Kuala lumpur: The special grant, which constitutes 40 percent of the federal revenue derived from Sabah, is to be treated as a distinct entity and not included in any other allocation as outlined in the state's budget documents, Prime Minister Datuk Seri Anwar Ibrahim has clarified.

According to BERNAMA News Agency, Anwar, who also holds the position of Finance Minister, explained that the federal budget is constructed based on predetermined allocations according to the Federal, State, and Concurrent Lists. He highlighted that the allocations in Budget 2026 extend beyond these fixed lists, incorporating projects like electricity, the Pan Borneo Highway, and initiatives by the Malaysian Communications and Multimedia Commission (MCMC), accumulating to a sum between RM7 billion and RM8 billion.

Anwar emphasized the importance of understanding the budget as a whole when considering the 40 percent special grant. He underscored the ongoing discussions between state and federal governments to ensure the arrangement aligns with established lists and responsibilities, with decisions on how the 40 percent entitlement fits in still pending.

In response to a question from Datuk Seri Takiyuddin Hassan (PN-Kota Bharu) regarding the potential overlap of the special grant with other allocations received by Sabah and the definition of net revenue, Anwar elaborated on the Finance Ministry's calculation method. This includes consideration of direct and indirect taxes, non-tax revenue, and petroleum income. He refuted the notion that 95 percent of petroleum revenue is allocated to the Federal Government and only five percent to the state, explaining the complexity of calculations involving investments, debt, and Petronas joint ventures.

Anwar further shared specific financial figures, indicating that in 2024, direct taxes amounted to RM58 billion and indirect taxes RM1.5 billion. He noted federal expenditure for Sabah was RM12 billion in 2021, RM17.3 billion in 2025, and RM17.6 billion in 2026, marking the highest expenditure recorded so far.

He concluded by affirming that the Federal Government concurs with Sabah's perspective that the 40 percent special grant should be calculated from revenue excluding the Federal Government's direct responsibilities, with final arrangements to be settled through mutual understanding and consensus.