Federal-state friction: Amid Malaysia’s dual political and pandemic plight

2020

August

AUTHOR:

RESEARCH BRIEF BRIEF RESEARCH Tricia Yeoh

1 ACKNOWLEDGEMENTS:

Federal The author would like to acknowledge Paul Hutchcroft and Catherine Yen for

- their feedback and edits, Bridget Welsh state relations amidst political and political in amidst relations state Malaysia plight pandemic for her piece on state government COVID- DISCLAIMER: 19 initiatives which she drew from in the report, and Lim Wei Jiet for sharing some This article is part of a New Mandala series related to the Supporting the Rules-Based legal perspectives. Order in Southeast Asia (SEARBO) project. This project is run by the Department of Political and Social Change at the Australian National University and funded by the Australian Department of Foreign Affairs and Trade. The opinions expressed here are the authors' own and are not meant to represent

those of the ANU or DFAT.

THE AUTHOR:

Tricia Yeoh is CEO of the Institute for

Democracy and Economic Affairs (IDEAS), an independent public policy think tank in Malaysia. She is Visiting Research Fellow at ISEAS-Yusof Ishak Institute and PhD Candidate at the University of Nottingham Malaysia, studying federal-state relations and opposition subnational politics in authoritarian regimes. She is the author of ‘States of Reform: Governing and Penang’, editor of ‘The Road to Reform: in Selangor’, and director of the award- winning documentary ‘The Rights of The Dead’, about the mysterious death of Beng Hock in 2009. Tricia was also an aide to the previous Selangor chief minister.

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clearly expressed and maintained.”

Federal n May 2018, the (Pearn, 2001).

opposition coalition Over the years, state powers have Pakatan Harapan (PH) gradually eroded, giving rise to greater - I state relations amidst political and political in amidst relations state Malaysia plight pandemic defeated the ruling central powers within the federal incumbent Barisan government. That process began when Nasional (BN), which local council elections were abolished in ranked as one of the 1965 and continued with federal world’s longest-standing emergency measures in 1969 and the use dominant party regimes, of state economic development having been in power corporations (SEDCs) to spearhead the since 1957. But this nationwide New Economic Policy in 1971. victory was short-lived. Over the following decades, other After only 22 months, PH institutional mechanisms were collapsed due to a introduced that further strengthened the prolonged leadership federal government’s hold over states. tussle in February 2020. On the surface, there appears to be a clear A new coalition, the demarcation of powers between the Perikatan Nasional (PN),

Introduction federal and state governments. The Ninth took over government. Schedule of the Federal Constitution Then came COVID-19. Malaysia in 2020 recognises the semi-autonomous nature has been hit not only with political of states, which have some turbulence but also by the crisis of the “constitutionally entrenched division of

pandemic. This report examines these powers in the legislative, executive,

twin shocks from the perspective of judicial and financial fields.” (Shad federal-state relations. Specifically, how Saleem, 2019, p. 74). have political turbulence and the In practice, there has been ample scope pandemic affected federal-state relations? for the solidification of a powerful central How have federal-state relations in turn government. For example, Article 71(3) affected the response to the pandemic allows the federal government to amend and national-level political turbulence? a state constitution if there is non- Article 1 of the Federal Constitution of compliance by a state with the federal Malaysia 1957 describes the country as a constitution. Article 75 provides that the federation of 13 states and three federal law shall prevail when any state territories. A spirit of federalism was also law is inconsistent with a federal law, infused into the Federation of Malaya while Article 76 allows the federal Agreement 1948, when the Malayan government to make laws pertaining to states came together. At that critical state matters if it promotes the foundational juncture, it was agreed “a uniformity of laws or if it is requested to strong central government” would be do so by states. Article 76A permits established. But it was also agreed that parliament to delegate its powers to the “the individuality of each of the Malay states. Further, states have absolutely no States and of the Settlements should be power to prevent a constitutional

