Sabah Pan Borneo Highway Phase 1 Faces Cost Increases and Delays
The Auditor-General's Report 2/2026 reveals that Phase 1 of the Sabah Pan Borneo Highway has seen contract costs rise to RM18.96 billion, with only 4 of 35 work packages completed as of March 31, 2026.
What happened
According to the Auditor-General's Report 2/2026, published on 2026-10-11, Phase 1 of the Sabah Pan Borneo Highway is experiencing significant cost increases and delivery problems. The report states that contract costs have escalated to RM18.96 billion, up from an original RM17.91 billion. As of 2026-03-31, only 4 out of the 35 work packages for the project have been completed.
The report also highlighted issues such as site-readiness and land-acquisition problems, RM513.99 million in variation orders approved beyond authorised limits, and RM41.37 million in delayed utility claims. These delays and cost overruns could postpone the expected economic benefits and improved regional connectivity that the infrastructure project was intended to bring to Sabah.
Agent insight
For buyers and agents considering properties along the Sabah Pan Borneo Highway, this report underscores the critical importance of actual infrastructure delivery. Relying solely on project announcements or developer's location maps to assess property value can be risky. Project delays mean that anticipated improvements in accessibility, job opportunities, and commercial activity growth may be postponed, potentially affecting the appreciation and rental demand for surrounding properties.
Agents should advise buyers to focus on the actual construction progress and the operational status of completed sections, rather than solely on future promises. For instance, inquiries should be made about which sections of the road are already functional, how much travel time is genuinely saved, and whether there is corresponding economic activity growth in nearby areas. When evaluating property prices, it's crucial to consider if the pricing already factors in future infrastructure improvements and whether that valuation is justified given the current status.
This situation also serves as a reminder that while infrastructure projects create potential, their execution determines when—and whether—that potential becomes real. Therefore, thorough due diligence is essential before making any property decision, and expectations regarding project completion timelines should remain realistic to avoid investments based on overly optimistic assumptions.
Checks before follow-up
Verify the latest completion status and estimated completion dates for each work package of the Sabah Pan Borneo Highway.
• Understand the specific reasons for project delays, such as land acquisition or funding issues, and assess their potential impact on future progress.
• Investigate the actual traffic flow on completed sections of the highway and its impact on economic activity in surrounding areas.
• Confirm with local planning authorities any new development plans or policy adjustments in response to project delays.
• Evaluate if property prices adequately reflect the current state of infrastructure, rather than solely future expectations.
Who to follow up with
Potential homebuyers looking for properties along the Sabah Pan Borneo Highway corridor
• Investors interested in the impact of infrastructure development on Sabah's property market
• Agents needing to understand risks and actual delivery of major infrastructure projects
What to watch next
Responses and subsequent actions from the government or project management regarding the audit report
• Quarterly or annual progress reports on the various work packages of the Sabah Pan Borneo Highway
• Launch and pricing strategies of new property developments along the project route
Buyer follow-up message
Given the project delays, would you reconsider your expected commute times or need for amenities in that area? We could explore alternative locations that have more immediate infrastructure benefits.
FAQ
What does 'cost increases' in the audit report refer to?
The Auditor-General's Report 2/2026, dated 2026-10-11, indicates that the contract costs for Phase 1 of the Sabah Pan Borneo Highway have increased from an original RM17.91 billion to RM18.96 billion, reflecting a significant rise in the project's budget.
What is the current completion status of Sabah Pan Borneo Highway Phase 1?
As of 2026-03-31, the Auditor-General's Report 2/2026, dated 2026-10-11, states that only 4 out of the 35 work packages for Phase 1 of the Sabah Pan Borneo Highway have been completed, indicating substantial delays in the overall project.
An agent’s follow-up message
Hi! The latest audit report on Sabah Pan Borneo Highway Phase 1 shows cost increases and delays. This could affect property values along the route. What's your budget and commute needs for the area? Let's discuss how this might impact your choices.