KUALA LUMPUR: Federal funding for states should be determined by a transparent formula based on their development needs and not at Putrajaya's discretion or political considerations, says an opposition MP.
Ahmad Samsuri Mokhtar (PAS-Kemaman) said the formula should take into account four factors – each state's fiscal needs, its ability to raise revenue, its infrastructure gaps and the cost of development and delivering public services.
“Allocations should be based on clear criteria, not simply on the discretion of the federal government, much less political considerations or personal ties,” said the Perikatan Nasional chairman when debating the 2027 budget in the Dewan Rakyat.
Samsuri, who is also Terengganu menteri besar, said the same sum could mean different things for different states.
“Two states may receive the same allocation, but each has a different capacity to build infrastructure, attract investment and raise people's incomes,” he said.
Samsuri said the proposed formula should also account for factors such as geographical size, population distribution and infrastructure development when determining per capita grants, rather than relying on population figures alone.
He also asked why the federal government could not apply the same principle of fair funding to peninsula states, given its ongoing discussions with Sabah and Sarawak over their rights under the Federal Constitution and Malaysia Agreement 1963.
“If the government accepts the importance of a transparent and fair formula in its dealings with Sabah and Sarawak, why can't the same approach be considered for states in the peninsula?” he asked.
Under the 2027 budget, federal allocations for Sabah and Sarawak rose to RM18.7 billion and RM16.2 billion, respectively.
Prime Minister Anwar Ibrahim also said that negotiations with the two Borneo states would continue until a fair and sustainable formula for annual payments is reached.
Samsuri noted that debt servicing costs would rise by 6.5% to RM61 billion next year, up RM3.7 billion from RM57.3 billion, exceeding the RM2 billion increase in development allocations.
He warned that rising debt commitments could constrain spending on schools, hospitals, roads, clean water supply and public facilities, potentially slowing development and limiting assistance to the public.
Samsuri also called for more funding to develop the economy in the east coast, particularly by linking the ports of Kuantan, Kemaman and Tok Bali with industrial areas and the East Coast Rail Link.
He said better connections between ports, railways and industries could attract investment in shipbuilding, manufacturing and logistics, create jobs and narrow the development gap between states.