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THE government has recorded significant milestones in the implementation of the Malaysia Agreement 1963 (MA63), with 13 out of 29 matters involving the rights and interests of Sabah and Sarawak successfully resolved as of the end of last year.
Deputy Prime Minister II Datuk Seri Fadillah Yusof had explained that the achievement reflects renewed federal commitment to addressing long-standing grievances related to autonomy, development, and equitable treatment of the two Bornean states within the Federation of Malaysia.
According to official briefings by the Prime Minister’s Department, the remaining 16 matters are still under negotiation through the Technical Committee under the Action Council for the Implementation of the Malaysia Agreement 1963 (MTPMA63).
These negotiations are closely monitored by the Sabah and Sarawak Affairs Division of the Prime Minister’s Department, which serves as the secretariat for MA63 implementation.
“The 13 matters already achieved cover a wide range of governance, fiscal, and administrative reforms. Among the most significant is the handover of electricity regulatory power to Sabah, enabling the state government to exercise full authority over electricity supply regulation through the transfer of Sabah Electricity Sdn Bhd (SESB).
“This move, long sought by state leaders, is seen as a critical step toward improving energy security and addressing persistent supply issues in rural areas,” said Fadillah, who is also the Chairman of the Technical Committee of the Malaysia Agreement 1963 Implementation Action Council (MTPMA63).
In another key development, the Public Works Department (JKR) and the Irrigation and Drainage Department (JPS) in both Sabah and Sarawak have been officially recognised as Technical Departments under Treasury Directive 182 (AP182).
Greater autonomy for Sabah, Sarawak
This recognition allows the two states greater autonomy in implementing infrastructure projects without excessive federal bureaucracy, a change welcomed by local contractors and engineers.
Sabah has also assumed regulatory authority over gas supply within the state, while Sarawak has secured greater power over the distribution and control of gas revenue.
These developments align with earlier constitutional and legal interpretations affirming state rights over natural resources, as outlined in MA63 and reinforced by subsequent court decisions.
Other resolved matters include plans to appoint Sabah and Sarawak representatives as permanent members of the Inland Revenue Board through amendments to the Inland Revenue Board Act 1995, increased autonomy in judicial administration, and clearer guidelines for the re-transfer of federally reserved land back to state governments.
The process of re-transferring Bintulu Port to the Sarawak Government is also underway, marking a strategic shift in port governance and revenue control.
Fadillah had stressed that the Madani government has further reviewed and increased annual special grants to Sabah and Sarawak under Section 112D of the Federal Constitution, addressing long-standing concerns over fiscal imbalance.
Delegation of authority to issue deep-sea fishing licenses to state governments and new procedures for planning Judicial Commissioners in consultation with the Yang di-Pertua Negeri were also finalised.
Perhaps most symbolically, Parliament passed constitutional amendments to Articles 1(2) and 160(2), formally recognising Sabah and Sarawak as equal partners in the Federation of Malaysia rather than merely constituent states.
Negotiations ongoing
Education policy coordination has also advanced, with Sarawak now permitted to implement its own Year 6 examination system and expand the Dual Language Programme (DLP) to strengthen English proficiency.
Negotiations are ongoing regarding Sabah’s claim to 40 per cent revenue entitlement, as well as proposals to increase parliamentary representation for Sabah and Sarawak by more than 25 per cent.
While there is policy-level agreement on the principle of increased representation, implementation requires a two-thirds majority in Parliament, making bipartisan consensus essential.
Fadillah has also repeatedly emphasised that MA63 implementation is an ongoing process rather than a one-off settlement.
In official statements, he noted that the government remains committed to continuous engagement with state governments to ensure that solutions are legally sound, fiscally sustainable, and aligned with the spirit of the agreement signed in 1963.
In response, government officials point to sustained increases in development allocations for Sabah and Sarawak, particularly for rural roads, water treatment plants, and electricity grid upgrades, as evidence of commitment beyond legal reforms.
Moving forward, policy experts suggest several measures to strengthen MA63 implementation: institutionalising federal–state consultation mechanisms, enhancing public awareness campaigns in both states, and ensuring that fiscal decentralisation is matched by administrative capacity at the state level.
Crucially, they argue, bipartisan political support is needed to pass constitutional and legislative changes that remain pending.
As negotiations continue, the MADANI Government maintains that MA63 remains a national priority.
The progress achieved so far, while not without criticism, marks one of the most substantial efforts in decades to realign federal–state relations and honour the foundational agreement that formed Malaysia. – February 10, 2026
