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The 1963 Malaysia Agreement (MA63): Sabah And

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 James Chin (2019) ‘The 1963 Malaysia Agreement (MA63): Sabah And
Sarawak and the Politics of Historical Grievances’ in S. Lemiere (ed),
Minorities Matter: Malaysian Politics and People (Singapore: ISEAS-
Yusuf Ishak Institute) pp. 75-92

5
The 1963 Malaysia Agreement
(MA63): Sabah and Sarawak
and the Politics of
Historical Grievances
James Chin

While Malaysia underwent a peaceful regime change in the 14th general

elections (GE14), one issue not discussed widely enough is the different
political dynamics operating in the East Malaysian states of Sabah and
Sarawak. Unlike other states, Sabah and Sarawak are physically located
in Borneo, far away from Putrajaya. These two states have a very different
history, demography and social history from the eleven states in the Malay
Peninsula, or Malaya. In the past decade, politics in these two states have
been increasingly dictated by state nationalism, which locals refer to as
‘MA63’. This refers to the Malaysia Agreement, the legal instrument signed
in 1963 which led to the formation of the Federation of Malaysia. After
more than half a century, many in Sabah and Sarawak think that they did
not get anything out of the federation despite many promises made prior to
the signing of MA63. Today, all the political parties in Sabah and Sarawak
are clamouring for ‘rights’ lost in the past fifty years and are openly calling
for a review of federal–state relations.
This chapter will detail the historical grievances among the peoples
of Sabah and Sarawak and argue that if Putrajaya does not take heed of
the unhappiness, over the long term there is a real risk of secession or a
breakdown in federal–state relations.

75
76 Minorities Matter

Introduction
On 9 May 2018, Malaysia underwent a peaceful regime change after
more than six decades of rule by the Barisan Nasional (BN) and UMNO,
the linchpin of the BN.1 While many articles have concentrated on why
UMNO lost control, little attention has been paid to the political dynamics
in Sabah and Sarawak, the two Malaysian states located in Borneo. It is my
argument that not only are the political dynamics different in the Borneo
states, historical grievances over the 1963 Malaysia Agreement (MA63), the
agreement that led to the formation of the Malaysian Federation, are the
main political force shaping Sabah and Sarawak politics.

MA63 and GE14

In Sabah, the GE14 contest was all about Parti Warisan Sabah (PWS), a new
political party established by Shafie Apdal and Darell Leiking, and Sabah
UMNO. In 2016 Shafie Apdal, then UMNO’s vice-president, was sacked
from the Federal Cabinet when he questioned Prime Minister Najib Razak
over the 1MDB scandal. The sacking caused a commotion inside Sabah
UMNO as Shafie was the most senior Sabahan in the UMNO hierarchy.
At this point, Shafie really had only two options: to join one of the existing
parties or establish a new local Sabah party. Shafie was approached by
PKR-PH to join the party in Sabah, but he wanted a Sabah-based party.
He understood the sentiment on the ground was state nationalism, and
joining PKR would expose him to being accused of joining a ‘Malayan’
party. Shafie comes from the east coast of Sabah and had strong support
among the Bajau and Muslim communities, but he lacked support among
the non-Muslims. To ensure non-Muslim support, he started negotiating
with Darell Leiking, the then PKR MP from Penampang. Leiking, who
comes from a prominent Kadazandusun Murut (KDM) political family,
was widely seen as one of a new generation of KDM leaders who had the
support of younger voters disillusioned by Sabah UMNO’s dominance. In
addition, Leiking was popular with the younger Chinese community. Shafie
then took over Parti Pembangunan Warisan Sabah, a dormant Sabah party,

