KOTA KINABALU: Pressure is building in Sabah to resolve its long-standing claim to a 40 per cent share of federal revenue, with a local NGO proposing that alternative forms of settlement may be considered if payments continue to be delayed.
Bantuan Orang Susah Sabah (BOSS) president Datuk Kenny Chua said this include Sabah taking over key federal assets in the region as form of payment.
He said the federal government should prioritise settling at least the undisputed portion of Sabah’s revenue claim.
“If the federal government has difficulty settling even the undisputed portion or making partial payments, Sabah may have to consider taking over key federal assets within the state as a form of settlement,” he said in a statement.
His remarks come amid renewed debate in the Sabah State Legislative Assembly over the long-standing issue tied to the Malaysia Agreement 1963 (MA63), which grants Sabah a 40 per cent share of net federal revenue derived from the state.
Sabah Finance Minister Masidi Manjun said the state has insisted that Putrajaya should pay the undisputed portion of its 40 per cent revenue entitlement, while negotiations continue on other components.
“Our position remains as previously stated. There are two types of taxes which, in our view, are largely undisputed, namely customs collections and inland revenue board taxes, and we do have the figures,” Masidi told the Sabah legislative assembly.
He said the data was published annually and should not be subject to dispute, adding that Sabah was seeking 40 per cent of these collections while discussions continue on other components.
Based on state estimates, total collections from income tax and customs duties in 2025 stood at RM7.547 billion, with 40 per cent amounting to RM3.019 billion.
Masidi added that while negotiations on other components of the claim are ongoing, some details cannot be disclosed publicly to avoid undermining the state’s position.
Chua said Sabah must explore “all lawful and practical options” to safeguard its fiscal rights if delays persist.
“This is not about confrontation, but about ensuring Sabah receives what is rightfully due under the Constitution,” he said.
He praised Masidi for highlighting Sabah’s firm stance on the claim.
“I salute Datuk Masidi for making the statement. He spoke the minds of Sabahans,” said Chua who previously asked Putrajaya to tell Sabahans whether or not it can pay what was due to Sabah.
“If they can’t pay in full, start by paying partially. If not let’s explore if Sabah can take over some of federal’s assets in the state as form of payment.”
Chua also concurred with Tambunan assemblyman Datuk Seri Dr Jeffrey Kitingan who proposed the establishment of a MA63 Revenue Tracking System (MARTS) to monitor federal revenue collected from Sabah in real time.
Jeffrey said such a mechanism would improve transparency and ensure accurate annual distribution.
He said current federal allocations to Sabah fall significantly short of what the state is entitled to, estimating that Sabah contributes up to RM50 billion annually to federal coffers, which could translate into roughly RM20 billion under the 40 per cent formula.
Despite a High Court ruling last year affirming Sabah’s rights and finding that the federal government had breached its constitutional obligations over past payments, implementation has yet to materialise due to ongoing legal proceedings.
Negotiations between the Sabah and federal governments are continuing.
