KOTA KINABALU, June 1 ― A former president of the Sabah Law Society (SLS) said Prime Minister Datuk Seri Anwar Ibrahim’s remarks yesterday concerning the state’s right to 40 per cent of revenue is inappropriate and insulting to Sabahans, even as the state government is engaged in a lawsuit against the federal government.

Datuk Roger Chin said that Anwar’s statement that the federal government had “given far more than 40 per cent” in its 2024 RM16 billion development expenditure showed failure to understand the underlying constitutional right as sought by Sabah.

“An increased allocation compared to previous years may appear generous on the surface, a closer examination reveals that this allocation does not adequately address the fundamental issue of Sabah's 40 per cent net revenue entitlement under the Malaysia Agreement 1963 (MA63).

“Instead, it seems to obfuscate the real financial needs and rights of the state, thereby insulting the intelligence of the people of Sabah,” he said in a statement late last night.

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Chin said that while an increase in federal allocations was a positive development, it falls short of addressing the fundamental issue of financial autonomy and fair revenue sharing, and shows a lack of understanding of the state’s issues with its federal counterpart.

“The people of Sabah deserve transparency, respect for historical agreements, and genuine financial empowerment. Anything less is an affront to their intelligence and their rightful place within the Malaysian federation,” he said.

Chin said that there was a crucial difference between federal allocations and special grants ― the former is for specific operational expenditures like various programmes and projects, with the unutilised balance rolled over to the next fiscal year.

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These funds do not flow directly into the state's coffers, to be channelled where the state can exercise autonomy over their use.

“In contrast, the 40 per cent net revenue entitlement under MA63 is a special grant that should be directly transferred to the Sabah state government. This grant represents a share of the revenue generated within the state and is intended to be used at the state's discretion.

“It is a fundamental component of Sabah's financial autonomy and self-determination, enabling the state to invest in its infrastructure, public services, and development initiatives as it sees fit. By not fully honouring this entitlement, the federal government undermines Sabah's financial independence and its ability to address local challenges effectively,” he said.

Chin said Anwar’s statement that the federal government’s RM16 billion allocation exceeds the 40 per cent net revenue entitlement is misleading and dismissive of the underlying issue.

“The allocation is not a substitute for the special grant; it is a separate financial arrangement with different implications. Conflating the two not only confuses the public but also detracts from the legitimate demand for financial justice and adherence to the Malaysia Agreement 1963,” he said.

He also took issue with Anwar’s claims that “parochial and narrow-minded sentiments” related to state rights should be stopped.

“Such statements trivialise the genuine concerns of Sabahans regarding their financial entitlements and self-governance. The sentiment for greater autonomy and fair revenue sharing is not parochial; it is a fundamental aspect of the federal relationship outlined in MA63.

“Dismissing these concerns as mere noise undermines the legitimacy of Sabah's aspirations and the historical agreements that form the basis of Malaysia's federation,” he said.

Chin said that the federal government's current approach is perpetuating a paternalistic model where Sabah remains dependent on federal allocations rather than being empowered through its rightful revenue share.

“It also fuels the perception that Sabah's contributions to the national economy are not adequately recognised or reciprocated, fostering resentment and dissatisfaction.

“To address these issues, the federal government must honour its commitments under MA63 and ensure that Sabah receives its full 40 per cent net revenue entitlement as a special grant. This grant should be free from federal oversight, allowing Sabah to exercise its financial autonomy fully. Additionally, the government must engage in genuine dialogue with Sabah's leaders and civil society to address the state's unique challenges and aspirations,” he said.

Yesterday when officiating the closing ceremony of the state-level Ka'amatan festival, Anwar said that the federal government had done better to solve the MA63 state issues in its one and half years compared to the previous 10 years.

He said certain lawmakers should not be so quick to criticise the federal government for not fulfilling its 40 per cent obligation when they have been given substantial allocation of RM16 billion which “far exceeds” the 40 per cent.

He also said that he hoped that the issue would be resolved soon.

The 40 per cent return of revenue to Sabah is provided for in Article 112C of the Federal Constitution, but has not been abided by in the last 50 years since 1974.

Recently, the state government has said that their queries to the federal government for data and figures to substantiate its 40 per cent have gone unanswered. Discussions are ongoing to determine the mechanism and calculations for the claim.

The SLS is currently suing the federal government for their failure to pay the 40 per cent, and questioning their gazette of an “interim payment” in 2022.