1 Strictly speaking, for the first decade, Malaysia was ruled by the Malayan Alliance.
In 1974 it was rebranded as Barisan Nasional and new parties were admitted. But
there was no change in the power structure.
 The 1963 Malaysia Agreement (MA63) 77

and renamed it Parti Warisan Sabah (PWS or Sabah Heritage Party). The
name was carefully chosen to reflect that it was a Sabah party fighting for
Sabah rights, a champion of MA63 issues.
The strategy was remarkably simple. Using state nationalism combined
with assertions that Sabah UMNO was too dominant, corrupt, and unable
to defend state interests, Shafie targeted the Muslim vote while Leiking was
to capture the KDM and Chinese votes. They created a ‘Sabahan front’ by
recruiting Junz Wong, a DAP state assemblyman who defected to PWS. The
Sabahan front reflected the three most important segments of Sabah politics:
Muslim Bumiputera (Shafie), Non-Muslim Bumiputera (Leiking) and the
Chinese (Wong). In reality, Shafie and Leiking knew that the urban Chinese
vote and NMB voters were mostly anti-BN, so it was a matter of convincing
the Muslim voters (Chin, 2018a).
PWS then negotiated a loose alliance with PH Sabah to ensure that,
as far as possible, it would be a straight fight between Sabah BN and the
PWS-PH alliance. As mentioned, Shafie did not want to join PH formally
because he was afraid of PWS being labelled as another ‘Malayan’ party.
He wanted the narrative that PWS was a state nationalist party trying to
depose Sabah UMNO, which is controlled by the federal UMNO and thus
a ‘coloniser’.
This simple strategy largely worked because Sabah voters were already
looking for political change in 2018. Many Sabahans saw PWS as a change
agent, similar to the way they saw Parti Bersatu Sabah (PBS) back in 1985.
The similarities are striking. PBS was established by Joseph Pairin Kitingan
after he was sacked as a minister in the Berjaya state government. Like
Shafie, Pairin was sacked because he challenged the authority of Harris
Salleh, then chief minister. In the 1985 and 1986 state elections, Sabahans
backed PBS and removed Berjaya from government (Lim, 2008; Kahin,
1992; Puthucheary, 1985).
At the parliamentary level, the PWS-PH alliance won 14 of the 25 seats
while Sabah BN got 10 seats. The last seat went to the Homeland Solidarity
Party (Parti Solidariti Tanah Airku Rakyat Sabah or STAR), the party
with the strongest MA63 message. Young voters from the KDM, Muslim
and Chinese communities backed the PWS-PH alliance. Their message of
change, corruption allegations against leaders such as Najib, Sabah Chief
Minister Musa Aman and pent-up frustrations over MA63 and the illegals,
against Sabah BN and Sabah UMNO in particular, all combined to create
an opposition wave. Sabahans wanted ‘independence’ from UMNO, symbol
of federal political oppression. Unlike other states, changes of government
78 Minorities Matter

in Sabah are not a new phenomenon and the voters simply reverted back to
the old pattern.2
In Sarawak, the story was more complicated. The Opposition won 12 of
31 parliamentary seats. This was a shock to the ruling Sarawak BN, which
was widely expected to win 26 of the 31 seats. Issues related to MA63 were
omnipresent, especially in the urban areas where SUPP-BN used it as the
key issue against the DAP-PH, which they claimed was a ‘Malayan’ party.
The Sarawak BN campaigned extensively on the premise that only Sarawak
parties can fight for MA63, not ‘outsiders’ like DAP. This did not work as
the voters really wanted to get rid of Najib and the federal BN, largely over
the 1MDB corruption scandal. Moreover, voters thought that Sarawak BN
was disingenuous given that all the MA63 ‘rights’ taken away by the federal
government occurred under Sarawak BN rule. Sarawak BN has been in
power continuously since 1970 (Chin, 2018b). Thus, if anyone was to blame
for Sarawak losing MA63 ‘rights’, it was Sarawak BN, since they had been in
power since 1970 and the federal government throughout this period was
also BN. If the federal authorities took away Sarawak’s rights, it was with the
agreement of Sarawak BN. Sarawak BN also lost six Dayak-majority seats;
however, the main factor was not MA63 but change of candidates at the last
minute and internal sabotage.

