Kuala Lumpur: The Federal Government remains committed to resolving the long-standing issue of Sabah’s Special Grant by ensuring that the proposed RM1.5 billion annual interim payment is implemented in accordance with the Federal Constitution and through mutual agreement between the Federal Government and the Sabah State Government.
The assurance was given by Minister in the Prime Minister’s Department (Sabah and Sarawak Affairs), Datuk Seri Mustapha Sakmud, in a written reply to a question from Ranau MP Datuk Jonathan Yasin during the Dewan Rakyat sitting.
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Jonathan had sought clarification on the Government’s proposal to provide an interim Special Grant of RM1.5 billion annually to Sabah, questioning whether the arrangement complied with Articles 112C and 112D of the Federal Constitution, which govern the State’s entitlement to 40 per cent of federal revenue collected in Sabah.
In its reply, the Government stressed that negotiations on Sabah’s Special Grant continue through the Malaysia Agreement 1963 Implementation Action Council (MTPMA63), taking into account the constitutional formula relating to 40 per cent of federal revenue derived from Sabah while ensuring full compliance with Article 112D of the Federal Constitution.
The Ministry explained that reviews of Sabah’s Special Grant were carried out in 2022, 2023 and 2025 through Orders issued by the Yang di-Pertuan Agong, following agreements reached between the Federal and Sabah governments before being tabled in Parliament.
The reviews were described as lawful and consistent with constitutional provisions.
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According to the Government, Sabah’s Special Grant remained at RM26.7 million annually until 2021, before being increased to RM125.6 million in 2022 following the first review.
Under the Madani Government, the grant was further increased to RM300 million beginning in 2023, before being raised again to RM600 million in 2025, reflecting a phased approach agreed upon by both governments.
The Ministry also confirmed that Prime Minister Datuk Seri Anwar Ibrahim announced on May 30 the Federal Government’s proposal to further increase Sabah’s Special Grant to RM1.5 billion for 2026.
It stressed that the proposal does not contravene the Federal Constitution, provided all prescribed legal procedures are completed.
The Ministry explained that the existing Order relating to the Special Grant under Article 112D would need to be amended and gazetted following agreement between both governments.
The revised Order would replace the current constitutional instrument governing Sabah’s Special Grant and would remain in force for a period of five years or longer, subject to mutual consent.
The Government added that payment of the revised Special Grant will commence once the gazettement process is completed, expressing confidence that all legal and administrative procedures can be finalised before the end of 2026.
The written reply provides the clearest indication yet that the Federal Government intends to honour its commitment to substantially increase Sabah’s Special Grant while adhering to constitutional requirements.
For Sabah, the proposed RM1.5 billion allocation represents another significant step in ongoing efforts to strengthen fiscal rights under the Malaysia Agreement 1963 and the Federal Constitution.
