KUALA LUMPUR: The Federal Government has progressively increased Sabah’s interim special grant from RM125.6 million in 2022 to RM1.5 billion in 2026, reflecting its continued commitment to raising financial allocations to the state amid ongoing discussions over Sabah’s constitutional revenue rights.

The latest increase, announced by Prime Minister Datuk Seri Anwar Ibrahim on May 30, 2026, follows a series of upward revisions over the past five years, with the grant rising to RM300 million in 2023 and RM600 million in 2025 before reaching RM1.5 billion this year.

In a parliamentary response to Tuaran MP Datuk Seri Panglima Madius Tangau, the government said the increases followed agreements between the Federal Government and the Sabah state government to raise the interim special grant progressively.

Of the RM1.5 billion allocated for 2026, RM600 million was paid directly to the Sabah government on June 12, while the remaining RM900 million will be disbursed once a new Special Grant Order under Article 112D of the Federal Constitution comes into force.

The Federal Government said it was committed to completing the necessary legal and administrative procedures, including drafting and gazetting the new order, to enable the outstanding payment to be made within 2026.

The new order will replace the existing Special Grant Order for Sabah issued in 2025 and will be based on an agreement between the Federal Government and the Sabah administration for a period of five years or longer.

The government’s latest commitment comes against the backdrop of Sabah’s contribution to federal revenue. Revenue collected in the state in 2022, 2023 and 2024 was estimated at approximately RM10 billion annually, including the five per cent cash payment from petroleum revenue and other direct and indirect taxes.

However, the progressive increases in the interim grant are separate from the broader issue of Sabah’s constitutional entitlement to 40% of net federal revenue derived from the state.

The Federal Government reaffirmed its commitment to continuing negotiations on the special grant through the Malaysia Agreement 1963 Implementation Action Council (MTPMA63), in accordance with Articles 112C and 112D of the Federal Constitution.

Madius had sought details on federal net revenue derived from Sabah between 2022 and 2025, the amount of special grants paid, the calculation methodology and the timeline for implementing Sabah’s 40% entitlement.

While the government outlined the successive increases in the interim grant and its plans to release the outstanding RM900 million, it did not provide a year-by-year breakdown of net federal revenue derived from Sabah or a detailed calculation of the 40% entitlement.

The continued increases in the special grant highlight the evolving financial arrangements between the Federal Government and Sabah, with further negotiations expected to shape the state’s longer-term funding framework and the implementation of its constitutional revenue rights.