Kota Kinabalu: The Sabah Government still relies on Federal loans to implement large-scale development projects that have a direct impact on public wellbeing and economic growth.
Deputy Chief Minister II cum Finance Minister Masidi Manjun said projects such as road construction, sewerage systems, irrigation and drainage, as well as water supply require substantial investment.
“For example, water supply projects involve large-scale infrastructure development including water treatment plants, dam upgrades, pipeline networks and asset maintenance, which can cost billions of ringgit,” he said at the State Assembly.
Responding to a question from Tamparuli Assemblyman Datuk Seri Wilfred Madius Tangau, Masidi said the total Federal loans that have matured and are due for repayment amount to RM3.2 billion.
However, he noted that annual repayments are significantly lower, at around RM220 million per year.
“This allows Sabah to accelerate development while benefiting from interest-free loans and extended repayment periods of up to 20 years, particularly for water supply and sewerage projects,” he said.
Masidi said this approach ensures that project implementation continues without straining the State’s financial position or neglecting other development sectors.
“The Sabah Government is also a ‘good paymaster’, consistently meeting its repayment obligations on schedule,” he said.
To reduce reliance on Federal loans, he said the State Government has outlined several measures, including strengthening revenue generation.
This includes optimising existing revenue collection and encouraging departments to explore new revenue sources.
Efforts are also focused on improving water utility management, including reducing non-revenue water (NRW) losses.
“This is crucial to enhance operational efficiency and revenue in the water supply sector,” he said.
Addressing concerns over rising global oil prices, Masidi said the Sabah Finance Ministry has established a Special Committee.
He said the committee will assess the situation and propose targeted subsidies if necessary, based on its findings.
He added that the Ministry will also propose expenditure rationalisation to ensure prudent government spending amid economic challenges.
“Efficient spending is key to ensuring Sabah remains sustainable and resilient without compromising its fiscal reserves,” he said.
On State taxation policy, Masidi said the Government maintains a balance between revenue expansion and industrial development.
He said any decisions regarding State Sales Tax (SST) are made based on detailed studies and stakeholder engagement.
“Effective Apr 1, 2026, the SST rate for scrap metal and waste has been revised from 10 per cent to five per cent,” he said.
Masidi also said the Government is prepared to consider grants for statutory bodies and government-linked companies (GLCs) to strengthen agricultural programmes.
“This initiative is important to drive the agricultural sector and ensure continued food security, subject to current financial capacity,” he said.
On development allocation distribution, Masidi said the State Government adopts an inclusive approach regardless of political differences.
He said allocations are provided to all constituencies, including opposition areas, through District Offices, Sub-District Offices and local authorities.
“For opposition areas, allocations are channelled under Special Provisions managed by the Sabah Finance Ministry,” he said.
He added that cooperation among implementing agencies is essential to ensure funds are properly disbursed and utilised.