LAND DEVELOPMENT PROCESS IN MALAYSIA

Looking from the Malaysian land administrative perspective, land development in

Malaysia simply means the change of original use of any alienated land that effects its
restriction in interest, express conditions and category of land use as opposed to what has
been earlier approved by the State Authority upon alienation (Abd Kadir Al-Haj, 1995).
Interestingly, land development is no where mentioned under the National Land Code
(NLC) which is the governing code for land administration in Malaysia. Under the Code,
land development however takes place in one or more of the following forms:-

(a) Variation of conditions, restrictions and categories (Section 124)

(b) Sub-division (Sections 135 – 139)
(c) Partition (Sections 140 – 145)
(d) Amalgamation (Sections 146 - 150)
(e) Simultaneous applications for sub-division and variation of conditions, restrictions and
categories (Section 124A), and
(f) Surrender and re-alienation - special provisions (Sections 204A – 204H)

Thus, in cases where the land chosen or acquired for the purpose of development
is still in its agriculture status, the application for the conversion (to building or industrial
status), sub-division, partition or amalgamation of land, wherever applicable, must be
obtained first before any actual development can take place.

In Malaysia, there have been regular occurrences in the past whereby decision for
land development was initiated by the government especially if it is recognized that
development of certain land not necessarily idle or under-developed, is essential in
fulfilling certain urban planning policies of the government. Two good examples are the
acquisition of urban land for the light rail transit project and the acquisition of mainly
estate land for the Putrajaya development. In some cases however, even though the
government initiates the development plan which may involve acquisition of private-
 owned land, the implementation of the actual development is still usually offered to
private developers.
The stages involved in land development for this instance whereby the state government
played the role as the initiator and the role of the developer was taken by a private entity.

Property Development and the Need For Re-development

Closely related to the term “Land Development” is the term “Property

Development”. There are various definitions by scholars on the term ‘Property
Development’. The one that best encapsulates its meaning and processes involved is
given as follows:
Property development is a process that involves changing or intensifying the use of land
to produce buildings for occupation. Property development is an exciting, at times
frustrating, complex activity involving the use of scarce resources. It is a high risk
activity which often involves large sums of money tied up in the production process,
providing a product which is relatively indivisible. The performances of the economy, at
both national and local levels, directly influence the process.

Cadman and Topping (1:1995)

Development comprises the following aspects:

(i) Perception and estimation on demand for various categories of new building
(ii) Identifying and ensuring safety of site before building is built on it to meet the demand
(iii) Designing accommodation to meet the demand for the identified site
(iv) Long term or short term financing to fund the acquisition of and construction on the site
(v) Design management and construction, and
(vi) Leasing out and management of completed building.”

On the other hand, the Town and Country Planning Act 1976 (Act 172) of
Malaysia defines property development as the carrying out of any building, engineering,
mining, industrial or other similar operations in on, over or under land, or the making of
 any material change in the use of any buildings or other land, or the subdivision or
amalgamation of lands. Thus, in broad terms, development can be divided into two
categories, one being the carrying out of physical operations such as building or
engineering works, and the second the making of a material change of use (Cadman et
al., 1994)

Property development can be divided into three prominent stages, namely:

1) Pre-development stage comprising sub-stages of idea initiation (decision to develop), site
selection, feasibility, financing and planning consents
2) Development stage comprising sub-stages of tendering, construction, project
management, leasing, financing and sale (disposal)
3) Post-development stage comprising sub-stages of maintenance, management, leasing,
financing and sale (disposal)

On the other hand, there is also new school of thoughts (Tan, 1998) that contend
that property development contains only two prominent stages; pre-development stage
which combines all the sub-stages in the old school of thoughts’ pre-development and
development stages; and post-development stage comprising the same sub-stages
identified by the old school of thoughts.

