KUALA LUMPUR, Nov 13 — Prime Minister Datuk Seri Anwar Ibrahim today said the federal government will not appeal the High Court ruling affirming Sabah’s constitutional right to 40 per cent of federal revenue collected from the state, reflecting the government’s commitment to uphold the Federal Constitution.
Speaking in the Dewan Rakyat, he said Treasury Secretary-General Datuk Johan Mahmood Merican has already written to the Sabah State Secretary, requesting that negotiations on the special grant begin immediately to avoid further delays.
“In fact, today, the Secretary-General of the Treasury has written to the Sabah State Secretary requesting that negotiations begin immediately to ensure there is no further delay.
“Let me clarify this to avoid confusion. Some have interpreted the Attorney General’s decision to file an appeal as an attempt to challenge Sabah’s 40 per cent entitlement. I must stress again that there is no appeal against Sabah’s 40 per cent special grant.
“What is being appealed relates only to what we regard as errors in the reasoning of the judgment, not its main decision,” he said.
He was responding to a question from Paya Besar MP Datuk Indera Mohd Shahar Abdullah on why the federal government is not appealing Sabah’s 40 per cent revenue share and the implications of such an appeal on other matters.
Anwar then clarified that the appeal is limited to certain aspects of the court’s reasoning, which the government considers inaccurate or unfair.
He also pointed out that the High Court had made remarks suggesting that the review of the special grant after 2021 was unlawful and irrational.
“In that reasoning, the court made several remarks that overstepped legal boundaries. For instance, it suggested that the review process of the special grant after 2021 was unlawful and irrational, and that successive governments since 1974 had committed serious errors.
“This implies that the federal government, from the time of Tun Abdul Razak and Tun Hussein Onn to Tun Dr Mahathir Mohamad and beyond—and likewise, state governments from the time of Tun Datu Mustapha and Tun Fuad Stephens to the present—acted in ways that were illegal, irrational, procedurally improper, and in neglect of Sabah’s constitutional rights,” he added.
He also described the remarks as a “very serious allegation” and said that misleading and inaccurate reasoning must be corrected through the appeal process.
Without such an appeal, Anwar said, all federal and state governments since 1974 would effectively be deemed to have breached the Constitution.
Responding to a supplementary question from Kota Bharu MP Datuk Seri Takiyuddin Hassan on whether the 40 per cent entitlement is related to other federal allocations received by Sabah or completely separate matters, Anwar explained that it is a distinct constitutional provision, separate from annual federal development allocations.
However, he said, from a fiscal management perspective, the overall financial relationship between the federal and state governments must be viewed holistically.
“Thus, ongoing negotiations are essential to define fiscal responsibilities clearly, whether an expenditure falls under state or federal jurisdiction.
“Regarding the definition of net revenue, the Finance Ministry currently interprets it as comprising direct taxes, indirect taxes, non-tax revenue, and petroleum revenue,” he added.
