SABAH will not accept anything less from Putrajaya than 40% of tax revenue and 20% royalties from the state’s oil production as stipulated in the federal constitution, said Chief Minister Shafie Apdal.

Shafie said the federal government had only been paying around RM23 million a year from total tax and levy collections from the state since 1974, even though collections have risen exponentially in the last 44 years.

“The demand on 40% revenue sharing must be realised. The federal government has been collecting a lot of taxes and levies from Sabah, but we have never complained. We don’t mind our wealth being shared with the other states.

“But we only demand 40% of what has been taken from us,” Shafie said at an event marking the Warisan-led government’s first 100 days in office.

On the oil royalty, Shafie said 20% of gross production was a fair demand as the state produced close to 50% of the country’s total oil and gas.

He said that in 2013, Putrajaya collected RM32 billion from Petronas, while Sabah received only RM7 billion despite supplying half of the national production.

Activists have accused Putrajaya of failing to pay Sabah its annual revenue entitlement or review its payments since 1974, although mandated under the federal constitution.

Article 112D of the federal constitution provides for a review to be carried out every five years government-to-government as stipulated under the special grant in Part IV of the Tenth Schedule – 40% revenue entitlement.

The review does not need to only be about funds, but can also be substituted, modified, varied, or abolished with the consent from both the state and federal governments.

However, the federal government said in 1974 that a review was not possible as the government was not in the proper financial position.

Critics say the revenue entitlement was the deal breaker that pushed Sabah to agree to form the federation together with Sarawak, Singapore, and the Federated States of Malaya in 1963.

Sabah agreed to give 60% of its revenue to the federal government, which would in return finance the police, army, and navy to ensure the state’s security.

On oil royalties, activist have questioned whether the Petroleum Development Act (PDA 1974) is unconstitutional as extraction of natural resources comes under the state’s purview, as stipulated under the federal constitution, a law much older than the PDA itself.  

When asked how soon the 20% oil royalty payment could be realised, Shafie said it was tough to predict, as the federal government was interpreting the oil royalty payment based on profit.

“I had a meeting with the Petronas president (Wan Zulkiflee Wan Ariffin) recently. I cannot reveal in detail what we had discussed about, but I have made the state cabinet’s decision clear to him that the payment must be based on gross production, not profit,” he said.

“I will soon meet the prime minister (Dr Mahathir Mohamad) and the economic affairs minister (Azmin Ali) on this,” Shafie said.

He noted Sabah is in dire need of funds for development as it is one of the largest states in Malaysia and that the government wanted to stop the migration of its people to Peninsular Malaysia to seek better opportunities.

“How many Sabahans have to migrate to the peninsula? I have seen hundreds of thousands of our people working in Johor and in Shah Alam, Selangor, because Sabah can’t provide jobs for them.

“We want to ensure job opportunities are also available in Sabah too,” he said. – August 22, 2018.