Necessary amendments of the FC and Federal Acts


Alex Ling

How to restructure the Special Committees following the IGC model 1962? What broadly would be amended?


For restoring MA63 by following the framework of IGC Report 1962, the proposed 2 instead 5 Special Committees under the Consultative Committee on MA63 could be set up by the August House for the specialized tasks, namely one for the restoration, revision and reformation of MA1963; and the other for O&G with Petronas, Petros, the federal and state governments bi-laterally or otherwise with Sabah at the later stage. Some legal and financial members with expertise will be seconded to both Special Committees. These Special Committees will have the same number of representatives from Putrajaya in the Steering Committee.


1. The Special Committee set up for the restoration of MA63 under the constitutional, international law and treaty on MA1963 should cover particularly on the oil and gas, natural resources, fisheries. The second Special Committee will be on the amending the breaches of the federal constitutions void and invalid federal legislations under the five tiers constitutional entrenched provisions, 7FCs and 7PMs, including autonomy, Borneonization, federal directives, greater usage of English in schools, education and healthcare to be under state for revision waived due to finance before (the federal would only be too happy to shake off its responsibilities), more infrastructures, healthcare grants and government departments for international digital economy and others.

(i) (a) On PDA1974, Act 354 (to be repealed), EEZ Act 1984, Fisheries Act 1985 and TSA 2012 should be stipulated to be inapplicable to the Borneo Territories. (b) Tun Rahman’s letter and Oil Agreements of Sarawak on 27th March 1975 and 14th June 1976 of Sabah should be declared void and illegal and to be replaced by a new standard international full-bodied Oil Agreement on royalty system with a revision clause not just two pages of open ended agreements, updated under international law eg UNLCOS 1982, in accordance to the 7FCs and 7PMs of Sarawak and Sabah, amplified later.

(ii) The second Special Committee will be tasked for the restoration, revision and reformation of MA1963 in respect of amending the parliamentary legislations and FCs. (a) Articles 1, 2 and 46 of FC shall be amended per Malaysia Bill under MA1963 and others, such as Article 77 on Residual Powers. (b) Under the Ninth Schedule, Article 121(1A) on the Syariah court, parallel to the civil court, shall have a new proviso, namely “this provision shall only be applicable to Sabah and Sarawak upon the approvals of their respective legislative councils.”

(c) The religious freedom under Article 11(4) of the FC and reinforced by Article 65 of the Malaysia Bill (“MB”) attached as Annex A to MA1963 was never amended by Council Negeri, namely on the imposition of the control or restriction on the propagation of non-Muslim among the Muslim or Muslim areas or vice versa, quite different from the States of Malaya and the federal territories.

The repeal of Article 161D of the FC by Act A354 on 27th August 1976 which must be reinstated was unconstitutional and void against Article 65 of MB, namely by changing the voting in the Council Negeri from the mandatory two-third to a simple majority on any amendment of Articles 11(4) of the FC, as this Article 65 is not amended as it serves as a pre-conditional protection and entrenched provision under the second-tier entrenched protection.

Similarly, the amendment of the Act 354 on the original Article I of the FC which must be reinstated on the void alteration of the territorial status and waters in breach of Article 4 of MB and relegation of Borneo Territories to satellite states of Malaya in breach of Articles 2 and 161E(3) of the FC was invalid and unenforceable against the Borneo States.

(iii) Sarawak needs not amend nor has amended that Article 11(4) in the Council Negeri by two-third majority. However ever since the White Rajah Brooke’s era it has always been the practice under the Brooke tradition for non-Muslims not to enter and preach in Muslim areas and vice versa. But if conversions happened, “live and let live” under the same roof harmoniously was the golden rule.

About a few years ago, some zealous teachers under political directives with religious teaching outside the classrooms, unfamiliar with Sarawak’s cultural, religious tradition and practice with promises of jobs and monetary rewards after conversion, they have almost converted the whole small village of Christians into Muslims. In the long run, we hope and believe that will not affect Sarawak’s high racial and religious unity indexes. Most likely that would be the common two-way traffic in the true religious freedom in Sarawak under Article 11(4) and the Ninth Schedule under State List II.

We hope this unique harmonious religious and racial unity with religious freedom will beacon as an example by leadership to our compatriots in Peninsula Malaysia and the world.

Peninsula Muslims have found it incredible to see Muslims and non-Muslims eating on the same table in public while joining in the celebrations of different festivals, cultures and inter-faith, a unique trait of Sarawak’s cultural heritage. Muslims and Christians have lived together under one roof without problems confirmed by our chief minister recently in the Christmas message and visits.

