KUALA LUMPUR: The federal government has assured that the RM1.5 billion increase in Sabah’s interim special grant will not reduce the state’s operating and development allocation ceiling under this year’s federal budget.
Deputy Finance Minister Liew Chin Tong said the increase in the special grant for Sabah announced by Prime Minister Datuk Seri Anwar Ibrahim in May would not affect funding for development projects and basic facilities in the State.
He said the federal government would continue to prioritise development expenditure in Sabah through various projects carried out by federal ministries and departments to ensure balanced development between the state and Peninsular Malaysia.
Liew said this during the Special Chamber session at the Dewan Rakyat on Tuesday in response to a question from Isnaraissah Munirah Majilis (Warisan-Kota Belud) on the increase in Sabah’s Special Grant payment to RM1.5 billion, its payment procedures and methods, as well as Article 112C of the Federal Constitution.
He said Sabah’s development allocation had increased from RM6.7 billion to RM6.9 billion this year, covering projects such as the Pan Borneo Highway, rural roads, rural electricity and water supply, as well as the construction and upgrading of hospitals, clinics, dilapidated schools and police stations.
In addition, Liew said the Federal Government would continue providing electricity supply subsidies to Sabah, even though regulatory powers over electricity supply had been handed over to the state government in 2024, with the subsidy allocation for 2026 expected to reach RM880 million.
He said the allocation for rural water supply had increased from RM103.5 million in 2025 to RM143 million this year, while cost-of-living assistance through the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) schemes for Sabah was estimated at RM1.2 billion.
Commenting on the payment of the new special grant, Liew said the federal government and the Sabah state government must follow the process and procedures stipulated under Article 112D of the Federal Constitution, similar to those implemented in 2022, 2023 and 2025.
Liew stressed that the federal government respected the principle of special grants to Sabah as provided under Article 112C of the Federal Constitution, despite filing an appeal against some aspects of the Kota Kinabalu High Court’s ruling on the matter.
He said the government was committed to continuing negotiations with the Sabah state government to establish a new mechanism for determining the amount of special grants in the future, in accordance with Articles 112C and 112D of the Federal Constitution.
