KUALA LUMPUR, Oct 10 — Sabah and Sarawak will receive RM600 million in special grants under Budget 2026, Prime Minister Datuk Seri Anwar Ibrahim announced today when tabling the federal spending plan in the Dewan Rakyat.
Anwar said the allocations reflect the government’s continued commitment to honour the Malaysia Agreement 1963 (MA63) and to close the development gap between the two Borneo states and peninsular Malaysia.
“In upholding the spirit of MA63, the Madani government is committed to accelerating development in Sabah and Sarawak.
“This is not merely a promise but a concrete effort to close the development gap, particularly in basic infrastructure,” he said.
Anwar said Sabah and Sarawak continue to receive the highest federal development allocations, with RM6.9 billion and RM6 billion respectively for 2026, an increase compared to 2022.
He also highlighted several key infrastructure and utility initiatives, including RM1.2 billion in federal funding to ensure electricity supply reliability in Sabah even after regulatory control was transferred to the state government last year.
Anwar said the Sarawak-Sabah Link Road (SSLR) Phase 1 is expected to be completed by November 2026, while Phase 2 is under construction and projected for completion by mid-2029.
“The Trans Borneo Highway (LTB) will complete the road network connecting Sabah and Sarawak. The SST (Letter of Award) will be issued as early as the first quarter of 2026.
“The government will upgrade the existing road pavement structure along the red line section between Durin and Salim in Sibu, Sarawak, at a cost of RM350 million,” he said.
In total, Anwar said that all the infrastructure projects involve an estimated cost of RM48 billion.
Among other projects mentioned were the RM765 million Southern Link Transmission Line, RM1 billion for water projects in Tawau, Kota Kinabalu, Penampang and Putatan, and continued works on the Pan Borneo Highway.
“Nine packages of the Pan Borneo Highway in Sarawak have been fully completed and opened for public use.
“Four packages under Phase 1A of the Pan Borneo Highway in Sabah have been completed. In 2026, RM1.67 billion has been allocated to ensure the project proceeds on schedule,” he said.
Anwar said the government will also invest RM2 billion in the Madani Submarine Cable System (Salam) to enhance digital connectivity between Peninsular Malaysia, Sarawak and Sabah, and allocate RM20 million to upgrade Tamu Desa trading sites for small traders in both states.
“Spanning 3,190km and costing RM2 billion, the system will run undersea from Sedili in Johor to Kuching and Sibu in Sarawak, and continue to Tuaran, Kudat, Pulau Banggi, Sandakan, and Tawau in Sabah,” he said.
