Brief Description of the Malaysia Local Government

7/22/2019 Brief Description of the Malaysia Local Government

http://slidepdf.com/reader/full/brief-description-of-the-malaysia-local-government 1/32

Brief Description of the Country and Its National/State Government

Structure

Demography

Located in the heart of tropical South East Asia, Malaysia straddles the SouthChina Sea. Peninsular Malaysia is at the tip of mainland South East Asiawhile the states of Sabah and Sarawak are part of the island of Borneo.Peninsular Malaysia has an area of 131, 582 square kilometres. It consists ofthe eleven states of Kelantan, Terengganu, Pahang, Johor Melaka, NegeriSembilan, Selangor, Perak, Kedah, Penang and Perlis. In East Malaysia,Sabah has an area of 73,709 square kilometres while Sarawak, with an area of124, 445 square kilometres is the larger. In total land area, Malaysia is aboutthe size of Myanmar, two-thirds that of Thailand, one sixth of Indonesia andone-third of the United Kingdom of Great Britain.

With an estimated Gross National Product (GNP) of about US$35,958 millionin 1989 and per capita GNP of about US$2790, the World Bank classifiesMalaysia as one of the Middle Income Economies. In this position, Malaysiaranks alongside Mexico, South Africa, Poland and South Korea (World Bank1994). The GNP per capita has risen from US$1,710 in 1981 to US$3,140 in1993 (World Bank 1995). The Malaysian development paradigm hasundergone a radical shift from a traditionally strong public sector presence insocial and economic development of the country to a greater role for the private sector as an engine of growth.

The Malaysian economy is expected to experience further structural changes

particularly from the evolution of an agricultural-based economy to one thatstrongly emphasizes industrial development (Abdul Rahman 1990:2). Thisstructural transformation is evident in the massive increase of the contributionof the manufacturing sector with regards to GDP from a mere 20 per cent in1980 to 35 per cent in 1996. This accelerated trend is in contrast with thetrend posted by the agricultural sector's contribution to GDP that continued todecline from 23 per cent in 1980 to 13 per cent in 1996 (EPU 1996: 14). Onecan expect that with the continued growth in the manufacturing sector and the present pace of economic growth, the national vision that Malaysia will become a Newly Industrialized Country (NIC) in the near future, might bereality by the turn of the century (Tan 1993: 57). Applying this vision to alonger-term prediction, Malaysia is expected to become an industrial nation by the year 2020.

The rate of urbanization tends to correlate significantly with economicgrowth. One inevitable consequence of this structural change and theconsequent rapid economic growth that has averaged an impressive 8 per cent per annum in the past decade, has been the increasing urbanization of thecountry. In fact, in 1980 the population living in urban areas was 35 per cent



but this figure has shot up to 55 per cent in 1995 (Malaysia 1996: 154). Theimpact of rapid growth and urbanization is naturally reflected in the numberof people living in local authority areas. According to a study made by theMinistry of Housing and Local Government in 1988, 68 per cent of the population in Malaysia live in local authority areas and make demands upon

urban services (MHLG 1988). The enlargement of urban areas also means anincrease in the problems, needs and complexities relating to urbangovernance.

It has created a new set of challenges that entail an enhancement in thecapacity and capability of the Malaysian local authorities. These problemsdemand new approaches, strategies as well as practical and effective answersand solutions for urban and local government managers. As noted by Davey(1993: 12): "The role of urban government in managing urban growth cannot be taken for granted in the context of today's debate".

Table 1. Urbanization Rate by State

State 1980 1991 1995 2000 6MP 7MP

Johor 35.2 48 51.8 56.4 4.6 4

Kedah 14.4 33.1 36.9 42.1 4.7 4.2

Kelantan 28.1 33.7 35.7 39.4 4.3 4.5

Melaka 23.4 39.4 44 49.8 4.1 3.5

Negeri Sembilan 32.6 42.5 44.7 47.6 3.3 2.8

Pahang 26.1 30.6 31 33.7 3.5 3.2

Perak 26.1 30.6 31.9 33.7 3.6 2.8

Perlis 32.2 54.3 60.5 67.8 5.5 5

Pulau Pinang 8.9 26.7 30.4 35.3 3.1 2.3

Sabah 19.9 32.8 35.2 38.2 7.9 7.1

Sarawak 18 38 43.4 50.5 5.6 4.8

Selangor 34.2 75 82.6 89.4 6.1 4.6Terengganu 42.9 44.6 45.1 45.7 3.5 3.1

Wilayah Persekutuan 100 100 100 100 1.6 1.2

Kuala Lumpur 34.2 51.1 54.7 58.8 4.5 3.8

Source: Seventh Malaysia Plan (1996 - 2000)