Perhaps the definition that is more relevant to be looked into in relation to the
subject matter of this study is the one given by Byrne and Cadman (1984) who have
divided the development process based on the perspective of uncertainty analysis
which relate to the aspect of viability of a development into three stages:

1. Acquisition
In this stage, development process involves land acquisition upon which the
development is to be carried out. There exists the element of uncertainty in this stage due
to physical features of the land, restriction in interest in the land ownership which may
benefit the land or otherwise and natural features and type of land use allowed or
approved by the local planning authority.
2. Production

This stage is when the construction of building takes place and the risk and
uncertainty that exists here is in the form of construction cost which constitutes the
second capital outlay. As such the provision for risk is included when deciding on the
building contract.

3. Disposal

This stage is when the completed building is owner-occupied, single or multi

occupied or disposed of as investment item. Risk and uncertainty exist in this stage when
disposal is by way of renting and selling whereby rental and return on investment and
purchase price contain risk element since the result of the development must be produced
first even though the developer cannot guarantee or know for sure that the stability of the
market at the beginning of the development is to last right till the disposal stage.

This article written by :

Sr Puan Nik Nazariah bte Nik Jaafar
Associate Director of
NILAI HARTA CONSULTANT SDN BHD
Research Department of NHCSB
25 Feb 2009.

STATE
GOVERNMENT

Tender Committee
 Decision To Acquisition

Privatise -investigations

-proceedings

Compensation

Evaluation

Tender Award Invitation To

Bid

Development
proposal
DEVELOPER
Financial proposal

Company profile

Engage
Consultant

Fast Track: Award to handpicked developer

Long Track: Normal procedure

 Figure 2.1: The land development process under privatization

ntroduction

125 The development strategies for the next 20 years are focused on the vision for
. Kuala Lumpur to become a World-Class City. The strategies are also firmly
grounded on the direction and accomplishments of the KLSP 1984 that set the
framework for the structure and present growth patterns of Kuala Lumpur. The
physical shape of Kuala Lumpur, the distribution of land uses, the new growth
areas, infrastructure development especially roads and rail systems are all directly
attributable to the policies and strategies set out in the KLSP 1984.

126 The population base of Kuala Lumpur is set to increase from 1.4 million to 2.2
. million over the next 20 years. Within the context of a city that is already well-
developed new strategies that optimize limited land resources need to be devised.
This Plan is part of the ongoing evolution of the City and the development
strategies set out here form the basis for the planned spatial development of Kuala
Lumpur as well as guiding the formation of sectoral policies up to the year 2020.

127 The strategies are all encompassing and cover every aspect of the City fabric from
. spatial and infrastructural development to urban design and the less tangible
qualities of the City experience that shape and mould people’s perception of the
City and their place within it.

6.2 Existing situation and issue

6.2. Land use 1984 - 2000

1

128 Table 6.1 indicates the existing land uses by sector while Table 6.2, Table 6.3 and
. Table 6.4 indicate the changes in land use between 1984 and 2000. The land use
specialisation index in these tables indicates the relative importance of a particular
land use in relation to the City as a whole for each of the planning units
designated in the KLSP 1984 (refer Figure 6.1).
 Table 6.1: Land Use by Category, 2000

a) Residential
i. Existing situation

129 Residential land use increased from 3,822 hectares to 5,490 hectares between
. 1984 and 2000 and is the largest land use component in the City. The majority of
increases in residential land use have been in the growth areas of Wangsa Maju
and Bandar Tun Razak, whereas Bukit Jalil has yet to establish its residential
base. Major established residential land use areas are in Damansara, Bukit Indah,
Setapak and Sentul.

