Sarawak proposes a flexible special grant tied to a percentage of its own revenue, aiming for a fairer system as the state funds major development projects.
KUCHING: Sarawak has formally proposed that its federal special grant be calculated as a percentage of the state’s own generated revenue.
Premier Tan Sri Abang Johari Tun Openg said the state government intends to propose a new formula linking the grant to Sarawak’s total income, particularly tax revenue. He cited a hypothetical example of 20% of state revenue being returned.
“We propose, for example, that 20% of Sarawak’s revenue be returned to the state. If revenue is high, the amount returned will be higher; if revenue is low, the amount will be lower,” he told reporters after a housing event here. He argued the current fixed allocation is insufficient for the state’s development needs.
Abang Johari said Sarawak currently bears the bulk of costs for projects like houses, bridges, and cancer centres using its own resources. The proposed flexible mechanism would reflect the state’s actual financial performance and capacity to contribute.
“At this time, Sarawak has revenue, so what is wrong with us contributing? At other times, if our revenue drops, the federal government can assist us,” he added. He emphasised that the people’s interests must come first in any financial arrangement.
The proposal concerns the special grant allocated under Article 112D of the Federal Constitution. This article mandates a review of the grant amount for Sarawak and Sabah every five years.
The Ministry of Finance confirmed this week that negotiations with Sarawak will be held this year to review the grant. In a parliamentary written reply, it said talks would formulate a new calculation method considering state service costs and the federal government’s financial position.