Sabah’s 40% Claim and the Crisis of Malaysian Federal Legitimacy in an International Context

By Mohd Khairy Abdullah @ DG Henry
SOOK (Sabah, Malaysia), 23 October 2025 — Sabah’s claim to 40 percent of its net federal revenue entitlement is no longer a mere fiscal dispute. It has evolved into a fundamental test of Malaysia’s federal integrity, Westminster democratic principles, and the nation’s commitment to the international agreement that founded its federation.

The core question now before global observers is clear: will Malaysia honour the original terms of its formation, or continue down the path of centralised dominance that erodes the legitimacy of the federation itself?

The recent remarks by the MP for Pasir Gudang questioning the willingness of Datuk Ewon Benedick to resign from Cabinet over Sabah’s rights reflect a profound misunderstanding of the true spirit of the Westminster parliamentary system. In Westminster democracies, resigning over matters of principle is not an act of rebellion—it is the highest expression of accountability, honour, and constitutional morality.

Across established Westminster democracies, resignations made on the basis of principle are celebrated as hallmarks of democratic integrity. Robin Cook in the United Kingdom resigned in protest against the Iraq War, defending constitutional morality over party alignment. In Canada, Jody Wilson-Raybould resigned to protect judicial independence from executive interference. Australia’s parliamentary tradition records multiple instances where leaders stepped down to defend state rights against federal encroachment. These resignations are not treated as threats to government stability, but as affirmations that moral principle must always prevail over the convenience of office.

In stark contrast, certain political voices in Peninsular Malaysia have attempted to portray principled resignation as disloyalty or political blackmail. This response exposes a post-colonial political mindset that prioritises central control over federal justice. Such rhetoric not only distorts the Westminster doctrine but also weakens Malaysia’s standing as a mature democracy on the global stage.

Sabah did not “join” Malaysia in the manner of a peripheral state; it co-founded the federation through the Malaysia Agreement 1963 (MA63), an international legal instrument recognised by the United Nations. The 40 percent entitlement is not a demand—it is a contractual right embedded in the terms of Malaysia’s formation. Any failure to honour this right constitutes not merely a constitutional violation, but a breach of an international treaty.

Advanced federations demonstrate that respect for regional fiscal rights is essential to national stability. Canada safeguards Alberta and Quebec’s financial autonomy to preserve national unity and energy sovereignty. Australia granted substantial revenue powers to Western Australia following a state referendum on autonomy. Spain was compelled to recognise Catalonia’s fiscal rights after economic and political pressure escalated. Belgium enhanced Flanders’ control over economic policy to maintain internal peace. In each case, national governments acted not as centralised rulers, but as guarantors of constitutional contracts with founding regions.

Sabah is not merely a historical partner but a geopolitical asset situated along the contested South China Sea corridor. Major global powers—including the United States, China, and the European Union—monitor Sabah’s political trajectory closely. Any perception of internal disenfranchisement could become leverage in international diplomacy, exposing Malaysia to strategic vulnerabilities.

The Kota Kinabalu High Court has affirmed Sabah’s constitutional right to 40 percent net revenue entitlement and recognised the federal government’s longstanding failure to comply since 1973. In any rule-based system, such a judgment is binding unless overturned on strong legal grounds. Pursuing an appeal without substantive justification would be perceived internationally as a political manoeuvre to deny the lawful rights of a founding territory.

Datuk Ewon Benedick’s readiness to resign from the Federal Cabinet if Sabah’s rights are denied aligns with the global tradition of statesmanship. His stance is not anti-government; it is pro-constitution and pro-federation. Such leadership is widely recognised on the world stage as evidence of principled nationalism and institutional reform—not populism.

Malaysia now stands at a decisive historical juncture: either it honours the foundational terms of its federation, upholds the rule of law, and strengthens unity through justice—or it risks delegitimising its federal structure, inviting instability and geopolitical vulnerability. Sabah’s claim is not a threat to national unity; it is an opportunity for Malaysia to re-emerge as a progressive, rules-based federation respected globally for its constitutional integrity and democratic maturity.