Sabah 40% Revenue Share: Political Calculus Behind Federal Non-Appeal

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Asia

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Image Source: Facebook/Anwar Ibrahim

The Malaysian federal government’s decision not to appeal a Kota Kinabalu High Court ruling on Sabah’s 40% revenue share is being portrayed by analysts as a calculated move to cool political tensions ahead of the Nov. 29 Sabah state election. The move aims to present Putrajaya as a government serious about Sabah’s interests, potentially boosting coalition partners’ prospects in the vote.

Observers say Prime Minister Anwar Ibrahim hopes a Sabah-friendly state government can be established through negotiations on the 40% special grant entitlement, a longstanding point of contention between the federal government and Sabah. The Federal Constitution entitles Sabah to a 40% share of net federal revenue generated within the state, but the court found the current arrangements to be illegal, ultra vires, and irrational, ordering negotiations to settle the figure for each financial year from 1974 to 2021 within 180 days.

The government’s stance has intensified political speculation in a state long seeking greater autonomy and a bigger say in revenue distribution. Analysts suggest that non-appeal messaging allows Peninsular-based parties competing in Sabah to frame themselves as reliable advocates for the state’s rights, potentially diminishing momentum for opposition or nationalist critiques.

However, some experts warn that the government’s strategy may be double-edged. While it signals commitment to Sabah, it also leaves open the possibility of appealing defects in the judgment, a move that could provide more time for negotiations but risk fueling further discontent if settlement terms appear insufficient or delayed.

Universiti Malaysia Sabah analysts note that campaigns are already using the 40% issue as a proxy for broader autonomy and fiscal fairness. Nomination day is approaching, and campaigning is set to intensify as parties vie for votes by portraying themselves as champions of Sabah’s economic future and constitutional rights.

As negotiations begin, all eyes will remain on how the federal government balances constitutional obligations with political realities on the ground in Sabah.