Full

uL0P ŷŴŸŷ Lanu Law

1.0 Introduction
The Malay Reservation is commonly known as the red-ink grants` which it is a special
category oI land within the territorial boundaries oI each state that has been declared and
published in gazette as Malay Reservation by the state authorities. The said land can only
be owned, dealt with or transIerred to Malays being the natives oI the state and to certain
speciIied bodies, statutorily recognized as Malays. In a better understand is that dealings
in respect oI such lands can only be transacted amongst Malay and any attempt by non-
Malays in dealing with such Malay reserve lands will be held null and void. The rationale
behind it is to protect and preserve the Malay race by prohibiting all kinds oI transactions
involving Malay reservation land with non-Malays.
In a more speciIic sense, a Malay reservation land is deIined in Article 89 oI the Federal
Constitution. Article 89(6) oI the Federal Constitution deIines Malay Reservation as
'.land reserved Ior alienation to Malays or to the natives oI the State in which it lies.¨
However, it must be noted that not all land owned by Malays is automatically Malay
reservation land. It can be that a Malay proprietor, on his own discretion may apply to the
state authorities to declare his land as Malay reservation.
1

The earliest law oI Malay reservation in the Federated Malay States was the Malay
Reservation Enactment 1913. History has produced two diIIerent Iorms oI the Malay
Reservation Enactment, namely a single uniIorm law known as the Federated Malay
States Malay Reservations Enactment 1933, and the Iive State Enactment which
applicable to all states in Peninsular Malaysia except Ior Penang and Malacca.
2
The
relevant State Malay Reservation Enactment are the Federated Malay Reservation
Enactment 1933 (Cap 142) applicable to the States oI Selangor, Perak, Negeri Sembilan,
Pahang and the Federal Territory oI Kuala Lumpur,
3
Perlis Malay Reservation
Enactment 1353,
4
Malay Reservation Enactment oI Kedah 1931,
5
Johor Malay

1
Article 89(3)(b) Federal Constitution.
2
Ainul Jaria Amidin, Principles of Malaysian Land Law, Lexis Nexis, 2008, pg. 440.
3
Takes eIIect on 15.12.1933.
4
No. 7 oI 1353, eIIective date is 17 Zulhijjah 1353.
uL0P ŷŴŸŷ Lanu Law

Reservation Enactment 1936 (No. 1, 1936), Malay Reservation Enactment oI Terengganu
(No. 17, 1360) and Kelantan Malay Reservation Enactment 1930 (No. 18, 1930).
6

It has to be noted that it is not the power oI the State to dispose oI any Malay reservation.
Malay land cannot be sold, lease or disposed in any manner to any person who does not
oIIicially belong to the Malays race. It had been stated that only a Malay person or Malay
company or corporation speciIied in the Schedule oI the Enactment can hold or acquire
Malay reservation land.
Here, it has to be deIined that what is Malay? Under Article 160 oI the Federal
Constitution, Malays` means a person who proIesses the religion oI Islam, habitually
speaks the Malay language, conIorms to Malay custom and domiciled in the Federation
or in Singapore.
7
As Ior the context oI Malay reservation, by virtue oI Article 89(6) oI
the Federal Constitution
8
the deIinition oI Malay is leIt to the discretion oI each State.
9

For instance, in Kedah Malay Reservation Enactment, section 2 provided that a person
proIessing the Muslim religion and habitually speaks Malay language oI whose parents
one at least is a person oI Malayan race or Arab descent. It can be owned by Siamese
origin as well.
Another example is the state oI Kelantan. Section 2 oI Kelantan Malay Reservation
Enactment provided that a person belonging to any Malay race who speaks any Malayan
language and proIess Mohamed Religion and shall includes Majlis Agama Islam and the
oIIicial administrator oI trustee oI estate or deceased. Other than that, section 9 oI the
Enactment too had stated that Malay reservation land can only be alienated to native oI
Kelantan` which include the rang Asli oI Kelantan.

5
No. 6 oI 1349.
6
EIIective date is 4.11.1930.
7
Article 160(2) oI the Federal Constitution.
8
Article 89(6) oI Federal Constitution stated that 'Malay¨ includes any person who, under the law oI the
State in which he is resident, is treated as a Malay Ior the purposes oI the reservation oI land.
9
Ainul Jaria Amidin, Principles of Malaysian Land Law, Lexis Nexis, 2008, pg. 441.
uL0P ŷŴŸŷ Lanu Law

There is a signiIicant case in state oI Kelantan on addressing the issue oI who is
considered Malay and who is not. In the case oI anisah v. Tuan Mat,
10
the Federal
Court leIt the issue undecided whether the appellant was Malay and a native oI Kelantan
in the Kelantan Malay Reservation Enactment and the Kelantan Land Enactment as due
to the Iact that under section 13 oI the Kelantan Malay Reservation Enactment, it is up to
the His Highness the Sultan in Council to decide whether the appellant is a Malay or not
and the decision shall not be questioned or revised by any court.

