PM doubles interim payments to Sabah and Sarawak to RM600mil each starting 2025

KOTA KINABALU: Prime Minister Datuk Seri Anwar Ibrahim has agreed to double the interim payment of RM300mil to Sabah and Sarawak following discussions with Borneo States leaders.

Disclosing this after the Malaysia Agreement 1963 (MA63) implementation action council meeting held for the first time in Kota Kinabalu, Deputy Prime Minister Datuk Seri Fadillah Yusof said Sabah and Sarawak will each get RM600mil starting 2025.

The Prime Minister will include the interim payment provisions under Budget 2025 to be tabled later this year, he told reporters after a two-hour meeting on Thursday (Sept 12).

The interim payment was agreed upon while negotiations are ongoing on the formula to return Sabah’s 40% net revenue owed to the state.

A new rate of RM125.6mil was agreed on in 2022, which was enforced through the gazetting of the Federal Constitution (Review of special grant under Article 112D) (State of Sabah state) Order 2022 dated April 20, 2022, for five years.

This replaced the old grant rate amounting to RM26.7mil, which had been gazetted on Sept 18, 1970, as provided under the Sabah Special Grant (First Review) Order 1970.

The special grant for Sabah was raised further to RM300mil for 2023 through the gazetting of Federal Constitution (Review of special grant under Article 112D) (State of Sabah) Order 2023 on Nov 24, 2023.

Asked how the Sabah Chief Minister and Sarawak Premier felt about the increase in interim payment, Fadillah said Sabah and Sarawak took it with open arms as they came up with a formula on the 40%.

He said as to how Sabah and Sarawak plan to use the allocation, it would be up to the two states to decide.

This technical committee attended by Sabah Chief Minister Datuk Seri Hajiji Noor and Sarawak Premier Tan Sri Abang Johari Openg also agreed for a high level discussion on the two Borneo states’ claim including the return of the continental shelf under the Territorial Sea Act 2012, royalties and stamp duty among other things.

Fadillah said these matters are in the ‘agree to disagree’ category, or that cannot be decided.

“This will be brought to the highest level, to be discussed among the three highest leaders, namely the Prime Minister, the Sarawak Premier and the Sabah Chief Minister.

Fadillah said the continental shelf is among the issues which cannot be resolved in the committee and be discussed at a higher level and updated in three months’ time.

He said many matters were technical issues which cannot be resolved at technical committee level as it involves different legal approaches from the Federal and state governments.

For example, he said the stamp duty on land sales is viewed by Sabah and Sarawak as state jurisdiction whereas the Federal government looks at it as an instrument of sale which comes under their jurisdiction.

“At the end of the day, the Federal government will be guided by the Attorney General and the state will be by the respective state AGs,” Fadillah said.

He said PM Anwar has achieved a lot during this short period of time, including recognising the Sabah and Sarawak works departments as a technical department, returning of the regulatory power for gas supply, amendment of Inland Revenue Board Act 1995 to appoint representatives from Sabah and Sarawak as permanent board members and return of the Sabah Electricity Sdn Bhd to the state.

He also saw the handing over of powers in the administration of the judiciary body in the two states.

On the issue of handing over of education and health powers to the state director, he said education matters were already handed to Sarawak, but still in discussion for Sabah.