Koon Yew Yin, 6th Dec 2025

Malaysia is the world’s second largest palm oil producer after Indonesia, with output exceeding 19.5 million tonnes in 2025. East Malaysia’s role: With nearly half of production, Sabah and Sarawak are critical to Malaysia’s export earnings and sustainability commitments.

Malaysia is one of the largest petroleum oil producers in the world.

Sabah and Sarawak together now produce about 65–70% of Malaysia’s petroleum oil and gas output, as Peninsular Malaysia’s reserves have declined sharply over the past decade.

Breakdown of Malaysia’s Petroleum Production

Peninsular Malaysia:

Once produced ~700,000 barrels/day.

Output has fallen by 50% to ~350,000 barrels/day due to declining reserves.

Sabah & Sarawak:

Offshore fields in Sarawak (Bintulu, Miri) and Sabah (Kota Kinabalu basin) now dominate production.

Combined, they contribute two‑thirds of Malaysia’s total petroleum output.

Most new discoveries and exploration success are concentrated in East Malaysia.

Why East Malaysia Dominates

Resource-rich basins: The largest reserves are offshore in the South China Sea near Sabah and Sarawak.

Decline in Peninsular fields: Aging reservoirs and fewer new finds have shifted production eastward.

Strategic role: East Malaysia’s oil and gas underpin Malaysia’s export earnings and energy security.

Strategic Implications: Federal revenue dependence: Malaysia’s petroleum income (RM775 billion between 2018–2024) relies heavily on East Malaysia’s output.

Bottom Line: Sabah and Sarawak now supply nearly 70% of Malaysia’s petroleum oil, making them the backbone of the country’s energy sector and strengthening their bargaining power in federal–state negotiations.

Sabah and Sarawak grievances:

Despite producing most of the palm oil and petroleum oil, Sabah and Sarawak only receive 5% royalty, fuelling demands for higher revenue sharing under the Malaysia Agreement 1963 (MA63).

What is the Malaysia Agreement 1963 (MA63)?

The Malaysia Agreement 1963 (MA63) is the treaty that created Malaysia. Signed on 9 July 1963 in London, it brought together the Federation of Malaya, North Borneo (Sabah), Sarawak, and Singapore into a new nation called Malaysia, effective 16 September 1963.

Key Facts about MA63: Parties involved: United Kingdom, Federation of Malaya, North Borneo (Sabah), Sarawak, and Singapore.

Purpose: To legally establish Malaysia as a federation, replacing colonial rule in Borneo territories.

Legal status: Registered with the United Nations on 21 September 1970 as Treaty No. 10760.

Languages: English and Malay were the authentic texts.

Autonomy guarantees: Sabah and Sarawak were promised special rights, including control over immigration, religion, language, and local governance.

Revenue sharing: The agreement recognized East Malaysia’s entitlement to a share of federal revenue (later interpreted as the controversial “40% entitlement”).

Constitutional changes: Annexes amended the Malayan Constitution to form the new Federal Constitution of Malaysia.

Singapore’s role: Singapore joined Malaysia under MA63 but left in 1965 after political and economic disputes.

Why MA63 Still Matters

Sabah & Sarawak grievances: Many promises of autonomy and revenue sharing were not fully implemented, fuelling calls for greater state rights.

National unity: MA63 is central to debates about whether Sabah and Sarawak are equal partners or subordinate states within Malaysia. Summary Table

Bottom Line: MA63 is the founding document of Malaysia, but its incomplete implementation—especially regarding Sabah and Sarawak’s autonomy and revenue rights—remains a source of political tension today.

My advice:

I am nearly 93 years old. From my long experience in doing business, everything can be settled by meeting face to face and negotiation until an amiable settlement is achieved.

PM Anwar must invite all the political leaders of Sabah and Sarawak to discuss their aggrievances and complaints and reach an amiable settlement. Basically, PM Anwar must honour MA 63 agreement.

If Sabah and Sarawak leave Malaysia, PM Anwar will be the worst Prime Minister in the history of Malaysia.

Anwar Ibrahim won the Tambun parliamentary seat with a majority of 5,328 votes.

Detailed Results – Tambun (GE15, 2022)

Majority: 5,328 votes (Anwar over Ahmad Faizal Azumu). Constituency demographics: ~71% Bumiputera, 18% Chinese, 10% Indian.

Context

This was Anwar’s first contest in Perak, after previously representing Port Dickson.

Tambun was considered a tough seat because Ahmad Faizal Azumu was a former Perak Menteri Besar and PN deputy chairman.

Anwar’s victory in Tambun was pivotal, as it strengthened his legitimacy to become Malaysia’s 10th Prime Minister shortly after GE15. Bottom Line: Anwar Ibrahim secured Tambun with a 5,328-vote majority, a significant win against a strong PN challenger, cementing his path to the premiership.

During the last general election on 19th Nov 2022, I champagned for Anwar in Ipoh where I live. I like his anti-corruption policy.

What PM Anwar must do to prevent Sabah and Sarawak from leaving Malaysia? - Koon Yew Yin