Just as Sabah heads towards a state election, the state has won a remarkable legal victory that could reshape federal–state relations — and, perhaps just as significantly, the political mood on the ground.
The Kota Kinabalu High Court ruled last Friday (Oct 17) that the federal government acted unlawfully by failing to honour Sabah’s right to 40 per cent of federal revenue derived from the state for almost five decades. The court found that the special grant arrangements under the Federal Constitution’s 10th Schedule were “unlawful, ultra vires, and irrational,” and issued a mandamus order compelling Putrajaya to review the allocation and reach an agreement with the state government within 180 days.
This ruling is the culmination of a judicial review filed by the Sabah Law Society (SLS) in 2022. The SLS argued that both federal and state governments had breached their constitutional duty by failing to review the grant since 1974, despite the requirement that such reviews be held every five years.
In other words, for nearly half a century, Sabah’s share of the revenue pie — a constitutional right enshrined in the Malaysia Agreement 1963 (MA63) — was ignored.
The Timing: Too Good to Be True?
The verdict couldn’t have come at a more politically fortuitous moment. With the Sabah state assembly dissolved and the election set for November 29 (Nomination Day: November 15), the ruling serves as an unexpected — and convenient — boost for the state’s ruling coalition, Gabungan Rakyat Sabah (GRS), led by Chief Minister Hajiji Noor.
GRS leaders wasted no time framing the judgment as the fruit of their steady, mature negotiations with Putrajaya. GRS Youth secretary Rafie Robert said the coalition had always taken a “responsible approach” by supporting legal channels such as the SLS case, while continuing talks with the federal government.
He contrasted this with the previous Warisan administration, which he claimed “produced no tangible progress” on the 40 per cent issue during its brief two-year rule. “The people want results, not political bickering,” Rafie said, in a statement that neatly doubles as a campaign slogan.
Warisan, for its part, has accused the ruling coalition of political opportunism, claiming that GRS will exploit the court’s decision as election fodder. To the opposition, the judgment’s timing — landing just weeks before the polls — looks suspiciously convenient, and perhaps even choreographed to strengthen Hajiji’s hand.
One can’t entirely blame them for being cynical. After all, the Attorney-General’s Chambers (AGC) has already announced its intention to review the ruling and possibly appeal it. The federal government’s legal challenge may yet delay or dilute the benefits of this apparent “victory” — but the political optics, for now, are undeniably in GRS’s favour.
A Long-Running Struggle for Fair Share
At the heart of the issue lies Sabah’s long-standing frustration over fiscal imbalance. Under the Federal Constitution, all major taxes are collected by the federal government, which then redistributes a portion to the states. But Sabah and Sarawak, as founding partners of Malaysia under MA63, were promised a higher degree of autonomy and financial entitlement — including the 40 per cent share of federal revenue derived from their territories.
Over the decades, however, this entitlement was gradually eroded, leaving many Sabahans feeling shortchanged and politically marginalised. The SLS’s legal victory thus resonates far beyond the courtroom — it taps into decades of pent-up sentiment about federal neglect, economic disparity, and the unfulfilled promises of MA63.
Even so, caution remains warranted. In 2022, the federal and Sabah governments had already agreed on “interim payments” pending further negotiations on the 40 per cent formula — an arrangement that critics say was designed to stall genuine reform. Now that the court has issued a binding order, the question is whether this will finally compel meaningful compliance, or merely spark another cycle of legal and bureaucratic delay.
Political Reverberations in Sabah
The court ruling has also intensified politicking among Sabah’s political players.
In Upko, for example, Upko Penampang has taken a bold stance — calling on its president, Ewon Benedick, to resign from the federal Cabinet if the AGC proceeds with an appeal. The division’s chief, Donald Peter Mojuntin, declared that Upko must “stand in solidarity with the people of Sabah” and defend their constitutional rights under MA63, even if it means breaking ranks with Putrajaya.
All this points to one thing: the 40 per cent revenue issue has evolved from a legal and fiscal dispute into a potent political symbol — one that now defines loyalty, legitimacy, and leadership in Sabah’s politics.
A Moment of Truth for Sabah’s Future
For now, the AGC’s next move remains uncertain. It has acknowledged that the dispute hinges on the interpretation of Articles 112C and 112D of the Federal Constitution — provisions dealing with special grants and periodic reviews for Sabah and Sarawak.
But whatever happens next, one thing is clear: this ruling has reawakened the question of state rights and fiscal justice in Malaysia. For decades, Sabah’s demand for a fairer share of national wealth was dismissed as regional grumbling. Today, it stands on the firm ground of constitutional affirmation.
Whether this moment turns into lasting reform or fades as another episode of political theatre will depend on what follows after the ballots are counted.
For now, the timing feels almost too perfect — a victory that may be both a legal milestone and a political windfall. The people of Sabah, as always, will decide which it truly is.
TheRealNehruism (nehru.sathiamoorthy@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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