The only really fine natural harbour in the island of which any use has been made is that of Sandakan, the principal settlement of the North Borneo Company on the north coast.
In 1872 the Labuan Trading Company was established in Sandakan, the fine harbour on the northern coast which was subsequently the capital of the North Borneo Company's territory.
Sandakan Harbour, on the north-east coast (5° 40' N., 118° To' E.), runs inland for some 17 m.
The principal town in the territory, and the seat of government (though an attempt has been unsuccessfully made to transfer this to Jesselton on the west coast), is Sandakan, situated just inside the mouth of the Sarwaka inlet.
The shade temperature at Sandakan ordinarily ranges from 72° to 94° F.
The company possesses a number of small stations along the coast, of which Sandakan, with a population of 9500, is the most important.
Sandakan is connected by telegraph with Mempakul on the west coast whence a cable runs to Labuan and so gives telegraphic communication with Singapore.
The overland line from Mempakul to Sandakan, however, passes through forest-clad and very difficult country, and telegraphic communication is therefore subject to very frequent interruption.
A German firm runs vessels at approximately bi-monthly intervals from Singapore to Labuan and thence to Sandakan, calling in on occasion at Jesselton and Kudat en route.
There is also fairly frequent communication between Sandakan and Hong-Kong, a journey of four days' steaming.
At Sandakan there is a Chinese population of over 2000.
There is a Protestant mission which supports a church - the only stone building in the territory - and a school at Sandakan, with branches at Kudat, Kaningau and Tambunan.
The Roman Catholic mission maintains an orphanage, a church and school at Sandakan, and has missions among the Dusuns at several points on the west coast and in the Tambunan country.
There are bank agencies in Sandakan, and the company does banking business when required.