lives especially when rubber prices fell
in the 1920s and 1930s. Furthermore, because Sarawak was integrated
into the world economy, its insignificant rubber status notwithstanding,
the Brooke administration elected to participate in the Stevenson
Restriction Scheme (1922-28). As one official stated: '... it is an
established fact that these native gardens cannot produce anything
approaching the maximum allowed under the Straits and FMS Restriction
Ordinance, on the lines of which this Government agreed to co-operate.'74
Government intervention in favour of metropolitan-based plantation
interests was also evident when Sarawak decided to participate in the
International Rubber Regulation Agreement (IRRA) despite the fact that
Sarawak's interests as a smallholder rubber producer were not served.
According to one source, Vyner Brooke agreed to join the IRRA Scheme
after strong representation from the Borneo Company (which through its
subsidiaries Sarawak Rubber Estates Limited and Sarawak Planting
Company contributed the bulk of estate rubber production and also had
rubber interests in other parts of Southeast Asia) at the behest of the
International Rubber Regulation Committee.75
Under the subsequent five-year programme which allocated to each
signatory country a quota which could gradually be expanded each year,
Sarawak's quota for 1934 was 24 000 tons with a graduated rise to 32 000
tons by 1938.76 New planting was forbidden and only such replanting as
would offset the depreciation of mature trees was allowed. Although
exports fell short of the quota in 1934, production increased by 60 per
cent from 1933. Subsequently, there was restriction in production through
two measures. Firstly, a 'tapping holiday' scheme which restricted the
number of days when rubber could be tapped and secondly, a coupon
system (established in 1938) which limited the quantity of rubber which
could be sold by an individual smallholder. Additionally, the Brooke
administration restricted Chinese male immigration which was intended as

a further limit on rubber output.77 The IRRA Scheme involved a four-
year assessment of all smallholdings and according to a Brooke official:
Ex-planters from Malaya ... [were] recruited at princely
salaries to cope with the more populous areas but
assessment of the scattered gardens up-river was left to the
District Officers ... They [native producers] all did very
badly when the allocation of 'shares' came to be made.78
Under such conditions, a deterrent to tapping was the informant
network, which the Brooke Administration employed, giving rewards to
persons who were willing to report on violations.79 This, and policing
the regulations led to the imposition of fines and arrests and the Sarawak
Gazette for the years 1934-38 is studded with reports of convictions.
Generally, there was dissatisfaction with the limitations imposed by the
coupon system and it even sparked off a demonstration by Chinese
smallholders at Batu Kawa in February 1938. The situation was only
eased by the gradual recovery of rubber prices and renewed demand for
rubber after the outbreak of the Second World War in 1939. Crucially
though, the demand for land both by the indigenous people and Chinese
smallholders inevitably led to competition for land and exacerbated 'Iban
troubles'. As noted previously, the administration had issued new land
legislation to establish a uniform land policy for commercial agriculture;
to constitute native land reserves for natives and to classify land for non-
natives (Chinese). Furthermore, steps were taken in 1933 to demarcate
land belonging to longhouse communities and to restrict access to 'state'
land, especially forests. Only the fact of a small administration and weak
enforcement saved the situation because the Dayak went about their
business as usual.80
A comparison of the two administrations, one a 'private' colony and
the other a Chartered Company territory, shows that as far as commercial
agriculture was concerned, events followed a similar pattern. In both areas,
specialisation in a few export crops occurred, not unlike other colonies
and protectorates. Compared to Malaya and Indonesia, production levels of
export crops were also relatively small. In both the interests of western
capital prevailed, although the Brookes consistently claimed that they
were in Sarawak to protect 'native interests'. 81 Additionally both
administrations legislated to curb the traditional native practice of shifting
cultivation and restrict native access to forests.
In summary, the biggest change as far as the natives were concerned
was the commercialisation of peasant agriculture. As noted previously,
the peasant economy was associated with subsistence-orientated pioneer
shifting cultivation. The peasants generally managed to produce a small
surplus of rice and exchanged this for salt, salted fish, steel, iron and
luxuries such as personal ornaments. Peasants also bartered miscellaneous
forest products in exchange for ceramic jars, brassware and imported cloth.
Large-scale production of rice was restricted because of limited
technological possibilities, the lack of demand and the chronic state of
warfare. Increased output also meant increased exactions. The extension of
Brooke and Chartered Company rule brought the peace that enabled trade
to expand in the two states. Furthermore, trade possibilities also expanded
with the growing demand for jungle products in the second half of the
nineteenth century, the opening of the Suez Canal and technological
improvements like the steamship, and the attraction of these states as
'British' outposts.
Thus, economic and social change from around 1850 to 1940 flowed
essentially from the impact of international commerce on the two
territories, and was especially significant in the agricultural sector. As we
have noted, the Melanau were drawn into the cash nexus and their
economy, a highly specialised one focussed on sago production. The Iban
in Sarawak took up coffee, and to a lesser extent, pepper. In Sabah, after
the collapse of plantation tobacco, tobacco cultivation was taken up by
the peasants. But the biggest change from our perspective came with the
introduction of rubber to these territories.
The boom years of rubber in the early twentieth century provided a
powerful incentive to peasant smallholders to switch to rubber and they
integrated rubber cultivation into already existing cycles of food and cash
crop production, Rubber could be fitted easily into the agricultural cycle;
it could be grown on a variety of soils; did not require much capital
outlay; and tapping skills were easily acquired. The integration of rubber
into the existing cycle of production took two forms among the
inhabitants of Sarawak and Sabah. Among the Malays, the Melanau and
the Kadazan who practised sedentary cultivation, a portion of their
established land was devoted to rubber growing. They continued their
usual subsistence-oriented existence of rice or sago cultivation while
waiting for their rubber trees to mature. Rubber production was thus an
adjunct to subsistence/food crop production. Among the Dayaks,
smallholdings were developed in the interior as an adaptation of swidden
agriculture where cultivators planted rubber trees in previously cleared
then disused areas. The rubber trees were an important and lucrative source
of income when they matured. Usually family labour or the family unit
satisfied the labour requirements although there were differential
contractual agreements such as share-tapping, cash leasing and wage
labour.82 The flexibility of part-time rubber production suited the peasant
existence. Furthermore peasants could defer production until the market
was at its most favourable. Nevertheless, while the disposable incomes of
the peasants increased, there was no widespread structural change in
peasant society arising from the rubber boom. The peasants' role was
limited to producing latex, or rubber sheets which were passed on to
Chinese middlemen who in turn passed the latex or sheets to western
exporters, principally the agency houses. The peasants were not involved
in rubber processing or marketing nor did they have a say in the
regulation of rubber supply or its price. They were largely peripheral to
the world markets they supplied.
Forests and Forest Resource Utilisation
In the expansion of an export economy, the trade in forest products played

an early transitional role with forest products like camphor, rattans,
beeswax and resins and marine products like sea cucumbers and
tortoiseshell being exchanged for tea and luxury goods from China. As we
have noted it was this trade that had caught the attention of James Brooke
and the Chartered Company investors. The trade in forest products was
soon superseded by the trade in minerals and agricultural crops. By the
1920s as commercial activity gathered momentum in these territories, the
demand for tropical timber led to more intensive exploitation of the forest
resources of these states.
Not all the earlier changes were pervasive or evident everywhere -
some of the activities were restricted to the ports or urban centres or areas
of mineral occurrence (for example, oil in Miri); export commodity
production was also largely integrated, especially in the case of rubber,
into traditional economic structures. The biggest change came when
timber became the main source of revenue, starting in the 1960s. The
logging industry affected the lives of the people in ways no other activity
had done - vast areas of the interior were opened up and logging and
related activities became the driving force behind the spread of the money
economy. Logging also provided employment opportunities in the
interior and had a destructive long-term effect on the natural environment.
In many parts of the interior subsistence agriculture and hunting and
gathering activities were no longer viable. Finally, the logging industry
played a crucial role in shaping the politics of post-independent Sabah and
Sarawak. The following section examines four themes: the historical
legacy of commercial extraction of forest products; the growth of the
timber industry; the development of state forest regulation; and the
conflicts of interest for allocation of land and rights to utilise resources.
Historical Legacy of 'Commercial' Extraction of Forest Produce
The importance of forest products in early commerce and their role in

the establishment of many trading colonies or states in Southeast Asia,
the link between these colonies or states and the intricate web of inter-
island and intra-Asian trade, is widely acknowledged.83 The Malay
chieftaincies (Sabah) or Brunei nobles (Sarawak) along the Borneo coast
derived their power in large part from the control of the commerce with
the foreign traders, from tolls levied on river traffic and from tribute in the
form of forest products extracted from the dependent indigenous groups of
the interior in their 'catchment' area. Forest products in demand by traders
included camphor (from Brybalanops aromatica), benzoin (from Styrax
spp), gutta-percha (Palaquium spp), aloe woods, rattan and resins. Other
jungle products with medicinal uses were rhinoceros horn (Rhinoceros
didermocerus sumatrensis) and bezoar stones. Edible birds' nests, beeswax,
feathers of birds of paradise and hornbill ivory were also in demand as
were products from the mangrove forests such as cutch and nipah. The
economies of Sabah and Sarawak were essentially 'external economies',
supplying luxury goods within a mercantilist framework.
In the nineteenth century, the trade in forest products was an important
phase in the commercialisation of the economies of the indigenous
peoples of Sabah and Sarawak. A naturalist who visited the territory in
the 1870s wrote:
[The Kadyans] ... collect gutta and caoutchouc, camphor and
rattans, from the forest, and the sale of these in Labuan, or
to Chinese traders who visit the coast, enables them to
obtain cloth, muskets and ammunition, tobacco and any
other little necessities or luxuries of Chinese or European
manufacture which they may require.84
Again, according to Baring-Gould and Bampfylde in their semi-official
history of Sarawak:
[The] ... energies [of the Iban] are almost entirely confined
to working jungle-produce; though to seek this, they now
have to go into the far interior, and this is often the cause of
their getting into trouble with remote and wild tribes; they
also go to North Borneo, Dutch Borneo, Sumatra, the
Malay peninsula, and even as far as Mindanau, in the
Philippines.85
Initially, this trade was controlled by the Malay nobles. Chinese traders
also sailed upriver to inland settlements to obtain these products in
exchange for beads, iron, crockery and pottery. The rapid growth of
Singapore resulted in an expansion of the export trade in the various forest
products and it was these resources that attracted European interest and led
to the subsequent occupation of two territories.
In the 1870s, world demand for jungle gums and resins for industrial
purposes rose rapidly and the Borneo Company, which had become the
most powerful monopolistic concern in Sarawak, moved in to corner the
export trade in these products. The pressures and opportunities for
expansion were also grasped by Charles Brooke who farmed out the major
forest products to westerners. Thus although the Dayaks and Chinese
traders had been collecting and dealing in forest products like cutch (wood
oil) and jelutong (wild rubber), he granted monopoly rights in these
products to several western companies. One of the earliest concerns was a

French company formed in 1894 which was awarded the right to collect
and export the dried leaves of the gutta tree. The cutch monopoly was
given to a former Borneo Company employee in 1897. When the latter
venture closed down, a long-term monopoly concession was awarded to
the Island Trading Company, one of whose shareholders was Charles
Hose, a former Brooke official. Charles Brooke also granted monopoly
rights to an Anglo-American concern, the United Malaysian Rubber
Company (UMRC) in 1909 to process jelutong at a large factory sited on
200 acres at Tanjung Batu (later known as Goebilt) on the Sarawak river.
These companies relied on local Dayak labour to collect the products.86
The conflict over access to these forest products meant that the Dayaks
were now relegated to the position of paid workers labouring on behalf of
the foreign companies. Moreover, the well-established local and Chinese
networks were now replaced by western trade circuits.
Table 3.10 Sarawak: Export Trade in Forest Products, 1873 and 1883
1873 1883
Forest Products Quantity Value ($) Quantity Value ($)
b
Beeswax (piculs) 16 000 438 16949
Birdsnests (piculs) 316 68 320 99 17312
Camphor (catties)c 72 1 450 520 12 974
Canes (no.) - 5 401 144 700 2 978
Damar (piculs) - 298 337 528
Gutta-percha (piculs) 3 241 16087 3 397 141 721
India-rubber (piculs) 2 829 113545 1 421 65 285
Kayu Garu (piculs) - - 82 24
Kayu Laka (piculs) - - 104 145
Kulit Tengar (piculs) - - 3 445 790
Rattans (piculs) - 7 797 23 910 67281
Timber ($) - - - 35 083
Total 369 907 325 982
Notes: In 1873, total trade was valued at $1 592 438.

In 1883, total trade was valued at $1 804 392.
a Other products included illipe nuts, beeswax, charcoal,
Gharau wood, laka wood, mangrove bark, nipah.
b 1 catty (kati) =1 1/3 lb or 0.605 kg
c 1 picul (pikul) = 100 kati or 133 1/3 lbs or 60.5 kg
Source: Sarawak Gazette, 1 July 1884, pp. 68-69.
At a time when export revenues were being built up, the trade in forest
products averaged about a third of a million dollars as shown in Table
3.10 above.
As shown above, the trade was not insignificant, contributing
approximately 23 per cent to the total export value in 1873 and
approximately 18 percent in 1883 (excluding timber).
Detailed returns for the guttas and other forest products for the period
1870-1940 are provided in Tables 3.11 and 3.12 and show that up to
1960, these products continued to feature in Sarawak's export trade.
Table 3.11 Sarawak: Quantity and Value of Gutta Exports, 1870-1940
GUTTAS
Gutta percha India Rubber Gutta jangkar Gutta jelutong
Tons £ Tons £ Tons £ Tons £
1870 - 96 470 - 4450 - - - -
1900 476 91 970 208 41 040 - - 24 270
1910 101 21 780 155 39 670 387 14820 6363 117090
1920 24 16320 - 130 71 5 310 5 227 233 820
1930 1 110 - - 113 5 180 3 893 101 430
1940 12 3 770 2 10 173 13 240 1 429 90 440
Source: B.E. Smythies, 'History of Forestry in Sarawak', Sarawak
Gazette, 30 September 1961, p. 174.
The trade in forest products was also of major importance to Sabah's
economy during this period. An important item was birds' nests and the
Chartered Company immediately enforced its claim over the Gomantang
birds' nests caves in the Kinabatangan area and other caves in the Lahad
Datu and Pensiangan areas. Other major forest products produced and
exported included cutch, damar, rattans, firewood and charcoal. The most
important of these was cutch. A cutch factory, the Bakau Syndicate, was
established at Sandakan and it started exporting cutch in 1892. Another
cutch factory was started in Marudu Bay in 1897. It soon ran intofinancial
difficulties and was taken over by the Bakau Syndicate. The enlarged
enterprise was renamed the Bakau and Kenya Extract Company. This
company, in which the agency house of Harrisons and Crosfield had a
controlling interest, concentrated its operations in the northern and eastern
coasts of the state. Mangrove bark was also exported by the Island Trading
Company and a Filipino owned company. During this period therefore,
the only industry based on the processing of minor forest products was the
cutch industry. The marketing of cutch and other forest products was
Table 3.12 Sarawak: Exports of Other Forest Products, 1870-1940
Year Damar Rattans Malacca canes Cutch (mangrove) Nipah sugar

Tons £ Tons £ Nos £ Tons £ Tons £
1870 - 210 - 90 _ _ _ _ _ _
1900 298 1950 2 458 32 67 - - - - 292 1690
0
1910 125 1720 1238 1083 - - 173 1210
0
1920 679 42 490 1054 12 08 271300 2 460 3 640 56 300 577 13 540
0
1930 470 8 200 446 3 100 580000 2 360 2 520 55 840 161 1010
Source: B.E. Smythies, 'History of Forestry in Sarawak', Sarawak Gazette, 30 September 1961, p. 174.
Table 3.13 Sabah: Cumulative reported export value and relative importance of forest products, 1881-1915
Forest Products Total cumulative No. of Average yearly % of jungle Year of Value in year of
reported export value years export value produce greatest greatest export
($) reported ($) value exports ($)
Cutch 3 853 999.97 24 160583.33 25.00 1915 294 138.00 ^
Rattan 3363 081.21 31 108 486.59 22.00 1905 189317.00 3
Birds'nests 1 780 128.39 31 57 423.50 12.00 1903 90 126.11 3
Gutta perch a 1 675 686.35 31 54 054.40 11.00 1901 225 428.98 a5'
India rubber 1 655 673.23 31 53408.81 11.00 1904 109 729.45 s
Damar 1 616701.20 31 52 151.65 10.50 1912 159 699.00 ^
Camphor 842 996.76 31 27 193.14 5.00 1915 51 816.00 a
Gharu wood bark and roots 230 848.80 15 15 389.92 1.50 1903 29 547.34 s51
Beeswax
Firewood
229615.63 31 7 406.95 1.50 1905 26 022.00 •S
O
109 745.90 14 7 838.99 0.70 1907 15261.00 3
Armadillo skins 53 742.30 30 1 791.41 0.35 1915 2 888.00 &
Attaps, mats & kadjangs 324 441.66 8 9 0.22 1900 2 504.77
3
Ivory 22 276.32 31 718.59 0.14 1912 1 904.00 O
Total jungle produce 15 468 940.75 31 547771.96 - 1903 734 825.71
Timber 10864 840.12 31 334 349.68 - 1913 869 463.00
Total cumulative export
value 101 655819.72 33 380 464.23 - 1915 7 419 094.00
Source: F.W. Foxworthy, The Timbers of North Borneo, Forestry Department Bulletin No.l (Sandakan:
ON
controlled by Harrisons and Crosfield, who played a role similar to that of

the Borneo Company in Sarawak. In 1892, cutch exports were valued at
$17 997.87 By 1916, exports had increased to $500 OOO.88 In the absence
of a significant mining sector, jungle products played an important role in
Sabah's export trade. The cumulative export value and relative
comparative importance of the various jungle products exported between
1881 and 1915 are shown in Table 3.13 above.
As shown above, the main items were cutch and the guttas (for
industrial purposes), firewood and rattan (for domestic and regional use)
and gastronomic products (birds' nests). Cutch was exported to the USA,
the United Kingdom, French Indo-China and Japan. Of the other forest
products, firewood was exported mainly to Hong Kong, while damar was
exported to Singapore. The birds' nests were exported to Hong Kong
where they were cleaned and graded for subsequent re-exportation to China.
Some birds' nests also went to Singapore or were consumed locally. The
importance of timber and forest resources led the Company to promote the
exploration of the forests 'so far as its limited resources permitted'. Two
of the most prominent explorers were Franz Witti, who commenced
exploration in 1880, and Frank Hatton, who started his journey in 1882.
Both these men and others made the Borneo interior become known and
paved the way for the exploitation of the territory's forest resources.
Forest administration was placed under the authority of the Treasurer-
General, thus acknowledging the value of the forests to the state.89
Until the First World War, the trade in forest products was relatively
more important than timber exports. As commercial activity in the timber
trade gathered momentum, both territories established forest departments -
Sabah in 1916 and Sarawak in 1919. Both administrations thus responded
to the global trade in timber, cautiously at first and then more
enthusiastically.
The Expansion of the Timber Sector and State Forest Policies
Borneo's timber wealth lay in the abundant stock of woods of medium

hardness belonging to the family Dipterocarpaceae, which is the most
important timber family in the tropics, producing more commercial
timber than all the others put together. The woods of this botanical group
vary greatly in physical character, ranging from the hard selangan batu to
the soft serayas. This group therefore produces woods valuable for
construction purposes as well as those suitable for interior finish and
furniture.90
From our perspective, forestry entered a new phase in the second decade
of the twentieth century in both territories and ushered in a new era of
monopolies and privileges.
In Sarawak James Brooke's interests were from the outset focussed on
the right of sovereignty; on demonstrating the power to regulate land use;
in classifying forests, some as ecological reserves, some as productive

forest, others as 'waste land' available for allocation to foreign capitalists
for mining, commercial agriculture and commercial timber exploitation.
In 1863, the Land Order gave James control over all 'unoccupied and
waste lands' which became automatically the property of the government.
This legislation included restrictions on clearing forests for agricultural
expansion without permission from the authorities. James thus asserted
his personal ownership over the whole of his domain and native rights to
land were technically rights to the use or lease of state lands.
James' successor, Charles Brooke, was also cognisant of the financial
advantages of claiming rights over 'unused' forest land and as noted
previously, encouraged foreign capitalists to tap Sarawak;s forest
resources. Not surprisingly, the Borneo Company, the principal foreign
investor in the state, was awarded monopoly rights over timber logging.
Subsequently, Sarawak Oilfields, which had a monopoly over the
petroleum resources of Sarawak, was also permitted to log timber for its
operations.
The Borneo Company ventured into timber logging in 1886. It
concentrated on logs or rough-hewn logs but the initial attempt proved
disastrous. This was principally because the logs, which were often left
for long periods in the water due to the poor and infrequent steamer
services, became infested with teredos or shipworms. At this stage, the
Borneo Company relied on hand-logging along the Rajang river. Later it
imported elephants for logging operations. Despite official support, the
Borneo Company's initial ventures were not very successful. The
company hired foreign experts and even imported tractors in the 1930s but
the absence of a good transportation system precluded any great success.
Under the first two Rajahs, the working of timber and forest produce
was virtually unregulated apart from the allocation of certain monopolies
to western capitalists. Export duties were levied on the forest products and
timber exported. Where timber was concerned, the duty was a flat rate of
10 per cent ad valorem.91 Although timber exports did not play a
significant role in Sarawak's trade (in 1870 timber exports were valued at
£20), by 1920 this figure had risen to £3140.92
During the administration of Vyner Brooke, there was a change in
timber policy which was to have far-reaching consequences for Sarawak's
forests. This change in policy stemmed from the fear that 'the native
peoples ... are increasing in number ... [t]he demand for farming land
grows proportionately ... [Additionally] every steamer adds its quota to the
stream of Chinese migrants, hungry for land'. 93 In 1919, following the
creation of a Forest Department a Conservator of Forests was appointed
because '... forests have an important place in the economy of a country,
both directly and indirectly'.94 A code of rules was drafted, which was
gazetted as the Forest Rules 1919 and came into force on 1 January 1920.
The Forest Rules covered four main areas; exploration and demarcation
of reserves; works of improvement of forests; research; and revenue

collection. Although the first three areas were significant - by 1927,
252 531 acres (or about 395 square miles) were demarcated as reserves and
a museum and arboretum constituted for the identification of species - the
last acknowledged the important financial aspect of Sarawak's forests. The
collection of timber and forest products, their regulation and licensing
came under this sphere. The government subsequently imposed fixed
royalties on forest products while for timber a graduated scale of royalty
based on the kind and cubic quantity of the timber was introduced.95
The change in official policy led to increased investment in timber and
the Borneo Company was joined by other interests. By 1923 there were
seven sawmills involved in logging operations. Most of the sawn timber
was for local consumption or for export to Brunei, Labuan, Singapore and
Hong Kong.96
Although the Brooke administration believed that the forest rules
would 'protect' the forest, the growing encroachment on forest land by the
Dayaks and the Chinese in response to new opportunities for commercial
agriculture was followed by new legislation in the 1930s which
consolidated the government's ownership over all non-registered land.97
The earlier forest regulations were replaced in 1934 by Order F-l (Forests)
known as the Forest Order which came into force in July 1934. This
legislation provided for a new type of permanent forest known as a
protected forest. Thereafter, there was some progress in designating
protected forests. The area of permanent forest increased from 1.2 per cent
at the end of 1934 to 5.5 per cent of the area of Sarawak at the end of
1940.98
All these developments, which ignored or diminished the significance
of communal ownership of community territory led to a growing unrest
among the inhabitants of Sarawak. The natives believed that the
demarcation of forests augured the disappearance of their means of
livelihood; they and the Chinese settlers also believed that forest areas
were being held in reserve by the state for others. Furthermore, the
Depression had affected their livelihood as Sarawak became a signatory to
the International Rubber Regulation Agreement and restriction on rubber
cultivation was introduced leading to friction between them and the
government. 99 Nonetheless, as pointed out by Cramb, the 'minimal
expenditure of resources on the machinery of government' by the Brookes
meant that 'the bulk of Iban land continued to be administered largely
within the context of the traditional, community based system'. 100
Subsequently, in 1940 an amendment was made to the Forest Order, the
F-1D of 1940. By this order, a third category of permanent forest, the
Communal Forest, was established. These communal forests were to be
reserved for the local community and came under the jurisdiction of the
district officer. In these communal forests, the natives could collect forest
products and timber for their own use.101
Thus the combined impact of Brooke land and forestry policies in the
1920s and 1930s meant that there was no acknowledgement of traditional
systems of communal rights over land and in effect, the natives had to
apply for various documents such as Permits to Plant, Rubber Garden
Registration Certificates and Occupation Tickets to ensure that they had
secure rights to their cash crops in the event of a dispute being taken to
court. State recognition of the commercial value of forests led to a
nibbling away of the previously 'empty and unexplored' interior.
In Sabah, this process had begun in the 1880s when the forests were
felled to make way for tobacco cultivation. The tobacco industry pioneered
the way into the interior, making Sabah's forests more accessible to
exploitation. Subsequently, when tobacco collapsed, timber took over and
sustained economic activity on the east coast.102
Formal forest exploitation commenced with the issuance of the first
timber concession on Gaya Island (off the west coast of Sabah) in 1879.
The west coast was generally regarded as commercially unimportant
because many areas had been cleared for settlement by the indigenous
people. Potentially productive commercial forests were confined to the
east coast which was relatively more isolated and had a smaller
population. There are references to an export trade in bilian (Borneo
ironwood) before the establishment of the Chartered Company. In 1883,
the first planting company in Sabah (the China Sabah Land Farming
Company) aimed to reduce its initial capital outlay by exporting timber it
cleared from its tobacco planting operations in Sandakan Bay.
Subsequently, the Australian Borneo Company, which in 1883 had taken
up 100 000 acres in the East Coast Residency to plant sugar cane,
exported timber instead. From then on the industry progressed rapidly,
with European capital and Chinese labour playing an important role in its
expansion. The earliest logging operations were along river banks and the
timber was cut (and squared if necessary) by Chinese and indigenous
workers and hauled by buffalo or manually to the rivers where it was
rafted to Sandakan Bay into which ran some seventeen timber supplying
rivers. Sandakan emerged as a major timber centre and became an
important anchorage on the northern coast of the island of Borneo.103
Timber cut on freehold land was exempted from duty and royalty
charges and could be used or sold locally. An export duty of 50 cents per
ton (of 50 cubic feet) was imposed if the timber was exported. Special
permits were required to cut timber on state land and the charge was about
25 cents per acre, per annum in addition to the export duty.104 Forest
administration was initially placed under the authority of the Treasurer-
General. During this period, the timber industry was managed on the
assumption that the supply of timber was inexhaustible, that the forest
regenerated in a short time, and that government intervention was
unnecessary.
By the first decade of the twentieth century, there was a growing
awareness that river banks were being stripped of trees and in 1909 the
Commissioner of Lands, onto whose department control of forests had
subsequently devolved, recommended the employment of professional
forest officers. In 1910, the Chartered Company's Court of Directors was
revamped, (following a change of managing director), and a more
'responsible' policy formulated for natural resource management.
Subsequently, in early 1913 a systematic investigation of the timber
potential of the state was undertaken and an ordinance, known as the
Ladang Ordinance of 1913, passed. This ordinance, which was based on
the assumption that shifting cultivation was responsible for deforestation,
restricted the felling of forest for ladang cultivation other than that of
secondary growth and of not more than five or six years' standing.105 A
temporary forestry officer was also hired. In 1914 a Chief Forestry Officer
was appointed and arrangements made for the establishment of a
Department of Forestry. This was followed by the introduction of forest
legislation which came into force in October 1916. The forest regulations
centred on the supervision and monitoring of forest exploitation; revenue
collection; and the collection of botanical specimens. The regulations also
covered the appointment and powers of Forest Officers, the imposition of
royalty, the production and removal of forest produce, and the procedures
and penalties for forest offences. Additionally, the regulations categorised
various types of forest licences and defined native rights vis-a-vis the
forest.106 Unlike Sarawak, where revenue collection was of relatively minor
importance because of the smaller investment in timber exploitation, in
Sabah it formed an important component of the new legislation, reflecting
the greater investment in the industry there.
The organisation of the forest department in Sabah was based on the
model of the Philippine Forest Service with modifications taken from the
Indian Forest Service. All forested land was placed under state
'ownership', the forests were largely 'unproductive'; and the land on
which they stood was seen as having great economic potential for future
cash crop cultivation. Consequently, the primary objectives of the forest
department in Sabah included the exploration of forest areas and the
ascertainment of their value; exploitation of forest land; verification of the
value and uses of timbers and forest products; and the 'stimulation' of the
timber trade by seeking new markets.107
Although the business of the Chartered Company was to administer
Sabah, at the same time it was composed of shareholders like any other
company, and the shareholders looked for their returns in the shape of
dividends no less than shareholders of an ordinary company. Earlier
investment in mining, for example, had not proved financially rewarding,
but the timber industry sounded promising. During this period, the export
trade in timber was controlled by four western concerns, the most
important of which was the North Borneo Trading Company. Before 1916
this company held fourteen leases covering 500000 acres, but failure to
work its concession areas had resulted in the state resuming the land that
year. One of the main reasons for the company's failure was shortage of
capital. The Chartered Company consequently decided on state
participation and the formation of a single company, armed with a long
term monopoly. In 1920, in partnership with Harrisons and Crosfield
(which controlled the bulk of Sabah's import and export trade through
concession arrangements), the Chartered Company formed the British
Borneo Timber Company Limited (hereafter referred to as BBT). Its
nominal capital was fixed at £1 000 000, of which £300 000 was issued.
Harrisons and Crosfield subscribed £125 000; the Chartered Company
£100 000; and the public's share was £75 000. The BBT's concession
covered 95 per cent of the forests of Sabah and the company acquired a
monopoly to cut, collect and export timber on state land for a royalty of
three farthings per cubic foot on merchantable timber. The original license
was for 25 years, plus two additional periods often years each. The BBT's
monopoly meant that it acquired virtual control of all timber cut and
exported from Sabah and it forced the smaller companies to procure
licences from it and work as sub-licensees. To ensure that the new
undertaking was run along sound lines, the Conservator of Forests,
D.M. Matthews, was appointed local manager of the BBT. This
monopoly concern was exempt from export duty on timber cut by it or by
any companies controlled by it, and on articles manufactured from such
timber. It was also exempt from import duty on machinery imported for
its operations. Additionally, it was given the right of first refusal of any
concession which the Chartered Company proposed to grant other than for
manufacturing timber products.108 In granting this monopoly to the BBT
the Chartered Company Administration, like the Brooke Administration
in Sarawak, formally acknowledged that monopolistic concerns were the
key to encouraging investment on a scale thought necessary for the
effective exploitation of their respective territory's natural resources.
Unlike the Brookes however, the Chartered Company was not averse to
investing in such concerns itself.
As a result of the transfer of many forest rights to the BBT, the
functions of the forest department became more circumscribed and its
main tasks were confined to export administration and revenue collection.
The creation of forest area under 'reserve' continued, albeit on a very slow
scale. The terms of the Timber Concession of 1920 allowed the
government to set aside forest reserves for public purposes, provided that
the reservation of merchantable timber was not made 'beyond the
imperative needs of the Community'. The programme of reservation
commenced in 1920 and by 1930, there were nineteen separate reserves,
covering a mere 0.37 per cent of the area of the state.109 By 1939, the
total area under reserve was 618 square miles or 2.1 per cent of the total
area although the target was at least 10 per cent.110
The creation of the BBT led to more extensive timber exploitation in
the state. Initially, operations had been largely limited to the Sandakan
river. From there, logging spread onto the Labuk and Sugut District to
the north, and into the Kinabatangan River, Darvel Bay and Cowie
Harbour to the south, until the whole of the north and eastern areas of the
state became one timber camp. Nevertheless, as a monopolist, the BBT
saw to it that Sabah's highly desirable hardwoods were extracted at low
levels in order to keep prices high. In terms of the export trade, timber
became the second most valuable export after rubber after 1921 and during
the Depression, timber became the principal export commodity.
Thus for both Sabah and Sarawak by the 1920s, timber had been
acknowledged as an important natural resource. State forestry policies in
the 1920s and 1930s were more concerned with placing forested land under
'state' ownership and there was no recognition of traditional systems of
communal rights over land, particularly forest land. Forest regulation was
also more concerned with the collection of revenue than actual
conservation measures, a situation which has persisted since that time.
Commerce and the State
In the first half of the nineteenth century, the economies of Sabah and
Sarawak could be characterised as largely 'external' to the world market,
selling 'luxury' and other forest products and marine products within a
mercantilist economy. The luxury products included decorative products
(like bezoar stones or hornbill beaks), aromatic substances like camphor
and gastronomic products like birds' nests. Additionally, other forest
products principally rattans, firewood, and the guttas, also found their way
into regional markets. Traditional networks of collection and marketing
channelled these products to coastal markets where Chinese or Malay
traders sold them on the regional market. By the late nineteenth century,
these territories had come under 'western' rule and the imposition of new
regimes led to significant changes in the commerce and trading patterns of
these territories. Both the Brooke and Chartered Company administrations
introduced policies for natural resource utilisation that paved the way for
the gradual incorporation of these territories into the international
economy. This resulted in the emergence of 'peripheral' economies,
whose production patterns were determined by the demands of the
industrialised west. Subsequently, the trade in luxury and other forest
products and marine products were supplanted by the trade in stimulants
and 'industrial products' like tobacco, pepper, rubber and mineral products.
The foci in these trading patterns included both old and new ports sited on
the major rivers. In Sarawak, Kuching became the centre for the gold,
pepper, gambier and rubber trade while Miri concentrated on oil
production and export. Sibu later on became the focus of rubber activity
in the north. In Sabah Sandakan, which had been the centre of the tobacco
trade and the trade in forest products, now specialised in the timber trade,
while Jesselton on the west coast became the focus of the rubber trade in
the state.
The imposition of Brooke and Chartered Company rule was
accompanied by the establishment of merchant houses which soon took
over regional and international commerce. Although there were a number
of small firms, the two dominant mercantile firms were the Borneo
Company in Sarawak and Harrisons and Crosfield in Sabah. The Borneo
Company's pivotal role as the developer of Sarawak's economy is
illustrated in Map 6. Starting with trade, these two agency houses soon
participated in the other sectors of the economy and played a key role in
the commercialisation of the economies of Sarawak and Sabah. As a
consequence, the system of trade which developed in the two territories
had three main components: large-scale import and export trade; medium-
scale bazaar (pasar) trade; and small-scale itinerant or peddling trade. Large-
scale import and export trade was based on the export of the mineral and
agricultural sectors and the local distribution of consumer necessities. The
chief exports (Sarawak - gold, petroleum, pepper, sago and rubber; Sabah
- tobacco, timber, copra, cutch and rubber) reflected the primary nature of
Sarawak and Sabah's production base. The major imports (machinery and
consumer goods) indicated the low priority accorded to consumer goods
manufacturing in these states, and reflected the demand for foodstuffs not
produced locally or produced in insufficient quantities, especially rice.
This large-scale trade was mainly controlled by the European
(predominantly British) agency houses who handled the trade and
commercial activities in the state and dealt in bulk or wholesale
transactions. Through their activities they connected Sarawak and Sarawak
to the international economy. These mercantile firms not only controlled
the import and export trade but also the services associated with this trade,
including insurance, banking and shipping. The international import-
export trade was concentrated in a relatively narrow strip along the western
coast of Borneo and flowed to either Britain or Singapore.
The medium-scale bazaar trade was controlled by Malay traders and
Chinese merchants who gradually superseded the former. The Chinese
merchants in particular traded through the European agency house or
individual merchants in towns. Among them the Tiechiu and Hokkien
dialect groups predominated. Each group was linked with firms in
Singapore operated by members of the same dialect group. The Chinese
groups were more than traders. They were also money lenders, particularly
in the interior, and promoted the expansion of pepper, gambier and rubber.
This group met a vital need by providing credit to Chinese and indigenous
smallholders and in turn controlled the marketing of the produce of the
smallholders. In Sarawak they were forbidden from residing in the interior
and were confined to the bazaars located at the forts. They even had to
provide lodgings for their Dayak customers who had travelled downriver to
SOUTH CHINA SEA
Towns
K* Branches
| Agents
Sf Forests
& Mines
fig> Rubber Estates

SARAWAK
U Pepper
O • Busau
Krokong
50 km
INDONESIAN BORNEO
Map 6 The Borneo Company in Sarawak

trade with them.111 There was some distinction between the types of
goods sold by urban and rural bazaar merchants. In the urban bazaars the
merchants stocked practically every commodity needed or desired by their
customers; in the rural bazaars where periodic marketing systems
developed the main items were cloth, salt, iron and foodstuffs.
The itinerant traders or 'boat peddlers' operated upriver in the interior
and exchanged small quantities of imports in return for local goods and
forest products. Theirs was a perilous livelihood. These itinerant traders
also comprised both Malays and Chinese although here again the Malays
were progressively unable to compete with the Chinese. (See section on
sago exports above). All these three components were interdependent and
complementary. During the Brooke and Chartered Company period
therefore, the various ethnic groups settled into economic relationships
which were to characterise their subsequent roles during the colonial
period (1946-1963).
The changing composition of the two territories' main exports is
shown in Tables 3.14 and 3.15.
As shown below, the three main commodity categories were jungle or
forest products; processed or manufactured goods (sago, cutch) and goods
such as tobacco, pepper and rubber; and mineral exports. In Sabah the first
two categories predominated while mineral exports were insignificant; in
Sarawak by 1929, with the emergence of the petroleum industry, mineral
products comprised almost three quarters of the state's exports.
Furthermore, in Sabah the increased importance of the first category,
jungle exports in 1929 can be attributed to timber exports.
Overall, the most interesting feature where trade is concerned is the
development of an export surplus in both states, as shown in Tables 3.16
and 3.17 below. Table 3.16 shows the import-export values for 1870-
1915 while Table 3.17 shows the import-export values after the First
World War.
As discussed in the preceding sections, the development of an export
surplus can initially be attributed to tobacco in Sabah and minerals
(gold/antimony) in Sarawak. Subsequently, other commodities entered the
scene - rubber and timber in Sabah and petroleum and rubber in Sarawak.
By 1939, both states were consistently recording a small surplus in trade
and their economies had become firmly peripheralised and dependent on
international trade. They had also become much closer to the economies
of Singapore and Malaya, with established mercantile networks, currency
systems and banking institutions.
Table 3.14 Sarawak: Exports by Value, 1900-1929
Total Jungle Processed Minerals

$ % % %
1900 5217036 31 43 19
1910 7 909 071 31 58 12
1915 8 357 663 21 48 22
1920 18 067 121 13 41 40
1925 56011 036 3 48 45
1929 63311 501 6 18 72
Source: CO 802: Annual Reports of Sarawak, cited in M.C. Cleary,

'Indigenous Trade and European Economic Intervention in
North-West Borneo c. 1860-1930', Modern Asian Studies 30,
2 (1996) p. 317
Table 3.15 Sabah: Exports by Value, 1890-1929
Total Jungle Processed Minerals

$ % % %
1890 902 290 33 50 0
1898 2881 851 27 65 0
1908 4 572 001 25 65 0
1916 9 223 487 15 73 4
1925 17861 147 13 81 3
1929 11 680614 32 61 4
Sources: 1890-98: Diplomatic and Consular reports 1908-29: CO 648

British North Borneo Administration Reports, cited in
M.C. Cleary, 'Indigenous Trade and European Economic
Intervention in North-West Borneo, c. 1860-1930', Modern
Asian Studies 30, 2 (1996) p.316
Table 3.16 Sarawak and Sabah: Import and Export Values, 1870-1915
Sarawak Sabah
Year Imports Exports Imports/ Imports Exports Imports/
Exports Exports
(%) $ $ (%)
1870 1 329 1494 89 - - -
1875 749 799 94 - - -
1 1
1880 1091 1 193 91 430 159 270
1885 1202 1 157 104 648 402 161
2 3
1890 1310 1 616 81 2018 901 224
1895 1 705 2 089 82 1 664 2 131 78
1900 3 395 5 035 67 3 179 3 336 95
1905 5 195 7 230 72 2837 4537 63
1910 5982 8011 75 3 801 4 609 82
1915 8433 10288 82 4 117 7 397 56
Notes: 1 1883 figures.
2 Calculated from data in E.P. Guerritz, unpublished paper
on Sabah (1897).
3 E.W. Birch, Report on North Borneo 1903, gives $1391.
Sources: Sarawak, 1870-85, Sarawak Gazette, 12 May 1887; 1885-
1900 Annual Report Department of Customs and Trade
1925; Sabah, Annual Reports, Chartered Company, various
years.
(Personal communication, John Drabble.)
Table 3.17 Sarawak and Sabah: Export and Import Values, 1919-39
($million, current prices, rounded)
Sarawak Sabah
Year Exports Imports Balance Exports Imports Balan<
1919 24.0 20.3 3.7 12.5 7.7 4.8
1920 22.4 19.9 2.5 11.9 10.8 1.1
1921 18.5 15.2 3.2 7.8 7.6 0.2
1922 25.6 16.5 9.1 8.2 6.8 1.4
1923 35.0 14.9 20.1 10.4 6.5 3.9
1924 36.8 16.7 20.1 11.2 7.1 4.1
1925 56.0 21.1 34.9 17.9 7.3 10.5
1926 53.5 24.2 29.3 17.0 8.3 8.7
1927 49.7 22.7 27.0 15.5 9.0 6.5
1928 54.5 21.4 33.1 11.4 8.4 3.0
1929 34.7 22.7 12.0 11.7 8.2 3.5
1930 24.9 16.4 8.5 9.0 6.3 2.7
1931 > 17.4 10.4 7.0 7.0 3.8 3.2
1932 13.6 9.7 3.9 5.8 3.3 2.5
1933 14.3 11.3 3.0 6.0 3.4 2.6
1934 21.5 14.0 7.5 9.7 4.8 4.9
1935 21.1 16.4 4.8 7.8 5.1 2.7
1936 24.6 18.3 6.4 9.0 5.3 3.7
1937 32.7 22.9 9.8 14.3 6.8 7.5
1938 26.1 22.4 3.7 9.5 6.4 3.1
1939 34.4 26.2 8.2 13.5 6.5 7.0
Source: (Personal communication, John Drabble)

4
Economic Frameworks, Policies and the

State
In the socio-economic transformation of the two territories, provision of
bureaucratic and economic frameworks formed the most significant of the
services provided by the two administrations. One, as discussed in
Chapter 1, was the enforcement of law and order and the assurance of
security. Another was an effective legal and administrative system that
included the formulation of a western-type land tenure system which
replaced traditional systems of landholding. As discussed in Chapter 3,
legislation and a licensing system were also introduced to deal with
mining, forest resource utilisation and the mobilisation of other resources
in the states. A third was a sound financial system. Both governments
linked the two territories' currency to the Straits dollar and ultimately to
sterling, which provided the stability needed for currency exchange, and
they also facilitated banking and insurance facilities. Two key elements of
economic management however, were the provision of infrastructure,
especially transport, and the organisation of labour, both of which are the
focus of discussion of this chapter.
Transport Development
It is in transport development that a major difference between the Brooke

and Company administrations becomes evident. While the Chartered
Company acknowledged the importance of transport as a key factor
influencing economic development, the Brookes were reluctant to invest
in this sector, preferring to rely on the extensive river systems.
Consequently, developments in land transport in Sarawak were minimal
and water transport continued to play a pivotal role in the maintenance of
both national and international links. It is therefore pertinent to trace the
history of transport in each state in order to assess the changes introduced
by the two administrations.
The vast majority of the population of Sarawak in the mid-nineteenth
century lived along river banks and rivers were as the chief means of
internal communication, serving as the links by which the export and
distribution feeder services operated. There were no roads in the interior
and to travel inland the traveller had to proceed upriver by launch,
outboard-boat, paddling, and then poling his dugout in that order.
Sometimes there were jungle paths connecting the rivers, providing short-
75
cuts but generally the only means of progress was by water.1 Sarawak's
trade links and patterns were influenced by geographical and political
factors so that trade flowed in two directions - one towards Kuching and
the coast (the seat of administration) and the other towards Sambas in
Dutch Borneo. Chinese goldminers who had been mining gold near
Pangkalan Tebang and later Bau, conducted trade with Sambas in Dutch
Borneo, not Kuching. Their autonomous existence was ultimately
challenged by James Brooke and after the Chinese uprising of 1857 the
Borneo Company took over mineral exploitation in the territory.2 The
trade with Sambas was disrupted and henceforth trading links were with
Kuching and the lesser ports that emerged during the period.
Chinese traders had also been participating in Sarawak's trade for
centuries and several archaeological finds have been made at the Niah
Caves in North Sarawak and at Santubong on the Sarawak River.3 The
Chinese brought ceramics, beads, gold, silver and silk and exchanged these
for products like camphor, rattans, resin and birds' nests. When the
Brooke state was established in 1841 these earlier links were strengthened
and the Chinese traders, alongside the European merchants, facilitated the
integration of Sarawak's economy into the international economy.
Apart from the Chinese traders, there were Malay traders who inhabited
the coastal areas of strategic river mouths and the confluences of major
rivers and their tributaries. The Malays evolved a special relationship with
the upriver indigenous people through political control of river traffic and
the imposition of taxes, tolls and tribute payments. Trading and raiding
were intertwined, with the Malays relying on the Sea Dayaks to raid
neighbouring communities. Through the activity of these Malay traders,
who dominated inter-island and archipelago trade, the up-river
communities were integrated into the regional economy.4
Under Brooke rule, Chinese traders virtually took over as the trading
partners of the Dayaks through the system of bazaars set up by the
administration at the fort stations. As noted previously, the Brookes
administered Sarawak on the basis of the river systems and forts were
built at the mouths of the important rivers. These forts, which
symbolised Brooke authority, enabled government officials to control
river traffic, whether of commerce or of people. The forts also became the
nucleus of settlements or towns and the internal configuration of such
settlements reflected the Brooke policy of administrative convenience.
Near the fort and usually parallel to the all important river was a row of
Chinese shophouses which constituted the bazaar. At either end of the
fort-bazaar nucleus were the Malay kampung areas. Every waterside
village had boat-building facilities for its own requirements. There were
no Dayak longhouses in the town area and Dayak officials appointed by
the administration ensured that the Dayaks stayed in their designated areas.
Apart from the itinerant boat hawkers who peddled their wares from
upriver community to community, the Chinese were not allowed to reside
Economic Frameworks, Policies and the State 11
at upriver settlements. Chinese shopkeepers therefore had to accommodate

Dayak customers who came downriver to trade. The typical bazaar shop
was a two-storey building, divided into five or six combination mercantile
and living establishments with adjoining kitchens at the back. Family
quarters were upstairs and there was invariably a sleeping loft for Dayak
customers who wanted to spend the night in town. The Chinese shops
traded in salt fish, kerosene oil, rice, flashlight batteries, cloth and silver
belts. These were bartered for rubber, rice, sago, gutta percha, rattan,
damar and jelutong.5 Thus Brooke policies and the security created by the
presence of the forts resulted in confining Chinese traders to the bazaars
and by making the Dayaks come down to them, integrating the Dayaks
more fully into the regional economy.
The major rivers, the Rajang, Sarawak, Batang Lupar, Baram and
Limbang, were unconnected except for the Rajang River system, which
comprises the Rajang itself and nine shorter waterways which branch from
it between the mouth and Sibu port. One of the Rajang waterways, the
Igan, was joined to the Oya River by means of a small channel (known as
the Kut waterway /channel) and it enabled the Oya to be reached from the
Rajang entirely by inland waterways. It was used mainly by native
dugouts. Otherwise, travellers had to go down to river mouths to ascend
neighbouring rivers. Internal travel was not only arduous and time-
consuming but also expensive.
River transport was complementary to sea carriage. Coastal ships
carried much of the merchandise that moved from one river system or fort
to another. Sea communications were thus crucial to Sarawak's trade with
Singapore, and from the outset James Brooke ran his own ship, The
Royalist, on the Kuching-Singapore run together with another ship, The
Swift. The early cargoes included antimony ore, gold and jungle produce.
The Borneo Company, the principal concessionaire in Sarawak, brought
in another steamer, Sir James Brooke, to handle the trade in the
government-controlled monopolies of antimony, coal and sago. By the
early 1870s, two developments made improvements in transport even
more imperative. One was increased trade (by 1870, Sarawak's export
trade alone was valued at $1 494 241),6 and the other was the realisation
that the government steamer had become the only link with Singapore for
most of Sarawak's inhabitants. Charles Brooke encouraged the newly
established Sarawak Chamber of Commerce (which had been set up to
advise the government on commercial matters and which repeatedly
complained about the lack of shipping services), to form its own shipping
line. He even offered to sell his Royalist to it. The Rajah's offer was
accepted by the Chamber of Commerce and in August 1875 the Singapore
and Sarawak Steamship Company was inaugurated. Apart from the
involvement of the leading Chinese sago-flour exporters, the principal
shareholder was the Borneo Company, which also acted as manager. The
new company purchased the Royalist and also had another steamer, The
Rajah Brooke, built. The shipping company's main trade was with
Singapore though it occasionally engaged in trade as far north as Labuan.
Despite the fact that the shipping company made a profit from its
monopoly of the sago carrying trade and the transportation of labour from
Singapore to Kuching, it maintained irregular schedules and the Sarawak
Gazette in the 1890s is studded with complaints of poor and irregular
service. In 1896, Rajah Brooke ran aground and was a write-off. This
naturally disrupted trade, and the company was accused, among other
things, of having a monopoly of trade and transit. Attempts by
individuals to offer alternative services were unsuccessful, as were Charles
Brooke's efforts to persuade the company to provide more regular services.
Subsequently, in 1908, Charles transferred two small government
steamers, Adeh and Kaka to the company in return for an assurance of
better services. In addition to the services with Singapore, the company
was required to provide a service that 'turned right' on leaving Kuching
and to trade with the Rajang, Limbang and Baram Rivers which were then
being opened up. This arrangement continued until 1919 when Chinese
interests in Sarawak bought out the Borneo Company's shares; liquidated
the former company; purchased its four steamers and established the
Sarawak Steamship Company.
Apart from the very valuable links with Singapore, the new shipping
company also inaugurated a direct service between Sibu (the site of a new
Chinese settlement) and Singapore. This run was unprofitable and was
subsequently discontinued. Instead, a branch office was established at Sibu
and the new company instituted a policy of local trade links all along the
Rajang and other rivers. Communication links with Singapore were also
improved. The Sarawak Steamship Company was managed by Edward
Parnell, a senior Brooke official loaned to the company and a personal
friend of Vyner Brooke. The Borneo Company managed the wharves, acted
as Lloyds' Agent in Sarawak, and maintained an active interest in
shipping, insurance and general trading activities. The shipping
company's fortunes depended on the export trade and following the trade
depression of the 1920s it incurred heavy financial losses. Subsequently,
it was taken over in 1931 by the Straits Steamship Company, a
Singapore-based concern.7
The Straits Steamship Company established branches at Sibu and
Bintulu and installed agents at all small river and coastal ports. The
services provided by the former shipping company were scheduled to fit in
with the regular runs to Singapore and other parts of Southeast Asia.
Thus after a period of ninety years, regular and frequent links were
established between Sarawak, Singapore and other parts of Southeast Asia
(see Map 7). The new services, which linked all the important producing
centres, meant that Sarawak's exports - rubber, rattans, pepper and other
jungle products - had easy access to the Singapore market. Most of the
local markets, especially in rubber, lasted only for the few days when the
Tutoh
Bintulu
Kuching
N
S"
Singapore to Sibu Co
Rejang
Kuching \ ^
100km
Map 7 Sarawak: Major Rivers and Shipping Lines

steamer was in port and provided an opportunity for the indigenous people
to participate in the wider trading network.8 With economic integration
came political integration and the shipping links had a dual function.
There was a contraction in economic distance between the hitherto fairly
remote areas of Sarawak which in turn led to a closer integration of
Sarawak as a territorial unit. Water services therefore united the diverse
territories of the Brookes.9
Land transport was little developed for a number of reasons. A
consistently wet swampy environment downstream inhibited movement
by land, while the dense forest was difficult to penetrate. The main arteries
of transport and economic activity were coastal, as was the chief town,
Kuching. Settlement inland was scattered, although the proximity of river
transport was a significant locational factor. For movement in the interior
the Dayaks built batang (literally tree stem/log paths) which were raised
footpaths consisting of logs laid from end to end, sometimes stretching
for a short distance. They were precarious and required adept footwork. A
little slip, as many a Brooke official found to his chagrin, meant an
unexpected 'mud bath' and an 'undignified appearance'. These paths,
which ran into the forest from villages located along river banks were
intended to facilitate the collection of forest products and were not really
designed for communication. The Dayaks also slung rope bridges across
the rivers to facilitate movement in the interior.
The Brookes were reluctant to undertake costly developmental
initiatives and believed that road construction was an unnecessary
expenditure since most settlements and crops (for example, sago and rice),
were located near rivers. Monopoly concerns like the Borneo Company
and Sarawak Oilfields built their own roads to serve their concessions, but
these were short, local roads. Consequently, the only roads that were
constructed during the first seventy years of Brooke rule were bridle paths,
which were nothing more than grass tracks four to five feet wide, and
short, poorly surfaced or unsurfaced earth roads. The bridle paths were
suitable only for ponies, or in places, bullock (oxen) carts, and connected
administrative posts with the outlying districts. The roads were restricted
to the immediate vicinity of the towns and the main distinguishing feature
was that they were not connected to each other.
In the 1930s there was a change in policy on road and bridle path
construction under the third Rajah Vyner Brooke and road development
was aimed at providing connections to navigable rivers to improve access
in the country. This policy was largely influenced by Dayak 'unrest'
between 1931 and 1934 and government realisation that the old system of
administering the Dayaks by means of regular visits to the ulu (interior)
from stations on the coast or at mouths of rivers was no longer effective.
It now became imperative to set up government stations in the interior
and this entailed the construction of bridle paths and roads to provide
access there to maintain political stability. Another reason was to
facilitate the implementation of the International Rubber Regulation

