ABSTRACT
Since the mid-1970s, East Malaysia’s Kota Kinabalu has been rapidly urbanizing; it is currently expanding more than densifying. The distinguishing feature of its urban economy today and for the foreseeable future is its service-oriented or tertiary industry, characterized by large government and commercial sectors that have emerged as a result of Kota Kinabalu’s role as Sabah’s state capital and its primary entry point for imported manufactured goods. Another driver of growth is public sector expenditure: the state and federal governments are paymasters for one-third of the labor force, and much of government development capital expenditure goes to Kota Kinabalu. In the early stages of its current economic expansion, revenue came mostly from timber, which provided the Sabah government with royalties for funding public development. Sabah timber tycoons and wealthy West Malaysians, who fund the commercial and housing sector, viewed such ventures as opportunities to diversify into property development (Chung 2000). But from 2005 onwards, oil palm revenues became the primary source of public and private investment funding. Hitherto political party rivalries and volatile state-federal relations stretching over four decades have impeded Sabah’s development especially in enabling infrastructure. The public sector has generally lagged behind in the provision of basic infrastructure and public amenities for urban growth compared to private sector achievements in profit-oriented housing, commercial and industrial development.
