Sabah’s state government requires RM7.97 billion for expenditure but expects only RM6.4 billion in revenue, adopting prudent financial management.
KOTA KINABALU: The Sabah state government requires RM7.97 billion for this year’s operating and development expenditure, but expects to generate only about RM6.4 billion in revenue, the State Legislative Assembly was told today.
Deputy Chief Minister II Datuk Seri Masidi Manjun said although expenditure needs exceeded projected revenue, the Finance Ministry had adopted a prudent approach to preparing the 2026 Budget by ensuring spending did not exceed the state’s financial capacity.
The Sabah Finance Minister said the government had adhered to the principle of “spend what you have, not what you don’t have”, allowing the state’s reserves to grow to more than RM7 billion at the end of last year.
“On requests for additional funding, the government applies the same approach, taking the latest revenue projections into consideration before deciding on the amount to be recommended,” he said in his winding-up speech on the Supplementary Supply Bill 2026.
Masidi said the Finance Ministry was also prepared to provide a special briefing to all state assembly members, particularly newly elected representatives, on Sabah’s budget and financial management to improve their understanding of the state’s various government accounts, budgetary discipline and overall financial management principles.
He said the government had also increased the development allocation ceiling under the 13th Malaysia Plan (13MP) to RM12 billion over five years, compared with RM4 billion under the 12MP.
He said supply expenditure remained higher because most government assets, including buildings, roads, bridges, drainage systems, slopes, water pipes and sewerage systems, had entered the maintenance phase and would continue to be maintained until they were due for upgrading.
Meanwhile, Masidi said delays affecting development projects were largely due to a combination of factors, such as contractors’ cash flow management capabilities, unexpected technical challenges, including unstable soil conditions that require additional engineering work, and delays in relocating utilities.
Meanwhile, he said the additional RM170,000 allocation for Daily Paid Workers (PSH) under the Finance Ministry will cover employment costs for PSH appointments and the 2026 Special Financial Assistance, to ensure the ministry’s day-to-day operations run smoothly.
Masidi said the state government had set a minimum dividend payment target of 10% of after-tax profits for government-linked companies in which it holds equity stakes, taking into account their financial standing, operational requirements and development plans.
Masidi said the RM10 million allocation for the water concession was intended to settle part of the arrears owed to Jetama Sdn Bhd, in accordance with the Privatisation Concession Contract Agreement and the signed settlement agreement.
“Under the settlement agreement, the state government’s arrears will be paid in stages over the period from 2013 to 2033, depending on its fiscal capacity and current financial position,” he said, adding that Jetama Sdn Bhd must continue providing bulk water supply services and meet its obligations under the agreement.
