KUALA LUMPUR: The Federal Government and Sabah have begun negotiations to determine how the 40% special grant will be calculated, including the development of a new formula for the state’s future entitlement, says Datuk Seri Anwar Ibrahim.
The Prime Minister said discussions are already underway between Putrajaya and the Sabah government under Article 112 of the Federal Constitution to review the amount of the special grant and to “formulate a new method that determines future calculations,” taking into account Sabah’s rising service costs and the federal government’s fiscal responsibilities.
Anwar, who is also Finance Minister, said the negotiations follow the Kota Kinabalu High Court’s Oct 17 ruling on the matter.
Putrajaya, he added, has chosen not to appeal the decision, which affirmed Sabah’s constitutional right to receive 40% of the net revenue collected by the federal government from the state.
“We respect the principle of this Special Grant as enshrined under the Federal Constitution,” Anwar said in a written parliamentary reply on Monday (Nov 24), adding that the government acknowledges both the ruling and the spirit of the constitutional provision.
He stressed that while talks on the 40% grant are ongoing, Putrajaya has also continued to improve other forms of federal allocations to state governments.
These include raising the development-based Tahap grant to RM400mil annually from 2023, increasing funds for state road maintenance to RM5.20bil in 2023, RM5.36bil in 2024 and RM5.49bil in 2025, and expanding the Ecological Fiscal Transfer from RM150mil in 2023 to RM250mil in 2025.
Other enhancements involve a revised Pemberian Mengikut Bilangan Orang (per capita federal grant) starting 2026 and updated Treasury guidelines governing federal-state financial processes, including circulars on state involvement in federal projects, the Tahap mechanism, road-maintenance procedures and deficit grants.
Anwar said the federal government remains committed to providing grants and financial allocations in line with constitutional requirements and to ensuring equitable development across all states.
“The federal government supports development, welfare and social programmes in every state, returning revenue through federal grants and annual budget allocations approved by Parliament,” he said.