The 1963 Malaysia Agreement (MA63)

On 27 May 1961, Tunku Abdul Rahman announced that he would push
for a merger of Malaya with Singapore, North Borneo (as Sabah was then
called), Sarawak and Brunei.3 Initial reactions among the indigenous
political leaders in North Borneo and Sarawak were mixed; some were
unsure of the details, while others wanted independence first before deciding
on any plans to merge with Malaya and Singapore. Tunku and Lee Kuan
Yew (LKY) began a charm offensive. With support from the British, they
established the Malaysian Solidarity Consultative Committee (MSCC)
with political leaders from all four territories to drum up support for the
proposal. After the MSCC meetings had concluded, the North Borneo and
Sarawak governments each published a pro-Malaysia white paper. The next

2 For the first three decades after Sabah independence (1963–93), the Sabah
state government changed regularly. From 1963–75, Sabah was ruled by Sabah
Alliance, from 1976–85, by Berjaya, from 1985–94, by Parti Bersatu Sabah and
from 1994–2018, by Sabah BN.
3 After a short period, Brunei quietly refused to take part in Tunku’s merger.
 The 1963 Malaysia Agreement (MA63) 79

step was to establish a commission to ascertain the ‘wishes’ of the peoples

of North Borneo and Sarawak. In late 1961, the Commission of Enquiry,
North Borneo and Sarawak, headed by Lord Cobbold (hence the Cobbold
Report) was formally established. The Cobbold Report, released in August
1962, stated that one-third of the population favoured Malaysia, another
one-third would support the proposal subject to safeguards, while the final
one-third rejected Malaysia and wanted independence first. The safeguards
referred to a list of 20 points submitted by Sabahans and 18 points raised
by Sarawakians (collectively referred to as ‘20 Points’) (more below). The
next step was the creation of the Inter-Governmental Committee (IGC),
sometimes referred to as the Lansdowne Committee, to work out the details
of how the 20 Points could be inserted into the new Malaysia Constitution.
The final IGC report was published in February 1963 and on 8 March and 13
March, the Sarawak and North Borneo legislative councils endorsed the IGC
report respectively. The Malaysia Agreement was formally signed in London
on 9 July 1963 and two weeks later, on 22 July 1963, the British House of
Commons passed the Malaysia Bill (Ongkili, 1985; Milne & Ratnam 1974).

The Grievances
The main sources of grievances against the federation of Malaysia and
the federal government are best divided into two major separate areas:
grievances related to the formation of the federation and contemporary
historical grievances (Chin, 2014b).
The gripes related to the formation of Malaysia fell into three segments:
The ‘20 Points’, merger without real consent, and non-recognition of
founder status.

1) The 20 Points
The main items under the 20 Points safeguards were:
(i) Islam’s status as a national religion was not applicable to Sarawak and
Sabah.
(ii) Immigration control was vested in the state governments.
(iii) Borneanisation of the civil service4 should proceed as quickly as
possible.

4 Replacement of the British civil servants, usually at the top of colonial adminis-
tration in Sabah and Sarawak, with local people as soon as practical.
80 Minorities Matter

