By Koon Yew Yin | July 16, 2012
The Malaysian Insider

JULY 16 — Recently, the Selangor state assembly passed a new regulation barring any state representatives and local council members from applying for state-owned land. This is a really brave and unprecedented move which deserves more public attention than it has drawn so far. One question is whether the new rule also applies to the members of the royal family. There are probably many examples of members of royalty applying for state land. Should they be given special consideration or be treated the same as the public? I am sure there are pros and cons when it comes to applying the rule to royalty. The important thing is for the issue to be brought out into the open and for rational public opinion to prevail.

Among the physical assets belonging to the state, land is undoubtedly the most valuable. According to the federal Constitution, land is a state matter. Even if land is not owned by the state, the state still has control over the development and use of land through administrative and executive council rulings.

In addition the Town and Country Planning Act (1976) provided powers to the local planning authority in relation to planning applications for the purpose of land development. Section 19 of the Act stipulates, “no person shall commence, undertake, or carry out any development unless planning permission in respect of the development has been granted”.

Land is big business

What does all of this administrative verbiage mean in real life? Basically, the bottom line is that land alienation and land dealings are big business running to the tune of hundreds of billions of dollars, and the gatekeepers are the civil servants and politicians.

Despite the importance of land to the state and citizenry — not only in monetary terms but also in terms of the overall quality of development (including environmental sustainability) the whole subject is covered in secrecy.

Who are the recipients of state land? How much do they pay for the land? What is the process of ensuring that the state receives the top market price for the land? Are land parcels alienated by the state transacted openly and transparently? These comprise one important set of matters which need reform.

The move by the Selangor state assembly to prevent politicians (especially elected ones) from making use of their position to gain privileged access to state land is only the tip of the iceberg in terms of the reforms necessary to make dealings in state land honest, transparent and accountable.

A second set of issues relates to administrative controls over land which has already been alienated to private individuals. For example, planning permission for development may delay or accelerate the implementation of project, resulting in lowered or higher costs for the individual or developer. This provides tremendous scope for corruption at many levels of the local government. I do not think I am exaggerating when I say that the majority of land and housing developers in the country have to pay “coffee money” to formal and informal “toll collectors” to ensure that the land issues are quickly resolved. This raises house prices for house buyers who are at the end of this production chain.

My estimate, based from my own experience with the construction industry, is that the price of the average house in Malaysia is higher by as much as 20 per cent or more as a result of the administrative and political toll booths found in the land and housing market.

The public also needs to pay special attention to the planning system. Since planning rules are flexible, any developer is at the mercy of the town planner and the approving authorities. There is no fixed rule regarding the area for parks, schools, secondary roads, the percentage of the total land area for commercial use and plot ratio for building.

Just imagine how the profit can multiply if a developer can get permission to build more units of offices or condominiums. This administrative discretion has only encouraged corruption. Admittedly it is difficult to fix planning rules or guidelines in perpetuity as conditions change. However, if the process of approval is open and transparent then land owners will not be completely at the mercy of the approving authorities

I would like to suggest the setting up a board of appeal so that dissatisfied applicants can appeal for reconsideration. If there is an appeal board to turn to, dissatisfied applicants would not be so desperate to increase their bribes

Other controversial land issues are also surfacing. For example, it has been disclosed in an Internet news portal that the Selangor state assembly has been buzzing with the revelation that Agriculture and Agro-based Minister Noh Omar has been involved in a prawn project in his Tanjong Karang parliamentary constituency. According to the report, Sekinchan state assemblyman Ng Suee Lim claimed that Noh bought 30 acres at a heavily discounted price in 1995, the year he won the Tanjong Karang seat.

Noh reputedly had inked a deal to rent the land to Pristine Agrofood Sdn Bhd for its prawn-farming project for 10 years. “Noh’s involvement raises the issue of conflict of interest as he is also the minister responsible for the industry… people are having a hard time getting land but a key leader is given land easily,” Ng had said.

Start reform now

It is timely for all state governments to follow the example set by the Selangor state assembly and to begin the process of cleaning out corrupt and unethical practices in the land and housing industry in the state wherever they may be found. As this process will be extremely complicated and sensitive it is likely to take many years. The sooner we begin, the better for the country.

I salute Mentri Besar Tan Sri Khalid Ibrahim and the state assembly for making the first move. Critics will say that this measure does not go far enough. For example, there is nothing to prevent relatives of politicians from getting privileged access to land.

This can be prevented by making public the details of every single case of new alienation by the state and for the establishment of a tender system in which state land is sold to the higher bidder in the open market. In this way, the state can generate a great deal more revenue that can be spent on developing the poorer areas. Many Malaysians, including I, look forward to hearing of the next land reform move by the state or federal government.

Finally, we must emulate how the Hong Kong and Singapore authorities sell their state properties and concessions by public auctions. It is truly incredible why after hundreds of study trips by our political and civil service leaders to the two cities that they have not got round to implementing this best practice of land sales by the state.