Significant achievement after MA63 implementation action council meeting, interim payment to Sabah and Sarawak, will be doubled to RM600 million each starting in 2025

12 September 2024

KOTA KINABALU: The interim payment of RM300 million to Sabah and Sarawak, will be doubled to RM600 million each starting in 2025, following discussions with Borneo States leaders.

Prime Minister Datuk Seri Anwar Ibrahim has agreed to this after the Malaysia Agreement 1963 (MA63) implementation action council meeting held for the first time in Kota Kinabalu.

Deputy Prime Minister Datuk Seri Fadillah Yusof stated that the Prime Minister will include the interim payment provisions under Budget 2025 to be tabled later this year. This interim payment was agreed upon while negotiations are ongoing on the formula to return Sabah's 40% net revenue owed to the state.

A new rate of RM125.6 million was agreed upon in 2022, which was enforced through the gazetting of the Federal Constitution (Review of special grant under Article 112D) (State of Sabah state) Order 2022 dated April 20, 2022, for five years.

This replaced the old grant rate amounting to RM26.7 million, which had been gazetted on Sept 18, 1970, as provided under the Sabah Special Grant (First Review) Order 1970. The special grant for Sabah was further raised to RM300 million for 2023 through the gazetting of the Federal Constitution (Review of special grant under Article 112D) (State of Sabah) Order 2023 on Nov 24, 2023.

The allocation usage will be decided by the two states, Sabah and Sarawak.

A technical committee attended by Sabah Chief Minister Datuk Seri Panglima Hajiji Noor and Sarawak Premier Tan Sri Abang Johari Openg also agreed to a high-level discussion on the two Borneo states' claims, including the return of the continental shelf under the Territorial Sea Act 2012, royalties, and stamp duty, among other things.

Some matters are categorised as 'agree to disagree' and will be brought to the highest level for discussion among the Prime Minister, the Sarawak Premier and the Sabah Chief Minister.

Fadillah mentioned that technical issues such as the continental shelf and stamp duty on land sales cannot be resolved at the technical committee level due to different legal approaches from the Federal and state governments.

The Federal government will be guided by the Attorney General, while the state governments will be guided by their respective state AGs.

Anwar has made significant achievements during this period, including recognising the Sabah and Sarawak work departments as technical departments, returning regulatory power for gas supply, amending the Inland Revenue Board Act 1995 to appoint representatives from Sabah and Sarawak as permanent board members, and returning Sabah Electricity Sdn Bhd to the state. Additionally, powers in the administration of the judiciary body in the two states have been handed over.

Education matters have been handed over to Sarawak, with discussions ongoing for Sabah.