The Way Forward on Sabah’s 40% MA63 Entitlement
As the Sabah state election enters its second week, one issue has towered above the campaign noise. It is the 40% net revenue entitlement under MA63, recently affirmed by the Kota Kinabalu High Court.
The court has given both the Federal and Sabah governments 180 days to determine the amount due and the method of repayment, and 60 days for either side to appeal. This ruling has opened a rare window — not merely for political statements, but for an honest reckoning and a long-delayed settlement.
The High Court decision has unquestionably energised Sabahans.
Yet between the emotions, accusations, and campaign narratives lies a deeper challenge: how do we transform this historic ruling into a workable, sustainable and fair solution?
That requires not just political pressure, but positive leadership, data transparency, and the courage to make difficult fiscal decisions.
Former Sabah Law Society (SLS) president Roger Chin, whose organisation initiated the judicial review, placed the matter in its proper frame, “The 40% Special Grant is not a privilege to be negotiated, but a constitutional right owed since 1963.”
For decades, Sabah has operated in a fog of incomplete revenue data, interim arrangements, and inconsistent interpretations of Articles 112C and 112D of the Federal Constitution. Chin warned that any ambiguity today cannot repeat the neglect of the past.
“Transparency is essential — Sabahans deserve to know exactly how much was collected and how much was returned.”
That point resonates with the revelation by Datuk Seri Masidi Manjun that the Sabah government has requested federal revenue statistics 19 times, yet without complete disclosure. Without establishing a mutual, verifiable revenue baseline, any negotiation — or repayment scheme — risks being inaccurate or politically manipulated.
The first step is therefore not rhetoric, but mathematics. A fresh calculation of Sabah’s entitlements from 1974 to the present.
Appeal but not appeal
Still, confusion emerged when the Federal Government announced that it “was not appealing” Sabah’s right, yet filed a notice of appeal. Prime Minister Anwar Ibrahim insisted the government was only appealing the “grounds”, not the entitlement itself.
But the explanation did not sit well with Sabah leaders, including those formerly aligned with the federal administration.
UPKO President Ewon Benedick, who took his party out of the federal coalition over this issue, described the mixed signals as unacceptable, “The people of Sabah have the right to know whether the Federal Government is honouring the High Court decision or seeking to undermine it.”
He criticised the “appeal but not appealing” narrative, saying, “This is not political theatre — this is about Sabah’s rights and the terms on which we joined Malaysia.”
His position has gained traction especially among younger voters who view MA63 not as history but as unfinished business.
The SLS itself has been firm. Its leadership reiterated that the ruling is binding and must be respected, cautioning Putrajaya not to reduce the matter to technical interpretations: “This is not about generosity; it is about constitutional obligation.”
The tone is clear: the era of discretionary payouts must end. The court has spoken, and the next 180 days must be spent on complying, not confusing.
Clouded by anti-Malaya sentiment
Yet even among Sabah leaders, politics risks clouding progress. KDM leaders, frustrated by federal parties’ dominance, have turned their rhetoric toward identity politics.
Huguan Siou Joseph Pairin Kitingan went as far as to say, “Parti Semenanjung tidak harus ada tempat di Sabah.” While the sentiment taps into longstanding grievances, the risk is that it oversimplifies the problem.
This is "the negligence of Mahathir, not Semenanjung", and reducing the issue to Sabah-versus-Malaya only diverts attention from the real battle: securing a fair, lawful, and financially workable settlement.
Under- or overfunded?
The reality is that the Federal Government does possess one legitimate concern and that is Sabah’s revenue in the early decades of Malaysia was significantly lower.
As Anwar pointed out in a roadside explanation, Sabah today receives RM17 billion in federal allocations while only RM10 billion is collected in federal tax there. If past years showed similar patterns — and they often did — Sabah may not have been “underfunded” in the narrow sense, though its constitutional entitlement was never properly reviewed. Such context underscores the need for a proper recalculation, not assumption-based claims.
This is why the Federal Government’s recent announcements matter. Negotiations have formally begun, and a special panel has been formed to review the 40% entitlement. These steps, though slow, show that both sides recognise the ruling cannot be ignored.
Uncomfortable steps
But process alone is insufficient. Malaysia must now craft a repayment schedule that is credible, transparent, and sustainable. A realistic roadmap would include:
- Verification of the true arrears through joint audits.
- Phased repayment over multiple years to avoid fiscal shock.
- Transfer of federal assets in lieu of cash, especially unused land, dilapidated federal buildings, or state-based facilities.
- Federal efficiency reforms, including merging or eliminating redundant agencies and reducing excess staffing, freeing funds for repayment.
None of these are comfortable steps. But they are necessary — not only for Sabah’s sake, but for national cohesion.
Political fragmentation
Politics alone cannot deliver MA63. In fact, political fragmentation risks derailing progress.
KDM’s disunity, Chinese voters shifting toward Warisan, and incessant opposition-versus-government narratives only distract from the fundamental truth: only the Ministry of Finance has the actual numbers, and only systematic reforms can honour Sabah’s rights.
What Sabah needs today is not slogans but structure; not anger but accuracy; not ultimatums but a united front. The goal must be a final, transparent settlement, not another generation of disputed interpretations.
Sabah has waited more than 50 years for this moment. Let the next months prove that Malaysia can still honour its promises — not by emotional politics, but through principled negotiation, verified data, and responsible governance.
The 40% entitlement is no longer a dream, nor a political prop. It is a constitutional promise whose time has finally come to be fulfilled.
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