Authored By: Chiu Hui Hui
Multimedia University
Introduction
Sarawak is the largest state in Malaysia, almost equal in size to Peninsular Malaysia combined. It is a land of diverse cultures and abundant natural resources. In 1963, a historic milestone was reached when Sarawak and Sabah joined the Federation of Malaya to form Malaysia by signing the Malaysia Agreement 1963 (hereinafter ‘MA63’).
This article examines the historical background of MA63 and how subsequent constitutional amendments may affect the Agreement. It also explores the ongoing challenges faced by Sarawak within the current constitutional arrangement.
Historical Background
In 1961, Tunku Abdul Rahman proposed that Sabah, Sarawak, Singapore, the Federation of Malaya, and Brunei form a wider federation. However, doubts were raised in Sabah and Sarawak, and the proposal faced opposition from neighbouring countries, particularly Indonesia and the Philippines.1 The Cobbold Commission was consequently formed to ascertain the views of the peoples of Sabah and Sarawak.
The Commission submitted its report to the British Government and the Federation of Malaya in June 1962. The report revealed that one-third of the population favoured Malaysia, another one-third would support the proposal subject to safeguards, while the final one-third rejected Malaysia and sought independence first.2 The Commission further recommended that autonomy and safeguards be afforded in certain matters not enjoyed by other states, having regard to the special circumstances of Borneo.3
These safeguards were articulated through 20 points from Sabah and 18 points from Sarawak. The Inter-Governmental Committee (IGC) was subsequently established, comprising representatives from the British, Malayan, Sabah, and Sarawak governments, with the task of working out how those safeguards could be incorporated into the new Malaysian Constitution.4 Those safeguards were thereafter embedded in MA63.
Malaysia Agreement 1963
MA63 is a document signed by the British Government, the Federation of Malaya, Sabah, Sarawak, and Singapore in London. Although Singapore departed from the federation in 1965, its exit did not void the Agreement.5
As noted, Sabah and Sarawak agreed to join the federation on specific conditions, designed to safeguard the rights and autonomy of the Borneo states. Under MA63, Sarawak and Sabah were granted extensive powers not afforded to other states in the federation, including powers relating to religion, language, immigration, and other matters.
Although the Agreement does not explicitly state that Sabah and Sarawak were equal partners, the extended entitlement of rights compared to other states in Peninsular Malaysia reflects their special standing within Malaysia. This was also recognised by the 1962 Cobbold Commission, which characterised the union as a “partnership” and not a “takeover”.6
The Constitutional Amendments
In 1976, the Federal Constitution (hereinafter ‘FC’) was amended to incorporate all of Malaysia’s states, including Sabah and Sarawak, under Article 1(2). This effectively placed Sabah and Sarawak on equal footing with the other states in the Federation,7 thereby diluting their special constitutional standing.
In 2021, a further constitutional amendment restored Sabah and Sarawak’s original status by clarifying that Malaysia comprises two groupings — Peninsular Malaysia, and the territories of Sabah and Sarawak — under Article 1(2) of the FC. This amendment reverts to the constitutional position as it stood in 1963. Although it does not confer additional rights, it represents a significant hallmark in recognising the autonomous and asymmetrical position of Sabah and Sarawak within the Federation.
Furthermore, the 2021 amendment also revisited the definition of “the Federation.” Prior to the amendment, Article 160(2) of the FC defined “the Federation” as the federation established under the Federation of Malaya Agreement 1957. The 2021 amendment extended this definition to encompass MA63, taking into account Singapore’s separation from Malaysia as an independent and sovereign state. This amendment reaffirmed the constitutional status of MA63, with the result that numerous claims and rights arising under MA63 may now be pursued with greater constitutional legitimacy.
