Recently, as public attention in Sabah and Sarawak has focused on the Kota Kinabalu High Court’s ruling that the Federal Government acted unconstitutionally in failing to return Sabah’s entitled 40% share of net revenue, certain news reports have claimed:

“The 40% revenue entitlement applies only to Sabah; Sarawak has no such right.”

Such statements disregard the historical facts and constitutional spirit of the Malaysia Agreement 1963 (MA63). They seriously mislead the public regarding Sarawak’s constitutional status and economic rights.
Sarawak is not an ordinary state without rights, but a founding partner of the Malaysian Federation, which joined on an equal footing and is therefore legally entitled to financial compensation and resource sovereignty.

Historical Facts: Sarawak Was Granted Explicit Financial Compensation and Special Grants

According to the Malaysia Agreement 1963 (MA63) and the constitutional instruments annexed thereto, as incorporated into the Federal Constitution, the Tenth Schedule (Part IV) clearly stipulates:

“In the case of Sarawak, a grant of 5.8 million dollars in each year shall be made.”

This means that the Federal Government was required to provide Sarawak with an annual special grant of USD 5.8 million.

The document further specifies a schedule of progressively increasing grants:

“In the case of Sarawak, a grant … in 1964 and each of the four following years shall be respectively 3 million, 7 million, 11 million, 16 million and 21 million dollars, and in later years shall be fixed on review under Article 112E.”

This provision establishes that Sarawak was to receive both fixed and increasing grants in the early years of the Federation, subject to periodic review (Article 112E) to ensure that the amount met its developmental needs.
This “special grant system” represented the Federal Government’s formal acknowledgment of Sarawak’s economic disadvantages, infrastructural gaps, and administrative transition costs, and thus constituted a legally binding form of compensation under both constitutional and treaty law.

    Equal Standing with Sabah: The Right to Financial Review

    The Malaysia Agreement 1963—an international treaty signed by the United Kingdom, Malaya, Sarawak, and North Borneo (Sabah)—explicitly provides:

“The Borneo States shall enjoy special financial arrangements to reflect their particular circumstances.”

    This means both Sarawak and Sabah, as co-founding partners of the Federation, enjoy equal constitutional status and are entitled to special financial arrangements and review mechanisms.

    Therefore, any claim that “Sarawak has no such right” is a blatant distortion that disregards the text of the treaty and the constitutional arrangements derived from it.
Such statements undermine both the rule of law and the integrity of Malaysia’s founding principles.

    The 1975 Loss of Petroleum Rights — Only 5% Cash Payment Remains

   When Sarawak joined the Federation in 1963, it held full sovereignty over its land and offshore resources, including oil and natural gas.
However, in 1974, the Federal Government enacted the Petroleum Development Act 1974 (PDA 1974), and in 1975 compelled Sarawak to sign the so-called Oil Agreement, which transferred ownership of petroleum resources to Petronas.
Since then, Sarawak has received only 5% in “cash payment”, while the remaining 95% of oil revenue has been controlled entirely by the Federal Government and Petronas.

    Worse still, the 1976 Federal Constitution Amendment downgraded Sarawak and Sabah from “Borneo States” to “States,” effectively eroding their constitutional sovereignty over territorial and continental shelf resources, in alignment with the centralizing objectives of the PDA 1974.
This series of actions represents a serious breach of the federal partnership principle and fiscal autonomy guaranteed under MA63.

    Sarawak’s petroleum resources have contributed immensely to the national economy, yet it has long received only a token 5% return.
This situation is not only unjust but also contrary to the spirit of international treaty obligations.
Rectifying the injustices of 1975 is therefore a fundamental step toward restoring Sarawak’s rightful financial and resource entitlements.

     The Legitimate Demands of the People of Sarawak

    We affirm that the people of Sarawak have every reason and right to demand the following actions:

    Restore the Financial Compensation Mechanism:
Pursuant to MA63 and Articles 112D and 112E of the Federal Constitution, the Federal Government must reinstate the financial grant review mechanism and recalculate Sarawak’s entitlements based on current economic standards.

    Reopen Negotiations on Petroleum Rights:
The Federal Government and Petronas must re-examine the 1975 Oil Agreement, return resource sovereignty to Sarawak, and increase the cash payment proportion.

    Ensure Balanced and Transparent Development:
A transparent national budget framework must be established to guarantee development funding proportional to Sarawak’s contribution of resources.

    Enshrine Legal Safeguards:
Through constitutional amendment or Sarawak state legislation, the fiscal autonomy and resource management rights of Sarawak must be legally protected against further erosion.

    Conclusion: Sarawak’s Rights Must Be Defended by Its Own People

    The claim that “Sarawak has no such right” is a denial of both history and law.
The people of Sarawak must recognize that we are not a subordinate territory, but an equal founding partner in the Federation of Malaysia.

    Sarawak belongs to its people.
Its resources and destiny must be determined by the people of Sarawak themselves.

    If federal justice is not built upon fairness in fiscal and resource distribution, there can be no genuine unity or trust.

Only by restoring the true spirit of MA63 can the relationship between Sarawak and the Federation return to equality, harmony, and justice.