The Senate has approved a bill to increase federal grants to states based on population, marking the first rate revision in over two decades.
KUALA LUMPUR: The Dewan Negara today passed the Capitation Grant Bill 2026, which amends the rates of federal grants allocated to states based on their population for the first time in 24 years.
Deputy Finance Minister Liew Chin Tong said the proposed increase in rates based on the population structure would provide optimal benefits to all states.
He explained that the new structure would help less populous states with limited revenue while ensuring more populous states receive higher annual grant increases.
The rates for the first 100,000 persons will increase to RM102 per person from RM72, while the rates for the next 500,000 persons will rise to RM14 per person from RM10.20.
For the subsequent 500,000 persons, the rate increases to RM13.50 per person from RM10.80, and the rate for the remainder of a state’s population will be RM13 per person, up from RM11.40.
The bill was passed by a majority voice vote after being debated by 15 senators.
Liew stated that the decision to review the grant was a joint decision reached by the federal and state governments, with the participation of all state leaders.
“The review of this grant or law every 10 years is based on the findings of the Department of Statistics Malaysia’s studies carried out every decade,” he said in the Dewan Negara.
He added that the proposed amendment will also increase the amount of operating grants to states on a per capita basis, particularly benefiting less populous states.
“This allows these states to receive larger allocations for the number of people in the first tier group, though all states will still receive annual increases based on DOSM population projections,” he explained.
Liew also proposed that senators establish a Dewan Negara committee to review the direction of federalism and understand current issues.
The Act will come into force on April 1 and is expected to involve an additional expenditure of up to RM538 million.
