SABAH and Sarawak continued to receive the highest federal development allocations, with RM6.9 billion and RM6 billion respectively under Budget 2026, marking an increase compared to 2022.
Prime Minister Datuk Seri Anwar Ibrahim said also said the special grant for both states will be doubled to RM600 million, from RM300 million in 2023.
"The allocations reflect the government’s continued commitment to honour the Malaysia Agreement 1963 (MA63) and to close the development gap between the two Borneo states and peninsular Malaysia," he said when tabling the budget in the Dewan Rakyat.
“In the spirit of MA63, the Madani government is committed to accelerating development in Sabah and Sarawak and will work to close the development gap, particularly in basic infrastructure,” he said.
The finance minister also said the government has allocated RM1 billion for water infrastructure upgrades in Sabah.
"These include the installation of new pipes in Tawau and replacement of ageing ones in Kota Kinabalu, Penampang and Putatan, expected to be completed next year," he said.
He also said RM1.2 billion in federal funding will be channeled to ensure electricity supply reliability in Sabah even after regulatory control was transferred to the state government last year.
He also said the Sarawak-Sabah Link Road (SSLR) Phase 1 is expected to be completed by November 2026, while Phase 2 is under construction and projected for completion by mid-2029.
"In total, all the infrastructure projects involve an estimated cost of RM48 billion. - October 10, 2025
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