Agreement which required regular policing of the interior gardens. A third
motive was to open up more land for Chinese agriculturalists and promote
colonisation along the roads. Funding was a key determinant in the
successful implementation of this policy and Vyner Brooke's reluctance to
expend funds in this direction meant that no blueprint for road
development materialised other than uncoordinated efforts. As a matter of
fact, the only road that resulted from this policy was the Kuching to
Serian road, which by 1940 totalled forty miles.10 Consequently, where
road construction was concerned the Brooke record was dismal, as shown
in Table 4.1 below.
Table 4.1 Road Mileage in Sarawak, 1939
Divisions
Type of Road *1 2 3 4 4 5 Total
Unimproved
earth and non-
surfaced - 34.00 ** 62.33 136.50 232.83
Improved
earth, sand,
clay or gravel - 39.50 ** 66.25 22.0 176.25 304.00
Waterbound
macadam _ _ _ _ 46.00 46.00
Not specified 30.00 - - - 32.75 62.75
Bridle paths 32.75 36 44.50 40.5 217.50 371.25
Macadam surface
and penetration _ _ 38.00 _ 68.00 68.00
Concrete
surface - _ _ _ _ 1.00 1.00
Total miles 136.25 92 211.08 62.5 678.00 1 179.83
Notes: * No information available
** Total of 56 miles in these two categories
In the Kuching Municipal Area (First Division) there were
29.22 miles of road, of which 15.9 miles were surfaced.
Outside Kuching there were 84.5 miles of road of which 13
miles were surfaced.
Source: Public Works Department, Sarawak, Annual Report 1939,
Census of Road Mileage, p. 1.
As noted above, most of the roads were short and built in the
immediate vicinity of the larger towns. The main exceptions were the
Miri to Lutong road built by Sarawak Oilfields (to link its petroleum
operations at Miri with its refinery at Lutong) and the economically
important Kuching to Serian road. Writing about the latter road in 1951,
an observer commented that the journey between Kuching and Serian took
less than 90 minutes by road while a similar journey by water took 8
hours by launch to Simunjan (on the Sadong River) and thence 4 hours
by outboard to Serian (making a total of 12 hours travelling time).
Additionally road travel could be undertaken at any time while water travel
was dependent on the vagaries of the weather.1 {
The introduction of roads led to changes in the modes of transport.
Bullock carts were introduced in the mid-nineteenth century and together
with porters and handcarts served as the main modes of transport. The
rickshaw was introduced in the last decade of the nineteenth century and
became very popular in the towns. Rickshaw stands were set up at various
points and in 1896, legislation was introduced to regulate rickshaw traffic.
In the early twentieth century bicycles appeared on the scene and in 1912
the first public motor service for the conveyance of goods and passengers
between Kuching and the Seventh Mile Rock Road was started. Private
taxis also made their appearance in the twentieth century.12 Nonetheless,
boats remained the main mode of transport in a country where waterways
were the principal means of communication.
The only railroad in the country was built during Charles Brooke's
time to open up the hinterland near Kuching. It had a very short life span
and only ever ran as far as the tenth mile although by 1917 a survey had
been completed to the twenty-seventh milestone. Track-laying commenced
in 1911 and the railway was opened officially to traffic during 1915.
Labour employed on the construction of the line was mainly Indian and
Chinese. The fare was two cents per mile. Subsequently, the construction
of a road parallel to the railway sounded its death knell. Furthermore, the
railway had relied on coal from the Sadong colliery (one of the two coal
mines in Sarawak) and the closure of this colliery in 1931 also affected its
future. The line was officially closed to regular traffic in January 1931 and
total losses on the railroad totalled $1 063 760. Subsequently, it was used
to transport stone from the quarries at the seventh mile to Kuching.13
In summary therefore, after a hundred years of Brooke rule, inland
waterways still retained much of their significance as the traditional
highways of Sarawak and the main areas of development and population
concentration remained closely linked to the coast and the major rivers.
Coastal trade and communication depended upon small vessels plying
regularly between Kuching and the main coastal and river ports. Most of
these local coasters acted as feeders to ocean-going vessels calling at
Kuching and Sibu. Thus a pattern of internal water transport had
developed which involved extensive transhipment and extra handling of
cargo, often more than once, before the destination was reached.
The impact of poor land and sea communications was
disproportionately felt in Sarawak by the poorer classes. As a result of the
time-lapse involved, there was an increase in the number of times goods
and services had to be handled between producer and consumer, each single
step being paid for at a comparatively high rate. Additionally, the actual
number of people engaged in the provision of these services comprised a
disproportionately high percentage of the total costs. The overheads
resulting from poor communications were thus enormous, especially for
the rural population. Finally, the facilities that were provided served the
export industries and stimulated the growth of export commodities.
Transport links which served to integrate the domestic/native economy
were generally assigned a lower order of priority or simply ignored.
Sabah's economic development was closely linked with the growth of
its trade with the outside world. Trade lines and patterns were influenced
by geographical and political factors so that in reality trade flowed in two
directions - one towards the east and the other towards the west.
Consequently, there were hardly any trade or communication links
between the two regions. Under Chartered Company administration, five
main anchorages served initially as gateways to these regions: in the east,
Sandakan and Tawau, and in the west, Labuan, Gaya Island and Kudat (See
Map 8). These gateways were linked to the interior by the natural
highways of the territory - the rivers. In the early days, it was
'government by expedition' along the natural highways to proclaim the
Chartered Company's presence in Sabah and to keep the peace in the
territory.
As the main mountain range, with it southwest-northeast orientation,
is much nearer to the west than to the east, rivers in the west are inferior
in length to those on the east side. The rivers on the east served as
permanent highways to the interior. Since the early days of Chinese
traders, who sailed up the Kinabatangan River for birds' nests, movement
into the interior was along the rivers Labuk, Sugut, Kinabatangan and
Segama. Most of the larger villages were situated along the rivers and all
the independent chieftaincies were shaped around the river estuaries. In the
west, there were large settlements along the rivers and coast. The early
explorers relied entirely on the rivers to reach the interior parts of the
country. Thus navigable rivers were a determining factor in both social
and economic development in Sabah. They gave the names to the districts
through which they ran and the boundary between two Residencies was
generally formed by a range of hills, often a watershed of two river
systems. The rivers also functioned as the main arteries of commerce,
particularly for the long distance conveyance of heavy goods. For the
villagers, the river was the high road, the water supply, the bath and the
drain. Within the peasant economy, rivers therefore served as the main
means of internal transport and trade linking river mouth 'capitals' or
HEIGHT IN METRES
Ku Jat
0 50 km
OVER 500 i ,
SOUTH CHINA SEA
Gaya Island } %
Jesselton
Sandakan
Labuan
Island.
^nib**1*
Lahad
Tawau
KALIMANTAN
Map 8 Sabah: Relief and Rivers

outposts with upstream villages and providing the only practical means of
penetrating the swamp belts of the interior.
River transport was complementary to sea carriage. Coastal ships
carried much of the merchandise that moved from one river system to
another and to the major trading anchorages. Coasters penetrated the
estuaries, chieftains set up 'custom houses' to monitor trade and collect
customs dues along the rivers. Goods were transhipped into shallow
draught sailing craft, poling boats or rafts and taken upriver to smaller
villages. The interior villages functioned as local centres of commerce and
were sources of forest products such as damar, rattan, gutta percha and
bamboo and markets for goods brought upstream such as salt, fish and
rice. Where coastal shipping was concerned, Sabah was favourably
situated in relation to ocean routes, being about midway between Hong
Kong and Singapore. Vessels trading with China and Japan during the
northeast monsoon went to harbours on the west coast. On the east coast
trade was mainly with China and Australia and was centred on Sandakan
and Cowie Harbour. The main export item from this region was timber.
During the nineteenth century Singapore's trade with northern Borneo
was largely with the western and northern rivers by prahu or junk. When
the Chartered Company was formed, Dent was not in favour of the
Company operating a regular shipping service between Singapore and the
territory. Hence while Sabah was being opened up, shipping services with
Singapore were on an irregular basis only, and were aimed at developing
trade links with the new outposts at Sandakan and Kudat and those on the
Padas, Papar and Tempasuk Rivers. By 1890, some six steamers plied
between Sabah and Singapore and two ran to Hong Kong. Each completed
a round trip, with calls at the various ports, in about sixteen days. The
Chartered Company also relied on launches to maintain communications
between the stations and the rivers. The expansion of the tobacco industry
in the 1880s led to an agreement with Behn Meyer and Company (a
well-established German firm in Singapore and elsewhere), who were the
agents for Norddeutscher Lloyd, to provide a fortnightly steamer service
from Singapore to Labuan, Jesselton, Kudat and Sandakan. During the
First World War, the German ships anchored at Zamboanga in the
Philippines and Sabah was completely cut off from the outside world.
Subsequently, the Chartered Company signed an agreement with the
Straits Steamship Company, a Singapore-based company, to establish a
regular weekly steamer service between Singapore and the Sabah ports,
calling at Sandakan, Miri (Sarawak), Labuan, Jesselton and Kudat on both
outward and homeward journeys. In 1927 a local steamship company, the
Sabah Steamship Company, was formed to provide weekly or fortnightly
services to smaller ports such as Lahad Datu, Semporna, Tawau and
Usukan, in addition to the larger ports of Labuan, Sandakan, Jesselton and
Kudat. The Sabah Steamship Company services complemented those of
the Straits Steamship Company. Although other companies also ran
monthly services which linked Sabah with Hong Kong, Manila, Japan,
Dutch Borneo, Java and Australia,14 the Straits Steamship Company had
an almost complete monopoly of the carrying trade to and from
Singapore.
Financial constraints, the nature of the physical terrain and
inaccessibility precluded any large expenditure on land transport. On the
east coast, the development of land transport was hindered by a
consistently wet swampy environment down river, dense tropical forest
and a mountainous interior. Footpaths or jungle tracks emanating from
one village to another allowed minor trips to the outer fringes of
settlement to collect forest produce. These forest paths were subsidiary to
the rivers, serving to extend the basic network rather than existing as a
separate entity. Forest paths also served as connecting links between river
systems. On the west coast, the rivers were unsuitable for navigation and
could not be used as highways for trade and communication. Here, a
network of land routes consisting of jungle tracks evolved. These land
routes were mere tracks 'winding in and out between buttressed trunks of
the gigantic forest trees, descending steep slopes, running first on one
side, then on the other of rushing hill streams, and often a foot deep in
slippery mud'. 15 On these jungle tracks, the beast of burden was the
kerbau or buffalo and in indigenous society, the buffalo was currency,
transport, tractor and food.
In the late nineteenth century therefore, in the absence of land
transport, it was the waterways that facilitated the expansion of Sabah's
two major export commodities, tobacco and timber, which were centred
on the east coast. Tobacco, restricted by location to the river banks where
soils were excellent for its cultivation, and by the availability of water
transport, was the mainstay of the Chartered Company's revenues
initially. In 1885, tobacco exports were valued at $1619. By 1895, the
figure had increased to $1 176 000 and represented more than fifty per cent
of the value of total exports.16 As discussed previously in Chapter 3,
when plantation tobacco collapsed in the early twentieth century, timber
took over and sustained economic activity on the east coast, again centred
on the great river systems there, and kept alive ports such as Sandakan,
Lahad Datu and Tawau.
On the west coast, it was the railroad and rubber that facilitated
capitalist expansion into the region. Railroad development can be traced to
the dream of one of the principal Chartered Company shareholders,
W.C. Cowie. Cowie believed that railway construction and economic
development went hand in hand but his initial railway proposal was turned
down, Subsequently, he managed to get his railway project approved when
he was appointed to the Court of Directors of the Chartered Company.17
Although Cowie had dreams of a trans-Bornean railway, the first part
of his railway project involved the construction of a west coast line.
Construction commenced in 1896 and the line was completed in 1905. It
was a metre gauge railway, 116 miles long and became the principal
means of communication along the west coast to Melalap in the interior.
It ran in a southerly direction from Jesselton to Beaufort, 56 miles away,
traversing a comparatively flat, coastal strip. Leaving Beaufort it ran
through hilly country and climbed approximately 700 feet through the
Padas River gorge to Tenom, 30 miles from Beaufort. From Tenom it ran
a further 10 miles to its terminus at Melalap in the interior. A branch
line, 20 miles in length, connected Beaufort to Weston, a small port on
Brunei Bay, which was linked by coastal shipping with Labuan. These
rail and shipping links are shown on Map 9.
Cowie's ideas that development advanced along railway tracks bore
fruit as the rubber industry expanded along both the Jesselton-Beaufort
line and the Beaufort-Weston line. Large tracts of land all along the track
or in its vicinity were acquired by European planters to cultivate rubber.
Chinese settlers were brought in to 'colonise' the line and they also went
into rubber cultivation, as did the indigenous inhabitants (see section on
rubber in Chapter 3). Rubber cultivation went hand in hand with track
expansion. In 1907, 1 306 ha were under rubber, and exports totalled 2.26
tonnes. By 1940, the acreage had increased to 53 812 ha while exports
totalled more than 17 900 tonnes.18 Rubber also became Sabah's leading
export. The railroad assumed the role of principal inland carrier and the
chief export commodities transported included rubber, timber, stone, sago,
jungle produce (damar and rattan), palm leaves and firewood. Under
imports, the main commodities were rice, 'shop goods', iron and
manufactured goods, kerosene oil and household provisions such as sugar
and salt. The railway thus facilitated and intensified the export-orientation
of Sabah's economy.
However, by the time of Cowie's death in 1919, the railroad was but a
light pioneer line and improvements were required to enable it to cope
with the increased traffic volume. The new Court of Directors hired two
railway consultants from Malaya to prepare a report on the railway. The
consultants 'condemned' the Jesselton to Beaufort line and recommended
that it be completely rebuilt and placed under the direct control of the
Sabah government. Repair and reconstruction commenced in 1921. A
considerable portion of the line which had 30 pound rails was rebuilt with
60 pound rails. A number of wooden bridges were dismantled and replaced
with steel structures and dangerous curves were eliminated. Additionally,
several new stations and buildings were erected at Tanjung Aru (north of
Jesselton) to serve as the central workshops while locomotives and rolling
stock were also increased. The loans incurred to pay for the railroad's
reconstruction subsequently saddled the Company with a heavy debt
burden throughout its existence.19
Nevertheless, the railway's economic and strategic role in Sabah was
remarkable. The railroad resulted in the development of districts all along
its track length and the opening up of agricultural land. It also brought the
a
cP SHIPPING ROUTE
RAILWAY
INTERNATIONAL
Kudat
BOUNDARY
SOUTH CHINA SEA
^>
Gaya Island
Jesselton
Labuan
Island
fee
Beaufort
Bukau *û^ />
5>*-fTenom
i Tawau-
KALIMANTAN
Map 9 Sabah: Rail and Shipping Links

interior, a comparatively unknown and inaccessible region (which had

previously been a three to ten day walk from the coast), to within an easy
day's journey from Jesselton, the new capital, and enabled the
administration to run the state more efficiently. The railway also led to
greater internal mobility and facilitated immigration into the state.
In 1922, a Chartered Company official, Owen Rutter commented:
Though still liable to wash-outs, which dislocate traffic for
several days, the State Railway has been improved greatly in
recent years. Of old there were few who cared to risk a long
journey without a large basket containing two days' rations,
and its eccentricities inspired an anonymous bard to sing:
Over the metals all rusted brown,
Thunders the 'mail' to Jesselton Town;
Tearing on madly, recking not Fate,
Making up time - she's two days late.
See how the sparks from her smoke-stack shower,
Swaying on wildly at three miles an hour.
Sometimes they stop to examine a bridge,
Sometimes they stick on the crest of a ridge;
Sometimes they find the line washed away
And postpone their advance till the following day.
Beaufort to Jesselton - tour of delight -
Taking all day and the best of the night,
Over the metals all rusted brown
Drives on the mail to Jesselton Town.20
Road transport did not feature prominently in the Chartered Company's
plans until 1902 when the British Colonial Office 'loaned' an able and
experienced administrator, E.W. Birch, as governor to Sabah. One of
Birch's first actions as governor was to implement a development strategy
that entailed the construction of a network of bridle paths to link up the
previously isolated outposts, especially in the West Coast and Interior
Residencies. The task of constructing the bridle paths fell upon the local
district officer. Each district officer had to trace and construct paths in his
district varying from between two to two-and-a-half metres wide with a
gradient between 1 in 12 to 1 in 15, and bridged to suit local
requirements. The paths ran in a line from north to south and
consequently offered a fairly easy means of access to the more populated
areas. At frequent intervals, there were a series of halting (rest) houses
which offered separate sleeping accommodation for travelling Chartered
Company officials, their carriers and servants for overnight stops. The
tracks were built and maintained by local labour levies under the district
officer's direction in return for food, drink and tobacco. Each man was
allocated 22 yards (a chain) a year and it took about six to eight days to
complete construction of an individual section. Buffaloes were either
barred from these paths or their owners were charged for using them. In
most cases the paths remained a European means of communication. The

locals preferred their own tracks, which were time-saving, though
strenuous. These bridle paths were also seen by the locals as disturbing
the spirits which they believed inhabited the landscape. Their own tracks
either avoided dangerous spirits or enjoyed a tradition of safety though
placatory offerings.
The forced labour levies, such as the construction and maintenance of
bridle paths and the provision of carrier service, were resented by the
indigenous people. Some people even migrated to Dutch territory to avoid
work on the bridle paths. Others were defiant and openly rebelled against
the Chartered Company.21 In some instances, villagers were paid to work
on road construction in the towns. Initially, they were paid in fathoms of
cloth but were later, and especially after 1914, paid in cash. The cost of
bridle path construction varied between $300 to $500 per mile while
maintenance was about $80 per annum.22 As the century progressed,
gangs of workers were also hired to maintain paths on the basis of one
worker for every four miles of bridle path when it became 'unfashionable'
to used forced labour.23
By 1929, the bridle path system in the Interior and West Coast
Residencies totalled a length of about 640 miles. The main artery of the
system ran from Tenom to Keningau, thence to Tambunan and onwards to
Ranau covering a distances of 115 miles. To the southeast of the main
artery was a 250 mile path in the form of a loop which encircled Murut
territory. This portion took twenty-two years to complete. From
Keningau the route ran via the Suk River to Sapulot, thence to Agis and
Pensiangan where it bent back via Rundrum, Kambong, Sapong and
Tenom.24 The bridle paths also served as feeder roads to the railway. To
quote the Resident of the Interior Residency:
There are three main outlets for produce from the Interior
Residency, in the West by railway from Melalap to the
Coast; in the North by bridle path to Usukan in Kota Belud
District; in the south by river to the coast in Dutch Borneo.
All are connected by a system of bridle paths. Produce also
filters out from Tambunan district by native tracks to the
vicinity of Jesselton.25
When telegraph lines were constructed, they followed the bridle paths,
linking all the west coast and interior stations so that the stations had
telegraphic communication in addition to land links. These bridle paths
were an important factor in the smooth and easy administration of the
territory and established the peace that was so vital for the exploitation of
the country by foreign capital. The travelling district officers with their
entourage of police detachments were frequent reminders of the
Company's power and awareness of their presence led to rapid pacification
of the different communities in the territory.26
Although the bridle paths promoted and assisted local trade, Company
officials acknowledged that these paths were inadequate for large-scale

enterprise and that 'only roads capable of carrying wheeled traffic' would
open up the country. Prior to 1914, roads were confined to the larger
administrative centres of Kudat and Sandakan. Here, apart from pony
traffic, there were a few jinrickshaws. The Company's finances however
were inadequate to support a large-scale road programme in the first quarter
of the twentieth century.
The development of the internal combustion engine, the introduction
of pneumatic tyres, technical advances in road surfacing and maintenance,
the convenience of road haulage services and the general upturn in the
economy following the rubber boom made it imperative to 'push roads in
all possible directions' as finances permitted. A scheme to extend the west
coast railway line from Jesselton to Tuaran (a fertile and prosperous
district 20 miles north of the railway terminus) was dropped in favour of a
proposal to connect these two centres by a road. It was also decided to
construct a road 21 miles long from the Melalap terminus of the railway
to Keningau with the aim of opening up new areas of accessible land.
These roads were built to serve as feeder roads as well as to promote
growth. A plan for a trans-Bornean cross-country railway was dropped as
was a plan for a cross-country road because of the high costs involved. No
progress was made during the First World War period and construction
proceeded in 1920. The Jesselton-Tuaran road (begun in 1920) was
completed in 1924. The Melalap-Keningau road was built in stages
depending on finances as was the Sandakan-Labuk road in 1922.
Land transport and road construction assumed a greater significance with
the appointment of a new Governor, J.L. Humpreys, in 1926. Like Cowie,
Humpreys also believed that development followed communications and
after conducting detailed investigations, initiated a ten-year road
construction programme. The project entailed the construction of 130
miles of first and second class roads, 80 miles of earth roads and 290
miles of bridle paths over a period of 10 years at an estimated cost of
£25 000. The scheme was to be a 'modest but continuous' one, providing
'simultaneous development' in all the Residencies. Humpreys' proposal
was approved by the London Court of Directors and the road scheme
commenced in 1928 under the direction of the residents and District
Officers The main features of the ten-year scheme were: on the west
coast, both the Jesselton-Tuaran road and the railway were to be provided
with a number of feeder roads to promote land development, for the other
districts, earth roads were to be constructed; in the Interior Residency, the
long-projected road from Melalap to Keningau was to be completed as an
earth road; an important new bridle path was to be constructed to connect
Penampang (linked to Jesselton by a metalled road) with Tambunan (43
miles) to provide access to the interior; on the east coast, a second class
road was to be built from Tawau to the fertile Apas, Balung and Kumpang
river valleys; in Lahad Datu, road construction was to proceed in an
eastward direction; and a comprehensive scheme was mapped out for the
Kudat and Marudu areas.27 The outcome of the scheme (interrupted by the
Depression and poor trade returns) is shown in Table 4.2 below.
Table 4.2 Road Mileage in Sabah, 1927-1940
Year Metalled Roads Earth Roads Total

1927 55.00 44.00 99.00
1928 68.75 40.75 109.50
1929 75.75 52.25 128.00
1930 80.75 63.25 144.00
1931 120.50 51.75 172.50
1932 112.50 74.75 187.50
1933 102.75 103.00 205.75
1934 110.50 111.25 221.75
1935 124.00 100.75 224.75
1936 135.00 100.00 235.00
1937 136.00 100.00 236.00
1938 136.00 100.00 236.00
1939 138.00 98.00 236.00
1940 140.00 101.00 241.00
Notes: 1 For 1927-1932, first class and second class roads ai
classified under the metalled category. A different
terminology was adopted from 1937 onwards.
2 There were 600 miles of bridle path during the period.
Source: Compiled from Annual Reports, North Borneo, 1927-1939.
For 1940, McFadzean's Report on North Borneo, inch in CO
531/37/1.
As a factor influencing social and economic development, land
transport was perceived as crucial by the Chartered Company
administration. Consequently, the Company invested a considerable
amount of money in road and railway construction in Sabah. These two
transportation links provided the basis for the development of the interior
areas. In both Sabah and Sarawak peace and stability were ensured through
the construction of bridle path systems. Additionally, in Sarawak the
Brookes constructed some fifty forts at strategic locations along the rivers
and coastline as visible landmarks of their administration. These forts

served to attract Chinese traders who played a strategic role in widening
trading networks based on the water transport. In Sarawak therefore, the
inland waterways retained a much greater significance as interior
highways. In both states, the main areas of capitalist development and
population concentration remained closely linked to the coast and major
rivers, though less so in Sabah.
The Organisation of Labour
In common with many other states in Southeast Asia in the nineteenth

century, Sabah and Sarawak were land-abundant, labour scarce regions and
labour rather than land represented a source of wealth for the ruling class.
This in turn influenced authority patterns and relationships and the
characteristic way in which the ruling class organised labour was through
slavery and forms of bondage. It was only in the late nineteenth and early
twentieth centuries that these forms gave way to different, though not
necessarily more 'free' forms of labour organisation. This was mainly a
function of the integration of the economies of these territories into the
wider international economy in the context of the spread of capitalism.
Economic development and elaboration of state control by the Brooke and
Chartered Company administrations thus provided conditions for the
gradual, albeit uneven, elimination of many varieties of traditionally
coerced labour. In the process, however, both governments introduced a
new type of 'unfree' labour - bound under penal contracts to work for
specified periods. The immigrants who came under the indenture system
laboured under harsh conditions reminiscent of slavery or bonded labour
and it was only with the publication of such abuses and public outcry in
Europe that indentured labour was gradually phased out. Thus, while
opportunities for wage labour expanded with the greater commercialisation
of the economy, the spread of plantation agriculture, and increased trade,
the vestiges of a 'bonded' society persisted. Workers remained tied to
overseers (foremen), or agents, or plantation owners; they were paid low
wages and laboured under extremely difficult conditions; ethnic or familial
networks determined occupation and residence and labour mobility was
limited. Consequently, a 'true' wage-labour market had not really appeared
in these states by 1940.
The Abolition of Slavery
In both Sabah and Sarawak, slaves and debt-bondsmen performed at least

three main types of duties. First, they rendered services to and for their
masters - these services included participation in expeditions, inclusion in
entourages, household and domestic service, looking after children and the
granting of sexual favours. Second, they worked on the agricultural
gardens of their masters or in the gold/antimony mines (Sarawak). Third,
they were also used to earn an income for their owners by working for
others. It was observed in the 1880s that many slaves also 'shifted for
themselves, rather than working for, and being maintained by, their
masters.'28 Assessing the nature of relations between the ruling class and
the slaves and bondsmen, A.H. Everett, a Chartered Company official
stationed at Papar, commented that the conditions of slaves was not
'generally one of hardship' in his district.29 Another Company official,
W.B. Pryer, stationed at Sandakan, reported that upon his arrival at
Sandakan he could not get anyone to work for him for wages. People only
offered to work for him if he would buy them. It was considered more
degrading to work for wages than to be a slave. Consequently, he bought
slaves from their owners (paying $60 for women and $40 for men) and
recompensed the administration by requiring the freed slaves to work for
the government for an appropriate period.30 In Sabah the first Governor,
W.B. Treacher, was directed by the Chartered Company to abolish slavery
and he legislated in 1881 and 1883 to bring about the gradual abolition of
slavery through banning the trade in slaves and new enslavement,
including that of children born of slave parents. In 1902, the Company
was able to abolish all slavery outright.31 Nonetheless, for a long time,
the economic foundations of slavery and the social relationships involved
remained in existence, though somewhat eroded and somewhat
transmuted.32
In Sarawak, James Brooke made no attempt to abolish bonded
dependency, although he forbade the killing of 'slaves' and declared as free
men those who had escaped from neighbouring territories. The legal
abolition of various forms of bonded dependence did not come until 1886,
during the administration of Charles Brooke. To improve the conditions
of slaves, cases of abuse could be brought before the courts. Next, trading
in slaves was prohibited. Slaves were also allowed to undertake paid work
for on their own account, and the money earned could be used to buy their
remission (the price in 1877 was about £6). Any sale or transference of
slaves within the country had to be registered. In 1883, Charles Brooke
introduced a bill arranging for the manumission of all slaves within a
period of five years. In 1886, he withdrew the Bill since he believed that
slavery had 'virtually' disappeared in the territory.
The Emergence of Wage Labour
In the absence of a native proletariat, both the Chartered Company and the
Brooke Administrations had to put in place mechanisms for the
importation of foreign workers (mainly Chinese) to labour in the
plantations and mines. Wage labour was largely confined to plantations,
mining and government services, especially in railway facilities (Sabah)

and urban and port centres. Apart from some raw material processing
(rubber, cutch) there was no industrial sector. The three major towns,
Kuching, Sandakan and Jesselton (Kota Kinabalu) were commercial-
administrative centres lacking any significant manufacturing sector.
Indeed, in the context of an export-oriented economy specialising in the
production of raw material exports, and the consumption of manufactured
imports, there was a decline in handicraft production in both territories.
In Sarawak, as noted previously, the Brookes played a major role in
establishing the coal mining industry and setting up various experimental
plantations to promote the cultivation of crops like tobacco, tea and later
rubber. 33 Apart from encouraging Chinese agricultural settlement, a
constant labour supply was needed for the mines, and later the oilfields.
Labour was also employed on government undertakings and on the
plantations. Sarawak's population was small and it was migrant labour
that played an integral part in the expansion of the capitalist economy.
Nevertheless, the indigenous inhabitants were also part and parcel of the
international division of labour.
Prior to recruiting wage labour, the Brooke Administration relied on
coerced labour and even prison labour to meet its labour needs. For
example, prisoners built the roads in the main centres, constructed coolie
sheds, worked in the stables, on government steamers, the Brooke Astana,
government estates, and the government wharf. One of the main duties of
the Inspector of Police and Prisons was to keep a detailed account of the
number of prisoners available daily and to allocate them specific tasks.
The prisoners were paid fifteen cents a day for their labour34 and it was
they who built the basic infrastructure of the state. One of the few
documented records in the number of prisoners engaged in 'semi-wage'
labour is shown in Table 4.3.
As shown above, in the period 1890 to 1901, some six decades after
the establishment of the Brooke state, an average of between 43 to 95
prisoners were employed daily to work on government undertakings. The
number of prisoners was always large and people were imprisoned for
offences ranging from adultery, to murder, to failure to pay a native court
fine. Even as late as the mid-1930s, prisoners who were not sick had to
work as gardeners for European officials or were employed on various
tasks in the town centres.35 Prison labour therefore constituted a small
but important component of the labour employed on government projects.
Indeed, the fluctuating prison labour was ideally suited to those projects
which were undertaken when funds permitted.
Forced or corvee labour was another form of labour organisation in the
state, despite the fact that the indigenous inhabitants paid taxes to the
state. The Malays were required to pay an annual tax of $2 while the
Dayaks paid a tax of $3 for each family (bachelors were liable for half the
tax). By mutual understanding, the Malays and Dayaks who served in the
Rajah's forces and the militia respectively were not subject to taxation,
and were also exempt from other 'government services'.36 In practice,
both the Malays and the Dayaks were often 'called out' to serve as carriers
on expeditions; they had to billet travelling government officials at their
own expense and also build paths and roads in the vicinity of their
districts. According to Vyner Brooke, they 'disliked' these demands on
their time and labour.37 Here again, in tasks not requiring a consistent
labour supply, the Brooke state relied on the services of the indigenous
groups.
Table 4.3 Prisoners Employed Annually by the Public Works

Department, Kuching, 1890-1901
Year No. of Prisoners Employed Daily Average

Annually
1890 23 529 75
1891 20 856 67
1892 27419 88
1893 29 785 95
1894 26 039 83
1895 22 999 73
1896 17021 54
1897 22538 72
1898 19805 63
1899 16089 51
1900 18063 58
1901 13373 43
Source: Annual Report, Public Works and Survey Department, 1901,

in Sarawak Gazette, 1 May 1902, p. 95.
For the mining and plantation sectors, the Brooke state turned to China
and South India. The Chinese were preferred as mining labour, while the
Indians (and later, Javanese) were considered more suitable as agricultural
labourers. Chinese immigration to Sarawak was encouraged for two
reasons. Firstly, Chinese migrants were brought in as colonists to settle
or rather 'populate' the First, Third and other Divisions. Their specific
task initially was to cultivate rice so as to reduce Sarawak's dependency
on rice imports. This group of immigrants, who came under official
sponsorship, soon ventured into gambier, pepper and rubber cultivation.
Since they came as agriculturalists, they do not fall into the wage labour
category and their story will not be dealt with here.38 Secondly, the
second group of migrants came as labourers to meet the requirements of
the mining and plantation agriculture sectors.
Chinese labour was recruited under the indenture labour system by the
state, the Borneo Company and the Oil Company, and was obtained
primarily through the Agency of the Chinese Protectorate in Singapore.
The workers came on three-year contracts which were 'renewed'
indefinitely until old age or infirmity made it impossible for them to gain
their liberty. Allegations of poor working conditions, high mortality rates
and 'enslavement' in the pioneering conditions of Sarawak resulted
initially in the Chinese Protectorate in Singapore threatening to boycott
Sarawak. Charles Brooke for his part, complained of the poor physique of
the workers. Subsequently, he appointed the Agency House of
A.L. Johnston to recruit labourers for Sarawak. This arrangement lasted
until October 1899 when Paterson, Simons and Company took over this
role from A.L. Johnston and Company.39 Charles also established
another agency in Labuan to recruit labourers for the government-operated
coal mines at Sadong and Brooketon, and the experimental tobacco and tea
plantations at Matang. In a bid to encourage 'free' labour migration, he
signed an agreement with the Straits Steamship Company in 1882, which
provided free passages for Chinese labourers from Singapore to
Kuching.40 After 1890 Charles introduced new legislation which provided
for the establishment of a depot in Kuching to 'receive' new workers in
'clean and hygienic surroundings'. Labour contracts had to be drawn up
'properly' and witnessed by a Brooke official before the workers could be
assigned to their respective place of employment.
In addition to recruitment by the state and western interests, Chinese
merchants and traders were also involved in labour recruitment.
Furthermore, individual employers often acted as sponsors and imported
labour directly from China. The migrants usually originated from the
same clan or district as the employers and shared a common dialect with
them. This resulted in specialisation in certain occupations among the
different dialect groups. As described in the extract below, the arrival of
workers recruited through brokers from China was eagerly awaited in
Sarawak:
The junks always came during the time of the northeast
monsoon (landas) when the wind was in their favour... The
decks were always crowded with coolies especially after the
great flood of the Yellow River in 1889 when disaster swept
over a large part of China. A few who had been lucky
enough to make money in Sarawak had returned to their
native land and rumours soon spread, "Sarawak, land of
gold". The life of a coolie in China at that time was a
constant struggle to earn enough to eat and so it is easy to
understand why they were ready to undertake the hardships of

a journey by a small junk to Sarawak.
The junks tossed about like corks in the rough sea and the
passengers were packed so closely that they could hardly
move. They were sea sick and unable to eat a ration which,
in any case, only consisted of one bowl of rice a day and one
teaspoonful of water three times a day...
It was never known for certain how long a journey would
take since, being entirely dependent on sails, it mostly
depended on the sea and wind, but normally it took a
month... The men more dead than alive, were engaged even
before the junk bringing them in had dropped anchor. Look
outs were posted at the mouth of the Sarawak River and, as
soon as the junks were sighted, a mad scramble started to
board them as quickly as possible and press half a year's
advance salary of $30 into each man's hand, thus buying
him almost body and soul at the rate of eighteen cents a day.
Most of it went to the broker (who came with them). These
men were much sought after as physically they were much
stronger than those who arrived from Singapore.. .41
By 1914, Chinese indentured labour was abolished in the Straits
Settlements and the Malay States. Singapore's role as a major recruitment
centre declined, and henceforth 'free' labour was employed and it came
directly from Hong Kong or China.
In terms of type of employment, Chinese workers were principally
employed in the gold, antimony, cinnabar, and coal mines. As the mines
closed, Chinese workers turned to either agriculture or sought
employment in the urban areas. After 1920, Sarawak Oilfields became the
largest employer of Chinese labour. Statistics on Chinese (and other
workers) are sketchy. In 1921, for example, there were about 528 male
workers in the Sadong Collieries (principally Chinese). In the oilfields,
3860 workers were employed of whom 754 were recruited under the
'contractor' system.42
Tamil labour was also initially recruited under the indenture system to
work on government experimental agricultural stations (where some
Javanese labour was also employed) and in the Public Works and Survey
Department. In 1897 Charles Brooke established an Indian Immigration
Department and appointed an Indian Immigration Agent to recruit South
Indian 'statute' labour. A 'large and roomy house' was selected as a coolie
depot in Kling (later renamed India) street in Kuching and during the first
six months of 1897, 202 adults and 36 children arrived in Sarawak.43
Their initial contracts were for two years and the migrants chose to stay
on in Sarawak on expiry of their contracts, either continuing their
employment at the government plantations or moving to Kuching to
work with the Public Works Department. In 1899 the total number of
indentured coolies was 381. Of this figure, 317 were employed on the
government plantations while 64 were employed by the public works
department.44 In the 1880s while Chinese indentured workers were given
advances of between $25.60 and $30.00 and earned on an average between
$8.00 and $10.00 per month,45 the wages of Indian labourers in 1900
were as follows: for those hired on a monthly arrangement men were paid
$7.50 while women were paid $6.00; for those employed on a daily basis,
men were paid 25 cents while women were paid 22 cents.46
As in the Malay States and the Straits Settlements, Indian indentured
or statute labour migration gave way to 'kangani-assisted' migration by
the first decade of the twentieth century (Indian indentured labour in the
Malay States and the Straits Settlements was officially banned in 1910).
Nevertheless, Charles Brooke took steps to regulate the activities of the
kangani who exploited Tamil labour by legislating in 1900 that
plantation workers were to receive their wages directly from their
managers; that all loan claims by the kangani on the workers had to be
made through the Debtors or the Police Courts in Kuching; and that the
kangani was in future to be referred to as mandoor or overseer.47
'Free' or unassisted Indian labour (apart from workers who had
completed their contracts and elected to stay on) was relatively unknown
in Sarawak. Instead kangani-ass'isttd labour was employed on the estates
and government services. By comparison, Chinese labour came
increasingly as 'free' labour by the first decade of the twentieth century.
On the whole, as in Sabah, Indian labour was not attracted to Sarawak and
consequently formed only a small proportion of the labour force. Gender
differentiation was also strongest where Indian labour was concentrated.
Generally, working conditions, despite official pronouncements, were
poor. Wages were low; living conditions, whether in the mines (where
they were dangerous as well), in the oilfields, or on the estates, were
unsatisfactory. Many of the Indians preferred to work in Kuching rather
than on the isolated plantations.
Up to the late nineteenth century, the Sarawak state relied on
legislation to prevent workers from absconding or changing jobs.
Coercive measures to prevent labourers from absconding via the land
border to Kalimantan (all departures by sea were strictly regulated)
included the requirement of a pass from the government officials in
Chinese-employment areas. These passes had to be shown to Dayak chiefs
through whose villages the Chinese passed. If the workers were not in
possession of valid passes, they were apprehended and taken as prisoners.
Flogging was a common form of punishment.48
In 1928 a Labour Department was established ostensibly to 'give a
guarantee to the governments of countries whence labourers arrive[d] and
to labourers themselves that their interests... [were] being safeguarded.'49
Following this in 1929, a Secretariat for Chinese Affairs was established,
headed by Chinese-speaking English officials to take charge of matters

involving the Chinese community, including Chinese labour. 50
Nonetheless, inspection of workers' conditions was minimal and often
perfunctory. To quote a Brooke official, on the few occasions that he
visited the Nissa Shokai Estate to inspect working conditions, he was
wined and dined by the management and given 'little or no opportunity of
interviewing the lower paid workers.'51 Workers were also not allowed to
take industrial action, such action being punishable by a fine or
imprisonment.
By 1935 the comparative wage rates for the different occupations were:
Government Labourers: -
Skilled $16- $55 per month
Unskilled $10- $18 per month
B. Agricultural Estates: -
• Rubber Skilled $20 - $25 per month
Unskilled $15-$20 per month
• Pepper General $10-$15 per month
• Coconut General $12 - $16 per month
C. Miscellaneous:-
Skilled $ 1 9 - $ 9 0 per month
• Cutch Unskilled $13-$19 per month
Skilled $30 - $60 per month
•Oil Unskilled $ 1 8 - $ 3 0 per month
General $20 - $35 per month
•Gold General $ 15 per month
• Sago $ 1 2 - $ 2 5 per month52
• Shop Assistants
After nearly a hundred years of Brooke rule, the wage worker's lot had
not shown much improvement. Interestingly, the cost of living for native
labourers was estimated at $7.50 per month, while that of Chinese
workers was estimated at $9 per month. The lower figure for the natives
was based on variations in the local availability of fish and fruit and the
predominance of foreign over indigenous labour.53
On the whole, wage labour formed only a small proportion of the
gainfully employed category in Sarawak. Most of the indigenous groups
and the Chinese agriculturalists were smallholders, relying on unpaid
family labour or other arrangements such as sharecropping. Unlike the
Malay States or even Sabah, 95 per cent of the rubber grown in Sarawak
was on smallholdings, which relied on family labour. In 1935 the wage
labouring population in Sarawak comprised 8881 out of a total
population of 490 585. The breakdown by ethnic group and occupation is
given in Table 4.4 below.
Table 4.4 Sarawak: Employment by Occupation and Ethnic Group, 1935
(number)
Malay & Dayak, Kayan &

Place of Employment Chinese Javanese Indian Melanau Kenyah Children Total
Rubber Estates 423 786 22 769 400 15 2415
Gold Mining 2 099 2 29 150 248 61 2 589
Sago Factories 183 - 1 - - - 184
Jelutong Factories 26 - 2 - 16 - 44
Sawmills 53 - 1 281 82 23 440
Oilmills 11 - - 18 - - 29
Brick Kilns & Potteries 20 - - - - - 20
Cutch Factory 24 - 2 70 81 5 182
Oilfields 1 691 - 109 895 197 86 2 978
Total 4 530 788 166 2 183 1 024 190 8881
Source: Sarawak Administration Report, 1935, p. 29.

As noted above the mining industry was the principal employer of

wage labour in Sarawak. Employment was confined mainly to gold
mining and the petroleum industry, reflecting the orientation of Sarawak's
economy. In 1914, revenues from petroleum totalled $377 537 and rose to
$1 472 193 in 1940.54 Royalties comprised more than fifty per cent of
Sarawak's revenues in the period 1928-1948. 55 Thus, though the
proportion of wage labour was small, it was concentrated in the sectors
where capitalist penetration was the greatest.
In summary, labour was primarily male and Chinese workers were
largely trained on the job and learned their skills by working in an
informal apprenticeship system. Labour was weak principally because
there was no real free labour market (private enterprise and state
undertakings recruited most of their labour indirectly) and because of the
ethnic factor. During the Depression period, the state used immigration
controls to restrict the supply and entry of labour. Mobility was also poor
because of the inadequate system of transportation in the state.
Consequently, the transformation of labour from 'unfree' to 'free' labour
in Sarawak was only partial and very uneven.
In Sabah, as noted earlier, in 1882 the Company decided that its best
interests lay in leaving commercial undertakings to others and confining
itself to establishing a liberal government in order to attract capital and
labour 'from without'. 56 As it turned out, it was easier to attract the
former but not the latter, unless the Company itself became involved in
the recruitment of labour. Like the Malay States and Sarawak, the
Company, turned to the 'vast reservoir of China' to meet its labouring
needs.
Initial measures taken by the administration to attract immigration
included cancellation of the registration fee of two dollars which had been
imposed on all immigrants, and abolition of the tax on rice and other
imports (replaced by a tax on exports). Subsequently, a Commissioner for
Chinese Immigration was appointed in London and dispatched to the East
in 1882 to put into place a system of recruitment of Chinese labourers
and agriculturalists and also to 'induce' Chinese investors to invest in the
territory. This early venture was a failure and cost the Chartered Company
$50000. The type of immigrants who took advantage of the free passage
were unsuccessful shopkeepers, who could not adjust to life in Sabah and
the majority of them returned to Hong Kong in 1883.57 After this
incident, labour recruitment in Sabah was undertaken both by the
Chartered Company and private enterprise to meet their specific needs.
Consequently, no free labour movement developed because most of the
workers were recruited indirectly. In fact, until 1941, Chinese labour was
still recruited under the 'contractor' system in the timber camps.
In the context of the expanding capitalist economy, Chinese labour
migration took place in three waves: first, for employment in coal
mining and the tobacco estates (1880s-1890s); second, for government
undertakings, especially the railway (1890s); followed by recruitment for

rubber plantations and timber camps (1900 onwards). Conditions of
recruitment varied according to the type of enterprise involved. In the early
days of Company administration, the indentured labour system prevailed.
This was followed by the 'contractor' system, whereby an estate owner or
timber concessionaire dealt directly with a contractor or towkay
middlemen who hired a gang of labourers to carry out specific tasks. In
effect, the labourers were hired by the towkay who provided
accommodation, stores and often meals through a kongsi or Chinese
business cooperative arrangement. Finally, there was the 'free' labourer
who worked either through a contractor or was employed directly by his
employer at his place of employment.
In the mining sector, wage labour was principally concentrated in the
coal industry. The Silimpopon Colliery, which was worked from 1906 to
1931, employed about 700 men (mainly Chinese) under the indenture
system initially and later under the contractor system.
However, the first major employer of wage labour was the tobacco
industry. Interestingly, the first plantation was started by the Chinese
Sabah Land Farming Company, which itself was the result of the earliest
attempt to recruit Chinese labour and attract capital to Sabah.58 Labour
shortages were a major problem and the tobacco companies and the
Chartered Company initially attempted to secure the services of 'scores of
African slaves which the British Navy was rescuing from Arab dhows and
liberating in Bombay' 59 to overcome these shortages. They were
unsuccessful and subsequently, Chinese contract labour was hired mainly
from Hong Kong and Singapore. The early tobacco planters were either of
Dutch or German origin and relied on their previous knowledge of tobacco
cultivation in the Netherlands Indies. The task of clearing sites was
contracted out to indigenous groups while the planting was done by
Chinese workers. The indigenous groups were paid on a casual, piecework
basis. The planters divided the area to be planted into 'fields' varying in
size between 1.3 and 1.6 acres, each of which was assigned by lot to a
labourer. These labourers were housed in 'coolie lines' or barracks on the
estates. The individual labourer was personally responsible for his 'field'.
He burnt off the felled timber, planted, tended and cut the tobacco in his
field, for which he was 'remunerated' on the basis of the quality and
quantity of the leaf he delivered to the drying sheds. The labourer was not
paid wages in the strictest sense; he obtained advances to cover his tools
and other necessities and during the cultivation period received a monthly
subsistence payment. If he was asked to perform additional tasks, he
received extra payment. At the end of the season, his crop was purchased
by the estate and accounts were drawn up, taking into consideration items
already debited to him. The tobacco estates thus represented a distinctive
pattern of organisation and control. Individual field labourers, each tending
and harvesting their own plants and paid on the basis of the end product,
were supervised by Chinese tindals or overseers. The latter worked under

the direction of European divisional managers, each in charge of a
'division' comprising about a hundred fields.60 The labourers' living
conditions were deplorable; there were tales of brutality, starvation and
non-payment of wages. These conditions existed not because of the
absence, but because of the evasion of legislation by the employers, and
the failure of the administration to police the estates.
In 1882 the then Governor, William Treacher, had adopted the
legislation of the Straits Settlements regarding labour contracts for Sabah.
This was followed in 1883 by the adoption of the Straits Settlements
ordinance on the regulation of working conditions and the protection of
labour on estates. These pieces of legislation were adopted principally to
satisfy British colonial administrators in Asia, through whose aegis the
Company hoped to import labour. However, the 'protectors' entrusted
with enforcing the legislation included the Residents of the east and west
coasts, together with the territory's two doctors, all of whom had
numerous other duties to tend to. Nevertheless, although inspection visits
were few and far between the administration reports occasionally
mentioned poor working conditions, ill-treatment and high rates of
illnesses among the workers.61
While the Chinese comprised the largest group of wage workers,
indigenous groups were also employed on the tobacco estates. In 1889,
for example, there were 13 316 workers, of whom about 8000 were
Chinese, 5000 'Malays' and 500 'others'. The death rate among the
Chinese, who had difficulty adjusting to the pioneering conditions and the
harsh treatment, was very high.62 However, the estate lobby (the Planters'
Association was formed in 1890) was very powerful both in Sandakan
and London, and local officials had to be both restrained and wary of
offending the planters. Nevertheless, the well-publicised tales of the ill-
treatment of labour earned Sabah a bad reputation in Singapore and Hong
Kong; contributed to labour shortages; and resulted in a failure to recruit
Tamil labour. In 1891, for instance, an Indian Immigration Agent was
appointed to deal with the recruitment of labour from South India.
Although the scheme was approved by the Indian Government, no Indian
labour migration took place. Tamil labour preferred to go to the Malay
states, which were 'more developed' and were not far-flung outposts.63 By
1891 the tobacco boom was over and the first wave of Chinese labour
migration was completed.
The Company's relationship with the indigenous population was a
curious one. On the one hand, Company administrators were reluctant to
allow the mobilisation of the indigenous inhabitants for estate
employment. In fact, the prevailing view was that the indigenous groups
were to be left undisturbed to follow their traditional economic pursuits
and social organisation while the brunt of economic modernisation was to
be borne by imported labour. On the other hand, Company officials were
not averse to relying on indigenous groups to provide unpaid labour

services on government projects. Indeed, in the second phase or wave of
labour migration, both indigenous and imported labour played an
important role in the economy.
The railway department was an important employer of labour and both
Chinese and native workers were hired for railroad construction on a casual
basis. Chinese workers were also engaged to 'colonise' the line and to
work in the railway workshops. A.J. West, who was hired by the
Chartered Company to build the line, initially brought with him a gang
of Chinese labourers who had worked with him in his previous posting in
Labuan (where he had built a short railroad). As the railhead advanced, it
became necessary to obtain more labour and 'very' attractive terms were
offered to attract prospective immigrants to Sabah. The following notice,
placed in English and Chinese newspapers in Hong Kong, reflects the
attempts made the Company administration to recruit Chinese labour.
They (Chinese emigrating to British North Borneo) may
receive 5 acres of land free for each married couple who may
agree to settle on the new Railway now being made.
They may also have $20 for each adult with which to pay
passage money and small expenses.
When they arrive at the Railway they can get work, day
wage 40 cents a day or earth cutting on contract at 30 cents
a cubic yard or sawing wood sleepers at 30 cents each 6 feet
long 9 inches by 4.5 inches besides other kinds of work
from the Railway Engineers.
When they have selected their five acres they can get a title
for 999 years by paying $7.62 for the survey and title.
They can have a loan of subsistence money for a short time
if they wish to borrow from the Government but as work
can be had on the Railway at good wages it is not expected
that any money need be borrowed.
There is no head tax in British North Borneo on Chinese.
The price of food on the Railway is very similar to the
prices charged at Sandakan.. ,64
Apart from differences in working conditions, there was a division of
duties between the indigenous and Chinese workers. Native labour was
employed in timber felling, jungle-clearing and porterage. For these tasks
and road construction, they were paid in 'fathoms of red or black cloth
worth seventeen cents a fathom'. Subsequently, they preferred and
obtained cash payments. The Chinese carried out the earthworks, sawed
the railway sleepers and laid the line. Once the line was built, they
selected 2 ha adjacent to the line and were allowed to carry out other
activities like sawmilling and vegetable gardening, in addition to
maintaining their section of the line. Some were employed in the

workshops and in the clerical department. A few Indians were also hired to
work in the Railway administration services. By 1931, there were about
150 clerical and operating staff in addition to the labourers-cum-settlers.65
The third wave of labour immigration overlapped with the second. As
noted previously, when the plantation tobacco industry collapsed, it was
replaced by the timber industry. Chinese labour played an important role
both in the early years of the timber industry and after 1920 when the
British North Borneo Timber Company (BBT) was formed. Apart from
timber, there was a new commodity - rubber - which 'followed' the
railway line on the west coast. The rush started in 1905 when the
Chartered Company offered two major inducements to would-be investors.
As noted in Chapter 3, a four per cent dividend was guaranteed for six
years to all companies formed to plant rubber in Sabah and they were
exempt from export duty on rubber for fifty years.66 The rubber boom led
to increased immigration in the state, both of Chinese and Javanese
migrants.
Javanese workers (numbering 70), were first recruited in 1882 by the
Chartered Company's agents in Singapore to work on the experimental
agricultural station at Silam. In 1903 and 1907, following negotiations
with the Dutch colonial government in the Netherlands East Indies, estate
managers were permitted to recruit Javanese labour on three-year contracts.
In 1910, the system of contract (indentured) labour was banned in the
Straits Settlements and Malay States and the British Colonial Office
advised the Chartered Company that the Sabah government would no
longer be permitted to recruit indentured labour in Singapore after July
1914. The Chartered Company consequently made new arrangements with
the Dutch which allowed the Sabah Government to station an official
recruiter in Semarang who was authorised to engage 2000 Javanese
workers annually on three-year contract periods. Under this scheme, the
planters notified the Sabah administration on the number of labourers
required and the administration billed them for transport and incidental
charges in advance. This labour recruitment arrangement which operated
from 1914 to 1930 contained a special penal clause. Recruitment under
this system only ceased when contract labour was abolished by the Dutch
in 1934. In 1938, another agreement was negotiated, this time for the
recruitment of 'free' Javanese labour. However the new scheme was soon
shelved. Between 1914 and the end of 1932, 9969 Javanese workers
arrived in Sabah. Of this number, 1489 female workers married local
residents and settled in the state. The rest were repatriated (with the
exception of 725 who had died).67
Generally, the working conditions of contract labourers remained poor
in the first two decades of the twentieth century. In 1909 a report on estate
labour revealed conditions reminiscent of the early days on the tobacco
estates. Subsequently, in 1919, the Anti-Slavery and Aborigines
Protection Society accused the Sabah government of cruelty to labourers

in the state and took its case to the British Government. The Society
produced statements of evidence taken from a former Judicial
Commissioner in Sabah; a former estate manager; and a former medical
officer on one of the estates. The Society alleged that the system of
contract labour was in effect a system of debt bondage; that other abuses
included the existence of estate brothels, gambling houses, the earning of
commissions by estates on the proceeds of immoral earnings, the
flogging of labourers; and the existence of the truck system.68
Although the Sabah government refuted all the charges laid against it,
it later revised the territory's labour legislation. For example, one of the
major reasons for the near-servitude of the contract workers was the
payment of an advance (up to $75) upon the signing of a contract. It was
then fairly simple for an indentured labourer to remain indebted to the
estate management through further charges placed against his account for
food, clothing, the recruiter's fee and other items and, in the case of
imported labour, transfer costs. Even under the proclamation of 1908, the
onus was upon the employee to seek a statement of account and if at the
end of his contract, he was in debt, he could be forcibly detained for up to
two years. Voluntary continuation of the contract was also common. Not
surprisingly, many labourers spent years on the estates in a condition akin
to 'debt slavery'. Amendments to the labour legislation were made in
1929, the main change being the restriction of advances in excess of five
dollars from the manager to a labourer.69
Wages were also raised when the administration approved a new labour
contract, which came into force in 1916. The daily wage was fixed at a
minimum of 33 cents. Where working conditions were concerned, the
maximum hours of work per day were fixed at nine. A minimum
employment age of eighteen was also stipulated for the territory.
Additionally, the Protector of Labour was required to sign every page of
the estate store price-list and to inform all labourers of their entitlement to
a free acre of land after a year's service. District officers were designated as
Assistant Protectors of labour and estate inspections became more regular.
In 1927 the minimum daily wage was raised to 50 cents.70
As mentioned earlier, one of the biggest social changes in Sabah was
the involvement of indigenous groups in wage labour. Such employment
was a profitable alternative or addition to traditional means of livelihood.
In the official censuses, the ethnic composition was never given any
precision, the categories being simplified to 'Chinese', 'Javanese' and
'Malay' (or 'Native') and it is impossible therefore to determine which
indigenous workers were employed under contract or as casual labour, or
their place of origin. Although initially they were willing to work for a
pittance, sophistication about the value of their labour came rapidly once
workers from various areas were exposed to each other and acquired
information about competing rates of pay. For example, at Sapong Estate
locally recruited workers were prohibited from working on the railway

after the estate manager protested that they were abandoning estate
employment in favour of employment on the railway where they received
higher wages. 71 Nonetheless, no attempts were made to regulate
competition. Generally, the wages offered appeared to have been attractive
enough to entice a growing number of indigenous labourers and certainly
had to be attractive to guarantee a supply of non-contracted daily labour,
and ensure the regular appearance of seasonal workers. These were mostly
Kadazan and Murut locals, who turned to wage labour during the quiet
periods of the agricultural year. The Bajaus were more likely to take up
long-term contracts on the estates.
In terms of the breakdown by ethnic group, in 1910, 3185 Malays or
natives were under contract out of a total of 17 394 workers. By 1917, 25
per cent of the contract labour force of 21 000 was 'indigenous and
Malay'. 72 In 1921, the year of the first reliable census, the estate labour
force had risen to 25 769 (which was 10.3 per cent of a total population of
257 804). The Chinese comprised 36.9 per cent, the Javanese 33.35 per
cent and the indigenous natives 23.35 per cent. Ten years later, the estate
labour force numbered 18 204. By 1940, the estate labour force comprised
20 503 of whom 9529 were indigenous natives; 7717 were Chinese; and
2333 Javanese.73 The number of 'coolies' registered in the state is shown
in Table 4.5 below.
As shown in the table below, Chinese labourers formed the largest
group of workers in the territory. From about 1911 Javanese workers
became an important component of the labouring class. Employment
figures varied with economic conditions. For example, during the
Depression, there was a restriction on Chinese immigration which is
reflected in the figures for those years. Crucially, the number of native
wage workers showed an increase and by 1938, the 'natives' (including
Malays) formed the largest group of workers in the territory. Nevertheless,
it has been noted that only about 20 to 30 per cent of the native labourers
could be classified as settled or at least not subject to bi-annual absences.
By 1949, 60 per cent of the labour employed on large holdings and up to
80 per cent of the labour employed on small holdings was native.74
In summary, three different systems of labour recruitment characterised
wage labour in Sabah. These were: contract or indentured labour; 'free'
labour; and the contractor system. While the first was a feature of the
early days of administration (apart from the Javanese for whom it was
continued until 1932), the last appears to have been generally restricted to
the remote timber camps. It was utilised by both Chinese and local
contractors. Chinese contractors worked with Chinese labourers, while
local contractors worked with indigenous groups. This was principally
because the labour legislation prescribed that indigenous people or locals
could be recruited only by other indigenous people without a licence.
Table 4.5 Number of Coolies Registered in Sabah, 1891-1940

