Malaysia was formed in 1963, when the eleven states of the previous Malayan Federation came together with Sabah, Sarawak and Singapore to create the Federation of Malaysia.
Federalism is a system of government in which legislative power is divided between a central or federal legislature and a number of state legislatures. Both levels of government derive their authority from a written constitution.
Unlike in a unitary state, sovereignty in a federal state is decentralized. Thus the rights of citizens are secured at two levels, federal and state. In Malaysia, federation was a way to accommodate the different histories and pre-existing sovereignty of the member states of the federation.
Federalism is a way of dividing and sharing power. In the system envisaged in our constitution, this division and sharing of power is part of a system of checks and balances meant to protect the rights and freedoms of our citizens. The separation of powers between the judiciary, the legislature and the executive are part of that complex interlocking system.
People often remark at how complex this country is, made up as we are of a patchwork of ethnicities and religions. But we are also complex in our political history. The nine sultanates of peninsular Malaysia, did not suddenly acquire their sovereignty upon the Federation Agreement of 1948. Instead it is by their voluntary coming together in that agreement that the federal authority was created.
Federal sovereignty and authority, although wider than that of the member states, is derived from the prior sovereignty of the states. In the nine sultanates of the peninsula, for example, we had sovereign states before we had a federation, and before the various forms of colonial rule.
The federation derives it powers by the voluntary and binding agreement of the states, not the other way around. This conviction was well tested in the way the Malayan Union proposal was rejected.
Thus we had an auspicious start as a country, because our political arrangement guaranteed our rights within a system that reflected and protected our cultural and historical diversity. Federalism provides for the right measure of local autonomy.
Decision-making, particularly about the allocation of resources, could be made in a way that more closely reflected the interests of people on the ground, that is to say, more efficiently.
This system did was not born overnight. The sovereignty of our member states is hundreds of years old. Our constitution was established on an 800 year old tradition of constitutional law. These are solid foundations for constitutional democracy.
If Malaya were not already a federation, Sabah and Sarawak would not have come together with us to form Malaysia in 1963. Federation is the only political basis on which Malaysia is a viable political venture.
Restating foundational truths
In present company these facts must seem so well-established that I hope you will forgive me if I come across as stating the obvious. Today we find ourselves in the position of having to state and re-state foundational truths about our country.
As a country we have come unmoored from our foundations in constitutionalism and federalism. We are now, for most intents and purposes, a federation in name only.
The central government hands out allocations that belong by right to the states as if these were gifts from on high. State governments are starved of resources, particularly if they are governed by the Opposition. How has this happened?
We have undergone two and a half decades in which, while hard infrastructure has sprung up everywhere, the deep infrastructure of the constitution has suffered great damage. Our federal arrangements provide for a fine balance between state and federal powers which provide multiple levels of assurance for the rights of citizens.
That balance has been removed as power has been concentrated in the federal government. Within the federal government that power has come to be centralized in the executive. In the executive, that power is concentrated in the hands of the prime minister
This forum addresses the question “should states be given more power?”, but really what needs to be done is to restore the constitutional rights of the states first.
The constitutional rights of the states are clearly violated in the way petroleum profits are being distributed and managed.
The federal government says Kelantan and Terengganu have no right to the “cash payments” agreed between the states and Petronas. These denials have been published in the newspapers and are repeated by official representatives of the government.
The full implications of their denial are not trivial. The federal government’s authority over these resources, as in all other things, is an authority derived from the original sovereignty of the states.
By the Federation Agreement of 1948, the states of the Malayan peninsula came voluntarily into a federation and created a common federal government. As part of that agreement, the federal government had jurisdiction over waters beyond three nautical miles. The states had jurisdiction within three nautical miles.
Oil had not been discovered in Malaya at the time. Had it been found, however, anything within three nautical miles would have belonged in its entirety to the state, and anything beyond that to the federal government. In 1974, we formed Petronas as a common trust between the federal and state governments for all petroleum found anywhere in Malaysia, onshore or offshore.
We did this by persuading the states governments, one by one, to vest their entire rights and claims to petroleum, onshore or offshore, in perpetuity to Petronas. The federal government did the same.
By design, this obliterated any considerations of whether the oil was found within or beyond three or 12 nautical miles. So long as Malaysia had any share in the oil, the profits would be divided between the federal government and the relevant state government according to a simple formula: five percent to each.
That series of vestings was secured through deeds signed according to the Petroleum Development Act. As the founding chairman of Petronas I signed these deeds with each chief minister and with the federal government.
Selective denial of fund
The federal government’s refusal to pay Kelantan, and it’s arbitrary treatment of Terengganu’s oil money – on and off according to whether the state was in Opposition hands—is in violation of a solemn contract, sealed in an Act of Parliament, between the state governments and Petronas.
The federal government is reneging on a contract and in contempt of Parliament. Its attitude to these oil payments is transparently based on one criterion: those states whose legislatures are not controlled by Barisan Nasional are denied payment.
This practice punishes citizens for their choice of state government. This is an attack on the right of the people to choose their own government within our system of parliamentary democracy. Oil payments are just one form of selective denial of funds to the states.
Putrajaya behaves as if we are a unitary state and not a federation. Ironically we have become in practice the Malayan Union which an earlier generation resisted and defeated.
The autonomy of the states, their rights to development and to the husbandry of their own resources, and the proper role of the rulers and the way in which religion is governed in public life are displaced in favour of increasingly centralized and absolute power.
This is unconstitutional and must be resisted with just as much vigour as we resisted the Malayan Union. Malaysia is not viable in the long run as a unitary state.
Tengku Razaleigh Hamzah is Umno's MP for Gua Musang. These remarks were made at 'Conversations on the Constitution - Federal–State Relations: Should states be given more power?' which was organised by the Constitutional Law Committee, Bar Council of Malaysia on March 11, 2010.
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