Is Malaysian Federalism a Good or a Warning Example for Solving the China/ Tibet Issue? A Brief Inquiry into a Half-Century Experiment in Asymmetric Federalism

[This piece appeared as a chapter in a recently published book, Jens Woelk and Roberto Toniatti (eds), Regional Autonomy, Cultural Diversity and Differentiated Territorial Government: The Case of Tibet – Chinese and Comparative Perspectives (Abingdon, Routledge, 2017). My argument is that it is a warning example.]

On 22 July 2013 the residents of Kuching, the capital of the Malaysian state of Sarawak, on the island of Borneo, were treated to a strange spectacle. They saw actors performing a re-enactment of the actual ceremony in 1963 when the last British Governor of Sarawak, Governor Sir Alexander Waddell, sailed from the Astana, the ancient seat of Government, directly across the Sarawak River to greet and officially hand over his duties to his Sarawakian successor, signalling the end of colonial rule.[1] For this staged re-enactment the State Government even arranged for Caucasian actors to play the role of Waddell and his entourage as they walked towards the Square Tower at the Kuching Waterfront, where the Union Jack was lowered as the newly independent state’s flag was raised.[2] The event was billed as a celebration of liberation day’ (22 July 1963), and the end of the colonial period in Sarawak.

The symbolism of all this would have not have been lost on Kuching residents. Between 22 July and 16 September 1963 Sarawak had been an independent territory, its brief independence terminated when it agreed to join the new Federation of Malaysia on the latter date. It was an existential statement of underlying independence and, ultimately, sovereignty. It was a reminder that adherence to the Malaysian federation, created in 1963, was a matter of choice, not compulsion, reminiscent of Canada’s declaration of war on Germany in 1939 – a day after the United Kingdom declared war.
A few days after this staged re-enactment, on 16 September 2013, Malaysia celebrated the 50th anniversary of its creation as a result of the federation of four entities: the existing Federation of Malaya (created in 1948 and becoming independent on 31 August 1957); and the British Crown colonies of Singapore, Sabah (known then as North Borneo), and Sarawak. Six years earlier, on 31 August 2007, the 50th anniversary of Malayan ‘independence’ (Merdeka) had been celebrated with gusto in what was from 1963 called ‘West Malaysia’ (i.e., the Federation of Malaya), but those anniversary celebrations seemed quite foreign to Sabah and Sarawak, which were under British rule for another six years after 1957; for them 1957 had no significance at all. For these East Malaysian states on the island of Borneo, separated from West Malaysia by a stretch of the South China Sea, it was not, they appeared to think, their party.
A further oddity in this arrangement is that, while the Federation of Malaysia was formed on 16 September 1963, yet the anniversary of Malaysia’s National Day (now usually referred to as Merdeka Day) is regularly celebrated on 31 August, commemorating the day in 1957 when the Federation of Malaya gained independence. It was not in fact until 2003 that the Government of Malaysia proclaimed Malaysia Day to be 16 September, the actual date of the creation of the country we know as ‘Malaysia’. 40 years is a long time for the correction of such a basic historical and diplomatic error.[3]
The confusion deepens further when one looks at the Federal Constitution of 1957, which is now known as the Federal Constitution of (please note) Malaysia. The creation of Malaysia did not apparently merit a new Constitution, but only amendment (and of course a renaming) of the existing Constitution, called the ‘Constitution of the Federation of Malaya’. Article 1(1) clarifies that ‘The Federation’ shall be known, in Malay and in English, by the name ‘Malaysia’. Yet Article 160 of the Constitution provides that ‘Merdeka Day’ (celebrating independence) refers to 31 August 1957, and defines ‘the Federation’ as the Federation established under the Federation of Malaya Agreement 1957, not the Malaysia Agreement 1963. The legal position can probably be best expressed by saying that that ‘the Federation’ referred to repeatedly in the Constitution is the Federation established by the 1957 Agreement as modified by the 1963 Agreement, and whose powers and structure are defined extensively in the Federal Constitution. So it seems that after 50 years, or 57 according to one’s calculation, Malaysia still has an existential problem that is seen quite differently from Kuching and from Putrajaya, which is now the seat of the federal government near Kuala Lumpur. Even the black letter of the Constitution seems to skate over the momentous events of 1963 and the creation, on 16 September of that year, of a new federation. Interestingly enough, the validity of the 1963 federation was challenged, unsuccessfully, by one of the existing States of the Federation of Malaya – Kelantan – in legal proceedings the day before the new federation took effect. They argued, very plausibly, that this change was a fundamental one on which they should have been consulted. Indeed it was and they should.
This might all seem to be purely technical confusion for draftsmen to sort out, but is not so. There was a palpable sense in September 2013 that federation itself was an issue only for Sabah and Sarawak. And even in Sabah and Sarawak it seemed as if the prevailing view was that federation was not something to be celebrated with great (or for some people, actually any) enthusiasm. Casual treatment of the ‘details’ discussed above is seen in those States as symbolic of dismissive attitudes, and a form of neo-colonialism in which the Malaysian Prime Minister stands in for Sir Arthur Waddell. In federalism protocol matters deeply; appearances can reinforce or damage the federal structure.
The fact is, however, that, despite the lack of enthusiasm for the federal arrangement in Sabah and Sarawak, not only has Malaysia succeeded as a federation, but it is plausibly the only Asian example of a successful federation east, that is, of Kolkata. So, from the point of view of China and Tibet, here is something worth investigating in a comparative perspective.
Now, it may be objected that mere survival is not the test of success, but rather the test should be whether the federal bargain of 1963 has been observed and has led to stability and development. Many Sarawakians, and even more Sabahans, would likely dispute that stability, or even development, has actually occurred. They might point to their States being swamped with illegal migrants who are given citizenship with alacrity to subvert the electoral politics of their States; to a brief insurgency in favour of the claim of the Sulu Sultanate (now part of the Philippines) to Sabah; and to West Malaysian colonialism – in politics, economics and religion/ culture.[4] It is objected that the federal power interferes in and manipulates State politics in a manner not in the spirit of federalism.[5] It is maintained that these two States, having the most abundant natural resources, remain the poor relations among Malaysia’s 13 states.[6] Still, the general trend of discussion around and after the anniversary in 2013 is not towards advocating independence for those States, but rather towards the decentralization of more powers to the State level. Significantly, however, advocacy of secession is defined as sedition and is punishable under Malaysia’s increasingly draconian sedition law.[7]
Clearly therefore there is deep disagreement about the nature of federalism in Malaysia and in looking at a possible future for Tibet we could learn valuable lessons, both positive and negative, from the experience of the East Malaysian states of Sabah and Sarawak. The example is salient in the sense that although these two States are two of 13, their position under the Constitution evinces more autonomy than the states of West Malaysia, where the federalism we see is characterized by Watts as quasi-federalism. It will be argued here that if Tibet is to become politically part of the People’s Republic, then whatever special guarantees are put in place will have to be carefully negotiated, drafted and implemented. If Sabah and Sarawak can remain part of the Malaysian federation, albeit with many grievances, historic and current, despite some lack of care in negotiating, drafting and implementing their guarantees, then perhaps - just perhaps – there is a possibility of reaching a successful conclusion for Tibet. But the example here also shows that Tibetans had better be wary of such processes. Federalism can also be a spider’s web of deceit.
Let us begin the inquiry by discussing federalism itself as a concept, and how it is applied in Malaysia.

