CHAPTER 4:

THE SYSTEM OF DECENTRALIZATION

AS PRACTICED IN MALAYSIA
1
CONCEPT OF
DECENTRALIZATION
Decentralization refers to the transfer of decision-
making from the central level to a sub-national
authority. The aim is to transfer power and resources
to a level that is closer, better understood and more
easily influenced by local people. This should result
in gains in efficiency and appropriateness of service
delivery, as well as better governance and greater
accountability. By creating the conditions for more
inclusive and transparent operations,
decentralization enhances citizen participation in
local governance, allowing communities to take
responsibility for their own development.
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DEFINITIONS OF
DECENTRALIZATION
Maddick (1966) defines decentralization as
consisting of two types- devolution and
deconcentration.
1. Devolution
Devolutioncentral governments transfer of
administrative and financial decision making
authority to local governments that have clear and
legally recognized jurisdictions within which they
provide public services to constituents they are
accountable to.
3
Cont..
2. Deconcentration
Delegation of authority adequate for the discharge
of specified functions to staff of a central
department who are situated outside central
headquarters .
Assignment of certain functions to the agents of
Central or State goverment in the field due to the
difficulty of governing from the centre. Examples
are the district office and registration departments.
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Cont
Smith (1985 ) differentiates two forms of
decentralization.
1. Devolution where the authority to make certain
decisions in some spheres of public policy is
delegated by law to sub national territorial
assemblies (eg. Local authorities).
2. Deconcentration delegation of authority to make
administrative decisions on behalf of the Central
administration to public servants working in the
field responsible for government policies within
their territories (eg. district office, health
department).
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HOW IS DECENTRALIZATION
DEFINED IN THE MALAYSIAN
CONTEXT?
Devolution here refers to the transfer of formal
powers through an act of parliament to bodies
created by law. These bodies have financial and
administrative powers and functional autonomy.
They are legal entities with the power to sue and
be sued and can enter into a legal contract. They
also have the discretion to spend their money and
to make policies for the benefit of their community.
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Cont..
Deconcentration on the other hand refers to
delegation of authority to agents of central and
state governments at the local level. These bodies
do not have any specific financial and
administrative powers. They act on behalf of the
higher levels of government and can only do as
instructed. They are basically executing the
policies decided by the higher levels of
government.
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REASONS FOR
DECENTRALIZATION
According to the World Bank (1989, pp. 71-2) there
are four arguments in favour of decentralization,
namely:
1. The first is based on the assumption that the
demand for local public services varies from
place to place. Only decentralized provision of
local services will adjust to the multifaceted
demands.
2. The second is efficiency. It can be argued that
locally financed and produced services will cost
less.

