Sabah has confirmed it owes RM6 billion to the federal government—funds largely channelled into long-overdue infrastructure projects in the state’s water and sewerage sectors.

Of that amount, RM3.1 billion has already matured and is being repaid The rest will only become due once the current deferred repayment period ends. Annual repayments are capped at RM500 million over 20 years.

“The state government wishes to clarify that the remaining RM3.1 billion from the overall RM6 billion (debt) will only mature after the deferred repayment period ends, with annual repayments capped at no more than RM500 million for a period of 20 years. 

“These interest-free federal loans are considered beneficial to the State Government, as they have enabled the State to implement various critical projects without affecting the state’s financial stability,” the Sabah Finance Ministry said in a written reply to the state assembly last week.

The issue was raised by Warisan’s Tungku assemblyman Assafal P. Alian, who sought clarity on the state’s financial commitments to Putrajaya. 

He confirmed to have received the ministry’s written response on April 21. 

FSabah has struggled with inadequate basic utilities despite its abundant natural resources. Vast areas—especially rural and fast-growing urban zones—still experience erratic water supply, while much of the sewerage infrastructure remains outdated or absent altogether.

Decades of underinvestment have left the state grappling with an infrastructure backlog, worsened by rapid urbanisation and growing demands from tourism. In many places, broken pipes, water rationing, and open drains are part of everyday life.

Federal loans have become a critical instrument for the Sabah government to fund projects its own budget cannot sustain.  – April 23, 2025