Jeffrey proposes Special MA63 Cabinet Committee to safeguard Sabah’s rights

KOTA KINABALU (Dec 16): Tambunan assemblyman Datuk Seri Panglima Dr Jeffrey Kitingan has proposed that the Sabah Government establish a Special MA63 Cabinet Committee to handle Malaysia Agreement 1963 (MA63)-related issues, particularly the most critical matters, in order to safeguard and protect Sabah’s rights.

He said the Special Cabinet Committee should be composed of bipartisan honourable members, namely from both the government and the opposition.

Earlier, when debating the 2026 Sabah Budget, Jeffrey said he believed Sabah’s revenue for 2026 could exceed RM30 billion if the revenues to which Sabah is entitled under the Federal Constitution are duly honoured and returned to Sabah.

“Why do I say it could exceed RM30 billion? This is because, aside from the estimated Sabah revenue for 2026 of RM6.43 billion, we also have to consider the special grant of 40 per cent under Articles 112C and 112D,” he said.

He reminded that the Sabah Government also has the right to collect import and excise duties on petroleum products under Item 1, Part V, Tenth Schedule, which could contribute more than RM1.0 billion, up from the current RM120 million per annum.

He further said Sabah also has the right to collect export duties on crude oil in lieu of oil royalties of up to 10 per cent ad valorem under Item 3, Part V, Tenth Schedule, which could contribute RM3.6 billion per year.

“This means the total sum can reach RM30 billion,” he said at the August House on Tuesday.

Unfortunately, he said, one of the weaknesses and failures that has caused Sabah to be unable to receive its constitutional financial entitlements is its own weakness, compounded by other factors such as the political situation. Among these was the fear of asserting Sabah’s rights, particularly during periods when the Internal Security Act (ISA) was in force.

“Although Sabah is labelled the poorest state in Malaysia and its people are impoverished, the reality is that Sabah and its people are in fact very wealthy. They have merely been impoverished and marginalised, largely contributed to by Sabah’s own leaders,” said Jeffrey.

He said that Sabah’s natural resource wealth, including oil and gas and, more recently, carbon conservation, the green and blue economy, and rare earth minerals, could propel Sabah’s economy to be on par not only with Sarawak but even with Singapore, which has no natural resources, no oil and gas, and even lacks sufficient clean water.

“In Sabah, everything exists. What Singapore has is transparent, professional and anti-corruption governance and administration.”

Returning to the Sabah Budget 2026, he urged that Sabah’s revenue of RM6.43 billion must be increased with an estimated allocation of the 40 per cent entitlement, as well as import and excise duties on petroleum products and export duties on crude oil in lieu of oil royalties of up to 10 per cent ad valorem.

“On Oct 17, 2025, the Kota Kinabalu High Court ruled that Sabah is entitled to the return of 40 per cent of the revenue collected by the federal government from Sabah, and that both the Sabah Government and the federal government have failed to implement Sabah’s financial rights, including the mandatory review, since 1974,” said Jeffrey.

He added that in 2024, the Prime Minister, in Kota Kinabalu, stated that the federal government collected RM10.2 billion in Sabah in 2023.

“Even that figure is understated, as it was said that Sabah Customs collected RM700 million, whereas in fact Customs collected nearly RM2 billion, not RM700 million. If the additional RM1.3 billion is added to the RM10.2 billion, the total amount collected from Sabah in 2023 is RM11.5 billion.”

“This RM4.6 billion does not yet include collections by the federal government from international oil companies such as Petronas, Shell, Petron and others, as well as giant plantation companies operating in Sabah such as FGV, Felda, IOI, KL-Kepong, IJM, Sime Darby and others that operate and reap profits from Sabah but pay their taxes in Malaya.

“Federal government departments and agencies also collect revenue in Sabah, for example JPJ, Immigration, the National Registration Department, and others,” he said.

Jeffrey said that, in order to guarantee the collection and return of the 40 per cent revenue, the Sabah Government must propose a new mechanism for collecting revenue obtained by the federal government from Sabah and for its distribution on a 60:40 basis.

“Pending the implementation of such a new mechanism, I propose that all collections made by the federal government be placed into a Consolidated Account in Sabah, from which 40 per cent will be released and distributed to the Sabah Government in accordance with Articles 112C and 112D of the Constitution.

“As for the arrears referred to as ‘The Lost Years’ from 1974 to 2021, negotiations may continue until an amount that reflects the true 40 per cent entitlement is agreed upon. If necessary, the federal government may pay part of it through the transfer of federal assets to the Sabah Government,” he added.

Jeffrey also rejected claims that the federal government would go bankrupt if it paid back Sabah’s 40 per cent entitlement.

“This is incorrect because the payment of the 40 per cent revenue is not from the federal government, but from Sabah herself, whereby the 40 per cent must be returned since we already contributed 60 per cent to the central government,” he said.

He further commented that negotiations on MA63 are now reaching a critical stage, and that the matters to be negotiated next are of utmost importance to Sabah and the people of Sabah.

These include ownership of oil and gas, payment of oil royalties, issues relating to the continental shelf and Sabah’s boundaries, the Territorial Sea Act 2012, the collection of revenue based on stamp duties on Sabah property, as well as negotiations on the 40 per cent Special Grant revenue and 35 per cent of Parliamentary seats for Sabah and Sarawak as a veto power and constitutional safeguard to prevent any amendments to the Federal Constitution that affect the rights of Sabah and Sarawak.

“On the issue of 35 per cent Parliamentary seats as a constitutional safeguard for Sabah and Sarawak, I wish to propose to the Sabah Government that Sabah adopts a new, proactive approach,” he said.

“First, with regard to the 35 per cent, only seek a constitutional amendment by adding a condition that Sabah and Sarawak shall hold 35 per cent of the total number of Parliamentary seats. This would allow Sabah and Sarawak to retain 35 per cent of the seats regardless of any increase in the total number of seats. As long as seats are added, Sabah and Sarawak will continue to hold 35 per cent.

“Second, like Sarawak, the Sabah Government and the Sabah State Legislative Assembly should take action by appointing a committee to study and recommend the delimitation of Sabah State Assembly constituencies. Sabah itself should determine where its State Assembly seats will be located. With such a study and recommendations on the delimitation of State Assembly seats, Sabah will be prepared with areas that may later be designated as new Parliamentary constituencies.

“In addition, there are several other issues that are the absolute rights of Sabah and cannot be negotiated or compromised — with your permission, they are not negotiable.

“If the continental shelf belongs to Sabah, as provided under ‘The Extension of Boundaries (North Borneo) Order in Council 1954’ and Article 3(1) of the Federal Constitution is in force and constitutes Sabah’s absolute right, then it means that all oil and gas on Sabah’s continental shelf belong entirely to Sabah and not to Petronas,” he said.