3 amendment as this is the exclusive nature of such “cooperation” has largely

1

Federal domain of federal parliament . Article 81 been determined by the centre. Even so, of the Federal Constitution states that the given overlapping domains, there has

executive authority of every state is to be been a substantial degree of contestation - state relations amidst political and political in amidst relations state Malaysia plight pandemic exercised to ensure compliance with over the policy responsibilities of federal federal law, and should impede or and state levels. This is not uncommon in prejudice the exercise of the federal federal systems, but particularly notable government. The federal government can given the centralised character of federal- also utilize emergency provisions to state relations in Malaysia. Some suspend state rights under Article 150. examples are found in the realm of The 13 states of Malaysia each form their utilities. In opposition-controlled own state governments by way of elected Selangor, the federal government representatives. Through the respective intervened in the state government’s legislative assemblies, they pass buyback of water concession companies legislation and formulate public policy at in 2008 after water services were the state level, in the domains over which transferred from the state to the they have jurisdiction. The Federal concurrent list in the Federal Constitution’s Ninth Schedule places local Constitution. When it comes to land government under the jurisdiction of the management, states have the authority to state governments. However, in the spirit approve land development projects and of ‘cooperative federalism’ with its strong opposition-controlled Kelantan has in the role for the centre, there exists the past blocked federal projects. Similarly, National Council on Local Government the federal government privatised waste (NCLG), formed under Article 95(A) of the management nationally from 2007 Federal Constitution. Chaired by the onwards, but three states opposed the Prime Minister, it meets annually and is move, preferring to carry it out through comprised of the state Menteris Besar their own service providers. and Chief Ministers as well as federal government representatives. Crucially, the NCLG is permitted to formulate national policy on local government that states must comply with. As the Chair has

a casting vote, the Prime Minister may

assert a strong role in local government matters.

While some have described the system as “cooperative federalism”, with consensual sharing or delegation of power from one tier to another (Shad Saleem 2019), the

1 In 1963 when Malaya was enlarged to Malaysia, was not required to obtain Kelantan’s consent to the Kelantan objected to the merger. In Government of admission of new states to the Federation, under the Kelantan v Government of the Federation of Malaya amendment procedure of Article 159 (Shad Saleem (1963), the court held that the federal government 2019).

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Federal Political crisis and downward - state relations amidst political and political in amidst relations state Malaysia plight pandemic resource distribution

hen PN took control of the impending recession with more than a federal government after a week third of the working age population W of labyrinthine plots and outside the labour force and an counterplots in February 2020, its unemployment rate that has spiked to partners included Parti Pribumi Bersatu Malaysia (Bersatu) which left from PH, 5%—a 30-year high. Given the highly the United Malays National Organisation centralised nature of resource (UMNO) and the Malaysian Islamic Party distribution in Malaysia, states affiliated (PAS). UMNO was at the core of the ruling with the federal government would coalition that dominated Malaysian invariably stand to gain by being granted politics from 1957 to 2018, with PAS a access to greatly demanded resources. longstanding bulwark of the opposition. The first effect on resource distribution In the midst of the political turbulence, from the national powershift was the several state governments also changed allocation of local political positions to their affiliation. PN gained the lion’s share party elites. The new PN state of states with eight in total: Kelantan and governments removed all PH local Terengganu (the two East Coast states led councillor appointees, as well as village by PAS), Perlis and Pahang (already community council members, and UMNO states prior to this), and the four replaced them with their own. While PN wins of Johor, Malacca, Perak and Kedah. consolidated power by awarding its allies This left PH with only three states in with lucrative board chairmanships and hand, down from seven: Selangor, Penang directorships within government-linked and Negeri Sembilan. The parties that companies (GLCs) at the national level, formed the Sabah (Warisan) and Sarawak this also took place within the states it (GPS) state governments maintained newly controlled. Because the Menteri their previous political affiliations, with Besar/Chief Minister is the Chair of most the former supporting PH and the latter major state-level GLCs by default, the new PN. PN-aligned state chief executives The machinations at the state level are automatically assumed these positions. important as they have a direct impact on For example, the new Johor Menteri how political, fiscal and administrative Besar took over chairmanship of the resources and positions are distributed state’s premiere GLC Johor Corporation. downwards from the centre to the The same took place in Kedah and periphery. The politics of resource Malacca where the state executive distribution has come into sharp relief councillors and party members forming during the pandemic, with the serious the new UMNO and Bersatu governments economic crisis heightening the need for were also rewarded with board support from the centre. There is an directorships.