(selected years)
Chinese Malays1 Others (mixed) 2 Javanese Total

1891 3 003 1 290 n.a. n.a. 4 293
1895 1 911 n.a. 972 n.a. 2883
1897 1 036 515 40 n.a. 1 604
1898 1 461 998 42 n.a. 2516
1899 1 753 925 n.a. n.a. 2678
1900 1 532 833 n.a. n.a. 2 365
1901 959 676 n.a. n.a. 1 635
1907 5 856 4611 n.a. n.a. 10467
1911 13736 n.a. 3 038 4 097 20871
1912 12345 n.a. 2 234 4 674 19253
1913 11 251 n.a. 2732 4825 18808
1914 9 347 n.a. 2537 4726 16610
1915 7814 n.a. 2 774 4925 15513
1916 8 604 n.a. 3 754 4814 17 172
1917 10703 n.a. 4959 5 278 20 940
1918 10568 n.a. 4527 5651 20 746
1919 10230 n.a. 5 350 5 925 21 505
1920 9412 n.a. 4480 7 032 20 924
1921 7 145 n.a. 3339 6056 16540
1923 7 184 n.a. 3719 5 276 16 179
1924 7818 n.a. 3 636 5 398 16852
1925 7530 n.a. 4085 6 065 17680
1926 6 668 n.a. 4 044 7 779 18 491
1927 7311 n.a. 4376 8 714 20401
1928 7 056 n.a. 3 740 7928 18724
1929 6839 n.a. 4 349 7 346 18534
1930 5 286 n.a. 2833 4 444 12563
1931 4714 n.a. 2 345 3 127 10276
1932 3 742 n.a. 2571 2 082 8 395
1933 3 368 n.a. 3 345 1 982 8 695
1934 4251 n.a. 5 340 2 574 12 165
1935 3 445 n.a. 3 890 2 208 9 543
1936 4950 n.a. 6188 2 169 13 307
1937 7 302 n.a. 8 688 2 490 18480
1938 6 222 n.a. 6 3263 2314 15592
1939 6 872 n.a. 75013 2 159 17383
1940 7717 n.a. 9 5243 2333 20 503
cont/d...
Notes: 1 After 1910, Malays were included under the other/mixed

category.
2 Other/Mixed category meant indigenous or natives
3 Indigenous/natives only.
There were 13 'cancellations' in 1897 and 15
'cancellations' in 1898.
Source: Annual Report, Department of Immigration, 1891 in British
North Borneo Official Gazette (BNBOG), March 1892, p. 42;
Annual Report Immigration and Protectorate in BNBOG 1896,
Vol. vii; Annual Report on Protectorate and Immigration for
1899 in BNBOG, May 1900, p. 53; Annual Report,
Protectorate and Immigration Department, 1900 in BNBOG,
May 1901, p. 83; Annual Report, Protectorate and Immigration
1901 in BNBOG, Nov. 1902, p. 398; State of North Borneo
Administration Reports, 1911-1940; British North Borneo
Herald, 1891-1940; personal communication, Kuah Kwai Fong.
Recruitment of natives by 'foreigners' (with the exception of British
subjects 'of good standing') was discouraged and permitted only under
licence. Advances were limited to $5 and contracts of more than one
month were illegal.75 Although on the one hand, some officials preferred
a policy of restricting the natives to 'traditional' activities labour
shortages meant that this policy was not feasible. Indeed, the Company
was not averse to utilising traditional forms of coerced labour for its own
activities or on government projects. Consequently, by 1941 natives
formed the largest labouring group. There was differentiation in terms of
payment and the Chinese and Javanese workers were paid higher wages
than the natives and 'others'. Prior to 1930, Chinese and Javanese males
earned 500 a day while females earned 450. For natives and 'others' the
rates were 450 for males and 350 for females. As in the Malay States
therefore, there was differentiation in payment based on ethnicity and
gender.76 However, unlike the Malay states, there was no differentiation
of occupation based on race, or place of residence, principally because the
bulk of the workers were employed in plantation agriculture.
Nevertheless, by 1940 the transformation of labour was not complete.
The Javanese remained as contract labour, the natives worked mostly as
casual labour, and although there was some mobility among the Chinese
in the timber camps, they were largely employed indirectly.
Thus during the period under study, 'modern' state formation and the
integration of Sabah and Sarawak's economies into the wider economy did
not lead to the superseding of all forms of 'unfree' labour. Rather, both
states sought workers for mines, oilfields or plantations and in the process
introduced new forms of coerced labour in the form of indentured labour.
Both administrations were also not averse to using corvee labour for road
or bridle road construction and for other public undertakings. Furthermore,
because different ethnic groups were employed in these jobs, there was no
unity among the workers and no labour movement developed. At any rate,
worker organisation was not encouraged and was punishable by
deportation. Thus there was very little evidence of a transition to a system
of free or 'freer' wage labour.
Economic and Social Transformation
By 1940 the economies of Sarawak and Sabah were characterised by a

small, but rapidly growing, largely rural population engaged in low
productivity semi-subsistence agriculture; coastal enclaves dominated by
western and Chinese capital; a dependence on the export of a few primary
commodities; the relative absence of modern transportation linkages
(especially in Sarawak); and a tiny manufacturing sector. Though
governed as independent states, they were nonetheless part of the wider
British trading empire centred on Singapore and Hong Kong. These two
states exhibited many of the organisational principles and practices of
other European colonies in the Southeast Asia region and differed from the
preceding administrations in the northern part of Borneo in several major
ways.
Firstly, a western bureaucratic-style administration was imposed on the
two territories. The 'Residency' and 'District' system of local
administration used in other British protectorates and colonies was
introduced. Senior administrators were recruited from Britain to fill posts
associated with the widening scope of bureaucracy. These included
departments like finance, revenue, public works, land administration and
trade, all of which were aimed at making the territory economically
viable. A number of functionally specific units were established, for
example, the forestry departments and labour protectorates to ensure better
economic management. At the same time, to keep costs down, existing
indigenous chieftaincies were either adopted or reinforced, or new political
authorities created, leading to the establishment of parallel systems of
administration both obedient to the central authority.
Secondly, the expanded size and broader scope of government also
meant increased governance of a whole range of activities which were
aimed at both administering and providing 'development' to the people.
As noted previously, the land regulations established Brooke and
Company sovereignty over land in their respective states; peasants were
forbidden from alienating new forest land; and ladang cultivation was
frowned upon and discouraged. The administrators also relied on
indigenous corvee labour to build paths, provide porter services and carry
out various government projects. Taxes were levied on the indigenous
population in the form of a poll tax, boat licence, fees on shifting
cultivation, on tapai (local liquor) and on birds' nests collection.
Crucially, official censuses made the evasion of these taxes more difficult
and the government administration impinged on almost every aspect of
life.77 Immigrant labour was no better off. Workers were caught up in a
growing body of regulations and procedures, subjected to corporal
punishment; policed by local garrisons and gaoled for absconding. The
encouragement of foreign immigration also led to the assigning of
specific economic roles perceived appropriate to the various communities,
especially in Sarawak. Social structures too changed as enclaves with
immigrant labour and populations emerged in towns like Kuching, Kudat,
Miri, Sibu, Sandakan, and Jesselton (Kota Kinabula).
Thirdly, the new style of administration in Sabah and Sarawak, with
its emphasis on impersonal institutions and the promotion of 'revenue-
earning' activities meant that in both territories, social services were
neglected. In Sabah, a mere 1 per cent of public revenue was expended on
health and only 1 in 30 people were reached by primary education. In
Sarawak, the rudiments of a system of vernacular education for Malays
and Chinese had been set up in 1902, but Iban education was left to
Christian missions with minimum government contribution. At the end
of Brooke rule, primary education had reached 1 in 26 persons. In public
health no concerted action was taken even after epidemics such as cholera
or smallpox swept through the state. By 1940, there were only three
medical officers in the states and two hospitals with 300 beds.78 By
contrast, more was spent on economic infrastructure development,
providing railways, roads, shipping services and ports. Indeed, these
transportation linkages facilitated the 'reproductive' capabilities of the
states, siphoned out the commodities needed by the West and also brought
the 'peace' that pacified local communities.
Despite the fact that Sabah was governed as a chartered company
territory and Sarawak administered as a private colony, it is interesting to
note how similar many of the administrative and economic policies were.
In one area though, that of finance, there were major differences. Sabah's
revenues had to meet both the needs of the Chartered Company and pay a
return to shareholders and at the same time cover administration and
development costs. Consequently, the Company had to engage in
economic activities on its own account (for example, in commercial
agriculture and timber exploitation) in order to pay dividends. Dividends
were paid at up to 5 per cent in 1919 and continued to be paid throughout
the slump. Loans which had been taken to finance development expenses
in railway construction severely strained Sabah's revenues.79 By 1941 a
large part of the debenture loans had been redeemed and the Company
possessed adequate cash and general reserves through the implementation
of a conservative financial policy which minimised capital expenditure and
kept recurrent outlay well within revenue.80 The necessity for greater
accountability in Sabah is reflected in the revenue and expenditure returns
as shown in Table 4.6.
Table 4.6 Sabah and Sarawak: Revenue and Expenditure up to 1940

(in millions of dollars)
Sabah Revenue Expenditure

Recurrent Capital
1900 0.6 0.4 1.1
1910 1.8 0.8 0.3
1921 3.2 2.0 1.6
1931 2.5 2.0 0.3
1940 4.2 2.1 0.3
Sarawak Revenue Expenditure

1897 0.6 0.5
1907 1.4 1.4
1917 1.7 1.4
1927 6.2 5.8
1933 3.6 3.6
1940 7.5 5.0
Sources: Sabah, Colony of North Borneo Annual Report, 1951, p. 170;

Sarawak, Handbook of Sarawak, 1949, p. 92.
As noted above, the Chartered Company in Sabah kept separate
recurrent and capital expenditure accounts compared to Sarawak. This was
principally because in Sarawak there was no legal distinction between the
Rajah's personal purse and the Sarawak Treasury. Everything belonged to
the Rajah and he had full control over the territory's resources and wealth.
Sarawak was also better endowed in terms of mineral wealth.
Nevertheless, with the discovery of oil in Sarawak, Charles acknowledged
the potential significance of petroleum royalties to state finances and in
1912 organised a State Advisory Council in England to oversee Sarawak's
financial administration. In part his action was motivated by his lack of
confidence in his son and successor's ability to provide sound
administration in the territory after his (Charles') death. Additionally, the
Brookes maintained throughout a conservative policy where expenditure
was concerned (there was no public debt after 1905). Crucially, both
governments relied on their political and economic advantages to mobilise
the resources of their respective territories for personal gain and power. In
the process they created and maintained the circumstances that enhanced
the export capability of these states and incorporated them into the global
system of commerce.
Part II
The Colonial State, Development Planning
and Economic Change, 1946-63
5
Britain, Sabah and Sarawak, 1946-63
By 1940 Sabah and Sarawak's economies were part of the global
commercial system and subject to major cyclical and political trends.
Administratively, the two states were now closer to British Malaya and
both governments were open to adopting ideas on administration, the
economy and technological advances introduced in Malaya. In fact, in
Sarawak, a constitution was proclaimed in 1941, which brought the
state's administrative system closer to that pursued in other British
territories. Plans were also afoot for greater control by Britain in
Sarawak's internal affairs. However, before these plans could be
implemented, the Japanese commenced their invasion of Southeast Asia
in late 1941.
The Japanese Interregnum, and the Cession of Sarawak and

Sabah to Britain
The Japanese occupation of Sarawak and Sabah during World War II was
part of Japan's master plan to gain control over sources of supply of vital
raw materials in the region. The ease with which this was achieved is
sufficiently well documented elsewhere and will not be dealt with here.
However, detailed information on economic affairs is relatively scarce. A
war command economy, subject to various forms of control, was imposed
on the two territories which came under a military administration based in
Singapore.1 The Japanese broke up the former commercial networks and
handed over large production units, for example, European-owned estates
and the oil refinery at Miri, to Japanese firms. They also imposed
restrictions on trade, controlled the movement and settlement of
population, and introduced rationing of foodstuffs. Ethnic divisions were
encouraged and perpetuated through the formation of various ethnic
associations. In the rural areas, the peasants retreated into subsistence
production while the urban residents suffered deprivation and were
conscripted for large-scale projects including the construction of airfields.
Land and air strikes by the Japanese to suppress discontent caused untold
destitution in Sabah. Further massive damage occurred during the allied
raids in the later stages of the war and major towns in Sabah, Jesselton
and Sandakan, were almost totally destroyed.2 This period was one of
dislocation and general decline marked by devastation, disruption of social
services, communication and administration, and general misery for the
population.
117
In late 1945 British control was imposed on the two territories and a
military government established to administer them until July 1946.
British strategy aimed at a unified administrative structure to bring about
some form of political integration (as opposed to the previous fragmented
structure); the integration of economic activities; and the encouragement
of territorial unity. Two important political changes also resulted. Vyner
Brooke, with the approval of the State Council, ceded Sarawak to Britain
on 1 July 1946.3 This was followed by an anti-cession movement in
Sarawak, the details of which need not concern us here,4 but which
resulted in the inclusion of certain existing policies relating to the rights
and privileges of the indigenous people. Sabah, as noted previously, had
been devastated and the task of rehabilitation and reconstruction was
beyond the resources of the Chartered Company. On 15 July, 1946, Sabah
and Labuan were transferred to the British crown. Dissent was negligible
and the transfer agreement 'provided for an initial payment by the Crown
of 860,600 pounds sterling, to enable the Chartered Company to redeem
its outstanding debentures, ... and ... appointed an impartial arbitrator ...
to ascertain the fair price of the Borneo sovereign rights and assets.'5 All
in all, the Company received £1.4 million in compensation.6
At a time when the trend was to oversee postwar economic recovery of
colonies as a prelude to self-government (and Britain was a signatory to
the Atlantic Charter declaring the rights of nations to self-determination),
Sabah and Sarawak became full-fledged colonies. It is argued here that in
the case of these states, the British colonial interlude, despite being an
anomaly, was a necessary condition for bringing these states to a similar
level of 'development' as the Malay states.
Reconstruction and Development
Since both Sarawak and Sabah were unable to finance their own
reconstruction programmes, they were eligible to apply for funds from the
British Colonial Development, Welfare and Reconstruction Fund. In
1946, both colonies were visited by H.S. McFadzean, Economic Adviser
to the Malayan Union, whose mission was to make proposals on the
most effective use of Colonial Development and Welfare allocations to
the two territories. This was followed by a further report by F. Benham,
Economic Adviser to the Governor-General.7 McFadzean's reports
outlined the need for economic relief in all the important sectors. In
Sarawak, for example, assets totalled just over $19 million. Of this, only
$8.6 million was available for rehabilitation and development because the
Colony had to make provision for arrears such as salaries and Provident
Fund contributions due to officers for the war period. McFadzean surmised
that the annual revenue stood at the level of 1929 because the period had
been characterised by expansion and contraction; periodic retrenchments
and reinstatement of key posts such as those of the Directors of
Britain, Sabah and Sarawak, 1946-63 119
Agriculture and Education, which had contributed to a lack of continuity

at the highest levels. He advocated a development plan involving the
expenditure of $13 million over five years, 1947-52,8 subsequently
extended to 1956, with the expenditure increased to $23.56 million.9 In
Sabah, the plan for reconstruction and development covered the period
1948-55 and cost just over £6 million (approx $52 million).10 Without
doubt, the funds for reconstruction enabled the two administrations to put
in place economic development packages that encompassed agricultural
and mineral development; the rehabilitation and expansion of
communication and transportation facilities; the rebuilding of towns; and
an expansion in the provision of social services.
The imposition of direct British rule in Sarawak and Sabah thus
resulted in major policy changes in the two territories. In the political and
administrative sphere, steps were taken to promote centralisation of
authority vis-a-vis distribution of legislative powers, greater integration of
legal systems and the encouragement and expansion of local self-
government. In the economic sphere, the key phrase was planned
development - to bring about economic change through the exploitation
of the natural resources of the state. This was to be achieved through
expanded communication and transportation facilities which would
improve the viability of the overall economy and the diversification of
production. In the sphere of social services, plans were devised to rebuild
towns, expand educational and health facilities and raise general standards
of living.
Administrative Reforms
Sabah and Sarawak were administered as part of British Borneo, which, in

addition to the two states, comprised the protectorate of Brunei.11 (See
Map 10). British authority was exercised by separate governors appointed
to the two states (the governor of Sarawak was also the High
Commissioner for Brunei), and the two governors came under the
jurisdiction of the Commissioner-General for Southeast Asia based in
Malaya. The Secretary of State for Colonies at the Colonial Office in
London was responsible for setting overall policy and administration. In
legal matters, there was the blanket jurisdiction of the Supreme Court of
Judicature for British Borneo, while in civil administration the various
divisional heads worked in co-operation and in co-ordination in all three
territories.
In the area of internal constitutional arrangements, Sarawak was the
more advanced state, having had a legislative council, the Council
Negeri,since 1941.12 The chief features of this legislative council were
incorporated into the new constitutional arrangements which
wereconcerned mainly with the machinery of government.13 A Supreme
International Boundary
*v\
KOTA
-SANDAKAN
KINABALUi
BRUNEI SABAH
SOUTH CHINA SEA
33
^CELEBES
SEA
SARAWAK
^KUCHING/
D U T C H
B O R N E
MAKASSAR
STRAIT
JAVA SEA 0 40 80 120 km
Map 10 Sarawak, Brunei and Sabah, 1946

Council was also established 'to consult...with the governor on...

administration.'14 In Sabah, the governor initially relied on an advisory
council comprising former members of the Chartered Company and
representatives of various interest groups. In 1950, a Legislative Council
and an Executive Council were established, the latter to advise the
governor on policy execution.15 For local administration, the previous
system of divisions and districts (Sarawak) and residencies and districts
(Sabah) was maintained, while new local authorities were established
rather than incorporating traditional leaders into government service.
These local authorities were empowered to collect fines and taxes, and had
responsibility over primary education. The creation of the local authorities
was a sharp departure from the past policies of the Brooke and Chartered
Company administrations because it led to the 'empowerment' of
traditional leaders without forcing them to become subordinate officers.16
Economic Reforms
The keynote of economic policy was the planned development of British

Borneo's resources in an integrated manner. This was necessitated by three
important considerations. First, the experiences of the postwar
reconstruction period had indicated the urgency for systematic planning on
a broader basis. This was a corollary to the regional and British
Commonwealth policy of economic and social advancement for the
inhabitants of British territories and colonies. Second, there was the
consideration that the colonial government had to improve the sterling
area balance of payments with the non-sterling world. Both Sabah and
Sarawak were rice-importing areas, largely from non-sterling countries
such as Thailand. A new policy was needed to promote rice self-
sufficiency and improve the sterling area balance of payments. Third,
while Sarawak and Sabah were not major players in the production of the
main export commodities from Southeast Asia (with the exception of
pepper), they were part of the wider British trading economy in the region
as they produced the same primary commodities for the European and
North American markets. This necessitated greater financial and economic
integration with the other British territories, principally Singapore,
Malaya and Brunei. The essential economic frameworks were: a common
currency; transport and communications; labour recruitment and
organisation; and inter-territorial trade; all of which had to be formalised
and regularised under colonial aegis.17
Finance, Currency and Currency Control
Under a currency agreement which came into force on 1 January, 1952, a

board of five currency commissioners was established for Malaya,
Singapore, Sabah, Sarawak and Brunei.18 A common currency, the

Malayan dollar (M$) was established and the Currency Board had the sole
right to issue currency and coinage in the five territories. The board
controlled a currency fund consisting of sterling securities as backup for
the currency issued by it. The sterling was received in return for currency
issued and was paid on demand for local currency. Apart from a liquid
working balance kept on hand by the board, the sterling was held in
London by the Crown Agents for Overseas Governments and
Administrations, and was invested in sterling securities. These included
United Kingdom Dominion and colonial bonds (except those of the five
territories) or other securities that the Secretary of State for Colonial
Affairs approved. This arrangement put the currency of Sarawak and
Sabah, along with Brunei, Malaya and Singapore on a sterling exchange
standard.19 While the system provided stability, it gave little scope for
monetary management locally. Crucially, the two states did not develop
an economic entity and interest of their own, but rather continued to be
dominated by foreign merchant, mining and plantation capital. No central
banking system was established.
Both Sarawak and Sabah were the recipients of special revenues from
the sale of enemy (that is, Japanese) properties. They also received war
damage compensation, grants-in-aid and Colonial Development Welfare
grants. All these financial settlements were inadequate for sustained
economic development and the provision of social services. Consequently,
an important first step was a reform of the financial system by the
colonial administration.
Prior to the Second World War, the two largest sources of ordinary
revenue were import and export duties. Other revenue sources included
license fees, land and forest duties, posts and telecommunications and poll
tax. The export-orientation of the economies meant an undue reliance on
international trade with its attendant fluctuations.
The main financial reform was a widening of the revenue base. In
Sabah, corporate income tax (a tax on companies) was introduced in 1949.
Initially 20 per cent, it was raised to 30 per cent in 1951 and 40 per cent
in 1954. Personal income tax rates (levied as a graduated 'resident's tax'
which had been introduced in 1941 on locally earned income) were revised.
The increase in taxation affected the small businesses, the civil servants,
shop keepers, small plantation owners and foreign employees. The scope
of licence fees was also enlarged to cover boat licences, and licences for all
vehicles. In the urban areas these taxes were collected by governments
officials while in the rural areas, the Colonial government continued the
system of entrusting collection to native officials or village heads. Part of
the rationale was to 'stimulate production at least to a limited degree in
areas which might otherwise remain entirely outside the sphere of the
developing money economy of the colony.'20 This change in the revenue
heads is shown in Table 5.1.
Table 5.1 Sabah: Analysis of Revenue Headings, 1938 and 1951

(in thousand Malayan dollars)
1938 1951
Head of Revenue M$ '000 % M$ '000 %
Ordinary
Customs duties 1 784 54.6 16418 62.7
Forests and lands 546 16.7 1 163 4.4
Licenses and
internal revenue 38 1.2 3 768 14.4
Fees, payments etc 119 3.7 581 2.2
Municipal 117 3.6 387 1.5
Harbour and light dues 54 1.6 260 0.9
Posts and
telecommunications 117 3.6 675 2.8
Light, water and
power - - 290 1.1
Rents 85 2.6 132 0.5
Interest 12 0.4 155 0.6
Miscellaneous 15 0.5 394 1.5
Railways - - 253 0.9
Taxes 46 1.4 - -
Poll tax 64 1.9 (Transferred to other heads)
Total 2998 91.8 24481 93.5
Extraordinary
Railways 225 6.9 - -
Land sales 12 0.4 494 1.9
Forests 5 0.1 - -
Royalties 12 0.4 - -
Other 14 0.4 - -
Colonial development
and welfare grants - - 1 205 4.6
Total extraordinary 268 8.2 1 699 6.5
Total Revenue 3 266 100.0 26 180 100.0
Source: Adapted from Great Britain, Colonial Office, An Economic
Survey of the Colonial Territories, Vol. 5 (London: HMSO,
1955) p. 125.
In Sarawak, corporate income tax was introduced in 1950 at a rate of

20 per cent. This was raised to 30 per cent in 1953. The revised revenue
heads for Sarawak are shown in Table 5.2.
Table 5.2 Sarawak: Analysis of Revenue Headings, 1938 and 1951

(in thousand Malayan dollars)
193£\ 1951
Head of Revenue M$ '000 % M$ '000 %
Ordinary
Customs
Import duties 12309962 26.0
Export duties 1 834 274 43.0 23 799 623 50.3
Excise duties 841 604 1.8
Licenses, taxes and
internal revenue not
otherwise classified 671 628 15.8 2 683 496 5.7
Reimbursements and
departmental services 232 342 5.5 776 509 1.6
Forests and lands 471 276 11.1 1 014 151 2.1
Posts and 133210 3.1 584950 1.2
telecommunicat-ions
Municipal 254 765 5.9 649 342 1.4
Rents of government
properties 310472 7.3 236459 0.5
Interest 310763 7.3 1 021 001 2.1
Marine 39939 0.9 174 702 0.4
Total 4 258 669 99.9 44 093 799 93.0
Extraordinary
Land sales 3 225 0.1 334 198 0.7
Rehabilitation loans - - 126986 0.3
War damage
compensation - - 1 444 381 3.1
Transfer of Sarawak
currency funds - - 1 350 000 2.9
Total Revenue 4261 894 100.0 47 349 364 100.0
Source: Great Britain, Colonial Office, An Economic Survey of the

Colonial Territories, Vol. 5 (London: HMSO, 1955) p. 125.
In both territories therefore, the hand of government extended even

further to embrace almost all aspects of life as new forms of taxation such
as stamp duties and trade licences were introduced. These new taxes
intensified governance as much as they broadened the revenue base of the
government.
Natural Resource Management
The greater integration of Sarawak and Sabah into the wider trading region
saw the establishment of institutions and structures to attract investment
into the area. A natural resources board was set up in Kuching in 1952,
followed by the formation of a natural resources committee in Sabah in
1959. Both these bodies were set up to promote the natural resources of
their respective states and to advise on the best uses of land. 21
Additionally, in Sabah the North Borneo Credit Corporation (NBCC), a
wholly government-owned pubic corporation, had been established in
early 1956 'with the purpose of "priming the pump" of private
enterprise.' 22 It had an initial capital of M$l million derived from an
interest-free government loan.23 Its function was to extend credits to the
private sector for agriculture, industry, rural, and urban housing and
building, and public and private utilities. The activities of the NBCC were
to complement government developmental strategies in bringing about
economic change in the state. The administration of the three states as one
unit (British Borneo) also facilitated the transfer of funds from one state to
another in the form of loans.24
The planned sectoral allocation in the development plans for Sabah and
Sarawak is shown in Table 5.3.
The key sectors that were emphasised were mining, agriculture,
forestry and transportation and these will be discussed in detail in the
preceding sections below.
Mineral Resource Exploitation
Mineral resource exploitation was an important component of the

government's economic diversification policy. The government's role was
to undertake geological surveys and provide the institutional structure and
transportation facilities that would permit resumption of production,
systematic assessment and further development of mineral resources. In
1949, under the Colonial Development and Welfare Scheme, a combined
geological survey department was established in the Borneo territories.
The director, six geologists and an assistant geologist were stationed at
Kuching while the deputy director, two geologists and an assistant
geologist were based at Jesselton.25 The geological survey's main task
was to compile information on mineral occurrence based on earlier
Table 5.3 Sarawak and Sabah: Development Plans, 1947-63
Planned Sectoral Allocation (per cent)

Economic Social
Development Plans Projects Infrastructure Services
Sabah
Reconstruction and
Development (1947-55) 8.2 26.05 65.75 1
Development (1955-60) [details n/a]
Development (1959-64):
Initial 7.7 48.6 13.80 1
Revised 14.9 44.8 17.50 1
Sarawak
Plan 1947-56 [Details n/a, but emphasis on raising exports,
foodstuffs and infrastructure]
Plan 1951-7:
Initial 4.0(agr. only) 63.0 21.3
Revised 10.0 55.0 25.0
Plan 1955-60:
Initial 14.0 55.0 25.0
Revised 20.0 40.0 31.0
Plan 1959-63 [details n/a, but emph asis on iinfrastructure]
Note: 1 General allocation to administration, internal security not

included.
Sources: Sabah: P.S. Gudgeon, 'Economic Development in Sabah
1881-1981' in Anwar Sullivan and Cecilia Leong (eds),
Commemorative His ton of Sabah 1881-1981 (Sabah: Sabah
State Government, 1981) Table 3, p. 205; Table 12, p. 229;
Sarawak: A. Morrison, 'Development in Sarawak in the
Colonial Period: A Personal Memoir' in R.A. Cramb and
R.H.W. Reece (eds), Development in Sarawak: Historical and
Contemporary Perspectives (Monash: Centre of Southeast
Asian Studies, 1988): 35-47; Report on Development 1956;
Annual Report Sarawak 1957.
investigations by various companies, supplemented by reconnaissance
mapping and more detailed work in localities of economic interest.
Another task was advisory work in connection with the development of
Sabah's and Sarawak's mineral resources. The natural resources board and
the natural resources committee played a major role in the promotion of
the natural resources of the territories.
In Sarawak a Mining Ordinance (No. 14 of 1949) was enacted under
which two types of prospecting licenses were issued: general licences for
prospecting in a particular district; and exclusive licences for prospecting
over a specific surveyed area of land for a limited period, during which
time the holder had first option to take out a mining lease. Mining leases
were for a twenty-one year period.26 In keeping with earlier policies, the
colonial government also asserted state ownership over all mineral
resources and infrastructural change went hand-in-hand with the
development of this sector. Exploitation of known minerals continued in
the state while the prospecting of other minerals was initiated. The
location of mineral deposits in Sarawak is shown in Map 11. Recovery
was slow in this sector because machinery had been removed,
replacements were costly, and there were competing demands for labour.
Where gold was concerned, 389 fine ounces of gold were produced in
1947, and production rose to 1523 fine ounces in 1949. Thereafter
production declined.27 To assist the industry, the colonial government
waived the royalty on gold in 1958, and also passed legislation which
modified the regulations governing the sale of gold locally. As a result,
gold sold locally fetched higher prices than that exported to Singapore.28
These regulations aroused increased interest in gold and by 1959, output
had risen to 2450 fine ounces. By 1961 output was 4132.4 fine ounces.
However this trend was short-lived. The majority of the underground
workings were small adits and shallow shafts and gold production was
based on the Bau region. Since the 1930s, it had remained a Chinese
activity. The Chinese enterprises were open to technical improvements,
just as earlier Chinese interests had adopted mining techniques from the
Borneo Company but deposits were exhausted. By 1962 there were six
mines in operation while four others were worked at intervals. The gold
mines, which declined to eight in 1964, employed a total of about 200
workers.29 Undeterred, the colonial government continued surveying for
other deposits. Antimony and mercury production virtually ceased
although there was the occasional production of small quantities of
antimony.
After the Second World War the shortage of coal within the British
Empire and the high prices coal fetched in Southeast Asia led to a decision
to reconsider the possibility of reopening the old coal mines in Labuan,
Sabah and west Sarawak. With funding from the Colonial Development
and Welfare Funds, the colonial government hired a consultancy firm,
Powell Duffryn Technical Services of the United Kingdom, to investigate
the possibility of reopening the old coal mines.30 The consultancy firm
carried out geological surveys in Sabah and Sarawak to determine the
viability of reviving the coal industry. In west Sarawak, a survey of the
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*"•' K400
Map 11 Sarawak: Distribution of Mineral Resources

bituminous coal deposits was made in 1953 and tests revealed that there
were reserves of about 3500000 tons that could be mined commercially.31
The area however was inaccessible and a major factor in the economics of
mining the coal was the cost of transporting the coal from Silantek to
Kuching.32 Interest in the coal deposits was shown mainly by Japanese
concerns because of the growing demand for coking coal in Japan. A
Japanese company subsequently undertook detailed prospecting of the
reserves and made a costing of mining and transportation costs. By the end
of the colonial period, drilling results were less encouraging than those
undertaken previously, and the transport factor made prices prohibitive in
comparison to imports from Australia and the United States.33 The
project was subsequently shelved.
Bauxite proved to be the most important of the new minerals
discovered by the Geological Survey Department at Semantan in west
Sarawak in 1949. Over twenty areas were located and from late 1949 until
1952 the deposits were prospected by the British Aluminium Company.
The company later decided not to proceed with mining. In late 1955 an
exclusive licence to prospect for bauxite was issued to a Singapore-based
company, which subsequently formed a local company to work the ores.
This company, Semantan Bauxite Limited, obtained a 21-year lease over
480 acres at Munggu Belian. It extended its lease in 1961 to 633 acres.
Mining was carried out on the hills and the ore was transported in damper
trucks to a central plant for washing and screening. The washed bauxite
was loaded mechanically onto lighters in the Semantan River and
transferred to ocean freighters about three miles offshore during the
shipping season, which ran from March to October.34 In its heyday, the
company employed about 200 workers. Exports of bauxite between 1958
and 1961 amounted to slightly more than 800 000 tons valued at about
M$16 million while royalties paid to the Sarawak government amounted
to about M$1.5 million. Most of the bauxite was exported to Japan
although some went to Taiwan also. By the end of 1965, the reserves at
Mungga Belian had been exhausted and the short-lived bauxite boom
petered out.35 Other minerals that were mined included dolomite, fireclay,
glass sand and phosphate with interest shown mainly by Japanese
concerns. Production and sales however, were relatively small.
Oil, which had dominated Sarawak's economy since the 1920s, showed
signs of diminishing in the 1950s. Output declined from 200 000 tons
prewar to about 50 000 tons per annum in the early 1950s.36 The oil
company continued to explore for new reserves and in 1952 the
government of Sarawak and Sarawak Oilfields Limited signed a new
mining lease which reviewed the lease and royalty arrangements.
Subsequently in 1954, the boundaries of Sarawak were extended to include
the marine areas of the continental shelf and Sarawak Oilfields' mining
lease was extended off-shore to about 55 000 square miles of the
continental shelf. In 1956, Sarawak Oilfields Limited set up a drilling
platform 8 miles off the coast of Sarawak. Drilling at these offshore

exploration wells was unsuccessful.37 Most of the oil refined at Lutong
was from Brunei Shell's Seria oilfield. In 1964, total oil exports
including re-exports from Brunei were valued at over M$205 million. Of
this amount, oil produced at Miri contributed M$2.2 million.38
In summary, during the colonial period the mining sector played a
relatively small part in Sarawak's economy. Although in the decade 1952
to 1961, the value of oil, bauxite, gold, bricks and tiles, lime and stone
and gravel produced in Sarawak amounted to more than M$63 million as
shown in Table 5.4 below, reserves were largely exhausted, and
commercial crops and timber had emerged as the chief exports.
Table 5.4 Value of Mineral Production in Sarawak, 1952-1961

(in $M)
Oil 31089 552

Bauxite (1958 to 1961 only) 16 228 935
Stone and gravel 10 517 408
Bricks and tiles 2 806 996
Gold 1 685 330
Lime 673 054
Source: Annual Report Sarawak, 1962, p. 118.
Nevertheless, by the end of colonial rule, an institutional framework
had been established for the more extensive exploitation of mineral
resources and this was to play an important role in the post-independence
period.
When the colonial government took over Sabah, the state's mineral
wealth was an unknown quantity. As noted previously, a Geological
Survey Department had been established to investigate the mineral
resources of the state and to consider the possibility of resumption of
production, especially of coal. The Labuan Exploration Company, which
held rights to coal on Labuan island had no plans to develop its coalfield.
A survey of the Tawau area by the geological survey department in 1954
showed the possibility of reserves of fourteen million tons of sub-
bituminous coking coal although not all could be mined.39 Additionally,
rehabilitation and transport costs were prohibitive and the project was not
pursued.
Oil exploration rights were held by the Shell Company which
continued sinking exploration wells in the Klias Peninsula during the
1950s. In the 1960s, exploration was carried out in the off-shore area but
again nothing resulted.40

Although other minerals such as asbestos, bauxite, chromite, copper,
dolomite, Fuller's earth, gold, iron ore, manganese and nickel were
prospected by western interests under annual or twenty-one year leases, the
remote location of many minerals and the fact that deposits were small
meant that commercial exploitation was not feasible. The location of
these minerals is shown in Map 12. By the end of 1963, only stone, coral
sand and clay remained as the few minerals to be exploited in Sabah.
In the mining sector the colonial government injected some much
needed funds to ascertain the mineral possibilities of Sabah and Sarawak.
Despite the creation of specialised departments, physical infrastructure and
the introduction of legislation to assist private capital, mineral resource
exploitation was largely unsuccessful during this period. Following past
practice there was continuity in the emphasis given to mineral resource
exploitation, and in the priority granted to western interests.
Agricultural Resource Expansion
In the agricultural sector, five major initiatives characterised colonial

development policy and these laid the foundations for the current
agricultural policies pursued by the post-independence governments. These
were: firstly, greater self-sufficiency in rice and other food crops
accompanied by government outlays on irrigation works; secondly, the
introduction of a diversification programme to reduce dependence on one
or two export commodities; thirdly, the adoption of a more scientific
approach to agriculture with related investment in research, the
dissemination of research findings and the advocacy of new techniques;
fourthly, investment in transport and communications to open up new
areas for agriculture and enable the peasantry to transport their produce 'at
reasonable cost' to ports and centres of consumption; and fifthly, the use
of land settlement as an integral factor in promoting economic
development. The philosophy that underlay these objectives was that
economic development had to be planned rather than be allowed to evolve
in an episodic or disjointed fashion.
Greater Self-sufficiency in Rice and other Food Crops
One of the first measures taken by the colonial government to increase the
export capabilities of Sabah and Sarawak was to reorganise the
agricultural sector and to establish new agricultural departments.41 The
new departments were directed to draw up an agricultural policy based on
the recommendations made by the Adviser on Agriculture to the Special
Commissioner for Southeast Asia. In view of the rice shortages
experienced during the Second World War, the British government was
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Map 12 Sabah: Distribution of Mineral Resources

eager to find a region in a British colony where sufficient rice could be

grown using modern technology, to satisfy the needs of all British
Southeast Asia. Sabah was judged to be the most suitable place. In 1950,
pilot scheme was started in the Marudu Bay area to establish irrigated
mechanical rice production but the scheme was a failure. In 1951 the
Conservative Party came to power in Britain and the project was
shelved.42 In both states, a padi purchasing scheme was also implemented
and rice exports prohibited. This latter scheme aimed at buying up surplus
rice direct from padi producers and stocking up the rice as a food reserve.
Suitable quantities were to be released on the market during times of
shortage. Controls were also enforced on the milling of local padi and the
movement of local padi and rice. These measures led to the introduction of
rationing and the price of rice was also controlled by the authorities.
In 1954 these measures were reviewed and it was decided to remove all
price controls on rice and to allow the free movement of rice from 1955.
Nevertheless, registered rice importers and licensed rice dealers were
required to maintain rice stocks according to a set quota to guard against
future rice shortages. 43 Thus the first stage of the policy of self-
sufficiency was a regulatory phase and it was abandoned when it was
considered no longer feasible nor desirable to attempt to achieve self-
sufficiency in rice production.
The second stage was to improve the lot of the farmer by offering a
guaranteed price for padi. This stage was also marked by a government
propaganda drive to persuade hill padi farmers to develop swamp padi land
further downriver to supplement production. A number of land settlement
schemes were also started in both Sabah and Sarawak in the late 1950s to
persuade the indigenous people to abandon shifting cultivation. But the
most important policy change was the implementation of an 'Assistance
to Wet-Padi Planters' scheme introduced in 1959 to encourage and assist
with the development of wet padi areas under the aegis of the drainage and
irrigation unit of the public works department. Several irrigation schemes
were started in the Benoni-Papar area (6000 acres), Tuaran and Keningau
in Sabah.44
In Sarawak, the government encouraged and assisted the development
of wet-padi areas by the farmers themselves by providing them with
technical advice, tools and materials, and small cash subsidies. This
scheme was designed to promote the construction of drainage and
irrigation works for areas under 300 acres. By the end of 1962, 90 separate
areas, aggregating 5120 acres had been improved and public investment in
the scheme was greatly increased.45 The farmers were also trained in the
use of buffaloes in wet padi cultivation. Generally, and because stocks
were limited, buffaloes were imported and provided at subsidised prices to
the farmers. Although the padi research programme was designed to
conduct experiments on the types of fertiliser, padi varieties and
cultivation methods, the thrust of the programme was to increase
productivity rather than to achieve self-sufficiency. Greater diversification

of the economic base of the farmer was also encouraged by the widespread
promotion of off-season crops such as soya-beans, groundnuts and sweet
potatoes. Additionally, the cultivation of coconut as a secondary crop was
encouraged.
Commodity Diversification Programme
In Malaya the crop diversification programme had commenced in the

1930s with the introduction of oil palm. In Sabah and Sarawak, cocoa
spearheaded the diversification drive. After the Second World War, the
uncertain long-term prospects of the rubber industry, the strong demand
for cocoa and doubts about a reliable supply of cocoa from the traditional
producing countries led to an interest in cocoa cultivation. In 1947-8, a
cocoa cultivation feasibility study was conducted in Malaya, Sarawak and
Sabah by E.E. Cheeseman, a research officer from the East Mailing
Research Station. Cheeseman was accompanied by a representative from
Cadbury Brothers Limited, the chocolate manufacturers. In his report
Cheeseman commented that Sabah possessed an area of first class andesite
soils in the southwestern part of the country suitable for cocoa
cultivation. Sarawak had less suitable soil but he envisaged cocoa crop
development in the Fifth Division in land settlement schemes. 46
Subsequently, a cocoa research station was set up at Quoin Hill, Tawau,
in Sabah by the agricultural department where trials on cocoa material
were carried out. Sabah also earned a good reputation for developing cocoa
planting materials. Additionally research showed that cocoa could be
grown on a variety of soils. Interestingly, in Sabah cocoa proved to be
very successful under the plantation cultivation system. At the end of
1959, there were only 1400 acres under cocoa. By the end of 1965, there
were an estimated 5500 acres.47 In Sarawak, development of cocoa was
slow and it achieved some limited success on land settlement schemes
especially after independence.
The second crop earmarked for diversification was oil palm. Again, it
was more successful in Sabah. Oil palm required heavier capital outlay
than either rubber or cocoa and was less suited to individual smallholder
cultivation. In 1959, there were only 206 acres of oil palm in Sabah and
at the end of 1964, there was an estimated 10 800 acres under plantation
cultivation. Furthermore, a further 1000 acres were earmarked for
development in medium-sized holdings.48 In Sarawak, an experimental
project of 20 acres was started at Danau in 1960. Like cocoa, further
development was to be in land settlement schemes.49 Essentially, the
diversification programme was related to the land settlement schemes and
concomitant with the policy of promoting the settled cultivation of crops.
Research and the Introduction of New Techniques
Prior to colonial rule, although special concessions had been granted to

planters to encourage investment in cash crops, little had been done in the
area of research, improved techniques and seed selection. Consequently,
one of the first tasks of the newly-established agricultural departments was
to raise the productivity of existing crops. Agricultural research stations
were set up at key centres to introduce and establish suitable new and
improved forms of stock and plants with a commercial/economic
potential; to have a balanced diversity of crops and livestock; to provide
specific services for the control of pests and diseases of crops and
livestock; and to carry out research in order to obtain more knowledge and
information on which to base future development.50 In Sarawak, a total of
M$l 630 641 was allocated for development schemes involving rice and
cash crop cultivation; the development of farm mechanisation and
cocoa/wet padi surveys; the construction of a staff training college; and
pepper disease investigation. An entomology laboratory, a field laboratory
for pepper research and auxiliary buildings and equipment for rice research
were financed through a further grant of M$l 623 062 under the Colonial
Development and Welfare funds scheme.51 In Sabah by 1956, nine
agricultural stations had been established, the most important of which
was at Tuaran. At Tuaran twenty-five acres were set aside for use by the
Rubber Fund Board for raising the quality and standard of rubber.52
The crop that received the most attention was rubber, principally
because rubber was seen as the mainstay of Sabah's economy. In 1948, a
commission of enquiry was set up to examine the rubber industry of
Sabah. Its terms of reference were:
Having regard to the probable future price levels for rubber,
to examine the economy and prospects of the rubber
industry as at present established and to make
recommendations on methods of improving the production
and marketing of rubber in respect of both estates and
smallholders.53
The Rubber Commission's report (which included a general review of
the industry), concentrated on methods of improving the production and
marketing of rubber and recommended accelerated replanting with high
yielding trees. This necessitated financial assistance by the government
and following the report, the Rubber Fund Board ordinance was passed in
1950. This led to the creation of a Rubber Fund Board which comprised
all interested parties under the chairmanship of the Director of Agriculture.
Agreement was reached by both plantation owners and smallholders for
the collection of an export cess on all rubber exported at the rate of one
quarter of one cent per pound. The funds raised were to be used for the
formation of a local Rubber Producers Advisory Service and for
contributions to such bodies as the Rubber Research Institute of Malaya,
with whose help the problem of replacing poor rubber with high yielding
strains was to be solved. An isolation seed garden was augmented and
birdwood nurseries developed. Clonal seed nurseries were also established
and seeds flown in from Singapore.54
Rubber planters were, on the whole, slow to adapt to the new
legislation. Consequently, to encourage more replanting, the collection of
cess on rubber exported was credited to the replanting fund. With the
replanting fund, the Rubber Fund Board was empowered to operate two
types of schemes; 'Account A Schemes' for plantations of 250 acres and
above; and 'Account B Schemes' for plantations under 250 acres. For both
schemes financial aid was to be made available for participating owners
planting or replanting with approved rubber, and this aid could be claimed
in respect of such planting and replanting done since 1 January 1946.
Furthermore, for estates of 250 acres and above, aid was made available
for planting crops other than rubber approved by the board.55 This
ordinance came into force on 1 January 1955 and from 1 April a cess of 2
cents per pound of rubber exported was levied. Clonal stumps were
distributed to the rubber growers and the demand for assistance meant that
the government had to loan money, interest free, to the board to operate
the schemes. Nurseries were also operated to produce stumps for
distribution. 56 The fund made it possible for smallholder rubber to
increase, and by 1957 the area under rubber rose by over 8000 acres to
137 000 acres.57
In Sarawak too, it was acknowledged that rubber had become the main
cash earner for many farmers, and there were no viable alternatives to
rubber as the major smallholder cash crop. Steps were thus taken in 1954
to rehabilitate the industry. The very small number of large plantations in
contrast to Sabah, meant that substantial private capital investment could
not be counted upon in Sarawak, nor could smallholders be expected to
draw inspiration from developments on neighbouring estates. Therefore,
the government had to provide the incentives and to stimulate the
expansion and improvement of the smallholder industry through financial
and other means. In 1956, a Rubber Planting Scheme to subsidise
replanting and new planting with high yielding material was introduced.
(It was backdated to 1955.) Subsidies were also made available to estates,
but the main aim of the scheme was to expand and diversify the
smallholder agricultural sector with a focus on rubber. The extension of
rubber planting was also seen as a means of promoting more permanent
cultivation among the shifting cultivators of Sarawak and drawing them
into the cash economy. Smallholders received grants in the form of cash,
planting material and fertilisers, while subsidies to estates were in the
form of cash only.58 The Rubber Planting Scheme was extremely
successful, and in January 1959, a cess was levied on all rubber exports to
help finance the scheme. The grant for new planting was also raised to
$250 per acre. A total of M$37.41 million was set aside in the 1959-63
Development Plan for the implementation of the scheme.59 In line with

developments in Sabah, the scheme became known as the Rubber
Planting Scheme A, with grants at $600 per acre for replanting and $400
per acre for new planting.60 In both states therefore, a major priority was
to raise the quality of rubber production because rubber was recognised as
the main cash crop and the only one seen as improving the rate and extent
of new capital formation in the states.
Land Settlement Schemes and Improvements in Transport
Land settlement schemes were regarded as a crucial component of the

economic development and export crop diversification programme in
Sabah and Sarawak. The success of these schemes hinged upon persuading
the indigenous groups to give up their shifting cultivation activities.
Additionally, the designation of land for the schemes meant impinging on
customary land rights. On the positive side, the schemes involved drawing
the peasants into the cash nexus and improving living standards in the
rural sector. More importantly, since the schemes were located in remote
areas, the government was obliged to provide transportation and
communication facilities in order for them to operate efficiently. This
meant increasing accessibility in the rural areas.
This development strategy focussed on introducing two key cash crops
- rubber and cocoa - into the peasant economy. In Sarawak, as noted
previously, a special Assisted Rubber Planting Scheme had been
introduced in 1960. As part of the scheme, peasants from remote areas
were brought to special centres where they received basic training in land
selection, preparation, planting and maintenance. Upon their return home,
they were required to prepare their fields for planting and were given free
planting material and fertiliser to cultivate one acre of land. They were
responsible for planting and maintenance and after a year the new holdings
were inspected by government officials. If they were found satisfactory,
the farmers received planting material and fertiliser for a further two acres
of land.61 The Sarawak Development Finance Corporation (established in
1958) also provided financial assistance for agricultural undertakings.62
Other land settlement schemes only came into fruition in 1964 and will
be discussed in Part Three. In Sabah, by 1961, 500 settlers in the 'Hill
Dusun' area of Keningau were settled on ten-acre rubber and wet padi
plots. Fifty families from the west coast and interior were also settled on
the Apas river near Tawau. Another area where land settlement schemes
were established was at Tambunan.63 In all these areas, a rudimentary
system of land connections was established to link the settlements with
the major urban centres. The promotion of land settlement schemes linked
by internal transport lines was a key factor in the agricultural development
of new lands. The British laid the foundations for more comprehensive
land schemes but their full implementation was only seen in the post-
independence period.
Where agriculture was concerned, the chief legacy of colonial rule was
a continuation of the emphasis on export crops. Although there was a
professed concern over the growing dependence on imported rice, and
attempts were made to increase rice production through the introduction of
an Assistance to Padi Planters Scheme,64 public investment in the rice
sector was minimal compared to the export crops. In Sabah, rubber
retained its premier position, as shown in Table 5.5 below.
Table 5.5 Sabah: Acreage of Major Crops, 1940-63
Commodity 1940 1946 1951 1955 1960 1963

e e
Rubber 128 680 125 000 118857 122 195 173 458 231 169
e
Coconut 53 029 46 000 45 627 45 663 50650 95 150
e e
Wet padi 46 153 45 000 43 398 44 840 46 000 62 700
e e
Dry padi 35 000 40 000 31 528 25 178 30610 23 950
e
Hemp 4 812 3 154 3714 4441 5 000
Cocoa - - 88 2 800 5 500
Oil palm _ _ _ _ 1 050 6 500
Notes: Pre-war statistics relate to 1938
... = negli gible
e = estimate
Source: Peter S. Gudgeon, 'Economic Development in Sabah' in
Anwar Sullivan and Cecilia Leong (eds), Commemorative
History of Sabah 1881-1981 (Kota Kinabalu: Sabah State
Government, 1981) p. 219.
Comparable statistics for Sarawak are unavailable, but an indication of
the volume of production of the more important crops is given in Table
5.6 below.
During this period, Sarawak imported about half of its rice
requirements (the figure for Sabah was approximately the same), despite
the fact that on average approximately 185 000 acres of hill padi and about
95 000 acres of swamp padi were planted in an average year.65 Rubber and
pepper comprised the main exports. The agricultural sector continued to
be the most important sector and it supported the majority of the
population in both states. In 1960 approximately 78 per cent of the
economically active population of Sarawak was engaged in agricultural
activities, while the figure for Sabah was 80.5 per cent.66 The agricultural
sector also offered the best long-term prospects for the development and
improvement of rural living standards.
Table 5.6 Sarawak: Exports and Value of Principal Products
1940-62
Rubber White Pepper Black Pepper Copra Sago

Tons Value Tons Value Tons Value Tons Value Tons Value
(M$) (M$) (M$) (M$) (M$)
1940 35 147 26 167 140 1 186 348 874 108 13 629 2 070 70 629 23 142 2 184 997
1946 23 521 19 316 549 601 826 881 53 33 020 18 3 369 5 048 1 097 664
1950 55 475 113941 617 267 3 997 749 15 109417 4 330 2 651 451 28 245 9 277 842
1955 39411 78 744 880 2 334 5 922 457 13 964 25 702 343 1 575 504 352 9871 2 006 735
1960 49 961 122 440 482 3 394 15 180 009 707 2 020 197 n.a n.a 19 967 2 788 335
1962 43 306 72 597 147 7 084 16 000 259 4 497 7 786 593 n.a n.a 31 621 4 169 921
Note: n.a. = not available
Source: Annual Report Sarawak, 1962, pp. 73-75.
Forests and Forest Resource Utilisation
During the colonial period, forests became integral to the development

process and their contribution in this respect depended essentially upon
their destruction. Forests were cut primarily for cash to provide
government revenue for investment in other sectors such as transport.
They were also cleared for agro-conversion associated with land settlement
schemes. At the same time development of the one-man chainsaw,
mechanised methods of timber extraction using wheeled-crawler tractors
and high-lead or 'skyline' winching, and heavy road construction
machinery and specialised log-hauling vehicles transformed the timber
sector.
The three main components of colonial forest policy were: the demise
of large monopoly concessions and the entry of greater capital investment
in the sector; the more efficient regulation of the forest and planned forest
resource utilisation; and the introduction of new and improved technology
in timber exploitation.
The Demise of Large Monopoly Concessions and the Entry of

