Informal Economy in Kundasang, Sabah

Kundasang is located around 97km to the east of Sabah if coordinating the location from Kota Kinabalu International Airport. The weather could be reached 11’C at night and approximately 25’C throughout the day. I have personal experience traveling with my friends from Kota Kinabalu to Kundasang back in February 2019.

However, in this entry, I will focus on two things only. Firstly, the definition of the informal economy. Secondly, a brief background of the informal economy development in Kundasang.

Throughout the 97km journey to Kundasang, we have been served with a beauty of nature view. The majority of local communities around Kundasang are involved in the informal economy whereby local communities run small-business such as selling foods at the night market, processing food on small scale, and taking an opportunity by offering their house as a homestay service around Kundasang town. Based on guidelines defined by the International Labour Organization, the informal economy does not constitute a legal entity (United Nations, 1997). In a simple term: they are running a small-scale business in improper structure, mostly using relatives or family members in running their business activities.

Why majority of the local communities involved in the informal economy instead of the formal economy? This topic becomes more interesting because this area of research is able to look at from various aspects. The political, economic, or social aspects. Even you can do some combination among that aspect in analyzing the development of the informal economy.

If you read on one research conducted by Tangit et al (2014), the informal economy was also detected in the Kundasang area. Based on this research, 54.2% of respondents had received formal education until secondary school. Meanwhile, only 25.1% obtained a diploma and degree certificate. The education level among the community also connects with the development of an informal economy in the Kundasang area. This is only one of the factors that contributes to the development of the informal economy.

Besides, if we look at the geographical-economic factor, the location of Kundasang is very nearby to Mount Kinabalu (the highest mount in Borneo and Malaysia). This is a strategic location for those who have a plan to do hiking and spend time with family members which close to nature. At the same time, local people able to grab this opportunity in generating their household income seems Kundasang become one of the tourist attractions. You can see that this factor also contributes to the development of the informal economy in Kundasang as well.

Again, in analyzing the development of the informal economy we are able to look at it from various spheres. Bear in mind that the informal economy has also contributed some significant progress in the economy especially in developing countries such as Malaysia, Indonesia, Thailand, Vietnam, and many more.

References:

1. United Nations. (1997). Handbook for Producing National Statistical Reports on Women and Men, Social Statistics and Indicators. Series K, 14. New York.

2. Tania Maria Tangit, Ahmad Khairuman Md Hasim, & Akmal Adanan Rural (2014). Tourism at its Peak: Socio-Cultural Impacts towards Host Communities of Kinabalu Park, Sabah (Malaysian Borneo). SHS Web of Conferences 12. DOI: 10.1051/shsconf/20141201097