The Malaysia Agreement Disagreement

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Today we celebrate our first Malaysia Day as a “new Malaysia”. But two of the three parties that helped create Malaysia might not have so much cause to celebrate.

KUALA LUMPUR (Sep 16): FOR over 10 years, activist Zainnal Ajamain has been fighting a seemingly losing battle – to get his home state of Sabah the rights it was promised under the Malaysia Agreement of 1963 (MA63).

If MA63 had gone according to plan, Sabah and Sarawak wouldn’t even be states in Malaysia – they would be founding partners, with more autonomy than other Malaysian states.

They would also probably be way more wealthy and developed than they are now, because they were promised a higher share of their petroleum revenue.

Despite them currently producing 60% of Malaysia’s petroleum, worth an estimated RM38bil in 2017, they’re only getting 5% of the revenue each. The original deal? Sabah was to receive two-fifths (or 40%) of its own net revenue. Sarawak was promised annual grants that would increase from RM3.5mil to RM21mil over four years, and the amount would be reviewed “in later years”. It never was.

“I think we’ve been cheated for over 50 years,” says Zainnal. “We’ve been developing based on policies set by Kuala Lumpur, not by us.

“Based on those policies, Kuala Lumpur will allocate us our funding even though the money came from us in the first place, through our oil and gas, timber and our income tax.”

Today, Sabah is the second poorest state in the country after Kelantan. Both Sabah and Sarawak continue to suffer from under-development and a lack of accessible healthcare and education.

To understand just how this all came about, we have to go back to 1963.

How it all went down

In order to persuade the Borneo Territories of Sabah and Sarawak to join Malaysia, MA63 included provisions to ensure autonomy of civil services, freedom of religion, and their own immigration control, in addition to the promise of development.

As founding partners, they were assured that there would be a review in a decade, in order to ensure the partnership was going as planned.

But that meeting never took place. In fact, it has never taken place.

What did take place, however, was the Petroleum Development Act (PDA) being passed in 1974, giving Petronas sole and exclusive ownership over the country’s oil and gas, most of which comes from Sabah and Sarawak.

The oil-producing states would receive cash payments in return, amounting to the aforementioned 5%, and the rates would thereafter be decided by “relevant parties”.

However, the PDA also states that Petronas is subject to the control and direction of the Prime Minister, which means the Prime Minister is, in effect, the only person who can change the rates – and those rates have not changed since.

Two years later, the Federal Constitution was amended. Sabah and Sarawak, the original stakeholders of Malaysia, saw themselves “demoted” from founding partners to the 12th and 13th states of Malaysia.

“We formed Malaysia because we wanted to form Malaysia. But instead in 1976, the clever people in KL went and put Sabah and Sarawak in Malaya. That’s wrong,” says Zainnal.

Sabahan lawyer and former PKR supreme council member Ansari Abdullah thinks the Federal Government was not solely responsible for the “downgrade”.

“It was passed by Parliament,” he says.

“The Sabah MPs at the time should have objected. But the state government and our MPs kept quiet. Likewise, Sarawak. So you cannot blame anybody but our MPs and state government at that time.”

But that wasn’t the only limitation Kuala Lumpur would pose on Sabah and Sarawak’s autonomy.

In 2012, the Federal Government passed the Territorial Sea Act which limits Sabah and Sarawak’s jurisdiction over their waters to three nautical miles (5.5km) from the coastline, away from most of the oil and gas fields.

Sarawakian politician Datuk Seri Nancy Shukri says the change was not approved by the state government, and called on the new Pakatan Harapan Federal Government to review the act.

“We are not asking for more – we are only asking for what is ours,” says Nancy.

Reconciling with the past

In line with its 2018 general election manifesto, the Pakatan Harapan government announced their plans for a Special Cabinet Committee to review and propose measures to rectify the status of MA63.

But this plan, while laudable, isn’t anything new. There were multiple committees under the Barisan Nasional administration as well, including the 2015 National Steering Committee (of which Nancy was co-chairperson), but nothing changed.

“We’re immune to it (the promise of rectifying MA63),” says Lina Soo, president of the Sarawak Association for People’s Aspiration.

