Sabah's 40% revenue share formula remains unsigned amid payment delays

The special grant provisions promised to Sabah under the Malaysia Agreement have yet to be formalized, hampering efforts to establish a permanent payment structure for the state. Officials have identified the 40 per cent revenue share as a critical component of federal-state fiscal relations, though the precise methodology for calculating distributions remains unresolved.

To bridge the gap during negotiations, both parties have discussed an interim payment mechanism valued at RM1.5 billion earmarked for the 2026 financial year. This stopgap measure reflects efforts to provide immediate financial relief to the East Malaysian state while technical details are worked out.

The delayed finalization of the revenue-sharing formula has created uncertainty for state-level budget planning. Officials from Sabah have emphasized the urgency of concluding negotiations, citing the need for predictable long-term funding to support development priorities and public services.

The federal government has signaled its commitment to resolving the matter, though sources indicate disagreement persists over specific calculation methodologies and baseline figures. Both sides are expected to continue discussions in the coming months as they seek to achieve consensus on a workable framework that satisfies the terms of the original agreement.