.0 Terminology of the Prohibition and Restriction
As reIer to the OxIord Advanced Learner`s English Dictionary
11
, the word oI
prohibition` denotes the act oI stopping something being done or used, especially by law.
The word that can always be used interchangeably is such as the word oI Iorbiddance`
which bears the similar meaning oI ordering somebody not to do something or ordering
something must not be done. As Ior the word oI restriction`, it was deIined in the like
dictionary as a rule or law that limits what you can do or what can happen. A thing that
limits the amount oI Ireedom one has.
These two terms are totally two distinct things. II careIully scrutinizing them, in
the context oI prohibition, one is absolutely estopped Irom doing an act, meaning that one
has no any power to do something which outlawed; however, as Ior the restriction, one
has power to act but subjected to certain condition. For the Iormer, no concession or
green light is made Ior a person to act in that particular way; on the other hand, in the
latter, one is granted oI a little power to act within the ambits oI law which certain
conditions are attached thereto. II we applied both in the context oI law, the prohibition is
such as the general rule whereas the restriction is such as the exception to the general
rule. Even they are two distinct objects, yet somehow they still share a similarity. Their

10
|1970| 1 MLJ 213.
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uL0P ŷŴŸŷ Lanu Law

similarity is that any breach oI either prohibition or restriction will really be caught it or
punishable.
.0 The Prohibition of the Malays Reservations Land
Many land scholars were oI the opinion that the Malay Reservation legislation
was a Iorm oI 'Restriction on dealings¨ to Malay reservation landowners. However, there
were also oI the opinion that this restriction or control on dealings may also be viewed as
a Iorm oI 'prohibition against disposition by the state¨ or as a means oI 'controlled land
alienation¨. Thus Malay reservation legislation can also be viewed as a Iorm oI planning
land use by the State Authorities which limits ownership and dealings oI land declared as
'Malay reservation¨ to Malays.
12

First and Ioremost, we have to comprehend that the law oI Malays Reservations
Land is governed by each State Enactment except Ior Malacca and Penang. It is not under
governance oI the National Land Code because the Section 4(2)(b) oI the National Land
Code has clearly stipulated that nothing in National Land Code shall aIIect the provisions
oI any law Ior the time being in Iorce relating to Malay Reservations or Malay holdings
unless it is expressly provided to the contrary. These Enactments include the Federated
Malay States Reservation Enactment (Cap 142) 1913 and the UnIederated Malays States
Enactment like Perlis Malay Reservation Enactment (No 7 oI 1353), the Malay
Reservation Enactment oI Kedah (No 63) 1931, the Johor Malay Reservations Enactment
(No 1 oI 1936), the Malay Reservation Enactment oI Terengganu (No 17 oI 1360) and the
Kelantan Malay Reservation Enactment (No 18 oI 1930). Historically, Larut was the Iirst
province in Perak to be gazette as a Malay Reservation area with 140,000 acres were
created as Malay Reservation Land on 5
th
June 1914 Iollowing by Selangor with more
than 36,542 acres in 1917 and Pahang with 32,640 acres in 1916.
13


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uL0P ŷŴŸŷ Lanu Law

asically, there are two types oI prohibition named as 5rohibition against
dis5osition of Malay Reservation land by the state to non-Malays and against 5rivate
dealings. Normally such prohibition against disposition by the State was imposed to
avoid the State Executive Council to dispose the Malay Reservation land without the
approval oI the Ruler oI State in Council.
As Ior the private dealings, the prohibition on Malays Reservations Land reIers no
alienation and dealings oI the right or interest on the Malay Reservations Land can be
made in Iavour oI non-Malay person or body. This means that any dealings and alienation
can only be entered amongst the Malays person or body. This prohibition oI dealings was
including the dealings in such land or holding by way oI a power oI attorney created Ior
non-Malay person. esides, the holder oI the Malays Reservations Land cannot charge
their land as security to non-Malay moneylenders due to an interest will be created in
Iavour oI non-Malay. Let say iI the charge has been made, no money or rent was paid
under such contract, the moneylender cannot recover the monies and damages through
the court. This is because any attempt oI dealing, dealing or dispose oI Malay
Reservation Land which contravene the respective State Malay Reservation Enactments
will be null and void. Thus, such void contract has no Iorce oI law.
For example, Section 23 oI Selangor Land Code was designed to prohibit the
Muslim landowners Irom mortgaging or transIerring their rights over land to non-
Muslims.
14
In some respects this provision resembled the Malay Reservations Enactment
which was put into Iorce 22 years later. oth were aimed at the same group, the Malays.
However, the Selangor Land Code cast a wider net as it was made available to all
Muslims, unlike the Malay Reservation, which was restricted to the Malays.
This similar principle was to be applied in the bodies like the company where not
every member is Malay, no dealings and alienation can be eIIected in Iavour oI such
company unless there is exception provided in the Enactment itselI. This meaning that
either Non-Malay person or body, iI deals with the Malays Reservation Land by a method

