Federal Arrogance

Khoo Kay Peng

Kelantan Umno chief Mustapa Mohamed last night insisted the state is only entitled to compassionate payments rather than oil royalty demanded by its PAS government for energy extracted miles off its coast.

This statement coming from one of the more moderate voices in UMNO reflects the arrogance of federal government. This is another example of encroaching and overarching federal power over states. The answer is more decentralisation from the central government.

Interestingly, Mustapa’s statement contains two major socio-political and moral flaws. First, almost all tax revenues go directly to the federal coffer. It is almost impossible for the states to initiate their own development programmes. Development projects are mostly led and sponsored by the federal government.

Second, there is no federal government without a collection of states agreeing to form a federation. Hence, it is morally and politically wrong to term the oil royalty payment to Kelantan as a compassionate payment. It is morally demeaning that residents of Kelantan need to be treated this way by the federal government.

Mustapa argues that the 2005 oil discovery falls beyond the 3 nautical miles stipulated in the 1974 Petroleum Act and agreement between the state government and Petronas. Hence, the state is not qualified to ask for any royalty. This is a warp logic which depends on a legal interpretation of the contract. Legally, I do not know if Mustapa is right. But it is wrong in the spirit of the federation and national building.

This points to the next question; what has the federal government done to the oil revenue if it does not intend to share it with the states?

If Kelantan’s compassionate payments are not related to the oil royalty, why other states especially the poorer ones e.g. Kedah, Perlis, Pahang and others are not entitled to the same payments?

Mustapa is trying to imply that only BN ruled states deserved to be treated with dignity. Others are subjected to the compassion of the federal government.