Greater Capital Investment in the Timber Sector
As noted previously, the timber industry had grown substantially in both

states prior to the Second World War and was dominated by large
concerns, the most important of which was the British Borneo Timber
Company (BBT). In the immediate post-war period, reconstruction in
Japan created a vast demand for timber from Southeast Asia. At the same
time, the Australian liberation forces in Sabah and Sarawak had realised
the timber potential of these states and were anxious to start an export
trade in timber.
In Sarawak the premier monopoly concern was the Borneo Company
which held an exploration licence for the Upper Rajang River. Fortunately
for the colonial government, the Borneo Company's licence had expired
during the Japanese Occupation period but had been renewed to the end of
December 1947 until new arrangements could be made. The other main
concessionaires were the Chicle Development Company, which
specialised in jelutong; the Island Trading Company, which was involved
in the manufacture of cutch; nipah distilleries dominated by Chinese
interests in Kuching; and the Vamco sawmill and a host of Chinese
sawmills. 6 7 These concerns were not seen as obstacles to a state timber
policy because of the specialised nature and size of their operations.
The situation was quite different in Sabah. There, the BBT's monopoly
was due to expire in 1945 but nothing could be resolved until the
Chartered Company's own future was resolved. Consequently, the BBT's
monopoly was renewed until 1955. In the postwar period the colonial
government was aware that the monopoly was a stumbling block in the
implementation of its grand development strategy, particularly since

timber represented Sabah's main source of wealth. As the Conservator of
Forests wrote:
[The] Forest Department ... had to function mainly as
agents, whose chief duties were the issue of forest licences
(when duly authorised by the concessionaires) and the
collection of royalty (much of it on behalf of the
concessionaires).68
Once the Chartered Company's fate was resolved, the colonial
government decided to terminate the BBT's monopoly in view of the long
term objective of getting the planning process in place. At the end of
1949, the BBT was given five years notice of the termination of its
monopoly, thus enabling the government to make new arrangements
effective from 1 July 1952. Under the terms of the new agreement, the
BBT received a limited concession covering about 1000 square miles
while the government acquired full control of forest operations.69 The
BBT was also required to work the concession area on a 21-year felling
cycle. Additionally, the government guaranteed the BBT that its profits for
the first three years would not be less than they had been for the period
1948-1950 under the old concession agreement. This guarantee was based
on the expectation of a thriving timber industry and in the belief that it
would cost the government nothing. However, the BBT took the
opportunity to embark on a costly programme of experimentation and
mechanisation and incurred very heavy losses. Thus the compensation for
loss of profits (about M$4.8 million)70 was considerably greater than the
compensation for the surrender of the exclusive concession (about M$3.4
million).71 Furthermore, the machinery purchased by the BBT allowed the
company to work its new concession even more efficiently and profitably.
The government's only consolation was retrieval of its sovereign claim to
the forest and its resources, an expectation of greatly increased revenues
from timber royalties deriving from new concessions and an expanded
timber sector.
The demise of the large timber monopoly concerns subsequently led to
the introduction of new concession arrangements in both states. This was
followed by new investment by British-, American- and Australian-owned
companies including firms that had been involved previously in these
states; for example, the Borneo Company, the Sarawak Company
(previously known as the Island Trading Company) and locally-registered
companies (for example, the Limbang Trading Company). A few large
concerns like the Bombay Burmah Trading Corporation Limited and
Montague L. Meyer Limited had concessions in both Sabah and
Sarawak.72
In Sabah, the state entered into new licence agreements with four big
companies. These were, the Bombay Burmah Trading Corporation
Limited, Montague L. Meyer Ltd,73 Kennedy Bay Timber Company Ltd.,
and the North Borneo Timbers Ltd. (owned jointly by North Borneo
Trading and Bombay Burmah). These four companies were allocated
concession areas totalling approximately three to five hundred square
miles of which approximately one-fifth was to be logged on the 21-year
cycle period at the rate of 1 per cent of the area per year, subject to
minimum royalty payments. The rate of royalty was raised with effect
from 1 July 1952. Although royalty varied according to the class of
timber won, the average was fixed at 10 cents per cubic foot (compared to
the previous figure of 2.7 cents).74 In addition to the long-term licences of
21 years, some annual licences were issued to local smaller operators.
Although in principle these licences were issued for one year periods it
was envisaged that there would normally be sufficient timber to last an
enterprise for ten years. In 1953 many applications were received under
this category of licence which were normally given for areas adjoining
river banks. (The larger concessions were for inland areas.) The annual
licensees who had smaller operating capital and costs proved to be more
efficient and this aroused the resentment of the long term licensees who
protested at the increase in the number of annual licences granted,
claiming that the annual licensees 'crimped' labour from their concessions
and 'created unfair conditions ... in the industry'.75 The issuing of annual
licences was curtailed for a while, but increased production by the annual
licensees subsequently angered the big operators. The big operators then
demanded that 'unfair' competition be ended; that annual licensees be
strictly controlled and that the big operators be given special privileges
because of the size of their investments.
The colonial government regarded western capital as the 'benefactor' of
development and subsequently implemented new legislation which
drastically restricted the annual licensees' right to export on their own
account and introduced export quotas on timber. Moreover, the state agreed
to suspend additional long-term concessions until it was proven that the
'Big Four' could operate profitably.76 The Chinese towkays, who had
become increasingly powerful under colonial rule and had benefited from
the liberal trade policies, took the Sabah government to court in the
United Kingdom.77 The Sabah government then backed down, and in June
1956 an agreement was reached between the Forest Department and the
annual licensees whereby the former agreed not to object in principle to
the issue of additional long-term concessions; that the export of timber
(excepting restricted species) would be uncontrolled; that the export quota
would not be increased; and that the allocation of the export quota would
be decided by the annual licensees' North Borneo Timber Producers
Association. If an annual licensee was converted to a long-term licensee,
the quota would be decreased proportionally.78 As a result of these
developments, the timber operators by the end of 1957 included four large
foreign companies holding 21-year concession agreements (the BBT, the
North Borneo Timbers Limited, the Bombay Burmah Trading Corporation
Ltd., and the Kennedy Bay Timber Company Ltd.); three large local firms
with long-term concessions; and 72 local firms working under short-term
annual licences.79 By 1958 timber had passed rubber as the main export
revenue earner and by 1961, more than $9 million were invested in the
timber industry.80
In Sarawak, the long-term concession arrangements ranged from 15 to
20 years.81 The annual licensees comprised mainly Foochow Chinese
who were in the forefront of increased logging activities in the state by
the 1950s. There the Chinese sawmillers formed two associations, the
Sarawak United Sawmills Ltd., and the Borneo United Sawmills Ltd.,
both based at Sibu (but the second including millers from Bintulu and
Kuching) to market timber on their own account rather than through the
Western timber exporters.82
In both states, colonial timber policy resulted in the emergence of
many small-scale concerns and the demise of former monopolies. Two
groups of timber operators emerged - the large western firms which held
long-term licences and the smaller Chinese-owned local firms which
normally held annual licences. Competition between the two groups was
intense and the Chinese timber towkays exported timber directly rather
than through the western timber merchants. This led to a change in the
traditional trading pattern of the states because the western interests had
previously dominated trading channels and networks. On another front, the
timber industry also led to the creation of rich Chinese capitalists who
were to dominate the timber trade after 1963.
More Efficient Regulation of the Forest and Planned Forest Resource

Utilisation
Colonial forest policy also ushered in an era of more efficient forest

regulation and the planned utilisation of forest resources. The forestry
development plan for the two states focussed on the constitution of an
adequate permanent forest estate and the introduction of systematic
management of the forests in accordance with the principle of sustained
yield. The plan involved the hiring of additional staff to examine and
constitute various areas as permanent forests, to undertake inventories of
the timber resources and to prepare and enforce working plans in those
permanent forests that were subject to timber felling.
The constitution of the permanent forest estate was accomplished
through legislation: in Sarawak, the Forest Law of Sarawak (Forests
Ordinance, 1953) and in Sabah, the Forest Ordinance, 1954.83 These
forest regulations enshrined four objectives. Firstly, the reservation of
permanent forest land sufficient for the safeguarding of water supplies and
soil fertility, and the prevention of erosion and flooding, and sufficient for
the reasonable supply in perpetuity of all forms of forest produce;
secondly, the management of the forests with the objective of obtaining
the highest revenue, compatible with sustained yield and the first
objective; thirdly, the promotion of thorough and economic utilisation of
forest products on land not included in the Permanent Forest Estate, prior
to the alienation of such land; and lastly, the fostering of a profitable
export trade in forest products. In both states, forestry policy placed great
emphasis upon the wood-producing potential, rather than the non-wood
productive potential, of the forest estate. Nevertheless, the 'protective'
function of forestry legislation was more evident in Sarawak. This is
principally due to the fact that Sabah contained some of the world's
richest rain forest stands and these were also more accessible compared to
Sarawak's forest endowments.
In Sarawak, the Brooke legacy of native tenure and land rights made it
imperative to establish another land classification system. According to
the 1958 Land Code, Sarawak was divided into four tenure categories:
Mixed Zone, Native Area, Reserved Land, and Native Customary Right
and Interior Land. Under reserved land were included Forest Reserves and
areas such as national parks, wildlife sanctuaries etc., all of which could
supersede native land rights. This Land Code supplemented the 1953
Sarawak Forest Ordinance which formed the legal basis for forest policy.
The latter led to the creation of two major forest classifications, the
Permanent Forest Estate and Stateland Forests. The Permanent Forest
Estate was sub-divided into Forest Reserves, Protected Forest, and
Communal Forest. Entry into Forest Reserves was prohibited without a
licence, and the local population was banned from hunting, farming, or
collecting forest produce, and very strict controls were enforced. In
Protected Forest, customary land tenure was forbidden but the local
population was allowed to hunt, fish and collect non-timber forest
products, provided they had obtained the permission of the authorities.
This was seen as a compromise by the government to overcome native
opposition to forest reservation. Communal Forests were established near
longhouses to provide for the community's needs and commercial
exploitation was prohibited in these forests. They were essentially 'village
forests' set aside for the domestic needs of particular communities. The
1953 ordinance, which provided for timber extraction and general forest
management, stipulated that 'potentially productive forests should ... be
so situated that they are provided with reasonable access to the principal
lines of communication' and that 'the policy of the government is to
foster a profitable export trade' in timber.84 Thus the forestry department's
function was both as revenue officer and as policeman and represented the
sovereign claim to resources and territory.
In summary, the rationale behind forest utilisation policy was to
manage the forests so as not to disrupt the existing order but with the
long-term goal of making the forests a paying concern. These forest
regulations continued to be the basic directive on the practice of forestry
in both Sabah and Sarawak during the colonial period and were not
designed to impose restrictions on the timber industry.

The inventory of forest resources that formed the second major part of
the forestry plan was carried out using a variety of methods. In some parts
of the country, particularly the peat swamps, the task was greatly
facilitated by aerial photographs on which the principal forest types could
be easily detected. This was followed by mapping from these photographs
with adequate ground checks, and the growing stock was assessed by
random sampling in selected areas. In the inland forests, systematic
sampling was necessary because there was frequently a patchwork of
various forest types even within small areas. Inventories were also
necessary to determine if certain species were in danger of being
overlogged, which had happened in the case of bilian (Borneo iron wood)
which had become scarce in certain areas.
New and Improved Technology in Timber Exploitation
The proper demarcation of concession areas, fairly accurate inventories of

forest type, the advent of new technology, and the support of the colonial
government went hand in hand with increased mechanisation of the
industry during the colonial period. In Sabah virtually all logging was
mechanised by the end of the 1950s.
Prior to the Second World War, the main and only method of moving a
log on the first stage of its journey was that known as kuda-kuda or hand-
logging. In this method the log was carried on a sled {kuda-kuda - false
horse) with greased runners, hauled by a team of men over a runway either
to the edge of the river or onto railway lines. Buffaloes and elephants were
also employed to haul logs. However, the elephants were not a great
success and the role of buffaloes was a limited one. Crawler tractors were
imported after the war and some companies imported even more
sophisticated machinery, including the Tournaskidder. By the mid-1950s,
chainsaws were in use for felling and cutting trees and skidder tractors
with caterpillar-type tracks employed in road-making and log-hauling.
Another system in use was the high-lead system, first introduced in the
1930s and reintroduced in 1952 from the Philippines.85 All these systems
required the construction of roads and the deployment of timber lorries.
The last part of the journey of a log was usually by water. In sheltered
waters and where sufficient floating logs were available, they were made
up into long narrow rafts and towed by tugs. Commonly a sinking log
was lashed between two floaters. Where floaters were not in sufficient
proportion, or where an open sea passage had to be made, the logs were
loaded onto lighters for towing by heavy tugs and taken to log ponds for
subsequent export.86
In Sarawak peat swamp logging for ramin (Gonstylus bancanus),
particularly for the Australian and United Kingdom markets, predominated
during this period and constituted the mainstay of the forestry sector. The
overlogging of ramin caused a minor depression in the Sarawak timber

industry which led to the imposition of a quota in 1956 (the Ramin
Exports (Restriction) Order 1956). This restriction was lifted in 1960, but
the proviso to obtain a licence to export ramin remained. Earlier, a flat
rate of royalty had been charged on a particular species of timber and in
1960, it was decided to apply export duty on ramin logs as well.87 After
the swamp areas (the wetlands) and the lands adjoining the rivers had been
logged, the concessionaires moved inwards and it was the new technology
that allowed them to exploit the hill slopes and the interior.
In this atmosphere of the systematic logging of the forest and the
prevailing conceptions of abundant resources, sparse populations and the
necessity to tame the environment in order to 'develop' the state, it is not
surprising that the timber industry of Sarawak expanded at an incredible
rate. Within less than six years of the new timber policy, forest revenue
exceeded a $1 million (approximately £116 667).88 As a matter of fact, in
just over ten years, the value of timber exports jumped from £348 440 to
over £5 million.
The expansion of the timber industry in Sarawak is shown in Table
5.7 below. Log exports formed the bulk of timber exports. Timber also
became the most important source of export revenue and foreign
exchange.
Table 5.7 Sarawak: Timber Exports, 1920-60
Total timber
Logs Sawn equivalent Value
Hoppus tons Cubic tons Hoppus tons £
n.a. 3910 7 820 3 140
n.a. n.a. n.a. 12 170
- 2 500 5 000 4960
26 500 19 000 64 400 348 440
195 693 165 970 527 633 5087510
Note: 1 sawn ton is reckoned as 2 hoppus tons.

1 hoppus ton =1.8 cubic metres.
Source: B.E. Smythies, 'History of Forestry in Sarawak', p. 174.
If the expansion of Sarawak's timber exports was remarkable, that of
Sabah's was truly phenomenal during the same period. Prior to the
Second World War and in the immediate post-war years (that is, before the
timber boom took off), the BBT had extracted hardwoods at low levels in
order to keep prices high. This low level of extraction is reflected in
Table 5.8 below. As in Sarawak, timber exports were principally in the

form of logs.
Table 5.8 Sabah: Timber Exports, 1938-53
Year Quantity ("000 cubic feet) Value(M$'000)

1938 4663 2 177
1938 5420 2436
1948 2458 3018
1949 2553 5 444
1950 3751 6534
1951 4427 10184
1952 3476 8 177
1953 5 697 12 198
Source: Colonial Office, An Economic Survey of the Colonial
Territories, Vol. 5, p. 122.
With the new timber policy in place accompanied by increased
mechanisation in the state, timber was increasingly exported in two forms
- logs and sawn timber. This trend is reflected in the timber exports for
1955-63, and is shown in Table 5.9 below.
In 1953, timber exports were valued at just over M$12 million. Two
years later, exports had increased to around M$20.5 million and by 1963,
timber exports were around M$ 149.5 million. The bulk of these exports
were in the form of logs since sawn timber was less popular with the
exporting countries. As with rubber, there was minimal processing in
both states and apart from providing employment opportunities in timber
felling, there was little or no scope for the establishment of a
manufacturing industry in the timber sector.
The colonial government's timber policy was not without its critics.
In 1960, J.R. Sargent, who was commissioned to prepare a report on
transport requirements in the light of economic development in Sabah,
commented that:
...there should be a balance between agriculture and
exploitation of timber. The timber industry has grown apace
and large areas appropriated as timber reserves and
concessions. This in turn has raised doubts whether too
much of the colony's land has not been bespoken for the
timber industry ... It is therefore argued that production of
timber represents an uneconomic use of land especially now
that opportunities for producing higher-yielding crops has
arisen ... 89
Table 5.9 Sabah: Timber Exports, 1955-63
Timber logs Value Timber sawn Value

Year (cubic feet) M$ (cubic feet) M$
1955 15 937 865 19 596 283 1 710780 1 990 646
1956 19 152015 23 329 567 1 341 446 2 847 423
1957 20787 585 27 484 082 1 094 720 4041 130
1958 25 339 279 32771 103 952 399 3 605 963
1959 38 445 343 57 393 045 1 061 676 3 670 662
1960 49 111 807 86 173 972 1 072 872 4572210
1961 62 529 380 100 668 047 590 999 2123532
1962 68 387 047 120 600 000 433 832 1 504781
1963 82512445 148 667 480 226 505 940 038
Notes: For 1955 and 1956, the quantities are:
logs - converted to true (solid) measure, round equivalent
timber sawn - true (solid) measure round equivalent.
For 1957-1963, the quantities are:
logs - value Hoppus quarter girth
timber sawn - sawn timber as measured.
Source: Compiled from the Annual Reports Forest Department, North
Borneo, 1956-1963.
Comments such as these were rare given the imperative of improving
state finances. More common were statements such as 'the damage done
by shifting cultivation must unquestionably be greater than all forms of
damage to the forests' which continued to be penned by various
Conservators of Forests in both states.90 Another regular inclusion was
'the rise in the number of recorded forest offences' as an indication of
better policing by the forest departments. Indeed the Annual Reports are
studded with the types of forest offences recorded, such as shifting
cultivation and the stealing of tengar bark by Filipinos.91 The authorities
responded to these crimes by 'stationing forest guards in the more remote
areas to educate the natives', by evicting shifting cultivators who had
cleared land in forest reserves through the courts92 and by passing new
legislation which stated that 'All Forests, whether inside or outside a
Forest Reserve or Protected Forests, remain the property of the
government until the land has been alienated under document of title'.93
In the case of Sabah the timber industry reached capacity production by
1961. What the BBT had 'failed' to accomplish in its 32-year monopoly
concession, the colonial government achieved within a space often years.
Between 1955 and 1963, there was a 13 per cent rise in exports, due
almost exclusively to timber exports.94 There was also a significant shift
in the direction of trade. In 1955, the United Kingdom had been Sabah's
dominant trading partner, accounting for 22.5 per cent of Sabah's exports
and supplying 26.8 per cent of its imports. By 1963, Japan became
Sabah's leading trading partner, accounting for 54.7 per cent of its
exports, 95 although the United Kingdom still provided the bulk of the
imports. Nevertheless, the full story of the timber sector and its impact
on economic change had yet to unfold.
Transport Development
During the Brooke and Chartered Company administration period,

transport development had been piecemeal, congruent with the localised
nature of economic penetration and confined mainly to the coast, along
major rivers, and in Sabah, the trunk railway line. The colonial
administration identified transport development as a key economic
objective and gave top priority to road construction - to open up the
territories to the wider capitalist economy; to provide access and
opportunity to the peasantry; and for administrative convenience. The
long term geographical effect of road transport during this period was the
reorientation of internal transport lines, since the new roads generally ran
transverse to the old river routeways. This process of road construction
had its political counterpart in the consolidation of colonial rule in Sabah
and Sarawak.
When Sabah and Sarawak became Crown Colonies in 1946, a social
and economic survey of the territories was commissioned to ascertain their
requirements prior to applying for assistance under the Colonial
Development and Welfare Act.96 A major recommendation was the
improvement of transport facilities to open up new territory for
agricultural purposes, and to enable peasants to transport their surplus
produce at reasonable cost to ports and centres of consumption. This was
tied in with the general development of the country which hinged on an
increase in mineral, agricultural and timber production, a redistribution of
population away from crowded areas and a reduction in the costs of
providing and maintaining administrative and social services.97 Road
development and improvement was therefore a basic feature of all
development planning between 1947 (when postwar development
planning began) and 1963 (when Sabah and Sarawak joined Malaysia).
Colonial transport policy is therefore marked by planned development and
the laying of a transport network which formed the basis for subsequent
road and air links in the country.
As noted previously, economic change was to be achieved through the
implementation of various Development Plans. In Sarawak, the first Plan
was designed to cover the period 1947/48 - 1955/56, and was revised to
take into account increased costs and resources and to meet the
implications of the Colombo Plan. In the revised plan, M$12.9 million

was allocated to transport and communications. 98 This plan was
subsequently reviewed and a more comprehensive and better documented
plan was drawn up for the 1955-60 period. In this latter plan, of a total
expenditure of M$99 400 000, M$54 200 000 or fifty-four per cent was
allocated to transport and communications.99
Transport policy in the state focussed on the overall coordination of
road, inland water, coastal and air transport. Rivers were to remain
important highways, especially the Rajang River in central Sarawak; a
trunk road was planned to run parallel to the coast; and internal air
services were to be introduced to provide a link between isolated
communities in the mountainous interior of northern Sarawak and the
outside world.
In the area of water transport, rivers were upgraded and improved by
removing obstructions, blasting rocks in the more dangerous rapids,
clearing channels through the bars at river mouths and controlling erosion
on the banks of certain rivers. Port facilities were also upgraded to
facilitate coastal traffic. In 1955, Tanjung Mani was opened as a
lighterage port and new facilities were completed at Sibu to enable two
ships on the Singapore-Sibu and Hongkong-Sibu routes to be loaded
simultaneously. 100 The Rajang River became the centre of the timber
trade and fostered the growth of Tanjung Mani, Sarikei, Binatang and Sibu
during this period.
In the area of land transport, until the 1950s priority was given to the
reconstruction/rehabilitation of existing roads. Subsequently, a road
construction programme for the period 1958-1963 was implemented by
the government which provided for the construction of a total of 504
miles of roads. These included an 81-mile trunk road from Serian to
Simanggang (which was completed in 1962); 232 miles of secondary
road; and 190 miles of feeder roads. The principal objective was to provide
a main line of road communication between Sematan in the First
Division with Durin on the Rajang River. The road passed through the
most densely settled rural areas and permitted their development through
the construction of subsidiary networks. It also enabled the opening up of
new land for agricultural development and the exploitation of nearby
mineral resources. Lastly, it had the effect of reducing travelling-time and
making marketing of produce easier. (See Map 13) Other changes occurred
in the pattern of population distribution and the location of towns,
villages and communities.101 The road network was complementary to the
river systems and laid the basis for subsequent economic development.
From the start road construction costs were prohibitive and on average,
the 438 miles of road completed under the Programme cost M$123 000
per mile and the average cost per mile for the Serian-Simanggang trunk
road was M$228 000.102 Consequently, plans to connect Kuching to Miri
were shelved because it was estimated that about M$200 million was
required to meet the capital cost of linking Kuching and Miri with a trunk
road.103
The third area of transport development was in civil aviation. Airfields
were built at Kuching in 1950, and in Sibu in 1952. By 1961, 22 airfields
of varying sizes and standards were in use in Sarawak. The extension of
these internal air services resulted in the integration of the remote
communities in Sarawak's mountainous interior with Kuching. Air
services also had important economic consequences for these remote
communities. For example, when the service to Long Akah was extended
to Bareo in 1961, it enabled the formation of a co-operative society
among the Kelabits to handle and distribute freight, and this once isolated
community was able to import consumer goods and export its products by
air.104
As mentioned earlier, the long term geographical impact of road
transport was the reorientation of internal transport lines, for generally the
new roads ran transverse to the old river routeways. The rapid expansion
of the road network also produced a minor transport revolution in
Sarawak. Prior to the completion of the Kuching-Simanggang road, there
had been no main arteries connecting the major centres of population and
consequently there had been no necessity for local transport services
outside of the main towns. With the completion of this road and the
Serian to Simanggang trunk road, public motor transport services for
passengers and freight grew rapidly.105 There was an increase in private
motor vehicles, this led to competition with public transport services and
the authorities had to intervene to coordinate the pubic transport system.
In 1954, a decision was made to grant route monopolies only to properly
constituted liability companies. By 1961 the Motor Licensing Authority
had achieved its aim of introducing a 'sound economic structure' and
eliminating 'wasteful' competition. Road transport thus brought greater
personal mobility and a greater degree of national cohesion. It also enabled
the easier movement of goods and the provision of social services among
the people of Sarawak.
Transport development facilitated and strengthened the previous pattern
of an export-oriented economy and the trade and commerce of Sarawak
continued to be centred on the collection of primary products for export
and the local distribution of imported consumer and capital goods. By
1963, over four-fifths of Sarawak's total export earnings, including re-
exports of petroleum, came from timber, rubber and pepper. Crucially, the
increased importance of timber in the economy resulted in the
commencement of direct shipping services to and from ports other than
Singapore and Bangkok, which traditionally had been Sarawak's main
sources of imported consumer goods and rice respectively. In 1954, direct
shipping services were started with Hong Kong, followed by services to
East Australian ports and Sabah in 1958, main Australian ports and
Malayan ports in 1961 and direct services to the United Kingdom,
100km \ BRUNEI
Bintulu
Kuching
o District Office
Map 13 Sarawak: Road Network, 1963

continental ports and Japan in 1962.106 These direct shipping services,

which were introduced as a consequence of specialist commodity exports
to these countries and were intended to reduce transhipment and handling
costs in the timber industry, facilitated the greater integration of Sarawak
into the regional and international economy.107
Sabah had been very badly affected by the Second World War. Roads
were damaged, bridges destroyed and the railway needed extensive repairs.
Heavy Allied bombing had also contributed to much devastation,
particularly of the port settlements. The colonial government prioritised
transport development in order to 'increase the productivity of the colony'
since '...a major part of its development ... [had to] be taken by outside
capital and colonisation, [and] the improvement of both internal and
external communications ... [was] of paramount importance.' 108
Consequently, physical infrastructure development received the highest
priority in the 1948-55 Plan for Reconstruction and Development. Out of
a total development expenditure of £6051 939, 29 per cent or £1 780000
was allocated to infrastructure. The three main items of infrastructure were
ports and harbours, air services and land transport (road and rail). Major
reconstruction and improvements were planned for facilities at Sandakan,
Labuan and Tawau (categorised as Class I ports) and Jesselton, Kudat and
Lahad Datu (categorised as Class II ports) so that trade (especially export
trade) could resume. Aerodromes and air services were essential both for
commercial and strategic reasons. Labuan was to be the main air base for
Sabah because of its strategic location relative to international air routes
and to Sarawak and Brunei, and its proximity to the oilfields. 109
Similarly, the improvement of land communications was essential to
enable produce to reach the ports and ultimately foreign destinations.
In the area of land transport, a key consideration was whether the
railway ought be reconstructed and improved (at a cost of £504 930) or be
replaced by a metalled and asphalted road at a cost of £432 400 but
requiring an annual maintenance of £18 500. n o Since opinion was divided
on the most appropriate means of supplying the land transport needs of
Sabah, the Government decided to appoint a transport commission to
examine the transport requirement of the areas served by the Sabah
railroad. The Transport Commission's report was tabled at the Advisory
Council Meeting in 1949 and a Select Committee appointed to make its
recommendations on the report. The main recommendations were: firstly,
that the railway be retained because it had served the area well and the cost
of replacing it with a road was enormous; secondly, that attempts be made
to develop land (approximately 116000 acres) adjacent and accessible to
the railway for agricultural and timber schemes and that these schemes be
linked by feeder services; thirdly, that the introduction of train services,
functioning as stage services, in addition to the mixed train services be
introduced; fourthly, the complete relaying of the Jesselton-Beaufort
section (56 miles) with 60 pound rails and the strengthening of all bridges
to take a 12-ton axle-loading; and lastly, the extension and expansion of

the existing line.111
These recommendations were adopted by the Advisory Council in
December 1949 and a major reconstruction and rehabilitation programme
estimated at $480 000 112 was planned and executed between 1949 and
1960. The main track was relaid with 60 pound rails while the other two
sections were maintained at the existing standard. Subsequently in 1959,
a second report on transport was commissioned by the Sabah
government.113 This second report advised that although the railway could
not be replaced by a road system immediately, in the long run a road
system would bring more benefits to Sabah. The main route
recommendations were: an east-west road linking Sandakan with
Tamparuli (via Telupi) and Ranau; a road linking Beaufort and Weston to
replace the railway; and a road linking Jesselton and Papar. Additionally,
the construction of feeder roads to link Kudat and Kota Belud, and Papar
with Beaufort (as links in a north-south road) along the west coast was
recommended. The report also advised the closure of the uneconomical
sections of Tenom-Melalap and Beaufort-Weston. (The latter was shut
down in 1963.) The recommended road construction schedule was
dependent upon economic conditions and the availability of funds.114
In the meantime, the scheduled road development programme was
commenced. This involved the construction and improvement of roads on
the west coast; the linking of these roads to Sandakan and Kudat; and the
building of roads to serve Tawau and Lahad Datu in the east. The west
coast roads were important because they traversed an agricultural plain the
Tambunan district on the Keningau Plain which featured in the grand plan
for a major rice irrigation scheme to boost the rice production of the state.
Other roads were designed to facilitate the transport of export commodities
such as tobacco, rubber and timber and boost the productive capabilities of
the state. As in Sarawak, road construction costs were very high.
Additionally, the shortage of labour in the state necessitated the purchase
of expensive mechanical equipment.115
In 1953, road building received an impetus with the appointment of a
new governor, Roland Turnbull. Turnbull had major plans for promoting
new growth in Sabah and instituted a programme of earth roads or jeep
tracks to link up the various districts and residencies throughout the
country. Between 1881 and 1954, some 300 miles of road had been built
in Sabah. Between 1954 and 1957, Turnbull doubled this figure. Road
construction was also decentralised and entrusted to the district officers.
The district officers opened up new areas for commercial cultivation in the
vicinity of the main population centres and agriculture expanded
rapidly. 1 1 6 To the earth or jeep tracks were added as part of a
comprehensive state Five Year Plan for development between 1959 and
1964, a major east-west road linking Jesselton to Sandakan. Work was
started at either end. By the end of 1961, there was also a road link
between Kudat and Jesselton via Kota Belud previously a pony trail. The
road construction programme was funded by major grants from the British
government and speeded up by Turnbull, the last British governor of
Sabah. The roads helped break down the pre-war isolation of the east coast
and linked the main population centres in the state. In each centre a
network of feeder roads radiated outwards providing access and assisting in
the economic development of the state. (See Map 14)
Road development in Sabah was accompanied by an increase in road
motor vehicles and motor services. The rubber boom in the 1950s also led
to an increased level of prosperity in the state and the importation of
motor vehicles. The increase in the number of motor vehicles, buses and
motorcycles in Sabah is shown in Table 5.10. Public transport flourished
and competition soon emerged between bus and taxi services.
The colonial administration realised that competing bus and taxi
services necessitated an overall change in policy with regard to road
regulation. Hence it was decided to invite the Commissioner of Road
Transport, Malaya, to visit Sabah and make recommendations on road
transport and traffic regulation. The Commissioner's recommendations
were accepted by the Sabah government and new road legislation was
introduced. In mid-1953 a Road Traffic Ordinance was passed which gave
the Commissioner of Road Transport (also the Commissioner of Police)
the authority to regulate passenger and goods service vehicles in any area
declared by the Governor-in-Council to be a regulated area. The vicinities
of Jesselton and Sandakan were declared regulated areas and the owners of
public transport vehicles were encouraged to form companies which were
granted monopoly licenses for the main routes. An improved and more
regular service resulted with the elimination of unnecessary competition
and by the end of 1953, the number of stage-carriers (buses) and taxis had
fallen from 503 to 216.117 Thus by the 1960s, there were cross country
road links between Sandakan and Jesselton, expanded road transport
services, and the public regulation of road passenger services, providing
safer and more reliable services. In the 1970s and 1980s, road transport
became an integral part of Sabah's social and economic structure, and
roads had progressed from being 'feeders' to agents of economic change in
the state.
In the area of air transport, only the Labuan airfield remained in use in
1947 while those constructed by the Japanese at Jesselton, Sandakan and
Tawau were destroyed by Allied bombing. Up to 1949, the only air
connection with the outside world was a weekly courier service between
Singapore and Jesselton, via Kuching and Labuan operated by the Royal
Air Force with Sunderland flying boats. In May 1949, Malayan Airways
began a service from Singapore to Jesselton, weekly at first, and increased
twice weekly later. This service was extended to Sandakan later that year.
Although other air links were established with Manila, Hong Kong and
Australia, the Malayan Airways service to and from Singapore, remained
EXISTING SEALED ROADS

EXISTING UNSEALED ROADS
EXISTING BRIDLE PATHS
UNSEALED ROADS CONSTRUCTED IN 1961
50 km Kudat PROPOSED ROADS UNDER PRESENT SCHEME
Tg. Tambuluran POSSIBLE FUTURE ROADS
TarrtipaV S ^ W
SOUTH CHINA SEA
SimpannarTO
Linkabau
Tuaran
Jesselton
âgmatan
Tambunan
Lingkungan
Tenom
Sipitang
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Kemabong
Pensiangan
f\^.^*' , \V'^.' , ;^.y^

KALIMANTAN
Map 14 Sabah: Road Network, 1963

Table 5.10 Sabah: Motor Vehicle Statistics1, 1933-63
Type of Vehicle
Private cars & Transport Vehicles
Year hire cars (incl. taxis & buses) Motorcycles
1933 116 75 107
1934 170 61 101
1935 203 76 108
1936 52 15 114
1937 49 21 111
1938 26 12 99
1939 22 7 102
1940 43 3 111
1941-49 - - -
1950 798 310 387
1951 1 187 351 640
1952 1 457 443 860
1953 2 677 2 n.a.
1954 3 134 2 n.a.
2
1955 3 532 n.a.
1956 4 380 2 n.a.
1957 5019 2 n.a.
1958 2319 1 698 1 708
1959 2838 2 027 2 099
1960 3 471 2219 2 464
1961 4258 2613 3 005
1962 5 159 3 327 3 964
1963 6 118 3 843 4833
Notes: 1 The statistics dating back to the 1930s may be somewhat
misleading because long-distance truck transport was
technically feasible only after around 1950.
2 From 1953 to 1957, private cars/hire cars and transport
vehicles were grouped together.
Source: For 1933-1940: North Borneo Central Archives, File #1199:
Motor Vehicle Statistics Annual Returns 1933-42. For 1950-
1963: Annual Reports North Borneo, 1950-1963.
the most important commercial air link for both Sabah and Sarawak,
reflecting the continuing importance of the economic orientation towards
Singapore. By the end of colonial rule, internal air services had also been
established between the main airstrips at Tawau, Lahad Datu and Kudat
with Labuan, Jesselton and Sandakan by Borneo Airways Limited (a
private company in which 51 per cent of the shares were held by the
governments of Sabah, Sarawak and Brunei).118
In the area of sea transport, the war had resulted in a severe disruption
of shipping services. The Straits Steamship Company, which had a virtual
monopoly in this sector, was only able to resume services on a
fortnightly basis with Singapore in 1947. This was increased to a weekly
service in 1949. The expansion of the lumber trade led to the
establishment of direct shipping links with Japan, Hong Kong, Taiwan
and Australia. Sandakan, Tawau, Lahad Datu, and Semporna emerged as
the chief 'lumber' ports, with Jesselton and Labuan playing a secondary
role. 119 Direct shipping services between the Borneo territories and the
consuming countries, especially where lumber was concerned, meant that
dependence on Singapore was reduced and additional (transit) costs avoided.
As a matter of fact, one of the first actions taken by the colonial
administration was to reach an agreement with the shipping companies
whereby the latter agreed not to include transit charges in freight costs on
goods transhipped via Singapore to the United Kingdom.120 This followed
on the findings of the Report of the 1949 North Borneo Rubber
Commission, which indicated that substantial transit costs on rubber
exported via Singapore had reduced the profit margins of rubber producers
in Sabah.121
As a corollary to the policy of encouraging direct shipping services,
ports and wharfs were upgraded and their facilities modernised. The total
sum made available for these items for the period 1959-1964 was
$8 454 048. 122 Financial aid for the construction of new wharves and
replacement of old ones was also provided by the United States of
America under the Foreign Operations Administration.123 By 1963,
Sandakan had become the principal port in the state with over 205 000
tons handled over the wharf (excluding mid-harbour loading of logs), a rise
of 31 per cent over the 1960 level. During the same period, Jesselton
grew by 66 per cent to reach 177 906 tons handled over the wharf.124
Like Sarawak, transport facilities in Sabah were introduced to meet
international, not domestic needs. The railway, roads, rivers, and the seas
were essentially part of a system of economic penetration connecting
Sabah to Europe, Asia, and Australia by way of the ports. They made
possible the rapid carriage of Sabah's exports -jungle produce, tobacco,
timber and later rubber - to the ports; and of equipment, stores and labour
(and settlers) to the producing centres inland. There were no cross country
links prior to the mid-1960s and each transport agency had a specific role
in the economic system. For example, the railroad and roads served the
western half of the country while the rivers served the eastern half. Not
coincidently, it was left to the shipping companies to provide the linkages
between the eastern and western parts in keeping with the tradition of
water 'uniting' the different parts of the state.
To focus exclusively on the export-orientation of transport lines is to
neglect the real achievements of the colonial period. Firstly, better
internal land links were introduced with the construction of transverse
lines in Sarawak and the east-west links in Sabah. These greatly increased
mobility, resulted in an expansion of the area under agriculture, and led to
a more systematic exploitation of the natural resources of these states. All
these changes in the different types of transport took place alongside
technical developments. For example, it was only after around 1950 that
long-distance truck transport was technically feasible. Secondly, direct
shipping links with foreign markets were instituted during the colonial
period which partially reduced dependence on Singapore as a transit point
and completed the integration of Sabah and Sarawak into the world
market. Thirdly, the revolution in air services reduced travelling time
between remote outposts in Sabah and Sarawak and other parts of the
world, and provided better trading possibilities for the people of the
interior. Thus, after more than a century, economic integration was made
possible not just in terms of administrative arrangements but also
physical links. This was to facilitate subsequent federal arrangements
within Malaysia.
The Organisation of Labour
As noted earlier, the colonial administration moved quickly to set in

motion policies considered necessary to facilitate the development and
continuing profitability of the export sector. An integral component of
these policies included the organisation of labour. Between 1946 and
1963, there was an increase in the scale of regional labour migration into
the Borneo Territories which was facilitated, created, and maintained by
the state in the interests of western capital and administrative convenience.
Labour Recruitment
Immediately after the war, the colonial government was faced with a
shortage of skilled and unskilled labour to carry out the extensive
development programmes planned for the two states. Wage labour was
also required for the expansion of the major export commodities - rubber
and timber. The bulk of the indigenous population was engaged in
smallholding agriculture while the Chinese were either engaged in the
distributive trades, or were rubber or pepper small-holders. It was no
longer feasible to promote institutionalised labour migration from either
China or India, nor was it desirable to encourage spontaneous migration

from these countries. The only other avenues available were the relocation
of surplus labour to labour shortage areas, or the importation of labour
from neighbouring British colonies. Both these avenues were utilised to
overcome labour shortages during the period. A third avenue was the
increased use of mechanisation, especially in road construction, as we
have seen in the previous section.
The shortage of unskilled labour was not insurmountable. The closing
of the goldmines and the abandonment of many pepper gardens in the Bau
district of Sarawak had led to many Chinese 'squatting' on native
communal land, with attendant problems. This problem was resolved by
relocating these 'squatters' to the Darvel tobacco estates in Sabah. The
territorial unity of the two states made such a labour movement both
feasible and workable. Following this, some fifteen hundred Cocos
islanders were hired for employment in Sabah and negotiations were
undertaken for the recruitment of Filipino workers.125 A major change
during this period was the spontaneous migration of Indonesian
immigrants who sought employment in the lumber camps of Sandakan
and Tawau on the north-east coast of Sabah. To facilitate this labour
movement, new labour legislation was initiated in 1948 by the colonial
government. This legislation, the Labour (Unification and Amendment)
Ordinance of 1948, was in keeping with International Labour
Conventions governing the recruitment and employment of dependent
indigenous workers of one territory brought to another. Subsequently in
1952, new legislation was introduced embodying the principles of specific
international conventions and regulating working hours, health conditions
and medical treatment, age of admission to employment, provision of
written contracts of employment, notice of pay and conditions of extra-
territorial recruitment.126
The colonial government also established employment or labour
exchanges in the state. The first was opened at Tawau in 1958 and new
exchanges were opened at Sandakan and Jesselton in 1961. Employment
officials, who had undergone a short training course in the Labour
Department, were employed at these exchanges to handle job placement.
The government also introduced a simplified form of registration for
'undocumented' Indonesians and Filipinos (those who had no proper
documents) who presented themselves at these exchanges on their arrival
or on change of employment. In Tawau and Sandakan alone, nearly 5000
Filipinos and Indonesians were placed in employment in the lumber
industry and in agriculture. In Sarawak, no such movement of unskilled
labour occurred under official 'blessing' because Sarawak did not have a
labour shortage.
In both states, the shortage of skilled labour was a matter of some
urgency. To overcome this shortage, the colonial government allowed the
conditional entry of skilled workers from Hong Kong, Singapore and
Taiwan. These workers were principally construction workers, mechanics,

fitters and artisans required for the construction industry. Hong Kong was
the main source of supply and recruitment was carried out in accordance
with the relevant International Conventions. The workers were engaged on
written contracts of employment drawn up in Hong Kong and completed
upon their arrival in Sabah and Sarawak. The administration went to great
lengths to ensure that their employment was not prejudicial to the
interests of local workers. These workers generally earned higher wages
than local workers in comparable wage bands. Although initially the
policy was that these workers would not be permitted to reside
permanently in these states, by 1962 this policy was amended to allow
them to bring in their families. At the end of 1962, there were no less
than 2500 families already settled or working on contract with a view to
eventually settling in Sabah.127
The greater complexity of the labour market during this period led to
the establishment of separate departments of Labour and Welfare to
safeguard workers' rights and to promote their welfare. The government
also introduced vocational training and apprenticeship schemes to increase
labour productivity. But the most important change was the greater
participation in the two states of the indigenous people in the wage labour
force. In Sarawak especially, the indigenous people were able to combine
their smallholding activity with paid employment, and the traditional
activity of padi cultivation was sustained by the female members of
households. This changing labour force participation is reflected in Table
5.11 and Table 5.12. As noted in the tables, the indigenous groups in
both states came to represent the largest segment of the economically
active population. Indeed, the new labour exchanges proved to be popular
with local residents and especially with school-leavers looking for their
first jobs.
Labour Organisation
Labour-management relations in Sarawak and Sabah were characterised by

paternalism on the part of government and employers. Conditions of
employment and welfare standards had been established largely at the
initiative of employers, and not by negotiation with the workers. In 1947,
the government introduced the Trade Disputes Ordinance which became
effective on 1 May 1948. The colonial government's strategy was to
establish 'pliant' trade unions and to discourage any notion that employers
and employees represented distinct and mutually adverse interest groups.
Consequently, trade unionism was relatively undeveloped in the first ten
years. In 1953, the total membership of the trade unions was 3524128 and
by the end of 1954, twenty-five unions had been registered in Sarawak
under the Ordinance. In Sabah, by 1954, only 3 trade unions had been
registered with a total membership of five hundred workers. A Registrar of
Table 5.11 Sabah: Economically Active Population by Gender, Community and Industry, 1960
Indigenous Chinese Others All Communities

Industry Males Females Total Males Females Total Males Females Total Males Females Total
Agriculture,
forestry, hunt -
ing and fishing 70 160 42 492 112 652 8 935 3 940 12 875 15 379 1 207 16 586 94 474 47 639 142 113
Mining &
quarrying 215 16 231 91 9 100 202 204 508 27 535
Manufacturing 1 451 806 2 257 3 301 453 3 754 685 41 726 5 437 1 300 6 737
Building and
construction 1 264 53 1 317 2 054 291 2 345 820 826 4 138 350 4'
Electricity, water
supply & sanitary
services 92 1 93 132 11 143 47 2 49 271 14 285
Commerce 661 184 845 5 419 889 6 308 537 44 581 6 671 1 117 7 734
Transport and
communication 1 TO 11 1 744 1 879 64 1 943 963 7 970 4 575 82 4 657
Services 2 788 522 3 310 3 274 1 821 5 095 1 235 437 1672 7 297 2 780 10 077
All industries 73 354 44 085 122 449 25 085 7 478 32 563 19 868 1 746 21 614 123 317 53 309 176 626
Note: 'Others' refers to communities other than Malay, Indigenous, or Chinese.

Source: Sabah: Annual Bulletin of Statistics, 1964.
Table 5.12 Sarawak: Economically Active Population by Gender, Community and Industry, 1960
Malay Mel anau lb;an Land Dayak

Industry Males Females Males Females Males Females Males Females
Agriculture, forestry, hunting
and fishing 19871 10529 9 362 5 881 61 543 58 293 12 943 9419
Mining and quarrying 811 3 140 - 309 1 66 -
Manufacturing 2 455 482 979 162 342 22 61 6
Building and construction 1 536 9 164 2 179 — 114 1
Electricity, water supply and
sanitary services 282 - 36 - 17 - 5 -
Commerce 1 018 125 234 42 268 84 98 15
Transport and communication 1 691 6 216 - 55 3 34 5
Services 3 597 490 411 53 1 370 215 612 119
All industries 31 331 11 644 11 572 6 140 64 083 58618 13933 9 565
Table 5.12 continued...
Table 5.12
European Chimese Others All Communities
Industry Males Females Males Females Males Females Males Females
Agriculture, forestry, hunting
andfishing 44 4 21 855 12 494 10 694 6 680 136313 103 300
Mining and quarrying 77 6 690 37 174 8 2 337 55
Manufacturing 13 - 5 963 667 358 14 10 171 1 353
Building and construction 60 1 2 200 42 253 8 4 526 63
Electricity, water supply and
sanitary services 12 - 161 10 17 - 530 10
Commerce 55 7 10531 1 041 295 8 12 499 1 322
Transport and communication 34 4 3 172 86 171 77 5 373 181
Services 298 154 5 543 2 659 604 97 12 465 3 787
All industries 593 176 50 135 17036 12 567 6 892 184214 110071
Note: 'Others' refers to communities other than Malay, Indigenous, Chinese or European
Source: Sarawak: Annual Bulletin of Statistics, 1964.
Trade Unions was also appointed to 'oversee' the 'sound growth of the
trade unions'.
Following the announcement of the proposals for the formation of
Malaysia, trade union activity stepped up, especially in Sabah. As in
Malaya, this was not so much due to the emergence of 'class
consciousness' but rather was a consequence of nationalist activity. In
1962 alone, eight new trade unions were formed, bringing the total to
thirteen in the state. These unions had a total membership of 3788
persons. All but one or two were established in the towns and
membership was predominantly Chinese. There was no move by
indigenous and Indonesian workers in the plantations and timber industries
to organise unions.129
On the whole, the trade union movement in both states was still in its
infancy by the end of 1963. Several reasons have been put forward to
explain this. Firstly, nearly two-thirds of the people engaged in
agriculture or industry were self-employed or dependent on family labour.
Secondly, the indigenous groups usually comprised casual or seasonal
labour and this retarded the development of unionism among these groups
of workers. Thirdly, the relative shortage of labour in the colony meant
that even unorganised workers were in a relatively strong position.
Finally, the low degree of industrialisation in Sabah and Sarawak meant
that there were no large groupings of people employed in a similar trade
housed under the same roof. Consequently, worker solidarity could not
emerge. Other reasons included inexperience in trade unionism , the
existence of semi-organised trade guilds among craftsmen, particularly the
Chinese, and the barriers of race and language among the workers.130
By the end of colonial rule there were some sectors, small in terms of
numbers but important to the export economy, where most of the
workforce was obtained with wages or salaries. These were mining,
transport, administration and manufacturing. The numerically dominant
agricultural sector, together with commerce, had most of the non-wage
earners, as well as most of the wage earners. There was no policy of
labour differentiation along ethnic lines nor was there a definite
identification of race with place of residence. Nevertheless, the Chinese
tended to be concentrated in the main towns. The two main labouring
groups were the Chinese and the indigenous groups (apart from the
Indonesians). The number of Indians was very small, because despite
efforts to recruit Indian labour, no large body of Indians had 'offered'
themselves for employment in either Sabah or Sarawak. Wage labour had
also become more common by 1963 among the indigenous groups. The
general shortage of labour meant that even unorganised labour was in a
relatively strong position in these states. Finally, despite the considerable
presence of wage labour, there was no real development of a labour
movement based on class solidarity in these states.
Foundations for Federation
By 1963, Sabah and Sarawak were closer to each other in economic and
political development. Administration in both states had also become
more bureaucratic and rationalised. Their economies were performing
reasonably well with the bulk of the total gross export earnings coming
from timber. To a large extent, their economic success was due to planned
economic development during the colonial period which improved upon,
and in some cases, created an infrastructure; legislated a more liberal trade
policy which enabled the entry of western capital and enterprise; fostered
Chinese enterprise; and facilitated the organisation of labour to meet the
needs of the export sector and government projects. In great measure, the
colonial government built upon previous structures introduced during the
Chartered Company and Brooke administration period, but their main
contribution lay in the much needed injection of capital into the states and
the implementation of master plans which resulted in overall coordination
of development. By 1963 therefore these states were much closer
economically to Malaya, had stronger economic foundations and were
better equipped for independence, and federation with Malaya.
Part III
Sabah and Sarawak in Malaysia: Continuity,
Change and Development since 1963
6
Independence and Federation
The idea of a merger between Sabah and Sarawak was not new, having
been broached on a number of previous occasions by various officials.
After the Second World War, when the British Government took control
to oversee the task of rebuilding the states, the two territories were
grouped with Brunei to form the British Borneo Territories. The main
objective in grouping the three states was to promote economic and
administrative co-operation and encourage economic integration.
There was also talk of a merger between the Borneo territories and
Malaya, alongside calls for some form of a Bornean federation.1 The
actual process of negotiation for federation between Malaya, Sarawak,
Sabah, Brunei and Singapore was speeded up because of the political-
strategic situation existing in the region around 1960. In that year, the
Federation of Malaya declared an official end to the twelve-year Emergency
but the spectre of communism was still dominant in the thinking of the
Malayan leaders. Singapore, which had been given internal self-
government in 1959, also desired merger for both political and economic
reasons. Additionally the broadening of the grouping to include the British
Borneo territories would enable the combined total of bumiputera (Malay
and indigenous people) to have numerical superiority over the Chinese
population. These factors underlay the public proposal for closer
understanding between these territories made by Tunku Abdul Rahman,
the then Malayan Prime Minister, in May 1961 in Singapore when he
declared:
Malaya today as a nation realises that she cannot stand alone
and in isolation. Sooner or later she should have an
understanding with Britain and the peoples of the territories
of Singapore, North Borneo, Brunei and Sarawak ... we
should look ahead ... and think of a plan whereby these
territories can be joined together in political and economic
co-operation.2
This notion of a federation was especially popular in the wake of the
breaking up of the colonial empires; the need to create viable political and
economic units; and to implement wider programmes for economic
development. Following Tunku Abdul Rahman's statement, there was
intense political bargaining among the states and considerable
apprehension in Sabah and Sarawak, resulting in the formation of a
number of political parties structured along communal lines.
Nevertheless, early opposition to federation on the part of the principal
political leaders of Sabah and Sarawak soon faded. This was largely
because Malaya was prepared to make a number of important concessions
169
to Bornean autonomy in order to draw the Borneo states into federation,

and also because the latter were concerned over the aggressive stance
directed towards them by Indonesia and the Philippines. In state elections
held in the first half of 1963, pro-Malaysia alliances in both Sabah and
Sarawak won decisively. In September 1963, the two states became
independent and merged with Malaya and Singapore to form Malaysia.
Although there has never been a serious East Malaysian challenge to
the unity of the Federation, since 1963 there has been an underlying
tension in the relations between the federal government in Kuala Lumpur
and the state governments of Sabah and Sarawak. In essence, this tension
has derived from the notably lower level of economic development and
political sophistication in Sabah and Sarawak. The continuing search for
identity has resulted in frequent shifts in party allegiance and alignment as
individual groups move into and out of coalitions. Crucially, East
Malaysian leaders are aware that no one who is confrontational to Kuala
Lumpur will last long and this has led to symbiotic relationships between
the Federal Government and the East Malaysian state governments.
Politics and the Economy
Two developments typified the post-colonial experience of Sabah and

Sarawak. The first was a shift in the mode of government, which went
from colony to a 'modified' democracy, to a more authoritarian form of
democracy orchestrated from Kuala Lumpur. The second was the
emergence of new kinds of relationships between the state and the
economy whereby the state itself became more directly involved in
financing and organising economic development and in the process
ensured its continued existence and power base through patronage and
'money politics'. 3 These transformations are best understood in the
context of political change in the two states.
At the time of the formation of Malaysia, the ethnic groupings in
Sabah and Sarawak were quite diverse. In Sarawak, the Iban (Sea Dayaks)
comprised the largest indigenous ethnic group, and formed 31 per cent of
the total population. Of the other indigenous groups, the Bidayuh (Land
Dayaks) comprised about 8 per cent. The Muslim Malay and Melanau
groups comprised 23 per cent while the Chinese constituted 32 per cent.
In Sabah, the Dusuns or Kadazans comprised 32 per cent; the Muslim
indigenous groups about 30 per cent; while the Chinese constituted about
23 per cent and the Muruts another 5 per cent. In both states therefore,
there were substantial indigenous bumiputera who were not Muslims;
there was also a substantial Muslim group and an equally large Chinese
group.
The changing composition of population in terms of its ethnicity is
shown in Table 6.1.
Table 6.1 Sabah and Sarawak: Population Size by Ethnic Group, 1960-91
Numbers ('000) Percentage

a
Community 1960 1970 1980 1991 1960 1970 1980 a 1991
Sabah
Malays 1.6 18.2 123.8 0.4 2.8 6.6
Kadazans/Dusuns 145.3 183.6 343.4 32.9 28.1 18.4
Bajaus 59.7 77.8 38.1 212.0 13.1 11.9 r 82.9 11.4
Muruts 22.1 30.9 53.9 4.9 4.7 2.9
J
Other Indigenous 90 7 150 3 270.5 20.0 23.0 14.5
Indonesians 24.8 39.2 142.3 5.5 6.0 7.6
Chinese 104.5 139.2 64.0 218.2 23.0 21.3 16.2 11.7
Others 5 5.7 14.4 8.9 34.8 1.3 2.2 0.9 1.9
Non-Malaysian
citizens - 464.8 - - - 24.9
Total 454.4 653.6 11.0 1 863.7 100.0 100.0 100.0 100.0
Table 6.1 continued ..
Table 6.1
Sarawak
Malays 129.3 181.4 257.8 360.4 17.4 18.6 19.7 21 0
Ibans 237.7 303.5 396.3 506.5 31.9 31.1 30.3 29.5
Bidayuhs 57.6 83.6 107.5 140.7 7.7 8.6 8.2 8.2
Melanaus 44.7 53.4 75.1 97.1 6.0 5.5 5.7 5.7
Other 37.9 50.7 69.1 104.4 5.1 5.2 5.3 6.1
Indigenous
Chinese 229.1 293.9 385.2 475.8 30.8 30.1 29.5 27.7
Others6 8.1 9.7 16.6 15.1 1.1 1.0 1.3 0.9
Non-Malaysian
citizens - - - 18.4 - - - 1.1
Total 744.5 976.3 1 307.6 1 718.4 100.0 100.0 100.0 100.0
Notes: a = The 1980 census figures for Sabah categorised all the indigenous ethnic communities as Pribumi.
b = Before 1991, the category 'Others' comprised mainly Indians and others, such as Europeans, but for
1991, it also included Filipinos.
Source: Richard Leete, Malaysia's Demographic Transition (Kuala Lumpur: Oxford University Press, 1996) p. 124.
Independence and Federation 173
When the Malaysia proposal was mooted, a prominent Kadazan leader

