By Daniel John Jambun, President Borneo’s Plight in Malaysia Foundation (BoPiMaFo)
KOTA KINABALU: Borneo’s Plight in Malaysia Foundation (BoPiMaFo) notes the growing public discussion suggesting that the Federal Government may be reluctant to implement Sabah’s constitutional entitlement to 40% of the net revenue derived from the state, on the grounds that such payment would impose a heavy financial burden on the Federation and might trigger similar demands from Sarawak.
Such arguments fundamentally misunderstand the constitutional position.
Sabah’s entitlement to 40% of the net revenue collected by the Federation from the state is not a political concession, a discretionary grant, or a matter subject to fiscal convenience. It is a constitutional obligation clearly provided for under Articles 112C and 112D of the Federal Constitution of Malaysia and detailed in the Tenth Schedule.
The Constitution does not state that Sabah shall receive its entitlement only if the Federal Government can afford it. A constitutional obligation cannot be suspended simply because fulfilling it may be financially demanding.
It is also important to recall that the constitutional provisions governing Sabah’s financial arrangements were incorporated into the Federal Constitution as part of the constitutional framework prepared for the formation of Malaysia in 1963. The financial safeguards under Articles 112C and 112D, including the 40% revenue formula, were therefore not later additions or political concessions granted after the fact. They formed part of the foundational constitutional structure under which Sabah agreed to join the Federation.
This historical fact reinforces a crucial point: the 40% revenue entitlement is not a new demand being raised today. It was one of the financial safeguards built into the constitutional arrangements that accompanied the birth of Malaysia itself.
For decades, however, the constitutional review mechanism required under Article 112D was not properly implemented. This long-standing failure has now been recognised by the High Court of Sabah and Sarawak at Kota Kinabalu in its landmark judgment delivered on 17 October 2025 in the judicial review initiated by the Sabah Law Society.
In that decision, the Court did not merely issue a declaration. It granted an order of mandamus, compelling the Federal Government to perform its constitutional duty by undertaking a proper review and reaching agreement with the Sabah State Government within the timelines set by the Court.
Despite publicly stating that it respected the court’s decision, the Federal Government subsequently filed an appeal and an application to stay the High Court’s order.
From the government’s own court filings, it appears that the appeal is not directed at the fundamental constitutional principle recognised by the High Court, but rather at certain aspects of the reasoning and implementation of the judgment.
BoPiMaFo is concerned that these legal manoeuvres risk delaying the implementation of Sabah’s constitutional financial safeguards, which have already been neglected for decades.
There are therefore strong grounds for the appellate court to uphold the High Court’s decision and dismiss the appeal, so that the constitutional review required under Article 112D can finally proceed without further delay.
The increasing public narrative that the Federation may not have sufficient funds to honour Sabah’s entitlement raises a deeper question that Malaysians should reflect upon.
If the financial consequences are now considered too large, it is precisely because the constitutional formula was not properly implemented for decades. The longer a constitutional obligation is ignored, the greater the eventual correction becomes.
Sabah should not be penalised simply because its constitutional rights were neglected for so long.
Attempts to frame the issue as a financial burden on the Federation also overlook another crucial point. The constitutional financial arrangements governing Sabah and Sarawak are not identical. Sabah’s 40% entitlement arises from specific constitutional provisions negotiated when Malaysia was formed.
Concerns that Sarawak may demand similar arrangements cannot be used as justification to deny Sabah its own constitutional rights.
BoPiMaFo also notes that in recent years the Federal Government has repeatedly assured the people of Sabah and Sarawak that it is committed to fully implementing the Malaysia Agreement 1963 and restoring the rights of the Borneo States within the Federation.
Those commitments will ring hollow if one of the most fundamental constitutional safeguards provided to Sabah is now resisted or delayed when the courts have already recognised the obligation.
Sabah agreed — though reluctantly — to enter the Federation of Malaysia in 1963 after being assured that important constitutional safeguards would protect the interests, autonomy and financial security of the Borneo States. These assurances were reflected in the well-known 20-Point safeguards proposed by Sabah leaders prior to the formation of Malaysia, many of which later influenced the constitutional arrangements governing Sabah within the Federation.
Among these safeguards were provisions relating to financial autonomy, including the constitutional formula entitling Sabah to 40% of the net revenue derived from the state. These financial guarantees were intended to ensure that Sabah would possess the resources necessary to develop its economy and safeguard the welfare of its people within the new Federation.
Indeed, it is difficult to imagine that Sabah would have agreed to join the Federation had such constitutional financial safeguards — including the 40% revenue entitlement — not been assured.
These commitments were also symbolically affirmed through the Batu Sumpah Keningau, where solemn assurances were given concerning religion, land rights and native customs — assurances that were intended to reassure the people of the interior that their rights and identity would be respected within Malaysia.
Promises made to the people should not fade with time, and assurances carved in stone should not be forgotten in government offices.
The implications of this case therefore extend beyond Sabah alone. The financial safeguards provided under Articles 112C and 112D were part of the constitutional architecture designed to ensure that the Borneo States would be treated fairly within the Federation. If these safeguards are finally implemented as intended, it may require a broader reassessment of the fiscal balance between the Federation and the states.
Such a development should not be feared. Rather, it would represent the long-overdue fulfilment of the constitutional structure that was agreed upon when Malaysia was formed.
If a constitutional guarantee expressly written into the Constitution can remain unimplemented for more than six decades, Sabahans are entitled to ask a simple but profound question: what assurance is there that any promise made under MA63 will truly be honoured in the future?
For more than sixty years, Sabah’s natural resources — including petroleum, timber and other economic contributions — have played a significant role in strengthening the national economy. Yet many rural communities across Sabah continue to struggle with poverty and underdevelopment.
In many parts of Sabah today, villages still struggle with basic roads, clean water, electricity, dilapidated schools and poor health facilities — conditions that raise a difficult question: how different might Sabah’s development have been if its constitutional financial safeguards had been fully honoured from the beginning?
It is therefore reasonable for Sabahans to ask whether the full and proper implementation of the state’s constitutional financial safeguards could have significantly accelerated development and improved the welfare of its people.
The real question facing Malaysia today is not whether the Federation can afford to honour Sabah’s entitlement. The real question is whether the Federal Government is prepared to comply fully with the supreme law of the land.
Sabah’s 40% revenue entitlement is not a privilege.
It is a constitutional right.
Sabah does not seek charity from the Federation. Sabah only asks that the Constitution be honoured.
Sabah helped build the Federation’s wealth for more than sixty years through its natural resources, its petroleum, its timber, and its people’s contribution to the national economy. Sabah cannot now be told that the nation is too poor to honour the very Constitution upon which the Federation of Malaysia was built.
A federation survives only when its constitutional promises are honoured.
