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Unraveling The Enigma Of "Lot Untuk Orang Melayu" In Land Ownership






Embarking on the complex journey of land ownership in Malaysia reveals a tapestry woven with historical, ethnic and legal intricacies. The Malay Reserve Land (MRL) initially introduced by the British Colonial administration was aimed to safeguard property rights for Malays. Bumi Lots then emerged from the National Economic Policy to address economic disparities among Bumiputera communities and others. Notably, the Kedah State Government introduced the intriguing policy of “Lot Untuk Orang Melayu” on title deeds, adding a layer of complexity to an already nuanced landscape. While Article 89(1) of the Federal Constitution prevents the conversion of MRL to non-Malay ownership, the legal standing of "Lot Untuk Orang Melayu" remains shrouded in ambiguity.


“Lot Untuk Orang Melayu”

 

As per the Pekeliling Pengarah Tanah Dan Galian Negeri Kedah Darul Aman (Bahagian 8): Lot Untuk Orang Melayu, paragraph 3 provides that:

 

“3.1     Lot Untuk Orang Melayu merupakan satu polisi Kerajaan yang dimasukkan dalam Sekatan Kepentingan untuk menjaga kepentingan orang Melayu dalam membeli hartanah. Oleh yang demikian, takrif Melayu untuk Lot Untuk Orang Melayu adalah lebih longgar berbanding dengan takrif Melayu dalam Enakmen Rizab Melayu Kedah [Enakmen 63].”

 

This policy has spurred legal contests, with the Kedah State Authorities imprinting these endorsements on specific title deeds.


Case Law

 

In Nyong Chin Khean & Yang Lain v Pendaftar Hakmilik Tanah, Kedah Darul Aman [2015] 3 CLJ 1144, the plaintiffs initiated a suit challenging the imposition of the “Lot Untuk Orang Melayu” endorsement on their land title. The crux of the dispute was whether the defendant had the authority to enforce this endorsement under the law, specifically the National Land Code 1965 (Revised 2020) (NLC).

 

The High Court recognised that the state authorities have jurisdiction over the land but stressed that such jurisdiction shall be exercised according to the provisions of the NLC. Referring to the precedent in Cayman Developments (K) Sdn Bhd v Mohd Saad Long & Ors [1999] 3 CLJ 601, the court highlighted a case where state authorities, while approving a land conversion application from “agricultural” to “residential” and “commercial”, attempted to impose conditions under Section 124 of the NLC that the houses to be built on the land should be sold at a 5% discount. The court found such conditions to be ultra vires.

 

The High Court held that the state authority’s imposition of conditions, although with well-intent, contravened Parliament’s objective of Section 124(5)(c) of the NLC and thus, was ultra vires:

"I have no doubt whatsoever of the good intention of the State Authority, and that in prescribing the price and the discount, it certainly had in mind the interest of the low income section of the general public, who would constitute the potential buyers of the low-cost units. Yet, with the greatest respect, I do not think that Parliament, in enacting sub-s. (5)(c), had in mind to confer on the State Authority such a wide power so as to empower it to even fix the price of the low-cost units for the purpose of sale to potential buyers, let alone to prescribe any discount. In other words, the State Authority, acting under s. 124(5)(c), has no power or jurisdiction to impose requirements of such nature. The requirements imposed are, in my judgment, ultra vires. This being the case, Cayman was not obliged to comply with such requirements.”

 

The High Court in Nyong Chin Khean referred to several unreported cases where the courts consistently invalidated the “Lot Untuk Orang Melayu” endorsement. The High Court also took cognisance of the fact that since 2000, the state authority had accepted the decisions of the High Court without pursuing appeals, thereby strengthening the plaintiffs’ claim.

 

In contrast, the High Court in G. Garden Development Sdn Bhd v Pentadbir Tanah Daerah Kota Setar, Kedah & Ors [2016] 1 LNS 11 ruled that a registered proprietor must first apply to the state authorities to remove the endorsement. Failure to follow this process will render the plaintiff’s claim premature and/or an abuse of the court’s process.

 

Similarly, the High Court in Lim Chee Keng & Anor v Pentadbir Tanah Daerah Kota Setar & Ors [2016] 1 LNS 416 held that the plaintiffs had prematurely sought court intervention without first applying to the state authorities under Section 124(1)(b) of the NLC. The High Court referred to an unreported Court of Appeal case (Civil Appeal No: K-01(NCVC)(A)-465-11/2014), stating that the High Court does not have jurisdiction to nullify the “Lot Untuk Orang Melayu” endorsement, as this power rests with the state authority.


The issue was again ventilated in SP Boon Seng Project v Pengarah Tanah & Galian Negeri Kedah & Anor [2018] 8 CLJ 216, where the following key questions were raised:

 

  1. Whether state authorities are legally empowered to impose the “Lot Untuk Orang Melayu” endorsement?

  2. If the answer to (a) is in the affirmative, whether state authorities acted within the limits of their powers?

  3. Whether the endorsement is unconstitutional?

 

The state authorities argued that they derive their power from Article 153 of the Federal Constitution and Sections 5 and 124 of the NLC. However, the High Court  rejected this notion as Article 153 did not grant power for such endorsement:

 

“… the quotas to be reserved under this article relates only to positions in the Federal public service, scholarships, exhibitions and other similar educational or training privileges or special facilities given by the Federal Government and for trade or business permit or licence. There is no mention of lands.”

 

Relying on Cayman, the High Court held that “any conditions imposed in the conversion exercise must relate to the category of land use”, rendering the imposition of “Lot Untuk Orang Melayu” endorsement to be ultra vires of Section 124 of the NLC. Consequently, the endorsement was deemed a nullity, demanding its removal from the land title of land. 


Commentary


The ongoing legal dispute surrounding the imposition of “Lot Untuk Orang Melayu” endorsement carries significant ramifications with widespread implications. The uncertainty shrouding compliance creates a challenging landscape for developers, who must maneuver potential legal hurdles. Likewise, for prospective buyers, the pursuit of property ownership may find itself entangled in complex legal labyrinths, casting shadows over their aspirations.

 

In light of these challenges, it becomes imperative for state governments to balance policy intentions with a steadfast commitment to adhering to legal boundaries. Striking this delicate balance is crucial not only for the clarity of land ownership regulations but also for fostering a transparent and predictable environment for both developers and aspiring property owners. As this legal tug-of-war unfolds, it emphasises the need for a harmonious convergence of policy objectives and legal frameworks to ensure a fair and equitable landscape for all stakeholders involved.


21 February 2024

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