Putrajaya, Sabah agree on 4.7-fold increase in special grant

The value of the new special grant for Sabah has been increased 4.7-fold from RM26.7 million to RM125.6 million for 2022, Prime Minister Ismail Sabri Yaakob and Sabah Chief Minister Hajiji Noor said in a joint statement today.

The amount will continue to increase every year for the period of 2023-2026 based on the rate mutually agreed on by both parties.

The amount was increased after the federal and state governments reached an agreement on the review of the special grant to Sabah under Article 112D of the Federal Constitution today, following discussions and negotiations by the finance ministry and the Sabah government, with most of the terms agreed to on Feb 14.

The last review before this was in 1969.

The new agreement also covers other matters, including the continuation of negotiations by the federal and state governments on the 40% revenue claim by Sabah.

This is to settle on a new amount for the special grant that can balance Sabah’s needs without affecting the federal government’s financial position.

“If a new amount is agreed to by both parties before 2026, then the new amount will be used to replace the special grant payment for Sabah starting 2022,” the statement said.

It added that the agreement was made without prejudice to the obligations and rights of the federal and Sabah governments to continue reviewing the special grant under Article 112D of the Federal Constitution, by taking into account the financial position of the federal government and the needs of the Sabah government.

It said the Sabah government also had the right to rely on the original formula as stated in Article 112C and Part IV of the Tenth Schedule of the Federal Constitution.

Implementation of the review on the special grant includes the right of both the federal government and the Sabah government to refer the matter to an independent assessor if no agreement is reached, as stated in Article 112D (6) of the Federal Constitution.

The federal and Sabah governments also agreed to provide data and information on the financial position of the federal government, as well as the needs of the Sabah government pertaining to the cost of state services, which will be taken into account when reviewing the special grant.