Malaysia is celebrating its 67th Independence Day, or known as “Hari Merdeka” in this coming 31st August 2024. However, the formation of Malaysia as a Federation took place on 16th September 1963, six years later after its independence with states of Sabah and Sarawak joined in after signing the MA63.
Since its formation in 1963, Malaysia has prided itself on being a harmonious federation, bringing together diverse states under one national banner. Yet, in recent years, the rise of anti-federalism, particularly from Sarawak, has threatened to unravel the unity and progress that Malaysia has worked so hard to achieve.
Sarawak’s increasing demands for autonomy and control over its resources, while rooted in historical grievances, risk undermining the nation’s cohesion and economic stability, with potentially dire consequences for national-owned government entities, corporations, and the broader Malaysian economy.
The Problem with Anti-Federalism in Sarawak
Anti-federal sentiment in Sarawak has grown increasingly vocal, with state leaders pushing back against what they perceive as federal overreach. While the call for greater autonomy might resonate with local populations, it raises serious concerns about the future of Malaysia as a unified nation. Sarawak’s demands for more control over its resources, particularly its lucrative oil and gas reserves, threaten to fragment the very foundation of the federation.
Professor James Chin, an expert on Malaysian politics and Asian studies, has noted that the push for autonomy in Sarawak, though understandable from a historical perspective, could have dangerous implications for national unity.
While MA63 did grant Sarawak and Sabah certain rights, the erosion of these rights over time has led to a sense of disenfranchisement. However, instead of seeking to work within the federation to address these grievances, Sarawak’s leaders have chosen a path of gaining greater independence, which risks alienating other states and weakening the federal structure.
Adding to the complexity is Sarawak’s track record of internal governance, marred by years of corruption and leakages that have enriched a small elite, particularly timber tycoons, at the expense of broader development, and the creation of economic multiplier effects to the state.
Despite this, Sarawak’s leadership has been using the Malaysian Agreement MA63 to justify its growing list of demands, raising questions about whether these demands truly serve the people or simply perpetuate the concentration of power and wealth among the few.
The implications of this anti-federal stance extend beyond Sarawak. If Sarawak succeeds in its demands, it could embolden other states, particularly Sabah, to follow suit.
This could lead to a domino effect, where states increasingly prioritize their own interests over the collective good of the nation. The result would be a fragmented Malaysia, where the idea of a united federation becomes little more than a relic of the past.
The creation of state GLCs disrupt the economic balance
Newly created state GLCs in recent years such as Petroleum Sarawak (PETROS) may be seen as a good move to realize the MA63 objective, but it is moving away from the concept of shared prosperity and unity under the spirit of Federation of Malaysia.
“PETROS is seen as Sarawak’s anti-federal stance since pose greater risks to Malaysia’s national oil company PETRONAS” said a research analyst.
As witnessed by recent events, Sarawak is now gaining full control of its gas distribution under the Distribution Gas Ordinance (DGO) 2016, impacting PETRONAS’s future earnings given 60% of the gas supply is originating from Sarawak.
Originally mooted by former Chief Minister Sarawak in the 1960s, PETRONAS was born from the Petroleum Development Act 1974, and it has been the backbone of the Malaysian economy, contributing significantly to the national budget through its revenue and dividends in the last 50 years.
As PETRONAS celebrates its 50th anniversary in August, it is one of Malaysia’s best creation that every Malaysians can be proud off. The hallmark of the PETRONAS Twin Towers, creation of the Putrajaya administration and other socio-economic development in other states including are just the tip of what the general public can witness, but its decades of contribution to create a balanced wealth distribution in Malaysia have benefitted oil producing states.
However, Sarawak’s demands for greater control over its oil and gas resources threatens to undermine PETRONAS’s ability to fulfill this role, further impacting the wealth distribution to other states.
Sarawak Premier Abang Johari Openg has been on the rise to transform Sarawak to greater autonomy, resulting in a greater political push for state control over oil and gas resources. Optically, this provides the state a second chance to redeem itself, having embroiled with decades of corruption, cronyism and leakages in the last 30 years.
