Digital Free Zone

The Prime Minister of Malaysia, Dato' Sri Najib Razak, has, in the 2017 Budget Speech, announced that the Government of Malaysia will introduce the first Digital Free Zone ("DFZ") in the world. The DFZ will "merge physical and virtual zones, with additional online and digital services to facilitate international e-commerce and invigorate internet based innovation". Although there is no publicly available information yet on the DFZ, the Minister in the Prime Minister’s Department in charge of the Economic Planning Unit, Datuk Rahman Dahlan, has explained that the DFZ concept would mirror the existing Free Trade Zone where businesses were given incentives, including tax exemptions. An attractive package is being formulated for the DFZ to encourage people to join Malaysia’ e-commerce sector and will reportedly be launched later this year.

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Amendment to the Town and Country Planning Act 1976

In October of 2016, the Town and Country Planning Bill 2016 ("Bill") was tabled for debate in the Dewan Rakyat of Malaysia and passed by block voting. While the Bill only contains 3 clauses, it was reportedly preceded by heated debates. The concern was on the proposed Section 20B(1) which introduces a duty on every Federal Government and State Government department or agency (except in Sabah and Sarawak) to seek advice from the National Physical Planning Council ("NPPC") on a development proposal relating to any coastal reclamation excluding reclamation for the construction of a jetty or beach rehabilitation, and construction of a major national infrastructure including airports, seaports, inland ports, railway transportation networks, highways, power stations, dams and toxic waste disposal sites, and other infrastructure of national interest as determined by the NPPC.

This proposed Section 20B(1) raised concerns because Section 1(3) of the Town and Country Planning Act 1976 ("Act") empowers the State Authority to bring the Act into operation in any manner the State Authority thinks most advantageous, convenient, expedient or practicable. Further, the State Authority may declare that a provision of the Act does not apply to an area or any part of the area of a local planning authority. The primary argument during the parliamentary debate was that each State Government still has the authority to decide whether it wishes the provisions of the Bill to apply to it, thus potentially rendering the Bill ineffective at law if not adopted by a State Authority and/or having the law apply unequally throughout Malaysia.

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Amendment to the National Land Code 1965 and the Land Acquisition Act 1960

The National Land Code (Amendment) Act 2016 ("NLC(A)2016") and the Land Acquisition (Amendment) Act 2016 ("LAA(A)2016") have been passed by Parliament, and was published in the Federal Gazette on 9 September 2016. Generally, the amendments are aimed at rationalizing the laws to address current needs in land development. Some of the main changes brought about by NLC(A)2016 and LAA(A)2016 are summarised below.

NLC(A)2016

One of the main changes to the National Land Code 1965 ("NLC") under the NLC(A)2016 are the amendments made to Sections 433B, 433E and 433H of the NLC. Prior to the amendment of Section 433B(1) of the NLC, non-citizens of Malaysia and foreign companies were restricted from dealing with land under the category of "agriculture" or "building" save with the approval of the State Authority. The amended Sections 433B, 433E and 433H of the NLC now extend this restriction to lands under the category of "industry". This amendment appears to be inconsistent with the Government's long standing position of allowing 100% foreign ownership in manufacturing companies, and is a step backwards in the Government's recent efforts to liberalise the Malaysian economy.

NLC(A)2016 has also been criticized for not establishing a centralized database controlling all land titles in Malaysia. Presently, there are two types of land titles in Malaysia, namely the Registry Titles and the Land Office Titles. The NLC (unamended) requires instruments of dealing relating to land held under Land Office Titles to be presented at the respective Land Office. On the other hand, instruments of dealing relating to land held under Registry Titles are to be presented at the respective Registry Title office. The current institutional framework leads to the creation of "numerous land register databases at State level" which hinders the implementation of an effective electronic land administration system nationally. A centralized database was in fact one of the several reform proposals recommended in the consultation paper issued by the Director General of Land and Mines but, unfortunately, the proposal was not incorporated in the NLC(A)2016.

LAA(A)2016

The LAA(A)2016 expands the ambit of the Land Acquisition Act 1960 ("LAA") to include compulsory acquisition of sub-divided buildings (parcels or provisional blocks) and underground land which currently only expressly addresses compulsory of land on the earth's surface. Besides that, in respect of temporary occupation or use of land under the LAA, the LAA(A)2016 introduces amendments to Section 60 of the LAA allowing land owners or lessees to object if aggrieved with the compensation offered by the Land Administrator and to refer their dispute to the Court. This is significantly different from the present wordings of Section 60 of the LAA and arguably bring more fairness compared to the present position under the Section 60 of the LAA, as the amendments now clarifies the position in law that aggrieved land owners are allowed to refer their dispute to Court.

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