8
Cont..
3. The third is of a political nature. Local government
is an important training ground for democracy.
Stronger regional or local governments can control
the tendency of central government to become all
powerful.
4. The fourth and last could be called institutional.
Co- ordination at the local level is necessary and
local public services cannot and would not be
treated independently. Local government can co-
ordinate these services much more easily than a
national government would.
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OTHER REASONS FOR
DECENTRALIZATION
To reduce burden of Central government.
It speeds up decision making and faster
implementation of policies.
It creates initiative and enthusiasm of lower level
officials.
Needs and resources vary between local areas
needs of the people in Kota Belud and Petaling
Jaya vary.
Political reasons for decentralisation- to enhance
political education and reduce feelings of
remoteness.
Political pluralism reduces political power of a
too powerful central government.
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THE RELATIONSHIPS OF FEDERAL, STATE
AND LOCAL GOVERNMENT:
11
Under the provision of Article 76(4) of Federal
Const., Parliament has the power to amend any
laws related to LG although they are the subjects of
the State Government.
Besides DBKL, all other Local Authorities are the
subjects of the state Government as specified
under the 9
th
Schedule of List II in Federal
Constitution.
FEDERAL GOVERNMENT CONTROLS OVER
LOCAL GOVERNMENT:
12
There are two main controls by Federal government over
local government. These are through the;
1. National Council for Local Government (NCLG)
Article 95A of Fed. Cons. provides for the formation of
National Council for Local Government (NCLG)
comprising of one representative each from the state
government appointed by the ruler of YDP Negeri and
no more than 10 representative from Federal
Government.
Being a body formed under the Const. ,it has its own
constitutional rights. Secretariat is the Ministry of
Housing and Local Government.
Cont..
Membership of this council consist of a federal
cabinet minister as the chair., .They meet and
discuss policy matters relating to local government
at least once a year. The chairman is the Prime
Minister or Deputy Prime Minister. The decisions
made by the council are binding on Federal and
state governments except Sabah and Sarawak.
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Cont.
14
The Federal and State Government shall consult
the NCLG in respect of any proposed legislation or
any other matters dealing with or relating to LG.
NCLG shall advice those governments on any
such matter.
Sabah and Sarawak are not members but
observers to NCLG.
Meeting of NCLG shall be as often as the
Chairman consider necessary but at least once a
year.
The functions of NCLG:
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1. Transformation and development of LG through
discussion and negotiations between the Federal
and State Governments.
2. Transformation and development must be within
the national policy so that it can develop and
control the functions and roles of Local Authorities.
3. To inform, direct or advice the Federal and State
Governments on matters pertaining to the legal
aspects and operations of Local Authorities.
Cont..
The NCLG can be seen as a forum for federal,
state and local governments to coordinate policies
and laws relating to local government. The creation
of this body is to make sure that all policy making
in all three spheres of government is tightly
integrated and coordinated. For eg. at the last
NCLG 55th meeting held on 25th September,
2006, which was chaired by the Deputy Prime
Minister, the following resolutions were made:
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Cont..
1. All local authorities must seek the opinion of the
public before making any decisions affecting them.
2. Local authorities to set up one-stop centres for
quick approvals for developers using the build and
sell concept. Under this concept, developers will
collect a 10% deposit and complete the
construction of the house before collecting the rest
of the money.
3. All public buildings must have disabled-friendly
facilities
4. All multi-storey car parks must install closed-circuit
television cameras.
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MINISTRY OF HOUSING AND LOCAL
GOVERNMENT
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In 1978, the Government has formed two ministries
responsible for the affairs, roles and development of
Local Authorities. These are the Ministry of Federal
Territory and the Ministry of Housing and Local
Government (MHLG). The former is responsible to the
Federal Territories and DBKL while the later is
responsible for all the other Local Authorities except
those in the Federal Territories, Sabah and Sarawak.
Through the MHLG, the Fed. Gov. has the power to
control and develop the policies and by-laws of Local
Authorities so as to be consistent with the policy and
objectives of the gov. The Fed. Gov. also provides
advisory and maintenance functions to LG so that it
could fasten its development and modernization
programs.
CONT
It is responsible for local government legislation in
Peninsular Malaysia. It is also responsible for the
development of local government policy and the
implementation of all local government functions. It
oversees overall development of local government
in Malaysia and they can direct state governments
to pursue federal government policies. They are
also responsible for improving the whole local
government system with the aim of increasing the
effectiveness and efficiency of local government. In
2004, the Ministry appointed Universiti Malaya as a
consultant to revamp the entire local government
system in Malaysia
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The functions of MHLG (according to Ahmad
Atory, 1991);
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1. To act as Secretariat to NCLG with the highest
authority to draft and amend policies and by-laws
related to LG.
2. Responsible for the development of the
administrative systems of LAs so as to improve its
services and capacity to execute it activities at the
grass root level.
3. Responsible to monitor the activities of LAs to be
in line with the national policies.
Continue..
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4. Responsible to co-ordinate and assist in provisions
of grants and funding from the Federal
Government.
5. To provide advisory functions to LAs in the
financial planning and the improvements of their
financial positions.
6. To organize seminars, workshops and relevant
courses to LAs to improve and exchange of
knowledge, experience and best practices.

