Constitution of Malaysia

PART VII - FINANCIAL PROVISIONS

Chapter 2 - Application to States of Sabah and Sarawak

112a

(1) The Auditor General shall submit his reports relating to the accounts of each of the States of Sabah and Sarawak, or to the accounts of any public authority exercising powers vested in it by the State law in either of those States, to the Yang di- Pertuan Agong (who shall cause them to be laid before the House of Representatives) and to the Yang di- Pertua Negeri of the State; and accordingly Clause (2) of Article 107 shall not apply to those reports.

(2) The Yang di- Pertua Negeri shall cause any such report submitted to him to be laid before the Legislative Assembly.

(3) The powers and duties of the Auditor General in relation to the accounts mentioned in Clause (1) for any period ending before the year 1969 shall, in the State of Sabah and Sarawak, be exercised and discharged on his behalf by the senior officer of his department for the time being stationed in the State in question:

Provided that during the absence or incapacity of that officer, or a vacancy in his post, those powers and duties shall be exercised and discharged by the Auditor General or such officer of his department as he may designate.

112b

Clause (2) of Article 111 shall not restrict the power of the State of Sabah and Sarawak to borrow under the authority of State law within the State, if the borrowing has the approval of the Central Bank for the time being of the Federation.

112c

(1) Subject to the provisions of Article 112D and to any limitation expressed in the relevant section of the Tenth Schedule-

(a) the Federation shall make to the States of Sabah and Sarawak in respect of each financial year the grants specified in Part IV of that Schedule; and

(b) each of those States shall receive all proceeds from the taxes, fees and dues specified in Part V of that Schedule, so far as collected, levied or raised within the State, or such part of those proceeds as is so specified.

(2) The amounts required for making the grants specified in the said Part IV, and the amounts receivable by the State of Sabah and Sarawak under section 3 or 4 of the said Part V, shall be charged on the Consolidated Fund; and the amounts otherwise receivable by the State of Sabah and Sarawak under the said Part V shall not be paid into the Consolidated Fund.

(3) In Article 110, Clauses (3A) and (4) shall not apply to the State of Sabah and Sarawak.

(4) Subject to Clause (5) of Article 112D, in relation to the State of Sabah and Sarawak Clause (3B) of Article 110-

(a) shall apply in relation to all minerals, including mineral oils; but

(b) shall not authorise Parliament to prohibit the levying of royalties on any mineral by the State or to restrict the royalties that may be so levied in any case so that the State is not entitled to receive a royalty amounting to ten per cent ad valorem (calculated as for export duty).

112d

(1) The grants specified in section 1 and subsection (1) of section 2 of Part IV of the Tenth Schedule, and any substituted or additional grant made by virtue of this Clause, shall at the intervals mentioned in Clause (4) be reviewed at the Governments of the Federation and the State or State concerned, and if the agree on the alteration or abolition of any of those grants, or the making of another grant instead of or as well as those grants or any of them, the said Part IV and Clause (2) of Article 112C shall be modified by order of the Yang di- Pertaun Agong as may be necessary to give effect of the agreement:

Provided that on the first review the grant specified in subsection (2) of section 1 of the said Part IV shall not be brought into question except for the purpose of fixing the amounts for the ensuing five years.

(2) Any review under this Article shall take into account the financial position of the Federal Government, as well as the needs of the States or State concerned, but (subject to that) shall endeavour to ensure that the State revenue is adequate to meet the cost of State services as they exist at the time of the review, with such provision for their expansion as appears reasonable.

(3) The period for which provision is to be made on a review shall be a period of five years or (except in the case of the first review) such longer period as may be agreed between the Federation and the States or State concerned: but any order under Clause (1) giving effect to the results of a review shall continue in force after the end of that period, except in so far as it is superseded by a further order under that Clause.

(4) A review under this Article shall not take place earlier than is reasonably necessary to secure that effect can be given to the results of the review from the end of the year 1968 of, in the case of a second or subsequent review, from the end of the period provider for by the preceding review; but, subject to that, reviews shall be held as regards both the States of Sabah and Sarawak for periods beginning with the year 1969 and with the year 1974, and thereafter as regards either of them at such time (during or after the period provided for on the preceding review) as the Government of the Federation or of the State may require.

(5) If on the occasion of any review under this Article the Government of the Federation give notice to the States or State concerned of their intension to vary any of the assignments of revenue under Part V of the Tenth Schedule (including any substituted or additional assignment made by virtue of this Clause), or vary Clause (4) of Article 112C, the review shall take the variation into account, and provision shall be made by order of the Yang di- Pertuan Agong so as to give effect to the variation from the beginning of the period provided for on the review:

Provided that this Clause shall not apply to the assignments under section 4, 7 and 8, and shall not apply to that under section 5 or 6 until the second review.

(6) If on any review the Federal Government and the Government of a State are unable to reach agreement on any matter, it shall be referred to an independent assessor, and his recommendations thereon shall be binding on the Governments concerned and shall be given effects as if they were the agreement of those governments.

(7) Clause (4) of Article 108 shall not apply to require the Federal Government to consult the National Finance Council in respect of matters arising under this Article.

(8) Any order of the Yang di- Pertuan Agong under this Article shall be laid before each House of Parliament.

112e

112E. (Repealed)