The Malaysian government is set to restore the status of Sabah and Sarawak as equal partners in forming the country, one of the claims from both states under the Malaysia Agreement 1963 (MA63) that is being considered by a high-level federal committee.
The states' requests for higher oil royalties from the central government, however, will not be resolved so easily, say official sources.
Chaired by Prime Minister Mahathir Mohamad, the inaugural meeting of the steering committee on "Implementing the Malaysia Agreement 1963" kicked off in Putrajaya yesterday to look into claims that Malaysia has reneged on its promises in MA63, which set out the arrangement under which Malaysia was formed by Sabah, Sarawak, the states of the peninsula and Singapore in 1963. Singapore left the federation in 1965.
Resolving these issues is crucial for the new Pakatan Harapan (PH) coalition, which is looking to shore up support in East Malaysia ahead of a state election in Sarawak due in 2021, and to take advantage of a fractured opposition in both Sabah and Sarawak, states which collectively make up a quarter of the 222 seats in Parliament.
The Straits Times understands that Kuala Lumpur is willing to make constitutional amendments which elevate the position of Sabah and Sarawak to "partners" in Malaysia, instead of them just being one of 13 states which make up the federation as currently outlined in the Federal Constitution.
"The move is largely symbolic, but it will be considered a vic-tory for those who insist that Sabah and Sarawak are equal to the whole peninsula," said an official who spoke on con-dition of anonymity due to the proposal's confidentiality.
The amendment - requiring a two-thirds majority in Parlia-ment which PH and its allies in Sabah, plus the Sarawak Parties Alliance (GPS) can manage - will separate the states into two, with Sabah and Sarawak occupying their own sub-clause. This will allow state leaders and the Mahathir administration to trumpet their commitment and ability to restore the special position these East Malaysian provinces were promised more than five decades ago.
A sticking point in the committee's deliberations, however, will be the states' claim that they are owed billions of ringgit, largely in terms of higher oil royalties of 20 per cent, up from the current 5 per cent of gross revenue.
The Straits Times understands that the Mahathir administration is unlikely to accede to these demands, given its own struggles with the RM1 trillion debt it inherited from the former Barisan Nasional (BN) government.
For decades, critics in Sarawak - one of the least-developed states in Malaysia - have accused the BN-run state government of being subservient to Kuala Lumpur and allowing the federal government to enrich its coffers through oil revenues at the state's expense.
PH also mined this issue in the run-up to the May general election, which it won, promising to raise royalties to 20 per cent of gross revenue in its manifesto.
"Oil royalties, equal distribution... and regional development... are close to the heart and mind of Sabahans and Sarawakians," Law Minister Liew Vui Keong, himself a Sabahan, had said when announcing the committee in October.
According to official sources, the federal government will argue that its allocations to Sarawak already outweigh those to other states.
"Sarawak only has a population of less than three million, which is not even 9 per cent of the population, but the federal government spends more than that of its budget on the state," a source said.