MA63 Autonomy Rights — What Sabah Was Promised and What It Actually Got
What was the Malaysia Agreement 1963?
The Malaysia Agreement 1963 (MA63) is the treaty signed in London on 9 July 1963 by the United Kingdom, the Federation of Malaya, North Borneo, Sarawak and Singapore, under which Malaysia was formed on 16 September 1963. Its annexes set out the changes to the Federal Constitution and the new state constitutions. In Article VIII, the governments of Malaya, North Borneo and Sarawak undertook to carry out the assurances and recommendations of the Inter-Governmental Committee report of 27 February 1963 that were not already written into the Constitution (UN Treaty Series, vol. 750, checked 7 October 2026).
Before joining, North Borneo had been administered by the British North Borneo Chartered Company from 1881 and became a British Crown Colony on 15 July 1946 (Borneo Post, checked 7 October 2026). Its legal and administrative systems were different from Malaya's.
Sabah's leaders, including Donald Stephens (later Tun Fuad Stephens), set out their minimum demands in the 20 Points of August 1962 (Borneo Post, checked 7 October 2026). Many of these were taken up by the Inter-Governmental Committee and written into the Constitution, which today gives Sabah and Sarawak powers and revenue sources other states do not have (Malaysian Bar, checked 7 October 2026).
What autonomy rights did Sabah negotiate?
The main safeguards Sabah asked for, as worded in the 20 Points (Daily Express, checked 7 October 2026), and how the Constitution deals with them today (Malaysian Bar, checked 7 October 2026):
Immigration (Point 6): North Borneo should have unfettered control over the movement of persons, other than those in federal employment, from other parts of Malaysia. Today Sabah and Sarawak can control the entry and residence of non-Sabahans and non-Sarawakians. Immigration from outside Malaysia is a federal matter.
Revenue (the 40% special grant): Article 112D and the Tenth Schedule of the Federal Constitution give Sabah a special grant of two-fifths (40%) of the growth in net federal revenue collected from Sabah, to be reviewed from time to time. Oil royalty is a separate arrangement that came later, in 1974.
Religion (Point 1): there should be no State religion in North Borneo, and the Malayan provisions on Islam should not apply there. Sabah's own constitution was amended in 1973 to make Islam the state religion (Malay Mail, checked 7 October 2026).
Language (Point 2): English should be the official language of North Borneo for all purposes, State or Federal, without limitation of time. Sabah can still use English as an official language, and native languages are used in the Native Courts.
Borneonisation (Point 8): Borneonisation of the public services should proceed as quickly as possible.
Land (Point 20): the Constitution's provisions on the National Land Council should not apply in North Borneo.
Constitutional safeguards (Point 16): no amendment, modification or withdrawal of the special safeguards without the positive concurrence of the State government. Today such changes need a two-thirds majority in both houses of Parliament and the consent of Sabah's Yang di-Pertua Negeri.
The Constitution also provides a separate High Court in Sabah and Sarawak, a system of Native Courts, and residence rules for lawyers practising in the two states.
What happened to the autonomy rights over time?
Many Sabah politicians and civil society groups argue that federal power has grown at the state's expense since 1963. Some of these claims are matters of record; others are political arguments about how far federal laws and policies should reach. This section separates the two.
Religion: Point 1 asked for no state religion. Sabah's constitution was amended in 1973 to make Islam the state religion, a change critics describe as a departure from the 20 Points (Malay Mail, checked 7 October 2026).
Borneonisation: Sabah politicians have long said the federal government departed from the 20 Points, including on filling the public service with local people (Daily Express, checked 7 October 2026).
Education and language: Sabah follows the national education system. Whether this matches what was promised in 1963 is argued by Sabah groups; this page does not take a position.
Immigration: Sabah still controls entry by other Malaysians. The large number of irregular migrants from outside Malaysia, and the identity-card allegations examined by a Royal Commission in 2012 to 2014, are a separate grievance. See Project IC.
The 40% special grant: Sabah received the formula for 1964 to 1968. The Sabah Special Grant (First Review) Order 1970 replaced it with fixed annual sums for 1969 to 1973, reaching RM26.7 million. The second review, due in 1974, never took place, and RM26.7 million a year stayed the figure for decades. A new order from 1 January 2022 (the Second Review Order) set RM125.6 million for 2022, rising to RM142.6 million for 2026 (High Court grounds of judgment, elaw.my, checked 7 October 2026). In October 2025 the High Court ruled that the missing reviews breached the Constitution.
Recent changes: in December 2021 Parliament amended Article 1(2) of the Constitution to list Sabah and Sarawak as the Borneo States (FMT, checked 7 October 2026). In 2021 the issuing of deep-sea fishing licences in Sabah was delegated from the federal Department of Fisheries to the state (Malay Mail, checked 7 October 2026). In September 2022 the then minister for Sabah and Sarawak affairs, Maximus Ongkili, said 15 issues monitored by the MA63 special council were still unresolved, among them state authority over health, labour, gas and electricity regulation, and more parliamentary seats (FMT, checked 7 October 2026).
| Safeguard | What was asked for or provided | Position today |
|---|---|---|
| Immigration (Point 6) | Sabah controls movement of persons from other parts of Malaysia | Still in force for other Malaysians; irregular migration from abroad is a separate dispute |
| 40% special grant (Art. 112D) | 40% of the growth in net federal revenue from Sabah, reviewed from time to time | In court: no review 1974 to 2021; High Court ordered one (Oct 2025); appeal heard 29 Oct 2026, decision reserved |
| Religion (Point 1) | No state religion in North Borneo | Islam made the state religion by a 1973 amendment to Sabah's constitution |
| Language (Point 2) | English as an official language without limitation of time | Sabah can use English as an official language |
| Borneonisation (Point 8) | Local people to fill the public service as quickly as possible | Disputed by Sabah politicians |
| Constitutional safeguards (Point 16) | No change to the safeguards without the State government's concurrence | Changes need two-thirds of both houses of Parliament and the Yang di-Pertua Negeri's consent |
What is the 40% dispute, and how is it different from oil royalty?