(iv) No amendments or modification of the safeguards granted under

the 20 Points could be made by the federal government without the
agreement of the Sabah and Sarawak state governments.
(v) There would be no right to secede from the Federation.
(vi) The indigenous peoples of both Sarawak and Sabah shall enjoy the
same ‘special position’ given to the Malay community in Malaya.
(vii) Sabah and Sarawak were to be given a high degree of autonomy over
their financial affairs. They would retain some control of their own
finance, development expenditure and tariff.
Many Sabahans and Sarawakians are of the opinion that other than (v),
all the other points have been breached by the federal government. I will deal
with them in some detail below, but in this section I will only deal with (iii).
When the British expatriate civil servants left by the late 1960s, most of the
local civil servants who were ‘fast tracked’ under the Borneanisaton policy
were Muslim civil servants, even though there were eligible non-Muslin
indigenous and Chinese candidates. This deliberate policy of favouring
Muslims has been carried through to this day. Recently it was revealed that
of the 46 most senior positions (JUSA grade) in the Sarawak civil service
30 (75 per cent) are Malays. Yet Malays account for less than 20 per cent
of Sarawak’s population (Sibon and Cheng, 2016). In 2013, two Sabah ex-
civil servants sued the federal government for its failure to implement the
Borneanisation of the civil service. The suit alleged that less than 40 per cent
of the federal heads of department in Sabah are of Sabah origin. The suit was
dismissed by the courts on a technicality (Daily Express, 2011).

2) Merger without Real Consent

There is general consensus among the Sabahan and Sarawakian middle
class that the Borneo states did not really have a choice when it came to
the Malaysia proposal. While on paper the ‘people’ of both states were
extensively consulted, especially during the Cobbold Commission’s trip and
a similar field trip undertaken by the United Nations, the entire process was
manipulated by the British Colonial Office.
First, the Cobbold Commission was barely independent. All five
members of the Commission (Lord Cobbold, Sir Anthony Abell, David
Watherston, Wong Pow Nee, Ghazali Shafie)5 were not independent actors,

5 Lord Cobbold, ex-Governor of the Bank of England; Sir Anthony Abell, a former
Governor of Sarawak; David Watherston, the former Chief Secretary of Malaya;
 The 1963 Malaysia Agreement (MA63) 81

but representatives of the Colonial Office (the first three) or the Malayan
government (the last two). As the Colonial Office and Tunku Rahman had
already agreed to the formation of the federation, the most charitable way
to describe the Cobbold Commission was that it was there to ascertain the
minimum political condition for the merger to proceed. Its findings that:
About one-third of the population of each territory strongly favours
early realisation of Malaysia without too much concern about terms and
conditions. Another third, many of them favourable to the Malaysia project,
ask, with varying degrees of emphasis, for conditions and safeguards …
The remaining third is divided between those who insist on independence
before Malaysia is considered and those who would strongly prefer to see
British rule continue for some years to come. (Cobbold Report, para 144)

In simple terms, one third for, one third against, and one third in favour
if there were safeguards. However, another way of reading the outcome is
two-thirds did not agree to Malaysia. In many public hearings, moreover,
it was clear that the indigenous population had no idea what federation
meant, as many of the indigenous groups had no concept of federalism or
even the concept of a new sovereign nation. Many of the indigenous leaders
appearing before the Commission were carefully screened by the local
colonial administrators to report that they were in favour of the plan.
Even the UN Malaysia Mission in 19636 which came to the exact same
conclusion as the Cobbold Commission cannot be taken seriously given the
text of two telegraphs. In the first one, the British UN delegation told the
Foreign and Commonwealth Office (FCO) that ‘the assessment teams will
be hand-picked to produce the right results from our point of view’ (Jones,
2001: 84). Another cable sent to the British Governor in North Borneo
stated explicitly that ‘We have good reason to think that [the] Secretary-
General’s teams are being very carefully picked … think the leaders of the
teams themselves will help you to keep the observers in their place’ (ibid.).

Wong Pow Nee, Chief Minister of Penang; Muhammad Ghazali Shafie, the
Permanent Secretary to the Malayan Ministry of Foreign Affairs.
6 The UN mission was established after objections by the Philippines and Indonesia

over the Malaysia Federation proposal. Tunku agreed to the mission which, like
the Cobbold Commission was to ascertain the views of the residents about the
proposed federation, during a summit with both leaders on 31 July 1963. The
Philippines objected because it claims North Borneo (Sabah) as its territory
while Indonesia objected because Sukarno saw Malaysia as a neo-colonial plot
to maintain British control.
82 Minorities Matter

With the British diplomats working overtime to pick the ‘right people’ in
the UN Mission, it could only report back with one conclusion – the people
of North Borneo and Sarawak were largely supportive of the proposed
Federation. Hence the same result as the Cobbold Commission.

