Investigations are still ongoing into the three suspects who are now under remand for 28 days.
The two Indonesians and a Sabahan were believed to have been on their way to Marawi City, southern Philippines, where government security forces have been fighting Maute militants, who have pledged allegiance to the IS.
Three “Rambo” knives and IS-related documents were found on the three suspects.
It was reported that the Malaysian man, 48, ran his own business while the two Indonesians, aged 24 and 36, worked as a lorry driver and construction worker respectively.
A local news site had reported that three more suspected militants had fled the scene and this had triggered a massive manhunt for them.
“There were no fleeing militants on Thursday as speculated by the media,” Bukit Aman’s Counter-Terrorism Division assistant director Ayob Khan Mydin Pitchay told FMT.
“The investigations into the three suspects arrested in Sandakan are still ongoing but we can’t release the details of the investigation.
“The three men are being investigated under the Security Offences (Special Measures) Act 2012 and are being detained under remand for 28 days.”
Pictures and a footage of the arrest went viral on Facebook and WhatsApp.
Many Sandakan locals expressed worry on social media about the possible presence of IS-affiliated terrorists in their town.
Traffic at a traffic lights junction halted when a special tactics police team made the arrests in full public view nearby.
“The public is advised to remain calm because the situation is fine and we’re taking proactive actions to tackle the problem,” Ayob said.
“If members of the general public have any information, we’d appreciate it if they shared it with us.”