Donald (later Fuad) Stephens, successfully united the non-Malay and non-
Murut indigenous groups under a common Kadazan platform. Apart from
promoting a Kadazan identity, he and other Kadazan leaders were also
instrumental in the formation of the United National Kadazan
Organisation (UNKO) in 1961, with Stephens as its leader. He led Sabah
into independence as part of the Malaysian federation on 16 September
1963 and became the first Chief Minister of Sabah. Two of his first acts
were to rename the Dusun, Kadazan and British North Borneo, Sabah.
Prior to Sabah's incorporation, Stephens and the other Kadazan leaders
acquired certain concessions from Kuala Lumpur which safeguarded
Kadazan language, culture and religion. These concessions and their
incorporation into the Federal Constitution have been explored elsewhere
and need not detain us.4 Both Sabah and Sarawak were granted special
rights and entered the Malaysia arrangement as 'equal partners' with the
Federation of Malaya.5 Nevertheless, although they were given far greater
autonomy than that accorded to the peninsular states, the central
government was wary of political leaders and groups that sought to
undermine Malaysia's unity and was not averse to intervention in state
affairs as discussed below.
Donald Stephens was the first casualty in the Bornean states. In his
efforts to have the special concessions accorded to Sabah implemented by
the federal government, he awakened fears of separatism (Singapore had
seceded from the federation in 1965) or an unacceptable degree of
autonomy. Consequently, he was eased out of office,6 and replaced by Tun
Mustapha, a Suluk Muslim, who was governor and headed the United
Sabah National Organisation (USNO). Mustapha, who claimed to
represent the 'Malay-Muslims', appeared to be more disposed to bringing
Sabah in line with the policies of the federal government, especially with
regard to 'establishing Malay-Muslim hegemony in Sabah'.7
In Sarawak too, the Chief Minister Stephen Kalong Ningkan, an Iban,
also sought to preserve the special concessions promised to Sarawak in
the Malaysia accord, and suffered a fate similar to that of Donald
Stephens. He was replaced in 1966 by another Iban, Tawi Sli, who was
more amenable to federal policies and directives.
But this was only the start of federal intervention in Bornean affairs. In
subsequent years, and especially after the political restructuring
implemented in Kuala Lumpur in the wake of the 1969 race riots, the
central government became even more interventionist and asserted federal
domination over the state government. In an effort to prevent any one
political group from threatening the status quo, the central government
promoted coalition governments in both Peninsular Malaysia and the
Bornean States. These coalition governments were seen as crucial to
balancing conflicting group and ethnic interests and undermining
particularistic tendencies.
In Sabah, the Sabah Alliance, based on the coalition model in

Peninsular Malaysia, included the United Sabah National Organisation
(USNO), the Sabah Chinese Association (SCA) and members of the then
defunct UPKO.8 Under Mustapha, the Sabah Alliance was completely
dominated by USNO with its base in the Muslim community and its
policy of 'Malayization' and 'Islamization'. As a result the Kadazan
language suffered, (along with other native languages), and in 1973 Islam
was made the official religion after the state constitution was amended by
Mustapha. Although many Kadazans took initiatives to oust Mustapha, it
was only when he fell out of favour with Kuala Lumpur that his removal
was made possible. Mustapha ruled Sabah as his personal fiefdom. During
his period of administration (1967-76), timber continued to be the most
important export commodity in the state and revenues from this source
provided Mustapha with both wealth and prestige. Nevertheless, his
blatant authoritarian style of government; support for the Muslim
separatist rebels in the Southern Philippines; his aggressive religious
policy; and disregard for directives from Kuala Lumpur, coupled with
allegations that he intended to withdraw Sabah from the Federation, led to
his downfall.
The then Malaysian Prime Minister, Tun Abdul Razak (the architect of
both economic and political restructuring in the Malaysian federation),
initially attempted to undermine Tun Mustapha's authority by appointing
a chief of police and a head of armed forces loyal to the central
government. The central government was also behind the formation of a
new party, Berjaya (Bersatu Rakyat Jelata Sabah or the United Common
People of Sabah), led by Tun Fuad Stephens. Berjaya was a multi-ethnic
party headed by prominent Muslim and Chinese leaders. In 1976, Berjaya
won the Sabah elections and Tun Mustapha was removed from power.
Unfortunately, two months after the elections many of the leading
members of the new government, including Tun Fuad Stephens, were
killed in an air crash. Stephens' place as chief minister was assumed by
Datuk Harris Salleh. The Berjaya government under Harris Salleh enjoyed
a period of close ties with the federal government,9 its position
maintained through a mix of authoritarian rule and patronage policies.
Harris' authoritarianism; mismanagement of resources; further efforts to
promote Malayization and Islamization; introduction of a policy of
reclassification of all Sabahans of 'Malay stock and related groups' as
Pribumi;10 and attempts to create a common political community with
Malay-Muslim cultural hegemony inevitably engendered Kadazan
discontent.
Earlier, in 1975, a Kadazan-based party, Parti Bersatu Sabah (PBS, or
United Sabah Party), had emerged under the leadership of ruling party
dissidents. PBS was a multi-ethnic party which depended heavily on the
Chinese vote and many of its leaders were Christian. This party, unlike
Berjaya in its early days, was not supported by the federal government. In
Independence and Federation 175
1985 PBS under the leadership of Joseph Pairin Kitingan defeated Berjaya
to win the Sabah state elections. Following its success, PBS was accepted
into the National Front or Barisan Nasional in 1986. From the start,
relations between PBS and the federal government were cool. In 1990,
PBS withdrew from the ruling federal coalition to join an opposition
federal coalition. PBS was undermined by the then Malaysian Prime
Minister, Mahathir Mohamad and the central government: it was deprived
of development funds; Joseph Pairin Kitingan, the Chief Minster, was
charged with corruption and his brother Jeffrey Kitingan and his close
associates were arrested under the Internal Security Act.11 Following this,
the United Malays National Organisation (UMNO) established a branch in
Sabah in cooperation with USNO. The political manoeuvring of the
central government was finally rewarded in 1994, when although the PBS-
led government won a narrow victory in the State selection, the UMNO-
led opposition enticed several members of PBS, including Jeffrey
Kitingan, to cross over to the UMNO side.12 As a result, the PBS
government fell and an UMNO-led coalition government was set up in
Sabah.
In Sarawak, attempts to form a Sarawak alliance of parties in the early
1960s were hindered by strong inter-ethnic rivalry. Each major group was
represented by two parties. The Malay-Muslim parties were Parti Negara
Sarawak (PANAS) and Barisan Rakyat Jati Sarawak (BERJAJA). The
other indigenous groups were represented by the Sarawak National Party
(SNAP) led by Stephen Kalong Ningkan; and Parti Pesaka, led by
Penghulu Tawi Sli. The two Chinese parties were the Sarawak Chinese
Association (SCA); and the Sarawak United People's Party (SUPP),
which was also open to non-Chinese. After intense lobbying and
negotiation the first five parties came together to form the Sarawak
Alliance and won the first elections. As noted previously, Stephen Kalong
Ningkan became Sarawak's first Chief Minster. He held his post for a
very short period; he was dismissed in 1966 by the federal government and
replaced by Penghulu Tawi Sli. Subsequently, Ningkan's party, SNAP,
withdrew from the Sarawak Alliance. In the meantime, the two Muslim-
Malay parties merged to form the Parti Bumiputera, which became a
dominant force in the Sarawak Alliance with the support of the federal
government. In 1973 the remaining indigenous party in the Alliance,
Parti Pesaka, decided to merge with Parti Bumiputera and the party took a
new name, Parti Pesaka Bumiputera Bersatu (PBB, or United Bumiputera
Pesaka Party).
A series of smaller coalitions between the political parties eventually
led to a larger coalition between the three main ethnic groups, the
Chinese, the Muslims and the Iban-based SNAP. This coalition remained
stable until 1983 when a split occurred in SNAP and a rival party, Parti
Bansa Dayak Sarawak (PBDS) was set up under the leadership of Datuk
Leo Moggie, a member of the federal cabinet. 13 PBDS, like its
counterpart PBS in Sabah, championed the cause of the indigenous non-

Muslim group, the Dayak. It was accepted into the Barisan Nasional at
the national level, although it withdrew from the state coalition. 14
Unlike in Sabah, the non-Muslim indigenous group was never able to
garner support from either the Chinese or the Muslims. Political
leadership remained in the hands of the Melanau Muslims. In the 1970s,
Datuk (later Tun) Haji Abdul Rahman Yaakub held the reins of power and
he was succeeded in 1981 by his nephew Datuk Patinggi Amar Abdul
Taib Mahmud. Although the former attempted to wrest control from the
latter, he was unsuccessful and at the time of writing, Taib Mahmud is
the Chief Minister of Sarawak.15
In summary therefore, political parties in Sabah and Sarawak, while
they were largely ethnic-based, also accommodated other ethnic groups.
They were dominated by elites and characterised by patronage politics. In
great part, this patronage was centred on the awarding of timber
concessions to consolidate political support. This was but an extension of
policies adopted during the colonial period when timber concessions were
awarded by the the British to indigenous and Chinese political leaders to
help them create power bases. By the 1970s and 1980s however, timber
concessions were used both to 'buy' support and to reward supporters so
that corruption reached new heights. Furthermore, when Mahathir
Mohamad came to power in 1981, he perfected the practice started by his
predecessors of central government interference in state governments to
get rid of inconvenient administrations run by intransigent parties. The
central government then manipulated itself or parties loyal to it into
power at the expense of the latter. This went hand in hand with central
government-backed parties cementing themselves in power by attracting
defectors from other parties and achieving the higher goal of keeping out
parties that did not support central government policies.
7
Managing Development
The establishment of the Federation of Malaysia brought together
economies at different levels of development - the staple port of
Singapore, the relatively advanced resource economy of Malaya; and the
less developed territories of Sabah and Sarawak, which were expected to
receive a stimulus from membership in the larger grouping. In
anticipation of the formation of Malaysia, a World Bank mission
submitted a report on the economic aspects of the federation.1 This
mission endorsed the thrust of post-colonial Malayan industrialisation
policy.2 It also urged that a Tariff Advisory Board be established to work
out a common external tariff after the formation of Malaysia.
Additionally, the mission recommended the setting up of a new body
specifically for industrial promotion. In the area of coordinated
development planning, an integrated Five Year Plan was devised to begin
from 1996. Existing institutions comprising planning bodies and the
Central Bank in Malaya were to form the basis for coordinated planning at
the Federal level.3
Overall, these policy recommendations constitute a turning point in
the evolution of a modern Malaysian economy, although the constituent
territories were not at the same stage economically. For Sabah and
Sarawak in particular, growth was geared towards the expansion of the
economic base which, though still largely concentrating on primary
production, was moving towards industrial development as well.
Just four years after the formation of Malaysia, the country
(specifically, Peninsular Malaysia) experienced its crisis of decolonisation
and nation-building resulting, in the post-election race riots of 13 May
1969. These ethnic riots reflected tensions over the distribution of
political power and the fruits of development. In 1970, the New
Economic Policy (NEP), covering the period 1970 to 1990, was launched
and subsequently became the underlying ideology of national
development.
The State, Development Planning and Ideology
The NEP had two main goals: the eradication of poverty, irrespective of
race; and the restructuring of society to eliminate identification of
economic function with race. It aimed to combine continued development
with redistribution, setting specific targets for bumiputera ownership (30
per cent of corporate share capital), and employment. It thus spelled a new
177
phase in development, overturning the previous relationship between state

and society. It also ended the alliance between the Malaysian state and
private capital in which the state's role had been to support and promote
private accumulation (both local and foreign). The state now took on the
leading role and laid down the agenda with private capital in tow. The
principal objective of the NEP was to increase Malay participation in the
modern sector of the economy. Since it was acknowledged that this goal
could not be achieved by private Malay capitalists acting alone, the
government established state corporations and trust agencies to act on
their behalf. The most important of the state corporations impacting on
East Malaysia were Perbadanan Nasional (PERNAS or National
Corporation), which had a wide range of activities including trading,
mining and securities; Permodalan Nasional Berhad (PNB or National
Equity Corporation); and Petronas, the national petroleum corporation
which took over the extensive new oil reserves. The development strategy
expressed primarily the demands of the Malay business and intelligentsia
network who wanted the state to be interventionist in favour of 'Malay'
business. Since state power depended largely on the support of the Malay
peasantry, the elimination of rural poverty was also critical to the
implementation and success of the NEP.
By the mid 1970s, there was concern among some bumiputera leaders
that the simple reliance on reaching prescribed targets through compliance
with government policy might not achieve the NEP aims, especially in
industry. In 1975 therefore, the Malaysian government passed the
Industrial Coordination Act (ICA), whereby a licensing system was
instituted that gave government the power to insist that firms meet NEP
requirements in terms of share ownership and employment structure. The
Act, which opened the way to arbitrary bureaucratic decisions, drew
adverse criticism from both foreign and non-bumiputera interests.
Although the Act was modified in 1977 in ways which generally satisfied
foreign interests, Chinese interests were not so easily satisfied and the
Chinese scaled down their investments.
In the mid-1980s Malaysia experienced a severe economic crisis as a
result of the prolonged world-wide recession, and the state was no longer
in a position to inject substantial funds into the economy. By the second
half of the 1980s, there were progressive moves to reduce the investment
of government in economic enterprises and a corresponding shift towards
privatisation. This meant that the requirements of the ICA and the NEP
wealth distribution targets were put into abeyance from 1985-6, and a
relaxation of the rules governing foreign investment sought to increase
input from this source.
Essentially, state development planning and ideology during this period
had two important consequences for Sabah and Sarawak's development.
Firstly, it was geared towards the utilisation of state resources to sponsor
a Malay capitalist class. In practice this meant the establishment of public
Managing Development 179
corporations to acquire assets for and on behalf of Malays and run by

political appointees and bureaucrats. In the first half of the 1970s the
discovery of offshore petroleum and natural gas in Sabah and Sarawak, and
a combination of economic and political manoeuvring by the federal
government, resulted in Petronas taking control over one of the East
Malaysian states' major source of export revenue. This in turn meant that
the East Malaysian states' only lucrative resource which they could then
control was timber.
Secondly, the use of political prerogative shifted the concentration of
wealth and power into the hands of those economic interests and
politicians close to and dependent upon the Prime Minister and the ruling
party UMNO, in the case of Malaysia; and the Chief Minister, in the case
of Sabah and Sarawak. The reciprocal relationship between the economic
interests and those in appropriate political positions has in effect meant
appropriation of resources by the state for private gain by individual
businessmen.4
Policy Issues and Economic Development
The dominant criteria for development in Malaysia and elsewhere have

been the transition from a dependence on primary exports to a diversified
economy with a vigorous industrial sector, and a rise in per capita
incomes brought about largely by industrialisation. As a whole, Malaysia
has made a successful transition in diversifying its economy, approaching
Newly-Industrialised Country (NIC) status by the 1990s. Malaysia's
pattern of industrialisation is sufficiently well known and will not be
discussed in detail here. The first phase of import-substitution
manufacturing lasted until the early 1970s. Pioneer enterprises were
granted tax concessions; manufacturing was diversified; and between 1960
and 1970, the share of manufacturing in the GDP of Peninsular Malaysia
rose from 8.5 per cent to 13.1 per cent.5 The relatively small domestic
market led the government from 1968 onwards to offer new incentives to
encourage production for export markets. Special concessions were
provided for export industries and attempts were made to attract foreign
investment that was expected to bring in new-technology and provide
access to foreign markets. In the 1970s and 1980s the manufacturing
sector grew rapidly at an average annual rate of 10.3 per cent; its share in
the GDP for Malaysia as a whole rising to nearly 27 per cent in 1990.6
Industrialisation in Sabah and Sarawak made less progress with the
manufacturing sector accounting for 8 per cent of GDP in Sabah in 1990
and 17 per cent in Sarawak.7 These states were less attractive to industrial
investors primarily because of their location, limited infrastructure and
higher costs (for example, electricity). Additionally, industrialisation in
these states was directly related to local patterns of production.
In Peninsular Malaysia economic growth was accompanied by
significant structural change. In Sabah and Sarawak, the industrial sector

remained small. Although diversification was a key priority in overall
development policy, East Malaysia's economy was primarily organised
around the exploitation and export of primary resources. What then was
the nature and pace of change in Sabah and Sarawak between 1963 and
1990? In this chapter, government strategies and priorities for economic
development will be examined in relation to the following areas: minerals
and mineral fuels; agriculture and land settlement; forests and forest
resources; and transport.
Minerals and Mineral Fuels
Prior to the 1970s, mineral resource exploitation was a major stimulus

for economic development in both Sabah and Sarawak. Gold attracted
Chinese enterprise and settlement while western capital was drawn mainly
to coal, gold and petroleum exploitation. After the 1970s, mineral fuels,
specifically petroleum and natural gas, emerged as major export
commodities for both states. The colonial government's policy of
extending sovereignty to offshore areas certainly paid off during this
period since these resources were located at offshore locations.
In Sarawak, exploration for petroleum resources had continued into the
late 1960s. In 1968, a new oilfield was discovered offshore the town of
Miri which went into production in July of that year. Subsequently, other
fields were discovered even further offshore and the oil industry became a
significant revenue earner for the state. In 1963, production of crude oil
was slightly more than 373 000 barrels. This declined to 328 000 barrels
in 1967. In 1968, the figure jumped to more than 1.5 million barrels. By
1971, the figure had increased to over 2.5 million barrels, and in 1981,
well over 35.5 million barrels of oil were produced. Peak production was
reached in 1976 when a total of 42.4 million barrels were produced.8
During its search for oil, the oil company encountered large
commercial quantities of natural gas. In 1971 substantial gas reserves
were found offshore at Bintulu. Initially, the gas was used as fuel for the
refinery at Lutong and for generating electricity. A large liquefied natural
gas plant, the Malaysian LNG Sendirian Berhad, a joint venture between
Shell, the Mitsubishi Corporation of Japan and Petronas (a Malaysian
government corporation), was completed in December 1982, and since
then there has been an important export trade to Japan.9 The natural gas
has also been used to produce solid nitrogenous fertilisers at the ASEAN
Bintulu Fertiliser plant. This joint-venture ammonia-urea plant, which
began operations in 1985, is a principal ASEAN industrial project. Its
capacity is 1000 tonnes of ammonia and 1500 tonnes of urea per day.10
The petroleum sector dominated Sarawak's economy and prior to 1974
formed the largest source of state revenue. The enactment of the
Petroleum Development Act in 1974, establishing a Malaysian state

corporation, Petronas, had a significant impact on Sarawak's economy.
Firstly, the Act heralded the end of the concession system whereby oil
companies were totally responsible for the exploration and exploitation of
petroleum resources in the country. Secondly, it ushered in an era of state
petroleum enterprises and production-sharing contracts as a means of
extending more control over the activities of transnational companies, and
of ensuring that much of the revenue earned accrued to the oil-producing
host, that is, the federal government. Thirdly, Sarawak's revenue from oil
shrank because in 1975 it signed an agreement with Petronas, whereby the
state government was allowed to retain only a five per cent royalty on
petroleum production while the ownership and control of petroleum and
gas reserves became vested in Petronas. 11 In return, the federal
government agreed to channel funds to Sarawak for development projects.
This agreement has naturally worked in the federal government's favour
and there is a feeling in Sarawak and other oil-producing states that the
states producing the revenue and export earnings are not getting a
proportionate share of development funds from the federal government.
Another significant impact is that shrinking overall revenues have resulted
in the state government resorting to excessive exploitation of timber, the
revenue from which accrues to the Sarawak government alone.12
Has the oil industry provided significant benefits to Sarawak's
economy? It is an extremely capital-intensive industry and a relatively
insignificant direct employer of labour. In the 1980 census the mining and
quarry sector accounted for only 1723 employees out of a total skilled
labour force of 457 192. It is also an enclave industry, providing few spin-
offs and multiplier effects in terms of improved transport, training
facilities and service industries. Development is localised rather than
widespread and offshore rather than onshore. The biggest change has been
the growth of Bintulu to serve the newly-developed natural gas industry.
Petronas started a retail marketing network in Sarawak with the
establishment of diesel and kerosene stations and also established an
aviation depot at the Kuching airport. Another network is the supply of
liquid natural gas for industrial and household purposes. However, the
financial benefits from these go to Petronas and ultimately to the federal
government.13
Coal is the most promising of the other minerals. Initially, the inland
location and inaccessibility of the coal deposits deterred many would-be
prospectors. Then under the Fourth Malaysia Plan period, especially after
the second oil crisis of 1979, the federal government decided to ascertain
and work the coal resources of Sarawak. The major coalfield in the state at
the time of writing is the Merit-Pila Coalfield, which is worked by a
private company. It supplies Tenaga Nasional Berhad (the National
Energy Board). Other coal deposits have also been identified and
prospected because of the increased local demand for coal and the
government's plans to set up coal-fired power stations and cement clinker

plants in Malaysia.14 Constructional materials - stone, gravel, sand and
clay products are used for road construction and maintenance, and to
satisfy local demand. Overall, mineral resource development has shifted to
the federal government and similarly, the Geological Survey has become a
branch of the Malaysian Geological Survey.
Developments in Sabah parallelled those in Sarawak as a similar tale
of control by the centre emerged. Commercial deposits of oil were made
public in 1971. The first strike was proclaimed by Exxon, followed by
Sabah Shell. In 1973 and 1974, Shell had further successes in oil
exploration and drilling. All the yields were from offshore wells off the
east coast near Kota Kinabalu. A gas strike was also made at Nymphe, 60
miles south east of Sandakan by Aquitaine Petroleum. By 1975, Exxon's
field at Tembungo and Sabah Shell s field at Semarang were producing
over 18 000 barrels per day.15 As in Sarawak, petroleum had been worked
under concession arrangements. Production-sharing arrangements came
into existence with the Petroleum Development Act and in June 1976, the
Sabah State Government signed over its rights to the oil in exchange for a
five per cent royalty on petroleum production. Thereafter, although oil
exports comprised a significant proportion of total exports, the share of
the oil revenues that accrued to the Sabah government was small. Like
Sarawak, the Sabah government also embarked on a policy of more
intensive exploitation of its forest resources, since revenue from those
resources accrued wholly to the state.16
In addition to fairly significant coal deposits prospected by Broken Hill
Proprietary Co. Ltd. (BHP) for several years since 1987, the most
important new non-fuel mineral in the state is copper which is mined near
Ranau. The commercial production of copper commenced in 1975 and the
first shipment of copper concentrate (containing copper, gold and silver)
began in November 1975. In that year exports were valued at $11.34
million.17 The export values of crude oil and copper concentrates from
Sabah for the period 1975-87 are shown in Table 7.1 below.
Initially copper mining was undertaken as a joint venture with 49 per
cent local equity. In 1980 the state government acquired a controlling
interest in the mining of copper and subsequently the mining and
quarrying sector's contribution rose from 0.5 percent of GDP in 1975 to
13.6 percent in 1980.18 All the copper concentrates are exported to Japan
and at the time of writing, extensive exploration is being carried out in
the state.19
For both Sabah and Sarawak, the discovery of large offshore oil fields
after 1963 has not provided significant benefits to their economies. Oil
exploration and production are activities that require large amounts of
capital, technical expertise and experience. From the beginning, the oil
industry has been controlled by western capital. The major change since
1975 has been the production-sharing contract system. The oil industry
does not have significant linkages with the domestic economy and only a
very small proportion of oil revenue accrues to Sabah and Sarawak.
Table 7.1 Sabah: Exports of Oil and Copper, 1975-87

(million Malaysian ringgit)
1975 1980 1987

Crude Petroleum 85.5 1 779.7 1 469.1
Copper Concentrates 11.3 177.3 191.1
Source: Pang Teck Wai, 'Economic Growth and Development in

Sabah: 25 years after Independence' in Jeffrey G. Kitingan and
Maximus J. Ongkili (eds), Sabah 25 Years Later (Kota
Kinabalu: Institute for Development Studies, Sabah, 1989) p. 92.
Agriculture and Land Settlement Schemes
Since independence, rural and agricultural development through land

settlement schemes has been a cornerstone of development policy. The
land settlement schemes are part of a strategy for agricultural change
aimed at encouraging the cultivation of tree crops in plantation
smallholding structures, supported by technology transfer, credit and
infrastructure. Ironically though, there has been a marked reluctance by
most villagers to work in the regimented conditions of these plantation
smallholding structures, resulting in the importation of substantial
numbers of workers from neighbouring countries.
Prior to the 1940s, regional society, with its relative independence for
individuals and flexible land rights systems under conditions of low
population density, made it easy for smallholders to take up economically
attractive plantation crops such as rubber as they became available in
these states. Indeed, the colonial government had encouraged this trend in
keeping with its policy of promoting permanent settlement among the
various groups. This was also part and parcel of the wider aim of
achieving an improvement in rural living standards as well as generating
growth in other sectors. National government agricultural policy was a
continuation of this course and centred on two broad approaches. The first,
often referred to as the 'improvement approach', was administered by the
state department of agriculture and concentrated on the granting of
subsidies to improve crop quality, management practices and the
diversification of farming operations. Extension services were also
provided to assist farmers upgrade their methods and techniques of
cultivation. The second approach focussed on land settlement and both
Sabah and Sarawak established various state statutory bodies enjoined
with the task of introducing large-scale centralised forms of cash-cropping

in either designated development areas or in areas with acute problems of
poverty and economic backwardness. Two types of land settlement
schemes were introduced: first, minor settlement schemes designed to help
farmers on their own holdings, therefore concerned with in situ
development; and second, major settlement schemes principally catering
for the landless peasantry, shifting cultivators and smallholders with
uneconomic-sized plots. The latter were organised on a communally-
managed plantation smallholding basis and involved the resettlement of
many communities. The models for rural development were taken from
Peninsular Malaysia and although planning policies and programmes were
formulated in Kuala Lumpur, they were largely instituted by state-
managed bodies.20
In Sarawak, the first government-sponsored land schemes were
instituted in 1964 under what was known as Rubber Planting Scheme B.
This scheme was administered by the Department of Agriculture. New
areas were opened up on state land, including in many cases Native
Customary Land, which had been surrendered to the government.
Following development, the settlers (many of whom were the original
title holders of customary rights to the land) were eligible for individual
mixed zone titles, on condition that they fully repaid the development and
housing costs.21 Each settler was allocated 10 acres (4.05 ha) of land of
which 8 acres were planted with rubber, while the remainder was used for
dusun (mixed fruit and vegetables) and a housing lot. In 1968, the
Sarawak Development Finance Corporation (SDFC) took over the
managerial, supervisory and financial responsibility of the schemes. By
1972, there were seven rubber schemes, scattered throughout the state
totalling 5668 hectares and accommodating about 7000 people.22 These
schemes were a mixed success, partly because many settlers found their
changed circumstances difficult to adapt to, and partly because they were
not fully committed to devoting all their time to rubber cultivation.
In 1972, the SDFC was reorganised and the agricultural schemes
became the responsibility of the Sarawak Land Development Board
(SLDB). The SLDB promoted oil palm cultivation (and later cocoa)
because of the poor returns from rubber, and opened up new areas in the
northern part of the state. These new areas were also intended to be
subdivided following crop establishment, with titles being issued to
individual settlers. However, because of the difficulty in finding,
selecting, and transferring settlers, the schemes were then managed as state
owned plantations using wage labour. Furthermore, although the SLDB
was authorised to enter into partnerships or joint ventures with private
companies, there were few takers. Subsequently, poor management
practices, imperfect accounting procedures and a host of other problems
including inadequate infrastructure and the like led to a decision by the
Board in 1986 to hire management services from Sime Darby, a
Malaysian-owned private company, 'in order to staunch the losses of the

oil palm estates and to set the Board on a firm financial and operational
footing'. 23 What therefore started as land settlement schemes were
transformed into plantation structures and Sime Darby Management
Services acted like any other commercial, profit-making entity - settlers
were thrown out of the scheme, some were imprisoned24 and there has
been an increasing reliance on immigrant Indonesian wage labour.
Other bodies such as the Sarawak Land Consolidation and
Rehabilitation Authority (SALCRA) and the Land Custody and
Development Authority (LCDA) were also instituted, in 1976 and 1981
respectively, to develop land settlement schemes. Since one of the reasons
for the unpopularity of the SLDB schemes was their remote location,
SALCRA's brief was to develop, consolidate and rehabilitate native
customary land belonging to local rural communities, primarily for the
cultivation of rubber, oil palm, tea and cocoa. Here too, each participating
household was entitled to a land title only after development had been
completed, the crops planted and yielding an income, and the development
costs (treated as loans to the settlers), paid off. The land was worked on a
consolidated block basis and participants in these schemes were also
initially treated as workers, rather than as owner-cultivators. SALCRA
also focussed on in situ development and the resettlement of Iban settlers
removed from their homeland as a consequence of the construction of a
hydroelectric project in the Lubok Antu area of the Second Division.25
The LCDA's task was to initiate and coordinate schemes for land
development on agricultural, residential and industrial sites, as well as for
'economic and social development'. A primary objective '... [was] the
development of agricultural estates, although the main thrust so far has
been on urban land development.'26
A similar commercial thrust in land settlement schemes was promoted
in Sabah. The Sabah Land Development Board (SLDB) adopted an agro-
business approach and consequently, an identical pattern of transformation
from land settlement to plantation-type structures of management
emerged. Sabah also experienced similar problems to those of Sarawak
such as the failure to recruit settler families; shortage of housing
facilities; and an undue reliance on immigrant labour. Not surprisingly,
Sime Darby Management Services were hired in Sabah as well, resulting
in the subordination of settlement objectives to commercial development
aims. The main crops grown in Sabah were cocoa, oil palm and coffee. In
Sabah too, management is of Peninsular Malaysian origin and only forty-
seven per cent of the staff are Sabahans. Other land settlement schemes
were proposed by a variety of government bodies. One other initiative was
the extension of Federal Land Development Authority (FELDA) activities
from Peninsular Malaysia. These FELDA schemes are concentrated in
eastern Sabah while settler recruitment is principally from western Sabah.
Sabah's land schemes have come under criticism from the World Wildlife
Fund for Nature (WWF) because they have resulted in serious implication
for wildlife and have also involved the clearing of land in upper catchment
areas.27
Apart from commercial crop production, in both states the earlier
emphasis on rice production was reconsidered and the achievement of self-
sufficiency was quietly shelved in 1984 with the implementation of the
National Agricultural Policy.28 Under the Fifth Malaysia Plan (1986-90)
the main thrust of rice production was to be concentrated in the granary
areas of Peninsular Malaysia where massive investment had taken place in
land development schemes. The Fifth Malaysia Plan also emphasised both
in situ development of smallholdings and the regrouping and resettlement
of communities within a newly-created structure of commercially managed
estates. A comparative survey of production and yields of the major crops
grown in Malaysia in 1990 is provided in Table 7.2.
As shown in Table 7.2, Sabah leads in only one crop, cocoa, where it
has a comparative advantage. 29 In both Sabah and Sarawak, rice
production is significantly less important than in Peninsular Malaysia.
Thus where agricultural policy is concerned, the trend towards export
commodities continues. Changes in the economy and the dominant role of
timber and petroleum have meant that by 1986 agriculture's share in GDP
was less than 10 per cent in Sarawak (in 1968, it was over 20 per cent)
and in Sabah it declined from 53 per cent in 1970 to 40 per cent in
1985.30
In both states land settlement has been part of a strategy for
agricultural change. It is based on the cultivation of tree crops - rubber,
oil palm, cocoa and in a few areas, tea. The land settlement schemes have
also been a vehicle for changing land tenure from a system of customary
rights to individual proprietary rights. The state governments have also
been able to extend rural credit through these schemes to needy peasants.
The underlying philosophy behind land settlement however, is centrally-
managed rural development and the major criticism of this policy is that
the land schemes do not build on existing economic activities and
structures. They require a drastic break with past practices, demand top
heavy management, and a regimented organisation of labour. Most of the
natives have some access to land and the phenomenon of a rural landless
proletariat in both Sabah and Sarawak is relatively non-existent. The
unpopularity of the land schemes and the unwillingness of the peasants to
participate in them indicates their unhappiness over centrally-managed
development, an inability to retain greater control over the pace and
direction of change, and the lack of recognition of individual needs
Furthermore, it has been suggested that the model adopted is based on the
Peninsular Malaysian experience and does not take into account
the.differences between Sabah and Sarawak and Peninsular Malaysia in
terms of ethnic diversity, and the cultural traditions of swidden cultivation
and longhouse communities.
Table 7.2 Sabah, Sarawak and Peninsular Malaysia: Agricultural Production and Estate Yields, 1990
Sabah Sarawak Peninsular Maia>rsia

Production Per capita Yield Production Per capita Yield Production Per capita Yield
('000 production (kg/ha) ('000 production (kg/ha) ('000 production (kg/ha)
tonnes) (kg) tonnes) (kg) tonnes) (kg)
Rubber 31.31' 18 1 070.00 16.110 1 10.0 422.00 1 243.60 87 1 335.00
Crude palm 679.00 391 - 107.600 65.0 - 5 308.00 374
oil
Palm kernel 159.20 92 _ 28.200 17.0 _ 1 657.30 117
Oil palm fresh fruits - 18.01 - - 17.63 - - 18.63 3
Copra 1.00 1 - 15.000 9.0 - 48.00 3
Coconut oil 0.30 - - 8.100 5.0 - 31.20 2
Copra cake 0.20 - - 5.100 3.0 - 16.00
Dry cocoa 97.40 56 0.78 0.371 0.2 0.48 23.05 1.6 0.72
beans
Wet rice 87.10 50 2 366.00 2 73.600 - 12 142.00 1 735.50 122 3 606.00 2
Dry rice 13.50 8 751.00 55.100 33.0 772.00 0.60 - 1 131.00
Notes: 1 = Refers to exports 2 = Main season 3 = Tonne/ha

Source: Department of Statistics, Malaysia, Yearbook of Statistics, Malaysia, 1992, Tables 4.2-4.7; cited in Wee
Chong Hui, Sabah and Sarawak in the Malaysian Economy (Kuala Lumpur: S.A. Abdul Majeed & Co. for
INS AN, 1995) p. 50.
Forests and Forest Resources
The first wave of the globalisation of Sabah's and Sarawak's economies -

colonialism - had laid the basis for the appropriation of the natural
resources by the state. The second wave of globalisation - development -
completed the process of the enclosure of the forests and their reservation
by the state for planned commercial exploitation.
In the post-independence era, as the colonial power was replaced by the
Malaysian state, the dominant theme was development through
diversification and industrialisation. A stream of studies from such bodies
as the Food and Agricultural Organisation (FAO) and the Asian
Development Bank (ADB) advocated greater natural resource utilisation
and an improvement in rural production which would generate the
investible surplus that industrialisation required.31 In this strategy
context, forests had a dual role: they were to be cut for cash to invest in
other activities, or were to be cleared for the expansion of agriculture and
settlement; and second, the productive capacities of forests themselves
were to be treated as appropriate targets for investment. This period is
thus characterised by the establishment of multilateral development
projects specialising in wood-processing and trade in pulp, and the
involvement of local politicians and entrepreneurs in profit-seeking
ventures which made resource appropriation even more sophisticated.
In pursuit of the development strategy outlined above, the Sabah
government in conjunction with the FAO unveiled its Forestry
Development Programme. During the period 1965-1970, M$1.79 million
was allocated to the above programme of which M$l million was for a
forest inventory to update information on the state's principal resource.
Additionally, the programme included the planting of small plots of fast
growing species (Albizia and Caribbean Pine) to assess their potential for
pulping and cash cropping. The Forest Inventory Survey commenced in
1970 and was completed in December 1973. According to its findings, out
of a total land mass area of 28 549 square miles, about 86 per cent of the
state was covered by forest.32
The implementation of the forest development strategy required greater
control over the forest resources and their management by the state. As
noted previously, prior to 1952, commercial activity in Sabah's timber
sector was controlled by the British Borneo Timber Company (BBT). The
BBT kept extraction levels low in order to keep prices high. When the
colonial government allowed the entry of other foreign concessionaires
and local companies, logging expanded rapidly in the state, accompanied
by greater mechanisation of the industry and the opening up of new forest
areas. In the post-independence period, a new era in forest resource
utilisation emerged with the establishment of the Sabah Foundation and
its gradual monopolisation of the industry. The Sabah Foundation
(Yayasan Sabah) had been set up in 1966 to play an important and
complementary role to the state education department in the overall

development of education in Sabah. Its main task was to improve and
expand educational opportunities, services and facilities at all levels of
educational development in the state. To assist it financially, it was
awarded a ten-year special timber license over an area of 40 square miles.
It was hoped that the revenues from its timber concession would enable
the Foundation to carry out its objectives. As the Foundation's role as a
development agency expanded over time, it became directly involved in
commerce and industry as well.
By the early 1960s, timber enterprises in the state had concession tracts
amounting to about one-fourth of the entire state's area (approximately
5700 square miles of commercial forest). In 1969, the long-term
concessionaires were informed that their licences would not be renewed
and that favourable terms would be available for those prepared to
voluntarily relinquish their licences, some of which were not due to expire
until 1984.33 Subsequently, in late 1970, as the Sabah Foundation's role
became gradually redefined, the state government granted it a 100-year
license over 2200 square miles (855 000 ha) of forest land to be developed
on behalf of all citizens of Sabah. Under Tun Mustapha's administration,
the Foundation became a statutory government body and its commercial
activities in the timber sector expanded rapidly. It virtually controlled
Sabah's richest timber stands and extended its economic and social
activities in the state.34 Crucially, control of the Foundation and its
timber concession was viewed as a political reward by the ruling party as
politicians vied to gain control of the government and take over the state's
leading source of wealth.35
Conjointly, forest policies were revised to incorporate changes in the
forestry sector. As a first step, new forest regulations allowed the state to
assume control of the forests and to award concessions to the Sabah
Foundation (Forest Enactment 1968 and Forest Rules 1969). The findings
of the Forest Inventory Survey (completed in 1973) also made it
imperative to place more emphasis on conservation and afforestation.
Subsequently, in 1974, a forest research centre was opened at Sepilok near
Sandakan where studies on afforestation and reforestation were started. A
new forest policy was also implemented in 1976. This policy focussed on
the reduction of round timber exports to 50 per cent of the 1976 level by
1982 in the interests of conserving the forest resource and promoting
downstream processing in the state. In the same year a statutory body, the
Sabah Forestry Development Authority (SAFODA) was established, with
the objective of converting marginal land to productive forestry use and
supplementing the production of timber and other products from the
natural forest. SAFODA had three different types of programmes. The
first involved the establishment of large scale 'timber' plantations: by
1988, it had planted 19 501 hectares of forest, mainly Acacia mangium,
and approximately 7400 hectares of rattan. The second programme centred
on planting aimed at the reclamation of degraded lands, the prevention of

soil erosion and the protection of water catchment areas. The third
programme focussed on the development of smaller plantations or tree
farms on private land with SAFODA providing technical advice, subsidies
and loans. These programmes were directed at building up the forest
resource for the development of wood-based industries and providing rural
employment opportunities through reafforestation schemes. The ultimate
aim was to establish at least 200 000 acres of plantation forest over the
Third (1976-80) and Fourth Malaysia Plan (1981-85) periods.36 The
Sabah Foundation also expanded its activities and started its own
plantation in a venture with another timber concessionaire, North Borneo
Timber (the Sabah Foundation's share was 60 per cent). This venture
involved the planting of 150 000 acres of logged land near Tawau with
fast growing species to provide wood for a chipmill factory. Another
venture involved Kuwaiti investors. The Foundation also undertook three
other joint ventures with Japanese, American and Filipino Companies, to
establish an integrated timber complex, and wood-based industries such as
sawmilling, mouldings, veneer and plywood. Subsequently, in 1979
export quotas for logs were introduced to promote domestic processing of
timber. Timber marketing, especially of sawn timber and sawn log
species by small producers was upgraded through the operations of the
timber unit of the Sabah Marketing Authority started in 1978.37
The rapid expansion of the timber industry in the first twenty years of
independence is reflected in Table 7.3 which gives the export values for
logs, sawn timber and plywood for the period 1971-1984.
Inevitably, shifting cultivation, rural poverty and government forestry
policy led to rapid deforestation in the state, as shown in Table 7.4 below.
Furthermore, Sabah's timber boom began to taper off by 1983-4. In
the period 1977 to 1980, forest revenue as a percentage of state revenue
varied between approximately 66 per cent to 77 per cent. As a result of
the world-wide depression of the mid-1980s, by 1985, forest revenue
accounted for only 43.6 per cent of state revenue.38
What benefits have accrued to Sabah from timber exploitation? Since
1970, the timber sector - primarily logging - has furnished about one-
third of Sabah's gross domestic product. Employment in the timber sector
in the late 1970s accounted for about 7 per cent of Sabah's labour force.
Since neither oil nor copper production (mineral resources) provide large
benefits to the state economy (most of the revenues flowing to the central
government), export earnings and tax revenues from timber have been the
mainstay of the state's earnings.39 This in turn has spawned new political
tensions in the state and heightened timber politics.
Table 7.3 Sabah: Export Values for Logs, Sawn Timber and Plywood,
1971-84
(million M$)
Sawn timber.
plywood and other Total value of
Year Log exports processed products timber exports
1971 419.0 0.7 419.7
1972 409.2 1.0 410.2
1973 806.9 1.7 808.6
1974 885.3 0.5 885.8
1975 597.1 0.7 597.8
1976 1 210.9 1.5 1 212.4
1977 1 262.2 6.2 1 268.4
1978 1 422.9 6.5 1 429.4
1979 2 050.9 45.3 2 096.2
1980 1 783.0 78.0 1 861.0
1981 1 642.0 170.0 1 812.0
1982 2092.1 226.9 2319.0
1983 1 692.0 418.0 2 110.0
1984 1 528.0 399.0 1 927.0
Source: Timber Trade Review, various issues, Vols. 2-14, cited in

Malcolm Gillis, 'Malaysia: public policies and the tropical
forest' in R. Repetto and M. Gillis (ed), Public Policies and the
Misuse of Forest Resources (New York: Cambridge University
Press, 1988) p. 125.
In Sarawak, change proceeded at a slower pace in the forestry sector.
Essentially, forest policy was guided by the 1961 policy statement of
forest ownership which reserved all forests to the government, to be
administered by the Forest Department on behalf of the state
government.40 As in Sabah, the Sarawak government also undertook a
comprehensive forest inventory in 1969 in conjunction with the FAO's
Forestry and Forest Industries Development Project. This survey, which
was completed in 1972, covered an overall area of almost 3 million acres
in mixed Dipterocarp Forests and Sarawak was estimated 'to contain a
resource volume, on net industrial stemwood basis, of 100 million tons
or 5 000 million cubic feet'. Apart from the inventory area, Sarawak's
forest endowments also included coastal swamp forests of 3.5 million
Table 7.4 Sabah: Utilisation of the tropical forest estate: deforestation due
to shifting cultivation, area utilised for logging, end 1985
(thousand hectares)
I Logged-over forest (stock) 1 280

II Unlogged natural forest under logging license (stock) 2 089
A Under regular concession (21-year lease) 869
B Under special license (10-year lease) 782
C Under Form I license (one-year lease) 77
D Licenses pending 301
III Area affected by shifting cultivation (stock)( 1970-80 3 650
only)
IV Annual deforestation rate due to shifting cultivation (flow)
(per cent)
A 1975-80 36
B 1980-85 42
V Annual deforestation rate due to logging and conversion of
land to permanent agriculture (per cent)
A 1976-80 24
B 1980-85 34
VI Total annual deforestation rate due to all sources (IV + V)
(per cent)
A 1976-80 60
B 1980-85 76
Source: FAO (1981: 301-309), cited in Malcolm Gillis, 'Malaysia:

public policies and the tropical forest', p. 122.
acres (or 11.7 per cent of the total land area) and hill forests of nearly 20
million acres or 64.8 per cent of the total land area. 41
The FAO also recommended the establishment of a timber corporation
'to stimulate by all possible means the planned expansion of wood-based
industries throughout Sarawak at a rate consistent with the overall
interests of the economy, the availability of capital and technical expertise
and the effective management of the forest resource'. 42 Accordingly, 1973,
the Sarawak Timber Industry Development Corporation (STIDC) was set
up by the Sarawak state government. The main objectives of the
corporation were to develop policies, plans and strategies for the
promotion and development of the timber industry, and the marketing of
high quality timber-based products for foreign and local markets. These
policies, while designed to promote the economic development of the
state, were also envisaged as an affirmative action programme to shift the
productive resources from the immigrant to the indigenous segment of
Sarawak's population.43 Among the beneficiaries of this programme were

Universiti Pertanian Malaysia (Agricultural University of Malaysia),
which was allocated a concession to establish a campus in Sarawak, and a
joint venture with Kuwaiti interests to operate forest concessions for
logging and processing industries. 44 Thus the state elites, who
consciously employed the ideology of the New Economic Policy to
legitimise the process of reallocating wealth and power, set out to create a
group of rich Muslim businessmen who would then be in a position to
play the role hitherto exercised by the rich Chinese towkays. These
businessmen were also to underwrite political leaders, factions and parties.
The overall effect of this use of political prerogative was to create a
vicious cycle of 'timber politics' and to shift wealth and power to those
business elites and politicians close to and dependent upon the Chief
Minister of the state.
As a first step, the forestry policy inherited from the previous
administration was further revised to suit the objectives of the new
administration. Amendments were made to the Land Code to give wider
definition to the categories of persons permitted to hold lands in areas
other than Native Area Land and also to permit certain persons or bodies
to hold and deal in Native Area Land. In 1974, an amendment to the Land
Code enabled the extinction of customary rights. Another amendment
introduced new sections preventing the manipulation of land values by
non-citizens. There was thus a total prohibition on land dealings by non-
citizens who had not been granted permanent residence in Sarawak and by
foreign-owned companies and corporations not registered in Malaysia.45
The impact of many of the amendments in the 1970s and 1980s was to
whittle away at Communal Forests and Communal Land as the policy of
maximisation of the utilisation of the forest resources took momentum.
According to one source, communal forests declined from 303 square
kilometres in 1968 to 53 square kilometres in 1987.46 Fourteen items of
the Forest Ordinance were amended in 1979 aimed at strengthening certain
sections of the Forest Ordinance against shifting cultivation, illegal
occupation and 'wanton' destruction of the forests in Forest Reserves and
Protected Forests. These amendments also revoked the rights hitherto
enjoyed by the Sarawak Shell Limited with respect of the felling of trees
and removal of timbers and other operations in the forests.47
Next, the powers of the Forestry Minister were expanded and increased.
Prior to 1980 Forestry had come under the combined Ministries of
Forestry, Land and Mineral Resources. In 1980, with the creation of a
separate Ministry of Forestry, the Forestry Minister became all powerful,
with the power to grant concessions, and assumed the responsibility of
overseeing the exploitation and conservation of forests as well as the
development of the timber industry.48 Since 1985 this portfolio has been
held by the current Chief Minister of Sarawak. Thus a situation
developed, not dissimilar to Sabah, whereby the Minister of Forestry
began to play a key role in timber politics, and fortunes were made by
those who placed themselves in appropriate political positions.
Concessions are awarded by the ruling elite to their political allies,
relatives and business partners. They are then sub-leased to contractors and
sub-contractors - usually Chinese - who put them into operation, and
again, these contractors have ties to the owners of the concessions either
politically or through businesses. It is an open secret that the Sarawak's
political elites' control over awarding logging licences gives them the
means to maintain and tighten their grip on state power by alternatively
rewarding their supporters and followers and buying off their political
rivals and opponents. The total area of forest under concession is 6
720 000 ha and it is public knowledge that in 1987, 2 850 000 ha (42 per
cent of all concessions) were controlled by just two leading political
figures and their families. It is likely that the rest was controlled by their
friends.49
The reciprocal relationships between the leadership and the business
elites had blossomed with the timber boom the mid-1980s. The gap in the
international timber trade created by the fall of Marcos in the Philippines;
Indonesia's ban on the export of logs in 1987; and deforestation in
Thailand resulted in Sarawak filling the trading niche created by the
changed circumstances of its neighbours. Large areas of inland forests
were handed out as concessions and the two main groups which emerged
xwere the Muslim Melanau and the Foochow entrepreneurs. However
because contracts, licences and approvals are gained principally through
political connections, the holders are highly vulnerable to any significant
change of political alignments. Consequently, logging in Sarawak is
characterised by a grab-and-run philosophy;50 the 'gains' are made as
quickly as possible and they are deposited overseas beyond the reach of
competitors from the other camp. More often than not, this capital is
invested in real estate overseas.
An indication of this pattern of forest resource utilisation is shown in
Table 7.5 below.
The bulk of the timber exports were in log form, as shown in Table 7.6.
As the timber industry in Sarawak geared itself to meeting the demands
of international trade, tribal land rights were pushed to the background.
The forest laws were consolidated in favour of the timber industry. The
1974 amendment to the land code empowered the Chief Minister of
Sarawak to make changes to any land tenure rights for a 'public purpose'.
Further amendments in 1979 enabled forest officers to evict anyone
breaking the code and to confiscate their belongings. Subsequently in
1987, the Forest Ordinance of Sarawak was amended further to make it a
criminal offence to barricade timber roads. Thus in effect, the Land Code
and the Forest Ordinance which are regarded as necessary to protect the
forests for the good of the state as a whole contain so many provisions for
their removal that they offer little protection.51
Table 7.5 Sarawak: Forest utilisation and deforestation

(thousand hectares)
A. Total forest area (1977) 9434

B. Total area under logging license (1978) 2459
1. Permanent forest 1 974
2. Stateland 1 485
C. Total area under license by type of forest (1979)
1. Hill forest 3 166
2. Swamp forest 1 313
D. Deforestation-average annual deforestation (per cent)
1. 1965-75 50
2. 1876-80 80
3. 1981-85 89

public policies and the tropical forest'.
Table 7.6 Sarawak: Export values for logs and processed products, 1971-84
(million US dollars)
Processed timber export

earnings (sawn timber, Total timber
Year Log export earnings plywood) exports
1971 50.3 19.6 69.9
1972 34.8 21.2 56.0
1973 56.3 35.3 91.6
1974 49.2 26.3 75.5
1975 29.0 28.3 57.3
1976 112.6 54.4 167.0
1977 118.3 41.3 202.3
1978 147.3 36.0 183.3
1979 161.9 41.4 202.3
1981 362.5 72.9 435.4
1982 543.5 72.9 616.4
1983 467.1 64.1 531.2
1984 522.1 69.0 591.1
Source: Cited in Malcolm Gillis, 'Malaysia: public policies and the
tropical forest', p. 146.
Exogenous demand and 'timber politics' is one side of the coin. The
other side is the structure of the Malaysian revenue system which has also
contributed to the destruction of Sarawak's forests and indeed 'nurtured'
timber politics. The Federal Government in Kuala Lumpur controls most
of the revenues earned by the states in the Malaysian Federation, but does
not control land-based revenues, which include royalties from the timber
industry. As noted previously, in 1975 Sarawak signed an agreement with
Petronas, surrendering ownership and control of petroleum and gas
resources to the latter. Since then the state government has consistently
relied on timber revenue to finance development programmes in the state.
To take an example, in 1983 the timber industry (which earned M$ 1093.3
million in log exports; M$84.97 million in sawn timber; M$67.22
million in finished timber products and M$2.52 million in minor forest
products) contributed about 20 per cent to Sarawak's total earnings, which
was retained by the state. In the same year, petroleum provided 65 per cent
of the state's earnings but because of the nature of the revenue system
only 5 per cent of this went to Sarawak.52
It is not surprising therefore, that in the contest for the huge financial
stakes involved, logging practices have contributed to the rapid destruction
of the forests. Although the state government has agreed to reduce output
and modify current logging practices, these pledges have not been
observed. In the wake of criticism from international conservation and
environmental organisations and local pressure groups, in 1989 the
Malaysian government and the Sarawak Chief Minister invited the
International Tropical Timber Organisation (ITTO) to send an
investigative mission to Sarawak to assess the sustainability of its
forestry policy. The ITTO's Report (1990), while endorsing state forest
management policies, recommended a reduction in the rate of logging.
The Sarawak government claimed the report as a vindication of its
policies, but it has been criticised by non-government groups for its
failure to evaluate the social impact of logging on local communities and
to investigate their grievances and the issue of customary rights. 53
Sarawak continues to account for the largest share of Malaysia's exports
of timber and timber products. In 1990, log production was 15.4 cubic
metres; in 1992, 18.8 cubic metres. Furthermore, as recently as October
1993, a company owned by James Wong, Sarawak's Minister for the
Environment and Tourism at the time of writing, announced a MR$143
million deal, involving property, a coal mine and nearly 200 000 ha
(500 000 acres) of rainforest. It is also one of the largest concessions in
Sarawak's history.54
Although the logging of tropical timber for export is the leading cause
of deforestation, forest clearance for agro-conversion has also resulted in
forest destruction in both Sarawak and Sabah. As noted previously, land
settlement was a natural corollary to the policy of commodity
diversification and development. It was a strategy for agricultural change
to move shifting cultivators into sedentary agriculture and was associated

with the system of individual and formalised property rights, and rural
development. Ironically, although the objective was resettlement of the
indigenous people from their longhouse communities and their
transformation into a labour force 'more obedient to the dictates of the
State and the external market', many of the original settlers have since left
the schemes while others refused to participate in them and consequently
immigrant labour was employed on these commercially managed
plantation structures.55
This section would be incomplete without a brief discussion of the
hydropower projects in Sarawak. As noted previously, the 1980s were
crucial in Malaysia's transition to an industrialised economy. Much
development under the Fifth Malaysia Plan (1986-90) was concentrated
on the provision of infrastructure in Peninsular Malaysia and the
construction of two hydropower schemes, the Batang Ai and the Bakun in
Sarawak. The Batang Ai, a relatively modest project, got off the ground
relatively quickly. It was financed by the Asian Development Bank and
involved the displacement of approximately 3000 people from 26
longhouses. These people have since been accommodated in the Batang Ai
Resettlement Scheme to cultivate cocoa and rubber but the programme
has not been very successful.56 The Bakun Dam Project is the largest
hydropower scheme in the Southeast Asian region with a 200 metre-high
rock fill barrage which will create a catchment area of around 700 sq km,
approximately the size of Singapore. It is expected to be nearly twice as
high as Egypt's Aswan dam and will displace nearly 10000 indigenous
people. Dam construction will affect 15 000 sq km of land, sections of
which have already been utilised for swidden cultivation, or have been
logged by timber companies and a proportion of which is under primary
rainforest. In return Malaysia will 'get a dam capable of generating 2400
megawatts of electricity', most of which will be transferred 650 km across
the South China Sea by submarine cable to Peninsular Malaysia. Its
estimated cost is US5.5 billion.57 Initially, the World Bank and the Asian
Development Bank considered financing the project but intense lobbying
by international environmental and human rights organisations led to their
withdrawal from the scheme. Subsequently, the Malaysian Prime
Minister, Mahathir Mohamad, awarded the project to a local firm, Ekran,
whose Chairman is a Sarawak Chinese entrepreneur, Tan Sri Ting Pek
Khiing. There has been no public debate or consultation on the project
and feasibility studies behind the Environmental Impact Assessment are
classified under Malaysia's official Secrets Act. Ekran was awarded the
contract without the requirement of a public tender and was also granted
pioneer status tax concessions by the government. The current Sarawak
Chief Minster's two sons are major shareholders in Ekran.58 In June 1996
three litigants took Ekran to court and the Malaysian High court ruled that
the project had not met the necessary environmental approvals and ordered
Ekran to stop all work on the site.59 The stop-work order lasted for four
days. Ekran appealed against the decision and resumed work on the project
before the appeal was heard.60 Ironically, in the wake of the Asian
financial crisis, the federal government deferred the project and in
November 1997 took over the project.
Currently, Sarawak accounts for more than 40 per cent of Malaysia's
timber exports. Loggers have whittled away the forest habitat of
indigenous tribes like the Penan. At the time of writing Sarawak is also
the only Malaysian state still allowed to export raw logs, rather than sawn
timber and processed wood. Timber is still the state's biggest export
earner. The only change is the destination of the logs. European import
restrictions and other western pressure have resulted in only a small
percentage of Sarawak's log exports going to Europe and the United
States.61
The second timber boom created many millionaires in Sarawak and
Sabah, but left the nomadic and other tribes little better off than before.
Indeed, their shifting cultivation has been blamed for deforestation by the
Federal and State Governments although several studies show that this is
not the case.62 Crucially, native customary forest resource use has been
assigned a lower priority than logging for profit. Chartered Company,
Brooke and colonial ideologies of forest control have been adopted by
national elites who have strengthened their grip over the state's resources,
resulting in conflicts of interest for allocation of land and rights to utilise
resources. Thus while administrations have changed, the main
beneficiaries remain the state and the state's elites.
Transport
Prior to 1963, administrations in Sabah and Sarawak had embarked on

road construction projects and improved water and air linkages to
stimulate economic growth in these states. These projects resulted in
some urbanisation and the emergence of new settlements in centres of
primary commodity production. The rural areas nevertheless had weak
linkages with these centres and remained largely isolated. In the post-
colonial period, consistent with national development priorities, transport
development focussed on three main objectives. These were: greater
integration between Sabah, Sarawak and Peninsular Malaysia through
improved air links; the facilitation of the global flow of goods, labour and
capital among the various states; and the promotion of rural development
through the provision of roads in the rural areas. Substantial allocations
were made in the various Malaysia Plans for transport development in
both Peninsular and East Malaysia. The essence of all planning was the
overall coordination of land, inland water, coastal and air transport to
achieve efficiency and maximum effectiveness.
In Sarawak, the most significant achievement of the First Malaysia

