KUALA LUMPUR: The federal government has increased its support and funding to state governments in 2023, including enhancing the allocation for the Pemberian Tahap programme to RM400 million.

Tahap is an aid programme for states based on the development level of the economy, infrastructure, and wellbeing.

Prime Minister Datuk Seri Anwar Ibrahim said the National Finance Council 2023, chaired by him, made the decision in a meeting today attended by all Chief Ministers of all the states.

The premier said the meeting also agreed to review and improve the guidelines and indicators for the distribution of Pemberian Tahap aid.

"This decision reflects the commitment and the determination of the federal government to provide opportunities to state governments to implement development projects according to their priority and model and in strengthening economic recovery in the direction of the development of Malaysia Madani," said Anwar in a statement.

He added that the National Finance Council also agreed to expand the allocation for the Ecological Fiscal Transfer (EFT) to RM150 million compared to RM70 million in 2022 to encourage states which have gazetted new protected areas.

The Finance Ministry has also agreed to assess and amend the methods of progressive payments involving new loans for development projects under the rolling plan.

The Prime Minister said such an approach would expedite the allocations provided through loans, helping the states with cashflow problems.

The federal government also agreed that tax incentive packages for investments in the states be extended two years until Dec 31, 2024, which will involve Kelantan, Terengganu, Pahang, Johor and Sabah in order to balance the development nationwide via investments by the private sector.

The federal government will also improve allocations for the maintenance of state roads and other works related to gated and guarded premises, besides the replacement of road signs.

State governments are also encouraged to give priority to road maintenance works involving contractors in Class G1 to G4, instead of only focusing on major concessionaires as this would help the smaller contractors, the premier added.

The Finance Ministry will also expand allocation totalling RM250 million for the maintenance and pavement works for federal roads.

"This will help to overcome potholes which cause accidents. The extra allocation is especially for the benefit of small Bumputera contractors," Anwar said.

With the extra allocation, the allocation for the maintenance of federal roads and pavements will be expanded to RM1 billion compared to RM750 million announced in Budget 2023.

Anwar said the federal government is committed to ensuring that relations with state governments are good and this has been manifested in the higher allocations to the states.

-- BERNAMA