The Future Development of Malay Reservation

Statute like Malay Reservations enactments, which restrict land ownership, are said to be not unique to Malaysia. America has its Indian Reservation and Hawaiian Native Land Trusts. M. Bakri Musa, an active writer suggested that Malaysia should follow the trail in America and Hawaii.

In America, Land in USA held in trust by federal or a state government for American Indian. The native land policy in America does not prevent development on these reservations as attested by the gleaming casinos and hotels. At the end of nineteenth century, the government even passed laws that broke the reservations into individual homesteads, encouraging impoverished occupants to sell their property. As a result of this and other policies, Indian reservation shrank dramatically and now comprises roughly 2 percents of the original holding. Some opined that the step taken by the government is to assimilate the native Indian in America. However, the truth is, by doing so, the native Indian almost pawn all their identity, culture and custom. In the meanwhile, the poverty remained unsolved.

In our neighbour country, Singapore, all the Malay villages have been acquired by the government, the Malay villages resettled in the new flats in order to assimilate them with other races. The Singapore’s policy aims to integrate all the races in the nation. But the cruel fact is that the original proof of the propositions of the land owned by Singapore Malay disappears together.

Meanwhile, Hawaiian native land policy is a better policy as compared to America’s. The native land right is generally governed under Hawaiian Homes Commission Act. The policy is aimed to preserve values, traditions, and culture of native Hawaiian. [1] The land is held on trust by the government for the use of Hawaiian natives in perpetuity, alienation by government is prohibited. [2] However, the land can be leased long term to non-native, [3] its low price compared to freehold properties is said to be a competitive advantage.

Besides, fiduciary obligations of the government imposed by the statute to provide adequate water, supporting infrastructure, financial support and technical support. The protection over the native Hawaiian is more comprehensive, and most probably this is the model we need to learn from.

5.2 Obstacles to Develop

5.2.1 The Issue of Multiple Ownerships

As mentioned earlier, most of the Malay reserve lands are facing the problem of multiple ownerships due to Islamic inheritance laws. In a Malay family, the inherited land is divided according to the fara’id law of Islam. Sale or lease of the land will therefore require all those concerned to agree to the terms. Sometimes, the owners of the land are really hard to be identified, as there is no written will. The unclear ownership has caused the attendant to have difficulties in decision making. Please imagine that there are 100 people owning one plot of land, it is difficult to convince everyone to sell. And such situation is really happened in reality.

In order to make sure that every individual land interest will not be affected by the development, the ownerships problem should be solved. Unless resolved, this will remain an insurmountable obstacle to development.

5.2.2 The Issue of Compensation

According to Land Acquisition Act 1960, compensation to the residents must be made according to fair market value. In First Schedule to the Land Acquisition Act lays down the matters to be considered and excluded in determining fair market value. Among others, these relate to the opinion of experts, the potentialities of the land acquired, its locality, accessibility, and the evidence of the price of sale of similar lands in neighbourhood.

Some of the reserve lands have very strategic location (such as Kampong Baru), but due to the restriction on dealings and its “non-transferable to non-Malay” status, the market value of the land has been depressed, meaning that the land has no potential to be sold for higher price. When the government acquires the land for development or the Malay developers buy the land, they are reluctant to pay high price or compensation over these lands because of the limited market and the lack of financial resources of the Malay buyers. According to Paul Khong, CB Richard Ellis executive director, sometimes, the landowners may drag the matter to court if they not agree to the quantum of the compensation payable. If the value get out of hand and the compensation payable is too huge, the project may then no longer economical to proceed. The common consequence is that the government or private developers will give up the land dealing if the affected landowners are insisting for high prices of their lands. As a result, the land potential for development remains undeveloped. [4]

5.2.3 The Concerns of Malay Community

Although money is strong temptation, because these are family homes for generations, these personal sentiments do not come with price tag. In the process to develop Kampong Baru, Big Property Consultants Chief Director Prof. Datuk Dr. Nik Mohd Zain Nik Yusof admitted that the main problem faced in development was the tedious process needed to obtain consent of the land owners. The last resort will be applied through statutory force under Land Acquisition Act if the residents remained reluctant to agree to develop.

Most of the Malay reservations came into existence even before independence of Malaysia. There are many historical elements in the reservation land and those older generations still have strong sentiments attachment on the land. They have a legacy they want to protect and pass on to future generations. The sentiments of the landowners cannot be ignored. Many are old timers.

