Since Borneo is ruled by three countries – Malaysia, Indonesia & Brunei, it’s better to sub-divide the island in order to get a better understanding of its economy.
Brunei, the abode of peace, is officially known as the Nation of Brunei. It is situated on the north coast of the island of Borneo and the only sovereign state totally enjoying the position of being the complete part of the island.
The state enjoys a small economy, but it’s an example of small, but wealthy economy. It is duly influenced by a combination of domestic and foreign entrepreneurship, government regulation, welfare measures and village tradition.
Up to 90% of the state’s GDP is dependent on crude oil and natural gas. Because of its rich oil resources, Brunei is the fourth largest producer of oil in South-east Asia.
Timber export was the main resource of Sabah’s economy, but with efforts to save forests and its flora and fauna, palm oil trade has emerged as an alternative trade. Other agricultural products that Sabah trades in, includes rubber and cacao along with fisheries and vegetables. With time, tourism industry has turned out to be the second largest contributor to the economy.
In the 70s, Sabah was one of the richest states in the Malaysian Federation next to Selangor, but with time, today it is Malaysia’s poorest states. It hasn’t been able to make full use of its natural resources. It has one of the lowest average incomes and ironically highest cost of living in Malaysia. The poverty level at 16% is three times more than the national average. The reason is the inequitable distribution of wealth by the Federal Government; prejudice towards Sabah and illegal immigration from other countries such East Timor, Indonesia and Philippines.
Situation is improving, with funds assigned to the state being increased and concentration diverted to developing rural areas, transportation, infrastructure, and sectors such as agriculture, manufacturing and tourism, which contribute to its economy.
Sarawak is one of the two Malaysian states situated on the north-west of Borneo. Its administrative capital is Kuching having a population of 579,900. Miri, Sibu, and Bintulu are other major cities and towns of the state. The total population of Sarawak is 2,420,009 (census 2010), whereas its inhabitants are dependent on an abundance of natural resources.
LNG and petroleum are main sources of the Malaysia federal government's economy for decades, while Sarawak merely receives a royalty of 5%. Tropical hardwood timber is the backbone of Malaysian exports and Sarawak is one of the largest exporters of such type of wood.
The state’s economy is also influenced by its rising tourism industry. Almost every year the state witnesses a drastic increase in number of tourists visiting Sarawak. This is because of direct flights from countries like Japan and South Korea. Main attractions in Sarawak include the Kuching city, the Gunung Mulu National Park and the Rainforest World Music Festival.
Around 73% of the island of Borneo is covered by Kalimantan, the Indonesian territory, which is sub-divided into four major parts such as East Kalimantan, West Kalimantan, North Kalimantan and South Kalimantan.
Economy of East Kalimantan is totally dependent on natural resources such as oilfield exploration, natural gas as well as coal and gold mining. Balikpapan consists of huge oil refinery restated by Indonesia Governance.
Other sources of income include agriculture and tourism. Major tourist attractions include Derawan Islands in Berau Regency, Kayan Mentarang National Park in Nunukan, Crocodile Husbandry in Balikpapan, deer husbandry in Penajam, Dayak's Pampang Village in Samarinda and many more.
Economy of South Kalimantan is supported by many economic sectors. Agricultural sectors include rice, corn, peanuts, soybeans, coconut, rubber, cloves and cacao. Livestock, fish products and forestry sector have a major role in the economy of south Kalimantan.
The mining sector is ruled by petroleum, coal, diamond, gold, iron ore and tiles. Wood carvings, rattan and wood furniture, reptile skins and weaving are famous handicrafts.
Major exports for West Kalimantan are processed wood, rubber, and fish while log, sawn timber, rattan and resin come from Central Kalimantan.