The term ‘federalism’ itself originates from the Latin foedus which means ‘treaty’. States have always tried to find structures for peace, co-operation and mutual benefit, and federalism is one such structure. ‘Federalism’ is used these days to denote a state with more than one level of government operating each within its own constitutionally protected sovereign sphere. It does not have to be based on a treaty; in fact a treaty-system would these days more likely fall within the notion of a ‘confederation’, a looser arrangement in which states come together for certain limited purposes.
The Federation of Malaysia on the other hand is based on a treaty - the Malaysia Agreement of 1963; and the original Federation of 1957 was also based on a treaty, the Federation of Malaya Agreement. The Malaysia Agreement was an international agreement involving the Federation of Malaya, the United Kingdom, and the then colonies of Singapore, North Borneo (now Sabah) and Sarawak. It needed to be effected and enforced by constitutional law. Accordingly, amendments were made to the Constitution of the Federation of Malaya of 1957, giving the country a new name and a modified constitutional structure taking account of the three new States and their enhanced status, compared with the existing States, within the Federation.
Federalism has been looked at as a blueprint for decentralization; as a way of resolving ethnic or central-local tensions; as a way of maximizing economic benefits; and as a way of resolving long-standing geopolitical cleavages. It has also had its disasters such as Yugoslavia in the 1990s and the West Indies in the 1960s.
It is also true, however, that we no longer regard federalism as the only way of solving these problems. Europe in particular has experimented with various kinds of ‘devolution’, which involve a form of delegation of executive and legislative powers to a sub-national unit but without implications for national sovereignty. These arrangements are typically one-off or asymmetrical, rather than a system adopted for all sub-national units, and respond to particular demands for autonomy. Asymmetry here means that the powers being exercised are not the same as in the other sub-national units. In Asia, Aceh within Indonesia provides a good example of an asymmetrical devolution of power, based on agreements between the separatist movement and the central government in Jakarta. This too might be of interest in Tibet. The people of West Papua are also seeking the same arrangement. And another clear example is the recently established Moro autonomous government in the Southern Philippines. As we can see from the symbolic enactment with which this chapter began, where sovereignty is an issue, federalism rather than devolution is a better fit: devolution assumes continuation of the sovereignty of the larger unit, whereas federalism merely suspends or limits the sovereignty of the smaller. That was essentially the message of the Kuching re-enactment. In this sense the one-country-two-systems approach relating to Hong Kong and Macau may not be suitable for the case of Tibet, where sovereignty is a hugely important issue.
In federal systems many tensions can arise, and federal systems tend to evolve over time, as has clearly been the case with Malaysia. To take an obvious example, the current phenomenon, since 2008, of opposition parties controlling a number of states brings an important new factor into the practice of federalism in Malaysia.[8] Office-holders at both levels have been exploring the political, legal, administrative and fiscal consequences of this novel situation. At the same time politicians on both sides have not been above exploiting some of these issues for political gain. The Constitution brings opposing coalitions into a direct relationship within a structure that each has to render effective, albeit in different ways. The test is whether the Federal Government can live with state governments of a different political stripe; and whether state governments can in practice operate within the constraints that the Constitution imposes. These practical issues are often obscured or complicated by political rhetoric. Most distinctly and positively in the case of Penang one can see the results of federalism at its best; this State thrives under opposition rule and has carved out its niche within the system, in terms of economic progress and internal governance.[9]
Federalism, despite the complexity it entails, is often considered to bring the benefit of requiring compromise and cohabitation between opposed parties, lessening tension and creating a positive competitive environment that is conducive to democracy. Of course in China democracy is not an ambition, but a federal arrangement could nonetheless facilitate the kind of cohabitation in which the issue of sovereignty is fudged and both sides benefit. It is built around the idea of dividing powers and accepting that winners do not necessarily take all. In this sense federalism can reinforce constitutional government, as well as providing a measure of autonomy for ethnic and religious groups. Whether China really wants this is a large question. In Malaysia’s case, while across most of the states pluralism is fairly evenly spread rather than geographically concentrated (except in urban areas where the Chinese minority predominates), this is far less true in East Malaysia, the subject of our concern here, where indigenous people are in the majority.
Federalism is nonetheless a concept that varies psychologically according to one’s perspective and according to the dynamics of a given context. It offers the prospect of building a new entity out of states or territories that may not have much in common except geostrategic interests or markets for their products; here it offers harmonization and maximization of value instead of fragmentation. It can on the other hand offer decentralization in the place of an authoritarian centre. Then again for some people, such as Kuching residents in 2013, it represents the surrender of already existing autonomy, and is therefore to be regarded with deep suspicion.
Because of the inherent tensions in a federal system it is also difficult to maintain a federation in a state of stability. This we will see from the Malaysian example. It can easily succumb to the assertion of central, federal power, dissolving in practice the elements of autonomy that are guaranteed legally but are subsumed in a political imperative that draws power towards the centre. This is the ‘centripetal’ (centre-seeking) tendency with a federal system, and it is very apparent in Malaysia. But a federation can also tend towards fragmentation and the breaking up of the federation, which is known as the ‘centrifugal’ (centre-fleeing) tendency, the ultimate end of which would lead to the breaking up of the federation, as was seen with Yugoslavia in the 1990s.
For this reason we need to pay close attention to the institutions that create and enforce federalism, especially those that protect states’ rights; and these institutions need to work in a way that understands and supports the distribution of power that federalism entails. Federalism needs to be constantly maintained through politics, administration, economics, and law, and is therefore a real responsibility of all branches of government, legislative, executive and judicial. This is true not just at the federal level but at the state level too. It is all very hard work.
One obvious and essential element of a federation, therefore, is a process of dispute resolution which polices the boundaries of state and federal powers, ensuring that the original bargain is not contravened by either or any side of that bargain. In Malaysia the Federal Court performs this task, just as the Supreme Courts of India, Canada, and the United States, and the High Court of Australia do within their respective federal systems. Given the precedents in Malaysia it is hard to say the Federal Court has maintained a balance between Federal and States’ rights over the last 50 years. Most decisions have gone against States’ rights.
The courts are not, however, the only forum for settling such disputes. One should add the legislature as a forum for raising federal-state issues, and in those jurisdictions which have a bicameral legislature, like Malaysia, one would expect State representatives in the upper house at least, if not all representatives in both houses who represent non-federal areas to be prominent in advocating the interests of the states. In addition there is usually a consultative body that pays attention to state and federal financing (in Malaysia it is the National Finance Council) and this body affords a non-confrontational method of settling all-important fiscal issues.[10] With this background, let us see how Malaysian federalism has been arranged and implemented with regard to Sabah and Sarawak.

