As the Sabah state election draws near, one question looms large: will the federal government appeal the High Court ruling affirming Sabah’s entitlement to 40% of federal revenue collected from the state — or will it accept the judgment and set a precedent that could redefine Malaysia’s fiscal balance?
According to Free Malaysia Today, Prime Minister Anwar Ibrahim has made clear that his personal inclination is not to appeal the court’s decision. “My personal inclination is to avoid appealing,” Anwar said in Tawau, adding that the Cabinet, after consulting the Attorney-General’s Chambers (AGC), would make the final decision.
This is not just a legal issue — it’s a political powder keg. An appeal could alienate Sabah voters and strain ties with key local allies like Gabungan Rakyat Sabah (GRS). Yet, refusing to appeal could set a precedent with far-reaching fiscal consequences, potentially emboldening other states to demand similar arrangements.
A Historic Ruling, a Delicate Balance
The Kota Kinabalu High Court’s October 17 decision directed the federal government to work with Sabah to review and determine the state’s 40% entitlement for every financial year from 1974 to 2021, with negotiations to begin within 90 days and conclude within 180.
As Malay Mail reported, Communications Minister Fahmi Fadzil urged caution, noting that the Madani government must ensure that any action taken is legally sound and aligned with the Malaysia Agreement 1963 (MA63). “The judgment must be carefully studied so that no irregularities or actions contrary to the Constitution occur,” he said.
Fahmi emphasised that the government remains committed to defending Sabah’s rights, pointing out that nine of 13 MA63 claims have already been resolved, and interim payments to the state have been increased from RM126 million to RM600 million — a record under Anwar’s administration.
The Cabinet Fallout
The ruling has already triggered political aftershocks within the unity government. Datuk Ewon Benedick, Upko president and Entrepreneur Development Minister, announced his intention to resign, citing disagreement with the AGC’s stance on the issue.
Anwar, however, described the move as “premature”, noting that the government had yet to finalise its decision. As reported by The Star, he said, “Sometimes we get pressured and panic. As leaders, we cannot panic. We must listen and understand Sabah’s concerns, but also understand the Federal Constitution.”
The Prime Minister’s remarks underscore his effort to balance constitutional caution with political sensitivity, especially given that GRS — a key component of his coalition — has publicly urged Putrajaya not to appeal the ruling.
Anwar’s Viral Street Encounter
The growing public sentiment around Sabah’s 40% entitlement also found a vivid reflection on the ground. During a walkabout at Gaya Street Sunday Market, Anwar found himself in an impromptu exchange with a local man who asked when the 40% revenue share would be implemented.
As reported by Malay Mail, the Prime Minister explained that the federal government currently allocates more to Sabah than it collects.
“How much revenue do we collect from Sabah? RM10 billion. How much do we give back? RM17 billion,” Anwar said, defending the federal position and urging the public not to be swayed by political rhetoric.
The man, however, countered that the 40% provision under Article 112C of the Federal Constitution was an entitlement separate from development allocations. The brief but heated exchange went viral online, capturing the rising grassroots frustration over Sabah’s long-delayed fiscal rights — and illustrating how deeply this issue resonates ahead of the state polls.
Between Precedent and Politics
If Putrajaya accepts the ruling, it would mark a watershed in Malaysia’s federal-state relations, fulfilling one of the key promises of MA63 and potentially reshaping future revenue-sharing frameworks. But such a move could also destabilise fiscal uniformity, prompting other states — particularly Sarawak — to push for similar arrangements.
Conversely, if the government appeals, it risks being perceived as betraying Sabah’s trust at a politically sensitive moment, especially when the Prime Minister’s Madani coalition is seeking to consolidate support in East Malaysia.
Anwar’s measured tone reflects his awareness of this delicate calculus: balancing constitutional obligations, budgetary prudence, and political survival.
The Road Ahead
For now, Anwar’s government appears to be buying time — studying the ruling, consulting legal experts, and gauging political sentiment. The final decision, expected soon, will have profound implications not only for Sabah’s fiscal autonomy but for the federal structure of Malaysia itself.
In short, the question is no longer just about money owed, but about trust earned. The 40% ruling has become a litmus test for whether the Madani government can uphold its promise of justice and equality for all Malaysians — or whether political expediency will once again outweigh the spirit of the Malaysia Agreement 1963.
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