In most of the Malay residents’ eyes, the Malay reservation is significant of Malay community’s identity and dignity. Some of them worry the land after development will fall into outsider’s hand and apparently lead to identity loss. They fear their land ownership will be jeopardized. There is strong sense that development should not come at the expense of Malay identity and rights or the descendants of the original settlers and the present landowners. Thus, they are reluctant to agree with the development.

5.3 Proposed Amendments and Safeguards

Based on the discussion above, there are few amendments suggested to be made to overcome the problems facing by the Malay reservation. Firstly, the restriction on dealing should be widened. Secondly, establish Land Trust over Malay reservation to develop the land for the benefit of the owners. Thirdly, all banks should be allowed to deal with such land. Fourthly, to solve the problem of multiple ownerships, a holding company should be established.

5.3.1 Allow Malay Reserve Land to Be Leased

There is generally no big possibility that the Malay settlement can be successfully developed if the market remains closed. The proposed amendment does not totally require the land to be opened for dealing. The Malay reserve land should be allowed for leasing to anyone, including non-Malays. When the lease expires, ownerships remain with the original owner. The suggested term is not more than 60 years. Some of the State enactments are allowing the Malay reserve land to be rented out not exceeding 3 years, but it make the corporation difficult to realize the profit after pouring in huge investments.

With such amendment, the Malay reserve land may enhance its market value and improve the poor image of the area. Malay entrepreneurs who face difficulty in raising funds to finance their business ventures can get their way out too. It is a win-win situation where the market value of such land will increase while the Malay ownership will not be affected.

5.3.2 Loan Flexibility

All banks should be allowed to deal with Malay reserve land. Currently, only limited numbers of bank listed under Malay Reservation Enactment permitted to deal with such land. The proposed amendment will allow Malay reserve land owners to pledge the property as collateral to any licensed bank in the nation. In such way, Malay reservation’s owners may easily get financing to develop their land. However, to safeguard the Malay interest on the land, it must be stressed that if the owner were to default in paying back the loan to the bank, the land can only be auctioned to a Malay buyer only.

5.3.3 Land Trust

Considered that individual owner may not have sufficient capital to develop their land, but at the same time development cannot be avoided. The Malay reserve land can be developed by establishing a land trust. The State government may set up a special body and allocate the development capital to such body to develop the land for the benefit of the Malay owner. The special body is established to develop, coordinate, supervise and act as a mediator between developer, landowners and shareholders.

To ensure that there is no conflict of interest between the special body and the Malay owner, private sector is not allowed to participate in such project. The effort is to ensure Malay ownership and bring up its value.

5.3.4 Holding Company

The problem of multiple ownerships is not new to the Malay reservation. Tun Razak realized of this when he started Felda. He has imposed the rule that such Felda land cannot be subdivided but must be inherited by only one son. However, this method seems went again the Islamic and traditional inheritance rules.

To solve the problem of multiple ownerships on Malay reservation but having no conflict with the Islamic inheritance laws, a provision should be added into Malay Reservation Enactment to require the owners of such land is compulsorily forming a holding company with its equity ratio held according to the interest in the land, where the ownerships of title can be divided, while the land cannot, it remains under this new entity. All the decisions will be made based on the wishes of majority shareholders.

5.3.5 Safeguard against Acquisition and Alienation by State

Although the law is strict against private dealings on Malay reservations, the lands were lost dramatically in last 50 years, reducing from 3 million hectares to mere 1.7 million hectares only. The main culprit is the State government with no limited power to compulsory land acquisition. Supposedly, the State government should replace the land that has been acquired under Federal Constitution. But so far, only 34% of the lands have been replaced. In such situation, the State government has actually breach of trust in protecting the Malay reservation.

It is not the correct way by prohibiting the private dealings on one hand, but releasing it easily by the State government on another hand. There must be safeguard to prohibit State government to dispose Malay reservation without replacing. In so far there is no report showed actions have been taken against State government. The possible problem is the issue of locus standi. Under the law in Malaysia, only those directly affected has the right to sue. The residents normally don’t have locus standi to sue, as there is always a few in a community willing to voice out their dissatisfactory. It is hard for NGOs to meddle in such matter too because their locus standi is rather vague .In Malaysia, public interest litigation is not popular, and it shows very little success over such litigation.

Therefore, to overcome such situation, the rules of locus standi must be amended to allow NGOs and residents to take action against the omission of State government to replace such land. If not, the provision under constitution only a statement without actual legal effect.