The Basic Structure of Malaysian Federalism
Federalism, we have seen, is a complex system of government and it is especially so in Malaysia given its complex, multi-layered nature. Malaysia is a federation of two States (originally in 1963 three, including Singapore) with an already existing Federation of 11 States, the Federation of Malaya, which came into being in 1948 and became independent, as we have seen, in 1957. The Federation of Malaya had brought within the federal structure the nine Malay States (which were already either federated or unfederated, and had their own traditional Rulers) and the two former Crown colonies of Penang and Melaka (Malacca). Additionally, the Federation of 1963 is an asymmetrical federal system in which Sabah and Sarawak have more powers, and more constitutional protection for their powers, at least in theory, than the other 11 states. The word ‘complex’ actually hardly does justice to the intricate, culture and history-ridden nature of these constitutional arrangements.
In Malaysia’s case federalism was essentially as we have seen an outcome of decolonization, and the need to create some kind of viable unification across the former British territories, of various kinds, in South East Asia. The object was to create a new entity powerful enough to compete economically and politically with rising nationalisms in the region such as those of Indonesia and Vietnam, in the context of the Cold War. Indeed the Malaysian Federation was opposed by Indonesia during 1963-5, but faced down the larger bully.[11] The Federation thus survived its first test. It survived its second test, too, when in 1965 Singapore left the Federation. Arguably, however, this departure, in which the views of Sabah and Sarawak were not sought, did alter fundamentally the nature of the bargain which formed the basis of the Malaysia Agreement.
The Reid Commission which drafted the Federal Constitution in 1957 was constrained by its terms of reference to bestowing on the States only a ‘measure of autonomy’. This implies that most legislative and executive powers are vested in the Federation rather than the States. This is confirmed by an examination of Schedule 9 of the Constitution. Schedule 9 contains three lists, pertaining to Federal, State and Concurrent powers. Concurrent powers can be exercised by either State or Federal authorities, and any residual powers not mentioned belong to the States. The lists designate both legislative and executive powers. If there is any inconsistency between Federal and State law, Federal law prevails.
As one would expect, the Federation deals with all of the larger issues affecting the country as a whole, such as external affairs, defence, energy, the legal system, and citizenship. Trade, industry, and transport are also Federal powers, as well as social issues such as health care and educa­tion. Most importantly, finance and general taxation are Federal matters. State powers on the other hand are largely limited to Islamic law and custom, land, agri­culture, forests and natural resources; however, local government and therefore all of its functions are also under State control. The concur­rent powers such as social welfare, planning and public health, are in general exercised by the States. We should note here that Sabah and Sarawak have additional powers over immigration, as well as over native customary law and personal law, and some other functions such as harbours and posts. They also have power to impose a sales tax but have not exercised it (the Federation has imposed a general sales tax from 1 April 2015).
It is immediately apparent that the Federation has much more power than the States, and that Sabah and Sarawak have much more power than the other States. Sabah and Sarawak’s control over immigration, not only from outside Malaysia but also from the rest of the country, is very unusual in a Federal system.
The exclusive arbiter over the constitutional division of powers is, as  discussed above, the Federal Court. It is also the exclusive arbiter of disputes of any kind between States or between the Federation and a State. Although the Federal Court has on occasion decided disputes of this kind, it has only rarely struck down a statute as being a trespass on state powers. In one case, Mamat Daud, it laid down the applicable criteria in such cases.
In Mamat bin Daud v Government of Malaysia all five judges in the apex court, which struck down a federal law, were agreed on the test to be applied:
it is the substance and not the form or outward appearance of the impugned legislation which must be considered . . . no amount of cosmetics used in the legislative make-up can save legislation from being struck down for pretend­ing to be what it is not. The object, purpose and design of the impugned section must therefore be investigated for the purpose of ascertaining the true character and substance of the legislation and the class of subject-matter of legislation to which it really belongs.[12]
The dissenting judgments, however, applied the test differently from the majority. So this ‘pith and substance’ test is not necessarily easy to apply, and much depends on the court’s willingness to protect states’ rights, as the majority did in this case. The point here is that even in a common law system with a stable constitutional order and a measure of judicial independence, judicial protection of states’ rights cannot be taken for granted. China does not even have an independent judiciary; therefore some other method of dispute settlement would have to be found. Constitutional law is not replete with examples of such mechanisms.