Plan period was the completion in 1968 of the 459.2 km Kuching-Sibu
road, linking four administrative divisions - The First, Second, Third and
Sixth Divisions in southern Sarawak. Subsequently, during the Second
Malaysia Plan period, the Miri-Bintulu road (228.8 km) was opened in
May 1973. With the completion of the Sibu-Bintulu road through
communication was achieved between Kuching and the Brunei border.
Priority was also given to the construction of loads linking Sarawak with
Sabah, Brunei and Kalimantan. Additionally, short feeder roads radiating
from the port/urban centres were built to link them with the producing areas.
The discovery of oil and natural gas reserves located offshore Bintulu
resulted in Miri and Bintulu emerging as important new ports serving the
northern part of the state. Sarikei was also developed as a port in the
timber producing area and was connected by road to Tanjung Mani,
another important timber exporting area. Air services centred on Kuching,
Miri, Sibu and Bintulu with airstrips of either bitumen, crushed gravel or
grass runways providing access to the interior.63
In Sabah, there was an equally dramatic increase in road mileage. The
road mileage increased from 1851 km in 1963 to 6500 km in 1985, of
which 2111 kilometres were sealed and 4276 gravelled. The main roads
completed during this period were the east-west road between Sandakan
and Kota Kinabalu (previously known as Jesselton), the Sandakan-Lahad-
Datu road and the Tawau-Semporna road. Thus it was only in the post-
independence period that there was an all-weather road linking the major
towns of Kota Kinabalu, Sandakan, Lahad Datu and Tawau with the
joining up of these roads.64
Transport development went hand in hand with improved services and
technological change. In both Sabah and Sarawak, river and coastal
launches - mainly Chinese-owned - provided both cargo and passenger
services on the waterways. A host of privately-owned small outboard
motor-driven craft also served as river buses while outboard boats replaced
the traditional dugouts. Similarly in the urban centres, the provision of
land transport resulted in a dramatic increase in public transport. In
Sarawak, the number of motor vehicles during the period 1963-1983, rose
from 11 857 to 148 628. 65 In Sabah, the number of motor vehicles
increased from 15 071 in 1963 to 195 811 in 1985.66
Road mileage and density in Malaysia in 1990 is shown in Table 7.7.
A comparison between Sabah, Sarawak and Peninsular Malaysia is also
provided in the same table.
Interestingly, among the Malaysian states, Sabah and Sarawak have
had the highest road grants since the late 1970s. For example, in 1990,
road grant allocations were 23 per cent and 9 per cent respectively of total
road grants.67 Nevertheless, it has been asserted that the higher allocations
to
o
o
Table 7.7 Sabah, Sarawak and Peninsular Malaysia: Road Mileage and Density, 1990
Federal Roads (km) State Roads (km) Total Density (m/sq km) Density of Paved
Roads (m.sqkm)
Paved Gravel Earth Paved Gravel Earth (km) Federal Total1 Federal Total1
Sabah 829 355 1 892 5 139 461 8 675 16 118 11 37
(8%) (22%)
Sarawak 433 885 — 917 2 129 92 4 456 36 11
(4%) (21%)
$
Peninsular 9 070 50 1 2 4639 2 947 2 708 40 855 80 310 70 256
Malaysia (80%) 441 (60%)
$
Notes: 1 = Federal and state roads,
m = metres.
Source: Department of Statistics, Malaysia, Yearbook of Statistics, Malaysia, 1992, Table 13.1, cited in Wee
Chong Hui, Sabah and Sarawak in the Malaysian Economy, p. 28.
were necessary because of higher maintenance costs in these states rather

than greater mileage.68
In summary the integration of Sabah and Sarawak into the world
market continued but at the same time the major change was the opening
of links with Peninsular Malaysia, between Sabah and Sarawak and with
Brunei and Kalimantan. Consequently, transport was an important factor
in promoting national cohesion and a sense of Malaysian identify.
Whither Change and Development?
To what extent have national development strategies since 1963 resulted

in economic growth and structural change in Sabah and Sarawak? In what
ways have the people of Sabah and Sarawak benefited from economic
growth?
The economy of East Malaysia prior to 1963 was organised around the
export of raw materials. Under colonial rule, attempts were made to
diversify the economic base, for example, by encouraging the expansion
of oil palm and cocoa cultivation. Industrialisation arising out of the
growth of primary exports was very limited. It did not go beyond a
limited range of primary processing, semi-finished articles and goods such
as foodstuffs, soft drinks and cement which enjoyed the protection of
distance. This was principally because of the small size of the domestic
market; lack of investment and the limited availability of finance from the
banks; and the nature of the primary products themselves, which
importing countries preferred in their 'raw' or semi-processed state. Over
the 1970-1990 period, the Malaysian economy as a whole advanced
towards industrialisation, but not the economies of Sabah and Sarawak. A
comparison of the Gross Domestic Product by industrial origin for
Peninsular Malaysia, Sabah and Sarawak is provided in Table 7.8.69
As shown in Table 7.8, agriculture, forestry and fishing dominate
Sabah's economy while Sarawak's economy centres on agriculture,
forestry and fishing and mining. In both states the manufacturing sector is
small. Growth has been based almost entirely on the massive exploitation
of natural resources. Thus the pattern of growth which developed early in
the century has not been broken in these states compared to Peninsular
Malaysia. Furthermore, the agricultural sector in the two states is less
diversified than that of Peninsular Malaysia as shown earlier in Table 7.2
and is associated mainly with rubber. Both these crops are grown on the
land settlement schemes while rubber has remained largely a smallholding
crop.
Table 7.8 Sabah, Sarawak and Peninsular Malaysia: Gross Domestic Product by Industrial Origin, 1970 1 , 1980 and 1990
(Ringgit Malaysia million in 1978 prices)
Sabah Sarawak Peninsular Malaysia Malaysia

1970 1980 1990 1970 1980 1990 1970 1980 1990 1970 1980 1990
Agriculture,
forestry 405 1 189 2569 319 824 1 679 2 708 8 675 10572 3 432 10688 14820
and fishing (53%) (37%) (37%) (37%) (27%) (24%) (30%) (22%) (16%) (32%) (24%) (18%)
Mining 2 601 1 376 30 739 1 855 581 3 147 4 457 613 4 487 7 688
(-) (19%) (19%) (4%) (24%) (27%) (6%) (8%) (7%) (6%) (10%) (10%)
Manufacturing 19 110 589 31 257 1 170 1 257 8 565 19 622 1 307 8 932 21 381
(3%) (3%) (8%) (4%) (8%) (17%) (14%) (22%) (30%) (12%) (20%) (27%)
Construction 48 159 315 46 195 278 387 1 712 2 195 481 2 066 2 788
(6%) (5%) (5%) (5%) (6%) (4%) (4%) (5%) (3%) (4%) (4%) (3%)
Services 296 1 176 2 153 434 1 082 1 966 4 145 16 770 29 355 4 875 19 028 33 474
(38%) (36%) (31%) (50%) (35%) (28%) (46%) (43%) (44%) (46%) (42%) (42%)
Total 770 3 235 7 002 860 3 097 6 948 9 078 38 869 66 201 10 708 45 201 80 151
(100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%)
Note: 1 = 1970 prices.

Sources: The Second Outline Perspective Plan, Table 4-6, Fifth Malaysia Plan, Table 5-2, cited in Wee Chong Hui,
Sabah and Sarawak in the Malaysian Economy, p. 48.
Ironically, economic growth in Sabah and Sarawak has been quite

remarkable in both states since the 1970s due to their timber and
petroleum resources, but these industries have produced little spin-off in
terms of manufacturing industries. Furthermore, as noted previously, the
major proportion of the petroleum revenues have accrued largely to
Petronas and the Federal Government. As prescribed by the Petroleum
Development Act, the distribution of the gross value of petroleum is as
follows.
Table 7.9 Distribution of Gross value of petroleum by percentage
Government of producing- 5% royalty on the gross value of petroleum

state output
Federal Government 5% royalty on the gross value of petroleum
output
Producer-company 20% for cost recovery
Total 30%
Producer-company 21% (30% of remaining 70%)
Petronas 49% (70% of remaining 70%)
Total 100%
Source: Wee Chong Hui, Sabah and Sarawak in the Malaysian

Economy, p. 25.
Not only does the Federal Government get dividends from Petronas, it
also obtains revenue from the taxes on the profits of the producer-
companies and Petronas. Meanwhile, Sabah and Sarawak get only a small
fraction of the royalty (five per cent) on petroleum. State government
revenue from petroleum and forestry is shown in Table 7.10 below. As
noted previously, the federal-state fiscal arrangements and the direct
involvement of the state in productive activities such as forest resource
utilisation have been expressed in the 'onslaught on the forests', which
has become a major issue internationally as well as regionally.
Has development planning, which was aimed at improving the standard
of living of the people, achieved its targets? Has government expenditure
which has concentrated on infrastructural development (especially road
construction), agricultural improvement (land schemes, new crops),
education and public services (health, electricity), led to an improvement
of the welfare of the population of Sabah and Sarawak? It is not proposed
here to discuss in detail indicators of welfare such as household income
and household expenditure. 70 Nevertheless, the incidence of poverty in
these states is a good indicator of plan assessment in terms of
macroeconomic targets. As shown in Table 7.11. Sabah and Sarawak had
higher incidence of poverty compared to Peninsular Malaysia during the
period 1976-90. Furthermore, the incidence of poverty is higher in the

rural areas compared to the urban areas. It is thus more widespread among
the bulk of the population in these states - the rural farmers - despite the
implementation of grandiose land settlement schemes. The agricultural
development programmes therefore do not appear to be tailored to the
needs of the population as outlined earlier.
In summary therefore, the economies of Sabah and Sarawak are
primarily resource extractive and largely non-welfare in orientation.
Management of these economies is in the hands of the central government
and local elites with little participation by the general population.
Politically, the ability of the masses to influence the political system is
constrained by their lack of political sophistication and the ethnic factor.
While agricultural production remains in the hands of the peasants, their
limited access to land, capital and markets guarantees continued
domination by local and national political and economic elites. Thus
although external capital in the form of foreign investment has been
available, this investment has strengthened the position of these economic
and political elites. Consequently, while an integrated national economy
has yet to emerge, Sabah and Sarawak have performed an extremely useful
function in the Malaysian economy through their contribution to export
earnings from timber, petroleum and liquefied natural gas. But the lack of
industrial development has meant that these states have incurred an adverse
trade balance with Peninsular Malaysia from which much of their
requirements of manufactures, foodstuffs and machinery have to be
imported. Several factors have contributed to and reinforced an economic
structure whose character was set in the late nineteenth century. These
include, the geographical isolation of the two states; their small and
dispersed populations, which makes the production of many goods and
services not economically viable; the high degree of commodity and
export concentration, which produces uncertain state revenue; and overt
direct state involvement in productive activities in these states.71
Table 7.10 Sabah and Sarawak: State Government Revenue from Forestry and Petroleum, 1963-90
(RM million)
Sabah Sarawak
1963 1970 1975 1980 1985 1988 1990 1964 1970 1980 1985 1990 g
Forestry1 14.1 81.1 152.3 1098.6 584.3 1082.1 818.1 5.9 19.4 132.7 336.1 703.5
(percentage) (14.4) (46.2) (57.3) (71.4) (43.6) (53.1) (50.5) (6.4) (22.4) (33.0) (35.8) (48.0) b
(*
Petroleum
•§
royalty - - 0.9 91.6 104.3 77.1 161.0 2 0.3 2.5 116.0 204.9 200.0 2 2
<*
3
(percentage) (-) (-) (0.3) (6.0) (9.0) (3.8) (9.9) (0.3) (3.0) (28.9) (21.8) (13.6)
Notes: 1 = Including export duty.

2 = Estimate.
Sources: Financial Statements, Sabah, and Sarawak, various issues, cited in Wee Chong Hui, Sabah and Sarawak in
the Malaysian Economy, p. 23.
Table 7.11 Sabah, Sarawak and Peninsular Malaysia: Incidence of Poverty1 by Stratum,
1976, 1984, 1987 and 1990
(%)
Sabah Sarawak Peninsular Malaysia Malaysia
Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total
1976 19.2 58.6 51.2 16.3 60.0 51.7 15.1 42.8 35.1 15.4 45.7 37.7
1984 14.3 38.6 33.1 8.2 37.3 31.9 8.2 24.7 18.4 8.5 27.3 20.7
1987 16.4 39.9 35.3 7.5 29.0 24.7 8.1 22.4 17.3 8.41 24.71 19.3
1990 14.7 39.1 34.3 4.9 24.7 21.0 7.3 19.3 15.02 7.5 21.8 17.1
, _, , . „ T ., _ Number of poor households %Mgw
Notes: 1 = Calculated as follows: Incidence of poverty = ——; r* — ;——-xl00%
Total number of households
2 = For 1989
Sources: Fourth Malaysia Plan, Table 3-4; Mid-Term Review of the Fifth Malaysia Plan, Table 3-6; The
Second Outline Perspective Plan, Table 4-2; cited in Wee Chong Hui, Sabah and Sarawak in the
Malaysian Economy, p. 107.
Appendix 1
Sarawak: Forest Policy and Legislation
Forest Policy
The Forest Policy of Sarawak, which was approved by the Governor-in-
Council on 23rd December 1954, continued to be the basic Supreme
Council directives on the practice of Forestry in the State. The details of
the policy are reproduced below. The following statement is to be read as
the official policy of the Government of Sarawak in matters pertaining to
forestry, and is issued for the information and guidance of all officers of
the Government service.
General Statement of the Policy

It is the policy of the Government of Sarawak:
(1) To reserve permanently for the benefit of the present and future
inhabitants of the country forest land sufficient
(a) for the assurance of the sound climatic and physical condition
of the country; the safeguarding of soil fertility, and of supplies
of water for domestic and industrial use, irrigation and general
agricultural purposes; and the prevention of damage by flooding
and erosion to rivers and to agricultural land;
(b) for the supply in perpetuity and at moderate prices of all forms
of forest produce that can be economically produced within the
country and that are required by the people for agricultural,
domestic and industrial purposes under a fully developed
national economy.
(2) To manage the productive forests of the Permanent Forest Estate
with the object of obtaining the highest possible revenue compatible
with the principle of sustained yield and with the primary objects set
out above.
(3) To promote, as far as may be practicable, the thorough and
economical utilisation of forest products on land not included in the
Permanent Forest Estate, prior to the alienation of such land.
(4) To foster, as far as may be compatible with the prior claims of local
demands, a profitable export trade in forest produce.
207
208 Appendix 1
Realisation of the Policy
Classes of Permanent Forest

The Forest Law of Sarawak (Forests Ordinance, 1953) provides for three
types of permanent Forest. All types are classified as Reserved Land under
the Land (Classification) Ordinance, 1948.
(1) Forest Reserves: Permanent Forests are to be constituted as Forest
Reserves wherever the strictest form of control is necessary for the
realisation of sections (1) and (2) of the general statement of policy.
They will normally be productive forests, destined to be the
principal permanent sources of the country's supplies of timber and
other forest produce; and forests that are rich in trees of particular
value, such as belian, should, except in very exceptional
circumstances, be constituted as Forest Reserves. Forest Reserves
should also be constituted where the protection of water catchment
areas is required; where the surrounding population is so dense that
the admission of the general rights and privileges recognised in
Protected Forests would prohibit the successful management of the
forest; and, in some circumstances (see Communal Forests), where
the forest is required as a source of domestic supplies for a specified
community.
(2) Protected Forests: In Protected Forests the Forest Law admits wide
rights to the people of Sarawak to take forest produce for their own
domestic use, to hunt and to fish, and to pasture cattle. A Permanent
Forest may be constituted as a Protected Forest if the primary
purpose of constitution is the general protection of soils and waters,
and the terrain or vegetation is of such a nature that intensive
management as an important productive forest is unlikely to be
practicable; or if an extensive Permanent Forest is constituted in
little-known territory, where the correct use of all the land cannot yet
be determined.
(3) Communal Forests: A Communal Forest will be constituted only
where it is clearly the desire of a settled community to set aside a
convenient area of woodland to provide its domestic needs of forest
produce. Such forests shall be under the control of the
Administration, who shall however, consult the Forest Department
on all important technical matters. Communal Forests will
normally be large enough only to supply permanently the domestic
needs of the community specified, allowing for a reasonable increase
in population; but exceptions may be made when the necessity of
preserving forests for protective reasons is combined with the need
for domestic supplies of forest produce. It may frequently be found
that the constitution of a permanent forest as a source of domestic
supplies is desirable, even where the wish is not expressed by the
Appendix 1 209
community concerned. The forest may then be constituted as a

Forest Reserve, in which all necessary privileges will be granted to
the specified community. In no case should such a forest be
constituted as a Protected Forest, which permits general rights
exceeding the limits of the specified community .
Constitution of Permanent Forests
(1) Permanent Forests are constituted by the Permanent Secretary of the

Ministry responsible for Forestry on the advice of the Director of
Forests, and after an inquiry in which the local people are consulted
and the existence of rights investigated. Similarly the Permanent
Secretary has powers to revoke Permanent Forests, and to change the
status of a Protected Forest to that of Forest Reserve.
(2) As timber is a slow-growing crop, it must be recognised that
security of tenure is an essential requirement of successful forest
management. It follows that Permanent Forest must be constituted
only after the most careful inquiry, for which local administrative
officers and other land use departments are responsible. Revocation,
particularly of forests under systematic plans of management,
requires equally careful consideration. Administrative expediency is
rarely an adequate reason for revocation.
(3) The most desirable of Permanent Forests is one that assures that
realisation of both the objects of protection and production laid down
in section (1) of the General Statement of Policy. In selecting areas
for constitution as Permanent Forests, however, the following
considerations are to be given due weight:
(a) The nature of the terrain may limit the potential productivity of
a forest. It is therefore not always possible to combine the
objects of protection and production.
(b) In order to provide conveniently for local demands for forest
produce, productive Permanent Forests should be distributed as
evenly as possible throughout the country.
(c) The establishment of a balanced economy in all districts is
desirable, and the tendency in newly developed countries to rely
upon a very few industries is to be deprecated. It has also been
repeatedly shown that forests may provide a livelihood for the
native peoples when food crops fail or other industries are
depressed.
(d) Timber is a heavy and bulky commodity, difficult to transport.
Potentially productive forests should therefore be so situated
that they are provided with reasonable access to the principal
lines of communications.
(4) The cultivation of essential foodstuffs by systems of settled
210 Appendix 1
agriculture, including properly managed bushfallow, on suitable

soils will normally take precedence over forestry, provided that due
consideration is given to section (3) above.
(5) Sarawak is deficient in mineral wealth. Mining will, therefore,
normally take precedence over forestry, provided that due
consideration is given to section (3) above, and provided also that
the nature of the mining operations shall not be deleterious to the
soils and waters of the country.
(6) In addition to the general rights granted in Protected Forests, rights
may be admitted or privileges conceded in Forest Reserves and
Protected Forests; but claims to rights must be clearly substantiated
by Native Customary Law or by evidence of their exercise over long
and continuous periods, and a clear distinction is to be made between
an established right and a conceded privilege.
(7) The exercise of any right or privilege that would prohibit the
successful management of a Permanent Forest is not to be
permitted, and the commutation of such rights is provided for in
sections 15 (a) and 35 of the Forests Ordinance, 1953. No right or
privilege that would permit the extension of shifting cultivation in a
Permanent Forest may be admitted or conceded; Native Customary
Law recognises such rights only over young secondary forest
(temuda), and this limitation is to be strictly enforced. The
admission of rights and the concession of privileges are to be so
worded that they may be subject to reasonable control in accordance
with sections 9 and 34 of the Forests Ordinance, 1953.
Management of Permanent Forests

(1) The Director of Forests is responsible to the Government for the
management of Forest Reserves and Protected Forests. He is to
ensure that productive forests are so managed that they will provide
the highest possible sustained yield of timber and other forest
produce. The principle of sustained yield will apply, as far as may
be possible, to each district and not only to the country as a whole.
(2) Where protection of soils and waters is the primary object of a
Permanent Forest, the Director is to ensure the control of
exploitation of forest produce in such manner that the protective
value of the forest is not impaired.
(3) Officers in charge of Communal Forests will ensure that the felling
of trees is within the limits of a possible sustained yield.
Exploitation of Forests: General

(1) The Forests Ordinance, 1953, provides that no sawmill shall be
Appendix 1 211
built or operated without the Director's permission. It is essential

to ensure that the capacity of sawmills does not exceed the
productivity of the forests that are available as sources of supply.
Where the source of supply is forest land destined for eventual
alienation, it is nevertheless desirable to ensure to each approved
sawmill an economically long life.
(2) It is probable that, for a long time to come, the potential production
of most kinds of forest produce will exceed the demand within the
country. While the condition endures, it will be the policy of the
Government to foster a profitable export trade. Rules intended to
promote the best interests of a timber export trade are included in
the Forest Rules, 1953, and are to be kept under constant review.
(3) Demands for forest produce within the country will nevertheless take
priority over an export trade. The influence of exports on the
availability of local supplies is therefore to be under constant
review, and the export of any kind of forest produce may be
restricted or forbidden as may from time to time be deemed
necessary.
(4) The Government views the exploitation of forest products as a
sphere for private enterprise. Commercial exploitation of forest
products by the Government will therefore be limited to
experimental projects.
Forest Revenue and Rights to Free Produce

(1) Timber and other forest produce being natural resources of the
country, or otherwise cultivated at the expense of the country, the
country as a whole may expect an equitable share, in the form of
direct forest revenue, of any profits made by means of their
commercial exploitation. The royalty rates and other fees provided
by the Forest Ordinance are to be under constant review and are to be
determined at the highest possible levels compatible with economic
exploitation and the maintenance of moderate local market prices.
(2) The Forests Ordinance, 1953, provides that, subject to some
controls, any inhabitant of Sarawak may without licence or permit
cut and remove from Stateland which is not a Forest Reserve any
timber or other forest produce required by him exclusively for his
own domestic use and not for sale, barter or profit. The grant of this
right is intended to benefit the poorer sections of the community,
who are themselves willing to collect and fashion such produce as
they may require for their own houses and other daily needs. Any
tendency towards the commercialisation of this right is to be strictly
discouraged. The use of forest produce, directly or indirectly, in
profitable village industries is not to be considered a domestic use.
212 Appendix 1
Exploitation of Other Forests

(1) The Forest Department is to ensure that, as far as may be possible,
the utmost use is made of forest produce on all lands prior to their
alienation. The Department of Lands is to co-operate with the Forest
Department in realising the greatest possible use of the forests.
(2) The Forest Department is to ensure that timber forests under licence
are of size, form and nature suitable for the particular logging project
in hand, and that logging methods are such that the whole area can
be efficiently exploited.
Forestry Research
(1) Research required for the full realisation of the aims of this policy
shall have as its primary objects:
(a) the assessment of the country's forest resources;
(b) improved silviculture and management of Permanent Forests,
and in particular the utilisation for the cultivation of productive
forests of soils unsuitable for agriculture;
(c) the economical use of the timbers of the country, and in
particular the investigation of suitable substitutes for rare
timbers;
(d) the improvement of the quality of timbers for local use and for
export;
(e) the placing of as many kinds of timber as possible on world
markets;
(f) the development on world markets of forest products hitherto
unexploited.
(2) Research within the country will normally be restricted to
investigations that can only be, or that can best be, conducted
locally. For the conduct of research of a more general nature, the
Government supports the development of regional research
organisations and recognises the principle that they should be
financially supported by all territories that they directly benefit, in
proportion to the benefits that may severally be expected. Close co-
operation is to be maintained with the leading research organisations
of the Commonwealth .
Education in the Value of Forests

It is evident that a large part of the population of the country still fails to
appreciate the productive value, and even more the protective value of an
adequate area of forest. Administrative officers on tour are therefore to take
every opportunity of stressing these values to the rural population. Forest
Appendix 1 213
officers are to be encouraged to provide suitable lectures, broadcast talks,

and articles in the press. In schools the encouragement of an interest in
natural history and a sound education in physical geography may be
regarded as the first important steps towards public understanding of the
national importance of forests.
Staff and Finance

(1) The Government recognises its responsibility for the provision of
adequate funds for the realisation of the policy, and recognises also
that continuity of management, and therefore of financial provision,
is essential for the successful cultivation of a slow-growing crop.
(2) The Government recognises the necessity for an adequate, well
trained and adequately remunerated Forest Department Staff, working
under the supervision of fully qualified forest officers.
Legislation
Forest Ordinance, 1953

Fourteen items of the Forests Ordinance were amended in 1979. The
amendments which were passed by the Dewan Undangan Negeri on 5th
December 1979 were aimed at strengthening certain sections of the
Forests Ordinance against shifting cultivation, illegal occupation and
wanton destruction of our forests in Forest Reserves and Protected
Forests. The amendments also give the staff of the Department more
authority to contain the problems of unauthorised felling operations.
Other facets of the amendments are concerned with the question of
licensing and renewals and the revocation of the rights hitherto enjoyed by
the Sarawak Shell Bhd. with respect to the felling of trees and removal of
timbers and other operations in the forests. The following are the major
changes.
(1) Forest licensing and renewal;
(2) Extinguishing of rights over forests in respect of Sarawak Shell
Berhad;
(3) Increased Penalties for encroachment and felling within Forest
Reserves and Protected Forests;
(4) Eviction Order;
(5) Seizure of timber and property connected with the commission of a
Forest Offence.
Source: Forestry Department Sarawak, Annual Report, 1979.
Appendix 2
Sabah: Forest Policy and Legislation
Following the enunciation of the Forest Ordinance and Forest Rules of
1954, the official forest policy which this new legislation was designed to
effect was streamlined and rewritten and may be summed up as follows:
(a) To reserve permanently for the benefit of the present and future
inhabitants of the country land sufficient:
(1) for the maintenance of the climate and physical condition of the
country, the safe-guarding of water supplies and the prevention
of damage to rivers and agricultural land by flooding and
erosion;
(2) for the supply in perpetuity at reasonable rates of all forms of
forest produce required by the people for agricultural, domestic
and industrial purposes.
(b) To manage the Forest Estate with the object of obtaining the
highest revenue compatible with sustained yield, in so far as this is
consistent with the two primary objects set out above.
(c) To provide the technically trained staff necessary for forest
management and revenue collection, and for research into such
problems as can be investigated locally.
(d) To support and co-operate in all appropriate schemes of regional
forest research .
(e) To accept in principle that security of tenure and long-term planning
are essential for the successful management of the Forest Estate.
(f) To foster, by education and propaganda, a real understanding
amongst the peoples of Sabah of the value of the forests to them and
their descendants ...
In order to achieve the first two (a and b) stated objectives of this policy
three major requirements are currently being fulfilled. They are as follows:
(1) A meaningful definition and delineation of the overall forest
estate and of the component parts which are to be devoted to the
attainment of each of the stated objectives.
(2) A comprehensive inventory of the existing wood resource with
meaningful assessments of its quantity, distribution, species
composition, size, utilisation, properties and quality.
(3) A sound basis for the forecasting of future growth and yield of
the forest.
Source: Forestry Department, Sabah, reprinted in The Malaysian
Forester, Vol. 42, No. 4 (1979) 288-9.
214
Appendix 3
Sabah and Sarawak: Special Guarantees
Sabah: The Twenty Points
The memorandum submitted by Sabah's five political parties to the Inter-
Governmental Committee (IGC) was of crucial importance to the
Malaysia accord. The various points (later known as the 20 points
safeguards) represented the areas the political leaders considered most
crucial to Sabah and its people. Many of these points were modified at
subsequent meetings of the Inter-Govermental Committee (IGC), either at
the constitutional sub-committee or at the plenary sessions.
The Twenty Points were:
1 Religion
While there was no objection to Islam being the national religion of
Malaysia there should be no State religion in North Borneo (Sabah),
and the provisions relating to Islam in the present Constitution of
Malaya should not apply to North Borneo (Sabah).
2 Language
a Malay should be the national language of the Federation
b English should continue to be used for a period of 10 years after
Malaysia Day.
c English should be an official language of North Borneo (Sabah)
for all purposes, State or Federal, without limitation of time.
3 Constitution
Whilst accepting that the present Constitution of the Federation of
Malaya should form the basis of the Constitution of Malaysia, the
Constitution of Malaysia should be a completely new document
drafted and agreed in the light of a free association of states and
should not be a series of amendments to a Constitution drafted and
agreed by different states in totally different circumstances. A new
Constitution for North Borneo (Sabah) was of course essential.
4 Head of the Federation
The Head of State in North Borneo (Sabah)should not be eligible for
election as Head of the Federation.
5 Name of Federation
'Malaysia' but not 'Melayu Raya'
6 Immigration
Control over immigration into any part of Malaysia from outside
should rest with the Central Government but entry into North
Borneo (Sabah) should also require the approval of the State
215
216 Appendix 3
Government. The Federal Government should not be able to veto the

entry of persons into North Borneo (Sabah) for State Government
purposes except on strictly security grounds. North Borneo (Sabah)
should have unfettered control over the movements of persons other
than those in Federal Government employ from other parts of
Malaysia into North Borneo (Sabah).
7 Right of Succession
There should be no right to secede from the Federation.
8 Borneanisation
Borneanisation of the public service should proceed as quickly as
possible.
9 British Officers
Every effort should be made to encourage British officers to remain
in the public service until their places can be taken by suitably
qualified people from North Borneo (Sabah).
10 Citizenship
The recommendations in paragraph 148(k) of the Report of the
Cobbald Commission should govern the citizenship rights in the
Federation of North Borneo (Sabah) subject to the following
amendments:
(a) subparagraph (i) should not contain the proviso as to five years
residence;
(b) in order to tie up with our law, sub-paragraph (ii) (a) should
read '7 out of 10 years' instead of '8 out of 12 years';
(c) sub-paragraph (iii) should not contain any restriction tied to the
citizenship of parents - a person born in North Borneo (Sabah)
after Malaysia must be a federal citizen.
11 Tariffs and Finance
North Borneo (Sabah) should retain control of its own finance,
development and tariff, and should have the right to work up its own
taxation and to raise loans on its own credit.
12 Special Position of Indigenous Races
In principle, the indigenous races of North Borneo (Sabah) should
enjoy special rights analogous to those enjoyed by Malays in
Malaya, but the present Malays' formula in this regard is not
necessarily applicable in North Borneo (Sabah).
13 State Government
(a) The Prime Minister should be elected by unofficial members of
Legislative Council.
(b) There should be a proper Ministerial system in North Borneo
(Sabah).
Appendix 3 217
14 Transitional Period
This should be seven years and during such period legislative power
must be left with the State of North Borneo (Sabah) by the
Constitution and not be merely delegated to the State Government
by the Federal Government.
15 Education
The existing educational system of North Borneo (Sabah) should be
maintained and for this reason it should be under state control.
16 Constitutional Safeguards
No amendment modification or withdrawal of any special safeguard
granted to North Borneo(Sabah) should be made by the Central
Government without the positive concurrence of the Government of
the State of North Borneo (Sabah).
The power of amending the Constitution of the State of North
Borneo (Sabah) should belong exclusively to the people in the State.
(Note: The United Party, the Democratic Party and the Pasok
Momogun Party considered that a three-fourth majority would be
required in order to effect any amendment to the Federal and State
Constitutions whereas the UNKO and the USNO considered a two-
thirds majority would be sufficient).
17 Representation in Federal Parliament
This should take account not only of the population of North
Borneo (Sabah) but also of its size and potentialities and in any case
should not be less than that of Singapore.
18 Name of Head of State
Yang di-Pertuan Negara
19 Name of State
Sabah
20 Land, Forests, Local Government, etc.
The provisions in the Constitution of the Federation in respect of
the powers of the National land Council should not apply in North
Borneo (Sabah). Likewise, the National Council for Local
Government should not apply in North Borneo (Sabah).
Sarawak
Sarawak too presented a paper to the Inter-Governmental Committee
containing 18 points as the basis for discussion by the IGC. To a
considerable extent, the Sarawak 18 points were similar to the Sabah 20
points. There were, however, a number of differences, and some of these
differences were very important. The significant differences between the
two papers were:
218 Appendix 3
1 Language
The Sarawak paper contained no request corresponding to that of the
USNO party's request that Malay should be an Official Language
together with English.
2 Head of State
Sarawak requested that the Head of State be chosen from any of the
indigenous ethnic groups in Sarawak, but the method of choice
would be discussed further. The Sabah paper did not mention this
which now seems strange. The Sabah paper only stipulated that the
name of Sabah's Head of State should be the Yang di Pertuan
Negara.
3 Immigration
The Sabah paper explicitly asked that Sabah should have unfettered
control over the movement of persons, other than those in Federal
Government employ, from other parts of Malaysia into Sabah. This
requirement was not included in the Sarawak paper, which explicitly
refers only to immigration control.
4 Borneanisation
The Sarawak paper was explicit in its reservation that federal posts
in Sarawak should be filled by Sarawak-born citizens.
5 Citizenship
Both Sabah and Sarawak requested that the period of residence for
registration as a citizen of Malaysia during the first eight years after
Malaysia shall be reduced from eight years out of twelve to seven
years out of ten. The Sabah paper added two further points, namely
the deletion of the requirement of five years' residence immediately
before Malaysia for a citizen of the United Kingdom and colonies,
born or naturalised, to become a citizen of Malaysia, and deletion of
the requirement that after the formation of Malaysia persons in both
Sabah and Sarawak should only be citizens by operation of law if
one of their parents was a citizen or a permanent resident.
6 Finance
The Sabah paper asked for control of its own finances, development
and tariff. The Sarawak paper only asked for three assurances: a
development fund, a formula ensuring adequate revenue to the State,
and gradual increase of taxation to Malayan levels.
7 Representation in the Federal Parliament
The Sarawak paper accepted that the terms of the 13th schedule of
the Constitution of Malaya should govern the assessment of
representation in the Federal Parliament. The Sabah paper, however,
avoided any reference to the provisions of the Malayan constitution
and asked explictly that the size and potentiality of Sabah should be
taken into account and that in any case Sabah's representation should
not be less than Singapore's. The Sarawak paper added the
Appendix 3 219
requirement for adequate ministerial representation at both the higher

and lower levels to provide for Sarawak's interests in the Federal
Government.
8 State Government
The Sarawak paper requested a Chief Minister and a membership
system. The Sabah paper asked for a Prime Minister and a proper
ministerial system.
9 Transitional Period
The Sarawak paper asked that this should be from three to five years
and during this period federal powers should be delegated to Sarawak
as a State by agreement. The Sabah paper asked for a seven year
transitional period, and that during such period legislative power
should be left with the State by the constitution and not merely
delegated by the Federal government.
10 Education
The Sarawak paper asked that provision should be made to safeguard
the Sarawak National Education Policy for the future. The Sabah
paper asked that the existing educational system of Sabah should be
maintained, and for this reason it should be under State control.
Source: Dutuk Dr. Herman Luping, The formation of Malaysia
Revisited' in Jeffery G. Kitigan and Maximus J. Ongkili (eds),
Sabah - 25 Years later 1963-1988 (Kota Kinabula: Institute for
Development Studies, 1989) pp. 14-16
Appendix 4
Sabah: Key Political Figures and Parties
1963-1990
Angkatan Demokratik Liberal Sabah (Sabah Liberal
Democratic Front - ADIL). The Angkatan Demokratik Liberal
Sabah (Sabah Liberal Democratic Front) was formed in July 1989, and
based its acronym Adil on the Bahasa Malaysia word for justice. Although
Adil was open to all Malaysian citizens, its founders intended to attract
Malay-Muslim Sabah residents who were once members or supporters of
USNO or Berjaya. While pro-term committee members who applied for
the registration of the party were unknown outside Sabah, there were
strong hints that Datuk Harris Salleh, a businessman since he lost the
state election in 1985, was behind the party.
Angkatan Keadilan Rakyat Sabah (AKAR). A Parti Bersatu
Sabah (PBS) splinter group, it was led by Senator Pandikar Amin Haji
Mulia, Kalakau Untol and Mark Koding and was formed in September
1989 in anticipation of general elections within the following 12 months.
The party, whose acronym 'Akar' means 'roots' in Bahasa Malaysia,
represents Sabah's Dusun ethnic group. The Dusun and the Kadazan (led
by former Sabah Chief Minister Datuk Seri Joseph Pairin Kitingan are
from the same indigenous stock but their languages evolved along
slightly different lines. This had led to a linguistic battle between the two
groups which marks deeper strains between Pairin and Koding who
represents the Dusun. Koding's spearheading of a new Dusun
assertiveness and his long-standing differences and personal rivalry with
Pairin led to his sacking from his post as Deputy Chief Minister and
subsequent expulsion from the PBS. Koding then recontested his seat in
December 1989 on an AKAR ticket, hoping a victory would tempt a
clutch of Sabah's small opposition parties to band together with AKAR
to oust the PBS and more specifically, Pairin. Instead the contest petered
out with the PBS beating the AKAR.
BERJAYA. The Bersatu Rakyat Jelata Sabah (Sabah People's Union,
commonly known as Berjaya) was founded in 1975 by veteran Sabahan
politicians, including Tun Fuad Stephens, as an alternative to the United
Sabah National Organisation (USNO) led by Tun Mustapha Harun.
Berjaya defeated USNO at the 1976 state elections. Tun Fuad Stephens'
death in a plane crash in 1976 left Datuk Harris Mohd. Salleh as
undisputed party leader and new Chief Minister. Shortly after Berjaya's
success, both Berjaya and USNO were accepted into the Barisan Nasional
or federal National Front, although USNO remained in opposition at the
State level. Berjaya, like USNO, had a strong Muslim following and
initially also received significant support from the Chinese and Kadazan
220
Appendix 4 221
communities. However, by the early 1980s, the latter groups had become
disenchanted with the Berjaya state government. At the 1985 state
elections, Berjaya was severely trounced by the Parti Bersatu Sabah (PBS)
led by Joseph Pairin Kitingan which had strong Kadazan and Chinese
support. In July 1985, Datuk Harris Salleh resigned as President of
Berjaya and his place was taken by Datuk Haji Mohamed Noor Mansur. In
the 1986 state elections, the party suffered further electoral reverses and for
all practical purposes is no longer a significant political force in Sabah. In
subsequent years, more leaders have resigned from the party. In early
1989, some of these leaders, under the leadership of Datuk Dr. James
Ongkili, formed the Parti Rakyak Sabah (PRS).
Harris Bin Mohamad Salleh, Datuk, a prominent Sabah
politician, was born in Labuan and educated in Kota Kinabalu. He worked
as a teacher, then as a clerk, and rose to the position of assistant district
officer in Sipitang. In 1963, Harris left government service to enter
politics and became the Secretary-General of USNO. He served in various
ministerial posts. In 1975, Harris and Tun Fuad Stephens, together with
some veteran Sabah politicians, founded the Bersatu Rakyat Jelata Sabah
(Sabah People's Union, commonly known as Berjaya). Berjaya wrested
control from USNO in 1976 and with the untimely death of Stephens the
same year, Harris became Chief Minister of Sabah. In 1985, Berjaya was
defeated by the PBS and Harris contrived with his former opponent, Tun
Mustapha to retain power. When he was thwarted, Harris resigned as
president of Berjaya.
Kitingan, Joseph Pairin, Datuk Seri, a leading politician and
Kadazan leader and formerly Chief Minister of Sabah, was born in Papar,
Sabah. He was educated in Sabah and Australia where he qualified as an
advocate and solicitor. He joined the Sabah State Legal Service where he
served as legal officer, and deputy public prosecutor. In 1974 he joined the
private sector and entered politics. He was a founder member and vice-
president of Berjaya. When Berjaya ousted USNO in 1975 and became the
ruling party in Sabah, Pairin Kitingan served in various ministries. As
President of the Kadazan community, he soon became disenchanted with
Harris' pro-Muslim policy and in 1985, left Berjaya and formed the Parti
Bersatu Sabah (the Sabah United Party) - PBS. The PBS won a
resounding victory in the 1985 state elections and although the leaders of
Berjaya and USNO attempted to seize power, Pairin formed the new state
government in April 1985. In fresh elections held in May 1986, the PBS
won a convincing two-thirds majority in Sabah, and Pairin also managed
to retain his leadership of the Kadazan community. In the 1990 General
Elections, Pairin Kitingan withdrew the PBS from the Barisan National
coalition and joined the national opposition headed by Mahathir's then
rival Tengku Razaleigh. He consequently lost favour with Mahathir who
had him arrested on charges of corruption. In 1994, although the PBS
narrowly won the state election, several members defected to the
222 Appendix 4
opposition, and the PBS government fell, resulting in Pairin's downfall.

Mustapha Bin Datu Harun, Tun Datu, a leading Sabah politician,
was born in Kudat. He was educated in Kudat and worked as a clerk there.
During the Japanese Occupation of Sabah, Mustapha escaped to the
Philippines to join a guerilla resistance group. Subsequently he became a
sergeant in the regular army and was attached to the secret service. In
1945, he was posted to Sabah with the rank of Captain. He was appointed
a native chief by the British and entered local politics. He served as a
member of the Legislative Council (1954), Executive Council (1956) and
in 1961, formed the United Sabah National Organization (USNO). With
the exception of a brief period when he was not president of the party,
Mustapha dominated USNO. In 1963 he was appointed Yang di Pertuan
Negara (Head of State) of Sabah. In 1967, he became Chief Minister of
Sabah with Kuala Lumpur's help because of his attempts to bring Sabah
into line with national policies. Once in power Mustapha ran Sabah as
his personal fiefdom, a feat made possible by Sabah's immense timber
resources and timber revenues. It has been alleged that he entertained
notions of separation from Malaysia and of the formation of a new nation,
consisting of Sabah and the three Philippine areas of Sulu, Mindanao and
Palawan. There were even claims that he channelled arms to Muslim
rebels in the southern Philippines. To undermine his authority, Tun
Abdul Razak, the then Prime Minister, appointed a chief of police and a
head of armed forces in Sabah who were loyal to Kuala Lumpur. When
the opposition party Berjaya gained popularity in 1975, Tun Abdul Razak
immediately accepted it as a member of the National Front. Tun
Mustapha finally resigned in October 1975, but still dominated Sabah
politics as head of USNO. After Tun Abdul Razak's death, his successor,
Hussein Onn continued to apply pressure on Tun Mustapha and was
finally rewarded by the latter's removal from power through Berjaya's
victory in the Sabah elections of April 1976. Mustapha then became a
member of the opposition. Following a three-way contest between the
Parti Bersatu Sabah (PBS), Berjaya and USNO at the 1985 state elections,
the PBS emerged victorious and Mustapha failed to form a minority
USNO-Berjaya government. Nevertheless, he contrived to take control of
Sabah (he was Chief Minister for a few hours) but was foiled in his
attempts when the High Court ruled against him. He regained favour with
the federal government under Mahathir in May 1991, and disbanded USNO
to form the Sabah UMNO chapter.
Parti Bersatu Rakyat Bumiputera Sabah. The United Bumiputera
People's Party (commonly known as Bersepadu) was registered in 1984
by expelled Berjaya Vice-president Datuk Pengiran Othman Rauf. The
party, supported mainly by Malays of Brunei origin, was committed to
preserving bumiputera interests and has no Chinese members. It was also
committed to preventing Berjaya from retaining power. At the 1985
Sabah state elections, all 37 Bersepadu candidates lost their deposits.
Appendix 4 223
During the subsequent crisis over the legitimacy of the PBS government,
Bersepadu publicly expressed support for the right of Datuk Pairin
Kitingan's PBS to replace Berjaya as the ruling party.
Parti Bersatu Sabah (PBS). The Parti Bersatu Sabah (Sabah United
Party) or PBS was founded by Datuk Joseph Pairin Kitingan , a Catholic
Kadazan lawyer who had resigned from the then ruling party Berjaya after
a disagreement with its leader Datuk Harris Salleh . The new party was
registered only 50 days before the state elections of April 1985. Pairin
succeeded in mobilising opposition to Berjaya mainly among the Chinese
and Kadazans disgruntled about what they perceived as the pro-Muslim
policies of the Harris Government. The PBS won a resounding victory in
the 1985 State Elections and although there were attempts by the leaders
of Berjaya and USNO to undermine it, formed the new state government
on 22 April with Joseph Pairin Kitingan as Chief Minister.
Subsequently, following considerable harassment from its opponents, the
party won a convincing two-thirds majority in fresh state elections in
Sabah held in May 1986 and was admitted as a member of the Barisan
Nasional coalition in June 1986. In a surprise move, the PBS withdrew
from the Barisan Nasional coalition after nomination day in the 1990
General Elections and joined forces with Tengku Razaleigh Hamzah, then
Mahathir's rival. Although the PBS narrowly won the 1994 State
Elections defection of some of its members resulted in the party conceding
defeat to an UMNO-led coalition.
Parti Bertindak Rakyat Sabah (United Sabah People's
Action Party) BERSIH. The United Sabah People's Action Party
(commonly known by the acronym Bersih which means 'clean' in Bahasa
Malaysia) was a minor Sabah-based party formed in 1983 by former
USNO leader Pandikar Amin Haji Mulia. At the 1985 Sabah state
elections, all 16 Bersih candidates lost their deposits.
Parti Cina Bersatu Sabah/Sabah Chinese Consolidated Party
(PCBS). The Sabah Chinese Consolidated Party or Parti Cina Bersatu
Sabah was a minor party which was formed in 1980. It claimed to
represent the Chinese community in Sabah. In the 1981 state elections it
joined forces with USNO and Pasok in an electoral pact to oppose the
ruling Berjaya and won one seat. However, following the resignation of
the PCBS's sole assemblyman, this seat was subsequently recaptured by
Berjaya. The PCBS decided not to contest the 1985 state elections and
instead supported Datuk Pairin Kitingan's PBS in the elections
Parti Cina Sabah/Sabah Chinese Party (PCS). The Sabah
Chinese Party was formed in 1986 as a minor party claiming to represent
the Chinese community of Sabah.
Parti Rakyat Sabah/Sabah People's Party (PRS). The Parti
Rakyat Sabah formed in early 1989, was open to all Malaysian citizens
and its founders intended to attract the Kadazans, the Malay-Muslims and
Chinese residents of Sabah. It was a multi-racial party and the party
224 Appendix 4
organisation provided for representative deputy leaders from all the

communities. It was headed by Datuk Dr. James Ongkili, who served as
Deputy Chief Minister of Sabah when Berjaya was in power. When
Berjaya lost the 1985 state elections, it became almost defunct. Most of
the party leaders were formerly Berjaya members or supporters. The party
did not win a single seat in the 1990 elections.
Pasok Momogun (Parti Kadazan Alsi Sabah). Pasok Momogun
was a revival of the United National Pasok Momogun Party first formed
in 1962 which merged with United National Kadazan Organisation
(UNKO) in 1964 to from United Pasok-Momogun Kadazan Organisation
(UPKO) and dissolved with it in 1976. It was essentially a Kadazan party
with strong Murut backing.
Pertubuhan Kebangsaan Pasok Nunukragang Bersatu
(PASOK). The National United Pasok Nunukragang Party, or Pasok as
it was usually known, was formed in 1978. It aimed at the establishment
of a Kadazan identity in Sabah politics and the preservation of Kadazan
culture. In the 1981 state elections, Pasok entered into an electoral pact
with USNO and the Sabah Chinese Consolidated Party , but lost in all
26 constituencies it contested. In the 1985 state elections Pasok managed
to win one seat, but the party's assemblyman subsequently defected to the
PBS.
Stephens, Tun Fuad/Donald, a popular politician and Kadazan
leader, was born in Kudat, Sabah. He was educated in Sabah and became a
teacher. When the Second World War broke out, Stephens left for
Singapore. He returned in 1945 and became a contractor to the Public
Works Department. In 1949, he joined the North Borneo News as the
newspaper's west coast correspondent. In 1953, he started his own paper,
The Sabah Times. Subsequently, he bought over The North Borneo News
and merged it with his own paper. He was a member of the Legislative
Council and the Executive Council and served on various committees. As
Chairman of the Kadazan Society, he founded the United National Kadazan
Organization in 1961 and served as its first president. In 1962, in
anticipation of the formation of Malaysia, he helped establish the Sabah
Alliance Party and served as chairman of the executive committee. He also
served as chairman of the Malaysian Solidarity Committee and was a joint
leader of the Sabah Team in the Inter-Governmental Committee of
Malaysia. He was a signatory to the Malaysia agreement in London.
When Malaysia was formed in 1963, Stephens became the Chief Minister
of Sabah. His insistence on special guarantees for Sabah led to his
ousting as Chief Minsiter and he was relegated to the Ministry for Sabah
Affairs and Civil Defence. In 1965 he resigned from his post and was
appointed Malaysia's ambassador to Australia. Upon his return he re-
entered Sabah politics and joined USNO . In 1975, he and other veteran
Sabah politicians formed Berjaya with the aim of defeating Tun
Mustapha and USNO. USNO was defeated in the 1976 state elections and
Appendix 4 225
Stephens became Chief Minister. His untimely death in a plane crash

shortly afterwards dealt a severe blow to Sabah society and politics.
United Sabah National Organisation (USNO). The United
Sabah National Organization (USNO) was formed in 1961 by Tun Datu
Mustapha Harun . It professed a non-communal membership policy but
was heavily dependent upon Muslim support. With the exception of a
brief period when he was not president of the party, Tun Datu Mustapha
dominated USNO. From 1967 to 1976, USNO and the Sabah Chinese
Association constituted the ruling Sabah Alliance, with Tun Datu
Mustapha Harun as Chief Minister. At the 1976 State elections, USNO
was ousted by Berjaya , a party formed by USNO dissidents. USNO
became the opposition party at State level, but joined the Barisan
Nasional coalition at the Federal level. In 1984, USNO was expelled
from the Barisan Nasional after Mustapha was accused of disloyalty to the
coalition and for opposing the federal government's acquisition of Labuan
as a Federal Territory. After a three-way contest between the Parti Bersatu
Sabah (PBS) , Berjaya and USNO at the 1985 State elections, PBS
emerged victorious and Tun Datu Mustapha Harun failed in his attempt to
form a minority USNO-Berjaya government. He was sworn in as Sabah's
Chief Minister for several hours, but the governor subsequently revoked
his commission and appointed Datuk Seri Pairin Kitingan of PBS, who
commanded the support of a majority of State assemblymen, as Chief
Minister. Tun Datu Mustapha Harun subsequently took legal action to
have his rival's appointment voided. However, the High Court ruled that
the governor had appointed Tun Datu Mustapha Harun under duress and
confirmed Datuk Seri Joseph Pairin Kitingan's appointment as Chief
Minister. USNO rejoined the Barisan Nasional in June 1986. In May
1991 USNO was disbanded to form the Sabah UMNO chapter.
Source: Amarjit Kaur, Historical Dictionary of Malaysia (New Jersey:
Scarecrow Press, 1993) pp. 31-155.
Appendix 5
Sarawak: Key Political Figures and
Parties,1963-1990
Abdul Rahman Yaakub, Tun Haji, a prominent Melanau
politician, was one of the founders of the Barisan Rakyat Jati Sarawak
(BARJASA) in 1961. BARJASA was predominantly Melanau in
membership while PANAS comprised mainly Malays. Abdul Rahman
served as federal education minister in the mid-1960s. He and his nephew,
Taib Mahmud, successfully united the Melanaus and the Malays to form
Parti Bumiputera in 1967. In 1973, Parti Bumiputera merged with the
Iban party Pesaka to form parti Pesaka Bumiputera Bersatu (PBB) with
Abdul Rahman Yaakub as Secretary-General. He became the third Chief
Minister of Sarawak and his ascendancy marked the end of Iban leadership
in the State. His main objective was to create a 'rich bumiputera group'
which could underwrite native political activity and dominance. In 1981
he relinquished power in favour of his nephew Taib Mahmud who became
the fourth Chief Minister. Abdul Rahman Yaakub was then appointed
Governor of Sarawak, a position which he later found untenable. In the
mid-1980s he attempted to unseat his nephew but failed and since then his
political power and role has been eroded.
Abdul Taib Bin Mahmud, Datuk Patinggi Haji, the Chief
Minister of Sarawak since 1981 was born in Miri, Sarawak . He was
educated in Sarawak and Australia where he obtained a law degree. Upon
his return, he served in the State Legal Department from 1961-63. He
also served on the State and Supreme Councils. He then joined the
Barisan Rakyat Jati Sarawak and became vice-chairman. From 1963-70 he
served in the Sarawak government administration in a variety of posts. In
1970 he was appointed first as deputy minister and later became a full
minister in the federal government. He held a number of different
portfolios, including that of defence. Following a crisis in the Sarawak
government, he returned to Sarawak and assumed the presidency of the
Parti Pesaka Bumiputera Bersatu (PBB) which was a merger between his
own party, the Muslim-based Parti Bumiputera and the Iban-based Parti
Pesaka. The PBB won the state elections and he became Chief Minister of
Sarawak in 1981, a post he has held since then.
Barisan Rakyat Jati (Barjasa), Barisan Rakyat Jati Sarawak, the
second Malay party, was formed in 1961. The formation of BARJASA
reflected divisions within the Malay community; BARJASA was anti-
cession, favouring the status quo of Sarawak as a British Crown Colony,
while PANAS was in favour of Sarawak's independence from Britain.
Among the prominent leaders of the party were Tuanku Bujang, its
founder President, Taib Mahmud, Rahman Yaakub and Abang Han Abang
226
Appendix 5 227
Ahmad. In 1967, it merged with the other Muslim party, PANAS, to

form Parti Bumiputera, the back-bone of the Alliance governments formed
after the 1970 and 1974 state general elections.
Moggie, Leo, Anak Irok, Datuk, a popular Sarawak politician and
Dayak leader, was born in Kanowit, Sarawak and educated in Sarawak,
New Zealand and the USA. He served as assistant district officer and
subsequently district officer for the Kapit region. He was appointed
Director of the Borneo Literature Bureau and later became the Deputy
General Manager of the Borneo Development Corporation. He then left
government service and joined the Sarawak National Party (SNAP). He
contested the state seat of Machan and the parliamentary seat of Kanowit
in 1974, won both seats, and served in the Sarawak State Government. In
1978, he was appointed to the Malaysian cabinet as Minister of Energy,
Telecommunications and Posts. Moggie was dissatisfied with SNAP, and
following a crisis in the party in 1983, left the party to form the Parti
Bansa Dayak Sarawak (PBDS) . The PBDS joined the Barisan Nasional
coalition in 1984. In 1989, Moggie became Minister for Works and Posts
in the Malaysian Cabinet, but was subsequently appointed to another
ministry.
Parti Bansa Dayak Sarawak (PBDS). The Parti Bansa Dayak
Sarawak (Sarawak Dayak Party) or PBDS was formed in 1983 under the
leadership of Datuk Leo Moggie after he and a number of his supporters
left the Sarawak National Party following an internal factional dispute. It
is a communal party orientated towards the Dayak community. In the
1983 Sarawak state elections the party won 6 out of the 14 seats it
contested and in 1984, it formally joined the Barisan Nasional coalition.
In the 1987 Sarawak elections, the PBDS won 15 of the 48 state seats.
Since then its popularity has declined.
Parti Bumiputera (Bumiputera). Parti Bumiputera was formed in
1967 from the merger of the Melanau-dominated BERJASA and the
Malay-dominated PANAS. The prominent leaders of BERJASA, Rahman
Yaakub and Taib Mahmud, went on to dominate the leadership of the
newly-founded BUMIPUTERA.
Parti Bumiputera Bersatu (PBB). The Parti Pesaka Bumiputera
Bersatu (PBB) was formed in 1973 following the merger of the Iban-based
Parti Pesaka and the Muslim-supported Parti Bumiputera. The Party is
dominated by its Muslim wing which has resulted in a significant loss of
Iban support for the PBB. It is the dominant party in Sarawak and its
leader, Datuk Patinggi Haji Abdul Taib Mahmud, is the current Chief
Minister of the state. It is also a member of the Barisan Nasional
coalition. In the 1983 state elections, the PBB won 19 of the 48 seats in
the Council Negeri (State Assembly). It is the senior component in the
state ruling coalition which also includes the Sarawak United People's
Party (SUPP) and the Sarawak National Party (SNAP) . The Parti Bansa
Dayak Sarawak (PBDS) was also a member of the ruling coalition but
228 Appendix 5
was expelled in 1987.

