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 Not Unitary

7. In view of the fact that all delegations acknowledge the desirability that all component States should retain their identity and autonomy, the possibility of Malaysia being formed as a unitary State was never considered.

Federation Defined

8. The Committee envisaged an association of several sovereign States with a central organ invested with powers directly over the citizens of the member State and in certain defined circumstances over the member States themselves. There would be a Central Government and also State Governments, but from the view-point of international law, the collection of States forming the Federation would be recognised as one Sovereign State within the family of nations.

Strong Central Government Vital

9. The Committee in the course of its deliberations has come to the conclusion that External Affairs, Defence and Security of Malaysia should be vested in the Central Government and it also supports the objective of an effective Central Government as vital to sustain Malaysia. Accordingly, the Committee arrives at the only logical answer that Malaysia should be in the form of a Federation. And, in view of the special problems relating to Singapore, the Committee appreciates the need for special arrangements for Singapore. It was agreed that, like Singapore, the three Borneo territories should have certain local safeguards—in the case of the Borneo territories, in respect of such subjects, for example, control of migration, Borneanisation and special provisions for taxation, customs and other fiscal matters to ensure that the less developed economy of the Borneo territories is not suddenly upset by the application of a unified Malaysian customs and excise duty and other national taxation but should only be made uniform gradually as the development of the economy of these territories progresses—but could otherwise be placed on equal footing with the other States of the present Federation of Malaya.

Wishes of People Respected

10. The Committee, of course, is of the opinion that whatever safeguards might be provided for the Borneo territories must conform with the expressed wish of the Borneo people themselves but that such arrangements should not prejudice the principle of a strong Central Government or curtail the fundamental liberties of the nationals of the Federation of Malaysia.

Singapore Plan

11. The Government notes with satisfaction the Heads of Agreement negotiated between the Governments of the Federation of Malaya and Singapore for the merging of the State in the Federation of Malaysia.

Status of Brunei

11a. The Committee recognises the fact that Burnei is a self-governing State and not a colony as in the case of Sarawak and North Borneo, that the Commission of Enquiry's jurisdiction does not extend to Brunei and that the State is competent to negotiate direct with the Governments of the United Kingdom and the Federation of Malaya.

Sovereignty

12. There is no doubt in the mind of the Committee that, from the international point of view, sovereignty rests with the Federation of Malaysia. Thd Committee accepts the principle that the Federation of Malaysia should have a constitutional Head of State and there is no reason to discontinue the system of the appointment of Yang di-Pertuan Agong. The sovereignty of the Ruler of each State of the Federation of Malaysia will be guaranteed. Within the concept of Malaysia the Sultan of Brunei will be eligible for nomination to be Supreme Head of the Federation while Sarawak and North Borneo will each have a Head of State. Each State will have a Constitution of its own and its powers defined.