The division of Federal and State powers also has to be read against provisions that give the Federation even greater power than appear in Schedule 9. Under Article 76, the Federal Parliament is empowered to legislate in respect of matters on the State list in three situations.

First, it may legislate for the purpose of implementing international agreements. Here however it cannot legislate with respect to Islamic law or Malay custom, and not in any case without consulting the State Government.

Secondly, it may legislate to promote legal uniformity between two or more States; in this case as well as for the first situation, the law only takes effect when passed by the State legislature, when it becomes State law. Additionally, Parliament is given a specific power to legislate for ensuring uniformity of law and policy in relation to land and local gov­ernment; but in this instance the law does not have to be passed by the State legislature and remains Federal law. The Constitution also recog­nises the importance of creating uniformity in relation to these issues by creating a National Land Council and a National Local Government Council. These provisions concerning land and local government do not, however, apply to Sabah or Sarawak.

Thirdly, Parliament can legislate where simply requested to do so by a State legislature. The National Land Code 1965 is a good example of the use of this power. Like the Local Government Act 1976 it is a Federal law dealing with a State matter; it was passed at the request of all the States rather than under the special pow­ers mentioned above for land and local government. The two statutes mentioned here were passed following agreement between the Federation and the States in their respective national councils. But again, they do not apply to Sabah or Sarawak, which, as on many other issues, have their own laws. It is of course axiomatic that it is perfectly possible for a subject of a federation to maintain its own legal system as quite distinct from the federal system and that of other subjects.

