PUTRAJAYA is unlikely to fulfil all the terms pertaining to Sabah in the Malaysia Agreement 1963 (MA63), in particular the 40% revenue entitlement owed to the state, experts said.
 
MA63 activist Zainnal Ajamain said it was possible that the federal government owed Sabah more than RM1 trillion and that payment was long overdue.

He said it was not possible to calculate the exact amount owed as Sabah’s revenue was collected by Putrajaya.

“Although it was mandatory under the agreement, the federal government stopped paying the 40% special grant (in) 1974,” Zainnal, who advises Sabah on the federal MA63 steering committee, told The Malaysian Insight.

The committee is revisiting the agreement in efforts to restore the rights of Sabah and Sarawk as promised in the Pakatan Harapan election manifesto.

Sabah received an annual special grant from 1969, when it received RM20 million, to 1973, when it was paid RM26.7 million. 
 
Sabah was informed in 1973 that the federation was not in a position to revise the payment upward as requested by the state. Under Article 112D of the federal constitution, however, a review is mandatory every five years.

There had been no effort to carry out a review since, Zainnal said.

Since 1974, the federal government has not paid the 40% grant in accrued payment, he said. Instead, it paid a fixed RM26.7 million a year.   

“They have been paying us some RM26 million per annum and that figure has not risen since. Their reasoning is that the federal government has no money.”

The revenue-sharing formula has been set to 60:40 according to the terms in the MA63 and this is reflected by the distribution of two-fifths as stated in the federal constitution.

Zainnal believes that Putrajaya would try to amend the constitution to reduce the amount of the state’s annual special grant.

But this would be futile, he said, as the MA63 document is an official document that is registered in the United Kingdom.

“So there is no way Putrajaya can renegotiate the terms for Sabah and by not meeting them, it would be unconstitutional,” he said.

Michael Peter Govind, a director at Sabah’s Institute Development of Studies, said the MA63 is an international agreement that should be taken seriously and implemented.

“There is a saying that we would go for miles to get what we want and give thousands of reasons not to do so. So, the state and federal must look seriously into the implementation of the agreement,” said Govind, adding that he hoped Putrajaya will not give Sabah “peanuts” in the ongoing talks.  

Nonetheless, Govind lauded Putrajaya for its willingness to revisit the MA63, saying it was a sign that the federal government had finally conceded that it had breached the agreement.

Zainnal said for many Sabahans, what was done by the previous federal regime was unacceptable and believed the Pakatan Harapan government was beginning to behave the same way.

“Finance Minister Lim Guan Eng continues to say that the federal government is facing financial constraints and that Sabah and Sarawak have to wait for the special grant.

“Yet Putrajaya could approve the RM20 billion Penang undersea tunnel project.

“How much does Putrajaya get from Penang in revenue collection? And how much is Sabah’s?”
 
Penang contributes around 6.7% to the national GDP or around RM90 billion while Sabah contributes close to the same amount, around 6.2%.

However, as pointed out by Sabah Chief Minister Mohd Shafie Apdal in the recent state assembly sitting, Zainnal said there was no way for Sabah to find out how much it has contributed to the federal kitty.

This is because most of the collection is  are done by federal agencies such as the Customs Department, Immigration and Inland Revenue Board.

“Only the federal agencies know how much they collect from Sabah and they are not obligated to report their collection to Sabah, but only to Putrajaya,” Zainnal said.

Unless Sabah is able to obtain this information, the state government will never be able to estimate its annual entitlement accurately, he said. – August 18, 2019.