PUTRAJAYA: The National Finance Council yesterday agreed that annual grants for local authorities be extended to those in Sabah and Sarawak, starting next year.
The grants would help to improve their services and performance, said Prime Minister Datuk Seri Najib Razak, who is also finance minister, after chairing the council's meeting yesterday.
The move will will result in an increase of RM62.8 million in grants for Sabah and Sarawak annually.
Local authorities in the two states have not been receiving financial assistance from the Federal Government as local government is a state matter there.
The meeting also agreed that the service charge paid to state governments with civil servants involved in the implementation of Federal Government projects be increased from five to 10 per cent in the peninsula, and to 10 per cent in Sabah and Sarawak.
This will result in payment of RM150 million instead of RM75 million annually.
Najib said all state governments had received audit certificates from the auditor-general.
"The state governments should take heed of the recommendations so as not to repeat mistakes, and to improve their performance."
In terms of spending, Najib said, all state governments must follow the regulations and the principle of value for money.
The meeting also took note of the loans taken from the Federal Government. Najib hoped the state governments would pay the loans according to schedule.
However, the Federal Government understood the financial constraints faced by them, he said, adding that the government had converted loans into grants for non-profitable projects, such as the rural water supply undertaken by the states.
"This shows the Federal Government's sensitivity towards the financial needs of the state governments," he said.
The Federal Government will also assist those having problems relating to management expenditures.
"This applies to all states controlled by Barisan Nasional or the opposition. In protecting the interests and needs of the rakyat, we will treat them the same way," the prime minister said.
Asked about the Malacca government's proposal to build a 52km bridge linking Malacca and Dumai in Sumatra, Najib said: "All I know is it is a private sector initiative. We have not studied the proposal yet. So, we will study it first and discuss with the Indonesian government."
The Malacca government had suggested the construction of the bridge, which is estimated to cost about US$11 billion (RM38 billion).
Chief Minister Datuk Seri Mohd Ali Rustam had said the bridge would have great economic potential, considering the population in Sumatra had reached 70 million compared with Singapore which had only four million.
He said the idea of the bridge had been raised since 1995, but was put on hold a few years later due to the Asian financial crisis affecting both countries then.
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