Although executive powers follow legislative powers, Article 80 pro­vides similar flexibility to Article 76 by allowing Federal law to confer executive authority on a State. A good example is the Immigration Act 1959, as amended in 1963, which gives the Governments of Sabah and Sarawak control over immigration in their respective States. It is also permissible for State and Federal authorities to exercise executive pow­ers on behalf of each other. State powers must also be exercised so as to ensure compliance with Federal laws, and not so as to impede the exer­cise of Federal powers.

The structure created in 1957 clearly bestows a preponderance of power on the Federation without reducing States to the position of mere agents of the Federal power. It is also a flexible arrangement and therefore much depends on observing the spirit of federalism in practice. The division of powers outlined above has not, however, required any significant adjustment since 1957, or since 1963 for Sabah and Sarawak, which indicates that on this issue the Reid Commission at least successfully reconciled the aspiration for State Government with the needs of national devel­opment and nation-building. Whether this applies also to Sabah and Sarawak under the Malaysia Agreement of 1963 remains disputed. The consensus amongst scholars discussing this issue at a seminar in Singapore an 2013 was that the balance of powers as it exists needs to be adjusted in favour of more state powers for Sabah and Sarawak, despite the already asymmetrical nature of the federal structure.

Fiscal Federalism

Desiring to create strong central Government with limited powers for the States, the Reid Commission placed financial matters firmly in Federal hands. The idea was to enable the States to draw on Federal resources while exploiting the possibilities for maximising their own revenue. An important example is taxation of income, where they refused on grounds of efficiency to give powers to the States, as a result of which there is an imbalance between Federal and State finances. The total revenue of all of the States combined in 2006 was less than RM9 billion, compared to Federal revenue of more than RM120 billion in the same year. Expenditure showed a similar imbalance. In practice State Governments have found it difficult to avoid an operating deficit, and devel­opment funding normally has to come from Federal sources. For States, fiscal issues are therefore fundamental to the exercise of their powers.

States are entitled under the Constitution to certain grants, which are calculated according to formulae. These grants are constitutionally guaranteed and set out in detail in Schedule 10 of the Constitution, so that there is no element of discretion involved.

First, there is a Capitation Grant, which is based on the annual popu­lation projection for the State, as assessed by the Federal Government; being graduated, it favours States with a small population. The amounts payable are amended from time to time by Parliament accord­ing to inflation and population increase, but Parliament may not reduce the grant to less than 90 per cent of the previous year’s grant.

Second, there is a State Road Grant. Maintenance of State roads is an important function and a large expenditure. This grant is calculated by multiplying an average maintenance cost per mile by the number of miles of road the State has, and so favours those States with extensive highways and therefore high maintenance costs. Arguably this leaves States that need infrastructural development at some disadvantage; how­ever, since this argument applies principally to Sabah and Sarawak whose development needs are dealt with by other means, a problem of entrenched underdevelopment seems not to arise from this system.
In the­ory, therefore, State finance does not depend on Federal approval; but in practice the situation tends to be otherwise. Mandatory grants are in general terms barely sufficient for State Governments to perform their basic functions, and they have usually been run on deficit funding which is then made up by the Federation. In order to take development initia­tives, however, States need finance over and above the mandatory grants, and unless they can find the resources otherwise, they will be dependent on discretionary Federal grants.
Nonetheless, States also have some sources of revenue based on their own powers, which are similarly guaranteed by the Constitution. They can, for example, charge rents on State property, impose licence fees, and charge water rates. In practice the most important elements are the royalties and other revenue derived from land and natural resources, such as tin, petroleum, oil, minerals, and timber; however, Parliament may restrict the levying of royalties or similar charges made in respect of mineral concessions. Conflicts have occurred constantly between the Federation and States over natural resources.[13]
It can be seen that a successful federal fiscal arrangement, which Malaysia by and large can claim to have, requires a good deal of negotia­tion and compromise. This is achieved through the mechanism of the National Finance Council (NFC), whose main task is to iron out difficulties of a fiscal nature arising in the federal context. It consists of the Prime Minister, such Ministers as the Prime Minister shall appoint, and one representative from each State. It must meet at least once every 12 months, and is summoned, as often as he considers necessary, by the Prime Minister (or else by three or more State representatives), who pre­sides. The Federal Government is under a constitutional duty to consult the NFC in respect of matters such as the making of Federal grants to the States; the assignment to the States of Federal taxes or fees; and the making of loans to the States. Parliament is required annually to pay into a State Reserve Fund such sums as are deemed by it, after consultation with the NFC, to be necessary; and the Federation may from time to time make payments out of the Fund to the States for the purposes of development or to supplement revenues. All matters of potential con­troversy are dealt with by the NFC, and it is interesting to note that open fiscal controversy between a State and the Federation, or between States (with the exception of the issue of natural-resource revenues, as mentioned above), is rare.

Sabah and Sarawak have some advantages fiscally over the other States.

First, unlike the other States, they may borrow money with the con­sent of Bank Negara (the Central Bank of Malaysia).