Additionally, Articles 161A(6) and 161A(7) were amended, granting Sarawak the authority to define its own indigenous races, effectively bypassing federal oversight on these matters.8
The Ongoing Challenges
The 2021 Constitutional Amendment is undoubtedly a step in the right direction. As of December 2025, a total of 19 items under MA63 have been resolved, as confirmed by Deputy Prime Minister Datuk Seri Fadillah Yusof.9 Nevertheless, significant unresolved issues persist. The original intent of the constitutional federation under MA63 was for Sabah and Sarawak to retain greater powers, including immigration powers, separate legal systems and legal professions, more guaranteed revenue, and the right to veto constitutional amendments affecting them.10
Judicial Appointments
In the judicial context, Article 122A(3) of the FC, which conferred on the Governors of Sabah and Sarawak the constitutional right to appoint Judicial Commissioners on the advice of the Chief Judge of the High Court of Sabah and Sarawak, was revoked in 1994. That power has since been transferred to the Yang di-Pertuan Agong.11
The constitutionality of that revocation was directly in issue in Government of Malaysia v Robert Linggi.12 The respondent argued that the amendment breached Article 161E(2)(b) of the FC, which provides that amendments affecting the High Court in Sabah and Sarawak and its judges shall not be made without the consent of the Governors of Sabah and Sarawak. The High Court ruled in favour of the respondent. However, this ruling was overturned by the Court of Appeal, which held that the appointment of Judicial Commissioners could not be equated to the appointment of “judges of that Court” as contemplated under Article 161E(2)(b) of the FC.
This outcome, though condoned by the Court of Appeal in Robert Linggi, runs counter to the spirit of Article 161E(2)(b) of the Federal Constitution.13 The interpretation raises serious questions about the effectiveness of the constitutional safeguards originally intended for Sarawak under MA63.
Oil and Gas Royalties
Natural resource royalties — particularly oil and gas — remain the most persistent grievance for Sarawak. Sarawak contributes 60% of Malaysia’s natural gas, of which 94% is used by Petronas to be converted to liquefied natural gas and exported. Yet Sarawak retains merely 6% of its natural gas for local industries and power generation, at prices determined by Petronas.14 According to data from the Malaysia Energy Commission, Sarawak holds more than 60% of Malaysia’s total natural gas reserves and 40% of total crude oil reserves.15 Notwithstanding this, the Petroleum Development Act 1974 (PDA) vests sole and exclusive ownership over petroleum in Malaysia in Petronas, with Sarawak receiving only a 5% royalty.16
The Continental Shelf Act 1966 and the Petroleum Mining Act 1966, originally applicable only to Peninsular Malaysia, were subsequently extended to Sarawak through legislation enacted following the Proclamation of Emergency in 1969. These arrangements have long been criticised as inequitable, particularly given that Sarawak had already enacted its own Oil Mining Ordinance 1958 (OMO).17 Under Article 162(1) of the FC, any pre- and post-Independence law shall remain in force unless repealed by the authority having power to do so under the Constitution. The OMO is therefore undeniably valid, operational, and enforceable.18 Furthermore, Parliament’s power over the development of oils, oilfields, and petroleum products is expressly made subject to item 2(c) of the State List.19 The operation of the three federal petroleum laws in Sarawak may accordingly give rise to questions as to their constitutional validity.
Parliamentary Representation
When Singapore exited the Federation in 1965, it left behind 15 parliamentary seats. The original allocation of seats among Sabah, Sarawak, and Singapore had been structured to ensure that they collectively held slightly more than one-third of the seats in Parliament — a constitutional safeguard expressly designed to prevent unilateral constitutional amendments by the Federal Government.20 These seats were not reallocated following Singapore’s exit. The original constitutional balance was no longer maintained, and Sabah and Sarawak now hold approximately one-quarter of parliamentary seats. This has fuelled ongoing discussion as to whether the current structure adequately reflects the original arrangement under MA63.
Ongoing Efforts Toward Resolution
As Suffian LP observed, “The doctrine of the supremacy of Parliament does not apply in Malaysia. Here we have a written constitution. The power of Parliament and of State legislatures in Malaysia is limited by the Constitution, and they cannot make any law they please.”21 This underscores the supremacy of the Constitution and the principle that no law may be passed in contravention of it.
Notwithstanding this, the uncertainties regarding the extent to which the constitutional safeguards under MA63 continue to be given effect persist. To address these outstanding issues, the MA63 Implementation Action Council (MTPMA63) has been established. According to its first meeting in 2026, the Council aims to bring federal and state leaders together to discuss unresolved matters and chart a path forward.
