Why Malaysia Agreement (MA63) Matters To Sarawak/Sabah (Part 1)?

Malaysia Agreement 1963 or MA63 as it is referred to today has become a hot issue since the last two years in Sabah and Sarawak. What is it really and what has happened to it since the birth of our nation  in 1963?

Briefly it is an international document signed by Malaya, Singapore, Sabah and Sarawak for the purpose of forming the new nation Malaysia on September 16 1963. It provided for safeguards to protect rights of the smaller parties to the agreement, in particular Sarawak and Sabah,  more so after Singapore was kicked out from our nation  some two years later. But it was not to be. There were serious  breaches and transgressions of the agreement over the last forty years or so.

Many legal experts have expressed their views on these breaches and transgressions. All of them agreed that it started with the introduction of the Petroleum Development Act 1974 where Federal Government unilaterally usurped the state’s rights over oil and gas.

This was the mother of all transgressions with vast impact on Sarawak’s position in the nation since the last forty over years. It was done without the consent of the Dewan Undangan Negeri at that time as required under the Malaysia Agreement 1963.

So, why  does it matter to us in Sarawak and Sabah? How does it affect you and me? Yes it matters a lot as it  affects every aspect of our lives.  In the first part of this article, I shall dwell on how it affects the state’s wealth and by extension, the pockets of  each and everyone of us.

But first let us look at our differences that tend to amplify these missed opportunities. We are separated geographically from Malaya and have never been part of them politically before Malaysia Day. In this respect both Sarawak and Sabah evolved  in their own ways over the millenium into a distinct entity with diverse ethnic groups each with its own language and culture with most professing different religious beliefs.

Everywhere in a modern nation state,  there often  exist strong internal pressures  for autonomy or devolution, more so when the territories that make up a nation are inhabited  by people of different ethnicities. This had happened in the United Kingdom where Scotland, Wales and Ireland managed to obtain some autonomy from London. The same scenario also  happened in Belgium, another European country. Closer to us there is Indonesia where its territories have obtained a degree of autonomy since the last few decades.

Such emotions which are prevalent in Sabah and Sarawak are no different than those in the above countries.

Since the territories   are supposed to be equal partners under the Agreement, the nation’s leaderships must avoid serious transgression and need to be sensitive to the feeling of the lesser partner and adapt accordingly. Otherwise the nation faces the perils  of  final disintegration like Pakistan after the departure of Bangladesh or Yugoslavia after the reign of President Tito in early nineties.

Let’s hope this will not happen to our beloved country and that the current Pakatan Harapan government under Tun Mahathir prove be more sensitive and accomodating and fulfil his promise. Congratulations to our Chief Minister Abang Jo and his GPS partners for spearheading this issue.

Now we come to economics. Having been trained in Economics and Business, I am more  familiar with this aspect of the issue.

Where would we be in terms of Sarawak or Sabah’s wealth in another dimension if the vision of our founding fathers were fully respected as written in the Malaysia Agreement 1963? What would our per capita income and household income be. How far richer would we be than the mediocre income that we are stuck in now? Would we be  as rich as Taiwan, Japan, UAE or Singapore?

First, let us examine where we are right now as indicated in the table below:

MEAN MONTHLY HOUSEHOLD INCOME 2016      ( IN RM)

The above table shows that Sarawak is in the tenth position with mean household income of RM 5,387 per month with Sabah in eleventh position at RM5,354 per month. Compare this with Kuala Lumpur in top position at RM 11,692.

Now, please look at the table below with comparative per capita Gross Domesti Product for states in Malaysia and some of the high income countries:

GDP PER CAPITA IN 2016                                  (IN USD)

While people in Sarawak are  placed only at 10th position  (among the poorest in the country)  as reflected by household income comparison, the  state itself is a big contributor to the nations’s wealth  with GDP per capita of USD 10,813, placed at 4th richest  in the country.

This big  discrepancy between household income and per capita income of Sarawak is wholly because of the huge production and export of natural gas, which has little effect on household income in Sarawak, since virtually all the proceeds from these exports go into the Federal coffers and distributed to other states.

To-day, Sarawak’s per capita GDP would have reached over USD 12,000.  With benefits and earnings from natural gas resources kept within the State, as under MA63  and without Petroleum Development Act 1974, this should have a direct effect of increasing the household income to the levels of  other developed states like Selangor, Penang and Johore.

This would bring household income in  Sarawak to  at least RM 10,600 monthly. When including  multiplier effect of investment of surplus income, the Household income would multiple further. This might not put us close  to Singapore, Japan or Australia, but it would definitely make us doubly richer and place Sarawak as the richest state in the country.

The above RM 10,600  is only the average income. Now imagine how many of you professionals, executives and managers in Sarawak and Sabah who  would earn above average amount of RM 25,000 to RM 50,000 per month,  just like those guys in KL.

Allow me to wish you a happy and prosperous tomorrow, but be ready to fight for it. Focus all your efforts on this most worthy cause.

DAH IKHWAN

Also read related articles:

1. Petroleum Royalty: PETRONAS vs Producing States