Official Position of the State Government of Sabah in Relation to the Constitutional Right to Claim the 40 percent Net Revenue from the Federal Government

No Compromise on the 40 percent.

The State Government of Sabah categorically confirms that it will never give up the fundamental constitutional rights of the State of Sabah in relation to the 40 percent Net Revenue special grant under Article 112C and 112D of the Federal Constitution. This fact is reinforced by the Prime Minister of Malaysia in his 2023 budget speech when he recognised and confirmed that the Federal Government is committed to improve the rate of the special grant compared to what was previously agreed and will expedite the negotiations to find a solution.

This critical issue is now under the purview of the MA63 Technical Committee chaired by the Deputy Prime Minister. We will continue to defend the State of Sabah’s constitutional rights in relation to the existing revenue sharing formula and this must be respected by the Federal Government. This includes the State's claim for the "lost years" where there has been no review conducted from 1974 until recently.

For now, there is an interim arrangement - on a without prejudice basis - where the State receives much more than before pending further negotiations between the State and Federal Government to claim what is rightfully due to the State of Sabah. In fact, pending the ongoing negotiations, the interim amounts have been increasing from RM125.6 million in 2022 and from the RM260 million announced in January 2023 to RM300 million in July 2023.

Whilst this falls short of what is expected, we have been committed and consistent in seeking more from the Federal Government than ever before. In the meantime, let me be crystal clear, we respect the right of the Sabah Law Society to commence legal proceedings on this matter. We recognise the important role that public interest litigation has in promoting the rule of law towards the fair and equitable administration of justice.

The State Government sees the initiative by the SLS in a positive light that is not partisan and not political in the common furtherance of the constitutional arrangements when Sabah formed Malaysia in 1963. I do not want to prejudge the outcome of the Court of Appeal, but I share the same sentiment as the rakyat of Sabah and hope that any decision will be favourable to the State.

I have already instructed the State Attorney General to scrutinise and review the ongoing legal proceedings and if necessary, to correct any misguided statement that differs from the State's clear and formal position. Notwithstanding the ongoing proceedings in the Court of Appeal - we maintain the official demand of the State Government of Sabah that the Federal Government is legally and constitutionally obligated to compensate the State of Sabah for what is lawfully due as a special grant, both historically and for the future.

This State right was negotiated prior to the formation of Malaysia and is enshrined in the Federal Constitution. It is the financial entitlement of the State. This stand is very much more than an aspiration. If there is no agreement or solution between the State and the Federal Governments on the special grant, we will move to activate the constitutional provision to appoint an independent assessor to determine this issue and decide what the Federal Government is obligated to pay to Sabah.

I assure the rakyat of Sabah that we will not stop in our relentless pursuit of all the State rights due under MA63 and the Federal Constitution. This is our uncompromising and absolute position.

Datuk Seri Panglima Haji Hajiji Haji Noor, Chief Minister of Sabah, 17 May 2024.