Dewan Rakyat passes law to revise state grant rates based on population

 

PARLIAMENT | The Dewan Rakyat passed the Capitation Grant Bill 2026 today, which aims to revise the capitation grant rates for each state under a new structure.

The bill was approved by a majority after being presented by Deputy Finance Minister Liew Chin Tong for its second and third readings.

“We have begun a process to review the capitation grant or per-person grant, and this is a starting point to ensure more regular reviews - every 10 years,” he said while winding up the debate on the Capitation Grant Act Bill 2026 in the Dewan Rakyat today.

Capitation grants are federal funds provided to states based on population size. The last amendment to these grant rates was made 24 years ago, in 2002.

Regarding whether the bill is related to a special grant for Sabah based on 40 percent of the state’s revenue, Liew said it is unrelated to that amendment.

“This is because the bill only reviews the population-based grant rates,” he said.

The bill aims to increase per-person grants to each state and ensure fairer treatment so that less-populated states receive appropriate support while more-populated states also receive higher grants.

The Act, which will take effect on April 1, is expected to involve additional expenditure of up to RM538 million.

Earlier, Liew said the proposed legislation is administrative in nature and intended to implement the new capitation grant rates.

“Part 1 of the 10th Schedule of the Federal Constitution needs to be amended to enable the new rates to be implemented. In addition, the Capitation Grant Act 2002 has to be repealed,” he added.

- Bernama