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Intra-coalition feuding also led to previous federal government guarantees

Federal immediate changes at the lowest levels. In secured under PH would likely no longer Penang, individuals linked to Azmin Ali apply under PN. In what Penang claimed

(who defected from PKR to Bersatu and to be a politically motivated move by the - state relations amidst political and political in amidst relations state Malaysia plight pandemic played an instrumental role in forming centre, former Chief Minister of Penang, the new PN government) resigned their Lim Guan Eng, was arrested in early positions from the PH-controlled state August on the back of investigations by government. However, individuals part of the federally-controlled Malaysian Anti- an NGO linked to him were rewarded Corruption Commission (MACC) for with local councillorships in another alleged corruption for a related Undersea northern state of Kedah. If there is a Tunnel. change in government yet again, this will Under PN, the federal government invariably directly implicate the way immediately resumed the culture of political, fiscal and administrative biased allocation, with claims by PH MPs resources and positions are distributed that their annual allocations have been from the federal government downwards reduced completely. It is true that longer to states and ultimately, local term reforms are necessary to completely communities. revamp the system of CDF allocations and The practice of discriminatory remove political bias, as well as detach Constituency Development Funds (CDF) funding dependency on individual is another good example of how resource politicians to allow for the distribution is affected by politics at the institutionalisation of aid through, for national level. Introduced in 1971 to instance, local governments or land allow BN politicians the opportunity to district offices. However, in the request resourcing for minor immediate context of an economic crisis, development projects within each large numbers of people will likely constituency, CDFs are an important increasingly depend on any source of aid source of funds for elected their representatives can provide. representatives. CDFs allow members of There have already been claims by PH parliament (MPs) to respond to the real- MPs that food basket aid to low-income time needs of their constituents, communities provided by the Ministry of especially within rural areas, ranging Women, Family and Community from fixing roofs to paying for funeral Development were not being delivered to expenses. During BN’s time, opposition opposition-led constituencies. However, parliamentarians could not access CDFs. the political discrimination cuts both When PH took over in 2018, some funds ways. were granted to the opposition although In an almost tit-for-tat manner, the this was still unequal (RM500,000 to opposition Selangor state government— government MPs; RM100,000 to one of the richest, most industrialised opposition MPs). states in Malaysia—responded by The Penang state government's ambitious announcing that its special COVID-19 Penang Transport Master Plan would also allocation in the state economic stimulus need to be reconsidered, since the package would not be given to state

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assemblypersons aligned with PN, but 1971 in Khoo and Toh, 2019). Entering

Federal instead to state-appointed constituency the coalition not only secured federal coordinators. Its official response was support and funding for Penang but also

‘this is not new practice.’ Opposition “inserted Penang’s progress into the - state relations amidst political and political in amidst relations state Malaysia plight pandemic parties are commonly punished in such a vision of economic nationalism” (Khoo manner, unsurprising for a country in and Toh, 2019). which political success is so greatly However, withholding resources has also dependent on personalised patron-client had the opposite effect of stoking relationships executed through the resentment against the incumbent federal vehicle of strong parties and party regime. PAS for instance has successfully coalitions. Access to state funds facilitates leveraged the narrative of oppositional such direct interaction with constituents, politics in the states it controlled (PAS in turn allowing better visibility amongst controlled the Kelantan between 1959– voters and attribution of performative 78 and from 1990 to the present, and legitimacy. Terengganu on the East Coast between One direct consequence of discriminatory 1959–61 and 1999–04). It commonly resource allocation from the centre to the blamed its economically disadvantaged periphery is that the political makeup of position on the federal government to state governments matters in a time of galvanise local electorate support against economic crisis. a villainised UMNO that would “rather see Opposition states that are well-endowed the state suffer for its recalcitrance” like Selangor and Penang can afford to (Azmil, 2018). carve out allocations from their annual budgets to provide direct assistance to

constituents. Even so, the state and local

governments in Selangor expect budgets to be slashed considerably as unplanned cuts in revenue and new demands for expenditure required by the emergency escalate. This includes rental fee waivers,

equipment for disinfection exercises and protective equipment for medical front- liners. So can poorer states afford to be run by the opposition? Do constituents strategically vote in the incumbent federal-level political party (or coalition), if only to benefit in the forms of financial and other welfare aid? Opposition party Gerakan joined the ruling coalition in 1972 for precisely the reason that the government’s primary task is to “restore economic buoyancy to the state” (Lim,