(iv) So under that sensitive Article 11(4), Article 65 of MB should be restored with Article 161D and then be left alone, observed but not politicized nor debated, as suggested in the parliament for Sarawak. (v) Various stages of devolution, financial constitutional and administrative of autonomy would have to be worked out by the Special Committees. (vi) Several federal directives should be repealed eg on immigration. (vii) Shipping and cabotage. (viii) Port dues for state ports. (ix) State land for development under Article 95E. (x) Financial and non-financial matters with administrative powers. (xi) Education grants, policy, programmes and schools on the actual history of the formation of Malaysia and the various ramifications of MA1963 and ongoing restoration, revision and reformation with oil history as well. Educating the public systematically is equally important in Chinese, Malay and other languages.


2.  Fiscal policies

(i) On O&G when Petros starts issuing PSCs, the four present taxes and state equity cash flow and R/C ratio, abandonment cost, deductions, capital allowances, threshold volume, profit share of oil on split barrel of O&G, all of these must be worked out with the federal government and Petronas or adopt Petronas ‘ formula with coordination on local sale taxes on O&G and others. (ii) Grants of various provisions under the FC and IGC 1962 provisions to be restored. (iii) To amend Item 3 of 10th Schedule under Part V, on the royalty to be based on the sale prices of their O&G without any fixed percentages imposed by the Borneo Territories on O&G while using the local sales tax under Item 7 of the same schedule and Article 95B(3) as the alternative fiscal mechanism until parliament approves this imposition of 20% royalty or more for O&G from onshore and offshore. (iv) Rebate of 50% of all federal incomes received from Sarawak annually as grants also under Item 2(1) of Part IV 10th Schedule assured by the PH government when financially able. (v) Stamp duties shall be for the accounts of the Borneo Territories. (vi) Others including around 50 violations by federal.


3. Public administration between the federal and state in IGC 1962 should be restructured. An advisor from Harvard University management experienced in advising the governments in Asian countries including LKY public policies from Singapore could be seconded to advise on natural justice for the various government departments to promote efficiency, integrity, transparency while restructuring the federal and state administration with implementation of balanced Borneonization under a revamped civil service and promoting more efficient service and proper mind-set for digital economy.


4. Public services. This should include fair basis on awarding scholarship, infrastructures, social services, medical health care, education, infrastructure and defence related to the grants as well. Sarawak has to rely on self-help on local sale tax on O&G and their by-products, if federal grants are delayed or cut. The RM 100Million allocation for the dilapidated school repairs has been disbursed recently. That was a good response from the federal government. More visits by the Federal Minister of Education, Dr Maszlee and other Federal Ministers coming from outside Sarawak to Sarawak’s rural areas would be a good eye opener and educational visits to alleviate 7 out 10 poorest and neglected districts out of the doldrums of “outwardly rich, inwardly poor” state since 1963 by the federal government.


5. Legal/judicial

(i) Setting up a statutory body for the advocates for Sarawak and Sabah respectively to be at par with the Malaysian Bar council, independent and efficiently run in addition of Article 161B of the federal constitution and IGC 1962. (ii) Sarawak and Sabah Bar should aim to have more judges to be appointed to the Bench. (iii) Native courts need to cater for NCR’s legal issues and laws refined despite courts’ decisions.


6. On Sarawak-exit, assuming that is achievable, would that be the best solution with so many uncertain and unchartered waters? Autonomy seems to be still the best option. The decision has to be based on rational analysis and opportunity costs not on emotional and sentimental “lyrics”.


Why Borneo states’ two specialists should be in the Steering Committee?


Sarawak state counsel, Datuk Sri JC Fung, who wrote the book, “Constitutional Federalism in Malaysia” and Mr Sukumaram Vanugopal who wrote the “Constitutional rights of Sabah and Sarawak” from Sabah should be added on the Steering Committee from Sarawak and Sabah too. Their contributions will be most valuable in the Steering Committee.

We hope the federal government and Petronas will follow the Rule of Law and five tiers of the entrenched constitutional provisions including the 7FCs and 7PMs so that Petros will reissue and issue new PSCs leases before Vision 2020 onwards with a transitioning period, with a litmus test of 6 months or more on a win-win formula with administrative justice and promptness under the PH government.

Datuk Seri Mohd Shafie Apdal

7. Sarawak and Sabah are two different territories, states, countries and governments after achieving self-government under the principle of self-determination under Article 1(2) of the UN Chapter. Is that correct?

i.Yes. Article 1 of the original Article I(2)(b) based on the same Article 4 of the Malaysia Bill (“MB”) Annex A to MA1963 states the “name, states and the Territories of the Federation (of Malaysia),” namely Borneo States, not merely two different regions, constitutionally and under international law.

ii.The Borneo States, not Borneo state, because they were two different names states and territories, namely North Borneo (Sabah) and Sarawak.

iii.Both became the British colonies in 1946 before joining in the formation of Malaysia on 16th September 1963. Sarawak achieved its self-government status on 22nd July 1963.

iv.Both executed as two separate parties or signatories representing two different countries, states, territories under MA1963, namely North Borneo and Sarawak with UK of Great Britian, Singapore and the States of Malaya with different representatives. Therefore, under international and municipal laws, Sarawak and North Borneo (Sabah) were two different British colonies, legal entities or territories or States after achieving self-governments for joining in the formation of Malaysia and continue to subsist till today with the same status and under MA1963 and the FC.