14 David S.Y. Wong, Tenure and Land Dealings in the Malay States (Singapore, Singapore University
Press, 1975)
uL0P ŷŴŸŷ Lanu Law

prescribed in the Enactment itselI and not contrary to the provisions oI the Enactment,
such dealings will not be null and void.
.0 Non-Malay Right Over Malay Reservation Land
In Johor, the Malay Reservation Enactment allows non-Malay reservation land deal with
the said land with other non-Malays. This recognition is granted iI the non-Malays have
been occupying the said land prior to the declaration oI Malay Reservation. Furthermore,
there is no Malay Reservation land can be alienated to non-Malay aIter Merdeka Day
15
.
Meanwhile, the provisions oI Kedah and Perlis Malay Reservation Enactment allow the
State Authority to dispose oI Malay reservation land to Siamese. In Kedah, any non-
Malay can deal the Malay Reservation Land with other non-Malay iI they hold the Malay
Reservation Land under the Surat akuan prior to the declaration oI the said land
16
.
In Federated Malay States Malay Reservation Enactment stated that any non-Malay
would be able to acquire an interest in Malay Reservation Land iI they make an
application through a company which is speciIied in the Third Schedule even though the
enactment clearly prohibits non-Malay to occupy the Reservation Land. The Ruler in-
Council is given a wide discretion to declare any company as a Malay company,
irrespective oI it members, whether they are Malay or non-Malays. However, Kelantan
disallows Malay reservation land to be disposed on Temporary Occupation License to
non-Malay Ior a period not exceeding one year. Furthermore, it allows Malay
Reservation land to be disposed through alienation to those persons approved by the
Ruler-in-Council to hold interest or right over the land.
17

In the case oI 1an Hong Chit v Lim Kin Wan
18
, the Federal Court held that there are two
ways where non-Malays can acquire a Malay reservation land. The Iirst way is through

13
Alnul !arla Maldlnţ Sharlfah Syed Abdul kader Ǝ eLcŦ (2008)Ŧ 9tloclple of ,oloyslo looJ lowŦ Malayslať
Lexls nexlsŦ Þage 433
16
lbldŦ
17
lbldŦ
18
|1964| 30 MLJ 113
uL0P ŷŴŸŷ Lanu Law

the approval oI Ruler-in-Council. The other way is any non-Malay occupied the land
prior to its declaration as Malay Reservation by the State Government can hold the land
or Iree to deal the Malay Reservation Land with the other non-Malay.
In real liIe, a Malay person has to get the approval Irom the Ruler-in-Council iI they wish
to deal the land with non-Malay. AIter the land belongs to non-Malay, he is Iree to deal
the land with other non-Malay without the approval oI Ruler-in-Council. In this
circumstance, the provision oI the Malay Reservation Land is not applicable to him
.1 Alteration and Revocation of Malay Reservation
No revocation or alteration is valid until it has been published in the gazette. Section 4 oI
the Federated Malay States Malay Reservation Enactment allows the Menteri esar with
the approval oI the Ruler in-Council to alter or revoke the status oI the Malay
Reservation Land either entirely or partially oI the area. esides, this is done without
going through the post-mortem with the Federal Government under Article 89(1) oI the
Constitution. On the other hand, the Commissioner oI Johor needs to get the approval oI
His Highness the Sultan in Council to revoke any Malay Reservation Land. Whereas in
Terengganu, Perlis, Kelantan and Kedah, it is the Sultan in Council who has the
prerogative to revoke the status oI Malay Reservation. Among these states, Kedah has an
additional part which is any person can apply to the Sultan in Council Ior revocation oI
Malay reservation land
19
.
Pursuant to the provision, any alteration or revocation oI the Malay Reservation Land
will only take eIIect once it has been published in the gazette. This was held in the case
oI ohamed Isa & Ors v Abdul Karim & Ors
2ô
. Raja Azlan Shah was Iirm in stating that
Malay reservation under the respective States Malay Reservation Enactment.
. Transfer

19
Alnul !arla Maldlnţ Sharlfah Syed Abdul kader Ǝ eLcŦ (2008)Ŧ 9tloclple of ,oloyslo looJ lowŦ Malayslať
Lexls nexlsŦ Þage 463
20
|1970| 2 MLJ 165
uL0P ŷŴŸŷ Lanu Law

