What new formula is proposed for equitable state funding?

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A "Justice for All Formula" is Proposed for Equitable State Funding

A new funding formula, described as a "justice for all formula," has been proposed to ensure more equitable distribution of federal revenue to Malaysian states. This proposal advocates for a system that aligns with the constitutional principle of equality before the law, aiming to rectify perceived shortfalls in allocations for states like Penang. The initiative seeks to establish a fairer return of federal revenue based on states' actual contributions to national development, rather than the current allocation methods.
Proposal for a New Funding Formula

The call for a new funding formula stems from concerns that certain states are not receiving federal allocations commensurate with their economic contributions. DAP national adviser Lim Guan Eng specifically urged Prime Minister Datuk Seri Anwar Ibrahim to implement this "justice for all formula." The underlying principle is to ensure that states are treated equitably, reflecting the constitutional right to equality before the law, and to prevent any state from being "shortchanged" in future financial distributions.
Addressing Penang's Perceived Shortfall

A key driver for the proposal is the assertion that Penang has experienced a RM2.8 billion shortfall in federal allocations between 2023 and 2025, compared to its contributions. Lim Guan Eng highlighted figures indicating that Penang contributed RM10.7 billion over this period but received only RM7.9 billion in allocations. This disparity, he argued, is unjust when contrasted with states like Kedah, which contributed RM3.7 billion and received RM9.5 billion, suggesting that contributions should directly influence the return of federal revenue.
Equitable Revenue Distribution as the Goal

Penang Chief Minister Chow Kon Yeow echoed the sentiment for a fairer return of federal revenue, emphasizing that the state is not seeking preferential treatment. Instead, the focus is on achieving equitable revenue distribution that accurately reflects Penang's actual contribution to national development. This perspective underscores a broader aim to ensure that economic engines of the country are adequately supported through a transparent and fair allocation mechanism.
Constitutional Basis for Equality

The proposed "justice for all formula" is framed within the context of Malaysia's constitutional guarantee of equality before the law. Proponents argue that state funding allocations should uphold this principle, ensuring that all states are treated impartially by the federal government. The current system, according to these arguments, may inadvertently create a sense of grievance among populations in states that contribute significantly but receive comparatively less in return, potentially impacting their perception of appreciation for their support to the federal government.

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What new formula is proposed for equitable state funding?

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