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Thursday, September 21, 2000
Malaysia: Government To Defend Oil Non-Payment

by Iqbal Ragataf

SINGAPORE (Islam Online) - The stage is set in Malaysia for another showdown between the ruling National Front (BN) and the Islamic government of Terengganu.

The federal government's cancellation of an oil royalty payment to the state government of Terengganu will be contested in court, the Party Islam Se-Malaysia hinted.

Prime Minister Mahathir Mohamad said the Federal Government would defend itself in court if Terengganu sues over the change in special payments.

"They [PAS] are entitled to take legal action and we will defend ourselves,'' he said.

Mahathir said he was not aware of what "rights'' Terengganu had to obtain the special payments on oil.

"We are convinced we have every right not to give these special payments. It's a kind of gift that is not an oil royalty although this has been done on a regular basis,'' he said.

Tun Salleh, ex-lord president of the Malaysian Supreme Court, recently declared that the payments made to Terengganu were considered royalty under the regime of Prime Minister Tun Razak. Tun Salleh said he drafted the agreement 25 years ago.

The Chief Minister of Terengganu, Abdul Hadi Awang, refused to acknowledge the federal decision to change the special cash payments for the state to development projects. He earlier said this change of decision was un-democratic and did not respect the idea of federalism.

He also said the PAS would charge the federal government in court for violations of the contract signed 25 years ago by the Malaysian federal government and state government of Terengganu, then under BN rule.

"The cancellation of the agreement is tantamount to a violation of a contract. Both Petronas - [the national Oil Company] - and the federal government must be charged in an International Court" a PAS official told Islam Online.

The official added that the decision by the Mahathir government is not surprising and was a way for the aging Prime Minister to get back at PAS for wrestling Terengganu from BN's absolute rule since the 1960s.

"Kelantan suffered the same wrath from Mahathir who refused to grant the normal official Federal government loans and advances when the state reverted to PAS rule in 1990," the PAS member said.

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