Record RM600mil special grant underscores govt’s commitment to Sabah, says PM

KUALA LUMPUR: The Madani government has reaffirmed its commitment to enhancing Sabah’s prosperity by doubling the Federal Special Grant for the state to RM600mil in 2025, the highest amount recorded to date.

Prime Minister Datuk Seri Anwar Ibrahim said the full payment of RM600mil was channelled on Sept 10, following an agreement between the Federal and Sabah governments after a review was conducted in accordance with Article 112D of the Federal Constitution.

“The increase in the special grant rate to RM600mil is an interim measure, while both governments are formulating a new method to determine the calculation of the special grant in the future,” he said during a briefing on the Madani government’s Stand on the Federal Special Grant for Sabah in the Dewan Rakyat on Thursday (Oct 22).

Anwar said the review of the special grant rate is carried out periodically and was gazetted in 2022, 2023 and 2025, taking into account the Federal Government’s financial position and the need to cover service costs in Sabah.

Previously, the special grant rate remained at RM26.7mil since 1969 before it was raised to RM53.4mil in 2019, RM125.6mil in 2022, and RM300mil in 2023.

Anwar said the review of the Federal Special Grant for Sabah was carried out based on three key principles – taking into account the Federal Government’s financial position and the need to cover service costs in Sabah, encompassing five years, with each gazettement also tabled in Parliament to ensure transparency in the process.

He said federal government expenditure for Sabah has continued to rise consistently under the Madani administration, reflecting the government’s commitment to ensuring balanced development between regions.

The Prime Minister said the actual federal expenditure for the state amounted to about RM13bil in 2022, rising to RM14bil for both 2023 and 2024, and is projected to increase further to RM17bil for 2025 and 2026.

“In reality, this expenditure far exceeds the total revenue collected in Sabah, which stands at around RM10bil annually, including the 5% petroleum cash payment and other direct and indirect taxes. This shows that the Madani government has spent more than the total revenue generated in Sabah,” he said.

Earlier in the session, Anwar said the Federal Government had taken note of the Kota Kinabalu High Court’s decision on Oct 17 regarding the review of the Federal Special Grant to Sabah.

He said the Madani government respects the legal process and will study the court’s written judgment before taking any further action based on the Attorney General’s advice in the best interest of Sabah and Malaysia as a whole.

“The High Court’s decision stands, and none of my statements contradict it. The decision will, of course, be taken seriously by the Federal Government, and we will await the Sabah government’s position following the upcoming state election,” he said.

The Kota Kinabalu High Court had, among other things, directed the Federal Government to conduct a joint review with the Sabah Government under Article 112D of the Federal Constitution to give effect to Sabah’s 40% revenue entitlement.

However, the Prime Minister said the decision has led to misleading interpretations, as if the Federal Government merely collects revenue from Sabah without contributing to its development.

“In respecting the ongoing legal process, the Federal Government cannot at this stage disclose details of matters still under judicial consideration.

“Today, to refute such accusations, I want to outline the broader framework of the Madani government’s commitment to Sabah’s development,” Anwar said.

Anwar, who is also Finance Minister, said that under Budget 2026, development allocation for Sabah has increased to almost RM7bil, the highest among all states.

He said several key projects listed under the 13th Malaysia Plan (13MP) take into account the priorities outlined by the Sabah government, including the Sabah Heart Centre in Kota Kinabalu (RM125mil), the Kalabakan-Simanggaris Road (RM416mil) and the Southern Link Phase 1A Electricity Transmission Line (RM200mil).

In addition, he said the Madani government has also resumed implementation of the Pan Borneo Highway Sabah Phase 1B project, with a total cost of RM14bil, comprising RM5bil in development allocation and RM9bil in loans.

“Since 2024, the government has also provided RM1bil in financing for Sabah’s water projects, which are expected to be completed next year,” he said. – Bernama

SABAH SWAK

COMP

Parliament, Anwar Ibrahim, Sabah, Special Grant, Budget 2026