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Federal The pandemic and - state relations amidst political and political in amidst relations state Malaysia plight pandemic federal-state relations

he COVID-19 crisis has offered an Constitution defines ‘public health, important study of the legality sanitation and prevention of infectious Tand constitutionality of Malaysia’s diseases’ as falling under the Concurrent three-tiered system of government. The List of the Federal Constitution of politicisation of the emergency response Malaysia between the federal and state The Penang state government stated that governments was evident even in the it was prepared to face legal challenges early weeks after PN was sworn in. The over its decision not to open up the first National Action Council meeting, economy on 4 May. The Sarawak state chaired by newly minted Prime Minister government stated that the reopening of to co-ordinate economic activities would not be government responses to the COVID-19 conducive to managing public health in crisis, excluded all opposition PH states. the state given the state’s logistics The decision to open up the economy on capability and its own capacity, while 4 May under a new phase of a Controlled Kedah said it would not compromise the Movement Control Order (CMCO) was safety and welfare of its people. Pahang also apparently made unilaterally without said it needed to carefully study the proper consultation with the state situation and maintained it would not governments. A document containing the reopen the economy yet. The federal standard operating procedures required government reacted by saying that all under this phase that the federal states are obliged to adhere to federal government promised to send to them law, even threatening that not complying beforehand was not delivered in time. would expose them to lawsuits from The sidelining of state governments industry players. Several industry caused considerable tension where nine associations have issued statements states—including even states aligned calling for state governments not to with the federal PN government— restrict companies from resuming announced they would not comply with operations. the sudden announcement to reopen the Legal interpretations differ on whether economy. The conflict arose in part from states have the right not to comply ambiguity between the 1957 constitution generally with federal law as well as and the Prevention and Control of specifically with Act 342, and the Infectious Disease Act 1988 (Act 342). Act constitutionality of non-compliance 342 is a federal law and an associated would have had to be contested in the federal order defines an “infected area” to court of law. As outlined above, states do include all states and federal territories in have some legal jurisdiction over matters Malaysia. However, the Federal

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related to the management of public For instance, more than 5000 staff across

Federal health. Further, provisions in the Local the two local governments of Penang Government Act 1976 grant local were mobilised to monitor compliance,

governments the ability to preserve and the same took place in Selangor and - state relations amidst political and political in amidst relations state Malaysia plight pandemic public health and prevent the outbreak Sarawak. The following section overviews and spread of diseases. These provisions how states mobilised their own resources greatly empower the country’s third tier to control the spread of the virus. of government. It is local governments STATE AUTONOMY IN PANDEMIC RESPONSES which have been determining the detailed Amid the federal-state tussle, state conditions surrounding the opening up of governments continued to play a crucial markets, sundry shops and restaurants role in managing the pandemic. This within states. section draws substantially from Bridget On the other hand, some legal experts Welsh’s (2020) analysis of the unsung emphasise Article 81 of the Federal role of state governments; her report is Constitution in stating that federal law worth reading in full. Public healthcare is prevails if conflicts arise between federal a federal matter, and all state health and state law. In the case of states departments across the country report refusing to re-open their economies, the back to the Ministry of Health at the states were not exercising their powers to centre. “impede or prejudice” the federal Several state governments engaged their government’s powers (which Article 81 own resources, for instance in testing and requires). Rather, they were asserting contact tracing. Selangor and Penang both their right to impose additional provided funds for additional testing, and precautionary restrictions which did not many states developed their own tracing defy federal restrictions under the CMCO. applications, for instance Johor (Jejak Since the country was still operating Johor), Selangor (SELangkah), and under one form of restricted movement, Sarawak (CovidTrace and Qmunity). For a the states merely interpreted this full list of states that emerged with their regulation based on their specific state own applications, see Welsh’s (2020) needs by requiring even more piece. Penang and Sarawak did a restrictions. Based on this view, it was particularly excellent job of providing therefore arguably within their powers public communication with their not to comply. constituents, having regular briefings on Regardless of constitutionality, states Facebook. Penang opened 24-hour would not have been able to realistically hotlines and its own COVID-19 website enforce their decision not to comply with (Welsh, 2020). The states of Sarawak, federal government orders to reopen the Sabah, Selangor and Penang also economy. This is because the police and collaborated well with civil society and army report to the federal government. charity networks to coordinate donations States could only depend on state and and medical assistance (Welsh, 2020). local government officials to enforce

