LDP: Putrajaya owes Sabah 40 per cent of revenue

The Sabah Minister of Finance has written to the Minister of Finance in Putrajaya but todate there has been no response.

KOTA KINABALU: Liberal Democratic Party (LDP) President Teo Chee Kang expressed regret that Budget 2016 failed to acknowledge that, under the Constitution, 40 per cent of Federal revenues collected in Sabah were to be returned to the state government. “The Sabah Minister of Finance has also written to the Minister of Finance in Putrajaya but todate there has been no response.”

For starters, he thinks that the Federal Government should also transfer half of its entitlement under the oil royalty formula, the 10 per cent, to the Sabah Government. “The Opposition never fails to bring up the oil royalty issue and Putrajaya should do something about it.”

Again, the Federal Government should re-open negotiations to revise the amount of Special Grant for Sabah, he reiterated. “After the first review of the Special Grant for Sabah in 1969, to determine the allocations for the following five years, there has not been any review.”

“There was a joint meeting of Sabah and Federal officials on the matter in 2013 but there has been no follow-up.”

Teo disclosed that the Sabah Cabinet has since discussed the matter and would be setting up a Special Cabinet Committee to explore it further. “The Committee will study the interpretation of the different clauses in the Constitution.”

“So, we will be pursuing the matter with the Federal Government, to re-open the revision of the Special Grant, because to us it’s a peculiar matter and is in line with the empowerment of Sabah and Sarawak as announced by the Prime Minister.”

Empowerment is the way forward as Sabah and Sarawak are different from the peninsula and besides the geographical distance, there are cultural and other differences, he said.

The Minister pointed out that the Special Grant for Sabah had stayed at RM26.7 million since 1974 until today. “Pursuant to section 2 under Part IV of the 10th Schedule in the Federal Constitution, Sabah is entitled to an annual Special Grant of an amount equivalent to 40 per cent of the increase in the net revenue derived by the Federal Government compared with such net revenue derived in the year 1963.”

This formula, he stressed, was peculiar to Sabah only. “The similar grant for Sarawak consists of pre-determined sums.”

Teo pointed out that the Federal Government derived a huge amount of revenue from Sabah every year in the form of import and export tax, income tax, and GST. “The RM26.7 million is a mere pittance compared with the formula enshrined in the Federal Constitution. We cannot be continuing to receive this mere pittance every year.”