This paper presents the emergent issues arising from a preliminary fieldwork (local desk research and key informant interviews) on the nature of handicraft production in rural Sabah. It is surprisingly that despite the government supports and initiatives under its handicraft development program that clearly wishes to encourage full-time workshop-based production, vast majority (93 percent) of handicraft producers in Kota Belud, Sabah still produce their handicrafts from home, in fact, half proportion of these home-based producers are part-timers. This finding has provided some valuable insight to question “why home-based production is so favoured among handicraft producers in rural Sabah”. Several issues related to producers’ decisions to go (or not) workshop-based production is argued in this paper: (1) “do workshop-based producers always high-performers and home-based producers always low-performers?” (2) perceived advantages or disadvantages of producing handicraft in a workshop or from home, (3) how are relationships with trader/retailers formed. In addition, based on the key informant interviews, several main challenges likely to inhibit producers’ decision to produce their handicraft in a formal commercialised manner, i.e. full-time workshop-based are also discussed: (1) difficulties in access to technical and financial resources (2) lack of motivations to move to higher level of commercialisation, and (3) the absence of young successor to sustain the craft production. This paper hoped to offer valuable insight for future research, specifically on factors for commercialisation process and performance among handicraft producers in rural Sabah, in spite of their “advantaged” or “disadvantaged” production status. In addition, this paper provides insight to government and policymakers about the current nature of handicraft production in Sabah, in which home-based and less formally managed production, in spite of their ‘disadvantaged’ status, might as well generate higher revenues to handicraft producers. ...