STATE GOVERNMENT CONTROLS OVER
LOCAL GOVERNMENT
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State control over local government are mainly
through the Local Government Act, 171.
The State Government has full authority over LG,
thereby leaving no autonomy to LG. Although the
LG is said to have financial autonomy, the financial
expenditure and budget of LG is approved by the
State Government.
Financial controls:
Financial Controls: This can be seen through;
S. 39 - Revenue of local authority
S. 41 - Raising of loans by local authority
S. 42 - Power to issue bonds
S. 46 - Power to borrow for special purposes
S. 47 - Loans by government
S. 49 - Overdrafts from banks

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Cont..
S. 55 - Where the budget needs approval of state
government.
S. 56 - Supplementary estimates need approval of
state
S. 60 - Audit of accounts to be tabled in state
legislative assembly
S.130 - Basis of assessment of rates to be decided
by state and any
increase in rates need approval of state authority
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Administrative controls:
S. 3 - Declaration and determination of status of
local authority areas
S. 4 - Change in name, status and alteration of
boundaries
S. 5 - Merger of two or more local authorities
S. 9 - Power of State authority to issue directions
S.10 - Appointment of councilors
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Cont
S.16 - List of offices which show a full list of posts,
numbers and types must be sent to state authority.
Any reduce in rank of category A officers
appointment must be approved by state authority
S.26 - Votes of majority decisive but in case of
conflict, state authority can intervene
S.102 - All by laws must be approved by state
government
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CONTROLS UNDER ACT 172
Under the Town and Country Planning Act, 1976
all local authorities have to prepare a Structure
Plan for their local areas once in 5 years. This plan
will show the land use of the area. This plan needs
the approval of the state authority. The plans also
need to be exhibited at public places for a month
for the public to give their views.
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EFFECTS OF THESE
CONTROLS ON LOCAL
GOVERNMENT
1. It restricts their financial autonomy of local
authorities since they cannot spend as they wish
and cannot increase taxes as they like.
2. Local governments administrative autonomy is
also restricted since they cannot hire and fire their
own staff especially for group A.

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Cont
3. State authorities can issue directions to local
authorities and instruct them to do as they wish.
For example. asking local authorities to install
CCTVs in public places and helping state
authorities to curb the sale of illegal VCDs are all
not functions of local authorities but have to be
carried out.
4. It slows down the decision making process
because whatever project or programs that they
want to carry out need approval of state
government.

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Cont..
5. It prevents decentralisation at the local level and
local authorities become more like deconcentrated
bodies and cannot practice full devolution and be
independent.
6. If local authorities are controlled by opposition
parties as in the case of Kelantan, it will create
conflict with the Federal government.
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The transforming roles of district officer
(DO)


It can be said that the first change in the traditional role of the
DO came during the Emergency in 1948. Before the war, the
DO was regarded as a strong and silent administrator
spending much of his time under the punka ( fan operated
by manual method) in his office dispensing order, writing well-
phrased letters and minutes and quite often indulging in
paper departmental war. The pace of work was quite
leisurely. There was no pressure(Raja Shah Kobat as cited
by Tan Sri Ahmad Sarji, May 20, 1995).
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Basic roles of DO
It can be summarised as follows:

32
Administration
Planning and
development
Statutory
function

Community
relations
Cont..
These roles must be well understood and
effectively executed by the DOs, as leader at the
district level.
33
Cont..
To undertake the above roles DOs are required to
learn and acquire new knowledge and skills.
More importantly, DOs must be able and willing to
initiate and accept changes in all their work
processes especially in respect to planning and
development.
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35
Role of District Officers powers
The next layer in the government hierarchy, which is at the
local level, is the district administration. The British formalised
district administration nationwide. Today it still is the prominent
administrative machinery at district level, for both the state
and the federal governments.
The District Officer (DO) heads the district council; in that
capacity he is also the Land Revenue Collector and President
(chairman) of most district councils.
In the former Federated Malay States such as Selangor and
Perak as well as the former states of the Straits Settlements
such as Penang and Melaka, the DO is a senior federal officer
from the elite Administrative and Diplomatic Service.

