SANDAKAN: Tanjong Papat State Assemblyman Alex Thien Ching Qiang of Parti Warisan has welcomed the increase in federal allocations for Sabah under Budget 2027, from RM17.6 billion in 2026 to RM18.7 billion, representing an increase of RM1.1 billion. However, he stressed that the public must clearly distinguish between the Federal Government’s annual financial allocations to the states and Sabah’s constitutional entitlement to 40% of net revenue derived by the Federation from Sabah.
He said the two are fundamentally different in their legal basis and financial nature and must not be treated as interchangeable.
“We certainly welcome the announcement of RM18.7 billion in allocations for Sabah. However, this allocation cannot be taken as proof that the Federal Government has fulfilled Sabah’s 40% net revenue entitlement. These are two separate matters involving different obligations,” he said.
Thien explained that the Federal Government has a responsibility to allocate funds for the development and maintenance of public infrastructure, including roads, hospitals, schools, water supply and electricity, according to the country’s development needs. Such allocations are provided to Sabah, Sarawak and other states in Peninsular Malaysia as part of the Federal Government’s broader development and public service responsibilities.
He said Sabah’s special entitlement is provided for under Articles 112C and 112D of the Federal Constitution, together with the relevant provisions of the Tenth Schedule. The entitlement concerns special grants calculated based on the net revenue derived by the Federal Government from Sabah, in accordance with the constitutional financial arrangements established when Malaysia was formed.
He stressed that this entitlement is not an ordinary development allocation granted at the Federal Government’s discretion each year.
“The fundamental purpose of the 40% entitlement is to ensure that Sabah receives its rightful financial resources and has greater capacity to plan and implement its own development priorities. Sabah should not have to continue relying on annual federal development approvals to address long-standing basic infrastructure problems,” he said.
He noted that development gaps between urban and rural areas in Sabah remain significant, with many communities still facing poor road conditions, unreliable water supply, inadequate electricity provision and shortages of healthcare facilities.
According to him, these persistent challenges underscore the importance of the special financial arrangement intended to ensure that Sabah has sufficient resources to address its own development needs.
Thien also raised concerns over the payment of Sabah’s interim special grant, which the Federal Government had previously announced would be increased to RM1.5 billion.
He said that, according to information previously presented by the Sabah State Government in the State Legislative Assembly, Sabah received an initial payment of RM600 million in June this year, leaving a balance of RM900 million outstanding.
Although the Prime Minister subsequently indicated that the remaining amount was expected to be paid by the end of October or early November, Alex said the actual payment progress must be clearly communicated to the public.
“Even if the full RM1.5 billion is paid, we must emphasise that this is only an interim special grant. It does not mean that Sabah’s 40% net revenue entitlement has been fully calculated or finally settled. The actual amount due must still be determined in accordance with the mechanism provided for under the Federal Constitution,” he said.
Thien also referred to the Kota Kinabalu High Court’s ruling in October 2025, which affirmed that Sabah’s 40% net revenue entitlement is constitutionally protected. The court directed the Federal and Sabah State Governments to conduct a review within 90 days and reach an agreement within 180 days to address the entitlement for the period from 1974 to 2021.
However, he noted that the implementation of the order was affected after the Federal Government filed an appeal and the Court of Appeal granted a stay of execution in April 2026.
“We respect the judicial process, but a stay of execution must not become a reason to delay Sabah’s constitutional rights indefinitely. The people of Sabah have waited for decades, and this matter cannot remain indefinitely at the stages of negotiations, reviews and calculations,” he said.
He stressed that since the Federal Government had acknowledged Sabah’s 40% entitlement, it should provide clear details on the calculation methodology, revenue data, review procedures and a transparent implementation timeline that the public can monitor.
“The most important question now is not simply how much funding the Federal Government is willing to allocate to Sabah, but how much net revenue the Federation derives from Sabah, how much should be returned under the Constitution, and how much remains outstanding,” he said.
Thien emphasised that increasing development allocations for Sabah and fulfilling its 40% net revenue entitlement are not mutually exclusive. Both obligations must be addressed, and neither should be used as a substitute for the other.
“Sabah is not asking for special treatment. We are asking for Sabah’s constitutional rights to be respected and fulfilled. Federal development allocations form part of the Federal Government’s responsibilities towards the states, while the 40% net revenue entitlement is a special financial safeguard guaranteed to Sabah under the Federal Constitution,” he said.
He urged the Federal Ministry of Finance and the Sabah State Government to promptly disclose the progress of the 40% net revenue calculations, the payment status of the interim special grant, and a clear timeline for subsequent negotiations and implementation, so that the people of Sabah can understand when this long-standing constitutional financial entitlement will finally be fulfilled.