In oo Say Lee v Ooi Heng Wai
21
, the Federal Court held that the purported agreement
to transIer the land already get the approval Irom the Ruler in Council. esides, the
transIer oI the land is not contrary to the Kelantan Malay Reservation Enactment.
However, in the case oI 1an Hong Chit v Lim Kin Wan
22
stated that a non-Malay
person who has been occupying a Malay reservation land prior to the declaration may
transIer his land to other non-Malays without the approval oI the Ruler in Council. The
reason is he is not bound with the provision oI the Malay Reservation Enactment.
. Charge
In the Malay Reservation Enactment, it clearly stated that no Malay holding shall be
charged to a non-Malay person except Government, Co-operative Societies registered
under the Co-operative Societies Act 1948 and to any person speciIied in the Second
Schedule oI the Federated Malay States Malay Reservation Enactment.
23
This was
evident in the case oI ainal Abidin bin ohd 1aib v alaysia Aational Insurance Sdn
Bhd.
24
In the case, the charge was registered on 6
th
September 1982 to the deIendant, a
non-Malay company. Then, the deIendant applied to the State Authority to be included in
the Second Schedule as a recognized charge. The application was approved on 23
rd

October 1991. Subsequently, the State Authority by its letter dated 21
st
July 1992, agreed
to have retrospective approval, dating back to 1
st
January 1982 in declaring the non-
Malay company as Malay Ior the purpose oI the charge under section 17 and Second
Schedule oI the Federated Malay State Malay Reservation Enactment. Faiza Thambi
Chick J. held that the charge was valid and the decision oI the Ruler in Council was
binding.

21
|1969| 1 MLJ 47
22
|1964| 30 MLJ 113
23
Alnul !arla Maldlnţ Sharlfah Syed Abdul kader Ǝ eLcŦ (2008)Ŧ 9tloclple of ,oloyslo looJ lowŦ Malayslať
Lexls nexlsŦ Þage 466
24
|1994| 3 CLJ 731
uL0P ŷŴŸŷ Lanu Law

Meanwhile, in the case oI Ho Ciok Chay v Aik Aishah
25
epworth stated that aIter
analyzing section 7(i) and 9A held that the charge created in Iavour oI a non-Malay by
Malay on Malay Reservation land was ab initio.
In the case oI 1 Bariam Singh
2ô
, Mohamed Zahir J Ielt that as there was no express
prohibition in creation oI a charge to a non-Malay person under the Kelantan Malay
Reservation Enactment. ased on the ambiguous provisions, it should be in Iavour oI the
Ireedom oI the individual. Hence, the Ireedom to create a charge in Iavour oI a non-
Malay person should be allowed.
Furthermore, Schedule A oI the Kedah Malay Reservation Enactment, allows holders oI
Permits, anci Sewa, and Surat Akuan to charge the Malay reservation land to anyone,
irrespective oI race. In the Kedah case oI Sime Bank Bhd v Project Kota Langkawi Sdn
Bhd
27
Mohd Hishamudin Yunus J, conIirms the above statement by saying that in the
light oI section 6 (1) oI Kedah Malay Reservation Enactment, a Malay or Siamese is
allowed to charge the Malay reservation land in Iavour oI a non-Malay.
. Lease
The Kelantan Malay Reservation Enactment allows the lease oI Malay Reservation land
situated within town area to non-Malays, subject to the approval oI His Highness the
Sultan. The said lease should not exceed 3 years and non-renewable and any provision in
the lease which allows renewing shall be declared null and void. In contrast, regards the
Malay Reservation Land which is outside the boundaries oI the town, monthly lease may
be given to non-Malays and such lease may be terminated upon giving one month
notice.
28
In the case oI ato' Haji Aik ahmud bin aud v Bank Islam alaysia Bhd,

25
|1961| MLJ 49
26
|1983| 1 MLJ 232
27
|1998| 4 MLJ 334
28
Alnul !arla Maldlnţ Sharlfah Syed Abdul kader Ǝ eLcŦ (2008)Ŧ 9tloclple of ,oloyslo looJ lowŦ Malayslať
Lexls nexlsŦ Þage 469
uL0P ŷŴŸŷ Lanu Law

Abdul Malek Ahmad JCA held that the Kelantan Malay Reservation Enactment allows
the Malays to lease Malay reservation land to non-Malays.
A similar provision is Iound in the Kedah Malay Reservation Enactment. A lease oI
Malay reservation land allowed Ior a period not exceeding 3 years to non-Malays.
Unlike the Kelantan provision, no consent oI the Sultan is required.
.5 Entry of Caveat
The non-Malays are allowed to enter a caveat on Malay reservation land, as the State
Malay Reservation Enactment provisions are silent on this issue. In Kedah case oI RAP
Aathan v Haji Abdul Rahman bin Haji Yusoff & Ors, Syed Agil arakbah J held that
the plaintiII, even though he is not a Malay person, he had caveatable interest in the
Malay reservation land.
In the case oI Malay holding in the Federated Malay States, Johor, and Terengganu
Malay Reservation Enactment, a non-Malay person is prohibited Irom entering a caveat
except the non-Malay is an agent to a Malay company. In this situation, he is allowed to
enter the caveat on behalI oI his Malay principal.
.6 A55ointment of Power of Attorney
Almost all the State Malay Reservation Enactment, except Ior Kedah prohibit the
creation oI a non-Malay power oI attorney to act on behalI oI a Malay proprietor to
transIer, charge or lease a Malay holding or Malay reservation land. In Kedah Malay
Reservation Enactment has allowed a non-Malay power oI attorney to be created on
Malay reservation land Ior a period oI not less than three years. Any extension oI the
duration would nulliIy the Iormation oI the power oI attorney.
29

