Budget 2027 boosts allocations for Sabah, Sarawak and other states, with higher grants for infrastructure, environmental conservation and regional development
KUALA LUMPUR: The federal government has always prioritised projects proposed by the state governments, including increasing allocations to all states, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
He said that since 2023, several main grants have been enhanced, with the Economic, Infrastructure and Welfare Development-Based Grants (TAHAP Grants) increased to RM400 million per year.
Meanwhile, the allocation for the Malaysian Road Records Information System (MARRIS) increased to RM5.6 billion in 2026 from RM5.2 billion in 2023.
“The allocation for the Ecological Fiscal Transfer (EFT) increased to RM270 million in the 2027 Budget from RM150 million in 2023. This increase supports services, infrastructure, and environmental preservation in the states,” he said when winding up the debate on the Supply Bill 2027 at the policy stage for the Ministry of Finance (MoF) in the Dewan Rakyat today.
He said the MADANI government also increased Sabah’s interim special grant from RM26.7 million in 2021 to RM1.5 billion, which is more than 50 times. For Sarawak, the interim special grant increased from RM16 million in 2022 to RM1.5 billion, which is more than 90 times.
Meanwhile, Amir Hamzah said the overall allocation for Sabah and Sarawak is the highest, increasing to RM18.7 billion and RM16.2 billion, respectively.
Sabah’s RM18.7 billion allocation comprises RM8.9 billion for operating expenses, RM7 billion for development, and RM2.8 billion in grants to the state government.
He said the government respects the principle of special grants in line with the Constitution, and negotiations are ongoing to finalise a fair and sustainable method of calculation.
“This is the commitment of the MADANI Government to drive the development of Sabah and Sarawak while negotiations are underway,” he said.
Federal expenditures are projected to rise from a revised estimate of RM444.1 billion in 2026 to RM459.8 billion in 2027, of which RM376.8 billion will be operating expenditure and RM83 billion as development expenditure.
Amir Hamzah said this when winding up the policy-stage debate on the Supply Bill 2027 (Budget 2027) for the Finance Ministry in the Dewan Rakyat today.
To further ease household expenses, he said the allocation for STR and SARA would be increased to RM16 billion in 2027, with monthly SARA assistance raised to RM150, or RM1,800 annually.
Those registered under eKasih would receive an additional allowance of up to RM100, bringing their monthly SARA assistance to RM250, or RM3,000 a year.
The government would also expand SARA purchases to include fresh produce at 216 Federal Agricultural Marketing Authority (FAMA) Farmers’ Markets and Tamu starting in 2027, while encouraging more small grocery shops and cooperatives to join the SARA Partner Merchant network.
“The SARA Partner Merchant network now comprises nearly 15,000 outlets, up from about 700 in 2024, with almost 7,000 being small grocery shops and cooperatives. This expansion not only makes it easier for the public to access assistance but also supports the sustainability of micro, small and medium enterprises (MSMEs) and local retailers,” he said.
On income growth, Amir Hamzah said the government had agreed to raise the minimum wage from RM1,700 to RM2,000 a month from June 2027, benefiting more than four million workers. It was also developing a minimum wage framework for semi-skilled jobs, with an initial rate of RM2,500 a month.
He said the living wage for employees of government-linked investment companies (GLICs) and government-linked companies (GLCs) would increase from RM3,100 to RM3,400 a month in 2027, benefiting 230,000 workers.
The government was also addressing the welfare of about 600,000 e-hailing and p-hailing drivers through Gig Consultative Council discussions on minimum earnings and a RM160 million co-financing package with Grab to raise their monthly net income.
Other measures included increasing the Social Welfare Department’s (JKM) allocation to RM3.3 billion. This would enable monthly assistance for bedridden persons with disabilities (PWDs) to rise to RM600, while the income eligibility threshold for the PWD Workers’ Allowance would increase to RM2,000.
To ease parents’ financial burden, the Early Schooling Aid would be raised from RM150 to RM200 for all 5.3 million pupils, with RM1 billion allocated for the initiative.
“Another RM200 million has been allocated to strengthen outsourced patient treatment programmes to reduce waiting times, while the voluntary basic medical insurance and takaful plan, MediAsas, is scheduled to be launched in late January 2027,” he said.
Amir Hamzah added that Employees Provident Fund (EPF) members below 55 would be allowed to pay MediAsas premiums through their Sejahtera Account as part of efforts to ensure the plan’s long-term cost sustainability.
