Kota Kinabalu: State-Federal negotiations regarding Sabah’s 40 per cent state revenue entitlement are actively ongoing, currently taking place at the technical and efficiency levels, said Deputy Chief Minister II Datuk Seri Masidi Manjun.
He said discussions have yet to reach the stage of formal negotiations, as the process is still focused on preliminary groundwork to ensure smooth and conclusive implementation.
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Masidi, who is State Finance Minister, explained that the perception among some quarters that no progress had been made stemmed from the lack of updates to the media.
“My officers just briefed me yesterday (Wednesday) on the latest developments,” he said.
The current focus is on data collection and the preparation of a solid foundation to facilitate negotiations and finalise the process.
Commenting on an opposition proposal to form a bipartisan committee on the matter, Masidi said a court decision had been made, meaning the issue was no longer about whether payment should be made.
“The court decision has already been delivered. So the issue now is no longer whether it should be paid, but when and how much.”
He emphasised that the matter is a government-to-government (G2G) issue between the Sabah State Government and the Federal Government, and that alternative approaches were unnecessary given the existing court ruling.
“This is a government-to-government (G2G) issue between the State Government and the Federal Government.
“If there had been no court decision, perhaps a different approach would have been required. But in this case, the question is purely about implementation.”
When asked whether he was confident the issue could be resolved before the expiry of the 180-day period, Masidi reiterated that the matter should not be seen as Sabah’s problem alone.
“As I have stated repeatedly, this issue should not be seen as a Sabah issue alone, but as a Malaysian issue,” he said.
He added that a solution could only be achieved if all parties came to the table in the spirit of unity as Malaysians.
“We need to sit down together as one team of Malaysians, not a Sabah team versus a Federal team. I am confident that a solution can be reached,” he said.
On October 17, 2025, the Kota Kinabalu High Court ruled that the Federal Government had acted unlawfully by failing to pay Sabah 40pc of net revenue derived from the State, a constitutional right under Article 112C of the Federal Constitution and the Malaysia Agreement 1963 (MA63).
The court ordered a review of this entitlement, which had been ignored for 48 years, from 1974 to 2021.
The Sabah Law Society (SLS) had filed a judicial review on June 9, 2022, arguing that the Federal Government failed to conduct the required five-year reviews of this special grant.
Judge Celestina Stuel Galid found that the Federal Government had breached Articles 112C and 112D of the Federal Constitution by failing to conduct these reviews, which are mandated by the word “shall”.
Under the MA63, Sabah is entitled to 40pc of net revenue collected by the Federal Government from the State. Instead, Sabah received a fixed, smaller amount of RM26.7 million annually for decades.
The court issued a mandamus order requiring both governments to review the 40pc entitlement for 1974–2021, setting a 90-day deadline for the review and 180 days for a final agreement.
