By DayakDaily Team
KUCHING, April 6: Sabah has urged that negotiations on its 40 per cent federal revenue formula continue without delay, despite a Court of Appeal decision temporarily suspending the High Court’s order.
Minister in the Prime Minister’s Department (Sabah and Sarawak Affairs), Datuk Mustapha Sakmud, said the stay should not slow down or halt ongoing technical negotiations and data verification between the federal and State governments.
“I urge the Chief Secretary to the Treasury and the Sabah State Secretary to continue the calculations, data verification, and technical negotiations that have already begun.
“This process is complex and spans a long period, requiring detailed scrutiny of financial data and historical records.
“With the additional time provided by this stay, both parties now have more space to ensure that every aspect is handled thoroughly, transparently, and with integrity,” he said in a statement today.
Mustapha further said that the momentum built so far should be maintained and strengthened to ensure a fair and precise payment formula.
He added that this approach aligns with the Prime Minister’s directive to resolve the 40 per cent revenue issue in accordance with the Federal Constitution and in the interest of Sabah.
Under the Malaysia Agreement 1963 (MA63), Sabah and Sarawak are entitled to special fiscal arrangements, including a share of revenues derived from their territories, as outlined in Articles 112C and 112D of the Federal Constitution.
Sabah’s entitlement includes a constitutional 40 per cent share of federal revenue collected from the State. For more than five decades, the State received a smaller fixed payment, and periodic reviews of its share were often delayed or incomplete, leaving the full entitlement unrealised. Sarawak, while entitled to other financial arrangements under MA63, does not have a 40 per cent formula, with its allocations managed through special grants and periodic fiscal provisions.
On Oct 17, 2025, the Kota Kinabalu High Court delivered a landmark ruling affirming Sabah’s constitutional right to the full 40 per cent and ordered both governments to review the entitlement and work out amounts due, including arrears dating back to 1974.
However, the federal government filed an appeal, and on April 6, 2026, the Court of Appeal granted a temporary stay on the execution of the review process, saying the stay was justified due to special circumstances while the appeal is heard.
On Sarawak’s part, the State is negotiating with the federal government on a long-term formula for its Article 112D Special Grant. Sarawak proposed linking the grant to 20 per cent of its revenue, while interim allocations have increased from RM300 million in 2024 to RM600 million from 2025 for five years. The Ministry of Finance (MOF) and Sarawak Financial Secretary’s Office are leading technical discussions, aiming to ensure the grant reflects both constitutional obligations and the State’s fiscal needs. — DayakDaily