5.0 Recent Develo5ments
0


29
Alnul !arla Maldlnţ Sharlfah Syed Abdul kader Ǝ eLcŦ (2008)Ŧ 9tloclple of ,oloyslo looJ lowŦ Malayslať
Lexls nexlsŦ Þage 471
30
Salleh 8uangŦ(2007)Ŧ ,oloysloo 1otteos 5ystemŦ uewan 8ahasa dan ÞusLakaŦkual LumpurŦ ÞgŦ 247Ŧ
uL0P ŷŴŸŷ Lanu Law

In the case oI Sime Securities Sdn Bhd v 1etuan Project Kota Langkawi Sdn Bhd
31
, the
deIendant company charged its land to the plaintiII as security Ior a loan. It is granted by
the plaintiII to one Patrick Lim. The borrower subsequently deIaulted in his repayment
and the plaintiII took Ioreclosure proceedings. The deIendant opposed the plaintiII`s
application on various grounds, including that the charge is unlawIul, null and void.
Alaudin J held that the charge was valid because there is no express prohibition against
the creation oI a charge under section 6 or section 8 oI the Kedah Malay Reserve
Enactment.
5.1 Issue 1: Whether Malay reservation land as a state 5olicy it has
brought any lasting and substantial benefits to the Malays?
In the larger concept, questions were also raised as to whether the concept oI Malay
reservation itselI should be allowed to continue in Iorce in the present archaic Iorm.
Some legal practitioners deny the good intentions oI the architects oI this law which
essentially aimed at bringing a higher economic income oI the rural Malay peasantry who
constitute the greater majority oI the owners oI such lands. Regrettably, with the wisdom
oI hindsight such good intentions appeared to be diIIicult due to the absence oI any
concrete Iollow up and enIorcement measures. Any system oI land law and
administration must not merely gear at creating a Malay land owning society although it
is admittedly a laudable state policy. The important steps is to ensure that such a land
tenure policy should also bring about and generate an income earning society, occupying
a place in no way inIerior vis-a-vis by other community. AIter the Federated Malays
State Reservation Law (1913) was enacted and Iollowing various lawsuits in the other
Un- Iederated Malays State, the Malay reservation landowners were still no improvement
in their economic advantages. On the contrary, aIter the prohibition against dealings was
imposed under the enactment, the economic value oI their properties suddenly
depreciated compared with the other Iree hold properties in the same area. For a long

31
|1999| 4 MLJ 585
uL0P ŷŴŸŷ Lanu Law

time, there were no Iollow measures in educating or assisting the Malay owners how to
produce a higher yield or earn a better income Irom the properties.
32


There was a public announcement about Iew years ago that the Malay Reservation Land
enactment would be revamped which the law would be amended so Malay Reservation
Land owners could lease their land to non-Malays Ior a speciIied period. Some saw the
lease as necessary, since it would mean that idle or undeveloped Malay Reservation Land
could be developed in joint venture with the Malay owners.
33
However, the existing law
does not in any way protect or saIeguard Malay Reservation Land Irom depletion through
the convenient machinery oI acquisition by a state.

AIter Malay Reservation Land is acquired, it becomes 'State land¨. Under this deIinition,
the path is open Ior these properties to Iall into the hands oI non-Malay developers. One
oI the stated objectives oI the proposed amendment to the Malay Reservation Land
Enactment is to 'Iree the land Ior development¨. The proposed amendment is also
intention to resolve the problem oI idle or undeveloped Malay Reservation Land across
the nation and to enable dealings in Malay Reservation Land between the owners and
non-Malay entities. The new law would not adversely aIIect the interests oI Malay
owners over their holdings. Let us assume that the new law is in place and that Malay
Reservation Land owners can lease their properties to non-Malays Ior up to 60 years. Let
us also assume that the land, classiIied as agricultural, is converted Ior development and
that buildings, either commercial or residential, can be erected upon it.