Parti Buruh Sarawak (Sarawak United Labour Party) Plus.
The Sarawak United Labour Party was a minor Sarawakian party based in
Sibu and was founded in 1985.
Parti Negara Sarawak (PANAS). Parti Negara Sarawak was formed
on 9 April 1960. The party grew partly out of the perceived need to unite
the Sarawak natives in order to protect them against the growing influence
of the SUPP, and partly as a response to the anti-cession movement;
PANAS was in favour of Sarawak's independence from Britain. Although
a multi-ethnic party, it was dominated by the Malay Abangs (aristocrats):
Abang Mustapha was its founder President, while his brother, Abang
Othman, was the Secretary-General. In 1967, it merged with BARJASA
to form Parti Bumiputera.
Parti Pesaka Anak Sarawak (PESAKA). The Parti Pesaka Anak
Sarawak was formed in 1962 to unite the Rajang Ibans who were not
adequately represented in SNAP. It was led by Temenggong Jugah, who
was then the PANAS Vice-President; he had to be persuaded to leave
PANAS and lead the party as its founder President. PESAKA was one of
the component parties in the first state Alliance party system; it provided
the candidate for the Chief Ministership after the removal of Stephen
Kalong Ningkan in 1966. In 1973, it merged with BUMIPUTERA to
form the Parti Pesaka Bumiputera Bersatu (PBB).
Sarawak Alliance. The Sarawak Alliance, the state component of the
National Alliance, emerged form the transformation of the Sarawak United
Front and consisted initially of SNAP, PERSAKA, BARJASA, PANAS
and SCA. Until the Alliance party system was restyled Barisan Nasional
in 1976, it has provided Sarawak with its first three Chief Ministers;
Stephen Kalong Ningkan (SNAP), Penghulu Tawi Sli (PESAKA) and
Rahman Yaakub (BUMIPUTERA).
Sarawak Chinese Association (SCA). The Sarawak Chinese
Association was formed in 1962 as a result of the perceived need for an
alternative party for the Chinese who did not support the SUPP. The
SUPP was regarded as too left-wing and it was felt that a moderate
alternative acceptable to the government should represent the Chinese in
the coalition government. With the formation of the Alliance, SCA
represented the Chinese in government, although it received considerably
less Chinese support than the SUPP. It was dissolved in 1974 and most
of its members joined the SUPP.
Sarawak National Party (SNAP). The Sarawak National Party
(SNAP) was formed in 1961 as a party open to membership from all
ethnic groups, although its supporters were largely Ibans with some
Chinese participation. In its early years, SNAP sought to win electoral
support as the protector of state rights against encroachments by the
Federal Government. The Party provided the chief minister and deputy
chief minister for the 1963-66 period. After its leader, Datuk Stephen
Appendix 5 229
Kalong Ningkan, was toppled as Chief Minister in 1966 through the use
of federal emergency powers, SNAP became an active opposition party at
both the state and federal levels. In the 1974 General Elections, SNAP
won 18 of the 48 State Assembly seats and 8 Federal seats, thereby
demonstrating its significant electoral following. It joined the Barisan
Nasional in 1976. In 1983, internal bickering and factionalism within
SNAP resulted in the establishment of a new party, the Echinacea
purpurea led by Datuk Leo Moggie, which won 6 seats from SNAP at the
subsequent state elections. Its power base was eroded when most of the
Iban leaders left the party. SNAP is currently a component of the Sarawak
state ruling coalition together with Parti Pesaka Bumiputera Bersatu and
Sarawak United Berjasa Party.
Sarawak United Peopled Party (SUPP). The Sarawak United
People's Party was formed in 1959 on a non-communal, 'socialist'
platform. It was a multi-racial party whose membership was largely
Chinese-based. SUPP was one of the first opposition parties in Malaysia
to negotiate an accommodation with the Alliance government in the
period after the 1969 General Elections. Following a state-level coalition
with the Sarawak Alliance in 1971, SUPP pledged the support of its MPs
for the Federal Government. In return its President Ong Kee Hui became
the first non-Alliance member of the Federal Cabinet. When the Barisan
Nasional was created SUPP became a founder-member. It is currently a
component party of the ruling coalition at both state and federal levels. In
the 1982 Federal General Elections, SUPP won 5 seats. At the Sarawak
State elections in the following year, SUPP WON 11 of the 48 seats in
the Council Negeri (State Assembly). Its current leader is Datuk Amar
Stephen Yong Kuat Tze.
Source: Amarjit Kaur, Historical Dictionary of Malaysia (New Jersey:
Scarecrow Press, 1993) pp. 26-139; Jayum A. Jawan, The Iban
Factor in Sarawak Politics (Serdang, Malaysia: Agricultural
University Press, 1993) pp.75-6.
Notes
Chapter I The Historical Setting
1 See Graham Irwin, Nineteenth Century Borneo: A Study in Diplomatic

Rivalry (Singapore: Donald Moore, 1955; reprinted Singapore: Graham
Brash, 1969) pp. 50-8; L.W. Wright, The Origins of British Borneo
(Hong Kong: Hong Kong University Press, 1970; reprinted 1988)
pp. 1-29.
2 The story of how James Brooke established his kingdom has been
recounted elsewhere and will not be dealt with here. The main works on
the subject are, Spenser St. John, The Life of Sir James Brooke, Rajah of
Sarawak (London: William Blackwood and Sons, 1879); S. Baring-Gould
and C.A. Bampfylde, Sarawak Under its Two White Rajahs, 1839-1908
(London: Sotheran, 1909; reprinted Singapore: Oxford University Press,
1989); Steven Runciman, The White Rajahs (Cambridge: Cambridge
University Press, 1960); Robert Pringle, Rajahs and Rebels: The Ibans
of Sarawak Under Brooke Rule, 1841-1941 (London: Macmillan, 1970);
Nicholas Tarling, Britain, the Brookes and Brunei (London: Robert
Hale, 1960).
3 See K.G. Tregonning, 'American Activity in North Borneo, 1865-81',
The Pacific History Review, 23, 4 (November 1954): 357-72.
4 The deeds of cession of all territories which eventually constituted the
territory of the Chartered Company are to be found in CO. 874/17-23,
36-40, 43-55.
5 For a more detailed account of the Company's establishment, see K.G.
Tregonning, A History of Modern Sabah (North Borneo) 1881-1962
(Singapore: University of Malaya Press, 1965), pp. 13-45. See also Ian
Black, A Gambling Style of Government (Kuala Lumpur: Oxford
University Press, 1983) ch. 2.
6 Early Brooke administration was characterised by wars to put down
'rebellions' in the interior. This practice of quelling Iban unrest with
punitive expeditions, manned by down-river Iban warriors (which was
continued as late as 1935) stimulated and prolonged inter-Iban warfare,
head-hunting and the related migration syndrome. See Robert Pringle,
Rajahs and Rebels.
7 The term 'Division' has been used in conformity with the practice in the
written sources. In 1973, two additional Divisions were created out of
the Third Division - the Sixth Division to cover the Sarikei area, and the
Seventh Division to include the Kapit district. All the Divisions were
again renamed in 1987 as the Kuching, Samarahan, Sri Aman, Sarikei,
Sibu, Kapit, Bintulu, Miri, and Limbang Divisions.
8 Robert Pringle, Rajahs and Rebels, pp. 135-77; Robert Pringle, 'The
Brookes of Sarawak: Reformers in spite of themselves', Sarawak
Museum Journal, 19, 38-39 (new series) (July-Dec. 1971): 65-69.
230
Notes 231
9 See Ian Black, A Gambling Style of Government, chs 1-2.

10 With the opening up of more settlements notably in the East Coast and
the Interior, two other Junior Residencies were established with
headquarters at Tawau and Keningau respectively. By 1922, with the
creation of Kudat Residency, the number had risen to five Residencies.
(In 1929, Kudat was merged with Sandakan Residency).
11 There were altogether ten Provinces, namely Alcock, Clarke, Cunliffe,
Dent, Dewhurst, Elphinestone, Keppel, Martin, Mayne and Myburgh.
12 The Provinces later became Districts and as a result the alien names of
the Provinces were also altered to those based on principal towns or
villages. See Owen Rutter, British North Borneo. An Account of its
History, Resources and Native Tribes (London: Constable and Co.,
1922) pp. 149-63; and Charles Bruce, Twenty Years in Borneo (London:
Cassell and Co., 1924) pp. 46-59 for an interesting account of early
administration.
13 D.S. Ranjit Singh, 'The Development of Native Administration in
Sabah,' in Anwar Sullivan and Cecilia Leong (eds), Commemorative
History of Sabah, 1881-1981 (Kota Kinabalu: Sabah State Government,
1981) pp. 81-116.
14 See Ian Black, A Gambling Style of Government, ch. 3.
15 See Amarjit Kaur, 'Hantu and Highway: Transport in Sabah 1881-1963',
Modern Asian Studies, 28, 1 (1994) pp. 18-31.
Chapter 2 Patterns of Settlement and Production
1 Tom Harrisson, 'Explorations in Central Borneo', Geographical

Journal, 114 (1949) p. 133.
2 See for example, Francis Jana Lian, 'On Threatened Peoples' in Harold
Brookfield and Yvonne Byron (eds), South-East Asia's Environmental
Future: The Search for Sustainability (Kuala Lumpur: Oxford University
Press, 1993): 322-37.
3 Useful summaries of the research carried out in Sabah and Sarawak since
the Second World War may be found in G.N. Appell (ed.), Studies in
Borneo Societies: Social Process and Anthropological Explanation
(Dekalb: Northern Illinois University, Centre for Southeast Asian
Studies, 1976); G.N. Appell (ed.), The Societies of Borneo:
Explorations in the Theory of Cognatic Social Structures (Washington
D.C.: American Anthropological Association, 1976); Victor T. King
(ed.), Essays on Borneo Societies (Oxford: Oxford University Press,
1978); Sherwood Galen Lingenfelter (ed.), Social Organisation of Sabah
Society: Studies From Six Societies, Bonggi, Idaan, Lotud, Makiang,
Tagal, Timugon (Kota Kinabalu: Sabah Museum and State Archives
Department, 1990).
4 Dutch and German Scholars use the word 'Dayak' to include all non-
Muslim indigenes while British writers use it in a more restricted sense
to denote the Land Dayak (Bidayuh) and the Sea Dayak (Iban).
5 For detailed studies, see Charles Hose, 'The Natives of Borneo', Journal
232 Notes
of the Royal Anthropological Institute, 23 (1893); Victor T. King (ed.),

Essays on Borneo Societies, pp. 156-72; H. Ling Roth, The Natives of
Sarawak and British North Borneo, 2 vols (London: Truslove and
Hanson, 1896); and J.Rousseau, Central Borneo: Ethnic Identity and
Social Life in a Stratified Society (Oxford: Clarendon Press, 1990).
6 James C. Jackson, Sarawak: A Geographical Survey of a Developing
State (London: University of London Press, 1968) p. 39.
7 S. Baring-Gould and C.A. Bampfylde, A History of Sarawak Under Its
Two White Rajahs, 1839-1905, p. 188; Jackson quotes a figure of 416
000 (estimated) in 1908, J.C. Jackson, Sarawak, p. 39. See also
J.L. Noake, The Growth of the Population of Sarawak, in Sarawak:
Report on the Census of Population 1960 (Kuching: Government
Printer, 1962) p. 319-24; L.W. Jones, The Population of Borneo
(London: Athlone Press, 1966).
8 British North Borneo Gazette, 1910, p. 16.
9 See sections below on tobacco cultivation. See also Amarjit Kaur,
'Hantu and Highway: Transport in Sabah 1881-1963', Modern Asian
Studies, 28:1 (1994), p. 16, 29; British North Borneo Herald, April
1901; Memorandum on Coffee, Cocoa and Tropical Products in British
North Borneo (London: William Brown and Co., 1890) pp. 7-8 (encl. in
NBCA File #1423).
10 Lee Yong Leng, 'The Chinese in Sabah (North Borneo)', Erdkunde, 19
(1965) pp. 308-9.
11 Craig Lockard, 'Chinese Immigration into Sarawak 1868-1917', (MA
Thesis, University of Hawaii) 1967, p. 69.
12 Lee Yong Leng, Population and Settlement in Sarawak (Singapore:
Donald Moore for Asia Pacific Press, 1970) Table 12, p. 110.
Chapter 3 Formation of an Export Economy

1 See John Ingleson, Expanding the Empire: James Brooke and the
Sarawak Lobby, 1839-1868, Research Paper No. 2 (University of
Western Australia: Centre for South and Southeast Asian Studies, 1979)
pp. 4 5 - 8 .
2 See Daniel Chew, Chinese Pioneers on the Sarawak Frontier 1841-1941
(Singapore: Oxford University Press, 1990) pp. 18-29, 37-8.
3 For an interesting account of James falling out with Henry Wise, see
J. Ingleson, Expanding the Empire, pp. 73-84.
4 Henry Longhurst, The Borneo Story. The First Hundred Years of the
Borneo Company Limited (London: Newman Neame, 1956) p. 18. See
also Ludvig Verner Helms, Pioneering in the Far East and Journeys to
California in 1849 and to the White Sea in 1878 (London: W.H. Allen
and Co., 1882), pp. 129-34; and Spenser St. John, Rajah Brooke: The
Englishman as Ruler of an Eastern State (London: T. Fisher Unwin,
1899) p. 211.
5 In 1879, the Borneo Company was given the monopoly of using quartz
machinery and prospecting for gold for a period of fifteen years.
Notes 233
H.H. The Rajah's Order Book 1863-1890, p. 211 (Sarawak State

Archives).
6 See G.E. Wilford, The Geology and Mining Resources of the Kuching-
Ludu Area, West Sarawak, including the Bau Mining District, , Memoir
No. 3 (Kuching: Geological Survey Department, British Territories in
Borneo, 1955) pp. 101-02. See also N.A. Lucas, 'The Production of
Gold in Sarawak', Sarawak Gazette, 1 February 1949; 'Mining in Upper
Sarawak', Sarawak Gazette, 1 April 1922.
7 N.A. Lucas, 'The Production of Gold in Sarawak'.
8 See, for example, Sarawak Gazette, 1 November 1932; G.E. Wilford,
'The Bau Goldfield', Sarawak Gazette, 30 April 1962.
9 E. Parnell, 'Sarawak - Its resources and Trade', Sarawak Gazette, 1 June
1923.
10 H. Longurst, The Borneo Story, p. 57.
11 Sarawak Gazette, 16 September 1872.
1 2 H. Longurst, The Borneo Story, p. 59.
1 3 Charles paid £25 000 for the concession, Annual Report Sarawak 1951,
p. 26.
14 Annual Report Sarawak 1951, p. 26.
15 Agreement Book, Vol. 3, January 1902-July 1909, pp. 210-11. One of
the clauses in the concession stipulated that a certain amount of oil was
to be stored for the use of the British Navy. See Charles Hose, Fifty
Years of Romance and Research or a Jungle-Wallah at Large (London:
Hutchinson & Co., 1927) p. 235. Hose was offered a considerable sum of
money for his services, but refused this in return for a royalty on the
production which gave him a significant source of revenue for many
years. G.C. Harper, 'The Miri Field 1910-1972', Sarawak Museum
Journal, 10, 17-18 (new series) (July-Dec. 1961), p. 23. See also
Sarawak Shell, The Miri Story (Lutong: Sarawak Shell, 1978).
16 H. Longhurst, The Borneo Story, p. 113. See also Stephanie Jones, Two
Centuries of Overseas Trading: The Origins and Growth of the Inchcape
Group (London: Macmillan, 1986) pp. 203-4.
1 7 Sarawak Oilfields was also a subsidiary of Royal Dutch Shell, Sarawak
Gazette, 1 October 1921.
18 Annual Report Sarawak, 1960, pp. 80-81; see also Sarawak Shell, The
Miri Story.
19 F.W. Rowe, 'Extracts from a Report on British Borneo Petroleum
Production, Resources and Industry', Sarawak Gazette, 31 July 1958;
G.C. Harper, 'The Miri Field', p. 28.
20 F.H. Rowe, 'Extracts from a Report on British North Borneo Petroleum
Production, Resources and Industry'; E. Parnell, 'Sarawak - Its Resources
and Trade'.
2 1 See Colin Crisswell, Rajah Charles Brooke, Monarch of All He Surveyed
(Kuala Lumpur: Oxford University Press, 1978) p. 216. Nonetheless,
Sarawak Oilfields reigned supreme in Miri. See E.H. Digby, Lawyer in
the Wilderness, Data Paper No. 114, Southeast Asia Program (Ithaca,
New York: Cornell University Press, 1980) pp. 5-6.
234 Notes
22 K.G. Tregonning, A History of Modern Sabah (North Borneo 1881-

1963) (Singapore: University of Malaya Press, 1965) pp. 9 6 - 9 7 ;
Handbook of the State of North Borneo, 1890, pp. 88-90; Handbook of
the State of North Borneo, 1934, pp. 83-4.
23 Dorani Johari, 'Coal Resources of Malaysia', in Geological Survey of
Malaysia, Dialogue Sessions of the Geological Survey of Malaysia with
the Private Sector, Sarawak and Sabah, 6 December 1994, Kuching
(Kuching: Geological Survey of Malaysia, Sarawak, 1995) p. 85. The
original mine was opened in 1846. It was taken over by British interests
twenty years later. E.W. Ellison, 'North Borneo: Reconstruction and
Development Plan for North Borneo 1 9 4 8 - 5 5 ' (Jesselton, 1948,
typescript) p. 76. Acrimonous disputes between the Chartered Company
and the coal company led to the absorption of Labuan into the Straits
Settlements in 1906. K.G. Tregonning, A History of Modem Sabah,
pp. 9 7 - 8 .
24 Dorani Johari, 'Coal Resources of Malaysia', p. 85. See also E.W.
Ellison, 'North Borneo: Reconstruction and Development Plan', p. 77;
Tregonning, A History of Modern Sabah, pp. 98-9.
25 Tregonning, A History of Modem Sabah, pp. 98-9.
26 E.W. Ellison, 'North Borneo: Reconstruction and Development Plan',
p. 76; Tregonning, A History of Modern Sabah, pp. 9 8 - 9 .
27 Tregonning, A History of Modern Sabah, pp. 9 9 - 1 0 1 .
28 See A.F. Porter, Land Administration in Sarawak (Kuching: Sarawak
Government Printer, 1967); Benedict Sandin, Iban Adat and Augury
(Penang: Penerbit Universiti Sains Malaysia, 1980); Derek Freeman,
Iban Agriculture: A Report on the Shifting cultivation of hill rice by the
Iban of Sarawak (London: HMSO, 1955); Ian Black, A Gambling Style
of Government, pp. 215-18; Sabah State Archives, File #248, Shifting
Cultivation, 1913-35; File #1356, Settlement of Native Lands.
29 William M. Crocker to Sir Rutherford Alcock, Report on British North
Borneo, 1 November 1887, appendix, Handbook of British North
Borneo 1890, p. 171.
30 Sabah State Archives, File #1428. See also Ian Black, A Gambling Style
of Government, p. 60; K.G. Tregonning, Under Chartered Company Rule
(North Borneo 1881-1946) (Singapore: Oxford University Press, 1958)
p. 119.
31 In general land which came into the following categories could not be
alienated and sold to Europeans:
1 Land under 'customary tenure' (broadly, land under sedentary or
shifting cultivation which had long been associated with a
particular ethnic group).
2 Land planted with fruit trees.
3 Land containing assorted fruit trees which were harvested by a
community. This applied particularly to trees such as the
durian, ramsuran and jackfruit.
4 Grazing lands.
5 Land which had been cultivated or built upon in the last three
years.
6 Land with a particular sacred significance, for example, burial
sites.
Notes 235
See M.C. Cleary, 'Plantation Agriculture and the Formulation of Native

Land Rights in British North Borneo 1880-1930', The Geographical
Journal, 158, 2 (July 1992) 172-4.
32 The felling of primary jungle and secondary jungle of more than five to
six years' standing was prohibited, unless a fee of 50c per acre was paid.
The headmen were responsible for collectin g the fees, and stood to be
fined for every acre felled without permit. See Ian Black, A Gambling
Style of Government, pp. 218-19.
33 ibid, pp. 217-18.
34 Cited in Porter, Land Administration in Sarawak, p. 39.
35 'Native Customary Law' (Excerpted from the newsletter of the Society
for Christian Service), Borneo Research Bulletin, 22, 1 (April 1990):
48-53.
36 Land was divided into five categories: mixed zone land; native area land;
native customary land; reserved land; and interior area land. Only the
first two categories could be held under title and the Chinese could only
own or occupy land under the first category. See also 'Native Customary
Law', p. 51; Evelyne Hong, Natives of Sarawak: Survival in Borneo's
Vanishing Forests (Penang: Institut Masyaraket, 1987) p. 43.
37 In 1939, the position of native Customary Law was formalised. In each
community, the village councils were appointed to act on native land
tenure and inheritance only. Village boundaries were defined and not
demarcated and thus became native Communal Reserves. No additions
were allowed without permission from the District Officer. Circular
No. 12/1939 on Native Customary Tenure, cited in 'Native Customary
Law', p. 51. For a more detailed treatment of the land laws , see A.F.
Porter, Land Administration in Sarawak and Evelyne Hong, Natives of
Sarawak, ch. 4.
38 For a fuller explanation of the Torrens land tenure system used in the
Malay States and which provided the basis for the land tenure systems in
Sabah and Sarawak, see Sudhir Kumar Das, The Torrens System in
Malaya (Singapore: Malayan Law Journal, 1963); David Wong, Tenure
and Land Dealings in the Malay States (Singapore: Singapore University
Press, 1975).
39 See for example, Derek Freeman, Iban Agriculture: A Report on the
Shifting Cultivation of Rice by the Iban of Sarawak (London: HMSO,
1955); J. Rousseau, 'Kayan Agriculture', Sarawak Museum Journal, 25
(1977): 129-56; R.A. Cramb and J. Dian, National Extension Project
Baseline Studies (Kuching: Department of Agriculture, 1979); M.C.
Cleary and Peter Eaton, Borneo: Change and Development (Singapore:
Oxford University Press, 1992). See below the section on land settlment
schemes.
40 Ian Black, A Gambling Style of Government, pp. 130-31. The import
duty was 20c per pikul.
41 See MacFadzean's Report on North Borneo, encl. in CO. 531/31/1, File
#167817, p. 7.
42 ibid., p. 140. This does not imply regular cultivation; often two or three
year fallows were observed between consecutive crops.
236 Notes
43 See Robert Pringle, Rajahs and Rebels: The Ibans of Sarawak under
Brooke Rule, pp. 117-25.
44 Henry Longhurst, The Borneo Story: The First Hundred Years of the
Borneo Company Limited, pp. 60-61.
45 The Melanaus chopped the sago logs with a small wooden adze. The
Borneo Company used steam engines to turn a nail studded drum for
rasping the sago logs and mechanically shook the pith on trays flooded
with water. After the Borneo Company gave up producing the flour the
Chinese used a long nail studded plane to replace the adze formerly used
to shed the sago palm to pith from which to extract the flour.
46 S. Baring-Gould and C.A. Bampfylde, A History of Sarawak under its
Two White Rajahs, 1839-1908, p. 431. See also Spenser St. John,
Rajah Brooke: The Englishman as Ruler of an Eastern State, pp. 211-
12; Sarawak Gazette, 1 August 1923. For a detailed study of the sago
industry, see H.S. Morris, Report on a Melanau Sago Producing
Community in Sarawak (London: HMSO, 1953); H.S. Morris, 'The
Decline of an Aristocracy: Economic and Political Change in Sarawak'
in William A. Shack and Percy S. Cohen (eds), Politics in Leadership. A
Comparative Perspective (Oxford: Clarendon Press, 1979) pp. 221-43.
47 Great Britian, Colonial Office, An Economic Survey of the Colonial
Territories, Vol. 5, p. 141.
48 See, for example, British North Borneo Company Agreement with Baron
von Stein, 31 December 1886 (CO. 874/62A); W.H. Treacher, 'British
Borneo: Sketches of Brunei, Sarawak, Labuan and North Borneo',
Journal of the Straits Branch, Royal Asiatic Society, 21 (June 1890) 82.
49 The lease conditions noted that 'should the cultivation prove successful,
the Concessionaire shall find capital to plant tobacco on a large scale
and be given the option of acquiring 15 000 acres of additional land',
(CO 874/5).
50 All mineral rights as well as rights of navigation remained vested in the
administration. The Company also reserved access to jungle products
such as rattans and birds' nests.
51 For an account of tobacco cultivation in North Borneo, see David H.
John and James C. Jackson, 'The Tobacco Industry of North Borneo: A
Distinctive Form of Plantation Agriculture', Journal of Southeast Asian
Studies, Vol. IV, No. 1 (1973): 88-106. See also British North Borneo
Herald, June 1929 (The Borneo Planter of Yore'); L.W.W. Gudgeon,
British North Borneo (London: Adam and Charles Black, 1913)
pp. 46-58; K.G. Tregonning, A History of Modern Sabah, pp. 85-88;
Annual Report North Borneo, 1929, p. 7, CO 874/59A.
52 In the Federated Malay States, rubber producers were liable to a 2.5 per
cent duty on gross value, see Voon Phin Keong, Western Rubber
Planting Enterprise in Southeast Asia (Kuala Lumpur: University of
Malaya Press, 1979) p. 145; see also pp. 108-14.
53 North Borneo Rubber Commission, Report of the North Borneo Rubber
Commission (Singapore: Government Printer, 1949) p. 4.
54 Amarjit Kaur, "Hantu and Highway: Transport in Sabah 1881-1963', 27.
Notes 237

Commission, p. 4. The following statistics were compiled by the
Rubber Commission:
Holdings over Holdings under
100 acres 100 acres Total
Planted up to 1924 49 442 13 848 63 290
Planted after 1924 21 426 41 924 63 350
New Plantings 1939- 3 322 3010 6332
132972
56 The royalty was on a sliding scale rising from 0.5 per cent of the value
of the rubber when the price was under 30 cents (8s. 4d.) per lb. A rebate
of royalty was made when the price was under 20 cents (5s. 6d.) per lb.,
provided such rebate was claimed within three months of export.
Handbook of the State of North Borneo, 1934, p. 69.
57 See Amarjit Kaur, 'Hantu and Highway: Transport in Sabah', 29-31.
Commission, p. 4.
59 ibid., p. 9.
60 North Borneo Administration Report, 1929, p. 6; 1934, p. 6.
61 Great Britain Colonial Office, An Economic Survey of the Empire,
Vol. 5, p. 120; see also D.H. Urquhart, British North Borneo: A Review
of the Colony with special reference to Agricultural Development and
Opportunities for Investment in Agricultural Enterprise (Bournville, UK:
Cadbury Brothers Ltd, 1959) p. 17.
62 Order of 3 January 1876, cited in H.F. Porter, Land Administration in
Sarawak, pp. 38-9.
63 See H. Longhurst, The Borneo Story, p. 65; see also W.H. Treacher,
'British Borneo: Sketches of Brunei, Sarawak, Labuan and North
Borneo', Journal of the Straits Branch of the Asiatic Society, 21 (June
1890): 25-28. S. Baring-Gould and C.A. Bampfylde, A History of
Sarawak, pp. 431-36; D. Chew, Chinese Pioneers on the Sarawak
Frontier, 1841-1941, pp. 44-7.
64 See G. Dalton, 'Pepper growing in Upper Sarawak', Sarawak Museum
Journal, 1, 2 (1912) 55. See also James C. Jackson, Sarawak: A
Geographical Survey of a Developing State (London: University of
London Press, 1968) pp. 98-104.
65 See E. Hose, 'Notes from the Old Days', Sarawak Museum Journal, 10,
17-18 new series (1961) 108-10; R.E. Tremeer, 'The Early History of
Rubber Planting in Sarawak, 1880-1910', Sarawak Gazette, 21 March
1964.
66 James Brooke to F.C. Johnson, June 1848, cited in N. Tarling, The
Burthen, The Risk and The Glory: A Biography of James Brooke (Kuala
Lumpur: Oxford University Press, 1982) p. 115. See also R.E. Tremeer,
'The Early History of Rubber Planting in Sarawak 1880-1910'.
67 Sarawak Gazette, 16 August 1909 and 1 October 1909; A.F. Porter, Land
Administration in Sarawak, p. 47; Annual Report Sarawak, 1951, p. 29.
238 Notes
68 Robert Pringle, Rajahs and Rebels, pp. 203-05; Sarawak

Administration Report 1935, p. vi.
69 R.A. Cramb, 'The Impact of the Japanese Occupation on Agricultural
Development in Sarawak.' (University of Queensland Agricultural
Economics Discussion Paper, 1993) p. 17.
70 See, for example, Annual Report, Department of Trade and Customs,
1926, pp. 1-3.
71 Editorial, Sarawak Gazette, 1 December 1887.
72 E. Parnell, 'Sarawak - Its Resources and trade', Sarawak Gazette, 1 June
1923.
73 The detailed rubber census undertaken in 1938 showed that all 'natives'
including Muslims and pagans, owned 76,940 rubber holdings, totalling
101 000 acres while non-natives (Chinese and Europeans) owned 17 910
holdings, totalling 127 000 acres. Only 5 per cent of Sarawak's total
rubber acreage was held by large estates. Sarawak, Report on the Rubber
Survey and Assessment (Kuching: Government Printer, 1938),
Appendix D, cited in R. Pringle, Rajahs and Rebels, p. 338.
74 Annual Report, Department of Trade and Customs, 1926, p. 3.
75 T.C. Martine, 'History of Borneo Company Limited' from 'Notes written
to me when in Singapore (Changi Gaol) 1943-44'. Some of the
Residents and District Officers were opposed to participation in the
scheme. See E.H. Digby, Lawyer in the Wilderness, p. 32.
76 Sarawak Gazette, 1 June 1934.
77 See Daniel Chew, Chinese Pioneers on the Sarawak Frontier, pp. 173—
74.
78 E.H. Digby, Lawyer in the Wilderness, p. 32; see also Sarawak Gazette,
2 May 1938.
79 Sarawak Gazette, 2 May 1938.
80 See Robert Reece, The Name of Brooke: The End of White Rajah Rule in
Sarawak (Kuala Lumpur: Oxford University Press, 1982) pp. 54-57.
81 For a further discussion of this subject, see Amarjit Kaur, 'The Babbling
Brookes: Economic Change in Sarawak 1841-1941', Modem Asian
Studies, 29, 1 (1995): 65-109.
82 According to one informant from the Skarang district in the Second
Division, her father employed about twelve Chinese tappers on his
rubber gardens in the 1950s. He was then able to send his children to
mission schools in Kuching. For a detailed study on the
commercialisation of Iban agriculture see Robert Cramb, 'The
Commercialization of Iban Agriculture' in R.A. Cramb and R.H.W.
Reece (eds), Development in Sarawak: Historical and Contemporary
Perspectives (Monash: Centre for Southeast Asian Studies, 1988)
pp. 105-34.
83 See, for example, F.L. Dunn, Rainforest Collectors and Traders: A Study
of the Resource Utilization in Modern and Ancient Malaya (Kuala
Lumpur: MBRAS Monograph, 1975); Wang Gungwu, 'The Nanhai Trade:
A study of the early history of Chinese trade in the South China Sea',
JMBRAS, 31, 2 (1958): 1-135; P. Wheatley, Impressions of the Malay
Peninsula in Ancient Times (Singapore: Eastern Universities Press,
Notes 239
1964); O.W. Wolters, Early Indonesian Commerce (Ithaca, N.Y.:

Cornell University Press, 1967).
84 F.W. Burbidge, The Gardens of the Sun. A Naturalist's Journal of Borneo
and the Sulu Archipelago (Singapore: Oxford University Press, 1991) p.
68.
85 S. Baring-Gould and C.A. Bampfylde, A History of Sarawak under Two
White Rajahs: 1839-1908, p. 376. [First published in 1909]
86 Amarjit Kaur, 'The Babbling Brookes: Economic Change in Sarawak,
1841-1941', p. 94.
87 K.G. Tregonning, A History of Modern Sabah 1881-1963, p. 84.
88 Handbook of the State of North Borneo, 1920, p. 59. Between 1852-53,
some 26 per cent of all the trade between Borneo and Singapore was
made up of just two products, sago and gutta percha. By 1865-66, the
figure for these two products was 56 per cent. Wong Lin Ken, 'The Trade
of Singapore 1819-1869', JMBRAS, 33, 4 (1960) 90-1; 220-1.
89 H.G. Keith, Forestry in the State of North Borneo: A statement prepared
for the Fourth British Empire Forestry Conference (South Africa) 1935
(Sandakan: Conservator of Forests, 1935) p. 12.
90 For a detailed account of the types of timber, see D.M. Matthews, British
North Borneo Forests, Opportunities for Lumber Investment, Forestry
Department, Bulletin No. 2 (Sandakan: Government Printer, 1910); H.G.
Keith, The Timbers of North Borneo, Bulletin No. 1 (Sandakan:
Government Printer, 1954).
91 Memoranda presented to the general council by order of H.H. the Rajah,
Kuching, Sarawak, 17 October 1927, Supplement to the Sarawak
Gazette, 1 November 1927, p. viii.
92 Sarawak Annual Report 1951, p. 5.
93 Memoranda presented ... by Order of H.H. the Rajah, 17 October 1927,
p. vi.
94 Annual Report Forest Department, Sarawak, 1939, p. 1.
95 B.E. Smythies, 'History of Forestry in Sarawak', Sarawak Gazette, 30
September 1961, 169; Memoranda presented ... by order of H.H. the
Rajah, 17 October 1927, pp. vi-viii.
96 In the 1930s, Great Britain became an important market for Sarawak
timber. B.E. Smythies, 'History of Forestry', 167-9.
97 To quote Cyril Le Gros Clark, a senior Brooke official: 'There is a
necessity of restricting the Dayak in his agricultural movements both
for his own sake and for the sake of the valuable timber which he is
destroying ...', The Blue Report (Kuching: Government Printer, 1935)
p. 30.
98 B.E. Smythies, 'History of Forestry', p. 169. Le Gros Clark
recommended forest reserves of 10 per cent (4500 square miles) to
'ensure an adequate supply of good timber and to supply the necessary
forest values to protect catchment areas', The Blue Report, pp. 30-1.
99 See Robert Reece, The Name of Brooke, p. 54-7.
100 See Robert Cramb, 'The Commercialization of Iban Agriculture';
R. Cramb and I.R. Willis, 'The Role of Traditional Institutions in Rural
240 Notes
Development: Community-Based Land Tenure and Government Land

Policy in Sarawak, Malaysia', World Development, 18, 3 (1990) 350-1.
101 According to K. Kitto:
Village Committees were formed and instructed by government to
'ascertain the extent of the lands over which their communities claim
customary rights. To these lands were added areas of virgin jungle to
allow for future needs ... These areas were looked upon as fixed native
communal reserves ...' K. Kitto, 'Customary Land Tenure', Sarawak
Gazette, 78 (1952): 91-93; B.E. Smythies, 'Forestry in Sarawak',
p. 170. These amendments were based on Le Gros Clark's
recommendations in The Blue Report, pp. 30-2.
102 See Amarjit Kaur, 'Hantu and Highway: Transport in Sabah 1881-1963',
pp. 12-17; David H. John and James C. Jackson, 'The Tobacco Industry
of North Borneo: A Distinctive Form of Plantation Agriculture': 88-
106.
103 See 'Report by A. Cook on the timber resources of British North
Borneo', encl. in Handbook of the State of North Borneo, 1890, pp. 72-
5; North Borneo Central Archives, file #1424.
104 W.R. Crocker, 'Report on British North Borneo', November 1887
(Sandakan: North Borneo), p. 3. British North Borneo Chartered
Company Handbook, 1886, pp. 59-88; see also Statistical Appendix.
105 Cited by Le Gros Clark in The Blue Report, p. 30.
106 H.G. Keith, Forestry in the State of North Borneo, p. 12; see also David
W. John, 'The Timber Industry and Forest Administration in Sabah under
Chartered Company Rule', Journal of Southeast Asian Studies, 5, 1
(1974) 60-1.
107 See F.W. Foxworthy, The Timbers of North Borneo; See also D.M.
Matthews, British North Borneo Forests: Opportunities for Lumber
Investment. The Forestry Department's system of strip survey
reconnaissance (suitable for use in the tropics) was developed by British
North Borneo's forestry officers who had done forest reconnaissance in
the Philippines. F.W. Foxworthy, 'Forest Reconnaissance in Malaya',
Empire Forestry Journal, Vol. 3, (1924): 78-86.
108 'History of Inception of the British Borneo Timber Company Ltd' in
Timber Memorandum of the BBT, pp. 1-2. [Sabah State Archives]
109 This was 74 294 acres, Annual Report Forest Department, North Borneo,
1930, p. 19.
110 Annual Report Forest Department, North Borneo, 1939, p. 22.
111 See Daniel Chew, Chinese Pioneers on the Sarawak Frontier, chs 4-6;
See also Amarjit Kaur, 'The Babbling Brookes: Economic Change in
Sarawak 1841-1941', pp. 72, 101.
Chapter 4 Economic Frameworks, Policies and the State
1 C.A. Fisher, South-East Asia: A Social, Economic and Political

Geography (London: Methuen & Co., 1964) pp. 622-23. For detailed
Notes 241
descriptions of the rivers, see ISIS Report on North Borneo (Sarawak,

Brunei, Labuan, British North Borneo) (Great Britain: Inter-service
Topographical Department, December 1944). [Arkib Sabah]
2 See Amarjit Kaur, 'The Babbling Brookes: Economic Change in Sarawak
1841-1941', pp. 73-77.
3 See, for example, Lucas Chin, 'Archaeological Work in Sarawak',
Sarawak Museum Journal, 23, 44 (1975): 1-7; Tom Harrisson, 'Gold and
Hindu Influences in West Borneo', Journal of the Malaysian Branch of
the Royal Asiatic Society, 22, 4 (1944): 33-110.
4 See, for example, William Hornaday, Two Years in the Jungle (London:
K. Paul Trench, 1885) pp. 342-43; R. Mundy, Narrative of Events in
Borneo and Celebes, down to the Occupation of Labuan: From the
Journals of James Brooke Esq, Vol. 1 (London: John Murray, 1848):
263-64; Hugh Low, Sarawak; Its Inhabitants and Productions: Being
Notes during a Residence in that Country with H.H. The Rajah Brooke
(London: Bentley, 1848; reprinted Singapore: Oxford University Press,
1988) pp. 135-36.
5 See, Daniel Chew, Chinese Pioneers on the Sarawak Frontier 1841-
1941, chs 4-6; Hedda Morrison, 'Jungle Journeys in Sarawak', National
Geographic Magazine, 109, 5 (1956): 719-21; A.B. Ward, Rajah's
Servant, Cornell University Southeast Asia Program Data Paper No. 62
(Ithaca, New York: Cornell University Press, 1966) p. 27.
6 Annual Report Sarawak 1951, p. 5.
7 For a history of the Straits Steamship Company Limited, see K.G.
Tregonning, Home Port Singapore: A History of the Straits Steamship
Company Limited (Singapore: Oxford University Press, 1967).
8 See, for example, Annual Report Department of Trade and Customs,
Sarawak, 1926, p. 3.
9 See K. Tregonning, 'A History of the Straits Steamship Company -
Sarawak', Sarawak Gazette, 28 February 1965; K. Tregonning, Home
Port Singapore, 122-35; see also Sarawak Gazette, 1 February 1897,
1 September 1899.
10 See Sarawak Gazette, 1 July 1922, 12 April 1951; Administration
Report Sarawak, 1935, p. 30; see also E.H. Digby, Lawyer in the
Wilderness, Southeast Asia Program Data paper No. 114 (Ithaca, New
York: Cornell University Press, 1980) p. 13.
1 1 Sarawak Gazette, 12 April 1951.
12 Sarawak Gazette, 16 April 1912.
1 3 A. Moy Thomas, 'The Sarawak Government Railway', Sarawak Gazette,
31 October 1959 and letter to the Editor dated 14 October 1960 in
Sarawak Gazette, 31 October 1960; see also Sarawak Gazette, 17 May
1915.
14 Handbook of the State of North Borneo, 1929, pp. 88-89; K.G.
Tregonning, Home Port Singapore, pp. 99-121.
15 L.W.W. Gudgeon, British North Borneo (London: Adam and Charles
Black, 1913) pp. 36-37.
16 Amarjit Kaur, 'Hantu and Highway: Transport in Sabah 1881-1963', 15,
Table 1.
242 Notes
17 ibid., 18.
18 ibid, 23, Table 3.
19 ibid., 24.
20 Owen Rutter, British North Borneo. An Account of its History,
Resources and Native Tribes (London: Constable and Co., 1922) p. 20;
see also Owen Rutter, The Travels of Tiadatha (London: T. Fisher Unwin,
1922) pp. 55-57.
21 Ian Black, A Gambling Style of Government, p. 226.
22 North Borneo Central Archives, File #463, Memo dated 19 October
1935.
23 North Borneo Central Archives, File #834, 'Bridle Paths in the Interior';
Handbook of the State of North Borneo, 1929, pp. 87-88. Apart from
these two sections, two paths led off in a westerly direction to Bundu
Tuhan on the slopes of Kinabalu. Bundu Tuhan in turn was connected
with the coast by a path proceeding via Tenumpuk to Usukan, a small
port north of Jesselton. Jesselton was linked with Tuaran and the Marudu
Bay district.
24 North Borneo Central Archives, File #112, Memo on 'Maintenance of
Bridle Paths', 15 May 1928.
25 Handbook of the State of North Borneo, 1890, p. 117.
26 Annual Report of the Interior Residency for 1931 (encl. in
Administration Report North Borneo, 1931) p. 4.
27 North Borneo Central Archives, File #1110, 'Road and Bridle Path'. J.L.
Humpreys, 'Memorandum on a ten-year scheme for Road and Path
Construction in North Borneo', 7 April 1927.
28 Cited in Ian Black, A Gambling Style of Government, p. 58.
29 ibid., p. 56.
30 ibid., p. 56.
31 ibid., p. 58.
32 See Oscar Cook, Borneo: The Stealer of Hearts (London: Hurst and
Blackett, 1924) p. 270.
33 Amarjit Kaur, 'The Babbling Brookes: Economic Change in Sarawak
1841-1941', Modern Asian Studies , 29, 1, (1995): 65-109.
34 Sarawak Gazette, 1 February 1898.
35 E.H. Digby, Lawyer in the Wilderness, p. 20.
36 See Steven Runciman, The White Rajahs: A History of Sarawak from
1841 to 1946. (Cambridge: Cambridge University Press, 1960) p. 164.
37 Cited in Robert Payne, The White Rajahs (London: Robert Hall, 1960)
p. 179
38 See, for example, John M. Chin, The Sarawak Chinese (Kuala Lumpur:
Oxford University Press, 1981); Craig Lockard, From Kampung to City:
A Social History of Kuching Malaysia 1820-1970. (Athens, Ohio: Ohio
University Monographs in International Studies, Southeast Asia Series,
No. 75, 1987); Daniel Chew, Chinese Pioneers on the Sarawak Frontier
1841-1941.
39 Letter of Rajah Charles Brooke, 14 February 1895, p 231: see also
Notes 243
Sarawak Gazette, 1 June 1882 and 11 December 1887.

40 Sarawak Gazette, 11 December 1887.
41 W.J. Chater, Sarawak Long Ago. (Kuching: Borneo Literature Board,
1969) quoted in John M. Chin, The Sarawak Chinese, pp. 56-57.
42 590 Dayaks were included in this figure. Sarawak Gazette, 1 June 1922.
43 'Report on the Indian Immigration Department, December 1897' in
Sarawak Gazette, 1 February 1898.
44 Sarwak Gazette, 1 March 1899. The Indian government allowed Tamil
labour migration to Sarawak in 1896, see Sarawak Gazette, 1 May 1856.
45 Sarawak Gazette, 2 November 1886; see also Daniel Chew, Chinese
Pioneers, p. 185.
46 Sarawak Gazette, 1 June 1900. The kangani was an Indian labour
recruiter who signed up men and women from his own village in India
and was paid a commission for each labourer. This system of assisted
labour recruitment was regarded as a 'free' labour system.
47 Order No. V, 1900, Sarawak Gazette, 2 April 1900.
48 Order dated 27 June 1876, cited in Sarawak Gazette, 1 February 1894.
49 Sarawak Gazette, 3 January 1928.
50 See Daniel Chew, Chinese Pioneers, pp. 204-5. The Protector of Labour
was also the Secretary for Chinese Affairs. E.H. Digby, Lawyer in the
Wilderness, pp. 33.
51 Digby, Lawyer in the Wilderness, pp. 33.
52 Sarawak Administration Report 1935, p. 29.
53 ibid.
54 F.H. Rowe, 'Extracts from a Report on British North Borneo Petroleum
Production, Resources and Industry', Sarawak Gazette, 31 July 1958.
55 Handbook of the State of Sarawak, 1949, p. 125.
56 Report by A. Cook on the timber resources of British North Borneo,
end., in Handbook of the State of North Borneo 1890, pp. 72-5.
57 'The British North Borneo Company: Report on Immigration and the
Formation of Chinese Companies' end. in NBCA File #1135-34; see
also K.G. Tregonning, A History of Modern Sabah, pp. 130-1.
58 Tregonning, A History of Modern Sabah, p. 34.
59 See note 33 above.
60 See W.H. Treacher, 'British Borneo: Sketches of Brunei, Sarawak,
Labuan and North Borneo', Journal of the Straits Branch, Royal Asiatic
Society, 21 (June 1890): 76-80; Owen Rutter, British North Borneo:
An Account of its History, Resources and Native Tribes, pp. 249-253.
61 In 1889, the mortality rate in one case was 29.13 per cent and in 9
others, over 10 per cent. See Ian Black, A Gambling Style of
Government, pp. 112-116.
62 ibid, p. 115.
63 Tregonning, A History of Modern Sabah, p. 134.
64 British North Borneo Herald, 1 April 1901.
65 Great Britain, Inter-service Topographical Department, Report on
244 Notes
British North Borneo - Railways, Oct 1944, p. 1.

