Sabah holding Anwar to his word: 40pc revenue that should be returned under MA63
Published on: Friday, June 23, 2023
By: Larry Ralon
“My confidence is based on what he (Anwar, right) had said. He (Anwar) said why want to set up a committee, just implement the MA63. I asked him directly, are you sure? And he said “yes”, Jeffrey (left) said.
Kota Kinabalu: Deputy Chief Minister I Datuk Seri Dr Jeffrey Kitingan is confident that Sabah will get back the 40 per cent of net revenue derived by the Federal Government from the state under the leadership of present Prime Minister Datuk Seri Anwar Ibrahim.
This is one of Sabah’s rights under the Federal Constitution and the 1963 Malaysia Agreement (MA63).
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“My confidence is based on what he (Anwar) had said. He (Anwar) said why want to set up a committee, just implement the MA63. I asked him directly, are you sure? And he said “yes”.
“So I hold him on to that. Mudah-mudahanlah (hopefully). I do not know whether it is actually the politicians or the civil servants that are hampering this. But I am confident at least there will be discussion and there will be some results.
“How much we get, I don’t know, but I have some idea, and it cannot be RM26.7 million or RM125 million or RM260 million. It cannot be like that...if we accept that it means we are not being loyal to our own constitution,” he told a media conference after the Panel Discussion on Sabah’s New Sources of Revenue organised by the
Institute for Development Studies (IDS) Sabah at Wisma IDS, Thursday.
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He was asked how confident he is that the Federal Government under Anwar would honour its promise.
Dr Jeffrey said according to the Federal Constitution, not just under Schedule 10, Article 112C and 122D, the revenue collected by the Federal Government derived from Sabah is not just tax collections.
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“So what are these, well, revenues collected by Customs, Immigration and other departments. Even the dividends of Petronas are also revenue derived from the state. These are some of them.
“And also not just companies operating in Sabah and having their headquarters in the state, but those big companies including plantation companies whose plantation operations are in Sabah but their headquarters are in Kuala Lumpur whose corporate taxes and so on go directly to the Federal Treasury but their source of income and business is from Sabah.
“They should be included as generating income derived from Sabah. So the 40 per cent...of course the formula is already there so we don’t need a new formula. But it should be agreed in terms of implementation on what should be included and what should not be included.”
He said in the Constitution, nett revenue means nett of the grants that we received, minus the development funds, where we supposedly contributed 60 per cent of our revenue to Federal.
“The Federal takes 60 per cent, while Sabah gets 40 per cent, minus the grants and also revenue that we receive as a basis in 1963, which is not much. The 40 per cent should include whatever Petronas income derived from Sabah, which is subject to that,” he said.
About the oil royalty of five per cent received by Sabah, Dr Jeffrey said Sabah was actually collecting 12.5 per cent oil royalty before 1976 (Petroleum Development Act).
“If you read the agreement what I called the oil surrender agreement dated 14 June 1976, somewhere there, maybe section 4 or 5, it stated that the State Government agrees to forgo collecting royalty.
Meaning they deprived us of our right to collect a royalty. But under the State Land Ordinance, we are entitled to collect a royalty. And we were collecting 12.5 per cent of royalty before 1976.
“Why are we being deprived, the Chief Minister at that time signed the agreement but actually the Chief Minister alone cannot do that because it involves our constitutional right and our own law.
“It is supposed to be tabled at the State Legislative Assembly (DUN) to be approved. But the Federal Government at that time just imposed on us.
“Can you imagine, are we not stupid that time when we not only surrender our oil and then they told us not to collect royalty? You were asked to agree, doesn’t that show that we are stupid and being fooled?
“So it should not have happened, because oil is a natural resource that belongs to the state. Land and whatever is under the land belongs to the state.
“Land in Sabah is defined as within the boundary of the state and the boundary of the state as stated under Article 1, Sub-section 3, is the boundary of the state before Malaysia, which would include the continental shelf,” he said.
Asked if the State Government would relook the 1976 agreement, Dr Jeffrey said the State Government wants to strengthen the state first. “Now, actually, they are opening up.
And the whole world wants to stop using fossil oil, so oil and gas are going to become a sunset industry.”
On carbon trading which is one the latest sources of new revenue Sabah is looking at, Dr Jeffrey said the State Government is moving forward with it but on a small scale first.
Apart from that, he said he had proposed to the Prime Minister to site the country’s carbon exchange centre in Sabah because the state already has a product – its two million hectares forest conservation area.
“We are moving and I am calling for the steering committee meeting next month and hopefully we can start. I have already discussed this with the Chief Minister and we will start small.
The Forestry Department is looking into the details,” he said.
“I suggested to the Prime Minister why not site the country’s carbon exchange centre in Sabah because we already have our two million hectares of conservation, which we can sell to the world and attract investment,” he said.
Asked about the possibility of a Sabah-Sarawak Economic Council being set up to strengthen and boost the economic development of both regions, Dr Jeffrey said the possibility is there because Sabah and Sarawak have had discussions together on general matters including economic development.
“Sabah Cabinet members have gone to Sarawak and had a discussion and there will be some follow-up,” he said.
Earlier, Dr Jeffrey said Sabah has huge potential due to internal factors like oil and gas and pristine tourism destinations as well as external factors like its strategic geographical location and relocation of the Indonesian capital, Nusantara, to eastern Kalimantan.
“Whether we like it or not, we need to find new sources of revenues to meet our development needs, for the enrichment and welfare of our people and to realise our true potential to be a modern, progressive and prosperous nation.
“if Singapore without many natural resources can be a leading nation, in terms of per capita GDP, there is no reason why Sabah with all its natural resources endowment and strategic geographical location cannot be a modern, progressive and prosperous nation like Brunei Darussalam or Dubai.
This is what the Government is striving under the “Sabah Maju Jaya” slogan and we intend to see to it that it will be achieved,” he said.
Meanwhile, Dr Jeffrey said the State Government is looking at inviting global investors to help in the implementation of the state’s flood mitigation projects which cost RM17 billion to complete.
He said he had discussed the idea with the Prime Minister during their private discussion because the state does not have the money to implement the projects.
“We need RM17 billion for flood mitigation alone. We don’t have the money.
So I suggested to him (Anwar) that there are investors out there who want to invest in this and they would accept payments in the form of sand cleared from the river mouth and so on.
“So meaning we can clear two problems, the blockages and the problem of flood mitigation.
And the Prime Minister said this is being done in Semenanjung already, which used sand as payment, so why not in Sabah? So I think that is a good idea and we want to do that,” he said.
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