In Trying to understand the Federal Govt Stand Regarding Sabah’s Entitlement of The Special Grant

By Nelson W Angang — Lawyer, Secretary-General of United Progressive Kinabalu Organisation


KOTA KINABALU: The 40 percent nett revenue entitlement to Sabah has been a hotly debated issue over the years. Sabah politicians and leaders have been demanding that the Federal government to respect and deliver what is owed to Sabah as intended by Article 112C and specifically Subsection 2(1) of Part IV of the Tenth Schedule of the Federal Constitution.
Now what is this really about? Most people understand that it is Sabah’s right to receive this but until today such obvious entitlement is still being denied to us. Confusion and anger naturally follow when we are denied what is due and rightfully ours. Especially for the fact that Sabah is blessed with rich natural resources and has been contributing significantly to the revenues collected by the Federal government annually since the formation of Malaysia.
Recently, the answer given by the Finance Minister Tengku Zafrul Aziz in Parliament and repeated in his press statement has given us a big shock equivalent as if an earthquake of more than 8.0 magnitude on the Richter scale has just hit Sabah (touchwood) and therefore finally explaining the position and stand taken by the federal government that Sabah’s reliance on the formula of 40 percent nett revenue entitlement is no longer applicable.
This could be understood to mean because of the review in 1969 [Sabah Special Grant (First Review) Order, 1970] instead of Sabah getting the 40 percent nett revenue collected, another grant was made (to replace the 40 percent) to Sabah for 5 years for the amount of RM20 million (1969), RM21.5 million (1970), RM23.1 million (1971), RM24.8 million (1972) and RM26.7 million (1973) respectively.
Since there was no other review made ever since, the last grant amounting to RM26.7 million still stand and had been paid to Sabah annually until today. The federal government in justifying this amount (RM26.7 million) had relied on the provision of Article 112D (3) FC which the relevant part states “…; but any order under Clause (1) giving effect to the results of a review shall continue in force after the end of that period, except in so far as it is superseded by a further order under that clause.”
Which basically means the Federal government is saying to Sabah that “Yes, we may have collected more from you annually since 1974, but sorry I will only continue to pay you the same amount of RM26.7 million yearly because I can do that since no review was done to increase the payment.”
In trying to understand why the finance minister would take the position that the 40 percent nett revenue formula no longer applies, one could reasonably conclude that it is because if the Federal government had acknowledged it, then it can be argued beginning from 1974 (where a 2nd review is due) Sabah could rely on the 40 percent formula and claim from the Federal government to make good on such payment starting from that year. However, by not acknowledging the 40 percent formula will be the justification for making the continous payment annually of RM26.7 million only to Sabah since 1974.
Therefore, it would seem that the Federal government is hiding behind the provision of Article 112D (3) of the FC in justifying their action of maintaining the payment of RM26.7 million only when clearly the amount should have been much more and that a review ought to have been made in 1974.
I do not believe that our sacred Federal constitution in recognising Sabah’s entitlement of the 40 percent net revenue can be so easily denied and ignored when the intention to respect such right is clearly stated in the Federal constitution and until today remain engraved there.  
We have heard from Sabah state government leaders that they will ensure and demand that Sabah to get what is rightfully ours based on the 40 percent formula. From the stand taken by Tengku Zafrul and the further excuse that it is beyond the Federal government capacity to consider the payment based on of the 40 formula, does that mean there would be no negotiation in paying back to Sabah based on the 40 percent formula starting from 1974? Or that the negotiation is only for future payment starting from 2022 onwards? 
Before our state leaders start banging any tables, this is the vital question that the people of Sabah would want an answer. The Sabah state government and Federal Government must make it clear to the people of Sabah on the terms of reference of the negotiation.
If indeed the Sabah government will not back off from claiming our entitlement based on the 40 percent formula, then our state leaders must be firmed in that the Federal government must be transparent and disclosed to Sabah the actual amount of revenues that they have collected from Sabah annually. Only then the state government of Sabah would be in the best position to negotiate our entitlement based on the 40 percent formula. Without it, Sabah will always be handicapped on the negotiating table of not being able to know the exact value of our 40 percent entitlement because it must be based on the actual amount of the total revenue collected by the federal government annually over the years.
Could it also be the reason that the federal government no longer recognised the 40 percent formula is to avoid in disclosing and denying Sabah the information of the actual total revenue that they have collected from Sabah annually over the years and in the future?
If the Federal government is adamant of not wanting to negotiate at all of paying or increasing the payment to Sabah since 1974 based on the 40 percent formula, then the Sabah government must take serious consideration of bringing this matter and enforcing Sabah rights to another level.
If they must bring this matter to be decided by the court then so be it. It is time that this matter be finally address and adjudicate by the court of law if the negotiation does not benefit Sabah or worst denying Sabah of its constitutional rights and disrespecting the spirit and intention of MA63.
The most grievous of harm would befall the people of Sabah of their constitutional entitlement should the interpretation of the federal government is accepted in that the 40 percent formula is no longer applicable based on the First Review Order of 1970 when clearly that order was only intended for a period of 5 years from 1969 to 1973 and that a 2nd review ought to have been made in 1974. That is why the State government must never agree in the negotiation with the Federal government that whatever consideration or settlement that is being proposed and agreed upon is not based on the 40 percent formula. It must always be based on the intention of the 40 percent formula. To do otherwise would create a dangerous precedent that the 40 percent formula can be ignored and dismissed.
That is why such interpretation and insistence by the Federal government must be legally challenged and I would dare say corrected. We owe this to our future generation to bring finality to this issue. Imagine if the promise of our rights in receiving 40 percent nett revenue is respected, we would be able to have the means and to plan in developing our state without having to wait and rely on the ‘goodwill’ of the Federal government in allocating us more development funds annually.
There will be less animosity and the avoidance of another quarrel between the people and our state minister on the demand to improve the road conditions in Sabah in the social media. That our students don’t have to climb trees just to get a good internet coverage so he or she could join their online classes and online exams. That our children don’t have to risk their lives daily by clinging to the cable of a broken suspension bridge so that they can go across the river to be able to attend schools. We would be one of, if not the wealthiest and most developed state in Malaysia. But sadly, until today we can only dare to imagine and dream of it.
Our founding leaders were persuaded by forming Malaysia, our people then and its future generations will experience a better life with developments on par (if not better) with our brothers and sisters in Peninsula Malaysia. After almost 59 years of Malaysia, do we truly have that?

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