By DayakDaily Team
KUCHING, Oct 22: Prime Minister Datuk Seri Anwar Ibrahim today said that the recent Kota Kinabalu High Court decision on Sabah’s 40 per cent federal revenue entitlement has led to misleading interpretations suggesting that the federal government merely “siphons” the state’s revenue without contributing to its development.
Delivering a special explanatory statement in Parliament today, Anwar said that the federal government respects the judicial process and will carefully review the High Court’s reasoning once the full judgment is received before taking further action on the advice of the Attorney General for the benefit and interest of Sabah and Malaysia as a whole.
“The High Court of Kota Kinabalu, among others, directed the federal government to conduct a review together with the Sabah government under Article 112D of the Federal Constitution to give effect to the 40 per cent entitlement.
“The decision has invited misinterpretations as though the Federal Government only drains Sabah’s revenue without giving back to the state,” he said.
Refuting the false allegations, Anwar affirmed that the Madani government has consistently demonstrated strong commitment to Sabah’s growth through increased allocations, infrastructure investment, and fiscal reform in line with the Malaysia Agreement 1963 (MA63).
Outlining the broader context, he said the Madani government remains steadfast in fulfilling all constitutional obligations to Sabah and has made “positive progress” in resolving issues tied to MA63.
“To date, 13 MA63 claims have been resolved, including the transfer of electricity regulatory authority to the Sabah government, while the government continues to provide RM1.2 billion to ensure electricity supply sustainability, the recognition of state technical departments under federal treasury instructions, and the appointment of Sabah’s permanent representative to the Inland Revenue Board,” he explained.
On the Federal Special Grant under Article 112D of the Federal Constitution, Anwar detailed that the amount, unchanged at RM26.7 million since 1969, has been progressively revised upward through mutual agreements with the Sabah government in recent years.
The grant was doubled to RM53.4 million in 2019, increased again to RM125.6 million in 2022, and further raised to RM300 million in 2023.
“In 2025, we agreed once more to double the rate to RM600 million, which has already been fully disbursed to the Sabah Government on Sept 10,” Anwar said, describing the amount as an interim rate pending the formulation of a new long-term calculation model.
He also underscored that federal spending in Sabah has far exceeded revenue collected in the state, pointing out that while total annual revenue from Sabah averaged around RM10 billion between 2022 and 2024, actual federal expenditure reached RM13 billion in 2022, RM14 billion in 2023 and 2024, and is projected to hit RM17 billion in 2025 and 2026.
“Including 5 per cent petroleum cash payments and other direct and indirect taxes, this means the Madani government has spent more than the total revenue generated in Sabah,” he said.
For the upcoming Budget 2026, Anwar stressed that the development allocation for Sabah is set to approach RM7 billion, the highest among all Malaysian states, with key projects such as the Sabah Heart Centre in Kota Kinabalu (RM125 million), the Kalabakan–Simanggaris Road (RM416 million), and the Southern Link Phase 1A power transmission line (RM200 million).
He added that the government has revived the Pan Borneo Highway Sabah Phase 1B project worth RM14 billion, and allocated RM1 billion since 2024 for Sabah’s water supply projects, expected to be completed next year.
The Prime Minister also reaffirmed federal support for Sabah’s oil and gas industry under the Commercial Collaboration Agreement (CCA) signed in December 2021, which has since seen Sabah-based contractors secure projects worth RM2 billion in 2024. Additionally, he noted that the federal government has allowed Sabah to impose its own sales tax on petroleum products, generating an estimated RM2 billion in revenue since 2022.
“The Madani government has made every effort to resolve outstanding MA63 claims, increase the Special Grant to Sabah, and raise annual operating and development allocations for the well-being of Sabahans,” he said.
He concluded that Putrajaya’s efforts are ongoing to ensure that all constitutional obligations to Sabah are met, while refining the Special Grant formula to better reflect the state’s service needs and the federal government’s fiscal capacity.
“This is the determination of the Madani government, and like our other promises, it will be realised,” he affirmed. — DayakDaily