During the lease period, Malay owners would get their 'rental¨ Irom the lessees, who in
turn would probably earn much more, either through rentals Irom the units or through the
sale oI the properties Ior the duration oI the lease period. Assuming that the Malay

32
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9eolosolot ,oloysloţ laculLy of loresLryţ unlverslLl ÞuLra MalayslaŦ
33
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uL0P ŷŴŸŷ Lanu Law

Reservation Land is held in perpetuity (what in commercial terms is called 'Ireehold
land¨), what happens at the end oI the 60-year lease? Everything depends on the terms
and conditions stipulated in the lease agreement between the landowner and the lessee
(the developer). An astute lessee would ensure that at the end oI the 60-year lease, an
option to renew could be exercised, and so the entire scenario would repeat itselI.
34


Assuming that the Malay Reservation Land is held Ior a term not exceeding 99 years,
what happens at the end oI the 60-year lease? Assuming that the land is reverted back to
the owner, there would be just 39 years leIt until the lease expires and the Malay
Reservation Land becomes State land again, under the National Land Code.
The question oI selling Malay Reservation Land by their Malay owners to non-Malays
does not arise. The move is intended purely to Iacilitate their development in the Iuture,
something that could not be easily done under the existing law. Under the amendment,
Malay Reservation Land owners can enter into joint-venture agreements with non-Malay
companies that have the Iinancial strength and proIessional skills to carry out
development projects. Under these agreements, the Malay owners would be actively
engaged as participants, not mere bystanders in the development work carried out by their
non-Malay partners.
It is common knowledge that many banks, even those classiIied as 'Malay¨ Ior the
purposes oI the law, are not particularly keen in accepting Malay Reservation Land as
collateral Ior loans. Apart Irom the question oI land values (which are dependent on
market Iorces), banks Ieel that when Ioreclosure proceedings are contemplated against
deIaulting borrowers, it will be diIIicult to Iind bidders Ior such property.
earing in mind that land, as a natural resource, is 'becoming increasingly scarce¨,
Malay Reservation Land, wakaI land, customary land, ancestral land and agricultural land
too "must not be leIt untended". Instead, they should be developed to create value and
higher economic returns.

34
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Other than that, at present, under Schedule 2 in the Land Acquisition Act (1960),
compensation paid to the aIIected landowner oI the Malay Reservation Land should
ignore the Malay Reservation status. ThereIore, the aIIected landowners oI Malay
Reservation Land should receive the open market value oI non-Malay Reservation Lands.
The main reason Ior this equivalent amount oI compensation is to consider the true nature
oI the indigenous land status beIore and aIter acquisition. However, when the landowners
oI Malay Reservation Land are not satisIied with the compensation paid, they may appeal
and prolong the acquisition process. In extreme cases, landowners` resistance may
adversely aIIect the decision to go ahead with the project. In this case, valuation and
landownership constraints are said to exist.

In general, the compulsory acquisition oI Malay Reservation Lands Ior public purposes is
undertaken Ior the beneIit oI the Malays. This is because the Malay Reservation Land
status is not transIerable to non-Malays in any circumstances, neither beIore nor aIter
being developed. In other words, there is a limited market Ior the Malay Reservation
Lands. When the government acquires the land Ior development or the Malay developers
buy the land, they are reluctant to pay a high price or compensation Ior these lands
because oI the limited market and the lack oI Iinancial resources oI the Malay buyers.
Since the aIIected landowners are still asking Ior high prices oI their lands, the
government or the private developers may no longer be interested in the land dealings. As
a result, the land potential Ior development remains undeveloped.
35

To sum up, Whether Malay reservation law is now an Anachronism, whether it was in
Iact beneIicial at all at one time but has now out lived its purpose is indeed a very
sensitive issue and unresolved question in this country. Nevertheless, the proposed
amendment in the Malay Reservation Land enactment by government with the intention
to Iacilitate the commercial development oI Malay Reservation Land shows prooI that the
Iederal government was really serious about the matter and trying to Iind out the most
appropriate solution to increase the value oI Malay Reservation Land but meanwhile

33
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protect the interest oI Malays without deIeated the real purpose oI having Malay
Reservation Land.

5. Issue : The 5roblems and challenges that encountered by the Malays
Reservation Land at the 1st centuries.
The most intriguing problems that rise up are the land owners whom owned the reserve
land also ignored the purpose oI this law. Moreover, the reserve lands are not allowed to
plant the rubber trees plantation and only restricted to the agricultural vegetation as well.
The Iirst challenges are some oI the people claiming that the decreasing oI the size oI
Malay Reservation Land. According to substantive law, Ior the acquisition oI land oI the
Malay Reservation Land shall be replaced by declared the other lands oI similar character
and oI an area not exceeding the area oI that land. It is observed that a total average oI
82,995.99 hectare oI Malay Reserve Land is reported to have been sacriIiced Ior
development purposes and only 28,377.48 hectares oI the lost reserve land was
replaced.
36

