The only natural resource under federal government jurisdiction is petroleum .
Be that as it may , there are necessary requisites within the Malaysian constitution for the country to be labelled as a federal polity . It goes without saying that the division of powers and sphere of competencies in the Malaysian constitution does not imply absolute equality of powers .
In the Malaysian context , the 1957 constitution was deliberately put together to facilitate national administration . The Ninth Schedule of the Federal Constitution spells out the distribution of legislative power and responsibilities between the federal and state governments . The federal government is given jurisdiction over subjects of a general nature . External affairs , defence , internal security , civil & criminal law & the administration of justice , federal citizenship and naturalisation , federal government machinery , finance , trade , commerce , and industry , shipping , navigation , and fishery ,
PETALING STREET | Trade , commerce , and industry , shipping , navigation , and fishery , communication , transport , health , education , and federal works , and power are under federal jurisdiction . communication , transport , health , education , and federal works , and power are under federal jurisdiction . On the contrary , the functions vested with the state governments include land , local government , local public services , licensing theatres and cinemas , state public works , state government machinery , state holidays , and turtles and riverine fishery . Islamic laws and customs as well as other native laws and customs in Sabah and Sarawak are vested with the state governments . The concurrent list covers social welfare , scholarships , town and country planning , drainage and irrigation , housing , culture and sports , and public health ( Mohd Salleh bin Abbas , 1978 ; Loh 2009 ).
As land is a state matter , land-based property taxation has been handled by state administrations . The only natural resource under federal government jurisdiction is petroleum . Under the Petroleum Development Act ( PDA )
1974 , all states give up their rights to petroleum resources found within their states . Ownership and control of petroleum and gas are transferred to the federal-owned company Petronas . Petronas is given the responsibility to exploit and mine oil and gas in the country and is required to pay the state and federal governments 5 % royalty each . Petronas receives 49 % whereas the producer company receives the remaining 41 % of the gross value of petroleum production . In addition , the federal government taxes producer companies ( Sarawak Shell , Sabah Shell or Esso ). Only Sarawak , Terengganu , Sabah , and Kelantan have petroleum resources . It should be pointed out that should petroleum resources be located beyond the state ’ s threemile territorial waters , the federal government can choose to deny this royalty to the state government .
The result is a very uneven distribution of revenue and therein financial resources between the federal and state governments .
The federal government is required to provide two major grants to the state governments , namely the capitation grant , based on the state population size , and the state road grant , for maintenance of roads . It should be noted that the federal government has sole jurisdiction and discretion over the disbursement of all development funds , on which the Ninth and Tenth Schedules are silent ( Jomo and Wee Chong Hui , 2014 ). At any rate , the federal government can , technically speaking , deny development funds to the state governments . For example ,
14 PERDANA MAGAZINE 2016