Based on the Population and Housing Census of 19912 Includes Wilayah Persekutuan Labuan

Local authorities must be prepared for adjustments in meeting the challengesrelated to growing urbanization. Such a transformation is already evident.

Like local authorities in other countries, particularly those in advancedeconomies, the local government system in Malaysia is also evolving itself to prepare for the challenges of the next millennium.

National governmental and political structure

A federation of thirteen states, Malaysia is a constitutional monarchy. Itachieved Independence from the British colonial rule on the 31st August of1957. At its birth the new nation promulgated a Federal Constitution. Theinclusion of Sabah, Sarawak and Singapore into the federation in 1963resulted in an amendment to the Constitution. In 1966, Singapore left the

federation. The current federation of thirteen states upholds the principles of parliamentary democracy. Parliament is bicameral; it consists of the Yang Di

Pertuan Agong (the King) in Parliament, the Dewan Rakyat (the House ofRepresentatives) and the Dewan Negara (the Senate). As prescribed underArticle 32 (2) of the Federal Constitution, the Yang di Pertuan Agong has afive-year term and is appointed by the Conference of Rulers from the rulers ofnine states in the Peninsula. Melaka, Penang, Sarawak and Sabah do not haverulers but governors appointed every four years by the King. The King doesnot preside in Parliament but may address the two houses as and whennecessary. Article 181 of the Federal Constitution, sets out the executiveauthority of the King. The Cabinet or Executive Council is a council of

ministers appointed by the King to advise him in the exercise of his functions.Chaired by the Prime Minister, the Cabinet consists of an unspecified numberof members of Parliament. The Cabinet is collectively responsible toParliament.

Administratively, Malaysia is organized along a three-tier type ofgovernment: federal, state and local government. In carrying out its duties asenumerated in the Federal and Concurrent Lists of the Federal Constitution,the federal government has established a number of ministries (currently theynumber 24), departments and agencies. The latter also include publicenterprises, statutory bodies and corporations. The Cabinet is the highestcoordinating executive body of all government activities and interests. Twonational councils - the National Economic Council (NEC) and the NationalSecurity Council (NSC) - headed by the Prime Minister assist the Cabinet inthe discharge of its functions. The NEC is the highest council responsible forcoordinating all development programmes while the NSC is responsible fornational security.

To improve and enhance coordination within the government machinery, the



Federal Constitution provides further avenues of federal influence over thestate governments. Such influence is exercisable over matters that are evenlisted under the state list of the Constitution. The three other nationalcouncils, the National Council for Local Government (NCLG) under article95A, the National Land Council (NFC) under Article 91 and the National

Finance Council (NFC) under Article 108, are chaired by the Prime Ministeror his appointee. Representatives both from the federal and state governmentssit in these committees.

In addition to the Constitutional provisions, there are various other officialcoordinating forums. These include periodical meetings between the PrimeMinister and the Chief Ministers of the states, the Federal-State LiaisonCommittee (FSLC) and the National Development Planning Committee(NDPC). The Chief Secretary to the federal government chairs the last twocommittees, which comprise the respective state secretaries and other seniorgovernment officials. The NDPC is the highest body formulating and

coordinating economic development policies in the country. Its secretariat isointly held by the Economic Planning Unit (EPU) and the Implementationand Coordination Unit (ICU) of the Prime Minister's Department.

