Questions over Malay reserve
land
30/10/2004
NST-PROP By Salleh Buang
Earlier this month, I spent a couple of days in the midst of more than 250
senior officers from Land Offices around the country, at a seminar on land
administration in a five-star hotel in Kuala Lumpur.
Such a seminar has, of late, become an annual end-of-the-year event - a
gathering of decision-makers (as far as land matters are involved) and
therefore something that I look forward to and try not to miss.
A wide spectrum of topics is discussed and this year, one issue of
particular importance was the Federal Government’s proposal to amend the
Malay Reserve Land (MRL) Enactment.
There are, in fact, several enactments, two which are a uniform law for the
former Federated Malay States of Selangor, Negeri Sembilan, Perak and Pahang,
and a separate enactment for each of the former Unfederated Malay States of
Johor, Kelantan, Terengganu, Kedah and Perlis.
Ever since the announcement by the Government was reported, quite a number
of people have given their views. Some are in support, while others question
the underlying wisdom of amending the MRL enactments.
However, this debate only surfaced in the pages of the Malay dailies. I saw
very little reaction in the English press. Perhaps, for a lot of people, the
proposal to amend the law is “a Malay affair” and not a national issue.
I beg to differ. Though not quite reaching the status of a constitutional
question, what must be asked is whether the amendments, if they are indeed
implemented in early 2005 as proposed, will benefit the Malays who own such
land. Or will they benefit the others, the co-beneficiaries of the
amendments?
Critics of the proposed amendments in their letters to the local media said
the law as it stands has not been able to safeguard MRL, which continues to
be depleted to this day. Wouldn’t the situation become worse, they asked,
under the proposed amendments?
According to data, there were three million hectares of MRL when the nation
became free of the British yoke in 1957. Now, some 50 years down the road,
the figure has been almost halved to 1.7 million hectares! (A local daily
quoted a higher figure, and there has been no way of verifying which is
accurate.)
Legal duty
So, what has happened to all the MRL? In Selangor (purportedly Malaysia’s
most developed State), 9,000 hectares were “lost” through compulsory
acquisitions under the Land Acquisition Act 1960. However, the Federal
Constitution requires State Authorities to replace every acre of MRL taken
away through compulsory land acquisition. This is a legal duty that the
States have to discharge.
I have been given to understand that to date, only about one-third of the
9,000 hectares have been replaced. I stand to be corrected, if someone of
authority in Selangor can provide a more recent (and accurate) figure.
Let us look at the other states. In Kedah, my home for the past decade,
friends tell me that more than 80 MRL owners have lost their land in Pantai
Chenang, Langkawi, through compulsory acquisition by the State Authority in
1990 for the Pelangi Beach Resort.
Then, in 1993, the State acquired some 167 lots totalling 1,000 acres in
Kerpan to undertake an aquaculture project with the Ben Ladin group from
Saudi Arabia.
In Negeri Sembilan in 1994, more than 600 MRL owners in Kampung Mambau,
Rasah, lost 930 hectares to compulsory acquisition by the State for a
massive mixed-development known as Seremban 2.
In the State of my birth, Johor, some 26,000 acres of MRL in the Tanjung
Langsat-Tanjung Piai area were compulsorily acquired for the development of
a new township. The beneficiary of this acquisition was a well-known
business entity - Kuok Brothers - which undertook the project in
collaboration with the UEM Group.
In Malacca, residents of Kampung Pantai Kundur and Tanah Merah also lost
their MRL to State acquisition. The beneficiary of this exercise was the
national oil corporation, Petronas, which needed the land as a “buffer zone”
for its activities there.
In Terengganu, the Pulau Redang islanders lost some 300 acres of MRL, also
through compulsory State acquisition. This land was subsequently handed over
to a private company owned by a well-known non-Malay corporate figure for
the development of a resort.
The existing law on MRL bars owners from entering into any deal, such as the
sale and transfer, leasing or charging of such land to non-Malays,
apparently to “protect” the land. However, this restriction does not in any
way protect or safeguard MRL from depletion through the convenient machinery
of acquisition by a State!
After MRL is acquired, it becomes “State land”. Under this definition, the
path is open for these properties to fall into the hands of non-Malay
developers.
It is not my intention to question the bona fide of compulsory land
acquisitions, nor the bona fide of alienating such acquired land to new
owners. State Authorities may very well have good reason for doing this,
even though the deprived owners continue to question the actions.
However, some vital questions remain. Having depleted such an extensive
amount of MRL, why haven’t these State Authorities taken steps to replace
the lost quantum? Why did they fail to abide by their constitutional duties?
Or is it that safeguarding MRL is not of constitutional importance?
One of the stated objectives of the proposed amendment to the MRL Enactment
is to “free the land for development”. A local English language daily used
the headline “Freeing Malay land”, as if to imply that all this while, this
was shackled and impaired land.
Let us assume that the new law is in place and that MRL owners can lease
their properties to non-Malays for up to 60 years. Let us also assume that
the land, classified as “agricultural”, is converted for development and
that buildings, either commercial or residential, can be erected upon it.
During the lease period, Malay owners would get their “rental” from the
lessees, who in turn would probably earn much more, either through rentals
from the units or through the sale of the properties for the duration of the
lease period.
Assuming that the MRL is held in perpetuity (what in commercial terms is
called “freehold land”), what happens at the end of the 60-year lease?
Everything depends on the terms and conditions stipulated in the lease
agreement between the landowner and the lessee (the developer). An astute
lessee would ensure that at the end of the 60-year lease, an option to renew
could be exercised, and so the entire scenario would repeat itself.
Assuming that the MRL is held for a term not exceeding 99 years, what
happens at the end of the 60-year lease? Assuming that the land is reverted
back to the owner, there would be just 39 years left until the lease expires
and the MRL becomes State land again, under the National Land Code.
Other questions that beg asking are: Will the new law spell out explicitly
the terms of the lease to be executed between the MRL owner and the
non-Malay lessee? Will the authorities vet these leases before giving final
approval? And, will non-Malay lessees be required to pay a deposit to the
owners or the authorities as a guarantee that they could perform their
obligations, so that the interests of the MRL owners are safeguarded?
Indeed, very little is known about this proposed new law, apart from what
has been reported in the local media.
MRL owners have been left in the dark, drifting between speculation and
conjecture as to where the authorities are taking them: Will it be safe
harbour, or turbulent waters?
Salleh Buang is senior advisor of a company specialising in competitive
intelligence. He is also active in training and public speaking and can be
reached at sallehbuang@hotmail.com