66 Handbook of the State of North Borneo 1934, p. 69. (Rubber Report
1949).
67 Tregonning, A History of Modern Sabah, p. 142-143.
68 See North Borneo: Correspondence on the Subject of Allegations
Against the Administration of the British North Borneo Company
[Command Paper 1060].
69 Tregonning, A History of Modern Sabah, pp. 145-6.
70 ibid., pp. 144-146.
71 Black, A Gambling Style of Government, p. 199.
72 ibid, p. 198.
73 Tregonning, Modern Sabah, p. 146.
74 Report of the North Borneo Rubber Commission (Singapore:
75 NBCA File #1135/34.
76 NBCA File #1126.
77 c.f. John S. Furnivall, Colonial Policy and Practice: A Comparative
Study of Burma and Netherlands India (New York : New York University
Press, 1956) p. 77; James C. Scott, The Moral Economy of the Peasant
Rebellion and Subsistence in Southeast Asia (New Haven: Yale
University Press, 1976) p. 94.
78 In 1880 a Singapore newspaper report commented that the Brooke
administration spent less than one dollar per head of population
compared with between $6 and $19.46 in the various Malay states under
British rule. Amarjit Kaur, 'The Babbling Brookes: Economic Change in
Sarawak 1841-1941', 107; See also D.K. Basset, 'The British Colonial
Legacy in South-East Asia c.1941', in D.K. Basset and V.T. King (eds),
Britain and South-East Asia (Hull: University of Hull Centre for South-
East Asian Studies, 1986), Occasional Paper No. 13: 29-47.
79 Tregonning, Modern Sabah, p. 68.
80 During the Great Depression, the Company unsuccessfully canvassed the
possibility of the territory being taken over by the Straits Settlements.
However, the Straits government would not undertake the additional cost
of administering Sabah and regarded the economies of the two territories
as competitive rather than complementary. (CO 531/24/2)
Chapter 5 Britain Sabah and Sarawak, 1946-63
1 See for example, R.A. Cramb, The Impact of the Japanese Occupation on
Agricultural Development in Sarawak. (Brisbane: Department of
Agriculture Discussion Paper, 1993) pp. 1-8.
2 See K.G. Tregonning, A History of Modern Sabah, pp. 216-217; M.H.
Baker, Sabah: The First Ten Years as a Colony 1946-1956 (Singapore:
Malaysia Publishing House, 1965) p. 29.
3 See Bob Reece, The Name of Brooke, pp. 47, 75-6, 122; Nicholas
Tarling, 'Britain and Sarawak in the Twentieth Century', JMBRAS, 43, 2
Notes 245
(1970) 42-4.
4 See for example, James Ongkili, The Borneo Response to Malaysia,
1961-1963 (Singapore: Donald Moore Press, 1967).
5 K.G. Tregonning, A History of Modern Sabah, p. 222. The Borneo
territories had been included in an earlier plan for merger with the Malay
states but they were subsequently excluded because they presented added
complications to the Malayan Union Scheme.
6 Human Relations Area Files (HRAF), North Borneo Brunei Sarawak
(British Borneo) (New Haven: Human Relations Area Files, 1956) p. 61.
7 See E.W. Ellison, North Borneo: Reconstruction and Development Plan
for North Borneo 1948-55 (Jesselton, 18 February, 1948) typescript,
p. i.
8 See McFadzean's Report on Sarawak: Details of economy, welfare and
development, included in CO 938/1/6 #16817, dated 5/11/46.
9 See A. Morrison 'Development in Sarawak', p. 38.
10 See E.W. Ellison, North Borneo Reconstruction and Development. Plan
for North Borneo 1948-55; see also P.S. Gudgeon, 'Economic
Development in Sabah', p. 205.
11 Brunei will not be dealt with here except in so far as it had common
administrative arrangements.
12 Vyner Brooke enacted a new constitutional ordinance in 1941 which
abrogated his absolute powers and established a Council Negeri. In
exchange he took $2 million. Amarjit Kaur, 'The Babbling Brookes',
p.109.
13 For further details on membership of the Council Negeri and its
functions under Crown rule, see HRAF, North Borneo Brunei Sarawak,
pp. 64-4.
14 ibid., pp. 63-64.
15 ibid., p. 65.
1 6 For detailed information see, HRAF, North Borneo Brunei Sarawak,
Ch. VI, pp. 69-89.
17 With the exception of currency, all the others will be dealt with
separately under specific state policies.
18 The commissioners comprised the two financial secretaries of the
Federation of Malaya and Singapore, one commissioner appointed
jointly by the Governors of Sarawak and Sabah and the resident in
Brunei, and two commissioners appointed by the five participating
governments acting jointly.
1 9 See HRAF, North Borneo Brunei Sarawak, pp. 134-7.
20 HRAF, North Borneo Brunei Sarawak, p. 147.
21 See Sarawak Natural Resources Board, The Natural Resources of Sarawak
(Kuching: Government Printer, 1952); Annual Report North Borneo,
1961, p. 204.
22 HRAF, North Borneo, Brunei, Sarawak, p. 138.
23 Funds for the loan came from proceeds of sales from Japanese assets,
ibid.
246 Notes
24 For example, a £500 000 loan from Brunei in the form of an inter-
colonial loan was used to finance public utilities in Sabah and to buy out
the monopoly rights of the British Borneo Timber Company. Peter
Spence Gudgeon, 'Economic Development in Sabah 1881-1981',
p. 206.
25 Annual Report North Borneo, 1961, p. 181. In 1962 the Director of
Geological Survey was made Chief Inspector of Mines in Sarawak,
Annual Report Sarawak, 1962, p. 121.
26 Colonial Office, An Economic Survey of the Colonial Territories, Vol V
The Far Eastern Territories. The Federation of Malaya, Singapore, Hong
Kong, Brunei, North Borneo and Sarawak (London: HMSO, 1955) p.
142. In October 1962, the Mining (Amendment) Ordinance was enacted.
It provided for the issue of mining rights below land where surface rights
were not also required. Although safeguards for native rights remained
unchanged, the amendment did away with the requirement to investigate
and record all native rights before an exclusive prospecting licence could
be issued. General prospecting licences were also made applicable to the
whole of Sarawak, except for land on which no prospecting was
permitted or which was the subject of a mining lease or exclusive
licence. A further amendment was that the Director of Geological Survey
also became Chief Inspector of Mines. Other amendments covered
underground mining, especially of coal. Annual Report North Borneo,
1962, pp. 120-1.
27 Colonial Office, An Economic Survey of the Colonial Territories,
Vol. 5, p. 143.
28 Annual Report Sarawak, 1959, p. 82. Gold was sold locally at $122 per
ounce compared to about $102 per ounce obtained for gold that was
exported to Singapore.
29 Annual Report Sarawak, 1961, p. 75; Annual Report of the Geological
Survey, Borneo Region Malaysia 1964 (Kuching: Geological Survey,
1965)' pp. 24-5.
30 E.W. Ellison, 'North Borneo: Reconstruction and Development Plan',
p. 77; Annual Report North Borneo, 1961, p. 175.
31 Colonial Office, An Economic Survey of the Colonial Territories, Vol 5,
p. 143.
32 Neville S. Haile, The Geology and Mineral Resources of the Strap and
Sadong Valleys, West Sarawak, including the Klingkang Rang Coal,
British Borneo Geological Survey, Memoir No. 1. (Kuching:
Government Printer, 1954) pp. 51-83. In 1954 the estimated reserves
totalled 4.76 million, ibid.
33 Annual Report Sarawak, 1962, p. 122; see also James C. Jackson,
Sarawak: A Geographical Survey of a Developing State (London:
University of London Press, 1968) pp. 141-4.
34 Annual Report Sarawak, 1962, pp. 121-22; Royal Institute of
International Affairs (RIIA), Sarawak: The Political and Economic
Background (Oxford: Chatham House, 1957), typescript, p. 16.
Notes 247
35 E.B. Wolfenden, 'Bauxite - Sarawak's Most Valuable Mineral', Malaya,

(September, 1963): 16-18; James C. Jackson, Sarawak, pp. 150-1.
36 Colonial Office, An Economic Survey of the Colonial Territories,
Vol. 5, p. 143.
37 Annual Report Sarawak, 1958, pp. 55-6; RIIA, Sarawak, p. 16.
38 Annual Report of the Geological Survey, 1964, pp. 10 and 29.
39 Annual Report North Borneo, 1961, p. 175. See also P. Collenette, The
Coal Deposits and a Summary of the Geology of the Silimpopon area,
Tawau District, Colony of North Borneo, British Borneo Geological
Survey, Memoir No. 2 (Kuching: Government Printer, 1954).
40 Annual Report North Borneo, 1962, pp. 178-9.
41 In Sabah, all agricultural activities prior to World War Two had to come
under the responsibility of the Conservator of Forests, reflecting the
greater importance of the forest to the economy. E.W. Ellison, 'North
Borneo: Reconstruction and Development Plan for North Borneo 1948-
55', typescript, p. 40.
42 See Amarjit Kaur, Irrigation and Rice Cultivation in West Malaysia
(Hull: Centre for Southeast Asian Studies, Univ. of Hull, 1992). By this
time too, ground-nuts or peanuts had become popular and enthusiasm had
waned for growing vast quantities of food and foodstuffs. See Annual
Report Agricultural Department North Borneo, 1950, p. 1.
43 Annual Report North Borneo, 1950, p. 22; 1954, p. 5.
44 See, for example, James C. Jackson, Sarawak, p. 85. In Sabah, these
schemes added about 20 000 acres to the wet padi area and around 10 000
tons per annum to the domestic production of rice. P.S. Gudgeon,
'Economic Development', p. 234.
45 Sarawak Development Plan, 1964-68, p. 35.
46 E.E. Cheeseman, Report on Potentialities for the Cultivation of Cocoa
in Malaya, Sarawak and North Borneo (London: HMSO, 1948) p. 11. See
also, D.H. Urquhart, British North Borneo: A Review of the Colony with
special reference to Agricultural Development and Opportunities for
Investment in Agricultural Enterprise (Bournville: Cadbury Brothers
Ltd., 1959); Annual Report North Borneo, 1951, p. 35.
47 North Borneo Development Plan, 1959-1964, p. 9; see also, Amarjit
Kaur, 'The Origins of Cocoa Cultivation in Malaya', JMBRAS, 68, 1
(1995): 67-80.
48 North Borneo Development Plan, 1959-1964, p. 9.
49 Sarawak Development Plan, 1964-1968, p. 22.
50 See Annual Report Sarawak, 1962, pp. 110-11; Annual Report North
Borneo, 1956, p. 11.
51 Annual Report Sarawak, 1962, p. 111.
52 Annual Report North Borneo, 1955, pp. 8-11; 1956, pp. 52-3.
Commission (Singapore: Government Printer, 1949) p. 1. The members
of the commission comprised three Europeans and one Malay. The
commission was later to remark that a Chinese member ought to have
been included, given the investment in rubber by Chinese smallholders.
248 Notes
54 Annual Report North Borneo, 1950, pp. 3, 22-23; 1952, pp. 44-45.
Progress was slow in this area. In 1953, only 10 per cent of the total
area under rubber was planted with high yielding material, Annual Report
North Borneo, 1953, p. 49.
55 M.H. Baker, Sabah: The First Ten Years as a Colony 1946-1956
(Singapore: Malaya Publishing House, 1962) pp. 107-08. There was
considerable opposition to the scheme principally because it required
more labour, at a time when there was a labour shortage in the state, ibid.
56 Annual Report Department of Agriculture, North Borneo, 1956, p. 2.
58 The grants were $200 per acre for those engaged in new planting and
$450 per acre for those involved in replanting. Annual Report
Department of Agriculture, Sarawak, 1957, p. 27.
59 James C. Jackson, Sarawak, pp. 92-3.
60 ibid., p. 94.
61 ibid., p. 94.
62 By the end of 1962, loans totalling $289 228 had been issued. Annual
Report Sarawak, 1962, p. 111.
63 Annual Report North Borneo, 1961, p. 52.
64 Under this scheme, farmers were encouraged to open up new lands for
cultivation and to adopt improved farming methods. The scheme
emphasised the construction of minor field drains and bunds on a self-
help basis under the supervision of staff from the Department of
Agriculture. A small subsidy in the form of construction materials was
provided to each participant.
65 Annual Report Sarawak, 1962, pp. 76-7.
66 This included agriculture, forests and fishing, Annual Report Sarawak,
1962, p. 72; Annual Report North Borneo, 1961, p. 25.
67 Annual Report Forest Department, Sarawak, 1946, pp. 8-9.
68 Annual Report Forest Department, North Borneo, 1952, p. iii.
69 This termination cost the state dearly because a loan of M$6 144 000
had to be floated to cover the cost of compensating the BBT for its
monopoly, in addition to covering the costs of other minor related
expenditure. HRAF, North Borneo Brunei Sarawak, pp. 147-8.
70 Annual Report, North Borneo 1956, p. 27.
71 Annual Report North Borneo, 1957, p. 28. See also North Borneo 1954
to 1959 (Jesselton: Government Printer, 1960) p. 54.
72 The main timber companies in Sarawak were the Bombay Burmah
Trading Company; Colonial Timber Company (previously known as the
British Milling and General Trading Company); Borneo Australia
Timber Company, Borneo Company, Borneo Timber Company, Song
Timber Company (a subsidiary of Colonial Timber Company); Sarawak
Company (previously the Island Trading Company); Montague L. Meyer
Limited; Soriano & Cia (a large company with logging interests in the
Philippines and elsewhere); and the Limbang Trading Company. The last
company is owned by the current Minister (1997) for the Environment
and Tourism in Sarawak, Datuk Amar James Wong.
Notes 249
73 Montague L. Meyer Limited withdrew its operations almost

immediately.
74 Annual Report Forest Department North Borneo, 1952, pp. 4-5.
75 The long-term licensees claimed that their production costs were higher
because they utilised mechanisation and hired European staff to run their
operations. See Edwin Lee, The Towkays of Sabah (Singapore:
Singapore University Press, 1976) pp. 5, 15-23.
76 Legislative Council Paper No. 34 of 1955, Timber Industry (Jesselton:
Government Printer 1955).
77 Some of the annual licence holders included Europeans and natives.
78 North Borneo News and Sabah Times, 29 June 1956. See also M.A.
Baker, Sabah: The First Ten Years as a Colony, 1946-1956, pp. 90-5.
79 Annual Report Forest Department, North Borneo, 1957, p. 9.
80 Annual Report Forest Department, North Borneo, 1961, p. iv.
82 Annual Report Forest Department, Sarawak, 1956, p. 15. Another
organisation formed by the Chinese was the Sarawak First and Second
Division Sawmillers' Association. This was not a business organisation
but was formed to discuss common problems, ibid.
83 See Appendices 1 and 2.
84 ibid.
85 The high-lead system involved the use of sky-line wires.
86 For an interesting account of timber extraction methods, see G.S.
Brown, 'Timber Extraction Methods in North Borneo', Malayan
Forester, 18, 3 (1955): 121-32. In Sarawak, extraction by locomotive
was made a condition of long-term licences issued for forests. Annual
Report Forest Department, Sarawak, 1950, p. 6.
88 Annual Report Forest Department, Sarawak, 1953, p. 1.
89 J.R. Sargent, Report on Transport Requirements in the light of
Economic Development in North Borneo (Council Paper No. 17 of
1960) (Jesselton: Government Printer, 1960) p. 1.
90 See, for example, Annual Report Forest Department, North Borneo,
1953, p. 6.
91 The Filipinos were employed as labourers by the Kenya and Bakau
Extract Company. The bark was used in the manufacture of native liquors
in the Philippines, Annual Report Forest Department, North Borneo,
1954, p. 8.
92 Annual Report Forest Department, Sarawak 1962, p. 10.
93 Cited in Sarawak Forest Department, 'Forest Resources of Sarawak',
Malaysian Forester, 41, 2 (1978) 99. [Proceedings of the ASEAN
Seminar on Tropical Rainforest Management, Kuantan, November
1977.] Similar legislation was also in force in Sabah.
94 Annual Report Forest Department, North Borneo 1963, p. liv; see Peter
Spence Gudgeon, 'Economic Development in Sabah', p. 232.
95 Japan's share in the timber trade of Sabah rose from 12.6 per cent in
250 Notes
1951 to 36.2 per cent in 1955, 64.7 per cent in 1960 and 80.8 per cent
in 1963, P.S. Gudgeon, 'Economic Development in Sabah', p. 232.
96 See McFadzean's 'Report on Sarawak: Details of economy welfare, and
development'; E.W. Ellison, 'North Borneo. Reconstruction and
Development Plan for North Borneo 1948-55', pp. 22-3; see also
Memorandum on Communications in Sarawak, end. in CO. 938/6/6,
File #58534/8/1951.
97 See Memorandum on Communications in Sarawak, end. in C O .
938/6/6, File # 58534/8/1951.
98 The allocations were as follows:
M$ 6 000 000 on agriculture
M$12 900 000 on transport and communications
M$ 1 700 000 on fuel and power
M$ 18 000 000 on social services
RIIA, Sarawak, p. 19.
99 14 per cent was allocated to agriculture, forestry, fuel and power and
geological survey and 25 per cent to social services, including
education, health and housing schemes, ibid.
100 RIIA, Sarawak, p. 20.
101 Annual Report Sarawak , 1962, pp. 251-4; Sarawak Gazette, 31 May
1962; 31 October 1962.
102 Sarawak Development Plan 1964-68 (Kuching: Government Printer,
1963).
103 Sarawak Information Bureau, Information on Sarawak (Kuching: Borneo
Literature Bureau, 1960) p. 64.
104 Annual Report Sarawak, 1961, p. 148.
105 A large fleet of small ten-seater buses providing public passenger
services (known as 'mosquito buses') expanded rapidly between 1946-
52 and, in the Kuching area alone increased from 57 to 257 during this
period. Annual Report Sarawak , 1962, p. 254.
106 Annual Report Sarawak , 1962, pp. 249-50. In 1948, 17 vessels called
at Tanjung Mani alone to load timber. By 1962, the number had risen to
334 vessels, ibid., p. 249.
107 See Amarjit Kaur, 'Transport and the Sarawak Economy, 1841-1983',
Borneo Research Bulletin, 25 (1993): 76-100.
108 E.W. Ellison, 'North Borneo: Reconstruction and Development Plan for
North Borneo, 1948-55', p. i.
109 ibid, pp. 5-24.
110 ibid., pp. 35-6.
111 Colony of North Borneo, Report of the Transport Commission, 1949
(Jesselton: Government Printer, 1949); Annual Report North Borneo,
1949, p. 7.
112 H. Gatford, 'Rehabilitation of the North Borneo Railway', Proceedings
of the Colonial Engineering Conference (London: William Clowes and
Sons, 1952) pp. 1 2 1 - 5 9 ; Robert L o w e , 'Ti ad at h a ' s R a i l w a y ' ,
typescript, n.d. [Oxford Development Project, Rhodes House Library,
Mss Ind. Ocn. S278].
Notes 251
113 J.R. Sargent, Report on Transport Requirements in the light of

Economic Development in North Borneo.
11 5 See E.W. Ellison, 'North Borneo. Reconstruction and Development Plan
for North Borneo', p. 36 for the table of priorities. The first results of
this road development programme were: a road from Jesselton to
Penampang and across the Crocker Range to Tambunan (80 miles); a 12
mile extension of the Paper-Bukit Manggis road to open up valuable rice
growing areas; completion of the North (Tuaran) Road as far as the
'prosperous' area of Kota Belud (47 miles from Jesselton); and an
extension of the Labuk Road from Sandakan by ten miles to a potential
agricultural area. At the same time, there were short extensions and
improvements in and around the main towns. Road improvements such
as asphalting or bitumenising of roads were carried out when funds
permitted.
116 Annual Reports North Borneo, 1949-57.
117 Annual Report North Borneo, 1953, p. 124; 1956, p. 124.
118 Annual Report North Borneo, 1961, pp. 152-55. Both the Sabah and
Sarawak governments also invested money in Malayan Airways.
119 For details of the main shipping lines and their services with North
Borneo, see Annual Report North Borneo, 1962, pp. 135-37.
120 E.W. Ellison, 'North Borneo. Reconstruction and Development Plan for
North Borneo', p. 5.
121 See Report of the North Borneo Rubber Commission, pp. 9-10.
122 Development under the 1959-1964 Development Plan (Jesselton:
123 Colonial Office, An Economic Survey of the Colonial Territories Vol. 5,
1955, p. 117; Annual Report North Borneo, 1955, p. 117; 1954,
p. 109; 1956, p. 113.
124 P.S. Gudgeon, 'Economic Development in Sabah', p. 240.
125 Great Britain Colonial Office, An Economic Survey of the Colonial
Territories Vol 5, pp. 144-6.
126 See, for example, the Recruiting of Indigenous Workers Convention
1936 (No. 50) and the Contracts of Employment (Indigenous Workers)
Conventions, 1939 and 1947 (Nos 64 and 86), Annual Report North
Borneo, 1948, pp. 17-18.
127 North Borneo Report of the Department of Labour and Welfare, 1962,
pp. 5-10.
128 The oil company also initiated a proposal designed to facilitate
communication between the company and the employees.
P. n.
pp. 10-11.
252 Notes
Chapter 6 Independence and Federation
1 See James Ongkili, Nation-building in Malaysia, 1964-74 (Kuala

Lumpur: Oxford University Press, 1986) pp. 149-50.
2 ibid., pp. 151-2; see also, B. Simandjuntak, Malayan Federalism,
1945-1963: A Study of Federal Problems in a Plural Society (Kuala
Lumpur: Oxford University Press, 1966) p. 124; A.C. Brackman,
Southeast Asia's Second Front: The Power Struggle in the Malay
Archipelago (New York: Praeger, 1966) p. 76.
3 This term covers a range of practices whereby the benefits of state
economic sponsorship and protection are channelled to individuals,
groups and private companies associated with the ruling political party.
See, for example, Khoo Kay Jin, 'The Grand Vision: Mahathir and
Modernisation', in Joel S. Kahn and Francis Loh Kok Wah, Fragmented
Vision: Culture and Politics in Contemporary Malaysia (Sydney: Allen
& Unwin, 1992): 44-76. See also Harold Crouch, Government and
Society in Malaysia (Sydney: Allen & Unwin, 1996) ch. 3.
4 See, for example, Datuk Dr Herman Luping, 'The Formation of Malaysia
Revisited' in Jeffery G. Kitingan and Maximus J. Ongkili (eds) Sabah:
25 Years Later 1963-1988 (Kota Kinabalu: Institute for Development
Studies (Sabah), 1989) pp. 1-59; Datuk Dr James P. Ongkili, 'Political
Development in Sabah, 1963-1988', in Jeffrey G. Kitingan and
Maximus J. Ongkili (eds) Sabah: 25 Years Later 1963-1988, pp. 61-79.
5 See Appendix 3 for details of these special rights and concessions.
6 Stephens was also forced to step down as President of UNKO. Earlier in
1964, Stephens had amalgamated UNKO with the National Pasok
Momogun Organisation to form the United Pasok-Momogun Kadazan
organisation (UPKO). This party was also open to the Chinese. For a
while UPKO went into opposition, but when Mustapha lured its members
to USNO, UPKO was dissolved in December 1967. Its members were
urged to join USNO. See Margaret Roff, The Politics of Belonging:
Political Change in Sabah and Sarawak (Kuala Lumpur: Oxford
University Press 1974) pp. 86-118.
7 See Francis Loh Kok Wah, 'Modernisation, Cultural Revival and
Counter-Hegemony: The Kadazans of Sabah in the 1980s', in Joel S.
Kahn and Francis Loh Kak Wah, Fragmented Vision, p. 228.
8 See note 5 above.
9 In 1984, Harris Salleh ceded the island of Labuan to the federal
government without any compensation being paid to the state. The
people of Sabah were not consulted on this decision.
10 This classification was undertaken to coincide with the 1980 census. The
term pribumi included not only the Kadazan, Murut, Bajau and other
indigenous groups but also Indonesians, Filipinos, natives of Sarawak
and Cocos Islanders. The last four groups had been categorised as
'others' in the 1970 census. See Francis Loh Kok Wah, 'Modernisation,
Cultural Revival and Counter-Hegemony: The Kadazans of Sabah in the
1908s', p. 233.
1 1 See ibid., pp. 245-250; see also Audrey Kahin, 'Crisis on the Periphery:
Notes 253
The Rift between Kuala Lumpur and Sabah', Pacific Affairs, 65 (1992):
30-49.
1 2 Jeffrey Kitingan was released after corruption charges laid against him
were withdrawn without explanation. Subsequently in June 1994, he was
appointed a deputy minister in the central government.
13 New Straits Times 15, 19, 25 June 1994. Although SNAP was a largely
Iban-based party, it was open to non-Ibans, including Chinese. The
Chinese, who formed a wealthy faction, provided the party with most of
its funds. When a prominent Chinese, Datuk James Wong, was elected
president of the party, many Ibans were dissatisfied and formed PBDS.
For a detailed account of Iban politics, see Peter Searle, Politics in
Sarawak 1970-1976 (Singapore: Oxford University Press, 1983).
14 Details on the main political parties are provided in Appendix 4 (Sabah)
and Appendix 5 (Sarawak).
15 The conflict centred on the control of timber concessions and the
politics of patronage. See the section on forestry in Chapter 7.
Chapter 7 Managing Development
1 Specifically the mission was required to examine and report upon:

i) the feasibility of establishing a common market in Malaysia,
taking into account the need to preserve Singapore's entrepot
trade;
ii) the implications of a common market for public revenue, in
particular with a view to harmonising at the current Malayan
(Peninsular Malaysian) level;
iii) the programmes for promotion of industry in the various
territories;
iv) potential overlaps or conflict of economic interest; and,
v) the arrangements necessary for coordination and integration of
development planning.
International Bank for Reconstruction and Development (IBRD), Report
on the Economic Aspects of Malaysia (Washington, D.C.: International
Bank for Reconstruction and Development, 1963) p. 1.
2 Earlier in 1955, in anticipation of Malayan independence in 1957, a
World Bank Mission had similarly issued a report making
comprehensive recommendations for post-colonial economic
development. The mission recommended diversification of production,
including import-substitution policies. Other recommendations included
the promotion of industrialisation with depreciation allowances and
some tariff protection. The report also advised that the primary role of
government was to provide infrastructural facilities - especially
transport, communications and power for such development. It advised
against state enterprise and economic nationalism and suggested various
financial and other inducements for the promotion of private enterprise.
It also urged the promotion of new arrangements for industrial finance.
254 Notes
See International Bank for Reconstruction and Development (IBRD),

The Economic Development of Malaya (Baltimore: Johns Hopkins
University Press, 1955).
3 International Bank for Reconstruction and Development (IBRD), Report
on the Economic Aspects of Malaysia, chs. 3, and 8.
4 For some detailed analyses, see Edmund T. Gomez, Politics in Business:
UNMO's Corporate Investments (Kuala Lumpur: Forum, 1990); J.
Jesudsan, Ethnicity and the Economy: the State, Chinese business and
Multinationals in Malaysia (Singapore: Oxford University Press, 1988);
Jomo Kwame Sundaran, A Question of Class: Capital, The State and
Uneven Development in Malaya (Kuala Lumpur: Oxford University
Press, 1986) chs. 10 and 11; Ozay Mehmet, Development in Malaysia:
Poverty, Wealth and Trusteeship (London: Croom Helm, 1986); Khor
Kok Peng, Malaysia's Economy in Decline (Penang: Consumers'
Association of Penang, 1987).
5 David Lim, Economic Growth and Development in West Malaysia,
1947-1970 (Kuala Lumpur: Oxford University Press, 1973) p. 109;
Jomo Kwame Sundaram, Growth and Structural Change in the Malaysian
Economy (Basingstoke: Macmillan, 1990) pp. 79-81. See Table 7.8.
6 Malaysia, The Second Outline Perspective Plan, 1991-2000 (Kuala
Lumpur: Government Printer) p. 40; Malaysia Ministry of Finance,
Economic Report 1990-1 (Kuala Lumpur: Government Printer) Table 3.
7 See Table 7.8.
8 Government of Sarawak, Sarawak 20 Tahun - 1963-1983 (Kuching:
9 ibid., pp. 60-61. The equity shares of the three partners are: Petronas -
65 percent; Shell - 17.5 percent; Mitsubishi - 17.5 percent.
10 Sarawak 20 Tahun, p. 61. This plant is one of the regional projects
established in the area. Malaysia, through Petronas has 60 percent
equity shareholding. Indonesia, the Philippines and Thailand each hold a
13 per cent share while Singapore has a nominal 1 per cent share.
11 Sarawak 20 Tahun, p. 60.
1 2 This is explored in greater detail in the section on forestry.
1 3 Sarawak 20 Tahun, pp. 62-66. An Inspector of Mines from Peninsular
Malaysia was sent over to take charge of the administration of the Mines
Department, ibid., p. 65.
14 Dorani Johari, 'Coal Resources of Malaysia', pp. 84-90.
15 Peter Spence Gudgeon, 'Economic Development,' pp. 298-99.
16 In Sabah, oil prospecting licences were usually issued for a period of 10
years. A separate mining lease under the State Land Ordinance was also
required to be executed before exploration and exploitation could
commence. Royalty charges were 12.5 per cent on offshore wells and a
lower rate for inland wells. P.S. Gudgeon, 'Economic Development',
p. 299.
17 ibid., p. 298.
18 ibid., p. 333.
19 Geological Survey Department, Malaysia, Malaysian Minerals
Notes 255
Yearbook 1993/94 (Kuala Lumpur: 1995) p. 22.

20 An especially influential rural development model is that which has been
organised and promoted by the Federal Land Development Authority
(FELDA).
22 ibid., pp. 71-72.
23 Victor T. King, 'Land Settlement Programmes in Sarawak: A Mistaken
Strategy' in Victor T. King and M.G. Parnwell (eds), Margins and
Minorities: The Peripheral Areas and Peoples of Malaysia (Hull: Hull
University Press, 1990) pp. 172-74.
24 See Marcus Colchester, 'Protesting Sarawak Plantation Workers
Arrested', in Committee Against Repression in the Pacific and Asia
(CARPA) Tangled Web (Haymarket, NSW: CARPA, 1988): 32-3.
25 V.T. King, 'Land Settlement Programmes in Sarawak', pp. 175-77.
26 c.f. Hamid Bugo, 'Economic Development since Independence:
Performance and Prospects' in R.A. Cramb and R.H.W. Reece (eds),
Development in Sarawak: Historical and Contemporary Perspectives,
pp. 49-55.
27 K. Sutton, 'Land Settlement in Sabah: From the Sabah Land
Development Board to the Federal Land Development Authority',
Malaysian Journal of Tropical Geography, 18 (1988): 46-56.
28 K.S. Jomo, 'The National Agricultural Policy', in K.S. Jomo (ed),
Mahathir's Economic Policies (Kuala Lumpur: INS AN, 1989): 71-4;
Amarjit Kaur, Irrigation and Rice Cultivation in West Malaysia (Hull:
Centre for Southeast Asian Studies, 1992).
29 See Amarjit Kaur, 'The Origins of Cocoa Cultivation in Malaysia': 67-
80.
30 See John R. Walton, 'The Economic Structure of Sarawak', pp. 130-46
and 'The Economic Structure of Sabah', pp. 208-26 in V.T. King and
M.G. Parnwell (eds), Margins and Minorities. The Peripheral Areas and
Peoples of Malaysia.
31 See for example, H. Myint, Southeast Asia's Economy: Development
Policies in the 1970s (Harmondsworth: Penguin, 1972).
32 Sabah Forestry Department, 'Forest Resources of Sabah', Malaysian
Forester, 4, 2 (1978) 96. [Proceedings of the ASEAN Seminar on
Tropical Rainforest Management.]
33 In 1970, there were 12 long-term concessionaires, 19 special licensees
and over 200 other licence holders, P.S. Gudgeon, 'Economic
Development in Sabah', p. 265. Under the provisions of the Forest
Ordinance (Cap. 169), Forest Enactment 1968, and Forest Rules
regulations, the Forest Department was empowered to issue licences to
exploiters upon signing the terms and conditions under which the forest
could be harvested. Sabah Forestry Department, 'Forest Resources of
Sabah', p. 94.
34 Apart from being a development agency, the Foundation also dispensed
endowment income to alleviate poverty in the state. It made annual cash
payments to all citizens over the age of 21.
256 Notes
35 P.S. Gudgeon, 'Economic Development in Sabah', pp. 265-67. As

reported in the Wall Street Journal, the newly elected Chief Minister in
1985, Joseph Pairin, claimed that the Sabah Foundation and the former
government 'had brought Sabah near bankruptcy' with foreign debts per
capita at $3000, far higher than more well-known debtors. See John
Bethelsen, 'Sabah Chief Inherits Troubled Economy', Wall Street
Journal, 5 June 1985. See also Malcolm Gillis, 'Malaysia: public
policies and the tropical forest' in R. Repetto and M. Gillis (eds), Public
Policies and the Misuse of Forest Resources (New York: Cambridge
University Press, 1988) p. 124.
Sabah's forest estate in 1980 is shown in the table below.
Sabah: forest estate, estimated end 1980 (thousand hectares)
A. Productive forest 3 200
1. Undisturbed 1920
2. Logged 1 280
B. Unproductive forest 1 797
1. Unproductive for physical reasons 1 622
2. Parks, reserves 175
Composition of total forest land
Mixed lowland and hill dipterocarp forests 2781
Montane dipterocarp forest 831
Reach and swamp forest 190
Other forest 845
Source: FAO (1981: 35, 297-305), cited in Malcolm Gillis,
'Malaysia: public policies and the tropical forest', p. 121.
36 P.S. Gudgeon, 'Economic Development in Sabah', pp. 328-31. See also
Mark Cleary and Peter Eaton, Borneo. Change and Development
(Singapore: Oxford University Press, 1992) p. 143.
37 P.S. Gudgeon, 'Economic Development in Sabah', pp. 330-31. In
1978, the Sabah Foundation accounted for 10.5 per cent of Sabah's log
exports and a growing proportion of processed timber exports.
38 Pang Teck Wai, 'Economic Growth and Development in Sabah. 25 Years
after Independence' in J.G. Kitingan and M.J. Ongkili (eds), Sabah. 25
Years Later, 1963-1988 (Kota Kinabalu: Institute for Development
Studies, 1989) p. 93.
39 For further details, see M. Gillis, 'Malaysia: public policies and the
tropical forest', pp. 124-7.
40 Sarawak Forest Department, 'Forest Resources of Sarawak', pp. 99-100.
41 Sarawak Timber Industry Development Corporation (STIDC). Five Year
Review (1974-1978) (Kuching: Government Printer, 1978) p. 4.
42 FAO Working Paper No. 16 (October 1972) cited in Sarawak Timber
Industry Development Corporation (STIDC), Five Year Review, p. 4.
43 See STIDC, preface and p. 11.
44 See STIDC, p. 12.
45 Sarawak 20 Tahun, pp. 57-8.
Notes 257
46 Cited in Mark Cleary and Peter Eaton, Borneo. Change and

Development, p. 184. According to S.C. Chin, the area under
Communal Forests shrunk from 30 300 ha in 1968 to 5600 ha in 1984.
S.C. Chin, 'Managing Malaysia's Forests for Sustained Production',
Wallaceana, 55 & 56 (1989) 4.
47 See Raj Kumar, The Forest Resources of Malaysia (Singapore: Oxford
University Press, 1986), p. 212.
49 In the run up to the 1987 state elections, the question of who controlled
timber concessions became a major issue. Extensive lists were published
showing that leading politicians, their families and numerous associates
controlled millions of hectares of concessions. New Straits Times, 12
August 1985.
50 See, for example, Fred Pearce, 'Hit and Run in Sarawak', New Scientist,
12 May 1990: 24-27.
51 In 1980, Sarawak's forest resources (thousand hectares) were listed as
follows:
Forest Type
Hill Swamp
foresta forest Mangrove Total
A. Permanent forestb 2453 684 41 3 174
1. Forest reserve 386 338 28 748
2. Protected forest 2 040 342 13 2 395
3. Communal forest 27 4 0 31
B. Statelandsc 5337 790 133 6 260
C. Total forest 7 790 1 474 174 9 434
Notes: a Hill forests include mixed dipterocarp and keranga forest
types,
b Permanent forests are under the full control of the Sarawak
Forest Department,
c The statelands have unsettled status. These are partly
forested and partly non-forested. Logging in the forested
areas of statelands is nominally under the control of the
Forest Department; systematic management is legally
infeasible. In the secondary growth areas, customary rights
of local Dayak groups exist and are exercised.
Public Policies and the tropical forest', p. 145.
52 See Harrison Ngau et ai, 'Malaysian Timber: Exploitation for Whom?',
The Ecologist, 17, 4-5 (1982) 175. The direct beneficiaries of the
timber industry are the state, the timber licensees, the main contractors,
the subcontractors and the timber employees. The state (both the
Sarawak state government and the Federal government) earns revenue
from the industry through royalities; custom and export duties;
miscellaneous payments to various government agencies and a
development fund; and from corporate and personal income tax. See
Francis Jana Lian, 'The Timber Industry and Economic Development in
Sarawak: Some Contemporary Trends and Proposals for 1990 and
258 Notes
Beyond', in Abdul Majid Mat Salleh et.al., Socio-Economic

Development in Sarawak. Policies and Strategies for the 1990s
(Kuching: AZAM, 1990) pp. 121-2. Federal government revenue from
petroleum rose from M$400 million in 1975 to M$2.8 billion in 1980
and M$5.4 billion in 1985; its share in total government revenue rising
from 8 per cent in 1975 to 20 per cent in 1980 and 26 per cent in 1985.
K.S. Jomo, Growth and Structural Change in the Malaysian Economy, p.
175.
53 The ITTC mission (1990) suggested withdrawing land under dispute from
native community claims from timber production, at least until all such
claims had been legally settled. Marcus Colchester, 'The International
Tropical Timber Organisation: Kill or Cure for the Rainforests', The
Ecologist, 20, 5 (1990): 166-73. The plight of the Penan, a nomadic
tribal group, has been well-documented elsewhere and will not be
discussed here. The Penan claim that their forest resources have been cut
down, wildlife has become scarcer and the construction of logging roads
has made the forest more accessible to encroachment by others. See
Marcus Colchester, Pirates, Squatters and Poachers: The Political
Ecology of Dispossession of the Native Peoples of Sarawak (Kuala
Lumpur: Survival International and INS AN, 1989).
54 The Economist, 16 October 1993, p. 3.
55 See INS AN, Logging Against the Natives of Sarawak (Petaling Jaya:
Institute of Social Analysis, 1989); World Rainforest Movement (WRM)
and Sahabt Alam Malaysia (FOE), The Battle for Sarawak's Forests
(Penang: Sahabat Alam Malaysia, 1989); Evelyne Hong, Natives of
Sarawak: Survival in Borneo's Vanishing Forest (Penang: Institut
Masyarakat, 1978); Marcus Colchester, Pirates, Squatters and Poachers;
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56 See James Masing, 'The Role of Resettlement in Rural Development' in
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57 See The Australian, 21 June 1996; The Economist, 22 June 1996, p. 24.
58 The two sons are also major shareholders in Pacific Chemicals (a
subsidiary of Dow Chemicals that Ting bought in 1992). Ekran has
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59 See 'Jungle dam ruling puts power project in doubt', The Australian, 21
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60 See Dennis Schulz, 'Rivers of the Dammed', The Australian Magazine,
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61 In 1993, 59 per cent of Sarawak's 9.1 million cubic metres of log
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cent. 'Virgin Territory', Far Eastern Economic Review, 8 December
1994, p. 29.
Notes 259
62 See, for example, R.Z. Callaham and R.E. Buckman, Some Perspectives
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(Washington DC: US Department of Agriculture, Forest Service, 1981)
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63 Sarawak 20 Tahun, pp. 127-37.
64 P.S. Gudgeon, 'Economic Development in Sabah 1881-1981', pp. 245-
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66 J.R. Walton, 'The Economic Structure of Sabah', p. 223.
67 See Wee Chong Hui, Sabah and Sarawak in the Malaysian Economy,
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68 ibid.
69 In 1990, GDP at current prices was RM10 072 million for Sabah,
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70 See, for example, Wee Chong Hui, Sabah and Sarawak in the Malaysian
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Glossary
adat customs and traditions
bahar or bahara a measure of weight, about 170 kilogrammes
bumiputra 'sons of the soil', a term employed by the
Malaysian government to refer to Malays and
other indigenous groups in the country
Dato, Datuk a title often associated with a great non-royal
chief; in modern Malaysia the term 'Datuk' in
conferred in recognition of outstanding service to
the nation
dusun orchard (usually fruit)
gantang measure of volume approximately equivalent to 5
lb. of unhusked rice and 8 lb. of dehusked rice
kampung a village; a compound of houses usually under
the authority of an important individual
kangani Indian labour recruiter/foreman (Tamil)
kerah corvee labour
kongsi Chinese business co-operative
kuala estuary
ladang cultivation shifting cultivation
negeri settlement, state, country
nipa/nipah thatch palm, Nipa fruticana
orang ulu upriver people, a term used for one of the
indigenous groups in Sarawak
padi wet rice agriculture
pengiran In Brunei, a title for nobles
pikul a measure of weight, about 62.5 kilogrammes
pribumi 'indigenous people', a term employed by the East
Malaysian governments to refer to the indigenous
people of Sabah and Sarawak
pulau island
raja/rajah king
sawah/bendang wet rice field
sinkheh literally 'new man'; a recent Chinese immigrant
284
Glossary 285
sungai river
tanah mati land no longer being worked
Tengku, Tunku title for Malay princes
tripang sea cucumber, beche de mer, sea slug
(holothurian)
ulu upriver
Yang Dipertuan Malay designation for king or ruler
Index
Agriculture goldfields 21,22,76, 127,

commercial 10, 16, 20, 160, 161
33, 36, 38, 39, 41, 45, 54, kongsi 21, 22
63, 64, 113, 131, 138, 185, insurrection 21, 22, 76
186, 197 Bezoar stones 51, 57
departments of 42, 119, Bidayuh (Land Dayaks) 16,18,
131, 135, 183, 184 170
indigenous/subsistence 30, Bintulu 21, 180, 181, 199
34, 36, 37, 39, 42, 43, 48, Birds' nests 51, 57, 58, 59, 62,
50, 52, 54, 55, 56, 69, 100, 68, 76, 83, 112
112, 117 133, 137, 161, Boat hawkers/peddlers 71,76
197 Borneo 3,4,6, 8, 13, 15-18,
peasant 30, 44, 54, 55, 20-24, 29, 44, 56-57, 62,
117, 131, 137, 149, 159, 65, 69, 85-86, 90, 112,
184, 186, 204 118-119, 121, 125, 158-
plantation 10, 11, 18, 30, 159, 169-170, 173, 190
32, 37, 38, 39, 40, 41, 42, Borneo Company 10, 21-24,
43, 46, 48, 50, 51, 53, 55, 26-27, 29-30, 37, 46, 48,
86, 93, 95, 97, 104, 107, 53, 57-58, 62-64, 69, 76,
111, 122, 134, 135, 136, 77-78, 80, 97, 127, 140,
165, 183, 184, 185, 189, 141
190, 197 Bridlepaths 39,80-81,89-92,
shifting/swidden 14-17,30- 111
34,41, 52-55, 66, 112, 133, British North Borneo Chartered
136, 137, 148, 184, 186, Company 6, 8, 14, 18, 28-
190, 192, 193, 197, 198 29, 31-32, 35, 38-39,41-
Antimony 3, 21, 22, 23, 29, 44, 52, 54-56, 59, 65-69,
46, 50, 51, 71, 72, 77, 94, 71, 75, 83, 85-86, 89, 90,
98, 127 92-94, 103-104, 106-107,
Bajau 17, 18, 109 112-113, 118, 121, 140-
Bakun Dam 197-8 141, 147, 166, 198
Baram British North Borneo Timber
river 13,26,77,78 Company (BBT) 12,67-68,
district 26 107, 140-142, 146, 148,
Batang Ai Dam 197 188
Batang Lupar 13, 26, 77 Brooke, Charles 4, 9-11, 18,
Bau 24, 26, 27, 33, 36, 46, 48,
district 46, 127, 160 50, 57-58, 63, 77-78, 82,
94, 97-99
Index 287
Brooke, Charles Vyner 4, 10, 127, 129-130, 180-182,

53, 63, 78, 80-81, 96, 118 196, 211
Brooke, James 4, 9-10, 18, 21, Cocoa 38, 134-135, 137-138,
24, 32, 37, 46, 56, 62-63, 184-186, 197,201
76-77, 94 Credit System (rural) 183,186
Brooke economic policies 10, Cultivation, shifting (see
12, 77, 198 agriculture)
Brooketon (Muara) coal mines Cutch 48, 51, 57-59, 62, 69,
24,97 71, 95, 100, 140
Camphor 51, 56, 57, 58, 68, 76 Damar 51,58-59,62,77,85,

Cession of Sarawak 4, 116, 117 87
Chinese Dayak, definition 16, 17, 208-
agriculturalists 18, 33-35, 211
42-43, 46, 48, 50-52, 64, Deforestation (see also logging)
69, 81, 95, 98, 100, 103- 33-34,66, 191, 193, 195-
104, 159 197, 199
coolies at Miri 26 Dusun 17-18, 138, 171, 174
immigration 10, 18-19, 36,
39, 41, 44, 52, 54, 63, 96,
103, 109 Foochow 18, 36, 46, 48, 144,
in Bau 21,46,76, 126, 195
160 Forests
labourers 9, 24, 26-28, 36, commercial 65, 67, 190-
43-46, 52, 65, 82, 94-100, 197
103-109, 160, 165 communal 64-65, 68, 145,
miners 12, 20, 22, 24, 28, 194, 199, 238
46, 76, 96, 98, 104, 126 departments of 32, 62-63,
numbers 18,98-99, 104- 66-67, 112, 142-143, 147,
105, 109-110, 169-170 192, 194-195
political associations 174- legislation/regulation 63-
176, 256, 261 64, 66, 112, 140, 141-146,
Protectorate 97 188-189, 191-194,240-247
rebellion 21, 76 policies 54, 63-64, 66-68,
settlers 18, 31-34, 36,50, 140, 143-146, 182, 188-
64, 78, 87, 178, 180, 194, 196, 240-247
199 products 56-57, 62, 64, 66,
traders 10, 11,26,36-37, 71, 80, 85-86, 143-146
55, 57-58,68-69,71,76- reserves 67, 143-146, 191,
77, 83, 93, 97, 139, 142- 193, 217, 237
143, 166
wages 99-100, 111 Gambier 38, 46,48, 51,68-69,
96
Coal 3, 6, 21-25, 28-30, 77,
Gold (see also Bau) 21,22,23,
82,95,97-98, 103-104,
28, 29, 30, 46, 51, 68, 69,
288 Index
71, 76, 77, 94, 98, 100, Kelabit 17, 150

103, 127, 130, 131, 160, Kenyah 17-18
180, 182 Kinabatangan River 13, 39, 59,
Gutta purcha 51, 59, 77, 85 68, 83
Kongsi (see also Bau)
definition of 21, 104
Hakka(s) 18,48 Brooke rivalry with 21
Hokkien(s) 69 economic organisation 21,
Hong Kong 3, 6, 85, 112 104
immigration from 98, 103- mining 21
106, 160-161 Kota Kinabalu 14,95, 182,
trade with 25, 28-29, 62, 199
64, 86, 151, 155, 158 Kuching 4,9, 13-14, 17-18,
Hornbills 57, 68 21-24, 26, 36-37, 46, 48,
50, 52, 68, 76-78, 80-82,
Iban 4,9-10, 16-18,50,52, 95, 98-99, 113, 125, 129,
54-55, 57, 64, 113, 170, 140, 143, 150-151, 155,
173, 175, 185 181, 199
Indian Kudat 18, 29, 38, 44-45, 83,
Immigration Agent 98, 105 85,91-92, 113, 153-155,
labourers 82, 96, 98-99, 158
105, 107, 165
International Rubber Regulation Labour
Agreement (IRRA), 44, 53- free/wage 20, 27, 29-30,
54, 64, 81; 40-41,43-44,55,58,93-
International Tropical Timber 95, 97, 100, 103-104, 108-
Organisation (ITTO) 196 109, 112, 159, 161, 165,
Iron 87, 131, 145 184
immigrant/migration 38,
Javanese/Indonesian 93, 97,99, 103, 105-106,
labourers 39,43-45,96, 159-160, 185, 197
98, 107, 111, 185 indentured 46, 93, 97-99,
numbers 107, 109-110 104, 107-109, 111
Jelutong 26,48,51,57-59, indigenous 96, 100, 104-
77, 140 106, 108-109, 112, 160-
Jungle products 17, 55, 57, 62, 161, 163, 197
71-72,77-78, 87, 158 legislation 160
Junk, Chinese 85,97-98 Labuan 4, 6, 8, 21, 28, 36, 57,
64, 78, 83, 85, 87, 97, 106,
Kadazan 11, 17-18,34,36,55, 118, 127, 130, 153, 155,
109, 173-174 158
Kalimantan 13,21,99, 199, Labuk River and district 13,
201 68, 39, 83, 91
Kayan 16-18 Lahad Datu 39,41,59,85-86,
Kedayan 16-17 91, 153-154, 158, 199
Index 289
Land New Economic Policy 177-178

communal/native rights 11, Nipah palm sugar 51, 57-58,
30-33, 63, 65, 68, 137, 140
144, 160, 184-187, 193- North Borneo Rubber
194, 212-213 Commission 158
disputes 65, 198 Occupation Tickets 50, 65
legislation 30-33, 54, 63- Oil and natural gas
64, 112, 144, 184, 186, concessions 26, 29, 80, 82,
193-194,212 181
settlement schemes 133- exports 23, 26-27, 51, 68,
134, 137, 140, 183-186, 130, 182-183
195, 201, 203-204 offshore production 129-
tenure 11, 15, 30-33,75, 130, 180, 182, 199
144, 186, 193-194, 197 prices and revenue 27, 130,
use 14-15, 17,30-33,62- 181-183
63, 87, 125, 135, 144, 184, production 26-27, 51, 56,
186, 189-190 68, 129-130, 180, 182, 190
Land Concession 38-39, 42, Oil Palm 38, 51, 134, 138,
46, 48, 66-67, 135, 140 184-186,201
Land Office, Commissioner of Opium 3, 21, 51
Land 66
Land Orders
Sabah 31-32 Penan 14, 17, 198
Sarawak 33,54,63-64 Petronas 178-181, 196,203
Lawas 48 Petroleum Development Act
Logging (see also 181-82,203
forests/timber) 63-65, 68, Pepper 30, 38,46, 48, 51-52,
188, 192, 194, 198 55, 68-69, 71, 78,96, 100,
concessions 140-143, 143- 135, 138, 151, 159-160
148, 192-195 Plantations (see also
environmental damage 56, Agriculture) 10-11, 18, 30,
196 32, 37-43,46,48,50-51,
exports 62-64, 71, 146- 53, 55, 86, 93, 95, 97, 104,
148, 195 107, 111, 122, 134-136,
revenue 146, 190 165, 183-185, 189-190, 197
Plywood production 190-191,
Malay traders 11, 15-16, 37, 195
57, 68-69, 76 Political parties
Melanau 14, 16-17, 36-37,50, formation (Sabah) 170-176,
55, 170, 176, 194 232, 253-58 (Sarawak) 259-
Miri 25-27, 56, 68, 82, 85, 62
113, 117, 130, 150-151, interests 177, 179, 189-190,
180, 199 193-194,204
Murut 17-18, 34,90, 109, Population 15ff, 41, 44, 75,
170, 173 83,95, 117, 138, 169-171
290 Index
census xiii, 18-19, 100, estate/plantation 38,41-42,

109 48, 53, 100, 104, 107
density/distribution 75, 82, smallholder 36, 43-44, 48,
93, 112-113, 150, 183 50, 52-56, 69, 87, 100,
indigenous 19, 32, 105, 136-137, 159, 183, 185,
112, 118, 159, 161, 170, 197, 216
197 Rubber Fund Board (Sabah)
migration 14, 30, 95 135-136
Poverty 177-178, 184, 190, Rubber Planting Scheme
203-204, 206 (Sarawak) 136-137, 184-
185
Railway construction
Sabah 11, 18,28, 39,42, Sabah Foundation (Yayasan
86-87, 89-92, 95, 104, 106- Sabah) 186-190
107, 109, 113, 153-154, Sabah Land Development Board
158 (SLDB) 185
Sarawak 82, 113 Sabah Forestry Development
Ramin 145-146 Authority (SAFODA) 189-
Rajang River 9, 13, 16, 18, 190
26, 36, 48, 52, 63, 77, 78 Sadong Colliery 24-25, 82, 97-
Rattans 51, 56-59, 68, 189 98
Rice cultivation 14-17, 32, 34- Sadong River 9, 13, 17, 24, 82
36, 38, 46, 51, 54-55, 69, Sago 30, 35, 37, 45-46, 55,
77, 80, 85, 87, 96, 98, 103, 213
121, 131, 133, 135, 138, cultivation 14, 17, 36-37,
151, 154, 186 55, 100
Road construction 140, 145, trade 19,36-37,51,69,77-
160, 182, 194, 198, 203 78, 80, 87
Sabah 12, 83, 89-92, 95- Sandakan 6, 11, 14,28, 39,
96, 111, 113, 149, 153-156, 41, 45, 59, 65, 68, 83, 85-
158, 199-200 86,91,94-95, 105-106,
Sarawak 75, 80-82, 95-96, 113, 117, 153-155, 158,
111, 113, 149-152, 199-200 160, 182, 189-190
Rural/agricultural development Santubong 48, 76
30ff., 137-138, 150, 183- Sarawak Development Finance
186, 190, 197-198,201, Corporation (SDFC) 137,
204 184
Rubber 12, 30, 37, 40, 45, 47, Sarawak Land Consolidation and
49, 51, 65, 68-71, 77-78, Rehabilitation Authority
86-87,91,95-96, 107, 134- (SALCRA) 185
135, 138, 143, 151, 154- Sarawak Land Custody and
155, 158-159 Development Authority
cultivation 17, 33, 35, 43- (LCD A) 185
44, 46, 48, 50, 96, 136, Sarawak Land Development
186, 197, 201 Board (SLDB) 184
Index 291
Sarawak River 3, 4, 13, 17, 65, 68-69, 71, 85-86, 89,

58, 76, 98 95, 97, 103-105, 107, 160
Sarikei 48, 151, 199
Shifting cultivation (see
agriculture)
Sibu 18, 48, 50, 68, 77-78,
82, 113, 143, 150-151, 199
Singapore 3, 18, 20, 24-26,
37, 46, 52, 57, 62, 64, 69,
71, 77-78, 85, 97, 98, 104,
112, 117, 121-122, 158-
160, 169-170, 173, 177
trade with Sabah 24-25, 36,
38, 44, 85-86, 105, 107,
151
trade with Sarawak 127, 150
Slave trade 93-94, 104, 107
Slavery 11,93-94, 108
Stevenson Rubber Restriction
Scheme 42, 44, 53
Sulu 4, 6, 13, 17
Tanjung Mani 150, 199

Tenom 87,90, 154
Timber (see also
forests/logging) 10, 12, 32,
50,56, 62-63, 87, 103-104,
106-107, 109, 111, 113,
130, 140-141, 144-146,
149, 153-154, 158-159,
165, 179, 185,-186, 188-
197, 199, 203, 228
concessions 65-67, 104,
140-145, 176, 188-190,
194, 235
trade 51-52,58,63,65,67-
69,71, 85-87, 130, 142-
144, 146-151, 166, 174,
186, 189-191, 192-198
licenses 63-64, 66, 141-
143, 189
Tobacco plantations (see also
agriculture) 11, 18,30-32,
35, 38-42, 44-46, 51, 55,

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STUDIES IN THE ECONOMIES OF EAST AND SOUTH-EAST ASIA

General Editors: Peter Nolan, Sinyi Professor of Chinese Management,

In order to understand better economic developments within this vast and

First published in the United States of America 1998 by

No paragraph of this publication may be reproduced, copied or transmitted save with

Part III Sabah and Sarawak in Malaysia: Continuity,

economic structure is derivative. It was also difficult to decide what to

/"V< ARAFURA SEA

Map 1 Southeast Asia

Table 4.6 Sabah and Sarawak: Revenue and Expenditure up to

Table 7.8 Sabah, Sarawak and Peninsular Malaysia: Gross

Climate and Rainfall

The Physical Environment

The landform of both the peninsula and Borneo is characterised by coastal

Ethnic considerations and religious affiliations are another sphere of

The British colonial authorities fostered the incorporation of the

This book's main theme is a long-term view of East Malaysia's

It is not proposed here to deal specifically with the brief Japanese

Themes and Beginnings (c.1850-1940)

The Historical Setting

continued until the arrival of James Brooke, an English adventurer, in

Map 3 Sarawak and Brunei showing successive boundaries, 1841 - 1946

following the ratification of a treaty with the Sultan of Brunei in 1846.

7N Final boundary of Chartered 7N-

Administration and Government

The keynote of administration in both Sabah and Sarawak was

military. Intermingling on a social level among the three main groups

These years have been described as ones of 'gambling' or 'makeshift'

The Demographic Background

A brief overview of the indigenous groups of East Malaysia presents

'cognatic' or 'bilateral' type in which descent may be traced equally

Their characteristic form of settlement remains the longhouse. These

Table 2.1 Population Growth in Sabah and Sarawak, 1911-1947 ('000)

Year Sabah Sarawak

Formation of an Export Economy

Mineral Resource Utilisation

In Sarawak five minerals predominated - gold, mercury, antimony,

successful exploitation of Sarawak's mineral resources required heavy

1899, the Borneo Company exported quicksilver with a total aggregate

Table 3.1 Sarawak: Mineral Production, 1868-1948

Notes: All values given in Sarawak/Straits dollars,

As indicated in Table 3.1, the percentage value of these mineral exports

Table 3.2 Sadong Coal Mine Account, 1881-1899 (in Straits $)

Excess of Expenditure Excess of Revenue

Table 3.3 Oil Production in Sarawak, 1911-1924

Year Production in tons

Source: Compiled from the Sarawak Gazette, 16 March 1917; 1 April

workers whilst the indigenous people also ventured on a small-scale for

Borneo Company did bring in new techniques of gold extraction. In coal,

Both economies were basically agricultural although only a small

Patterns of Land Tenure and Land Legislation

community's land was demarcated by natural features such as ridges and

introduced in 1842. By this legislation, there was to be no interference

Food Crop Production

In much of the discussion on the peasant sector in Southeast Asia a clear

Crop Area (acres)

Rubber 128 200 119 000

Notes: 1 Not all in production.

Cash Crop Production

The spread of plantations was a major consequence of economic

varying rates and intensity in Sabah and Sarawak. Essentially, the

waiving of duties on equipment imported for or by the concessionaires.