At the state level, the Ruler is supreme. He acts on the advice of the StateExecutive Council (EXCO) that is chaired by the Menteri Besar or ChiefMinister. In the states where there is no hereditary ruler, a governor isappointed by the Agung to be the state's ceremonial head as in the case ofPenang, Melaka, Sarawak and Sabah. In distinct contrast to the arrangementin the federal government, all the states have unicameral legislatures. Theseare elected at least every five years. The state legislature has the autonomy to pass any law so long as it does not militate against a corresponding federalcompetency, as underlined by Schedule IX of the Federal Constitution.Therefore, the state legislature is the centre of democratic policy. TheExecutive Committee, or the EXCO, is the Federal Cabinet equivalent at thestate level and is the highest coordinating body on all matters of interest in thestate. Coordination and supervision are carried out through a committeesystem where the heads are members of the state legislature.

The next layer in the government hierarchy, which is at the local level, is thedistrict administration. The British formalised district administrationnationwide. Today it still is the prominent administrative machinery at districtlevel, for both the state and the federal governments. The District Officer(DO) heads the district council; in that capacity he is also the Land RevenueCollector and President of most district councils. In the former FederatedMalay States such as Selangor and Perak as well as the former states of theStraits Settlements such as Penang and Melaka, the DO is a senior federalofficer from the elite Administrative and Diplomatic Service. In the states ofSabah and Sarawak and the former Unfederated Malay States such as Kedah,Terengganu and Kelantan, the DO is a senior officer from the respective State



Civil Service. The position of the District Officer as the chief administrativeofficer in a district is further enhanced by virtue of the fact that he is the mostsenior officer in the district and answers directly to the state secretary.

The District Officer is responsible for the development of the district as a

whole. Coordination of the various development activities is done through thevarious district committees most of which the District Officer chairs. The twomost important committees are the District Development Committee andDistrict Action Committee. They include all the heads of governments andagencies at the district level such as the District Council, AgriculturalDepartment and Public Works Department. Although no statute provides forthese consultation committees, administratively, they constitute an importantmachinery to monitor and coordinate all development proposals and activitiesin the district.

Another dominant local public entity at the local level is the local government

or authority (Wan Abu Bakar 1996:487). Under Item 4 in List II of the NinthSchedule, the Federal Constitution stipulates local government to be a subjectunder the State List. Hence, all local authorities fall under the exclusiveurisdiction of the state governments. Following an amendment to the Federal

Constitution, the government enacted, under Article 95A, the NationalCouncil for Local Government to advise and coordinate the local authoritiesin matters especially pertaining to legal and major policy issues (Malaysia1986: 79-80). Within this formal framework, the Town and Country PlanningAct further enhances the relationship of a local authority with other localinstitutions (Malaysia 1976). This Act also classifies local authority into twogroups: municipality for large towns and district council for small urbancentres. Under Section 5 of the Act, a local authority is the local planningauthority and thus the authority that approves and controls all planning anddevelopment applications in its area. Besides the District Action Committee,the local authority, which incorporates the heads of the technical departmentswho are either councilors or ex-officio members, especially in full councilmeetings, also provides a consultation forum at the local level.

Evolution of Local Government, its Legal and Political Background

Like most institutions of government in many countries that were formercolonies, the present system of local government in Malaysia could be traced back to Britain, which colonized Malaysia for nearly two centuries. As noted by Norris (1978: 4): "Malaysia inherited a British legacy in terms of localgovernment objectives and style and has been deeply influenced by British precedents". Hence, it is only logical and inevitable that early forms of localauthorities introduced in Malaya tended to be modelled along their Britishinstitutions. A cursory look into the laws governing the local authorities inMalaysia, particularly during its formative stage, would show that most ofthese local government statutes were based on English laws. However, with



the accretion of time, local government authorities in Malaysia have evolvedinto a system having its own identity, characteristics and laws that reflect thesocioeconomic and political environment of the country. In Malaysia (at thattime Malaya), Penang and Malacca - which were part of the Straits Settlement- were the first two states to form local governments. It was in Penang that the

British formed a Committee of Assessors in 1801 and gave it theresponsibility for planning and implementing urban development. This laidthe foundation for the establishment of local government in this country.

Local councils were later set up in Malacca and other Federated andUnfederated Malay States including those in Sabah and Sarawak. Tooperationalize the setting up of town boards and local councils as well asholding local elections, the British formulated various types of legislation.The Local Authorities Elections Ordinance (1950) for instance, granted thetown councils the power to organize elections. In another case, the LocalCouncils Ordinance (1952) was formulated to provide power to local

residents to establish local councils if it was deemed necessary. At the end ofcolonial period, there were 289 local councils in Malaya (Malaysia 1972).After Independence in 1957, when the Federal Constitution came intoexistence, local government outside the federal territory was placed under thestate list.

