KUALA LUMPUR (March 5): Federal grants to state governments are projected to reach RM10.5 billion in 2026, following a revised allocation framework endorsed by the National Finance Council on Thursday.
The Ministry of Finance said the increase is driven by a hike in the per capita grant (Pemberian Mengikut Bilangan Orang) rate, which is set to take effect this year. The move marks a steady climb in federal support, which has risen from RM8.1 billion in 2022 to RM10.3 billion in 2025.
Among key enhancements approved under the revised structure are:
- 100% tourism tax for states: In conjunction with Visit Malaysia Year 2026, the federal government will channel 100% of tourism tax collections back to the respective states. The current practice shares only 50% of the proceeds.
- Concurrent List enhancements: The council agreed to improve the disbursement mechanism for the "Concurrent List" — areas where federal and state governments share responsibilities, such as public welfare and specific infrastructure. Funds will now be channeled earlier to strengthen state cash flow sustainability.
- Expanded road maintenance scope: The state road maintenance grant will now include the procurement of modular steel panel bridges (Bailey bridges), as well as the repair and upgrading of drains and culverts along state roads.
“These improvements in federal grants are important to accelerate socio-economic development and strengthen critical infrastructure so that we can progress together as one nation,” MOF said in a statement.
The National Finance Council is chaired by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, who said the Madani government remains open to working closely with all state administrations, regardless of their political stance.
“This improvement in federal grants is essential to intensifying socio-economic development and critical infrastructure, so that we can all stand on equal footing [berdiri sama tinggi, duduk sama rendah] as one nation,” Anwar said.