KUALA LUMPUR – Malaysia’s Budget 2026 has placed East Malaysia at the forefront of national spending, pledging billions for infrastructure, electricity, and water projects in Sabah and Sarawak , a move analysts say carries strong political undertones with Sabah’s state election approaching. Coming just days after the dissolution of the Sabah state assembly on Oct 6, the budget raises development allocations to RM6.9 billion for Sabah and RM6 billion for Sarawak, while doubling annual special grants for both states to RM600 million each. The federal government also earmarked RM1.2 billion to boost electricity supply, RM765 million for the Southern Link Transmission Project, and RM1 billion for water upgrades in key Sabah districts.
Prime Minister Anwar Ibrahim’s administration is widely seen as seeking to consolidate East Malaysian support, which was instrumental to his unity government’s formation after the 2022 general election. But scepticism remains high in Sabah, where voters have seen similar promises before. “People here have heard promises of billions before, yet infrastructure problems remain,” said political analyst Dr Arnold Puyok of Universiti Malaysia Sarawak. “The main issues are implementation, weak governance, and the inability of representatives to turn those billions into tangible results.”Dr Puyok also noted that the new grants fail to address Sabah’s longstanding demand for a 40 per cent share of federal revenue, calling the move “a temporary and symbolic solution.”
Opposition MP Syahir Sulaiman echoed the criticism, saying the allocations looked like “pre-election goodies.”Sabah, home to over 1.7 million eligible voters, will elect 73 assembly representatives within 60 days, setting the stage for a highly competitive race among overlapping alliances. Chief Minister Hajiji Noor’s Gabungan Rakyat Sabah (GRS) faces challengers from allied parties such as Parti Solidariti Tanah Airku and the Sabah Progressive Party, reflecting the state’s fluid and personality-driven politics.“Sabah has long been an arena to shape federal power,” said Dr Bridget Welsh of the University of Nottingham’s Asia Research Institute Malaysia.
“Sabah politicians have a history of switching support, so keeping them onside requires meeting their demands.”Federal leaders have framed the budget as a step toward fulfilling the Malaysia Agreement 1963, which guarantees special rights and autonomy to Sabah and Sarawak. Deputy Minister Chan Foong Hin said the allocations “signal Putrajaya’s commitment to closing the infrastructure gap.”Beyond utilities, the budget includes continued investment in the Pan-Borneo Highway, the 28km Kalabakan-Simanggaris cross-border road with Indonesia, and a RM2 billion undersea cable project connecting Johor, Sarawak, and Sabah.
Dr Tricia Yeoh of the ISEAS–Yusof Ishak Institute described the budget as a blend of short-term political calculus and long-term planning. “These upgrades to connectivity and utility in Sabah are very welcome, but they have to come with implementation and delivery,” she said. While Sarawak’s RM6 billion allocation underscores its growing autonomy and stable relationship with the federal government, analysts caution that effective coordination between federal and state agencies will determine whether Budget 2026 delivers lasting progress or remains another exercise in political reassurance.