3) Non-Recognition of Founder Status

When the Federation of Malaysia came into being on 16 September 1963,
Article 1(2) of the new Constitution stated clearly that the new federation
was made up of three distinct political entities: Malaya, Singapore and
the Borneo States (Sabah and Sarawak). In 1976, the Constitution was
amended and the reference to the three distinct entities of the Federation
was removed. Sabah and Sarawak were simply listed as two of the 13 states
in the Federation of Malaysia. This has annoyed many people in the Borneo
states as they see this as rewriting of history to downgrade their status. The
argument is that Sabah and Sarawak are founders of the Federation and not
merely equal to the Malayan states. The sentiment is so strong that one of
the first promises made when the new PH government took over in May
2018 was to revert the Constitution to its original wordings to ensure that
the ‘status’ was restored (Chok, 2018).
In the following section I will deal with the contemporary grievances.
Basically, there are five areas: (1) Marginalisation of indigenous peoples; (2)
Malayan political model; (3) Federal intervention in state politics; (4) The
PTI issue in Sabah; and (5) Under-development.

1) Marginalisation of Indigenous Peoples

The indigenous majority in East Malaysia are totally different from the
majority Malays in West Malaysia. Sabah and Sarawak have different history,
languages, customs and even religious beliefs. The largest indigenous
grouping in Sabah is the Kadazandusun Murut (KDM) and in Sarawak, the
Dayak. They are divided further into more than a dozen sub-groups and
the overwhelming majority are non-Muslims (many are Christians) and
their culture and language are totally different from the Malays. There is
also a high level of intermarriage between the indigenous groups and the
Chinese community; in Sabah, they even recognise a separate category, the
Sino-Kadazan.
Despite being the majority in both states the indigenous people are
actively discriminated against when it comes to political representation
 The 1963 Malaysia Agreement (MA63) 83

(Chin, 2017a). In the first decade of the federation, there were two Iban
chief ministers in Sarawak, but none since 1970. The electoral system in
both states was manipulated in such a way that Muslim-majority consti-
tuencies became the largest single block in both states, thus ensuring
Muslim political dominance. One direct consequence of the dilution of
political power is the inability of the indigenous people to get native titles
to their ancestral lands, especially in Sarawak where the indigenous are
fighting a losing legal battle to reclaim their native customary rights (NCR)
(Doolittle, 2005; Chin 2017b).
While the indigenous were promised that they will be recognised as
Malays, i.e., enjoy the ‘special position’ under the Federal Constitution, in
reality they often call themselves ‘second class bumiputera’ (Chin, 2017a).
The Malays and Muslims are the main beneficiaries of the New Economic
Policy (NEP), with the non-Muslim indigenous in Sabah and Sarawak
getting the leftovers. The only area where the indigenous benefit from the
NEP is access to higher education.

(2) Malayan Political Model

Since the 1969 ethnic riots, the Malaysian political model has essentially
been based on two underlying elements: ketuanan Melayu (Malay
supremacy) and, in recent decades, ketuanan Islam (Islamic supremacy).
The model works by ethnic political mobilisation. Thus in Malaya, the three
major ethnic groups – Malays, Chinese and Indians – are mobilised in
largely mono-ethnic political parties such as UMNO, MCA and MIC. The
second layer is straightforward: the population is politically divided into
Muslims and non-Muslims.
This model does not work in the Borneo states due to their different
demography, history and culture. Yet the federal government, controlled
by UMNO for six decades, has been trying to ‘export’ this model to East
Malaysia (Chin, 2014a; Kahin, 1992). UMNO has insisted that the chief
minister of both Sabah and Sarawak must be a Malay or, failing that,
at least a Muslim. In 1970, Kuala Lumpur insisted that Abdul Rahman
Yakub, a Melanau-Muslim, be appointed as chief minister and since then,
all Sarawak chief ministers have been Muslim. In Sabah, they were many
attempts to replace a non-Muslim chief minister. One of the reasons why
the federal government intervened heavily in Sabah state politics was to
install a Muslim chief minister. For example, the popular Sabah rotation-
chief minister system which allowed all the main political groups to occupy
84 Minorities Matter