On March 10 Sabah Chief Minister Datuk Seri Mohd Shafie Abdal said that the Malaysia Agreement 1963 stipulated that Sarawak and Sabah is one territory. His claim was quickly refuted by Sarawak leaders who countered that it is clear that Sarawak and Sabah separately signed the agreement as two separate regions in Malaysia. Question No. 7 further explains the status of Sarawak and Sabah in Malaysia.

v.They have some different rights and privileges between them for example, only Sabah has the rebate of 40% of the federal incomes received from Sabah that the federal government would give them back to Sabah as grants under Item 1.2.(1), Part IV Tenth Schedule, quite different from Sarawak under Item (1)(i) with RM 5.8Million (balancing) special annual grant. This special grant was unilaterally abolished in 1969 without the fulfilment from Tun Razak’s and Tun Tan Siew Sin’s assurances under Article VIII of MA1963 that all the offshore oil and gas proceeds from Sarawak’s continental shelf would be given to Sarawak in 1966 or thereafter.

Tun Razak only reviewed the escalating grant once in 1973 to RM 16Million. No more 5 year review after that. That balancing grant was not replaced nor the escalation grant increased even with the 80% of the federal’s sharing profit/taxes/Petronas’s profits from the dominions of Sarawak and Sabah on their O&G up to this day. Under imperium, the federal government has only supervisory powers under the FC..

Besides, only Sarawak has the additional 5% of royalty as an additional development grant in consideration of Sarawak aborting the appeal to the Privy Council for a declaratory judgment in 1975 on PDA1974, assured by premier Tun Razak to YAB Tun Rahman then. In general, more O&G are in deeper waters of Sabah than Sarawak’s wider and shallower areas with lower production costs.


a)After Malaysia Day Sabah unlike Sarawak under the protective previous YAB now, Tun TYT Pehin Sri Taib, YAB Tok Nan and YAB Datuk Patinggi Zohari, has surrendered its most important immigration powers under Article V of MA1963, waived its rights in education and religion as well as ceding of Labuan to become a Federal Territory.

b)So the history of the waived rights of Sabah under the Federal constitution and Sabah’s municipal laws has resulted a gulf of differences from Sarawak through voluntary surrender of Sabah’s right with a different historical culture, political development and public administration under the commercial undertaking of the British North Borneo charter company under the British protectorate, quite distinct from Sarawak which had the unique benevolent and better White Rajah Brooke’s administration and traditions after setting up the Council Negeri before both became British colonies on 1st July 1946 after the Second World War.

c)Politically Sarawak’s state government has been more stable than Sabah since Malaysia Day.

vii.Most unfortunately, the legacy of the Treaty signed by Baron de Overbeck and Alfred Dent with Sultan of Sulu Amal Al Alam in 22nd January 1878 with the Dayang vs Dayang (1939) case have left Sabah with that thorny problem of paying Ringgit 5,000 per year to the Sulu descendants under “Padjak”, regardless whether it meant cession or lease in perpetuity (no more in existence under international law), since Judge Mackaskie’s judgment. Yet, the annual payment of “Ringgit 5000” still perpetually remains vexatious as ever.

Sabah has decades problems with ramifications of accepting citizens from the Philippines and Indonesia to become Sabahans quite different from Sarawak. With the Pan Borneo Highway connecting Sabah, the dribs and drabs of “illegal” migration through the “rat paths” in the jungle near and across the remote Indonesian border could pose some social and security problems even with progress on the connectivity on infrastructure in future.

viii.Due to the expected high costs of defence, against the Southern Philippines insurgents, Tun Razak gave that as an excuse or reason to give on grounds of national interest, only 5% O&G royalty to Sarawak because of heavy navy and security costs in Sabah’s coast in 1975. This was also confirmed in the DCM’s of Sarawak, Tan Sri Stephen Yong’s book, “A life twice lived!” where Tun Razak raised the toast to the national interest. That meant the end of further negotiation. It was like when “God save the queen” was played at the colonial dinners, the party was over.

History will not only remember our hard fought achievements,

But record the fatal mistakes prevented in critical moments,

Let history point to the future without repeating our errors,

Let us take away the good, key and grace of unforced errors.



Datuk seri mohd Shafie Afdal



On March 10 Sabah Chief Minister Datuk Seri Mohd Shafie Abdal said that the Malaysia Agreement 1963 stipulated that Sarawak and Sabah is one territory. His claim was quickly refuted by Sarawak leaders who countered that it is clear that Sarawak and Sabah separately signed the agreement as two separate regions in Malaysia. Question No. 7 further explains the status of Sarawak and Sabah in Malaysia.