40 Pct Special Grant Different From Other Allocations Received By Sabah — PM Anwar

KUALA LUMPUR, Nov 13 (Bernama) -- The special grant equivalent to 40 per cent of federal revenue derived from Sabah is treated separately and is not part of any other allocation stated in the state’s budget documents, Prime Minister Datuk Seri Anwar Ibrahim said. 

Anwar, who is also Finance Minister, said the federal budget is prepared based on fixed allocations according to the Federal, State and Concurrent Lists.

“However, what we’ve implemented (in Budget 2026) goes beyond those fixed allocations, such as electricity, the Pan Borneo Highway project, and initiatives through the Malaysian Communications and Multimedia Commission (MCMC).

“These alone amount to RM7 billion to RM8 billion. So, when considering the 40 per cent special grant, it’s important to view the budget in its entirety.

“That’s why ongoing discussions between the state and federal governments are vital, to ensure the arrangement aligns with the respective lists and responsibilities. Once decided, we can determine how the 40 per cent entitlement fits in,” he said during Minister’s Question Time in the Dewan Rakyat today.

He was responding to a supplementary question from Datuk Seri Takiyuddin Hassan (PN–Kota Bharu), who asked whether the special grant overlaps with other allocations received by Sabah and how net revenue is defined.

On the definition of revenue, Anwar said the Finance Ministry’s calculation includes direct and indirect taxes, non-tax revenue, and petroleum income.

He stressed that the assumption that 95 per cent of petroleum revenue goes to the Federal Government and only five per cent to the state is inaccurate.

“That’s not the case. The calculation is not that straightforward as it involves investment, debt and Petronas joint ventures. We are, however, open to sharing information during negotiations.

“For example, in 2024, direct taxes amounted to RM58 billion and indirect taxes RM1.5 billion. In terms of federal expenditure for Sabah, it was RM12 billion in 2021, RM17.3 billion in 2025, and RM17.6 billion in 2026 — the highest so far,” he said.

Anwar added that the Federal Government agrees with Sabah’s view that the 40 per cent special grant should be derived from revenue excluding the Federal Government’s direct responsibilities, to be finalised through mutual understanding and consensus.

-- BERNAMA