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Ushar Daniele

Joseph Sipalan

A gentle breeze stirs the wooden houses of Sarang, a sleepy fishing village on Sabah’s northern coast, its tranquillity seemingly at odds with the mounting troubles facing the resource-rich yet persistently impoverished Malaysian state.
For years, Sabahans have endured water shortages, power cuts and some of the lowest wages in the country.
Each time the taps run dry or the lights flicker out, local fisherman Johan Toikin is reminded of the central government’s failure to fulfil the commitments it made under a founding document signed more than 60 years ago.
“There is no need for any more discussion,” Johan This Week in Asia. “This is Sabah’s right.”
Under the Malaysia Agreement of 1963, Sabah ceded 60 per cent of its annual revenue to the federal government in exchange for autonomy over its borders, religion, culture and development.
In doing so, it and neighbouring Sarawak joined with Malaya and Singapore – the latter of which exited the federation after less than two years – to form Malaysia as supposedly equal partners.
Many Sabahans, however, argue that Kuala Lumpur has taken the money but never fully honoured the autonomy.
Demands to restore these rights have reached a crescendo ahead of Sabah’s state election next weekend, a contest that will double as a referendum on Malaysian Prime Minister Anwar Ibrahim’s government.


Separated by some 1,600km (1,000 miles) and the South China Sea from the high-rise skylines and tech parks of Peninsular Malaysia, Sabah’s residents resent the widening wealth gap despite their state’s natural resource bounty.
Voters want candidates to explain this disparity – and many say they plan to back the party promising to reclaim Sabah’s resource control.
“We are supposedly ‘equal partners’, but if you look at Sabah, it is clear the promise was never taken seriously,” blacksmith Jason Labunda, 32, told This Week in Asia.
“It’s hard to trust people who only remember us during election season.”
Coming roughly midway through Anwar’s five-year term, Sabah’s vote is seen as a litmus test of his coalition’s popularity beyond the peninsula and his “Madani” unity government’s overall strength.

During a recent campaign stop, Anwar urged voters not to “follow your anger” and pledged to resolve Sabah’s chronic water crisis by next year.
The state’s support is crucial to shore up Anwar’s parliamentary supermajority. But in Sabah, patience is wearing thin.
“Sabahans don’t want to be placated. They want what is legally owed to them,” said Bridget Welsh, a political analyst and long-time Malaysia watcher.
“They want the deserved funds for basic needs that have been grossly neglected for decades to right a wrong.”
They no longer want to rely on others begging on their behalf
Shafie Apdal, Sabah politician
Sabah’s frustrations are not just about money but also control. Many voters say they want a stronger say over education, healthcare and the exploitation of the state’s oil and gas, forestry and fisheries.
Its population of 3.4 million has Malaysia’s highest poverty rate at 17.7 per cent, a statistic that grates against its resource wealth and fuels the indignation behind the “Sabah for Sabahans” slogan heard increasingly on the campaign trail.
“This election feels different. The sentiment is stronger, more pronounced,” said Shafie Apdal, president of the state’s former ruling party, Warisan.
“People realise that this is the moment they can exercise their rights. What belongs to them does not belong to anyone else, and they no longer want to rely on others begging on their behalf.”
Billions out, billions back?
The fight has crystallised around the 40 per cent share of federal revenue collected in Sabah that the state says it is constitutionally entitled to receive back.
How much money actually flows to the central government is not clear. There is no comprehensive, publicly available breakdown of the revenue generated in Sabah and how much is returned.
The accounts of national oil giant Petronas offer some insight, however. Between 2018 and 2024, Petronas generated 205 billion ringgit (US$49.2 billion) from Sabah – a little more than one quarter of its total revenue.
Yet in the 47 years from 1976, when Petronas started operations in the state, through to 2023, it paid just 23 billion ringgit in royalties to Sabah.
To many Sabahans, the figures tell a simple story: oil and gas wealth is being pumped out of their waters and into federal coffers and the more developed peninsula, while basic infrastructure at home is crumbling.

