Anwar rebuts state marginalisation claims, says allocations driven by development needs, not tax returns

PRIME MINISTER Datuk Seri Anwar Ibrahim has rejected assertions that certain states are being neglected in the distribution of federal government allocations, stressing that funding decisions are made on the basis of development needs rather than the amount of tax revenue generated within each state.

Speaking in the Dewan Rakyat on Tuesday, Anwar said all states had received higher federal allocations compared with previous years, with priority given to urgent national development requirements, including poverty eradication, infrastructure upgrades and education facilities.

“All states receive allocations that are higher than before. We defend these decisions based on urgent needs such as poverty eradication, upgrading infrastructure and schools, among others. It is absolutely untrue to claim that certain states are being sidelined or neglected,” he said.

He added only Selangor and Penang recorded tax contributions that exceeded federal expenditure in their respective jurisdictions, attributing this to their stronger economic foundations and strategic roles in the national economy.

“For Selangor, the average tax revenue for 2023 to 2025 is RM43.6 billion, while federal spending in the same period is RM15 billion. For Penang, the average federal revenue is RM10.7 billion, while expenditure is RM7.9 billion,” he said, in response to a question from Sri Aman MP Datuk Seri Doris Sophia Brodi.

Anwar also highlighted expanded federal support mechanisms for states, including Ecological Fiscal Transfer and Capitation Grants, aimed at strengthening development capacity nationwide.

Responding to a supplementary question on special grants for Sarawak, the Prime Minister said discussions between the federal government and the Sarawak government were ongoing in the spirit of the Malaysia Agreement 1963 (MA63).

“We are continuing discussions with Sarawak, including recent meetings with the Premier in Bintulu and Kuching,” he said.

He added that details of the negotiations had not been publicly disclosed as attention was being focused on broader fiscal arrangements, including a RM1.8 billion allocation involving the federal government, while assuring that talks would continue.

“I have given assurances that discussions will continue, and it is appropriate that increases are considered in line with the spirit of the MA63 agreement,” he said. - June 30, 2026