Two different payments are often confused, including on this page in the past.
The 40% special grant. Under Article 112D and the Tenth Schedule of the Federal Constitution, Sabah is entitled to a special grant of two-fifths (40%) of the growth in net federal revenue collected from Sabah. The grant is to be reviewed jointly by the federal and state governments, each review covering five years or a longer agreed period. Sabah received the formula for 1964 to 1968. The Sabah Special Grant (First Review) Order 1970 replaced it with fixed annual sums for 1969 to 1973, reaching RM26.7 million. The second review, due in 1974, never took place, and RM26.7 million a year stayed the figure for decades. A new order from 1 January 2022 (the Second Review Order) set RM125.6 million for 2022, rising to RM142.6 million for 2026.
Oil royalty. This is a separate 5% cash payment on the value of petroleum produced, agreed between each producing state and Petronas under the Petroleum Development Act 1974. It is not part of MA63 and not the subject of the 40% case.
The court case
- 17 October 2025: Kota Kinabalu High Court (Celestina Stuel Galid J) allows the Sabah Law Society's judicial review. It finds no Article 112D review took place for 1974 to 2021, and orders the federal and Sabah governments to hold the review within 90 days and reach agreement within 180 days. It also required payment from the Federal Consolidated Fund within 180 days of the order, but did not itself fix the amount: that was to come out of the review.
- November 2025: the federal government says it is not appealing the 40% entitlement itself, only parts of the judge's grounds, and files a notice of appeal.
- 6 April 2026: the Court of Appeal stays the High Court's order until the appeal is decided.
- 29 October 2026: the Court of Appeal hears the appeal in Kota Kinabalu and reserves its decision; 12 November 2026 is fixed for case management to set the decision date. The federal government told the court it does not dispute the 40% formula, only the finding of a breach from 1974 to 2021, the quashing of the 2022 Review Order and the court-set deadlines.
How much Sabah is owed for the missing years is not decided. Figures in the tens or hundreds of billions quoted in the media are estimates by commentators, not numbers from the judgment.
Sources: The Edge Malaysia; Borneo Post, 12 November 2025, quoting the judgment; Bernama, 14 November 2025; The Star, 7 April 2026; FMT, 6 April 2026; Sabah Law Society notice via Newswav, 20 September 2026; The Edge on the RM26.7 million years. On the 5% petroleum payment: Forum of Federations. Checked 27 September 2026.
What is the immigration control issue?
Point 6 of the 20 Points asked that North Borneo have unfettered control over the movement of people from other parts of Malaysia (Daily Express, checked 7 October 2026). That control exists today: Sabah can control the entry and residence of non-Sabahans (Malaysian Bar, checked 7 October 2026).
The wider immigration grievance is about people from outside Malaysia, mainly from the southern Philippines and Indonesia. When the Royal Commission of Inquiry on immigrants in Sabah reported in December 2014, foreigners made up nearly 30 per cent of Sabah's population of 3.12 million (Malay Mail, checked 7 October 2026). Control of Malaysia's external borders is a federal responsibility, and many Sabahans argue that it has not been enforced well enough.
The Royal Commission also examined allegations that identity cards were issued to foreigners, known as Project IC. It concluded there was a probability that Projek IC existed (Malay Mail, checked 7 October 2026). See our Project IC page for what it found.
Is there a movement to restore MA63 rights?
Yes. Calls to restore MA63 rights have been part of Sabah politics for decades and are now made by parties across the spectrum.
At federal level, a committee was set up in 2018 to look at giving Sabah and Sarawak more powers (FMT, checked 7 October 2026). This was followed by the MA63 special council, the December 2021 amendment to Article 1(2) of the Constitution, and the delegation of deep-sea fishing licences to Sabah in 2021 (Malay Mail, checked 7 October 2026). In September 2022 the federal minister for Sabah and Sarawak affairs said 15 issues were still unresolved (FMT, checked 7 October 2026).
The most prominent live issues are immigration control and revenue: the 40% special grant, now before the Court of Appeal, and calls from Sabah leaders for a higher oil royalty than the current 5%.
Why does MA63 still matter today?
MA63 matters today for several reasons. First, many Sabahans see it as the terms on which Sabah agreed to join Malaysia, and judge the federal government by whether those terms are kept.
Second, money. Sabah had the highest absolute poverty rate of any state in the Department of Statistics' 2024 household income survey, at 17.7% (DOSM, checked 7 October 2026). Supporters of the 40% claim argue that settling the special grant would let the state spend more on schools, hospitals and roads.
Third, identity. Immigration, religion and language safeguards relate to how Sabah keeps its distinct character within the federation.
Fourth, political voice. Championing MA63 rights is a way for Sabah parties to show they stand up for the state's interests.
Finally, law. Some MA63 safeguards are written into the Federal Constitution and can be tested in court, as the Sabah Law Society's 40% case shows. Others depend on negotiation between the two governments.