additional restrictions, possibly only in selected states with the capacity to do so. State governments were able to complement the federal government’s

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social assistance packages by reallocating tasks at hand—in this case the handling

Federal additional budgets to further aid affected of COVID-19. communities. The two largest budgets Although public health is a federal matter,

specific to COVID-19 assistance packages that state governments have been able to - state relations amidst political and political in amidst relations state Malaysia plight pandemic were from the East Malaysia states of make use of institutional and fiscal Sarawak and Sabah, followed by the resources to provide healthcare services highly developed Selangor and Penang and assistance during the pandemic (both of which are opposition- opens up the possibility of reinterpreting controlled). Other states that provided how healthcare is conceived funds to assist communities included constitutionally. Even prior to 2018, Perak, Pahang, Kelantan, Negeri Selangor and Penang that were both Sembilan, Johor, Terengganu, Malacca, controlled by the opposition coalition are and Perlis. Among the assistance examples of states which harnessed their provided was cash aid to medical front- own resources to distribute health-based liners, rent relief and food aid (this assistance programmes that were paragraph’s analysis is based on a table popularly received. In Kelantan and within Welsh’s (2020) piece here). Terengganu, religious organisations have Some states exercised their constitutional played a vital role in mobilising powers to guide the emergency response assistance to impoverished communities within their borders, including Sabah and (Welsh, 2020). During the current Sarawak (the two states of East Malaysia pandemic, Sabah, Sarawak, and Penang that have greater autonomy relative to passed aid packages within their their Peninsular Malaysia counterparts respective state legislative assemblies, in under the Federal Constitution). Sarawak stark contrast to the federal issued their own circulars on regulatory government’s unwillingness to do the compliance such as on the closing of same at the national level. Prime Minister premises, and both states created their Muhyiddin convened only a half-day own immigration regulations (Welsh, parliamentary session without any 2020). Sarawak’s scheme for listing cases debate whatsoever to witness the King’s and Sabah’s amendments to rules on speech on 18 May, in a move seen as entering the state tended to contradict avoiding a no-confidence vote. federal announcements, creating some FEDERAL-STATE TENSIONS, NATIONAL confusion (Welsh, 2020). POLITICS AND THE PANDEMIC RESPONSE State health directors worked More recently, central-state contestations professionally and coordinated well with over oil rights have awoken again, a state executive council members in longstanding issue given that the four oil- charge of health, whether in government- producing states in Malaysia (Kelantan, aligned or opposition-controlled states Terengganu, Sabah and Sarawak) also (Welsh, 2020). This highlights the record some of the highest poverty rates important role that the civil service often relative to the national average. The plays in sidestepping the politics of the grievances of oil-producing states day and carrying on with the immediate significantly affect national politics, as their desires for more representation and

10 access to resources are a field of Sarawakian MPs, in an attempt to be able

contestation for governments seeking to to form government yet again. The loose

Federal woo MPs, and is a source of leverage “Pakatan Plus” coalition, which includes during this period of economic crisis and the original PH and additional MPs from

