Peninsula has long been sustained and developed on the back of Sabah’s 40% revenue entitlement.
Under the Malaysia Agreement 1963 (MA63) and the Federal Constitution, 40% of the net revenue derived by the Federation from Sabah must be returned to Sabah. Regrettably, when the mandatory second review due in 1974 failed to materialise, the Federal Government (FG) paid Sabah only RM26.7 million per year from 1974 to 2021 - nearly five decades without question.
During the Judicial Review proceedings on 7 July 2025, Federal Counsel submitted to the High Court that annual reviews had been conducted from 1974 to 2021, and that the yearly RM26.7 million payment constituted the full 40% of net revenue owed to Sabah. This claim is simply not credible.
The people of Sabah deserve a full and transparent accounting of how our money has been used to fund Malaya’s development and operating expenditures since Malaysia Day.
Where did Sabah’s money go?
Before 2012: -
- 18 public universities in Malaya RM ??? billion
- Money for Petronas twin towers RM6 billion
- The North-South Express Highway RM1 billion by Fed Govt
- Cost of creation of Putrajaya RM34 billion (1995-2019)
- Penang second bridge RM4.8 billion
- KL International Airport Terminal 1
- RM10 billion
[Pre-2012 total: RM54.8 billion and counting.]
From 2012: -
- KL International Airport Terminal 2 RM4.5 billion
- KLIA Terminal 1 upgrades RM30 billion
- Electric Train Service 1 & 2 RM12.5 billion
- Electric Train Service 3 RM9.5 billion
- East Coast Rail Link (ECRL) RM75 billion (under construction 2027/28)
[Post-2012 infrastructure total: RM131.5 billion.]
BRIM [Bantuan Rakyat 1 Malaysia] was introduced in 2012 with a budget of RM2.6 billion and the subsequent annual allocations were as follows: -
2013 RM3.0 billion
2014 RM4.6 billion
2015 RM4.9 billion
2016 RM5.4 billion
2017 RM6.8 billion
BR1M was replaced by Bantuan Sara Hidup (BSH) under the Pakatan Harapan government in 2018, and by 2020, RM14 billion had been spent under this programme.
It was subsequently renamed Bantuan Keluarga Malaysia (BKM) in 2021 and 2022 under the Perikatan Nasional government, with RM16.4 billion disbursed over those two years.
Under the Madani government, the programme became Sumbangan Tunai Rahmah (STR), with allocations of RM8 billion in 2023 and RM10 billion in 2024. A budget of RM13 billion was set for 2025, and in August, the Sumbangan Asas Rahmah (SARA) was introduced as an additional programme - disbursing a further RM2 billion as a one-off RM100 payment to every Malaysian citizen aged 18 and above, regardless of income.
From 2012 to 2025, the combined total spent on Bantuan and Sumbangan programmes exceeded RM90 billion.
The national Budget 2026 has allocated:
- RM15 billion for STR/Sara,
- RM1.26 billion for Bantuan Emas, in addition to STR and SARA, RM800 million for Bantuan Awal Persekolahan - covering primary one to Form Six students, regardless of household income. It is Sabah’s 40% share that has effectively financed these Bantuan and Sumbangan programmes since 2012 – programmes that benefit more than 90% of non-Sabahans. Malaysian citizens in Sabah represent only approximately 9% of the total Malaysian citizenry.
The proposed Bandar Madani - Kota Madani development in Putrajaya carries a budget of RM4 billion, with a target completion date of late 2027. One must ask: is this a genuine national priority, when Sabah continues to suffer from chronic water shortages, unreliable electricity supply, severely deteriorated roads, and dilapidated school and healthcare facilities - all of which demand urgent attention?
The Federal Government’s financial position appears sufficiently robust to begin repaying Sabah’s money. Yet on 14 November 2025, the FG filed an appeal against the High Court judgment delivered on 17 October 2025 - and in March 2026, filed for a stay of execution, which was granted on 6 April 2026, just 9 days before the 180-day implementation deadline.
Among the grounds of appeal is a challenge to the High Court’s finding that there was no evidence of any ongoing review between the Federal and Sabah Governments on what the annual 40% net revenue return should have been since 1974.
Senior Federal Counsel further submitted that the High Court ought not to have considered whether the RM26.7 million annual payment failed to meet Sabah’s needs within the parameters of Article 112D (2) of the Federal Constitution which provides:
“Any review under this Article shall take into account the financial position of the Federal Government, as well as the needs of the States or State concerned, but (subject to that) shall endeavour to ensure that the State revenue is adequate to meet the cost of State services as they exist at the time of the review, with such provision for their expansion as appears reasonable.”
The law is clear: both the Federal Government’s financial position and Sabah’s needs must be considered. The FG is in a demonstrably sound financial position, as the expenditure record above shows. Sabah’s needs, by contrast, are stark and long-standing - severe infrastructure deficits that continue to impede economic growth and degrade the daily lives of ordinary Sabahans.
Despite contributing enormously to the nation’s natural resource wealth and national revenue, Sabah endures chronic water crises, persistent power outages, and roads in a state of serious disrepair.
Recommendation:
The Federal Government should defer the Bandar Madani project, reduce the Budget 2026 STR/Sara allocation, and return RM10 billion to Sabah in 2026 as a partial settlement of the revenue arrears owed since 1974.
The 40% is Sabah’s own money - earmarked for the urgent needs and well-being of all Sabahans. The remaining 60% of Sabah’s revenue is our contribution to the Federal Government’s annual national budget for the entire country. These are two entirely distinct obligations: federal spending on emoluments, infrastructure, and development is a matter of policy, whereas the return of Sabah’s 40% is a constitutional duty.
Malaya is today well developed - endowed with the North-South Expressway, KLIA Terminals 1 and 2, multiple electric train services, the ECRL, the Penang Second Bridge, the Petronas Twin Towers, uninterrupted electricity and clean water, a 5G network, well-equipped hospitals, dozens of universities, and an extensive social assistance ecosystem. What has Sabah received in return?
Conclusion:
The 40% revenue entitlement is the bedrock of trust upon which Malaysia was founded - the promise that Sabah would develop at a pace that would allow the whole nation to achieve equitable progress across its territories and peoples.
Without respect for Sabah’s constitutional rights, the Malaysia Agreement is not merely unfulfilled - it is hollow.
The High Court judgment of 17 October 2025 was a test of the Federal Government’s sincerity in honouring MA63. The subsequent appeal on 14 November 2025 and the stay of execution granted on 6 April 2026 - just 9 days before the payment deadline - have angered and deeply disappointed the people of Sabah, many of whom are now questioning the very basis of our place within the Federation.
We must recover what is rightfully ours. This is not charity. This is not a request for Bantuan. Sabah is asserting its lawful entitlement to 40% of the revenue collected by Putrajaya from our land and people - as enshrined in MA63 and the Federal Constitution. It is the foundation of faith, trust, and justice upon which Malaysia was built. Returning Sabah’s money is about fairness, dignity, and justice for every Sabahan.
Dr. Chong Eng Leong
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