the chief minister’s post was stopped in 2004, and since then a Muslim has
continuously occupied the office.
In the context of East Malaysia where there is great diversity and no
single ethnic group constitutes more than half of the state’s population, the
imposition of the Malayan political model has led to heightened cleavages in
Muslim and non-Muslim relations and led to a feeling of political alienation
among the non-Muslim indigenous. They feel that under this model,
they will never be able to occupy the chief minister’s post as the federal
government will always try to block a non-Muslim.
The emphasis on Islam has led to severe political alienation among the
Christian community. In Sarawak, where 40 per cent of the population
are Christians, and in Sabah where most of the KDM are Catholics, there
is a strong sense that the federal government is actively trying to restrict
the growth of Christianity at best and ‘control’ Christianity at worst.
The Kalimah Allah issue is a case in point. In many indigenous churches
throughout Sabah and Sarawak they have been using ‘Allah’ since before
1963 and they cannot understand why the federal government is trying to
stop them from using the word in their worship. They are also angry that
there were attempts to ban the use of Iban-language Bibles by the indigenous
Christian congregation (Mazwin and Norulhuda, 2003).
Despite a clear promise during the MA63 negotiations that there will
be no state religion in Sabah and Sarawak, the Sabah state constitution
was amended in 1973 to make Islam the de jure state religion.7 Although
attempts have been made in Sarawak to undertake a similar amendment,
thus far they have failed.
When the Malayan model is imposed in East Malaysia, the outcome is
power competition between three groups: Muslim Bumiputera (MB), Non-
Muslim Bumiputera (NMB) and the Chinese.

(3) Federal Intervention in State Politics

For the past half century, the federal government has intervened multiple
times in domestic Sabah and Sarawak politics to get the desired results

7 The amendment was made by Mustapha Harun, the powerful Muslim chief
minister. What was especially galling to non-Muslim Sabahans was that Mustapha
was one of the signatories of the Malaysia Agreement (representing North
Borneo) and he knew that it was agreed that North Borneo would not have a
state religion. Mustapha’s animosity towards Christians was described in detail
in a book by Bernard Sta Maria (1978), which remains banned to this day.
 The 1963 Malaysia Agreement (MA63) 85

(Chin, 1997). The earliest intervention in Sarawak was in 1966 when federal
leaders engineered the removal of Stephen Kalong Ningkan, Sarawak’s first
chief minister and indigenous Iban-Dayak. Ningkan was forced out when
the federal government thought he was too anti-federal and was about the
make changes allowing non-natives (read Chinese) to access more land
(Milne & Ratnam, 1974; Lockard, 1967). In 1970, the federal government
directly intervened again to ensure that a Muslim-led coalition became the
state government after an inconclusive state election. Since then, all Sarawak
chief ministers have been Muslims.
In Sabah the political history is more convoluted. Nevertheless, the
federal government is consistent in supporting moves to cement Muslim
control over state politics. In the first decade after independence, the
federal government supported Mustapha Harun, a Muslim leader who
was locked in endless political battles with Donald Stephens, the first
Huguan Siou (paramount leader) of the Kadazandusuns. Stephens was only
accepted by Kuala Lumpur when he converted to Islam and took the name
Fuad Stephens. In the 1980s, the federal government blatantly supported
Harris Salleh, a Muslim leader, against Joseph Pairin Kitingan, a Catholic
and Huguan Siou (Lim, 2008). When Pairin won the 1985 and 1986 state
elections, the federal government kept pressuring him to include a Muslim
party in his governing coalition. In 1994, after Pairin narrowly won the state
election, the federal government engineered defections, causing the Pairin
state government to collapse (Chin, 1994).

