Kota Kinabalu: The Sabah Government has reaffirmed its firm stance that the original formula for the State’s 40 per cent special grant entitlement must be fully implemented, while pressing for payments including for “lost years”.
Deputy Chief Minister II cum Finance Minister Datuk Seri Masidi Manjun said the State remains guided by Article 112C and Part IV of the Tenth Schedule of the Federal Constitution.
“The Government maintains its position that the original formula provided under Article 112C and Part IV of the Tenth Schedule of the Federal Constitution must be implemented.
Therefore, it is not accurate to say that the Sabah Government has compromised,” he said when winding-up for the Finance Ministry at the State Assembly sitting, here, Wednesday.
Responding to queries from assemblymen for Kuamut, Tambunan, Merotai and Sungai Sibuga, Masidi acknowledged that the special grant currently received remains far below what Sabah is entitled to under the constitutional formula.
However, he pointed to significant progress over time, noting that for 48 years Sabah received only RM26.7 million annually without any increase.
“This amount has now been raised to RM125 million in 2022, RM300 million in 2023, RM306 million in 2024 and subsequently RM600 million last year,” he said.
Masidi said the development reflects the effectiveness of Sabah’s continuous and strategic negotiation approach, with the increased interim payments helping to strengthen the State’s financial resources to fund development and improve public wellbeing.
Nevertheless, he stressed that such payments are strictly interim in nature.
“I wish to emphasise that the interim payments received by the Sabah Government are without prejudice to the State’s right to claim the ‘lost years’ and are based on the original 40 per cent formula.
These payments are merely an interim arrangement and not the absolute amount of the Special Grant due to the Government,” he said.
Masidi added that although his Ministry had previously provided explanations during last Tuesday’s question- and-answer session, the Government continues to update the august House on the latest developments in negotiations.
He said following the Kota Kinabalu High Court decision on Oct 17, 2025, the State Government moved proactively by establishing the Federal-State Special Grant Negotiation Committee at the officials’ level on Nov 17, 2025.
“At the meeting, the Sabah Government presented its method of calculating the Special Grant, while the Federal Government agreed to share the relevant data,” he said.
He added that during a subsequent meeting on Jan 28, 2026, the scope of Federal revenue components was discussed, with the Federal Government given time to complete the necessary data, including for the ‘lost years’.
“Both parties agreed to adopt an estimation approach where actual data is incomplete, particularly for earlier years, and a working committee was also formed for cross-verification of the data,” he said.
Masidi said further progress was made during working committee meetings on Feb 27 and March 13, 2026, where both sides presented estimates covering the period from 1974 to 2025 and carried out data verification.
At the same time, Sabah stressed that payments should first be made for undisputed revenue components and that the Special Grant must not be substituted with Federal development expenditure.
“In addition, an official ruling must be established to determine the method of revenue declaration by Sabah-based companies and non-Sabah companies operating in Sabah but declaring their revenue outside the State,” he said.
On implementation, Masidi said the State Government remains open to discussions in refining constructive solutions, including suitable payment options.
Following the Court of Appeal decision on April 6, 2026, he said Sabah, through a letter dated April 10, 2026, stressed that the deferment only involves the ‘lost years’.
“As such, payments for the years 2022 to 2025 and the current year must be implemented immediately in accordance with the 40 per cent formula under the Federal Constitution,” he said.
Masidi stressed that although not all developments are made public, the Government has been consistently taking action.
“The reality is that every negotiation meeting does not stop at discussions alone, but is followed by further action through official correspondence and continuous reaffirmation of Sabah’s position to urge immediate action by the Federal Government,” he said.
He said the issue transcends political lines, with both government and opposition united in pursuing Sabah’s constitutional rights.
“One fundamental point I can conclude is that, whether on the Government or opposition side, we are all united in the same struggle, which is to ensure Sabah’s 40 per cent Special Grant entitlement is implemented immediately by the Federal Government,” he said.
