The finance ministry announced the enhancement in a statement issued after a National Finance Council meeting today, chaired by Prime Minister Muhyiddin Yassin.
For the first enhancement, the finance ministry said the federal government had agreed to increase the allocation under the economic, infrastructure and welfare development-based grants to all state governments from RM350 million to RM400 million.
“The increase in this allocation is for the purpose of financing ecological fiscal transfer activities as an additional incentive to state governments to ensure the sustainability of the country’s biodiversity.”
The ministry noted the federal government was also aware of the challenging financial situation faced by states due to the Covid-19 pandemic. “Therefore, the federal government has agreed to approve a contribution to the state reserve fund amounting to RM440 million.”
The ministry said this would help states that were facing any deficit and financial problems.
As for the third enhancement, the council agreed to improve the guideline for the federal government’s Malaysian Road Records Information System, including expanding the definition of state road maintenance.
“It is hoped that this decision will give flexibility to the state governments in carrying out road maintenance work according to priority and urgency of the respective states, thus ensuring the safety of the people, especially road users,” it said.
The ministry said the federal government was aware that the state governments were also experiencing a very drastic reduction in revenue due to the impact of Covid-19.
Therefore, the federal government agreed to provide an allocation of RM260 million to state governments to help them implement small-scale projects at the grassroots level.
The ministry said the first distribution of RM60 million had been channelled to the states with the maximum limit for each project set at RM100,000 through a ballot method to ensure that the distribution of allocations could benefit Bumiputera small contractors.