Penampang (May 30) - Prime Minister Datuk Seri Anwar Ibrahim used his address at the opening of the 2026 Sabah State-level Kaamatan Festival to announce a significant increase in the federal government's interim special grant to Sabah — from RM600 million to RM1.5 billion — while making clear that the announcement does not represent the full settlement of Sabah's longstanding revenue entitlement under the Malaysia Agreement 1963.
Bernama reported that Anwar made the announcement at Hongkod Koisaan, KDCA's cultural complex in Penampang, in the presence of Chief Minister Datuk Seri Hajiji Noor, Deputy Chief Minister I Datuk Seri Dr Joachim Gunsalam, and KDCA president Tan Sri Joseph Pairin Kitingan.
What was actually announced — and what it is not
The distinction matters, and it is one that has caused some confusion since the announcement. Sabah is constitutionally entitled to 40 per cent of the net revenue collected by the federal government from the state, a right enshrined under MA63. That entitlement — which would translate to a substantially larger sum than RM1.5 billion given that the federal government collects around RM10 billion annually from Sabah — has never been fully paid out, and the precise mechanism and final figure for implementing it are still being negotiated.
What Anwar announced at Kaamatan is an interim payment — a bridging sum intended to provide Sabah with additional funds while those negotiations are concluded. It is not the 40 per cent entitlement itself, and it is not a final settlement. As Bernama reported, Anwar stated plainly that the RM1.5 billion figure is temporary and that the actual amount owed under the 40 per cent entitlement still needs to be agreed upon through formal talks between the federal and Sabah state governments.
In plain terms: the federal government is paying Sabah more than before as a goodwill measure, but the bigger constitutional question of exactly how much Sabah is owed and how it will be paid remains unresolved.
Why negotiations are taking time
Anwar acknowledged the delay but pushed back against characterisations of it as deliberate stalling. Bernama reported that he said the commitment to fulfil the 40 per cent entitlement had already been brought to Cabinet and announced in Parliament — the challenge now is purely one of mechanism. He said he has tasked Second Finance Minister Datuk Seri Amir Hamzah Azizan and Treasury secretary-general Datuk Johan Mahmood Merican to lead the negotiations with Sabah. He stressed that the process must proceed carefully because any decision touching on MA63 carries implications not only for Sabah but also for Sarawak and the states of Peninsular Malaysia.
Federal spending in Sabah
To counter what he called irresponsible political narratives portraying Sabah as neglected, Anwar cited figures showing that although the federal government collects roughly RM10 billion in revenue from Sabah annually, development expenditure returned to the state actually exceeds that at RM17 billion. He added that fuel subsidies for petrol, diesel, and liquefied petroleum gas in Sabah are expected to reach RM3 billion this year — up from RM1 billion last year — partly due to the global supply crisis. He said these figures were not meant to diminish Sabah's entitlement, but to give residents a clearer picture so they are not swayed by what he described as petty politics built on misinformation.
Reactions
Sabah's Chief Minister welcomed the announcement and expressed hope the funds would be disbursed quickly. According to the Daily Express, Hajiji said the increase demonstrated that the federal government under Anwar was one that fulfilled its promises, and that the state government would continue working closely with Putrajaya to ensure all MA63 provisions — particularly the 40 per cent special grant — are eventually realised in full.
The Star reported that UPKO president and Deputy Chief Minister III Datuk Ewon Benedick called the increase very much welcome, describing it as proof of the federal government's commitment to fulfilling state rights in stages while the larger negotiations continue.
For Sabahans still awaiting the full implementation of MA63's revenue provisions, the RM1.5 billion represents meaningful progress — but not the finish line.