Despite the political rhetoric, the love for PETRONAS among the Sarawakian people is evident. The national oil company has created thousands of jobs for Sarawakians, contributing significantly to the state’s economy and offering opportunities that might not have otherwise existed.
Yet, this contribution is often overlooked by the state’s political leaders, who increasingly portray PETRONAS as a federal entity rather than a global Malaysian company. This perception is exacerbated by the fact that PETRONAS was established under the Petroleum Development Act (PDA) of 1974, a federal legislation that some in Sarawak view as an imposition on their rights.
PETRONAS’s ability to generate revenue is crucial not just for the company itself but for the entire nation. The Federal Government relies heavily on dividends from PETRONAS to fund its budget, including critical public services such as education, healthcare, and infrastructure. By challenging PETRONAS’s control over Sarawak’s resources, the state government risks disrupting this revenue stream, with potentially severe consequences for the nation as a whole.
Professor James Chin has warned that Sarawak’s actions could set a dangerous precedent, leading to a scenario where PETRONAS is forced to renegotiate its agreements with other states as well. This would create a more fragmented and complex operating environment, reducing the company’s efficiency and profitability. Ultimately, this could result in lower dividends to the Federal Government, forcing cuts to essential services and slowing Malaysia’s economic growth.
The National Implications of Sarawak’s Demands
Sarawak’s growing assertiveness is not just an economic issue; it is a political one with far-reaching implications for national unity. By prioritizing its own interests over the collective good (and for other states too), Sarawak risks creating divisions within the federation that could be difficult to heal. Bearing in mind that shared well and prosperity have been the backbone of Malaysia’s growth in the last decade, despite challenging headwinds due to massive corruption by political leaders in some states, notably Sarawak, Sabah, Penang and other others.
The Federal Government faces a difficult dilemma: how to address Sarawak’s demands without setting a precedent that could lead to the fragmentation of Malaysia.
Abang Johari has made it clear that Sarawak will no longer be content with the status quo, stating that the state must have its rightful share of revenue from its resources – and the implementation of the full gas control via the DGO 2016 Act was seen as a political action rather than benefitting Sarawakians as a state of 2.5 million people.
Political analysts argue that this approach overlooks the broader impact on the nation. The push for greater autonomy might benefit Sarawak in the short term, but it could weaken the federal system that has held Malaysia together for over half a century.
If Sarawak and other states are allowed to unilaterally assert control over their resources, the Federal Government’s ability to govern effectively could be severely compromised. This could lead to a situation where national policies are increasingly dictated by state-level interests, rather than by a cohesive vision for the country. In such a scenario, Malaysia’s ability to function as a unified nation would be in jeopardy.
Conclusion: The Need for National Unity
Does the MADANI Government led by the Prime Minister Anwar Ibrahim has the political will to unite the state leaders, people and parties together for a stronger Malaysia?
Malaysia should not yet celebrate its independence, but the question of whether Malaysia is fully independent from the colony of its own states has taken on new urgency in light of Sarawak’s growing anti-federalism.
While the desire for greater autonomy is understandable, it is crucial that these demands be balanced against the need for national unity and economic stability. Sarawak’s actions, if left unchecked, could lead to a fragmented Malaysia where states prioritize their own interests over the collective good.
The impact on PETRONAS is a clear example of the dangers posed by Sarawak’s anti-federal stance. By challenging the national oil company’s control over natural gas resources, Sarawak risks undermining the financial stability of the entire nation.
The Federal Government must find a way to address Sarawak’s concerns while maintaining the integrity of the federation and ensuring that PETRONAS can continue to contribute to the national budget.
In this delicate moment, it is essential for Malaysia to reaffirm its commitment to unity and to the principles of federalism that have guided the nation since its formation.
The current MADANI Government must work with Sarawak and other states to find a solution that respects their rights while ensuring that the nation remains strong and cohesive. Only by working together can Malaysia overcome the challenges posed by anti-federalism and continue to thrive as a united nation.
