Sabah State Govt's effort in preparing its own calculation for 40% entitlement commendable

20 June 2024

It is encouraging that the Sabah state government is preparing its own calculations regarding the 40% entitlement. Equally interesting is the state's intention to appoint an independent assessor to determine the amount of this entitlement.

Following the MA63 technical committee meeting on May 28, 2024, there is interest in the progress of discussions, especially since the one-year deadline to finalize Sabah's 40% entitlement is approaching.

The federal constitution provides for the appointment of an independent assessor, but what value can this assessor bring at this point? The Sabah finance minister has noted the lack of data from the federal government regarding annual revenues collected from Sabah, particularly since 1974. This lack of data means the independent assessor would need to start without facts and figures. Therefore, the assessor must be an expert in constitutional law, auditing, accounting, and federal financial policies to effectively begin the task. Finding such an assessor would be challenging.

Even if an appropriate assessor is found, another hurdle remains: the dispute over the interpretation of Malaysia's constitutional provisions. The federal government does not acknowledge the applicability of Sabah's 40% entitlement, while Sabah asserts it as a constitutional right under Articles 112C and 112D of the Federal Constitution. Legal practitioners understand that only the courts can interpret the federal constitution, particularly in disputes over its meaning and intent. Thus, can an assessor interpret the constitution in a manner that is binding on both federal and state governments?

Alternatively, the state government could establish a committee of experts in constitutional law, accounting/auditing, and experienced or retired civil servants with knowledge of federal fiscal policies to advise Sabah.

Sabah cannot negotiate effectively without its own basis for the 40% revenue entitlement. Expecting the federal government to provide all the data is unrealistic, given their differing perspective on the entitlement's applicability. Negotiations cannot be one-sided; Sabah must define and identify the revenues forming the basis of its claim.

The state must compile a list of revenue sources to be included in the 40% entitlement, understanding that taxes are only one part of the revenue. While starting with data from the Inland Revenue Board (LHDN) is beneficial, the state must also identify other revenue areas to support its 40% claim. Only with this foundation can Sabah determine the annual revenue collected by the federal government from these sources.

Some question the need for negotiations and demand the immediate implementation of the 40% entitlement. The challenge lies in determining the exact figure and the specific revenue areas included, as the federal constitution does not specify these details. Would Sabah be satisfied with the federal government providing a figure without disclosing the revenue areas it is based on? Similarly, would Sabah accept the federal government's defined revenue areas without question?

Therefore, Sabah must develop its own list of revenue areas to guide the MA63 committees. The federal government has its interpretation of the 40%, and Sabah must prepare its basis for disagreement if necessary. With the deadline approaching, has Sabah presented its list of revenue areas to the MA63 technical committee?

This is a critical opportunity for Sabah to resolve this matter. With a committed Prime Minister and a Deputy Prime Minister from Sarawak heading the MA63 technical committee, alongside ministers from Sabah and Sarawak on both the technical and implementing committees, this issue can be addressed effectively. However, these committees need clear arguments and bases for the claims.

The people of Sabah hope their leaders will demand their rights be respected. While there may be differing views, enforcing Sabah's 40% constitutional entitlement is a unifying issue. Let us not waver in this crucial final step to achieving our goal.

Nelson W Angang

Ahli Dewan Negara