These long-standing grievances erupted into a politically explosive legal battle last month, when the High Court in Kota Kinabalu ruled in favour of a case brought by a group of local lawyers, affirming that Sabah has a constitutional right to 40 per cent of the federal revenue collected from the state.
The court held that the entitlement is distinct from the federal government’s separate duty to fund development in Sabah – effectively reinforcing the view that the 40 per cent share is a floor, not a ceiling.
“The constitution already recognises the entitlement, the courts have affirmed the federal duty to review and pay, and nothing short of a constitutional amendment – requiring Sabah’s consent – can take that right away,” said Roger Chin, a former president of the Sabah Law Society, which filed the suit in 2021.
The federal government has said it will abide by the ruling, but in the same breath signalled its intention to appeal over what it described as “defects” in the judgment. Among other things, it objected to the court’s finding that both federal and state governments had abused their powers and shirked their constitutional duties.
“Legally, the implications are clear and unavoidable,” Chin argued.
‘Sabah for Sabahans’
In the wake of the appeal, some key Sabah-based allies in Anwar’s coalition have withdrawn or threatened to withdraw their support for his unity government, citing it as proof that Putrajaya is stalling.
Political veteran Jeffrey Kitingan, a firebrand proponent of “Sabah for Sabahans”, pulled his Homeland Solidarity Party out of Chief Minister Hajiji Noor’s ruling Sabah People’s Coalition in October, accusing the federal government of a decades-long pattern of broken promises.
“I would say none of the federal promises have been delivered,” said the 78-year-old former deputy chief minister. “In fact, it has become worse. Instead of making federalism work, they are coming into our territory and trying to take over.”
He argued that Sabah’s leaders had to fight hard to regain control of the state’s energy development and marine resources.
There is a perception among Sabah voters that the federal government prefers dealing with compliant local elites willing to sidestep debates over revenue and resource rights.

“Divide and rule has long defined Sabah politics,” Welsh said. “On the one hand, it allows for different parties, leading to more democracy and inclusion. On the other hand, it weakens Sabah’s demands for better policies and due revenue.”
Power in the state has mostly rotated among a small circle of families and parties, and many Sabahans now see that as part of the problem.
The depth of that frustration became evident in February, when students staged protests against the appointment of former chief minister Musa Aman as state governor.
Musa, who was in post from 2003 to 2018, was acquitted of corruption five years ago, but his critics still accuse him of using his office to enrich his family and himself.
Several of Musa’s family members, including his brother, three nephews and two of his sons, are contesting seats in next weekend’s state election – including one under Anwar’s People’s Justice Party banner – showing how deeply his clan is embedded in Sabah politics.

Corruption scandals have further eroded trust. In June, two assemblymen allied with Chief Minister Hajiji’s ruling coalition were charged with accepting 350,000 ringgit in bribes linked to mining concessions.
For voters like Johan and Jason, such cases are symptoms of a wider malaise, in which both local and federal elites profit from Sabah’s rich endowment while the state remains stuck at the bottom of Malaysia’s development ladder.
With a record-breaking 596 candidates from over a dozen parties vying for 73 state assembly seats, next weekend’s election will be crowded.
On paper, such intense competition suggests a vibrant democracy. In practice, analysts say that it fragments the vote and makes it difficult for any single party or bloc to secure a clear mandate to govern.
This fragmentation risks reproducing a similar patchwork coalition to the last election, giving the federal government ample opportunity to cobble together a friendly state administration through alliances and horse trading with local parties.
It will end with enmity and strife
Lee Kuok Tiung, political analyst
In such a scenario, Putrajaya could once again exercise considerable influence through political surrogates on the ground.
But the longer-term risks to Anwar’s Pakatan Harapan coalition are harder to ignore. Malaysia must hold its next general election by February 17, 2028, leaving plenty of time for grievances in Sabah to metastasise into a broader backlash in East Malaysia – and potentially on the peninsula as well.
Political analyst Lee Kuok Tiung from the University of Malaysia Sabah warned that disappointing results could ignite a blame game and deepen rifts within Anwar’s coalition, creating a “domino effect” at the federal level.
“If the results are less encouraging, then the game of blaming each other will begin, and the question of who is liable for whom will arise,” Lee told This Week in Asia. “It will end with enmity and strife.”


An earlier version of this article incorrectly stated that 476 candidates would be taking part in Sabah's state election. This figure has been corrected to 596.


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Musa Aman, former chief minister of Sabah state, arrives at Kuala Lumpur High Court in 2018 during his corruption trial. Photo: AP

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Decades of neglect and withheld resource revenue have left short-changed Sabah seething and primed for a political fight


Decades of neglect and withheld resource revenue have left short-changed Sabah seething and primed for a political fight.


Malaysia’s poorest state prepares a poll shock for Anwar Ibrahim

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Decades of neglect and withheld resource revenue have left short-changed Sabah seething and primed for a political fight

Decades of neglect and withheld resource revenue have left short-changed Sabah seething and primed for a political fight