When Mahathir claims that “they became rich because they joined Malaysia”, he ignores how their resources were centralised under federal control through legal and administrative structures that matured during his premiership. The Petroleum Development Act 1974 had already vested all oil and gas ownership in Petronas, but it was during Mahathir’s tenure that the corporation evolved into a monolithic entity answerable only to the Prime Minister. Petronas became the most powerful institution in Malaysia not by accident, but by design. State authorities in Sabah and Sarawak had neither meaningful bargaining rights nor real control over licensing, regulation, or royalties. Their oil was not simply “shared”; it was absorbed into a federal system that treated state claims as administrative inconveniences.
Mahathir’s defence of centralised revenue as moral “sharing” further distorts history. While he champions a philosophy of rich states helping poorer ones, the flow of oil wealth during his era told a very different story. Billions from Sabah and Sarawak’s natural resources were channelled into federal megaprojects in the peninsula, from Putrajaya and KLCC to Proton and repeated industrial bailouts. Meanwhile, the two resource-producing states consistently remained among the poorest in Malaysia, with infrastructure and social gaps that widened rather than closed. For decades, they lived with a 5% royalty that Mahathir refused to revisit, even as he expanded federal control over every major economic lever.
The irony of Mahathir praising Sarawak’s “success within the federation” is that Sarawak’s resurgence only began when it started reclaiming the powers that federal centralisation had stripped away. The formation of PETROS, the reassertion of regulatory authority under the Oil Mining Ordinance 1958, the insistence on state licensing, and the willingness to challenge Petronas’ monopoly in court did not originate from federal guidance. They were the result of Sarawak undoing the tight federal grip that Mahathir spent decades reinforcing.
When Mahathir now says Sarawak is merely “reinterpreting rules”, he glosses over how those rules were reshaped during his own premiership to marginalise the rights Sabah and Sarawak believed they possessed under the Malaysia Agreement 1963. The original spirit of MA63: equal partnership, territorial autonomy, and shared sovereignty, eroded gradually under policies he championed. Even when East Malaysian leaders sought to renegotiate royalty rates or push for greater administrative flexibility, Mahathir consistently dismissed or delayed such efforts, insisting that uniformity and central control were necessary for national development.
It is also misleading for Mahathir to warn that stronger state revenue or autonomy could trigger separatist tendencies. Sabah and Sarawak have not asked to leave Malaysia; they have asked for what was promised in 1963 and later diluted under the federal system he perfected. Their demands are neither radical nor destabilising; they are corrective. They seek the very balance that the federation was meant to uphold, but which drifted steadily toward Kuala Lumpur during Mahathir’s two lengthy terms.
The current contest over oil rights did not emerge because Sabah and Sarawak suddenly grew bold or because the federal government weakened. It emerged because the centralised model Mahathir championed for decades finally became untenable. The resurgence of state authority is not a rebellion; it is a restoration. It is not defiance; it is repair. And it is not a threat to Malaysia; it is a necessary recalibration of a federation skewed by decades of overcentralisation, a process rooted in Mahathir’s own decisions.
Mahathir now urges unity, fairness, and fidelity to MA63, but the federal-state imbalance that Sabah and Sarawak are trying to fix today is the product of his political architecture. The oil rights battle is his legacy, and the East Malaysian push for autonomy is the overdue response. To portray their assertion of rights as ungrateful or misguided is to ignore who constructed the system that disadvantaged them in the first place.