Sarawak has also taken independent measures to address the oil and gas issue. Petroleum Sarawak Berhad (Petros), a state-owned oil and gas company wholly owned by Sarawak, was formed in 2017, enabling the state to benefit more directly from its resources. In addition, Sarawak imposes a 5% state sales tax on all petroleum products — a levy that has become a key revenue stream, strengthening the state’s control over its resources and financial autonomy.22
Finally, the shared demand for 35% of parliamentary seats remains a standing goal for both Sabah and Sarawak, and is not a new claim. Restoring that 35% allocation would revive the original veto power agreed under MA63. A measured step toward this was taken in 2025 when Prime Minister Datuk Seri Anwar Ibrahim confirmed that the unity government had adopted a policy to increase the number of parliamentary seats allocated to Sabah and Sarawak. While this falls short of the one-third threshold, he confirmed that additional seats would be added, with the final decision to be made by the Election Commission.23
These efforts indicate that the issues surrounding MA63 are being addressed through a combination of constitutional dialogue, legal processes, and policy reforms, rather than through unilateral action.
Conclusion
MA63 is more than a historical agreement or a symbolic declaration. Its true significance lies in ensuring that the practical safeguards it contains are given real and meaningful effect. The challenges discussed in this article are not merely obstacles — they are reminders of the ongoing work required to achieve greater clarity in constitutional interpretation. It is only through that clarity that the provisions of MA63 can be meaningfully and effectively applied within Malaysia’s constitutional framework.
Footnote(S):
1 Hasbollah bin Mat Saad, A Brief History of Malaysia: Text and Materials (Pena Hijrah Resources 2018) 112.
2 James Chin, The 1963 Malaysia Agreement (MA63): Sabah and Sarawak and the Politics of Historical Grievances (Yusuf Ishak Institute, 2019) 79.
3 Cobbold Commission, Report of the Commission of Inquiry, North Borneo and Sarawak (Colonial Office, London 1962) para 145.
4 Hasbollah bin Mat Saad (n 1) 109.
5 Roger Chin, ‘Legal standing of MA63, the breaches and consequences’ Daily Express (22 September 2024) dailyexpress.com.my accessed 1 April 2026.
6 Jaclyn L Neo, ‘Restoring Constitutional Equality to Sabah and Sarawak: Do the Proposed Amendments to the Malaysian Federal Constitution Go Far Enough?’ (ConstitutionNet, 9 November 2021) constitutionnet.org accessed 1 April 2026.
7 ibid.
8 ‘MA63 Amendment Passes’ The Borneo Post (Sarawak, 22 July 2022) theborneopost.com accessed 1 April 2026.
9 BERNAMA, ’19 items under MA63 resolved, says DPM Fadillah’ The Borneo Post (Putrajaya, 7 December 2025) theborneopost.com accessed 1 April 2026.
10 Jaclyn L Neo (n 6).
11 Federal Constitution, art 122AB(1).
12 [2015] 1 LNS 1515.
13 Sheila Ramalingam, Dato’ Johan Shamsuddin Sabaruddin & Saroja Dhanapal, ‘The Establishment of One High Court for Malaysia: A Pipe Dream or a Possibility?’ (2023) 50(1) JMCL ejournal.um.edu.my accessed 1 April 2026.
14 Peter Sibon, ‘Sarawak’s Indisputable Rights’ (Unit Komunikasi Awam Sarawak, 21 November 2025) ukas.sarawak.gov.my accessed 1 April 2026.
15 Andreas Exarheas, ‘BMI Says Malaysia Upstream Poised for Further Growth’ Rigzone (21 March 2024) rigzone.com accessed 1 April 2026.
16 Unit Komunikasi Awam Sarawak, ‘Facts, Not Fiction, Why Petros is Sarawak’s Lawful Gas Aggregator’ (5 September 2025) premierdept.sarawak.gov.my accessed 1 April 2026.
17 Ling Hui Chuan, ‘Sarawak’s Oil Mining Ordinance 1958: An Existential Indeterminacy?’ [2025] CLJU(A) li.
18 ibid.
19 Federal Constitution, item 2(c) State List, Ninth Schedule. [Note to author: please verify — footnote 19 in the original references item 8(j) Federal List; this may require confirmation against the Constitution.]
20 James Chin, ‘MA63: What Sabah and Sarawak Wants’ (SEDAR Institute, 14 March 2025) isedar.my accessed 1 April 2026.
21 Ah Thian v Government of Malaysia [1976] 2 MLJ 112.
22 Lian Cheng, ‘A Divine Inspiration: The Conception of State Sales Tax’ DayakDaily (14 December 2025) dayakdaily.com accessed 1 April 2026.
23 Adib Povera & Olivia Miwil, ‘Anwar: Seat increase for Sabah, Sarawak is unity government’s policy’ New Straits Times (Kota Kinabalu, 16 November 2025) nst.com.my accessed 1 April 2026.
