KUALA LUMPUR: The government, through the National Finance Council, has agreed to improve grants and financial support for each state this year.
In a statement today, Prime Minister Datuk Seri Anwar Ibrahim said this was decided during the Council meeting he chaired today.
The meeting was also attended by all state menteris besar, chief ministers or their representatives.
Anwar, who is also the Finance Minister, said the federal government had agreed to increase the Economic, Infrastructure and Welfare Development-Based Grants (Tahap) to RM400 million.
"Today's meeting also agreed on the review and improvement of indicators and the distribution of Tahap Grants.
"This decision shows the government's commitment and seriousness in providing opportunities for state governments to implement development projects based on priorities and state needs, and further strengthen the economic recovery momentum towards the development of Malaysia Madani," he said.
He added that as announced in the 2023 Budget, the council also agreed to increase the Ecological Fiscal Transfer allocation from RM70 million in 2022 to RM150 million.
This increase, he said, was a special incentive to states that gazette new protected areas.
The federal government also agreed to improve the use of allocations under the State Road Maintenance Grant to maintain roads and other related work in gated and guarded areas, as well as the replacement of road and lane name signs, including villages and residential roads, and other road signs apart from direction indicators.
Anwar also said state governments had been advised to prioritise Class G1 to G4 contractors in road maintenance works in their respective states, and not just focus on a few large concession companies.
"This step aims to help the economic cycle of small contractors more fairly, and can indirectly stimulate the country's economic growth holistically."
The Finance Ministry would also allocate another RM250 million for periodic maintenance of federal roads, to deal with potholes which he said were among the contributing factors to accidents.
"The federal government fully understands the importance and need for regular maintenance of federal roads so that the condition is always safe and comfortable for the people.
"This additional allocation will also be dedicated to benefit small Bumiputera contractors," he said, adding that the addition increases the overall allocation to RM1 billion from RM750 million announced in the 2023 Budget.
To improve federal government loans to state governments, the Finance Ministry has agreed to consider and amend the disbursement method to progressive payments involving new loans for development projects under the Malaysia Plan rolling plan, said Anwar.
This approach, he said, could speed up the process of channeling allocations provided in the form of loans, which would aid state governments with cash flow problems, needing to depend on loan allocations to implement development projects.
Anwar said the federal government also agreed that the tax incentive package for state investments be extended for a transition period of two years until Dec 31, 2024.
This would involve states such as Kelantan, Terengganu, Pahang, Johor and Sabah, in line with the government's desire to balance development across the country through investment activities carried out by the private sector.
He said this was also an interim step towards a more comprehensive application of the new incentive structure.
"The government is always committed to ensuring that the relationship between the federal government and the state governments is at its best," he said.
"This desire is manifested through increased allocations channeled in various forms of grants to state governments every year.
"It is the federal government's hope that these grants will be fully utilised by state governments to implement a more balanced national development in line with the concept of Malaysia Madani."
