The Federal Government will spend RM38 billion to develop Sabah and Sarawak in the next five years, which will include the toll-free Pan Borneo Highway, Prime Minister Datuk Seri Najib Tun Razak said.

"The best equaliser in terms of income disparity is education and social equality.

"Secondly, it is connectivity. That is why we are giving Pan Borneo Highway to Sarawak and Sabah without toll," he said at the Dialog Perdana Transformasi Nasional 50, here Thursday.

Najib, who is also Finance Minister, said the federal government will spend RM38 billion for the development of the two states.

"(It's not only the Pan Borneo Highway but also) the other roads and bridges. We will do it," he said.

The first phase of Pan Borneo Highway in Sarawak involves a total cost of RM16.5 bilion and is expected to be completed in five years (in 2021).

The length of the highway, which is expected to be about 2,083 km, will connect Sarawak, Sabah and Brunei. -- BERNAMA