However, there were no casualities.
According to one of the factory workers, who identified himself as 42-year-old Wilvrianus Dami, he and 15 other workers were sleeping in a house located next to the factory when the incident occurred at about 5am.
Wilvrianus, who has been working in Sebah Plastic Foam Sdn Bhd, for ten years said it belonged to his employer.
He claimed that several machines and stocks which were ready to be delivered were razed in the fire which destroyed about 80 per cent of the premises.
Meanwhile, a total of 34 personnel from the Lintas and Kota Kinabalu Fire and Rescue Department went to the scene following a distress call at about 5.11am.
The operation ended at about 7.10am.
The cause of fire and estimated loss are still being investigated.