Mahathir said Malaysia’s petroleum wealth was not discovered or monetised by either side on its own, but through a combination of natural endowment and national expertise.
“Oil was not being produced at that time,” he told FMT in an interview.
“It was after they joined Malaysia that we were able to exploit the gas and oil potential of Sabah and Sarawak. So, they became rich because they joined the federation.”
According to Mahathir, Sabah and Sarawak were “very poor states” when the federation was formed. Their subsequent transformation did not happen in isolation but was a “team effort”, he said.
“They were far behind in terms of development compared with the peninsula. But because of the federation and the allocation of funds from the federal government to the states, Sabah and Sarawak made progress,” he added.
“In fact, Sarawak has become the richest state in Malaysia. Where before it was a poor state, now it is the richest state.”
Mahathir — who served as prime minister from 1981 to 2003, and returned to office from 2018 to 2020 — has previously gone on record to stress that resource sharing is integral to federalism.
He explained that the federal government collects revenue from the richer states and allocates funds to boost the development of their counterparts. States are expected to contribute more when they become richer, not ringfence resources for themselves, he said.
“You have to share — the rich with the poor. You can’t say that since oil is coming from Sarawak, therefore only Sarawak would benefit.”
He added that while Sarawak may today contribute more to the national coffers, the underlying principle of Malaysia’s formation was always one of mutual benefit — not competition.
“Each state contributes — not the same percentage, not the same amount. Some states contribute more than others. But that doesn’t mean that those states which contributed more should have greater independence compared to the poorer states.”
At the same time, Mahathir said Sarawak’s recent assertion of its rights over the control and ownership of oil and gas resources should not be mistaken for rebellion or taking advantage of a weaker central government.
“(Sarawak) is reinterpreting the rule, not changing it,” he said.
Power play
Commenting further on the state of federalism today, Mahathir called for Malaysians not to mistake Sarawak’s current success as happening despite federal government policies. Instead, he said, it happened because of those policies.
He explained that Sarawak’s strengthened position today reflects its success within the Malaysian federation, and should not be misconstrued as signifying an intention to break away from it.
“They became rich because they joined Malaysia,” he said. “Now that they are rich, they must also help the federation that once helped them.”
Mahathir said the spirit of the Malaysia Agreement 1963 must therefore be understood, not as a licence for separation, but as a framework for unity through shared development.
“The decision at the beginning was between three parties — Sabah, Sarawak and the peninsula. But instead of being given their rights, they were made to be like any other state in the federation.
“They have been reduced in terms of their status. Now they are demanding that we go back to the 1963 agreement, and I think that is logical and proper,” he said.
Mahathir stressed that the Malaysia Agreement 1963 does not merely list the special rights of Sabah and Sarawak, but also those of the federal government. “This has been agreed upon at the beginning,” he said.
He said that while Sarawak and Sabah may want to exert autonomy, they have to accept that certain powers are given to the federation.
“Certain other powers are given to the states, which the federal government must recognise. But there are also shared powers, and these require both governments to work together,” he explained.