The North Borneo Federation, also known as Kalimantan Utara or North Kalimantan was a proposed political entity which would have comprised the British Colonies of Sarawak, British North Borneo (now known as the Malaysian state of Sabah) and the protectorate of Brunei.
By 1956, the governments of Sarawak, North Borneo, and the State of Brunei announced that they would abandon the Malayan dollar and adopt a common currency of their own,[1] but that never came into being.
The idea of the North Kalimantan was originally proposed by A. M. Azahari, who had forged links with Sukarno's nationalist movement, together with Ahmad Zaidi, in Java in the 1940s. The idea supported and propagated the unification of all Borneo territories under British rule to form an independent leftist North Kalimantan state.
Azahari personally favoured Brunei's independence and merging with British North Borneo and Sarawak to form the federation with the Sultan of Brunei as the constitutional monarch.
However, the Brunei People’s Party was in favour of joining Malaysia on the condition it was as the unified three territories of northern Borneo with their own Sultan, and hence was strong enough to resist domination by Malaya, Singapore, Malay administrators or Chinese merchants.[2]
The North Kalimantan (or Kalimantan Utara) proposal was seen as a post-decolonization alternative by local opposition against the Malaysia plan. Local opposition throughout the Borneo territories was primarily based on economic, political, historical and cultural differences between the Borneo states and Malaya, as well as the refusal to be subjected under peninsular political domination. Joining to form Malaysia was seen as a new form of colonialism under Malaya.
The basic concept behind the formation of a union of British Borneo was partly based upon the Federation of Rhodesia and Nyasaland in Southern Africa. After the defeat of the pro-democracy revolutionaries in the Brunei Revolt, the idea was put to rest. Had the federation been formed, the capital city would probably have been chosen from Kuching, Jesselton (present-day Kota Kinabalu) or Bandar Seri Begawan, the historical capital of the region.
The Sultanate of Brunei has traditionally opposed such a federation. When it was first proposed during the 1960s the Sultan of Brunei favoured joining Malaysia, though, in the end, disagreements concerning the nature of such a federation, and also disputes over oil royalties stopped this from happening.
Currently, there still remain groups of people who favor the creation of such an independent state and desire separation from the rest of Malaysia. These groups see union with Malaysia as being unfair to the people of Borneo, particularly Sabah, as the majority of the region's wealth goes to the Malaysian federal government. Only about 5% of the region's oil revenue goes to the state governments of Sabah and Sarawak.
Malaysian politics have usually been centred in Peninsular Malaysia, and critics see the federation neglecting the needs of East Malaysians. Some opposition parties in the Sarawak State Legislative Assembly have tried to promote a North Borneo federation. The matter was refused to be debated in the Assembly due to its sensitivity, by the coalition of governing parties in Sarawak, namely the Barisan Nasional led by Abdul Taib Mahmud.
In the Malaysian general election, 2008 the populations of both the East Malaysian states voted to keep the ruling Barisan Nasional coalition in power, which saw it lost support in its traditional Peninsular Malaysian strongholds. This has seen an increase in development in the two states.