This article first appeared in The Edge Malaysia Weekly on December 29, 2025 - January 4, 2026

TO Sabahans, the Kota Kinabalu High Court’s ruling in October on the special grant from the federal government would have seemed long overdue.

The state has felt deprived of sufficient funds or grants from the federal government to assist in its development since the formation of the Federation of Malaysia in 1963. Hence, the Kota Kinabalu High Court’s decision on Oct 17 was viewed by many as a landmark decision in many ways.

Judge Datuk Celestina Stuel Galid ordered Putrajaya and the Sabah government to hold a mandatory review of the special grant under the Malaysia Agreement 1963, which accords Sabah the return of 40% of the net revenue collected by the federal government in the state, as there had not been a review of the grant since 1974.

Galid also ruled that Putrajaya’s issuance of a special grant to the Sabah government from 2022 to 2025, and its method of deriving the sum to be granted, to be unlawful.

Her rulings were in response to a judicial review sought by the Sabah Law Society (SLS) to compel the federal government to hold a review with the Sabah government to make good on the constitutional promise made at the formation of Malaysia in 1963, which grants Sabah a 40% share of the net revenue collected by the federal government in the state above the 1963 baseline amount, for each year between 1974 and 2021. The SLS also sought an order for the federal government to pay the entitlement as determined.

Article 112D of the Federal Constitution stipulates a periodic review of the special grants and assignments of revenue to the states of Sabah and Sarawak, as outlined in Article 112C, which the SLS said had not been undertaken since 1974.

The federal and Sabah governments were required to hold a second review of the special grant in 1974, following the first review in 1970. A review was to be undertaken every five years from 1974. In relation to this, the Kota Kinabalu High Court found that the federal government had committed a breach of natural justice that it said had resulted in the 40% entitlement to be ignored for 48 years.

Galid ordered a review for the period from 1974 to 2021 to be made within 90 days and for an agreement to be reached within 180 days from the date of the court order. The 1974 to 2021 period has been deemed “the lost years”.

Although the federal government is not appealing against the quantum of 40% to be paid, it is appealing against the remarks made by Galid on legal and constitutional issues, where it is of the view that she had erred in law and fact.

Whether the Sabah government — named along with the federal government in the SLS judicial review — agrees with this move is something the recently re-elected administration of Datuk Seri Hajiji Noor would have to consider.

Asked how much the federal government is estimated to owe Sabah, SLS past president Roger Chin, who initiated the judicial review in 2022, responded that given something as important as Sabah’s 40% entitlement, the people deserve straight answers and consistent communication.

“That is the standard Sabahans expect — and the standard they are entitled to. However, there is no definitive figure because the numbers have never been transparently disclosed. That is precisely the problem. For decades, the data needed to calculate Sabah’s 40% entitlement has been withheld from public view,” he stressed.

“Different economists and analysts have estimated anywhere between RM100 billion and RM300 billion in arrears. But without access to the actual federal government revenue figures attributable to Sabah, no one can say with certainty,” he told The Edge.

“What we do know is this: the Federal Constitution mandated periodic reviews, and those reviews did not happen for nearly half a century. When you compound five decades of non-compliance, the sum will inevitably be large.”

Chin said this is why the Kota Kinabalu High Court’s order for an accounting is so important as it is meant to finally bring truth to the numbers. “Without transparency, Sabahans are left guessing about what should already have been paid as a matter of constitutional obligation,” he added.

Putrajaya’s claims that reviews had been undertaken did not convince the judge. While the federal government said there had been an ongoing review of Sabah’s revenue share since 1974, Galid observed that the government’s claim was made via affidavit without any proof. As such, the judge ordered Putrajaya and the Sabah government to carry out the long overdue review of the special grant within 90 days.

“Not a single document was exhibited [by the federal government], only the following averment by the federal government [to the claim of ongoing review], that starting from 1974 to 2021, the review process was ongoing between the federal and Sabah government, concerning the amount to be granted by way of a substituted grant under Article 112D(1) of the Federal Constitution taking into consideration of Article 112D(2).

“One would think that after the lapse of some 48 years, some semblance of evidence would be forthcoming of such ongoing review. The people of Sabah [whose interests have been and are directly affected] have a legitimate expectation and deserve to know what exactly their government and state have done in those 48 years to realise the continuity of the conditions and safeguards that their forefathers had insisted on when they agreed to be part of Malaysia.”

Galid said it was troubling that the federal government relied only on an affidavit to support its claim of a 48-year ongoing review, adding that citing rahsia (confidentiality) did not prevent Sabah from providing similar documents, yet none was shown.

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