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PRIME MINISTER Datuk Seri Anwar Ibrahim has confirmed that the federal government will not appeal the High Court ruling affirming Sabah’s constitutional right to 40 per cent of federal revenue collected from the state, underlining a commitment to uphold the Federal Constitution.
Speaking in the Dewan Rakyat, he said Treasury Secretary-General Datuk Johan Mahmood Merican had written to the Sabah State Secretary to begin negotiations on the special grant without delay.
“In fact, today, the Secretary-General of the Treasury has written to the Sabah State Secretary requesting that negotiations begin immediately to ensure there is no further delay.
“Let me clarify this to avoid confusion. Some have interpreted the Attorney General’s decision to file an appeal as an attempt to challenge Sabah’s 40 per cent entitlement. I must stress again that there is no appeal against Sabah’s 40 per cent special grant.
“What is being appealed relates only to what we regard as errors in the reasoning of the judgment, not its main decision,” he said.
Anwar made the remarks in response to a question from Paya Besar MP Datuk Indera Mohd Shahar Abdullah regarding the implications of an appeal. He explained that the appeal targets specific elements of the court’s reasoning deemed inaccurate or unfair.
He noted that the High Court had suggested that the review of the special grant after 2021 was unlawful and irrational, and implied that successive federal and state governments since 1974 had made serious errors.
“In that reasoning, the court made several remarks that overstepped legal boundaries. For instance, it suggested that the review process of the special grant after 2021 was unlawful and irrational, and that successive governments since 1974 had committed serious errors.
“This implies that the federal government, from the time of Tun Abdul Razak and Tun Hussein Onn to Tun Dr Mahathir Mohamad and beyond—and likewise, state governments from the time of Tun Datu Mustapha and Tun Fuad Stephens to the present—acted in ways that were illegal, irrational, procedurally improper, and in neglect of Sabah’s constitutional rights,” he added.
Anwar described these remarks as a “very serious allegation” and stressed that misleading and inaccurate reasoning must be addressed through the appeal process. Without it, he warned, all federal and state governments since 1974 would effectively be deemed to have breached the Constitution.
Answering a supplementary question from Kota Bharu MP Datuk Seri Takiyuddin Hassan, he clarified that Sabah’s 40 per cent entitlement is a distinct constitutional provision, separate from annual federal development allocations, though the overall financial relationship between federal and state governments should be considered holistically.
“Thus, ongoing negotiations are essential to define fiscal responsibilities clearly, whether an expenditure falls under state or federal jurisdiction.
“Regarding the definition of net revenue, the Finance Ministry currently interprets it as comprising direct taxes, indirect taxes, non-tax revenue, and petroleum revenue,” he said.
Anwar reiterated that the federal government is only appealing the grounds of judgment in the High Court ruling on Sabah's revenue entitlement, which it regards as a serious and harsh claim.
“The first issue is that there is no appeal against the matter of the special grant itself — full stop.
“What we are appealing is the error in the judgment, as the reasoning contained many statements that exceeded the legal boundaries.
“The judgment claimed that all reviews of special grants made after 2021 were irrational and against the law, and even alleged major mistakes by the government since 1974.
“This, in effect, implies that the federal government until now, the state government until now, and Members of Parliament from 1974 until today acted unlawfully, irrationally, with improper procedure, and neglected their responsibility to the state of Sabah,” he concluded in the Dewan Rakyat. - November 13, 2025
