On the north-east of Borneo _proper_ lies a very considerable territory, the sovereignty of which has been long claimed by the _Súlu_ government; a very considerable part of this, together with the islands off the coast, have been for upwards of forty years regularly ceded to the English by the _Súlus_, and has also at different periods been assumed by them, without any objection on the part of the government of Borneo _proper_. This ceded district, extending from the river _Ki-manis_ on the north-west, which forms the boundary of Borneo _proper_, to the great bay on the north-east, is undoubtedly a rich and fertile country, though in a rude and uncultivated state, and it is admirably situated for commerce, notwithstanding the different failures of _Balambángan_ may seem to indicate the contrary. _Balambángan_ is one of the small islands off the northern extremity of the island of Borneo, and included in the _Súlu_ grant to the English. It would be foreign to the present object to enter into any details concerning the history of the settlement of _Balambángan_, but it may be proper to mention, that all the gentlemen who were engaged in the last attempt were convinced that the bottom of the great _Malúdu Bay_ would have been infinitely preferable as a settlement on every account. _Balambángan_ is exactly analogous, in every respect, to Pinang; it does not admit of territorial extension, and must exist, if at all, by commerce solely. _Malúdu_, on the other hand, is a dependency on the island of Borneo, which admits of any degree of territorial extension, may always subsist any number of inhabitants by its own produce, and is said to communicate, by a land carriage of little more than forty miles, with the central lakes in the vicinity of the gold countries.