130 However, residential land use in the City Centre has declined significantly
. between 1984 and 2000 and now accounts only for 26.4 percent of the total
residential land use in 1984.

ii. Issue

• Decline in residential land use in the City Centre; and

• Slow growth of residential land use in Bukit Jalil.
Figure 6.1: Land use, 2000
Table 6.2: Land Use Change in Residential, Commercial and Industrial, 1984 -
2000
Table 6.3: Land Use Change in Institutional, Open Space Recreational and Sports
Facilities and Community Facilities, 1984 - 2000
 Table 6.4: Land Use Change in Undeveloped Land, Squatters, Infrastructure and
Utilities, 1984 - 2000

b) Commercial
i. Existing situation
 Photo 6.1: ...residential land use in the City Centre has declined
significantly...

131 Commercial land use growth has been significant, increasing by 116.5 percent
. from 504 hectares to 1,092 hectares between 1984 and 2000. Although there has
been some dispersal of commercial land over Kuala Lumpur as a whole, the City
Centre continues to be by far the most important commercial location in Kuala
Lumpur accounting for 25.2 percent of the current total commercial land use.

132 The growth areas of Wangsa Maju and Bandar Tun Razak have had respectable
. increase in commercial land use which is in accordance with the objectives of the
KLSP 1984. However, Damansara has had moderate growth in commercial land
use and Bukit Jalil has only developed marginally. It is significant that of the four
growth areas, only Wangsa Maju has a specialisation index in respect of
commercial land use greater than 1.0. There has however, been significant growth
in commercial land use outside the designated growth areas, in particular in
Sentul, Bukit Indah, Jinjang and Seputeh.

ii. Issue

• Preponderance of commercial land use in the City Centre; and

• Commercial growth outside the designated growth areas.

c) Industrial
i. Existing situation

133 The industrial component of land use is relatively minor and has increased from
. 475 hectares in 1984 to 553 hectares in 2000. Most of the industrial land use is
distributed in Jinjang, Sentul, Bukit Indah and Maluri, which all grew during the
period. Industrial land use also grew in the new growth areas of Wangsa Maju and
Bandar Tun Razak and there has been a significant increase in Bukit Jalil because
of the Malaysia Technology Park.
134 Many of the older industrial areas are in a dilapidated state, for example, Chan
. Sow Lin and areas along Jalan Klang Lama.

ii. Issue

• Dilapidated industrial areas.

d) Institutional
i. Existing situation

135 Institutional land use which includes government land and military reserve land
. has decreased by 12.5 percent from 1,852 hectares in 1984 to 1,621 hectares in
2000 and currently accounts for 6.7 percent of the total land use. Most of this land
is located in Sungai Besi Military Camp, Batu Cantonment, Sungai Besi Royal
Malaysian Air Force Base, Ministry of Defence Complex (MINDEF) of Jalan
Padang Tembak and the federal government complexes at Jalan Duta and
Mahameru Highway.

ii. Issue

• Future use of buildings and lands formerly occupied by federal government

offices.

e) Open space, recreational and sports facilities

i. Existing situation

136 Open space, recreational and sports facilities land use includes city park, district
. park, neighbourhood park, local park, local play area, sports complex, golf course,
polo field and as well as forest reserves. Total open space, recreational and sport
facilities land use has increased significantly by 169.6 percent from 586 hectares
in 1984 to 1,580 hectares in 2000, although there has been a steady decline in
public open space in the City Centre largely because of conversion to other uses.

137 Major open spaces in the City Centre comprise the public open spaces of Taman
. Tasik Perdana, Bukit Nanas and the Kuala Lumpur City Centre Park (KLCC)
totalling 301 hectares. Penchala contains the largest amount of open space,
recreational and sport facilities totalling 486 hectares comprising mainly the Bukit
Kiara Botanical Garden, Bukit Kiara Equestrian Park, Kiara West Valley Park,
 Kuala Lumpur Golf and Country Club (KLGCC) and Malaysia Civil Service Golf
Club. The development of the National Sports Complex, International Park,
Botanical Park and Berjaya Golf Course at Bukit Jalil, together with the district
park of Taman Tasik Permaisuri at Bandar Tun Razak have contributed to the
significant increase in open space in these growth areas.

138
.