(4) The Pendatang Tanpa Izin (PTI) 8 Issue in Sabah

This issue is unique to Sabah. In the 1980s, the indigenous KDM began to
assert themselves politically (Loh, 1992). In 1985 Joseph Pairin Kitingan
established Parti Bersatu Sabah (PBS) as the political platform to fight
politically for the KDM and non-Muslims in Sabah. PBS won the 1985 and
1986 state elections despite the federal government’s open support for Sabah
Muslim-based parties. The rise of KDM led to a covert operation commonly
referred to as ‘Project M’ named after the Prime Minister (Mahathir) at the
time. Project M involved giving Malaysian citizenship to illegal Filipino and
Indonesian Muslims in Sabah in order to alter the voting outcome in Sabah
(Sadiq, 2003). In 1976, there were twenty-two KDM-majority seats in the
state assembly. Three decades later, in 2008, there were only thirteen KDM-

8 Illegal immigrant.
86 Minorities Matter

majority seats. Contrast this with Muslim-majority seats. In 1976 there were
eighteen Muslim-majority constituencies; this increased to thirty-six in
2008. Sabah’s population increased by 390 per cent during the period from
1970 to 2010, making Sabah a Muslim-majority state by the early 1990s.
(Chin, 2014b: 172). Even a Royal Commission of Inquiry (RCI) established
in 2013 came to the conclusion that it is ‘more likely than not’ that ‘Project
M’ exists and thousands of PTIs were issued Malaysian identity cards to
allow them to vote for BN/UMNO in Sabah (Boo, 2013). One witness who
was involved in issuing these identity cards told the RCI proudly that he saw
it as his duty to increase the number of Muslim citizens in Sabah to ensure
Muslim dominance (Murib, 2013).

(5) Under-development
Sabah and Sarawak are rich in natural resources, including large deposits
of oil and gas just off the coast. The land area of both states is bigger than
Malaya, but these two states are sparsely populated. Sabah’s population is
approximately 3.9 million, while Sarawak’s is even lower, at approximately
2.9 million. Collectively, this is equal to only about 20 per cent of Malaysia’s
population. Sabah is consistently one of Malaysia’s poorest states, while
the interior of Sarawak does not have regular electricity or piped water
supply (Malaysiakini, 2016). Many interior towns in Sarawak do not have
road access. There is no highway linking Sabah to Sarawak. Contrast this
with Malaya where there is the North–South and East–West highways, a
purpose-built capital (Putrajaya), the world’s tallest twin towers and much
other modern infrastructure. In other words, the infrastructure of Sabah
and Sarawak is at least one decade behind Malaya. Most of the anger
centres on the oil and gas resources. In 1974, the Malaysian parliament
passed the Petroleum Development Act (PDA 1974) which gave the federal
government ownership of all oil and gas deposits found in any part of the
federation. States with oil and gas, such as Sabah and Sarawak, were given a
paltry royalty of 5 per cent. Since Sabah and Sarawak produced more than
half of Malaysia’s output, many believe the bulk of the oil money was used
to develop Malaya at the expense of the oil-producing states (Ling, 2014).
Sabah is entitled to 40 per cent of the net revenue it has collected in
the state under MA63’s ‘Special Grants to the State of Sabah and Sarawak’,
but this has never been implemented. The amount owing is several billion
ringgit if the arrears are counted (Free Malaysia Today, 2017). There is no
realistic possibility that the federal government can pay this amount.
 The 1963 Malaysia Agreement (MA63) 87

