PUTRAJAYA, April 15 – The Federal Government and the Sabah State Government have successfully reached a consensus on the review of special grants to the State of Sabah under Article 112D of the Federal Constitution today.
This is a follow -up to several discussions and negotiations held by the Ministry of Finance and the Sabah State Government, with most of the terms agreed on 14 February 2022. This agreement is also an important sign as the last time the review was done was in 1969. This new review agreement includes the following:
(a) The amount of new special grants to the state of Sabah is increased by 4.7 times from RM26.7 million to RM125.6 million for 2022, and the amount will continue to increase annually for the period 2023-2026 according to the mutually agreed rate of increase; and
(b) At the same time, the Federal Government and the Sabah State Government will continue to negotiate on the claim of 40% of Sabah State revenue and conduct a review of special grants under Article 112D of the Federal Constitution to obtain a new special grant amount that can offset state needs. Sabah without affecting the financial position of the Federal Government. If a new amount agreed by both parties is successfully reached before 2026, then the new amount will be used to replace the special grant payment to the state of Sabah starting in 2022.
(c) This Agreement is without prejudice to the obligations and rights of the Federal Government and the State Government of Sabah to special grants under Article 112D of the Federal Constitution taking into account the financial position of the Federal Government as well as the requirements of the Sabah State Government in relation to the cost of State services.
The Sabah State Government also reserves the right to rely on the original formula as stated in Article 112C and Part IV of the Tenth Schedule of the Federal Constitution. The implementation of this special grant review includes the right of both the Federal Government and the Sabah State Government to refer the matter to an independent assessor (if no agreement is reached) as stated in Article 112D (6) of the Federal Constitution.
(d) Both the Federal Government and the Sabah State Government will provide data and information on the financial position of the Federal Government as well as the requirements of the Sabah State Government in relation to the cost of State services to be taken into account in the process of reviewing the special grant.
The successful agreement between the Federal Government and Sabah State Government symbolizes the spirit of the Malaysian Family, the Federal Government’s commitment under the Federal Constitution and the 1963 Malaysia Agreement to the Sabah State Government and the Sabah State Government’s concern for the role and ability of the Federal Government to bring development and prosperity to Sabah. .
Our appreciation to the Federal Government delegation led by the Minister of Finance of Malaysia and the Sabah State Government delegation led by the Minister of Finance II Sabah for this historic achievement.