Second, Schedule 10 also provides for special grants for Sabah and Sarawak, over and above the Capitation Grant and the Road Grant, the bases of which were negotiated at the time of their accession. The object of these is to ensure that State revenue is adequate to meet the cost of existing State services, with reasonable provision for their expansion.

Third, they are allowed eight further sources of revenue not allowed to the other States.

Fourth, the restrictions on the propor­tion of export duty on minerals do not apply to Sabah and Sarawak.

The Politics of Federalism

While the preceding sections dealt with the legal and financial aspects of the federation, this section will deal with the politics. The first thing to recognize is that for the past 50 years, in fact since independence, the Federation has been ruled by a single coalition, called the Alliance until 1973, and thereafter the Barisan Nasional (National Front, or BN). The core of the coalition consists of three political parties, each representing the three major ethnic groups in Malaysia. They are: United Malays National Organisation (UMNO), the Malaysian Chinese Association (MCA) and the Malaysian Indian Congress (MIC). As the name suggests, UMNO represents Malays, MCA the Chinese and MIC the Indians. The BN is arguably one of the most successful political alliances in the world, and for the most of the past 50 years, the coalition commanded more than two-thirds majority in Parliament. This allowed BN to alter the Malaysian Constitution at will.

At the state level too the BN has been politically successful, although they have problems with three states: Kelantan, Terengganu and Sabah. Kelantan has been ruled by Parti Islam Malaysia (PAS) for most of the past 50 years while Terengganu was under PAS rule for several terms. Sabah presents an interesting case-study. While the Parti Bersatu (PBS) state government was officially part of the BN from 1986 to 1990, it behaved like an opposition party within the BN. It took a strong ‘state-rights’ stand against the Federal power, so much so that on the eve of the 1990 elections, it left the BN and joined an opposition alliance. Since 2008, Penang and Selangor have joined Kelantan as opposition-ruled states, suggesting that the dominance of the BN may be coming to an end. In fact in the 2013 general elections, BN lost the popular vote to the opposition, although it won a majority of parliamentary seats.[14]

Nevertheless, when Tun Dr Mahathir Mohamad was prime minister (1981-2003), he centralized power at Putrajaya,[15] and within the BN power was decisively shifted towards UMNO. Mahathir himself did not really believe in federalism, being more comfortable with a strong central power that was in his view needed to transform Malaysia into a fully developed country.[16] He maintained a tight control over the states. In every state where UMNO operates (the only exception was Sarawak), the Chief Minister’s post was not only given to UMNO but personally approved or nominated by the Prime Minister.

Thus federal-state relations were smooth as long as the both federal and state governments were ruled by the BN. When the state was ruled by the opposition, the Federal Government tended to do its utmost to make life difficult for the state, even punishing it by use of its fiscal control and withholding development funding in order to weaken the State Government with a view to replacing it with a BN state government in the next election.[17] The same pattern is repeating now - Kelantan, Selangor and Penang are experiencing little or no cooperation from Putrajaya when it comes to issues such as trade and investment regulation, that are under the purview of the Federal Government.

The lesson to be drawn from the politics of Malaysian federalism is that if a single party holds power at the federal level, it can assert overwhelming power and effectively demolish all but the appearance of federalism.

Position of Sabah and Sarawak

Let us turn now to the salient question of Sabah and Sarawak’s membership of the Federation, and how and on what terms it came about.

These States had few viable options in 1963 other than joining Malaysia. At the same time there was unease about the possibly deleterious effects of joining the Federation. A Memorandum of the Malaysia Consultative Committee, a Committee of the Commonwealth Parliamentary Association, consisting of representatives of the Governments of Britain, Malaya, Sabah and Sarawak, supported the federation of Sabah and Sarawak with Malaya and Singapore in its Memorandum of February 1962. The Cobbold Commission, consisting of representatives of the British and Malayan Governments, visited Sabah and Sarawak in 1962 and reported that the majority supported federation with Malaya, provided due regard was had to the special position of Sabah and Sarawak, the eth­nic implications, the physical distances involved, and these territories’ political immaturity compared to the Federation of Malaya and the then colony of Singapore.

The Legislative Assemblies of both territories voted in favour of federation subject to appropriate safeguards. An Inter-governmental Committee was then set up, comprising representatives from the same four Governments, to thrash out constitutional safeguards for Sabah and Sarawak, reporting in February 1963. Negotiations with Singapore proceeded separately, and a referendum in Singapore also supported federation. The Malaysia Agreement was eventually signed on 9 July 1963 by all the Governments concerned, and Malaysia came into being, as we saw earlier, on 16 September 1963. This was effected not by a new Federal Constitution, but simply by the admission of new States to the existing but renamed Federation under Article 1 of the Constitution, and by numerous amendments to the Constitution giving effect to the negoti­ated settlement that was embodied in the Malaysia Agreement.