political uncertainty. Warisan (Sabah) and the Mahathir faction

- state relations amidst political and pandemic plight in Malaysia in and political pandemic amidst plight relations state Sabah and Sarawak have a relatively high from Bersatu, has reportedly increased its degree of political leverage nationally count of MPs to 107—still insufficient to because they collectively comprise more form even a slim parliamentary majority. than 25 percent of the total number of Nor has the coalition been able to come to MPs in Parliament’s lower house (56 out an agreement on its prime ministerial of 222 MPs). Any Peninsular-based candidate, with component parties political coalition intending to form the vacillating between Mahathir Mohamed federal government requires the support and Anwar Ibrahim. In a surprise of either, or ideally both, state political announcement at the end of June, parties. Including Sabah and Sarawak in Mahathir himself dropped his bid to national decision-making platforms has return as prime minister, naming instead therefore been of vital political Sabah’s Chief Minister Shafie Apdal for significance. Any coalition of parties premiership in a public recognition of helming the federal government has to East Malaysia’s significance at the ensure leaders from these two states are national level. given ministerial positions within the As alluded to above, one political sore federal cabinet. point in federal-state relations over the Though not officially part of either of the last decade has been the sharing of two coalitions, the parties that form the natural resource revenues between the central government and the four oil-

Sabah (Warisan) and Sarawak (GPS) state governments are crucial political allies producing states of Kelantan, that the PH and PN have both tried to Terengganu, Sabah and Sarawak. While woo. Although neither party ultimately PH was in power, it came to an agreement changed its political affiliation following to settle longstanding disputes over the government change in early 2020, it unpaid oil royalties with the Kelantan and was never quite certain throughout the Terengganu state governments. Payments turbulent political crisis week which side to Kelantan were to have begun in early each was going to support. Decisions 2020, but these were based only on 2 out were presumably decided on the basis of of its 12 oil and gas fields. Meanwhile greater self-rule and political Terengganu received RM1.27b in oil representation at the central leadership royalties owed from January to level and increased access to fiscal September 2019. These were intriguing resources, particularly in the form of oil developments, since at the time both royalties. Kelantan and Terengganu were under the federal opposition party PAS. In a clear sign that state grievances continue to affect national turbulence, in That the PH federal government was early June several PH leaders publicly willing to go the extra mile providing alluded to having won over several concessions to the two opposition states

11 was meaningful on several counts. First, education and more controversially, the

PH may have needed to publicly display right of secession if the agreements are

Federal support to Malay-Muslim communities, as not honoured. Most recently, the PN it was battling the widespread perception government announced that a special

that the coalition was dominated by the council would be set up to monitor the - state relations amidst political and pandemic plight in Malaysia in and political pandemic amidst plight relations state mostly ethnically Chinese Democratic implementation of the Malaysia Action Party (DAP). The two East Coast Agreement 1963 together with the Sabah states are primarily Malay-Muslim in and Sarawak state governments, which demographic makeup. Second, then includes cash and royalty payments over Minister of Economic Affairs Azmin Ali oil and gas resources. acted as the chief negotiator with the PAS The Petroleum Development Act 1974 state governments. He had maintained vests Petronas with the entire ownership, friendly relations with the Islamic and the exclusive rights, powers, liberties party—partly to maintain Pakatan’s hold and privileges of exploring and exploiting over the Selangor government in 2015— all petroleum resources in Malaysia. since his days as Selangor Chief Minister. Given such powers, it has been central to During the 2020 political crisis, Azmin Ali the debate surrounding oil-producing defected from PKR to Bersatu and played states and their demand for greater an instrumental role in forming the new royalties, oil rights and hence, federal- PN government. state tensions. In May this year, national Calls for oil rights have come the loudest oil company Petronas agreed to pay and strongest from the East Malaysian US$470mil (RM2b) in sales tax on states. Sabah and Sarawak collectively petroleum products to Sarawak, settling a contribute to 60 percent of the country’s longstanding dispute between the two

oil and gas revenues. Sarawak lawmakers, parties. However, state officials later said