The Politics of MA63 and State Nationalism

After half a century of domination by the federal government, the grievances
in Sabah and Sarawak over MA63 are gaining currency. Partly this is due
to social media; many groups are using social media to air their grievances
and they have gathered a large following. Another reason is that both the
Sarawak and Sabah state governments are actively promoting MA63 issues.
When the UMNO/BN coalition lost power on 9 May, the Sarawak BN
immediately announced that it was quitting BN and creating a new coalition
called Gabungan Parti Sarawak (GPS or Sarawak Parties Alliance). GPS’s
political ideology is ‘Sarawak First’, and it brands itself as the real champion
of MA63 in seeking autonomy from the federal government (Norni, 2018).
One of Parti Warisan Sabah’s early promises when it won the Sabah election
was that it will get back the MA63 autonomy lost to Putrajaya (Lee, 2018).
Within a few months of the fall of the BN federal government, Anifah
Aman, the former Malaysian foreign minister, announced that he was
quitting UMNO Sabah to plan for a new political party devoted to a single
issue – the implementation of MA63 (Muguntan, 2018).
All political parties in contemporary Sabah and Sarawak now claim
MA63 as one of their main platforms. Even Malayan parties operating
in Sabah and Sarawak, such as DAP and PKR, claim to support the
implementation of MA63 promises on autonomy. There is consensus
among the political class in both Sabah and Sarawak that state nationalism
under MA63 is the only political game in town. In 2016, a survey in
Sarawak showed there is strong support across all ethnic groups for greater
autonomy for the state (read MA63), particularly in the areas of economic
development, exploitation of natural resources, and education. 63 per cent
of respondents identify themselves as Sarawakian first, and only about 25
per cent identify themselves as Malaysian citizens first (Lee Hock Guan,
2018).
If the federal government continues to ignore the core MA63 grievances
and does not reset federal–state relations, then they are risking pushing the
polity towards the secessionist movements. At present there are half a dozen
groups in both states pushing for exit from the Federation. The most recent
one even adopted the British moniker, ‘Sarexit’, as in UK’s Brexit from the
EU (Borneo Post, 2018). Although under ‘20 Points’ there is no possibility
of secession from the Federation, proponents argue that it is possible.
First, they argue that there is a precedent – Singapore left the Malaysian
Federation in 1965 after a special act of parliament was passed. Second, the
final Malaysian constitution adopted in 1963 is silent on the secession issue.
88 Minorities Matter

However, the harsh reality is that Putrajaya will not allow Sabah or Sarawak
to exit the federation without bloodshed.9
The best option is thus for the federal government to negotiate com-
pliance with what was promised under MA63 (Chin, 2018c). If the main
promise – a high degree of autonomy – is implemented going forward, the
support for secession will remain limited. The previous Najib administration,
realising the political force of MA63, actually started discussions on de-
centralisation with the Sarawak government prior to its defeat in May
2018. The new PH administration has established a high-level committee
headed by Mahathir himself to look at the MA63 issues (Kaur, 2018). The
administration has also promised to amend Article 1 (2) of the constitution
to restore Sabah and Sarawak’s status as founder states of the Federation
(Ling, 2018).

Conclusion
Sabah and Sarawak represent a unique political challenge to the Malaysian
political landscape. As mentioned above, they are separated physically from
Malaya, have different demography, culture, language and even colonial
history.10 The imposition of the Malayan political model on these Borneo
states has not really worked and the fallout from the 2018 general election
has led to a situation where now the polity is using historical grievances
as the basis for their unhappiness with the Malayan political model as
embodied by the previous BN federal government.
If the PH administration does not deal with this issue urgently, there
is a heavy political price to be paid and federal–state relations will be full
of tensions and difficulties. There is every incentive to restore the promises
of MA63 sooner rather than later. Otherwise, historical grievances linked
to a specific identity and/or a region can often lead to a full-scale rebellion
epitomised by the Catalan movement in Spain.

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