KUCHING, Sept 16 2026: The federal government has agreed to increase the interim rate of the Special Grant to RM1.5 billion annually to Sarawak, effective from 2026.
Prime Minister Anwar Ibrahim said the state government has agreed to the increase of the interim rate.
“The federal government continues to negotiate with the Sabah and Sarawak governments to finalise a sustainable formula for determining the annual Special Grant rate,” he said at the Malaysia Day celebration at the Borneo Convention Centre Kuching (BCCK) tonight.
The increase of the interim rate for Sarawak was among the announcements that prime minister made.
He also announced several key initiatives that were aimed at easing the people's burden and strengthening ties between the federal government and the states of Sabah and Sarawak.
“These include the enhancements to the BUDI diesel initiative for the public, and a one-off special flight ticket purchase subsidy for every eligible new student at Public Higher Education Institutions (IPTA).
“These initiatives also embody the spirit of the Malaysia Agreement 1963 (MA63) as a national pledge that must continue to be upheld by respecting the rights and interests of Sabah and Sarawak within the federal framework,” the prime minister said.
He said the federal government will continue to work tirelessly to ensure that the nation's progress translates into tangible benefits for the people, allowing Sabah, Sarawak, and the peninsula to move forward together towards a more prosperous and dignified life.
On the BUDI diesel initiative, Anwar explained that the eligibility transfer facility will be extended to any eligible Malaysian citizen, no longer restricted to immediate family members.
“This means that buyers of vehicles under "continued payment" arrangements (where the buyer takes over loan repayments from the original owner) can enjoy the subsidy once the registered owner designates them as the actual user,” he said.
He said the registered owners who possess more than one diesel vehicle are permitted to transfer eligibility for each vehicle, up to a maximum of three vehicles.
“For instance, if a father owns three diesel vehicles, the eligibility for one vehicle can be transferred to his wife and another to his child.
“Each actual user will receive the subsidy benefit for the vehicle they use,” he explained.
He said these enhancements take effect immediately, and applications can be submitted via the BUDI MADANI Portal.
Acknowledging public concerns regarding high airfares, he said the federal government has agreed to provide a one-off Special Flight Ticket Purchase Assistance of RM500 to each eligible new student at Public Higher Education Institutions (IPTA)—including Public Universities, Polytechnics, and Community Colleges—for the September and October intake sessions this year.
“This grant is expected to directly benefit 7,095 students who need to take domestic flights between Peninsular Malaysia, Sabah, Sarawak, and the Federal Territory of Labuan to commence their studies,” the prime minister said.
He said the RM500 will be channeled directly into the eligible students’ bank accounts so to facilitate the process and ensure the aid reaches recipients quickly.
He said this method allows families to use the assistance to cover flight ticket costs without the burden of a complicated claims process. Implementation details will be announced by the Ministry of Transport (MOT) in the near future.
“This initiative strengthens the FLYsiswa agenda and serves as another manifestation of the federal government's concern for the people regarding the cost of living—particularly for parents who must cover additional expenses when their children pursue studies across regions.
“The federal government believes that distance and travel costs should not be barriers for Malaysian youths in pursuing knowledge and building their futures,” he said, adding that every child—whether from the Peninsula, Sabah, Sarawak, or Labuan—deserves equal educational opportunities.
“While RM500 may not cover the entire cost of travel, it represents tangible government assistance to lighten the financial burden on families as their children embark on a significant new chapter in their lives,” Anwar added.
