Page:Report of The Inter-Governmental Committee, Malaysia.pdf/12

10 (iii) The first review should be undertaken in time to enable the assessor's recommendations to be implemented with effect from the beginning of the sixth year after the application of Part VII of the Constitution to the Borneo States, and once implemented should remain in force until superseded by implementation of the recommendations of a second assessor.

(iv) The second review should similarly be undertaken in time to enable the assessor's recommendations to be implemented with effect from the beginning of the eleventh year and should relate to the ensuing period of five years or such longer period as might be agreed upon by the parties concerned, and once implemented should remain in force until the end of that period and thereafter until superseded by implementation of the recommendations of a subsequent assessor.

{v) If, before the end of the period to which the second (or any later} review relates, or at any time afterwards, any of the parties desires a further review, but not otherwise, an assessor should again be appointed.

(vi) The Federal Government should be able on the occasion of any review to vary any of the assignments of revenue specified in sub-paragraph (2)(i) (a), (c) or (d), on the second or a subsequent review, that specified in sub-paragraph (2)(i) (b); on the second or a subsequent review this power should extend to any substituted assignment made on the occasion of a previous review, Where the Federal Government intends to do this, it should give the State concerned and the assessor notice of its intention, and the assessor should take the effect into account his recommendations.

(10) The Malayan Government agreed that the figure of $300 million should be accepted for planning purposes as the total of Federal and State development expenditure required in Sarawak for the five years after the inception of the Federation of Malaysia, and, subject to the amount of financial aid which might be forthcoming from the British Government and to the general availability of funds, undertook to use its best endeavours to enable this amount of development expenditure to be achieved.

(11) The North Borneo delegation mentioned that development expenditure in North Borneo should amount to $200 million during the first five years after the establishment of Malaysia in order to obtain a satisfactory rate of economic growth. The Malayan delegation noted this estimate and recognised that State resources under the proposed arrangements would be inadequate to reach this level of investment and that subject to the amount of financial aid which might be forthcoming additional funds from outside North Borneo would be required.

(12) The British delegation promised on behalf of the British Government that a grant of one and a half million pounds a year would be paid for five years after Malaysia Day towards the development of the Borneo States. This grant would be for the specific sum of one and a half million pounds a year and would not be to cover any gap in development finance. It would be taken into account at the ultimate financial settlement. How the grant was divided between the two Borneo States would be for the Government of Malaysia to decide. The British Government was extending this promise for five years on the basis that the Malayan Government was also extending aid for the same purpose for at least this period.

(13) Notwithstanding the provisions of Article 166(7) it was recognised that North Borneo and Sarawak would wish to specify certain property and assets they would wish to retain and discussions on this are proceeding. Where assets (including loans and investments) created from the proceeds of a State Government loan issue were retained by the State Government, the State Government would remain liable for the corresponding public debt. It was also accepted that Article 166 (7) of the Constitution should not be applicable to assets representing the unappropriated balances and reserves of North Borneo and Sarawak, which would remain State assets.

(14) Where State loan funds had been expended on what would become a Federal purpose on Malaysia Day the debt service charges should become a liability of the Federal Government except where the State concerned retained the asset in question under sub-paragraph (13).