Tobacco is the most important article of export. There are several companies busily engaged in developing this industry, as the Bornean leaf has now taken a high position in the markets, and its quality is excellent. It not only furnishes the leaves used as wrappers, but as a smoking tobacco it has met with much favour. The principal plantations are in the north-eastern coast, near the river Kina Batañgan and Darvel Bay. The Government are also trying an experiment on the Sapong line, which will be followed by the railway. The tobacco which was so sought after by the natives in old days was, however, a product principally of the north-west coast. It would probably be advantageous to find out the exact spots where the Saba plants were grown. There is very little likelihood of there being a glut of tobacco on the market, as many of the old sources of supply are drying up, as in Cuba, and, to a lesser extent, in Manila, and the recent judicious reduction of duty in England will increase its consumption. I have no sympathy with those who would instead have lowered or abolished the duty on tea, as if tea drinkers should not contribute to the support of our navy, which secures the arrival of their favourite leaf. The production of coffee, cotton, gambier and pepper are as yet on a very small scale, as most of the plantations are in their infancy. Pepper used to be grown to a considerable extent in the districts opposite, and a little north of Labuan, but here, as elsewhere, no doubt, the exceedingly low prices may have induced the natives to neglect the cultivation of this vine. Sarawak now produces about 15,000 tons of gambier, worth $700,000. This should encourage planters in North Borneo. Cutch, manufactured from the bark of the mangrove tree, has became a very important export, and the development of this industry can only be limited by the demand. Gutta and rubber are of some importance, and rattans are taking an important place in the list of exports, and so are sago flour and timber. Although as a rule export duties on cultivated products are to be avoided, there are many good reasons why the Government should put a duty on tobacco, which, however, is so very light, only one per cent., as scarcely to affect its price, whilst the sum so raised is of importance to the Treasury. The police and other expenses connected with the protection of this industry are considerable.