for example, had previously passed a Sarawak is still pursuing the case, and motion in their legislative assembly to seeking nearly US$680mil. Around the increase oil royalties owed to the states same time as PH’s public pursuit of from 5 to 20 percent. Though Sarawak Sarawak MPs in early June, the CEO of agreed to drop the royalty hike demand Petronas was announced as having left in late 2019, similar demands have been his position prematurely before the end made in Sabah. Sarawak has spread its of his contracted tenure. It was reported feathers further, setting up its own state- that he had resigned in opposition to the based oil and gas company in the form of planned tax settlement, with which the Petros (Petroleum Sarawak Berhad). board and management allegedly also Sabah and Sarawak have also demanded disagree. The previous Petronas position the federal government restore the state was that the sales tax was not valid, as it rights that were part of the original 20- appeared under the constitution’s Federal point agreement and 18-point agreement List and could not be double-taxed that contained the terms upon which the (Petronas already pays petroleum income two states respectively agreed to enter tax to the federal government). In the into the new entity of Malaysia when it Petronas CEO’s outgoing message, he was formed in 1963. The documents called on his colleagues to “always stick to include points on religion, language, their principles” amidst “conflicting

12 choices and difficult decisions.” In what which controls the Sarawak state

seems like a closing chapter to this hostile government. There is speculation that

Federal exchange, it was announced on 3 August Muhyiddin is potentially open to that Petronas withdrew its appeal over its increasing royalty payments to Sarawak

failed judicial review against the Sarawak and Sabah—which the Petronas board - state relations amidst political and pandemic plight in Malaysia in and political pandemic amidst plight relations state state government. and management are said to oppose—on Petronas is primed to be an increasingly top of having approved the sales tax attractive source of funds to the central payment to Sarawak. government. Malaysia’s fiscal deficit is In the most recent incident that expected to grow as a result of tanking underscores the impact of the long energy prices and pressure to introduce drawn-out political uncertainties on even more stimulus packages following national politics, the Sabah state the COVID-19 pandemic. The federal government fell at the end of July when government has already announced 13 state assemblypersons defected from several stimulus packages amounting to the pro-PH ruling coalition to support US$70b, which represents 19% of the former Sabah chief minister and PN- country’s US$270b economy (although linked Musa Aman. Several only US$10.5b in direct fiscal injection). assemblypersons claimed that they were The economic fallout of COVID-19 is offered millions of ringgit to defect. Musa projected to be severe, with the announced he had the simple majority to unemployment rate reaching 5%, the form a new state government, but the highest in 30 years. Although this is state’s Governor consented instead to a similar to trends throughout the world, state dissolution. Snap polls will be held Malaysia was already facing a slowing in Sabah within 60 days. Although the

economy prior to the onset of the political context in Sabah varies quite

pandemic. Petronas had already significantly from that at the national contributed a special additional dividend level, the outcome of its upcoming state of US$7 billion to the 2019 budget, and it elections will invariably be an indicator of is expected that it will be called on to national popular sentiment. This will also further finance social assistance packages be observed as a precursor to the and programmes under the pandemic Sarawak state elections that must be held response. by September 2021, as well as to the Petronas has already expressed caution general election that although must only over paying special dividends to the be held by May 2023, is widely speculated government, claiming it needs to take into to be called for before the end of 2020. account its own funding needs, debt obligations and future growth investments. Given the political pressures

faced by Prime Minister Muhyiddin, in which he needs to shore up support for his currently one-seat majority in parliament, he may need to depend on goodwill from Gabungan Parti Sarawak,

13 brought to question the role that states

can and should play.

Federal Recently, the PN government has recognised state rights to some degree

- and in certain instances, possibly for state relations amidst political and pandemic plight in Malaysia in and political pandemic amidst plight relations state Long-term implications for federal-state relations

alaysia’s government is political reasons. In announcing the operating on extremely shaky Conditional Movement Control Order, M ground with a razor-thin Defence Minister Ismail Sabri said that majority. Its position—and therefore that Sarawak was exempt from Act 342, as the of the 13 state governments—continues state has its own Protection of Public to be at risk. Although governed by a Health Ordinance 1999 which allows the Federal Constitution that sets out legal state minister responsible for public and institutional safeguards protecting health to regulate movement in and out state and local government rights against from the infected local area. When federal intervention, Malaysia’s policy announcing that in principle all non- decision-making and resource Muslim places of worship can operate,

distribution is more heavily influenced by Minister Ismail Sabri also said this was

