By Datuk Ts Dr. Hj Ramli Amir, former President of the Chartered Institute of Logistics and Transport (CILT) Malaysia and Vice-President of CILT International for Southeast Asia
KOTA KINABALU: Sabah’s inability to implement major public transport systems like the Light Rail Transit (LRT) or Bus Rapid Transit (BRT) is not a matter of technical incapacity or lack of will.
It is a structural failure embedded in Malaysia’s centralized development planning system, where the Economic Planning Unit (EPU) in Putrajaya determines economic viability through metrics designed for Peninsular Malaysia’s dense urban environments.
This viability standard, rooted in narrow cost-benefit analysis and national interest criteria, perpetuates Sabah’s infrastructural stagnation.
As long as Sabah remains bound by EPU’s centralized approval structure, it will continue to lag behind. The recent High Court ruling affirming Sabah’s constitutional right to 40% of net federal revenue represents its only viable path to escape developmental paralysis and achieve genuine parity with Peninsular Malaysia.
The EPU Viability Straitjacket
The EPU’s evaluation system determines project feasibility based on financial, economic, and socio-economic analysis that prioritizes return on investment, population density, and national-level impact rather than regional equity or developmental need.
The Public-Private Partnership Master Plan 2030 codifies this approach, requiring projects to demonstrate strong financial projections, GDP contribution, and immediate multiplier effects before approval.
This system inherently disadvantages low-density regions like Sabah, where projects might not show immediate profitability but are essential for long-term growth and accessibility.
The BRT Mirage: A Case Study of Federal Discretion
The Kota Kinabalu BRT project is the most glaring example of how EPU viability standards and federal discretion intersect to stifle state development. In 2015, Prime Minister Najib Razak announced RM1 billion in Budget 2016 for a BRT in Kota Kinabalu—an implicit certification that the project had cleared EPU’s feasibility criteria.
Yet, by December 2020, assistant minister Datuk Abidin Madingkir confirmed that “the allocation never arrived”. Despite the approval, no funds were ever released.
This “approval-implementation chasm” is not an isolated incident. Studies of Malaysia’s planning structure show that over half of approved projects remain unimplemented within a Malaysia Plan cycle, primarily because EPU approval alone does not guarantee inclusion in annual budgets.
Development plans become political instruments where federal ministries can retract funding without accountability. The Sabah BRT thus became symbolic of a broken system—one in which the federal government’s rhetorical development promises to carry no fiscal obligation.
The Mechanics of Federal Denial
Sabah’s structural subordination arises from the EPU’s central role as fiscal gatekeeper. All major infrastructure proposals—roads, public transport, ports, airports—require EPU endorsement. The evaluation metrics emphasize high population density, rapid cost recovery, and national priority alignment. For Sabah, with its dispersed communities, this creates a policy paradox: projects most needed to integrate its population and spur growth are systematically labelled “not viable.”
The 40% Revenue Entitlement: A Structural Breakthrough
The October 2025 Kota Kinabalu High Court decision ordering the federal government to honour Sabah’s 40% revenue entitlement under Articles 112C and 112D of the Federal Constitution. This judgment transforms public finance dynamics: the 40% entitlement is not a grant but Sabah’s own constitutional revenue.
Estimates suggest Sabah is owed between RM80 billion and RM150 billion in arrears, with RM20 billion annually moving forward. The magnitude of this entitlement dwarfs’ federal allocations and fundamentally threatens Kuala Lumpur’s control over Sabah’s development path. If fully implemented, the 40% rule could finally free Sabah from the EPU’s economic viability quota system.
Fiscal Autonomy and Self-Determined Development
Access to its 40% entitlement would give Sabah unprecedented fiscal autonomy. Unlike federal allocations subjected to EPU screening, the entitlement would be deposited into the state’s Consolidated Fund—directly managed, budgeted, and spent under state oversight. This would allow Sabah to define its own viability criteria, prioritizing regional integration, social equity, and future growth potential rather than immediate profitability. Large-scale projects like LRT or BRT systems could proceed based on developmental logic: connecting low-density zones today to stimulate urban clusters tomorrow.
As Jeffrey Kitingan asserted, “It is our money—it is not federal money.” This distinction is both fiscal and constitutional. The entitlement represents ownership, not discretion. Sabah could finally plan multi-decade projects with predictable revenue streams instead of waiting for erratic federal transfers that vanish when political winds change.
