Land Acquisition in Malaysia: An Overview

Introduction

With the roll out of infrastructure projects such as the MRT and the extension of LRT, land acquisitions are being carried out rapidly in Malaysia.

Persons interested in a land are often being caught unaware of their rights when theirs land are earmarked for acquisition.

In this piece, we will try to simplify the relevant issues and the process of land acquisition for easier dissemination of information.

What is Compulsory Land Acquisition?

Simply put, the government wants to acquire some lands, and the landowners, except in limited circumstances, cannot say no.

The government can only invoke its power to compulsorily acquire a land for the following purposes:

(i) for any public purpose;

(ii) where it is need by any person or corporation for any purpose that is beneficial to economic development; or

(iii) for the purpose of mining or for residential, agricultural, commercial, industrial or recreational purposes or any combination of such purposes.

A landowner would not be able to prevent a compulsory acquisition by the government unless he can show that the acquisition is not for the purposes stated above.

Compensation

Compulsory acquisition does not mean a landowner would not be paid for his land. Land Acquisition Act 1960 (“the Act”) provides for some guidelines on how compensation is being calculated.

A person need not be a landowner in order to be compensated. As long as he has an interest in the land, he can be compensated. For example, leaseholder and tenant can very well claim for compensation under the Act.

While there are certain other items that affect the amount of compensation, typically, the compensation would consist of:

(i) Market value of the land

(ii) Damage sustained or likely to be sustained if the acquisition of the land severed the land from your other land(s)

(iii) Damage sustained or likely to be sustained if the acquisition affects your other property

(iv) If you are compelled to change your residence or place of business, the reasonable expenses incidental to the change

Of course, if the landowner benefits from the acquisition, such benefits shall be deducted from the total amount of compensation.

Process

We will skip all the steps that do not directly concern the landowners or other persons interested.

Notices

The first step in the land acquisition process would be for the Land Administrator issuing a notice to the persons interested that informing them that their land is “likely to be acquired”.

This does not mean that the land will surely be acquired. This notice merely serves as a notification that the government is looking at the land. However, if you hell bent on preventing the government from proceeding with its plan, this may be a good time to form a pressure group.

When the government has decided that a certain piece of land is to be acquired, the Land Administrator will issue another notice which state that the certain piece of land “is needed” for a certain purpose (such as building highways). This notice serves to inform the persons interested that their land will be acquired.

Upon receiving this notice, you should consult a valuer and/or a lawyer familiar with land acquisition on what you should do, and how much compensation you can obtain. Strategize with your valuer and your lawyer. Most of the time, there are certain heads of compensation that a person interested is entitled to, but did not claim, because of ignorance on what is claimable.

Land Inquiry

The Land Administrator will next issue a notice to the persons interested on the date of an inquiry to enquire into the sum of compensation that the persons interested is entitled to.

At the inquiry, a person interested is supposed to adduce his evidence as to the amount of compensation that he is claiming.

The government, of course, will also have its own valuers who will be presenting their valuation.

The Land Administrator may or may not decide immediately on how much compensation to be awarded. If he doesn’t, he will fix another date to render his decision.

Reference to High Court

If the person interested is not satisfied with the award of the Land Administrator, he may refer the matter to the High Court within 6 weeks, provided that the amount of compensation is more than RM3,000.00.

So far as compensation is concerned, the decision of the High Court is final.

This article is written by our Partner, Loke Yuen Hong