The second challenges land is the land itselI located at the rural area and the soil oI the
land also inIertile. It can be proved by inIerred to section 3(1) oI the Kedah Malay
Reservation Enactment which provided the land that will be declared to be town shall not
be declared as the Malay Reservation Land. So, commonly, the land that declared as
Malay Reservation by the ritish was considered as third and Iourth class land. The
reasons Ior the reserved land to be remained undeveloped by virtue oI remoteness oI
these lands and jungle Iorest instead. esides that, lack oI inIrastructure in that reserve
land made it expensive to be developed and in terms oI not commercializes which led
them reluctant to inject the investment in order to develop reserve land areas. So, that`s
the reason the land being neglected by the land owner and abandoned by the government.
Apart Irom the above, the ineIIectiveness oI restrictions on the Malay Reservation Land
which inspired the loophole oI the law. Despite the law emphasize the prohibition oI the

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reserve land to be passed Irom Malays to non-Malays, but there are some exceptions that
allowed the legal authority to justiIy the act. For example, Ruler-in-Council or the Yang
Dipertuan Agong have the discretionary power to alienate Malay Reservation Land to any
person, body, corporation or company which is speciIied in the Third Schedule and
declare any company or corporation as Malay Ior the purpose to permit development and
to raise the economic status oI the Malays Reservation Land Owners. The decision
cannot be questioned in the court. esides that, the discretionary power that own by them
to add, delete or amend the list in the Third Schedule and subsequently, the list will
automatically become oIIicial as long as it is published in the Gazette. Furthermore, some
irresponsibility oI decision makers who either openly or secretly sell, charge or even
lease the land to non-Malays had caused a lot oI Malays lost reserve land title and
privileges. In addition, the law itselI also justiIied the grant oI the reserved land to non-
Malays with compliance oI conditions.
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Despite, according to Article 89(1) oI the Federal Constitution enumerate that the
sacredness oI the Malay reservation institution provides a very strict procedure in order
alter the size oI the pre-Independence Reservation land on the part oI the legislature oI
the state. Then, the amendment subsequently required to be passed by two Houses oI
Parliament, the House oI Representatives and House oI Senate. The reason behind the
law is to protect the Malays land owner Irom being abused by the state. However, any
reserve land that declared aIter Independence days will Iall under jurisdiction oI the State
Authority, thereIore, any changes to the area oI the Malay reservation land can be easily
by by-passing the proper procedures. Nevertheless, this act shall be regarded as illegal
and constitute a breach oI trust.
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esides that, the slow development oI the reserve land is due to the limitation oI Iinancial
Iunds that available Ior the Malay owners. They are not allowed to deal their land with
non-Malays oI natural person and also company or corporation. ThereIore, they cannot

37
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deal with the strong Iinancial developers Irom non-Malays. Apart Irom that, the
government also reluctant to allocate the large development Iunds to develop the lands
compared with the other lands that possess the commercial beneIits returns. esides that,
Ior any reserve land that being sold in auction, some oI Malay owners also not aIIord to
buy the lands even the lands that sold adjacent to the land oI himselI. Nevertheless, this
problems had been suggested by the ProI. Salleh uang that the reserved land could be
developed by the non-Malays housing developers but the houses that built shall be sold to
Malays only as one oI the good solution better than abandoned the lands.
In conclusion, the Malays land owners have to change their attitudes oI complacency and
aware oI their rights on the reserved land as well as being manipulated by the
irresponsibility legal authorities which changing their reserved land Ior the development
purposes that not beneIit the land owner himselI and among Malays races as well.
esides that, the Malay reservation lands shall be properly replaced with another land
that with same characteristic as well to the land owner who lose it lands and adequate
compensation by virtue oI the land acquisition by the government