Breaking the EPU Monopoly Over Viability
With fiscal autonomy, Sabah could recalibrate its developmental logic. Federal criteria favour projects where benefits are measurable in short-term economic indicators—GDP contribution, financial returns, ridership. Sabah, however, could adopt a model emphasizing “transformative viability,” where projects are judged by their capacity to create future economic potential.
Such multi-dimensional viability frameworks would liberate Sabah from Putrajaya’s market-centric developmentalism and recognize that infrastructure in peripheral states serves not profit but nation-building.
Sustaining Development Beyond
Construction
Transport infrastructure requires ongoing operational subsidies—globally, public transit rarely achieves full farebox recovery. The federal government’s continued subsidization of Klang Valley’s MRT and LRT contrasts with its refusal to underwrite similar commitments for Sabah.
With RM20 billion in annual revenue, Sabah could independently sustain operational expenditures and maintain public affordability. This fiscal predictability would enable long-term contracts, integrated planning, and professional management—essential for avoiding the “start-stop” cycles characteristic of federal-driven projects.
Transparency and Democratic Accountability
Perhaps the most far-reaching transformation lies in governance. Currently, most “federal spending” in Sabah occurs off-budget through federal agencies, invisible to Sabah’s legislature and public auditors. Once 40% revenue flows into the state’s Consolidated Fund, all expenditure would be subject to state legislative approval and audited under state procedures. Citizens could see how much revenue Sabah generates and how it is used—creating political accountability where today there is opacity.
Transparency also dismantles a central instrument of political control. Federal manipulation of allocations has historically functioned to discipline state governments. Fiscal autonomy would replace clientelism with self-determination, allowing voters to judge state leaders based on actual developmental outcomes rather than their access to federal favour.
Federal Resistance and Political Stakes
This shift is precisely why implementation faces resistance. Despite the court order, elements in Putrajaya are reluctant to loosen control over revenue streams that anchor federal authority.
The 50-year federal delay in conducting constitutionally mandated reviews reveals that administrative inertia masks political intent—to preserve the centre’s leverage over resource-rich but politically weaker states. UMNO and Sabah leaders have urged the federal government not to appeal the ruling, warning that further obstruction would “deepen old wounds”.
Should the 40% entitlement finally materialize, it would inaugurate Malaysia’s first genuine experiment in fiscal federalism—one where state governments command sufficient resources to plan, execute, and sustain their development visions.
The Necessity of Financial Sovereignty for Sabah’s Future
Without fiscal sovereignty, Sabah’s development remains hostage to Putrajaya’s periodic benevolence. The EPU’s evaluation regime ensures that only projects replicating Peninsular profit logic receive funding, effectively writing Sabah out of the modernity narrative. This institutionalized bias condemns the state to infrastructural dependency, where each delayed project perpetuates economic underperformance and outmigration.
Conversely, the 40% entitlement offers more than money—it offers freedom to plan. Sabah could prioritize not just LRT and BRT, but rural road networks, digital connectivity, and industrial corridors aligned with state-specific development goals. This autonomy aligns with the original spirit of the Malaysia Agreement 1963, which envisioned Sabah as a coequal partner, not a subordinate territory.
Conclusion: Liberation Through Fiscal Justice
The reason Sabah still lacks an LRT or BRT is neither technical inadequacy nor political laziness—it is the structural disempowerment inflicted by Malaysia’s centralized system of fiscal control. The EPU’s economic viability tests are instruments of exclusion, systematically filtering out projects that do not conform to Peninsular Malaysia’s demographic and economic geometry. This has locked Sabah into a cycle of underdevelopment disguised as prudent planning.
The High Court’s affirmation of Sabah’s 40% net revenue entitlement provides not merely restitution but redemption. It transforms fiscal dependency into fiscal sovereignty, allowing Sabah to fund its infrastructure according to local priorities, values, and timelines.
With RM20 billion annually and up to RM150 billion in arrears constitutionally owed, Sabah possesses the financial muscle to rewrite its future—to build transport systems that bind its people, open its economy, and assert its rightful place in the federation.
The path to progress lies not in waiting for EPU approval but in reclaiming constitutional justice. Only by harnessing its 40% entitlement can Sabah escape the economic viability paradox and finally steer its own development destiny—no longer as a dependent recipient of federal favour, but as a self-determining state fulfilling the promise of Malaysia’s federal compact for the sake of its people’s dignity and future prosperity.
