153. Having described the main features or the arrarigeineitts which we recommend for the transitional period. it remains to consider oonistitutional proposals which would provide the framework within which these arrangements could operate smoothly and could move forward progressively towards the full realisation of Malaysia. We recommend that on the creation of Malaysia, the United Kingdom should by Agreement surrender sovereignty over the two territories, which would be admitted as States of the new Federation. At this stage agreement would be reached as to the ultimate division of powers between the Federal Government and the Governments of the two States and we have made certain recommendations on the subject in paragraph 157 below. The Federal Government would at once assume responsibility for Defends, External Affairs and Internal Security (anti-subversive aspects). By Agreement, powers and functions in respect of all other matters that are ultimately to be allocated to the Federal List or the Concurrent List would be delegated to the new States for a specified period of from three to seven years. During this transitional period the new States would by Agreement between the United Kingdom and the Federation be administered by a Governor to be appointed by His Majesty the Yang di-Pertuan Agong, on the joint nomination of His Majesty and of Her Majesty The Queen, under transitional State Constitutions. These Constitutions would allow for rapid progress towards a full Ministerial system of responsible govenment with a constitutional Head of State, and would be replaced at the end of the transitional period by permanent Constitution on the lines of those provided for Penang and Malacca.
154. Turning now to the shape of long-term arrangements after the transitional period, we consider that the aim should be to strike a balance in the common interest between two conflicting requirements on the one hand, the Federal Parliament must have sufficient powers to ensure alignment of policies in matters essential to the creation and maintenance of a real and strong Federation. On the other hand, the Borneo territories should be enabled to maintain their separate identities within the Federation, Racial and other problems in the two territories are quite different from those in Malaya, and distances are so great as to make day-to—day administration from the Federal centre impracticable and undesirable.
155. Whatever the division of formal and legal powers between Federation and State. the practical administration of Federal subjects must largely be carried out on the spot. We recommend that the Joint Committee, whose appointment we have suggested in paragraph 152(f), should oonsider the desirability or regionalising the more important of the Federal posls and services in the Borneo territories. We believe that there may be a strong case for certain Federal Departments having a regional head in Borneo with sufficient authority to deal with local problems. In this connexion a suggestion has been made to us that in due course the Federal Government should appoint a Minister for Borneo affairs with a general responsibility for Federal subjects in the two territories on the analogy of the Secretary of State for Scotland; this suggestion seems to its to merit serious consideration.
156. Many witnesses have insisted that the Borneo territories should not join just as two States of the new Federation but in some way which would give more recognition to their identities and to their comparative size. We agree that it is