The Post-Independence period of the sixties was a turbulent one for localgovernment authorities in Malaysia. Internal administrative and political problems facing the local councils and the violent confrontation against thenewly-formed Malaysian federation by Indonesia in 1964, led to thesuspension of local government elections. This suspension was executedthrough the enactment of two regulations: the Emergency (Suspension ofLocal Government Elections) Regulations (1965) and the Emergency(Suspension of Local Government Elections) Amendments Regulations(1965). Since then, local governments in Malaysia were never to experienceanother election again even though the local government system in Malaysiahas undergone a lot of positive changes. Tenant, writing in 1973, commentedthat: "Elective local government was a late colonial intrusion which did notflourish within the Malaysian political system" (Tenant 1973: 365). Anotherwriter, Norris (1978:8), remarked that: "The Malayan environment was andremains unfavourable to large scale devolution".

The problems faced by local government authorities in the sixties werefurther compounded by the existence of various types of local councils aswell as by the complexity of the application of a number of differentordinances, enactments, bylaws, rules and regulations. By the early seventies,the proliferation of local government units had resulted in a large number oflocal administrations and entities. For Peninsular Malaysia alone there were374 such local governments. Hence, the government felt a need to reexamineand reform the local government system in Malaysia to improve its working.



A Royal Commission was established in 1965, but only managed to submit itsreport to the federal government in December 1969. The report was onlyreleased in December 1971.

Even though the report was not accepted, its findings formed the basis for the

restructuring of the entire local government system in Malaysia (Sabah andSarawak included). Based on its recommendations, the report paved the wayfor the formulation and adoption of the Local Government Act 124 in 1976.This Act was to facilitate the process of restructuring local authorities.Commenting on the restructuring exercise, Norris (1978) had an external perspective of the social, economic and especially the political environmentof the local authorities in Malaysia and gave a pragmatic analysis of the issueof local government after the reform. He envisioned the issue as follows: "(...) No longer the authorities' survival but rather the degree of their revival (...)There is above all, a growing awareness of a new value for local government,not in its traditional democratic virtues, but in its potential capacity to spread

development" (1978: 75). Norris added that: "This new perceived vision forMalaysian local government is of considerable political significance. Arestructured local government system should provide local authorities newimpetus to move beyond the traditional role of garbage collection and sanitaryinspection or general maintenance functions to those of urban developmentand management".

Following the passage of the uniform Local Government Act 124 (TemporaryProvisions) in 1973 - used as temporary act in the restructuring process - thegovernment reviewed all basic laws that regulated the powers, duties,responsibilities and functions of local authorities. Three parent laws wereenacted for that purpose: The Street, Drainage and Building Act 133 (1974),the Local Government Act 171(1975) and the Town and Country Act 172(1976).

Local Government Categories and Hierarchies

Prior to the restructuring exercise and the adoption of Local Government Actof 1976, there were six types of local authorities:

City Hall of Kuala Lumpur; Municipal council; Town council; Town board; Rural district council; and Local councils.

Table 2. Distribution of Local Authorities by State

State names Restructuring



Before After MC DC

1. Johor 96 14 1 13

2. Kedah 38 11 1 10

3. Kelantan 28 11 1 10

4. Malacca 4 3 1 25. N.Sembilan 20 8 1 7

6. Pahang 35 7 1 6

7. Perak 97 15 2 13

8. Perlis 4 1 1 -

9. P.Pinang 5 2 2 -

10. Selangor 33 11 3 8

11.Trengganu 13 7 1 6

12.Fed. Terri - 1 1 -

13. Sarawak 23 22 2 1914. Sabah 22 25 4 21

Total 418 138 23 115

Source: Report of Royal Commission (1968, Table XII, P.341) and MHLG(Local Government Division)

As a result of the adoption of Act 171, there exist in essence only two types oflocal authorities in Malaysia: the municipal councils and district councils.However, the Act provides for the establishment of a city council. Conferred by the Supreme King of Malaysia or the Agung , this status requires the prior

concurrence of the Conference of Rulers. Over the years, some of thesedistrict councils have been upgraded to a higher status. These include theSelayang Municipal Council and the Ampang Jaya Municipal Council thatwere formerly respectively known as the Gombak District Council and theUlu Langat District Council.

