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2005

Article

*38 Revamping the Malay Reserve Law: Are We Not Getting into More Troubled
Waters?
2005

Citation:
[2005] LR 38

Towards the end of last year (2004), I stayed for a couple of nights at a five-star hotel in downtown
Kuala Lumpur amidst more than 250 senior officers from the Land Offices around the country. The
occasion was a national seminar on land administration, which of late has become an annual event. I
was invited as a guest speaker. It was a gathering of decision-makers (affecting land administration)
and therefore something which I look forward to and try not to miss.
The agenda covered a wide range of topics. One particular issue of extreme importance is the
proposal by the Federal government to amend the Malay Reserve Enactment. There are in fact
several enactments one 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. There is no equivalent law for the Federal
Territory, nor is there any for Penang and Malacca.
Ever since the idea for a revamp was mooted, a large number people have come forward to express
their views. Some were in support of the move, whilst others questioned its underlying wisdom. This
lively debate, however, surfaced mostly only in the pages of the Bahasa Malaysia dailies. I saw very
little reaction (one way or the other) in the English press. Perhaps for a lot of people the proposed
move is regarded merely as a Malay affair, not a national issue.
I beg to differ. I think it is a national issue, though not quite reaching the status of a major
constitutional question (such as the recent amendment affecting water administration). Incidentally,
the Malay Reserve law had been entrenched in the Federal Constitution since Merdeka Day see
further Article 89, read alongside Articles 38(5), 153, 159(5).
Friends ask who would really benefit from the proposed amendment? Would it be the Malay land
owners, the intended primary beneficiary of the legislative exercise? Or would it actually benefit others
more?
Critics of the proposed amendments (in their letters to the local media) said that the law, even as it
stood all these decades, was not able to safeguard Malay Reserve (MR) land. On the contrary, over
the years, the quantum of MR land continued *39 to be depleted. Under the proposed amendments,
would not the situation become worse, they asked?

Depletion via compulsory acquisition

According to data available in cyber space (the accuracy of which I cannot guarantee), when this
nation celebrated its independence in 1957, we had something like 3 million hectares of MR land in
the country. Now, some 50 years down the line, the figure stands at a mere 1.7 million hectares only.
Incidentally, a local daily mentioned a higher figure, but I have no way of checking which of these
conflicting figures are nearer the truth.
What happened? In Selangor (the countrys purported most developed state), 9,000 hectares of MR
land were lost through compulsory land acquisition under the Land Acquisition Act 1960 . Every
Malaysian knows that for every acre of MR land lost through compulsory land acquisition, the State
Authority is required under the Federal Constitution to replace it. This is a legal duty which the state
must fulfil and discharge. Failure to discharge it is a breach of trust by the state to its subjects. I am
made to understand that to-date, only about one-third (34%) has been replaced.
In Kedah, my home for the last decade, friends tell me that in 1990, more than 80 Malay owners of
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MR land in Pantai Chenang, Langkawi lost their land when the Kedah State Authority acquired their
land compulsorily to build the Pelangi Beach Resort. Then in 1993, the State Authority acquired some
167 lots in Kerpan (measuring some 1,000 acres) for the purposes of undertaking an aquaculture
project with the Ben Ladin group from Saudi Arabia.
In Negeri Sembilan, in 1994 more than 600 owners of MR land in Kampung Mambau, Mukim Rasah,
lost their land (measuring some 930 hectares) when the State Authority compulsorily acquired their
land to build the massive mixed-development project now known as Seremban II.
In Johor, my state of origin, some 26,000 acres of MR land within the bounds of Tanjung Langsat and
Tanjung Piai were compulsorily acquired by the State Authority to build a new township. The
beneficiary of this compulsory acquisition was a business entity well known in the state Kuok
Brothers, who undertook the project in collaboration with the UEM group.
In Melaka, residents of Kampung Pantai Kundur and Tanah Merah also lost their MR land when their
properties were compulsorily acquired by the State Authority. The beneficiary of this compulsory land
acquisition exercise was Petronas. The national oil company needed the land to be turned into a
Buffer Zone.
In Terengganu, Malay islanders in Pulau Redang lost their MR land (measuring some 300 acres)
when the state authority took the land compulsorily, in turn to be handed over to a private company
owned by a well-known non-Malay corporate figure. Local residents failed to see the logic or the
justice in this case.
*40 In short, whilst under the existing law, Malays (owners of MR land) continue to be barred from
entering into any dealing (such as sale and transfer, leases or charges) affecting their lands with
non-Malays, this legal restriction does not in any way protect or safeguard these properties from
depletion through the convenient machinery of land acquisition. After the land acquisition exercise
had been completed, these lands no longer retained their original attributes (having now become
once again State land), and from that point on, the way is open for these properties to fall into the
hands of non-Malay developers.
It is not my intention to question the bona fides of these compulsory land acquisitions, nor the bona
fides of fresh alienation of such acquired lands to their new non-Malay owners. The State Authority
may very well have good reasons for doing what they did in the past though the deprived owners
continued to question them. Be that as it may, the vital question still remains. Having depleted such
an extensive amount of MR land, why did not these State Authorities take immediate steps to replace
the lost quantum? Why did they fail to abide by the constitutional duties? Or do they think that
safeguarding MR land is no longer of any constitutional importance?

