PRIME Minister Datuk Seri Anwar Ibrahim announced a revision for the Capitation Grant which has now been approved for an increase of 25% effective from 2026 carrying a total allocation to RM548 million.
This marks the first revision of the Capitation Grant rate since its introduction in 2002, reflecting the Government’s commitment to supporting state governments in delivering essential services to the people.
The Capitation Grant, as stated in Article 109 (1) (a) of the Federal Constitution, is a sum of money given to each state by the federal government based on the state's population. The grant is used to help manage the state government.
The matter was decided at the 2025 National Finance Council (Majlis Kewangan Negara) meeting, chaired by Anwar, who also holds the position of Finance Minister today.
The meeting further approved improvements to the guidelines for the Ecological Fiscal Transfer for Biodiversity Conservation (EFT).
This aligns with the government’s ongoing efforts to conserve and protect the environment.
In a release by the Ministry of Finance (MOF) today, the ministry said: “The MADANI government has demonstrated its dedication to environmental preservation with a significant increase in the EFT allocation from RM150 million in 2023, the fund will now rise to RM200 million in 2024, and RM250 million in 2025.”
"Through the National Finance Council, the MADANI government has shown its commitment to collaborate and provide continued support to all state governments towards the development of Malaysia MADANI," said Anwar.
MOF explained that the federal government's commitment to supporting state governments is also evident in the increased federal grants.
“For 2024, federal transfers to the state governments will amount to RM9.3 billion, with an additional allocation of RM9.8 billion for 2025. This funding aims to benefit all Malaysians across the country,” the statement read.
Additionally, the federal government has committed to inclusive development, ensuring that new projects approved in Budget 2025 align with the priorities of each state government.
A notable increase in agricultural cooperation with the state governments has seen the allocation rise from RM150 million in 2024 to RM300 million in 2025.
Anwar had stressed that the federal government remains steadfast in ensuring strong relations with all state governments to promote the welfare and prosperity of all Malaysians.
“Through these allocations and initiatives, the government aims to foster greater collaboration and shared progress across the nation,” he added.
It was reported earlier that Anwar had chaired the annual meeting of the National Financial Council 2025 at the Ministry of Finance (MOF) Complex in Putrajaya.
Among the dignitaries in attendance were Sarawak Premier Tan Sri Abang Johari Tun Openg and Sabah Finance Minister Datuk Seri Masidi Manjun representing Chief Minister Datuk Seri Hajiji Noor, as well as the Menteri Besar of Selangor Datuk Seri Amirudin Shari, Datuk Onn Hafiz Ghazi of Johor, Datuk Seri Muhammad Sanusi Md Nor of Kedah and Datuk Seri Ahmad Samsuri Mokhtar of Terengganu.
Also present were Deputy Prime Ministers Datuk Seri Dr Ahmad Zahid Hamidi and Datuk Seri Fadillah Yusof, Cabinet members and senior federal and state officials.
The annual meeting is a platform for negotiations on financial matters between the federal and state governments. – March 6, 2025
