PM Anwar clarifies Sabah’s 40% special grant is treated separately from other federal allocations, with ongoing discussions to finalise revenue calculations.
KUALA LUMPUR: The special grant equivalent to 40% of federal revenue derived from Sabah is treated separately from other allocations in the state’s budget documents.
Prime Minister Datuk Seri Anwar Ibrahim clarified that the federal budget is prepared based on fixed allocations according to the Federal, State and Concurrent Lists.
He explained that additional initiatives implemented in Budget 2026 go beyond these fixed allocations.
“These include electricity, the Pan Borneo Highway project, and initiatives through MCMC,” Anwar said during Minister’s Question Time in the Dewan Rakyat.
He noted these additional allocations alone amount to RM7 billion to RM8 billion.
The prime minister stressed the importance of viewing the budget in its entirety when considering the 40% special grant.
“Ongoing discussions between the state and federal governments are vital to ensure the arrangement aligns with respective lists and responsibilities,” he added.
Anwar was responding to a supplementary question from Datuk Seri Takiyuddin Hassan regarding potential overlaps between the special grant and other allocations.
On revenue definition, Anwar said the Finance Ministry’s calculation includes direct and indirect taxes, non-tax revenue, and petroleum income.
He clarified that the assumption of 95% of petroleum revenue going to the Federal Government with only 5% to the state is inaccurate.
“The calculation is not that straightforward as it involves investment, debt and Petronas joint ventures,” he explained.
Anwar revealed that direct taxes amounted to RM58 billion and indirect taxes RM1.5 billion in 2024.
Federal expenditure for Sabah reached RM12 billion in 2021, increasing to RM17.3 billion in 2025 and RM17.6 billion in 2026.
The Federal Government agrees that the 40% special grant should be derived from revenue excluding the Federal Government’s direct responsibilities.
This arrangement will be finalised through mutual understanding and consensus between both governments. – Bernama
