KUALA LUMPUR (Feb 11): The Capitation Grant Act, which proposes higher payments to states under a new funding structure, was tabled for its first reading in the Dewan Rakyat on Wednesday. Capitation grants are federal funds given to states based on their population size.

Deputy Finance Minister Liew Chin Tong tabled the bill, with its second reading scheduled for the current parliamentary session.

According to the bill circulated in Parliament, the proposed legislation seeks to amend Part I of the Tenth Schedule to the Federal Constitution to revise the rates of capitation grants allocated to states.

The bill proposes higher payment rates per person and a new rate structure that benefits both small and large states.

Under the proposed revision, Subsection 1(1) of Part I of the Tenth Schedule will be amended to replace the existing rates with a new structure that provides RM102 per person for the first 100,000 persons, RM14 per person for the next 500,000 persons, RM13.50 per person for the subsequent 500,000 persons, and RM13 per person for the remainder of the population.

The amendment will revoke the current grant rates under the Capitation Grant Act 2002 (Act 622), which have been in effect since Jan 1, 2002. Currently, the first 100,000 persons receive RM72 per person, the next 500,000 persons RM10.20 per person, the following 500,000 persons RM10.80 per person, and the remainder RM11.40 per person.

In March 2025, the National Finance Council meeting, chaired by Prime Minister Datuk Seri Anwar Ibrahim, agreed to review and amend the capitation grant rate, which carries financial implications of RM548 million, representing a 25% increase.

The government said the revised structure is intended to strengthen fiscal support for states through higher capitation grants.

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