KUALA LUMPUR, Oct 22 — Prime Minister Datuk Seri Anwar Ibrahim has rejected claims that the federal government exploits Sabah’s resources without reinvesting in the state.
He told the Dewan Rakyat today that federal expenditure under his administration has far exceeded Sabah’s revenue contributions.
“To suggest that the federal government only drains Sabah’s wealth without contributing to its development is misleading. Under the Madani government, we have significantly expanded funding and fiscal transfers to Sabah,” he said in Parliament here.
Anwar said total federal expenditure for Sabah has risen steadily, from RM13 billion in 2022 to RM14 billion in 2023 and 2024. The figure is expected to reach RM17 billion in 2025 and 2026, surpassing the state’s annual federal revenue contribution of around RM10 billion.
He said the government has also progressively raised Sabah’s special annual grant, from RM26.7 million before 2019 to RM53.4 million in 2021 and RM125.6 million in 2022.
“Under the Madani government, we doubled the allocation to RM300 million in 2023, and following the 2025 review, raised it again to RM600 million, which was fully disbursed to the Sabah government on September 10,” he said, adding that the amount is interim pending a new formula jointly developed by both governments.
On October 17, the Kota Kinabalu High Court ruled that the federal government acted unlawfully by failing to fulfil Sabah’s right to 40 per cent of federal revenue derived from the state for nearly 50 years.
The prime minister said the federal government respects the court’s decision and will study the judgment in full before taking further action, based on legal advice from the Attorney-General’s Chambers.
“We will examine the reasons for judgment carefully to ensure any follow-up measures are consistent with the Federal Constitution and the interests of both Sabah and Malaysia as a whole,” he said.
Anwar said the Madani government has also achieved notable progress on 13 outstanding issues under the Malaysia Agreement 1963 (MA63), including the transfer of electricity regulatory powers to the Sabah government and the recognition of Sabah’s technical departments as federal technical agencies.
“The Madani government has done more in two years to resolve long-standing MA63 issues than previous administrations. Our commitment remains to ensure fairness, fiscal inclusion, and progress for the people of Sabah.”
He added that Sabah’s development allocation under the 13th Malaysia Plan (13MP) has been raised to RM7 billion, the highest among all states.
It covers key projects such as the Kalabakan–Semanggaris Road, Southern Link power transmission line, Pan Borneo Highway Phase 1B, and Sabah water supply upgrades.
The prime minister also noted Sabah’s growing participation in the oil and gas industry through the Commercial Collaboration Agreement (CCA) signed in December 2021.
This had enabled local contractors to secure projects worth RM2 billion in 2024, alongside the state’s right to impose a sales tax on petroleum products, projected to generate RM2 billion annually.
