Kota Kinabalu: One of Sabah’s longstanding weaknesses in securing its financial rights was failure of past leaders to act honestly and courageously on provisions enshrined in the Malaysia Agreement 1963.
Speaking during the 2026 State Budget debate at the State Legislative Assembly, Tambunan Assemblyman Datuk Seri Jeffrey Kitingan (Star) corroborated the view of former Sabah Law Society President Datuk Roger Chin in the assembly on Monday. Roger was made a Nominated Assemblyman in the current session.
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Dr Jeffrey did not name the leaders but urged the Sabah Government to establish a new mechanism to guarantee the collection and return of the State’s 40 per cent revenue entitlement.
He said Sabah must put in place a clear system to collect revenues derived by the Federal Government from Sabah and ensure their distribution on a 60:40 basis.
He said this is essential for safeguarding the State’s constitutional rights.
While awaiting the creation of such a mechanism, Jeffrey proposed that all federal collections from Sabah be channelled into a consolidated account in Sabah, from which the 40 per cent share could be extracted and distributed to the State in accordance with Articles 112C and 112D of the Federal Constitution.
On the issue of arrears from 1974 to 2021, often referred to as “the lost years”, he said negotiations should continue until an amount reflecting the true 40 per cent entitlement was agreed, adding the Federal Government could, if necessary, settle part of the sum through the transfer of federal assets to Sabah.
Turning to the 2026 Budget, Jeffrey said Sabah’s projected revenue of RM6.43 billion should not be treated as final because it must include a specific allocation for the 40 per cent Special Grant of Net Revenue.
He cited the Kota Kinabalu High Court ruling that “40 per cent of all revenue obtained by the Federal Government from Sabah must be returned to Sabah”, noting that the court had also ordered both governments to conclude negotiations on the amount payable within 180 days from Oct. 17, this year.
Jeffrey argued that Sabah’s revenue in 2026 could exceed RM30 billion if all constitutional entitlements were honoured, saying, “Sabah is entitled to far more than what is currently reflected in the budget.”
He broke down the estimate by pointing to current revenue of RM6.43 billion, a potential 40 per cent grant under Articles 112C and 112D that could reach RM20 billion, import and excise duties on petroleum products that could exceed RM1 billion, and export duties on crude oil in lieu of royalties that could contribute up to RM3.6 billion annually.
“Although Sabah is labelled the poorest State in Malaysia and its people are said to be impoverished, the reality is that Sabah and its people are actually wealthy,” he said, adding that the State had been “made poor and marginalised, largely by its own leaders.”
He said Sabah’s natural wealth, including oil and gas, as well as emerging sectors such as carbon conservation, the green and blue economy and rare earth minerals could elevate Sabah’s economy to rival not only Sarawak but even Singapore.
“What Singapore has is a transparent, professional and anti-corruption administration,” he said.
Jeffrey said Prime Minister Datuk Seri Anwar Ibrahim had said in 2024 that the Federal Government collected RM10.2 billion in Sabah in 2023, but claimed the actual figure was higher due to underreported Customs collections.
He said if the additional RM1.3 billion allegedly collected by Customs was included, total federal revenue from Sabah would amount to RM11.5 billion, making Sabah’s 40 per cent share RM4.6 billion, which he said “must be the minimum amount added to the 2026 Budget by the Finance Minister”.
Jeffrey added that this figure did not yet account for federal collections from international oil companies, Petronas, major plantation groups operating in Sabah, or revenue collected by federal agencies such as the Road Transport Department (RTD), Immigration Department and National Registration Department (NRD).
On MA63, he said negotiations were reaching a critical stage, with upcoming issues including ownership of oil and gas, royalty payments, the continental shelf, Sabah’s maritime boundaries, stamp duties on property, the 40 per cent Special Grant and the demand for 35 per cent parliamentary representation for Sabah and Sarawak as a constitutional safeguard.
Regarding parliamentary representation, he proposed a more proactive approach by amending the Federal Constitution to guarantee Sabah and Sarawak a permanent 35 per cent share of seats, regardless of future increases in the total number of constituencies.
He also suggested Sabah emulate Sarawak by establishing a State-level committee to study and recommend the re-delineation of State seats, which would in turn prepare Sabah for the creation of new parliamentary constituencies.
Jeffrey stressed that several matters under MA63 were absolute rights of Sabah and “are not negotiable”, including ownership of the continental shelf if Sabah’s boundaries under the 1954 Order in Council and Article 3(1) of the Federal Constitution were upheld.
“If the continental shelf belongs to Sabah, then all oil and gas on the continental shelf belong to Sabah and not to Petronas,” he said.
In view of the significance of these issues, Jeffrey proposed the establishment of a special MA63 Cabinet committee to manage and safeguard Sabah’s rights, calling for it to be made up of bipartisan assemblymen from both the government and the opposition.
