The bill revises state grant rates for the first time in 24 years, aiming for fairer distribution with an additional RM538 million in federal funding.
KUALA LUMPUR: The Dewan Rakyat has passed the Capitation Grant Bill 2026, revising federal funding to states based on population for the first time in 24 years.
Deputy Finance Minister Liew Chin Tong said the bill marks a starting point for more regular reviews every decade.
The legislation increases per-person grants to ensure less-populated states receive appropriate support while more-populated states get higher allocations.
It is expected to involve additional federal expenditure of up to RM538 million.
Liew clarified that this bill is unrelated to the separate issue of a special grant for Sabah based on 40% of state revenue.
“This is because the bill only reviews the population-based grant rates,” he said.
The act, which will take effect on April 1, requires the repeal of the existing Capitation Grant Act 2002.
Part 1 of the Tenth Schedule of the Federal Constitution also needs amending to implement the new rates.
Liew described the proposed legislation as administrative in nature during the bill’s second and third readings.
The bill was approved by a majority after he presented it to the house.
