What do we mean when we say that Malaysia is a federation? It means that 13 states got together to form a nation. The Malaysian nation is bound by a written contract. We call it the Federal Constitution.
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One of the important features of the Constitution is that most of the revenue collection powers is given to the federal government. The federal government, then, allocates the revenue collected to federal government ministries and agencies and, to the states. There is a formula for distributing funds to the states. One measure is the state's population. Another is the length of roads in the state. Apart from these constitutional formulas, any other funds or grants by the federal government to the states are purely discretionary.
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This discretion has been the problem ever since Merdeka in 1957 (which affects 9 states in Peninsular Malaysia) and remained after 1963 when Sabah, Sarawak and Singapore joined the Federation (Singapore left in 1965, of course).
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It is quite obvious that because so much wealth is collected and kept at the federal level, state governments have been forced to be subservient. This federal wealth has also been used effectively to maintain political control over state governments.
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That was the state of play from 1957. But, since the 12th General Elections of March 8, 2008 the situation has taken an interesting turn. There are now 5 state governments that are controlled by non-Barisan Nasional parties (I refuse to call them "Opposition States") aka Pakatan Rakyat ("PR") states, namely, Penang, Kedah, Perak, Selangor and, of course, Kelantan.
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The PR states have begun to challenge the Federal-State relationship. The nature of the challenge is broad, ranging from funding of infrasructural projects e.g. 2nd Bridge Penang, to toll roads.
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But, the even more interesting development for federalism is the restiveness of the Members of Parliament from Sabah. The Sabah MPs are from BN component parties. While there may be indications of political gamesmanship by Sabah MPs, it will be perilous (not to mention naive) for the powers-that-be in UMNO (the main beneficiary of BN) to ignore the restiveness.
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Sabah is an extremely resource-rich state. It has an abundance of fertile land for oil palm plantations, plenty of offshore oil and gas, timber, wonderful beaches, diving sites, mountains ... an endless list. Yet, there is much poverty and serious underdevelopment.
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Yes, one can blame the Tun Mustapha era. Yes, mud can be thrown at the Harris Salleh administration. No doubt, the Pairin era did not engender positive changes. Yes, rotating CMs for several years caused much indecision. All these are Sabah's own state governments. But any visitor to Sabah who bothers to really mingle with the ordinary Sabahan will become very quickly aware that the wariness of "orang Malaya" (that's what they call West Malaysians) is very real. So, it is not that Sabahans love the state BN but, that they hate KL more! (to paraphrase Shakespeare).
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Whatever the motivations, the "rebellion" from Sabah MPs has generated issues of federalism particularly the concentration of wealth at the federal level. Unlike the 5 PR states who need federal largesse, states like Sabah are merely asking to be allowed to have a larger share of oil royalties from oil extracted from their offshore oil and gas deposits. Now, that is a powerful argument.
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More importantly, the impact of these trends on the constitutional issue of federalism will be very significant, indeed. One interesting question is, why are the Sarawakians so quiet this time around? Let us recall the Malay proverb, air tenang jangan disangka tiada buaya.
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