Freeing Malay land

Amongst the stated objectives of the proposed amendment exercise is to free the land for purposes
of development. A local English language daily referred to the amendment as Freeing Malay land ,
presumably in contra-distinction to its former status as imprisoned, shackled and impaired land. In
Collector of Land Revenue Kuantan v Noor Cahaya [1979] 1 MLJ 180 , Wan Suleiman FJ
picturesquely referred to Malay Reserve land as a Cinderella piece of property.
Let us assume then that the new law is in place and the land owners of these MR lands can now
lease them to non-Malays (individuals or companies) for a term not exceeding 60 years. Assume also
that these land (formerly under the category of agriculture and subject to s 115 of the National Land
Code 1965) are then converted into building land and thereafter commercial or residential buildings
are constructed on them. During that period of the lease, the Malay owners probably receive rental
from the lessees, such payments to continue for the duration of the lease. The lessees, meanwhile,
probably earn much more (in proportion to their investment in the venture) either through lease
rentals of the built units or through sales of the properties for the entire duration of the remainder of
the lease.
*41 Assuming that the MR land 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, conditions
and stipulation found in the lease agreement between the MR land owner and the lessee (the
developer). An astute lessee (developer) would ensure that at the end of the 60-year lease, an option
to renew can be exercised, and so the entire scenario repeats itself.
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Assuming that the MR land is held for a term not exceeding 99 years (which in commercial terms is
called leasehold land), what happens at the end of the 60-year lease? Assuming that the land owner
gets his reversion, the question is how many years left has he to enjoy his property before the 99-year
period expires and the land reverts to the State Authority under the National Land Code 1965?

Safeguards

Other questions which come to mind at this stage is whether the new law will spell out explicitly (say,
in a Schedule) the standard terms of the lease which the parties (the MR land owner and the
non-Malay lessee) must execute? Will each and every lease between the MR land owner and the
non-Malay lessee be vetted before approval is given? If so, by whom? Will the non-Malay lessee be
required to put up any sum of money as caution money or deposit with the owner or with the
authorities to ensure that the lessee will honestly and properly perform his obligations and the interest
of the MR land owner is continuously safeguarded?
To-date, as far as the general public is concerned, very little is indeed known of this proposed new
law, apart from what the local media had hinted. Left adrift between speculation and conjecture,
owners of MR land are indeed in the dark as to where the authorities are taking them into safe
harbour or more dangerous and turbulent waters?
Would it not be a marvellous idea if any MR land owner who is interested to know more of the
proposed revamp can log on to a government website and actually can find out what he is searching
for? That would really be transparency, and that would be really practising E-Government.

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