Budget 2018 Must Include Sabah’s 40 Per Cent Net Revenue Entitlement

Parliament is in sitting currently and the 2018 Budget is expected to be presented on Friday, October 27, 2017.

COMMENT: The Budget 2018 slated to be tabled on Oct 27, 2017 at the Dewan Rakyat (Parliament) must take into account the 40% net revenue collected in Sabah and other provisions which amount to between RM10 billion and RM20 billion yearly.

The Federal government cannot excuse themselves of this responsibility and say these cannot be paid due to the country’s current financial situation.

They have already collected the money. It is just a matter of setting aside the money and reimbursing Sabah.

It is the federal constitutional obligation and part of the Malaysia Agreement.

So far, the State government has yet to look into getting back what the Federal government owed to Sabah.


Under the Federal Constitution, Sabah is entitled to 40% of net revenue derived by the Federation from Sabah under the 10th Schedule, Part IV Special Grants to States of Sabah and Sarawak, Item 2(1).

Sabah is also entitled to 10% of the import and excise duties on petroleum products and additional 10% export duties on its petroleum in lieu of oil royalties as set in items 1 and 3 respectively of Part V, Schedule 10 of the Federal Constitution.

However, instead of giving the full 40% entitlement, the Federal government had given only RM26.7 million to Sabah government annually, an amount which was agreed upon in 1969 for simplicity reasons.

It was never revised after 1973 even though Article 112D of the Federal Constitution provides for mandatory reviews every 5 years.

We are not talking about arrears here, which by the way, Najib’s government should consider paying as it had been long time coming.

Security in Sabah is now a major concern.

Once the Sabah government is given what is due to them from the Federal, it would finally set the Bornean state on course to carrying out all its development plans.

Out of these RM20 billion, the State government can finally develop its economic and industrial infrastructure, develop its basic infrastructure and beef up its security to complement the federal obligations.

Additionally, it would also go a long way in raising and developing the people’s education level and improve its human resources.

Jeffrey who said the money could go towards managing and improving Sabah’s welfare instead of relying on hand-outs from the federal.

To protect its future, the Sabah government could set aside a portion of the money to be invested and reap the benefit in the future.

Last year, the Sabah government tabled a modest budget of only RM3.78 billion with a surplus of RM32.83 million which eventually turned out to be a deficit budget after a supplementary bill was passed in July 2017.

Out of the RM260.8 billion federal budget tabled last year by Prime Minister Najib Razak, Sabah and Sarawak were given only one major infrastructure project, the Pan Borneo Highway.

Nevertheless, we are more concerned about security issues in the State especially with the increase of crime committed by both locals and foreigners.

Kidnapping, foreign intrusion, Project IC, over-dependence on the Federal government on security issue, immigration and Sabah citizenship – all these are the reasons why Sabah has to play a role on homeland security.

Last year under the Defence Ministry, the Federal government allocated RM10 million for Esscom operations involving the forward base and the basing of aircraft at Labuan and Lahad Datu. Ironically, the budget allocated RM17million for LIMA 17.

• Dr Jeffrey Kitingan is Bingkor Assemblyman / president Parti Solidariti Tanah Airku (Star). He also heads the committee to demand the 40% net revenue under a loose group known as MySabah