KUALA LUMPUR (June 7): The distribution of the capitation grant to state governments is not made based on political affiliation, but rather on the number of residents in each state in the country, said Deputy Finance Minister II Steven Sim Chee Keong.

He said the federal government always conducts a comprehensive review of all grants given to state governments and does not only focus on one grant.

“Based on the current rate, the amount of allocation provided to states increases every year,” he said during the question and answer session in the Dewan Rakyat on Wednesday (June 7).

He said this in reply to a question from Datuk Awang Hashim (PN-Pendang) regarding the government’s efforts to refine the capitation grant based on Part I of the Tenth Schedule of the Federal Constitution.

In fact, Sim said, Kelantan received the highest distribution of the Economic Development, Infrastructure, and Welfare Development-Based (Tahap) grants for the years 2022 to 2023, totalling RM42 million, followed by Sabah (RM41 million) and Kedah (RM40.7 million).

“In 2023, the federal government improved three grants for state governments.

“It includes increasing the allocation for the Tahap grants from RM330 million to RM400 million; increasing the Road Maintenance Grant to RM5.2 billion from RM5.05 billion in 2022; and increasing the Ecological Fiscal Transfer (EFT) to RM150 million from RM70 million in 2022,” he said.

At the same time, Sim said that the federal government has no plans to carry out a review of the formula and calculation based on the number of people.

“This is because this proposal will involve significant financial implications and will have an impact on the government's efforts to revive the county’s economy,” he said.

He also said that the ministry of finance will always be committed to reviewing and improving grants to states holistically, subject to the current financial capabilities of the federal government.