EPISODE 1: How East Malaysia and Terengganu were robbed of their wealth

In 1973, Barisan Nasional was launched and PAS became part of the federal government. In 1974, the new ruling coalition in Parliament (where all the opposition parties except DAP were now members of) passed the Petroleum Development Act and the oil and gas were transferred from the states to the federal government, meaning Petronas.


Raja Petra Kamarudin

Give or take, give and take, they are both four letter words, just as Umno is (pun intended). Nevertheless, we can expect Umno to be confused about when to use the word ‘give’ and when to use ‘take’. However, Pakatan Rakyat too?

As Julius Caesar said, “Et tu Brute?”

I am talking about the 5% Oil Royalty ‘given’ to Sabah and Sarawak (and, of course, to Terengganu — as to all the other states as well: in the event that they too have oil and gas).

Yes, both Barisan Nasional and Pakatan Rakyat are currently discussing how much Oil Royalty should be ‘given’ to those states that have oil and gas. How do you ‘give’ them something that already belongs to them in the first place? Should not the word we use be ‘take’? We should instead be discussing how much we should ‘take’ from them, not how much we should ‘give’ them.

Let me explain the history of this entire thing.

The oil and gas already belongs to the states. This is what the Malaysian Agreement and the earlier Federation Agreement was all about. And, in that Agreement, it was agreed that all natural resources would be the property of the states.

No doubt, some things such as defence, security, foreign policy, etc., were federalised. But religion and natural resources are supposed to be the prerogative and property of the states.

Water, timber, land, sand, minerals, etc., all belong to the states. As do oil and gas. These are what we call natural resources. Hence they belong 100% to the states, not 5% or 20% or 50% or whatever.

Now, Umno is, of course, misleading us. They are talking as if all natural resources, except oil and gas, belong to the states and that oil and gas belong to the federal government. That is not true. And to suggest otherwise is a violation of the Malaysian Agreement. And I would expect better from the opposition. Why is the opposition sounding like Barisan Nasional and talking about how much Oil Royalty to ‘give’ to the states?

Oil was first rumoured to have been discovered in Terengganu even before 1972, during the time when Dato’ Nik Hassan bin Wan Abdul Rahman was the Menteri Besar of Terengganu and Tun Abdul Razak Dato’ Hussein the Prime Minister of Malaysia. And I said rumoured because the discovery of oil was never officially announced but was something that was being whispered in the corridors of power.

Why the hush-hush? Well, because the government had to first sort out some ‘loose ends’ before announcing the discovery of oil. So they did not want anyone to know about it until the federal government could ensure that the oil was ‘transferred’ to the federal government. If not, 100% of the oil revenue would go to the state of Terengganu.

In the meantime, they secretly sold the oil to foreign buyers. The oil was transferred from the oil rigs to the ships in the middle of the sea and was exported. Only some people knew about it, the Petronas officers being some of those people.

Lim Kit Siang came to find out about this secret arrangement and there was a hue and cry when he revealed that the oil was being stolen from Terengganu. It seems a Deep Throat in Petronas had told him about it. Exxon, in collaboration with Petronas, were fingered as the chief conspirators.

A crisis was about to explode. There were rumours that all the documents in the Exxon office in Kuala Lumpur suddenly disappeared and reappeared in Singapore the following day. Then, suddenly, the whole thing mysteriously died down and nothing more was said about the matter. No denial or rebuttal was ever issued.

Soon after that, the Menteri Besar went into conflict with the Sultan and was forced to resign. He was also exiled from Terengganu and was not allowed to ever set foot on Terengganu soil again as long as the Sultan was still alive. He never returned to Terengganu until the Sultan died.

The tense moment in that entire episode was when the Sultan’s brother stormed into the Menteri Besar’s office and pointed a gun at the Menteri Besar’s head. The Sultan’s brother too was exiled to Pahang and only returned to Terengganu to attend the Sultan’s funeral.

Meanwhile, Tun Razak came out with a plan on how to bring PAS into the federal government. PAS had to be neutralised if the federal government wanted to grab Terengganu’s oil. The idea to form Barisan Nasional was mooted and all the opposition parties such as PAS, PPP, Gerakan, etc., were invited to join Barisan Nasional.

In 1973, Barisan Nasional was launched and PAS became part of the federal government. In 1974, the new ruling coalition in Parliament (where all the opposition parties except DAP were now members of) passed the Petroleum Development Act and the oil and gas were transferred from the states to the federal government, meaning Petronas.

To keep the states quiet, they were given 5% as a token ‘Oil Royalty’.

This was like the whites taking away the Native American lands (then called Red Indians) by giving them worthless beads as payment.

Now, if the federal government had power over oil and gas, why the need to pass the Petroleum Development Act in Parliament? Just take it! But they couldn’t just take it. Oil and gas are the property of the states. So they needed to pass an Act of Parliament to legalise the illegal takeover of state property.

There was of course some resistance to this move, in particular from Sabah. But all resistance was silenced when the dissenters died in a mysterious plane crash that has never been properly explained until today.

Pakatan Rakyat should stop talking about how much Oil Royalty to ‘give’ the states and whether it should be increased from the current 5% to 20% or 50% or whatever. That is Barisan Nasional type of talk.

The federal government is actually taking what belongs to the states. Therefore, you should be talking about how much you should take: whether 95% like now, or whether you reduce what you take down to 80% or 50%.

If we go by the spirit of the Federation Agreement, then you should take nothing. You should return 100% to the states. The most you can do is to levy a tax, like the timber export tax, palm oil tax, etc. That is all the federal government can earn. Even if the tax is 35% or 45% never mind. But it has to be a tax on the profit of the sales or a form of export tax or sales tax, whether you make a profit on the sale or not.

We always talk about Rule of Law and not Rule by Law. The Petroleum Development Act is a classic example of Rule by Law. They passed a law to legalise something illegal: meaning, nationalising state property.

We must now correct this injustice and call a spade a spade. The federal government has been robbing the states of their oil for the last 40 years and has been giving them a mere 5% of the proceeds when it should be 100%. That is the reality of the situation.

Lim Kit Siang of DAP knows about this. He was the one who revealed what was going on even before most people knew that oil was being extracted from Terengganu. And Tun Salleh Abas of PAS also knows about this. He was the ‘architect’ who drafted the Petroleum Development Act. So no more talk about how much to give the states. We must now talk about what we are taking from the states.