The principal point of concern was the possible effect of migration on land, commerce, and the employment and professional opportuni­ties of East Malaysians faced with competition from more qualified people from Malaya and Singapore. In this connection a draft Bill on immigration was appended to the Malaysia Agreement and promptly passed into law as the Immigration Act 1963 a few days before Malaysia came into being. However, there was also concern about other issues: financial arrangements and development; the special position of natives of Sabah and Sarawak; the national language; religion; the legal system; representation in the Federal Parliament; and of course how these States would be protected from future constitutional changes affecting any of these issues. Between them Sabah and Sarawak have about 60 per cent of Malaysia’s land but only about a fifth of its population. The Cobbold Commission had stressed the need for a sense of equality and partnership in the new federal scheme. According to Lord Cobbold it was to be a ‘partnership’, not a ‘takeover’. In retrospect those words carry some irony.

Sabah and Sarawak were thus placed in a position that was not avail­able to the other States that formed the Federation in being able to negotiate their participation. Sabah and Sarawak were both resource-rich and under-developed.

Quite apart from the central issue of immigration, Sabah and Sarawak have as we have seen substantially more powers than the other States. Parliament’s powers to legislate for land and local government, for example, do not apply to Sabah and Sarawak; this allows these States exclusive legislative control over these two matters. Crucially, the Governments of Sabah and Sarawak also have special powers to veto constitutional amendments affecting their States. Under Article 161E(2) no amendment shall be made to the Federal Constitution without the concurrence of the Government of Sabah or Sarawak, as the case maybe (oddly, not the State Legislative Assembly), if the amendment is such as to affect the opera­tion of the Constitution with regard to: Malaysian citizenship and the equal treatment of persons born or resident in the State; the constitu­tion and jurisdiction of the High Court of Sabah and Sarawak, and the appointment, removal and suspension of its Judges; the State’s legisla­tive and executive powers and financial arrangements between the Federation and the State; religion and language in the State, and the spe­cial treatment of natives of the State; and the quota of MPs allocated to the State in proportion to the total number of MPs.

The demarcation of powers as between the Federation and Sabah and Sarawak has remained unaltered since 1963. But although the Federation has not sought to alter the balance of legis­lative powers in its favour, the underlying reality of Federal politics means there are limits to States’ political autonomy, even where they receive special constitutional protection.

Secession and other remedies
For Sabah and Sarawak Malaysian federalism has proved to be centripetal in a way that deprives these States of real autonomy and this has been deleterious to their interests. The question then arises, what is the remedy? Three remedies are raised: namely, political process at the federal level; secession; and, a ‘Second Malaysian Federation’,[18] or renegotiation of the federal bargain.
Federal constitutions rarely mention secession, and therefore when it is raised it is necessarily a grey area. We cannot deny that, legally, where there is a federal agreement, this could be repudiated by an aggrieved party. This is simply part of international law. But it does not get us very far. In the case of Singapore in 1965 secession (by expulsion in this case) is possible, and can even be effected with great rapidity; and there are of course many other examples across the world such as the collapse of the Soviet Union and Yugoslavia.
Nonetheless many questions arise with regard to secession. How could secession be effected in a situation where even raising the issue might be seen as treasonable and a reason for armed intervention? Who would have the right to declare secession and how would the exercise of such a right be rendered legitimate? Could a State government make such a declaration? Would the people have to be consulted in a referendum (the recent example of Crimea springs to mind)? Would such consultation even be possible in a fast-moving environment? Is the reality that, in these days of political, administrative, legal, and economic complexity, secession could only be effected cleanly by mutual consent and careful negotiation? And would such negotiation not also involve renegotiation of the federal bargain itself, given the effects of secession on the other units?
In the case of Sabah and Sarawak secession is probably impossible in practice, and perhaps not even desirable given (in Sabah’s case) the prospect of an independent state being taken over by the large numbers of illegal migrants from the Philippines.
It is also worth mentioning here Article 159 clause 4 (bb), which states that Parliament can admit new states by amending the Constitution, based on a Bill which receives a simple majority (ordinary majority) in both Houses of Parliament. So the nature of the Federation can be altered by the federal power acting unilaterally, it seems.
In Tibet’s case thought would have to be devoted to the issue of how it might be protected in terms of severance of any agreement that might be made with China. My conclusion here is that it would have to be specifically provided for.
Give the economic imbalance between Malaysia’s states that are rich in natural resources and those with the best economic position, it can be be seriously questioned how federalism as implemented for the past 50 years could be justified. One answer is that these States have special funding and it is up to their leaders, not the Federal Government, to distribute it for the benefit of their States and to defend States’ interests through the political process. Unhappily, attempts to do this have not been looked upon with favour by federal leaders. In an early instance in 1966 a Sarawak Chief Minister seen as recalcitrant was turned out of office by constitutional manipulation, including an emergency proclamation, which ought to have been impossible in a federal system. Similar episodes have continued to occur over the last half century.
This leaves the question of how a Second Malaysian Federation might differ from the first, the 1963 model. In the view of many observers states have too few powers, so that possibly education, healthcare, transportation, and police could be assigned to the states. In this way the states would have enough power to devolve, in turn, to local government, making a genuinely three-tier government system possible. Decentralisation would have to be asymmetric in favour of the larger and more inherently autonomous states f Sabah and Sarawak. In order to prevent the decline and extinction of native languages and cultures in Sabah and Sarawak, which has become a real fear (and very salient with regard to Tibet) devolved powers should allow these States to preserve native languages.

