In 1883, Sandakan becames the capital of British North Borneo Company and established itself as the largest timber-exporting port of tropical wood in the world.

After World War II, which completely destroyed Sandakan, British Crown decided to moves its capital to Kota Kinabalu, while Sandakan remains Sabah's second most important port palm oil, tobacco, cocoa, coffee, manila hemp and sago exports.

Timber industry is no longer as robust and tourism has become incresingly important to the future of Sandakan. A series of eco-tourism destinations such as Sepilok Orang Utan Rehabilitation Centre, the Rainforest Discovery Centre, Turtle Islands Park, Kinabatangan River and Gomantong Caves are now major attractions to local and international tourists.