THE Petroleum Development Act (PDA) is invalid as Parliament is prohibited to impose levy on royalties to Sabah and Sarawak natural resources, Malaysia Agreement 1963 (MA63) activist Zainnal Ajamain said.

Zainnal, who is also a member of the federal steering committee revisiting the MA63, said the levy clause comes under Section 4 of the PDA, which specifies the 5% cash payments as royalties for both states.

This, he said infringes upon Article 112c (4) (b) of the federal constitution, which prohibits Parliament from the levying of royalties on any minerals from both Sabah and Sarawak. 

“The law, therefore is unlawful and invalid. As far as we could tell, the MPs who passed the law may have overlooked what was in the constitution,” he told The Malaysian Insight.  

Sabah and Sarawak each gets 5% royalty in cash payment at present.  

Putrajaya, meanwhile, receives 3% royalty from Petronas and as additional income. The federal government also imposes tax on Petronas while earning annual dividends as the prime minister is a stakeholder in the national oil company.

Zainnal said PDA was drafted by former attorney-general Salleh Abas for the then Petronas chairman Tengku Razaleigh Hamzah with the aim of nationalising oil in Malaysia, which he said did not make sense.

This is because minerals owned by the states are non-negotiable. 

“The federal government could have picked any GLCs or negotiate with any oil firms for the purpose of nationalising oil companies, but could not negotiate with the states which own the minerals,” he pointed out.

Furthermore, he said the claim that the federal government has authority over 3 nautical miles from Sabah shores due to the imposition of emergency laws in 1969 is no longer relevant.

He said the federal government had lost its claim of ownership to Sabah’s and Sarawak’s territorial waters when it lifted the Proclamation of Emergency on November 23, 2011 to pave the way for the abolishment of the Internal Security Act (ISA).

Zainnal said this reverts to Continental Shelf Act which states the seas and land now belongs to the state.

When asked whether security comes under federal purview, Zainnal said this was out of the question as defence, health and education were federal obligations towards Sabah and Sarawak when forming Malaysia in 1963. 

He said these obligations and the funding that comes with it should not be mistaken with annual revenue entitlement for the state and if Putrajaya insisted that it was, Sabah should be an independent state.

“Why? Because we are paying for defence, health and education using the state’s own monies,” he said.

Zainnal said another unlawful practice done by the federal government at present is collection of fees by the National Security Council on Sipadan Island, a dive haven. 

He said this is unconstitutional as security is already being provided for by Putrajaya. – August 12, 2019.