Federalism is not as we can see a self-executing concept, and it needs to be enacted very carefully, but also judiciously enforced and carefully maintained by a process of continual dialogue. So the fact that Malaysia has survived as a federation is notable. But why has it survived?
The fundamental issue is that independence is not a realistic option 50 years down the track of federal government. It does not seem as though there is an ‘East Timor’ solution to the problems of Sabah and Sarawak; indeed there is no international interest in or support for such an outcome. If decentralization is the remedy to the issues raised in this chapter, rather than complete independence, then the present Federation must make some sense (political, geostrategic, economic?), even in the eyes of its fiercest critics. Even if the federation of Malaya with Sabah and Sarawak was just a way of dealing with what Charles de Gaulle once called ‘the dust of empire’, it is apparently a Federation that is even now worth having, albeit perhaps on different terms from those of 1963, or perhaps on 1963 terms if actually adhered to in practice.
In Malaysia one does not hear federalism per se criticized as a bad method of territorial organization. What one does hear is that federalism or the spirit of federalism has not truly been practised or experienced in Malaysia. i
Perhaps dissatisfaction or even depression is an occupational hazard for federalists. Federalism is always a least-worst solution to territorial organization. It seems to leave all parties feeling they have less than they should have had. But … do they not also have more than they could have had? This counter-factual scenario is worth considering. For Tibetans it should be clear that federal solutions carry many intractable problems. The issue is whether there is a solution that offers more hope than the present impasse.

[1] For a century before Sarawak became formally a British colony in 1945 it had been ruled by the ‘white rajahs’, the Brooke family, who derived the legitimacy of their rule from a grant of sovereignty over Sarawak by the Sultan of Brunei in 1842. This story of the white rajahs is one of strangest stories of the entire colonial period; here we are concerned only with its aftermath.
[2] ‘Sarawak observes big day’, New Straits Times, Kuala Lumpur, 23 July 2013.
[3] See, further, Andrew Harding and James Chin, ‘Fifty Years of Malaysia: Reflections and Unanswered Questions’, in Andrew Harding and James Chin (eds), 50 Years of Malaysia: Federalism Revisited (Singapore, Marshall Cavendish, 2014), 8.
[4] For contemporary discussion of these grievances, see James Chin, ‘Federal-East Malaysia Relations: Primus-Inter-Pares?’, in Andrew Harding and James Chin, above n.3, at 152.
[5] Andrew Harding, ‘Protection of the Indigenous Peoples of Sabah and Sarawak’, in Andrew Harding and James Chin, above n.3, 186, at 2014ff; Khairil Azmin Mohktar, ‘Confusion, Coercion and Compromise in Malaysian Federalism’, in Andrew Harding and James Chin, ibid., at 220.
[6] Bridget Welsh, ‘Interview with Tan Sri Simon Sipaun’, in Andrew Harding and James Chin, ibid., at 50.
[7] ‘4 Charged with Sedition over Sabah, Sarawak Secession, Reports Says’, The Malaysian Insider, 16 March 2015:
[8] Andrew Harding, The Constitution of Malaysia: A Contextual Analysis (Oxford, Hart Publishing, 2012), ch.5.
[9] Tricia Yeoh, States of Reform: Governing Selangor and Penang (Penang, Penang Institute, 2012).

[10] Andrew Harding, above, n.8, at 144.
[11] Poh-ling Tan, ‘From Malaya to Malaysia’ in Andrew Harding and HP Lee (eds), Constitutional Landmarks in Malaysia: The First 50 Years, 1957-2007 (Petaling Jaya, LexisNexis, 2007), 25, at 30ff.
[12] Mamat bin Daud v Government of Malaysia [1986] 2 Malayan Law Journal 192
[13] E.g., see Rasyikah Md Khalid, Faridah Jalil, and Mazlin Bin Mokhtar, ‘Fifty Years of Water Resource Management in Malaysian Federalism: A Way Forward’, in Andrew Harding and James Chin, above n.3, 266; Andrew Harding, above, n.8, at 143.
[14] In-Won Hwang, Personalized Politics: The Malaysian State under Mahathir (Singapore, ISEAS, 2003).
[15] Andrew Harding, above, n.8, ch.2.
[16] Rais Yatim, Freedom Under Executive Power in Malaysia: A Study of Executive Supremacy (Kuala Lumpur, Endowment Books, 1995).
[17] James Chin, ‘Politics of Federal Intervention in Malaysia, with Reference to Kelantan, Sarawak and Sabah’, Journal of Commonwealth and Comparative Politics, Vol. 35, No 2 (July 1997), 96-120.
[18] Chin-Huat Wong, ‘Time for a Second Federation in Malaysia?’, Penang Monthly, 13 September 2013.


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