Sabah’s 40%: Promise, Delay, and the Future of the Federation

By Jo-Anna Sue Henley Rampas

KOTA KINABALU: April 6 is not just a legal date. It is a test of what kind of federation Malaysia intends to be.

The Court of Appeal’s ruling on the federal government’s stay application in Sabah’s 40% case will be important, but the deeper significance lies beyond the immediate legal outcome. 

For decades, Sabah’s 40% entitlement has symbolised unresolved questions of constitutional integrity, equity, and the spirit of the Malaysia Agreement 1963 (MA63).

What is at stake is not simply revenue, but whether constitutional commitments are honoured in both principle and practice.

In simple terms, the 40% entitlement is a constitutional promise. Under Article 112C and the Tenth Schedule, Sabah is entitled to a special grant equal to 40% of the net revenue that the federal government collects from the state, above a defined 1963 baseline. 

This arrangement was reviewed once in 1969, with new figures taking effect in 1974 but no genuine review followed for decades, even as federal revenue from Sabah continued to grow. 

The recent High Court ruling in favour of the Sabah Law Society has, for the first time, imposed clear obligations and timelines on the federal government to conduct a proper review and to account for how this entitlement is calculated.

The first point that must be understood is this: Sabah’s 40% dispute is no longer an isolated grievance. It is part of a wider constitutional recalibration in East Malaysia.

Sarawak has filed a petition in the Federal Court challenging the constitutional validity and continuing applicability of three major federal petroleum laws: the Petroleum Development Act 1974, the Continental Shelf Act 1966, and the Petroleum Mining Act 1966. 

Sarawak’s core argument is that these laws, many passed under emergency conditions, may have overridden preexisting state laws such as the Oil Mining Ordinance 1958 without proper state consent, in ways that sit uneasily with MA63 and the Federal Constitution. 

Crucially, Sarawak has framed its position not as confrontation, but as clarification, grounding its case in constitutional instruments, while openly stating its willingness to negotiate in ways that strengthen the federation rather than weaken it.

Taken together, Sabah and Sarawak are doing something unprecedented in Malaysia’s modern history. In different arenas, both Borneo states are asserting that the federation must finally operate as written. This should not be read as a rejection of federalism. It is, instead, a reaffirmation of federalism , a call for the federation to function as intended under the Constitution, not just as managed by daytoday politics.

The second point is about Sabah itself  and the leadership choices that now lie ahead, especially around April 6 and April 15.

April 6 marks the Court of Appeal’s decision on the stay application , a critical moment that will determine whether the High Court’s ruling proceeds within its intended timeline or is delayed. April 15 is tied to the next phase of proceedings and compliance expectations, and thus becomes a practical test of whether momentum is maintained or deferred. 

These dates matter not just to lawyers, but to Sabahans who have waited generations for meaningful movement on an issue that has been repeatedly discussed, but rarely resolved.

Sabahans’ patience is not infinite, but neither is it reckless. There is no widespread desire to tear the country apart. What Sabahans want is far more grounded: that constitutional rights be implemented with sincerity, consistency, and respect.

This is where leadership matters.

The most defensible posture  and one that Sabah’s Attorney-General has already outlined, is to remain constructive but firm. That means participating fully in negotiations, engaging on technical details, exchanging data, and proposing methodologies in good faith, while firmly opposing any move that undermines the integrity of the court’s timelines, especially in the context of these key dates.

In practice, this also means resisting attempts to reduce the 40% issue to vague political assurances without concrete numbers, formulas, and deadlines attached.

The coming weeks must not be treated as political theatre. They are a test of governance.

Sabah’s leadership now has an opportunity to do something different: to build a bipartisan negotiating position, to clearly communicate the methodology behind Sabah’s claims, and to ensure that the issue of “Sabah rights” is not reduced to slogans, but grounded in institutional credibility. 

This is not a peripheral concern. It is central to whether Sabah can negotiate effectively and be taken seriously at the federal level, regardless of which coalition holds power in Putrajaya.

Third, we also need to be clear about why the courts are now involved at all.

For years, this issue was left to negotiation, committees, and special envoys, but without a clear outcome or enforceable timeline. The courts have stepped in not to replace discussions, but to move things forward and provide a structure within which negotiations must occur. 

The stay application is therefore more than just a technical step. It raises a bigger question: are we serious about resolving this, or are we still looking for ways to delay it?

There is already a practical way forward if talks reach a deadlock. The Constitution anticipates this scenario. Under Article 112D(6), an independent assessor can be appointed to examine the facts and recommend the sums due, with both sides bound by that outcome. In everyday terms, the Constitution provides a “referee” for precisely these situations when agreement is difficult, but a resolution is still necessary.

A serious federation does not rely on goodwill alone. It relies on institutions that ensure fairness, transparency, and accountability.

For Sabah’s 40% entitlement, that means agreeing on a clear methodology, publishing the basis of calculations, setting transparent timelines, and, if necessary, invoking the independent assessor mechanism to ensure that no party can indefinitely delay compliance. 

The point is not to humiliate any side, but to demonstrate that constitutional promises are enforceable, not optional.

Finally, there is an unavoidable national dimension.

Sabah and Sarawak are not peripheral to Malaysia’s political future but they are central to it. As we move toward the next general election, how this issue is handled will shape not only statelevel sentiment in Borneo, but also the broader legitimacy of federal leadership. 

Borneo seats will again be pivotal in determining who forms the government in Putrajaya. In that context, perceptions of whether MA63linked commitments including the 40% entitlement and resource rights are honoured in substance, not just in rhetoric, will have real consequences for any coalition claiming to represent a stable and fair federation.

This is not a threat. It is political reality.

If constitutional commitments are seen to be honoured in substance, it strengthens the federation. If they are seen to be delayed, diluted, or managed away through procedure, it risks deepening longstanding frustrations that are already widely felt, especially among younger Sabahans and Sarawakians who did not live through 1963 but are living with its consequences.

Ultimately, this is not just about revenue. It is about whether Malaysia can still function as a federation of partners bound not only by history, but by a Constitution that is taken seriously.

The Court of Appeal’s ruling on April 6 will matter. But the larger judgment will come from how Sabahans, Sarawakians, and Malaysians as a whole interpret what follows,  not just in law, but in trust. And trust, once tested, becomes the foundation or the fault line of everything that comes next.

Jo-Anna Sue Henley Rampas, researches youth political participation in Sabah and Sarawak, Host and Co-Founder of Smart Talks Sabah Podcast

DISCLAIMER: The views expressed here are those of the author/contributor and do not necessarily represent the views of Jesselton Times.

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