36
In the states of Sabah and Sarawak and the former
Unfederated Malay States such as Kedah, Terengganu and
Kelantan, the DO is a senior officer from the respective State
Civil Service.
The position of the District Officer as the chief administrative
officer in a district is further enhanced by virtue of the fact that
he is the most senior officer in the district and answers directly
to the state secretary.
The District Officer is responsible for the development of the
district as a whole.
37
Cont..
Coordination of the various development activities is done
through the various district committees most of which the
District Officer chairs.
The two most important committees are the District
Development Committee and District Action Committee. They
include all the heads of governments and agencies at the
district level such as the District Council, Agricultural
Department and Public Works Department.
Although no statute provides for these consultation
committees, administratively, they constitute an important
machinery to monitor and coordinate all development
proposals and activities in the district.

Main sources: Local Government in Asia and the Pacific.
www.unescap.org/huset/lgstudy/country/malaysia/malaysia.
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Case study:
Roles of District Officer in Sarawak:
Traditional roles:
1. Administrative Function
Being the chief executive of the District, he is the Chief
Administrator and thus must ensure that District and sub-
district administration is efficiently and effectively executed.
He administers his resources (staff and funds), his time and
his work. As a leader, he leads, directs, executes, monitors
and evaluates.
2. Statutory Function
Certain Acts and Ordinances give power and authority to
officers to execute legal duties in their official capacity (ex-
officio). Thus a District Officer is also a Licensing Officer under
the Arms Act. He is also a Power of Attorney and the
Commissioner of Oaths under the Statutory Declarations Act.
39
Cont..
3. Protocol Function and Events Manager
As there will be regular visits of leaders and dignitaries, it is
not uncommon that the protocol function may also take a
certain, if not, considerable portion of his time. With these
visits will come the management of events and activities,
logistics and people. Thus, if and when official functions or
official visits are made and require the presence of leaders
and dignitaries within the District and Sub-District like Ketua
Masyarakat and the rakyat it is the DO and SAO (Sarawak
Administrative Officers) who will be responsible to invite them.
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Cont..
4. Social Development, Social and Socializing Function
Another function that also needs to be performed particularly
at the ground level is one that relates to social development,
social and socializing function. While economic and
development activities are being implemented by the other
departments and agencies within the District and Sub-District,
the social development, social and socializing function also
need to be executed. He is expected to mix and mingle with
the local populace and requires him to understand their local
customs, adat and traditions.
These are the traditional roles. We shall now focus on what
we see as the new, challenging and glamorous roles of the
District Officer: that of a development planner, project director
or manager, and a resident project officer for his District.
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Cont..
5. DO as a District Development Planner
A DO can play and perform the role of a development planner
and contribute in performing a macro planning function for his
district. He can start by collecting, compiling, generating,
collating and analysing socio-economic data and information
about his District. These data and information are not hard to
obtain and should include the size of the district and sub-
districts, the population and demographic information,
resource endowment like land use under agriculture, forestry,
industry and many other activities. Other important data cover
employment and occupation, production and productivity,
physical and social infrastructure. These information are very
useful for planning. Such information can provide the
benchmark for forecasting and formulating the District
Development Plan.
42
Cont..
The DO can also prepare the list of programmes and projects
that have been implemented in his District over the years. For
example, all programmes and projects implemented during
the past Plan (7MP) or planned, approved and scheduled for
implementation (8MP) should have been compiled and used
as the District Reference Book.
6. DO as a Project Director or Project Manager
Currently, the DO has only been known to be the
person/officer in charge in implementing Minor Rural Projects
(MRPs). On this basis alone and based on his experiences,
the DO is in fact already performing the function of a Project
Director or Project Manager.
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Cont..
In performing the role of project director or project manager in his district,
he is not necessarily working alone on his own. He has under his
administrative role the district engineer and the full array of technical
assistants and support staff, the land officers, the local council staff and
whomever he can avail. In this role, he administers and manages. He
needs to be an organizer and coordinator of events, tasks and activities.
7. DO as the Resident Project Officer
As the ground or resident project officer, the DO being
responsible for implementing and completing a project (and
on time), within budget, and in accordance with technical
performance requirements must be in total command of the
following tasks:
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Cont..
Project Planning
Project Co-ordination
Project Staffing and Training
Project Implementation
Project Management Control and Reporting
Project Interfacing or Linkages
Conflict Management
Change Management
Project Financial Management
Compliance with Procedures
Project Turnover and Commissioning


Main sources: Rakan Sarawak, October 2001.
Thank you..
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