Is the 40% Sabah entitlement negotiable?

By Remy Majangkim, MA63 Activist, Tutor and Historian


KOTA KINABALU: Good day, everyone, so what is the 40% revenue entitlement for Sabah? In order to understand it, we need to understand history in the formation of Malaysia, the agreement that has been reached, and our status in Malaysia. We need to dwell on the treaty itself and Constitutional obligation.

First of all, there is no Malaysia without the members of the participating states getting together, reaching mutual agreement and finally forming a federation of States called Malaysia. The State of Sabah, Sarawak and Singapore is a recognized international entity by the British Government and the United Nation.

After the initial recommendation of the Cobbold Commission and finally the inter government committee recommendation, supplemented by the United Nation intervention, the terms and obligations of the Federation of Malaya are bare.

The Inter Government Committee meeting begins on 30 August 1962 and ends on 20 December 1962 with a total eleven (11) plenary meeting, which was attended by all 74 delegates. These discussions pivot on many issues, and one of them is the financial revenue sharing formula and safeguards. It was legally binding then with the advent of the new Federal Constitution in exchange for the Malayan Constitution. As stipulated in the Malaysia Agreement 1963.

What is the role of the Federation of Malaya in the formation of Malaysia? A trustee.

As a trustee, the Federation of Malaya’s role was to take over the obligation of the British Government to set their former colonies into their final endgame, that is, independence. The new Federal Constitution naturally includes a constitutional obligation and objectives of the host trustee.

In the shared revenue formula, it was clearly defined on the tenth schedule on the Federal Constitution, heading special grants for the States of Sabah and Sarawak. Why is this item so important that it was inserted in the tenth schedule in relation to Article 112C & 112D? These are safeguards imposed by the British to ensure that the people of Sabah get their fair share. The money can therefore be used for a wide range of development in the State.

As a cherry in the cake, the British also sought out by including article 161E in the Federal Constitution that stated that the position of Sabah and Sarawak was not the same as the states of Malaya.

The State of Sabah has never got paid as agreed in the revenue sharing formula since 1963. This prolongs delays has made what we are today, the richest state in the federation and yet the poorest one.

Come back on April 20, 2022, a Federal Government Gazette was issued during the height of the lockdown by the then Perikatan Nasional Government. The only aim was to derail and reinvent a new revenue sharing formula for the period of five years. (2022 to 2026) affixed to an exponential amount ranging from RM 125.6 to RM 142.6 million per year. The 40 % entitlement or one fifth of the revenue collected from Sabah is now replaced with the term Sabah Special Grant. That means the payment will be within the whims and fancies of the Federal Government, this act is clearly unconstitutional.

The Pakatan Harapan 2.0, announces in the recent federal budget, Sabah will receive RM 300 million for 2024. It was also proclaimed that a total RM 6.3 billion revenue collected from the State. If following the agreed revenue sharing, we should get at least RM 2.52 billion for the State. This amount is far cry from what we are supposed to get if our rich oil and gas field is included. In recent days, MPs from UPKO, GRS, KDM and Warisan were at the fore front in fighting for Sabah rights until the end of this year’s parliamentary session. That alone is a drama by itself, as MPs were not allowed to debate the issue with a recorded hansard.

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