5. Issues : The issues on ethnic quota.
Years ago, there was a public announcement that the law would be revamped. Again, sad
to say, nothing Iurther has been heard. The status quo remains. We were told then that the
law would be amended so MRL owners could lease their land to non-Malays Ior a
speciIied period. There was some healthy debate on the proposed duration: Some Ielt it
should be 30 years, others said 60. Some saw the lease as necessary, since it would mean
that idle or undeveloped MRL could be developed in joint venture with the Malay
owners. OI course, there were many detractors; however, the majority seemed to support
the proposed legislation.
Under the amendment, MRL owners can enter into joint-venture agreements with non-
Malay companies that have the Iinancial strength and proIessional skills to carry out
development projects. Under these agreements, the Malay owners would be actively
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engaged as participants, not mere bystanders in the development work carried out by their
non-Malay partners.
Under the existing law, only Malay individuals and the so-called "Malay institutions" can
enter into dealings aIIecting Malay reservation land. "Dealings" reIer to sale and
transIers, leases, charges, liens and easements. Non-Malays are also not allowed to caveat
MRL nor take them under attachments. A number oI Iinancial institutions in the country
have earned their "Malay" status, but unIortunately Ior the Malay reservation land
owners, not all banks have done that. It is common knowledge that many banks, even
those classiIied as "Malay" Ior the purposes oI the law, are not particularly keen in
accepting Malay reservation land as collateral Ior loans.
It is to be expected that the new housing policy oI the Kedah stated government would
encounter problems. The Malay position would Iind it diIIicult to endorse or support the
proposed policy. From their point oI view, why should Malay reserve land be converted
to Ireehold with only a 50° allocation Ior them? Isn`t this giving up part oI their land?
Though in all probability the Malay reserve land had been compensated elsewhere,
normally in a less valuable or desirable location, naturally they would resent the idea oI
giving up their claims on halI oI the converted land, especially when the land value had
escalated in that particular area. Hence massaging the Iigure Irom the magic 30° oI NEP
to 50° would not really endear the state government to the people oI Kedah, be it Malays
or non-Malays.
As been pointed out, replacing the Malay Reserve acreage in Iar-Ilung areas is certainly
not equitable. They must remember that Malays are no longer those generally poorly
educated ones in ritish colonial or immediately post-Merdeka times. It is even plain
common sense Ior them to see the vast diIIerence in land values between the urban and
rural areas. It's simple arithmetic to know that 3 acres in the outskirts oI town must be
worth many more acres in 20-30 miles or even Iarther away.
It is thereIore natural that they don't agree that such properties, when developed into a
housing scheme, be allotted 50-50. The Sekolah Melayu Pak Tani would know that's not
right. We must support those who protest against such an unIair treatment oI Malay
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Reserve land. We must call upon the State Government concerned, especially the Malay
component oI such a Government, to ensure an equitable treatment on all Malay Reserve
land all over the country.
In determining the value oI potential Malay Reserve land, valuation by independent
parties must be done. The Government Land Valuation Department has its oIIices in
every district. However, Government land valuation has always in the past been in Iavour
oI the Government. II such Malay Reserve lands are being proposed Ior development
even as joint ventures with tany state agency, the Malay land owner may stand to lose. In
such a situation, the Land is a state matter but the National Land Code is a Federal
business. We must also urge the Federal Government to weigh in on such issues and
protect the interest oI Malay Reserve land owners.

6.0 Conclusion
The objective oI implementing the policy oI Malay reservation land is to protect the
interest oI the Malay`s economic rights. It is to ensure that certain quota oI land in this
country is to be reserved Ior the Malay due to its importance in development. Thus, the
Malay reservation land has been categorized under the state`s matter whereby each oI the
relevant states has its own enactment on the land. This is because the development oI
each state is diIIerent. Followed by the increasing oI the population, the development oI
the country and so many other Iactors, the value oI immovable properties has sky-
rocketly since the country`s independence. More and more lands are needed to satisIy
the demand oI development.
However, there are still some lands which are leIt behind with values increased in such a
slow pace, which are the Malay reservation land. The value oI something will only be
increased when there is high demand on that thing, which includes the value oI land.
Government data shows that there are now 3.7 million acres oI MRL in Peninsular
Malaysia. This does not include the 219.8 acres oI prime land in Kuala Lumpur's
Kampung aru also does not include: Sarawak's Native Customary Rights land; Sabah's
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Native Title land; parcels oI land in
Terengganu less than 10 acres in size which Ialls under Malay Reservations Enactment
Terengganu (1941).
A check by City & Country shows that a 3,822 square Ieet(will be reIIered as sq It) oI
Ireehold residential land (non-MAS) in Kampung aru, located next to Jalan Tun Razak,
is on the market Ior RM950,000, or almost RM249 psI. In contrast, a tract oI 5,400 sq It
oI residential MAS, also in Kampung aru, is going Ior RM1 million, or about RM185
psI.
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The price diIIerentiation also exists in commercial land in Kampung aru.
40
The
slow pace oI the land`s development is due to the decrease oI its demand. The cause oI
lack oI demand on Malay reservation land is because oI its inIlexibility oI dealings or
transactions. The bankers barely want to take the land Ior loan, companies were doubts
to purchaser the land consider its diIIiculties in transactions and it is limited to Malay
purchasers only. When those lands are leIt without any progress on it, the land will be
either under the acquisition oI the State or Federal government, or abandoned.
It shall not be Iorgotten that the intention oI Malay reservation land is to ensure that the
Malays can be beneIited Irom the policy by possessing the land. ut iI we look into the
present situations oI Malays reservation land, the policy seemed to have restricted the
potential value oI the Malay reservation lands and subsequently the outcome oI the policy
will go contradict beyond the initial objective. It is no doubt that the interest should be
protected but on the other hand, the administrative or legislative should really put on their
mind to re-consider with regard to the policy, to avoid the blessing become the curse oI
the owners oI Malays reservation land. All in all, the corporations Irom all the parties are
important in order to protect this sacred law Irom being deprive their Iundamental rights
that covered in the Federal Constitution.



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