Kota Kinabalu: Sabah’s constitutional right to 40 per cent of federal revenue collected from the state yearly will finally receive a full court hearing after five decades of delay.
The Sabah Law Society (SLS) has brought the case before the High Court of Sabah and Sarawak, challenging what they claim is a long-standing breach of constitutional obligations by the Federal Government.
The hearing, scheduled for July 7, would address whether the Federal Government failed to honour Sabah’s entitlement to 40 per cent of net revenue as guaranteed under the Malaysian Constitution when the territory of British North Borneo joined the federation in 1963 as Sabah.
“This is not a political matter but a constitutional obligation, grounded in Article 112C and the Tenth Schedule of the Federal Constitution,” said SLS Immediate Past President Datuk Roger Chin.
The case revolves around Article 112C and Article 112D of the Federal Constitution, which entitle Sabah to a special annual grant equal to 40 per cent of the net revenue collected by the Federal Government from the state, above the baseline established in 1963.
These provisions required a review by 1974, but no such review occurred until 2022 — a delay of nearly 50 years.
The court would determine whether this delay and the absence of appropriate payments during what SLS calls the “Lost Years” constitute a breach of constitutional duty.
The Federal Government contends that the 40 per cent formula was replaced after a 1969 review, which substituted the original entitlement with a fixed annual grant.
They maintain that ongoing negotiations and the continuation of RM26.7 million annual payments have satisfied their constitutional obligations.
Meanwhile, the State Government acknowledges that no review occurred between 1974 and 2021 but states it consistently sought one. The State entered into interim agreements in 2022 and 2023 due to “pressing financial needs” but did so without prejudicing its right to pursue the original 40 per cent formula and any arrears.
The outcome could significantly impact Sabah’s finances and redefine the balance of power within the Malaysian Federation.
“Every Sabahan has a stake in the outcome,” said Roger. The hearing will be open to the public at 9am at the High Court here.
To help citizens understand the legal and historical context, SLS would host a Townhall Session at their Secretariat on Friday, June 20, at 3pm.
Those interested can register by calling 088-232662, with seats available on a first-come, first-serve basis.