political dynamics than by the legal- subject to approval by state governments, constitutional set-up or evidence-based which would issue their own guidelines. data. In concluding, how have the two These recent statements seem to indicate shocks to the country’s system over the a slight alteration in the way the federal past few months impacted federal-state government approaches what had been relations in Malaysia? hitherto considered a national crisis. In The political crisis seems to have recognising the roles and responsibilities embedded centralisation trends even of state governments, it ought to pay further. Malaysia’s first-past-the-post attention to growing trends of electoral and political party system tend subnational autonomy around the world. to favour the victor solely. Because of the The state of Kerala in India has been “winner takes all” outcome, there are touted as a successful case study in the rarely any in-built incentives for political managing of COVID-19, with a key factor leaders to reform the highly fiscally and being India’s relatively less centralised administratively centralised structures. public health system in which, unlike Even so, the government’s highly Malaysia, states have the autonomy to centralised response to COVID-19 has manage their own public health system. India’s investments in public health

14 infrastructure from as early as 1969 states which are politically aligned will

resulted in every village having a health have to carefully wade their way through

Federal centre with doctors, nurses and the complexities of political party and paramedics. During the COVID-19 coalition factionalism, which continue to

outbreak, the local government and be murky. In the battle for national - state relations amidst political and pandemic plight in Malaysia in and political pandemic amidst plight relations state community-driven village councils have leadership, being on the side of the nimbly supported locals requiring eventual victor will weigh heavily on healthcare assistance. machinations even at the state level. In Malaysia, neither the political Fluid negotiations between parties and turbulence nor the pandemic crisis have coalitions are expected to continue, significantly changed federal-state amidst rumours that a general election relations. However, the pandemic has will be called before the end of 2020. All raised some interesting questions as to of this will inadvertently impact upon what states can do to assert their central-local relationships. Mahathir constitutionally-backed authority. Mohamad’s move of announcing he would Although in the end—after several days form a new party on 8 August, followed of resistance—all states complied with by defections from several Bersatu federal instructions in the case of the leaders in Selangor and Johor are early CMCO, states with a larger independent indications that the political uncertainty resource base took pandemic will continue to have a direct impact on management into their own hands in a the stability of state governments, even in number of interesting ways as outlined the immediate future. above. This indicates that if local Unless states can leverage their political governance autonomy is to deepen and influence the way Sabah and Sarawak decentralise further in Malaysia, this will

have done, and to a certain extent, Johor, most likely emerge through a bottom-up Kelantan and Terengganu, as well as approach rather than being devolved highly developed Selangor and Penang, from a top-down process. prospects for state and local autonomy COVID-19 has also shown that sharing are not bright. Nevertheless, as shown by public policy between different levels of the responses of states to the COVID-19 government can result in positive crisis, one way of achieving autonomy is outcomes. The federal government will to reinterpret existing constitutional not necessarily resist if the initiative of provisions and challenge formal state governments do not conflict with boundaries in innovative ways. While the centre’s goals, and if both parties leadership within strong political parties agree on a common shared outcome. from the centre is still what prevails in The future of central-local relations in Malaysia, there is room for state-level Malaysia will continue to be directly lawmakers to push for relatively greater correlated with the future of political measures of decentralised governance in parties and their electoral outcomes. public policy and public administration. States will continue to benefit only if they are politically aligned with the federal government at the centre. Even those

15 https://www.malaysiakini.com/co lumns/532836> Accessed 3 July

Federal 2020.

- state relations amidst political and pandemic plight in Malaysia in and political pandemic amidst plight relations state

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Accessed on 2 June 2020. Khoo, Boo Teik and Toh Kin Woon (2019), “Lim Chong Eu and Penang: Glimpses of a Personal and Political Relationship.” In From Free Port to Modern Economy: Economic Development and Social Change in Penang, 1969 to 1990, eds. Chet Singh, Rajah Rasiah and Wong Yee Tuan, 1-36. Georgetown: Penang Institute. Pearn, Bertie R. (2001), “Malaya.” In South East Asia, Colonial History, ed. P.H. Lim Kratoska, 121-130. London: Routledge. Shad Saleem, Faruqi (2019), Our Constitution. Subang Jaya: Thomson Reuters Asia Sdn Bhd. Welsh, Bridget (2020) “The unsung role of state governments in battling Covid”. Malaysiakini. <