KUALA LUMPUR, Oct 22 — The Madani government has reaffirmed its commitment to enhancing Sabah’s prosperity by doubling the Federal Special Grant for the state to RM600 million in 2025, the highest amount recorded to date.
Prime Minister Datuk Seri Anwar Ibrahim said the full payment of RM600 million was channelled on September 10, following an agreement between the Federal and Sabah governments after a review was conducted in accordance with Article 112D of the Federal Constitution.
“The increase in the special grant rate to RM600 million is an interim measure, while both governments are formulating a new method to determine the calculation of the special grant in the future,” he said during a briefing on the Madani government’s stand on the Federal Special Grant for Sabah in the Dewan Rakyat today.
Anwar added that the review of the special grant rate is carried out periodically and was gazetted in 2022, 2023, and 2025, taking into account the Federal government’s financial position and the need to cover service costs in Sabah.
Previously, the special grant rate remained at RM26.7 million since 1969, before being raised to RM53.4 million in 2019, RM125.6 million in 2022, and RM300 million in 2023.
The review of the Federal Special Grant for Sabah was carried out based on three key principles, taking into account the Federal Government’s financial position and the need to cover service costs in Sabah, encompassing five years, with each gazettement also tabled in Parliament to ensure transparency in the process.
He said the Federal government expenditure for Sabah has continued to rise consistently under the Madani administration, reflecting the government’s commitment to ensuring balanced development between regions.
The actual Federal expenditure for the state amounted to about RM13 billion in 2022, rising to RM14 billion for both 2023 and 2024, and is projected to increase further to RM17 billion for 2025 and 2026.
“In reality, this expenditure far exceeds the total revenue collected in Sabah, which stands at around RM10 billion annually, including the five per cent petroleum cash payment and other direct and indirect taxes.
"This shows that the Madani government has spent more than the total revenue generated in Sabah,” Anwar said.
Earlier during the session, the Prime Minister said the Federal government has taken note of the Kota Kinabalu High Court’s decision on October 17 regarding the review of the Federal Special Grant to Sabah.
He said the Madani government respects the legal process and will study the court’s written judgment before taking any further action based on the Attorney-General’s advice in the best interest of Sabah and Malaysia as a whole.
“The High Court’s decision stands, and none of my statements contradict it. The decision will, of course, be taken seriously by the Federal government, and we will await the Sabah government’s position following the upcoming state election,” Anwar said.
The Kota Kinabalu High Court had, among other things, directed the Federal government to conduct a joint review with the Sabah government under Article 112D of the Federal Constitution to give effect to Sabah’s 40 per cent revenue entitlement.
However, he said the decision has led to misleading interpretations, as if the Federal government merely collects revenue from Sabah without contributing to its development.
“In respecting the ongoing legal process, the Federal government cannot at this stage disclose details of matters still under judicial consideration.
“Today, to refute such accusations, I want to outline the broader framework of the Madani government’s commitment to Sabah’s development,” said Anwar.
Speaking in his capacity as Finance Minister, Anwar noted that under Budget 2026, Sabah's development allocation has increased to almost RM7 billion, the highest among all states.
Several key projects listed under the 13th Malaysia Plan (13MP) address the priorities outlined by the Sabah government, including the Sabah Heart Centre in Kota Kinabalu (RM125 million), the Kalabakan-Simanggaris Road (RM416 million), and the Southern Link Phase 1A Electricity Transmission Line (RM200 million).
In addition, the Madani government has also resumed implementation of the Pan Borneo Highway Sabah Phase 1B project, with a total cost of RM14 billion, comprising RM5 billion in development allocation and RM9 billion in loans.
“Since 2024, the government has also provided RM1 billion in financing for Sabah’s water projects, which are expected to be completed next year,” he said.
