KUALA LUMPUR: Federal development funds should be allocated according to a transparent formula that accounts for each state's needs and development gaps rather than political considerations, says an Opposition lawmaker.
Datuk Seri Dr Ahmad Samsuri Mokhtar (PN-Kemaman) said the formula should consider each state's fiscal needs, ability to generate its own revenue, infrastructure gaps, and differences in development and public service delivery costs.
"The fairness of funding should not be judged by the amount given alone, as some states have greater capacity than others to attract investments, build infrastructure and improve household incomes," he said during the Budget 2027 debate in the Dewan Rakyat on Thursday (Oct 15).
"Two states may receive the same allocation, but each has a different capacity to build infrastructure, attract investments and increase the income of its people."
Samsuri said the proposed mechanism should be transparent, consistent and based on actual needs, rather than relying solely on the Federal Government's discretion or political considerations.
He cited Australia, Canada and Germany as examples of countries with fiscal equalisation systems that use formulas to account for differences between states or regions.
"Malaysia already has provisions under Article 109 of the Federal Constitution, including capitation grants and the State Road Maintenance Grant, but there is room to strengthen existing mechanisms to better reflect current needs.
"For instance, capitation grants should not be determined by population alone, as the cost of providing basic facilities could also depend on a state's geographical size, population distribution and infrastructure development," he said.
Samsuri also questioned why a similar transparent and needs-based approach could not be considered for states in Peninsular Malaysia, given that fiscal arrangements for Sabah and Sarawak were being discussed under the Constitution and the Malaysia Agreement 1963.
He said a clear formula, regular reviews and public reporting could help narrow development disparities between states.
"The approach should be guided by the principles of fairness and the government's ability to deliver on its development commitments, particularly amid economic and geopolitical uncertainty," he said.