“But since the (previous) Federal Government hadn’t bothered to change anything for 55 years, we hope the Pakatan Harapan government will be better.”

Under the 2015 National Steering Committee, four Federal-level meetings were held and reports were submitted, including to then-Prime Minister Datuk Seri Najib Tun Razak, but the committee has been defunct ever since the change in government, according to Nancy.

While it might still be possible to rectify the status of MA63, fulfilling every single aspect of it might be impossible, according to Sarawakian James Chin, director of the Asia Institute in the University of Tasmania.

“If the financial arrangements weren’t followed since 1963, the Federal Government really can’t pay off the amount of money owed to Sabah and Sarawak,” says Chin, who has written in numerous academic journals about governance in Southeast Asia. “There’s no way they have that pot of money.”

A start, however, would be fulfilling the Pakatan Harapan manifesto, which promised to “increase petroleum royalty to Sabah and Sarawak to 20%”.

But in July, Prime Minister Tun Dr Mahathir Mohamad said the 20% would be on profit, not revenue, which sparked another round of debates on whether this would actually be an upgrade on the 5% of gross sales Sabah and Sarawak currently receive.

On top of that, the Special Cabinet Committee promised by the Pakatan government to review MA63 is still yet to be announced.

Parti Warisan deputy president Darell Leiking, who is also Minister of International Trade and Industry, isn’t giving up hope, despite having fought for Sabah’s oil royalty to be increased to 20% for years.

For change to happen, the PDA would have to be looked into and amended, he says.

Leiking had been trying to get answers from the former government about what the 5% figure meant in cash allocations to Sabah.

“I had been asking the government for seven years about why Sarawak got more money than Sabah, even though we’re both supposed to have 5%,” he says.

“I hope the committee will go into further details on how we can correct the revenue sharing and whether we have been treated fairly.”

Leiking has fought for years, but people in Peninsular Malaysia might not fully understand why. After all, not every state has oil royalties – why is it so important two states get all that money?

The problem is that many areas in Sabah and Sarawak still lack clean water, electricity, roads, healthcare and access to education.

According to the Report of the Director-General of Health Malaysia, basic healthcare and facilities are available to only 70% of the population in Sabah and Sarawak, compared to more than 95% in Peninsular Malaysia.

Similarly, literacy rates in Sabah and Sarawak are lagging behind at 79% and 72% respectively while the rest of Peninsular Malaysia had a 97.3% average in 2010.

While Malaysia has prospered off the backs of Sabahan and Sarawakian oil, much of their population have continued to live in poverty.

“Time has stood still for the past 55 years,” says Soo. “The oil revenue has not returned to Sarawak. Everything has gone to Petronas and the Federal Government to fund the massive development in Malaya, but in our rural areas, our schools are collapsing, our school children study by candlelight.”

Leiking entreated people across Malaysia to learn about the history of how the country was founded, saying there is a “disconnect” between east and west Malaysia.

“As long as the disconnect continues, the people of Sabah, the people of Sarawak will never be satisfied and there will always be growing resentment towards west Malaysians.”

Understanding our origins

According to Chin, our history textbooks in schools simply don’t educate Malaysians enough about how their country was founded.

The way it is taught in school does not reflect the complexity of the country’s formation, or the contributions made by Singapore, Sabah and Sarawak, he says.

“The historical grievances can’t be undone,” he says.

“What you have to do is actually confront it and reflect on it so future generations will not make the same mistakes.”

Public education is the key to bringing balance back in the relationship between east and west Malaysia, he said.

“There’s really no understanding of the Malaysia Agreement. We really need the population of Malaysia to understand its own history and not allow it to be hijacked by vested interests.”

That’s what Zainnal has been trying to do for the past decade. To educate Malaysians about our history, beginning with East Malaysians themselves, through a set of modules he has developed over the past five years.

“Let me put it this way: anyone who doesn’t have a history has no future,” he says.

“We want our young to have an even better future than us, so if we can prepare the groundwork now, we should do it.”

[Source: “The Malaysia Agreement disagreement” published by The Star Online/Star Media Group Berhad]
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