Table 3. Local Authorities in Malaysia (Status of 1997)

Status of Loc. Authorities Penin Sabah Sarawak Total

City hall

City council

Municipal council

District council

1

2

19

74

-

-

4*

19

1

1

3

20

2

3

26

113



Total 96 23 25 114

* Inclusive of the Labuan Municipal Council;Source: Briefing Notes, Ministry of Housing and Local Government

With the completion of the restructuring exercise that took place from 1974 to1988, the 374 local authorities that were previously in existence (consisting ofcity Councils, town boards, town councils, rural and district councils) have been restructured into 14 municipal councils and 79 district councils inPeninsular Malaysia. In Sabah and Sarawak, the restructuring has resulted in6 municipal Councils (4 in Sabah and 2 in Sarawak) and 39 district councils(18 in Sabah and 21 in Sarawak). At present, there are 96 local authorities inMalaysia, 23 in Sabah and 25 in Sarawak. However, due to the expansion ofservice areas and administrative expediency, it is expected that more localcouncils will be established or that the present districts will be upgraded to amunicipal status.

Local Government Functions

The functioning of local government is based on the principle of ultra-viresand general competence (Mohd Yahya, 1987:466). The situation is very clearas Hashim and Yahya (1984: 155) write that: "Local government in Malaysiaoperates on the principle of ultra-vires (...) local authorities may performthose functions as specifically enumerated in its various Acts and bylaws. Ithas no general competence to undertake any activity according toaffordability (...) it cannot undertake any activity that is beyond its powers orelse it is ultra vires. Being a corporate [body] it can sue and be sued as well".

In spite of what has been written, local authorities in Malaysia have beengiven wide powers within the Local Government Act of 1976. The functionsnot only include mandatory functions but discretionary functions as well. Themandatory functions include all critical functions such as refuse collection,street lighting and activities pertaining to public health. Discretionaryfunctions include all development functions such as providing amenities,recreational parks, housing and commercial activities. The provisions of theLocal Government Act grant local authorities the following roles ((MohdYahya):

Local planning authority; Licensing authority; Power to impose certain kinds of taxes; Undertake building, housing and commercial construction (markets,

hawker stalls etc.); Power to perform urban planning and management functions; Traffic management and control (manage urban public transport



systems); and Power to plan and provide public utilities.

The Local Government Act of 1976 provides local authorities in Malaysiawith a very comprehensive set of functions and responsibilities. Two other

main laws, the Town and Country Planning Act (1976) and the Street,Drainage and Building Act (1974), help local governments to perform theirfunctions under the 1976 Act. These Acts allow the local authorities toassume more developmental functions in the field of urban management and play a more dynamic role in national development. As Mohamed Afandi(1989:125) notes: "Under the provision of the related local government laws(...) local authorities may carry out a whole range of functions, limited only by their own ambitions and resources." The major functions of Malay localauthorities can be summarized as environmental, public, social anddevelopmental.

Environmental

This relates to functions of maintenance and improvement of the environmentwithin the area of jurisdiction. This includes obligatory services such ascleansing, collection and disposal of solid wastes, proper drainage andsewage, sewerage system and beautification programmes.

Public amenities

This applies to services such as abattoirs, veterinary services, transportation, burial grounds and crematoria.

Public health and cleansing

This function includes the provision of sanitation and solid wastemanagement system, cleaning drains and roads and the general upkeep of theenvironment. The licensing of hawkers, stall holders, shop and businessoperators whose businesses are public nuisances and obnoxious in nature,falls under this function as well.

Social functions

Some larger municipalities provide social services such as childcare centres,clinics within their health care service programmes, ambulance and hearseservices. Besides these, they maintain fountains and arrange for lighting public streets and other public services and provide manual labour andfacilities to state governments or the district offices to assist in theorganization of ad hoc social services at the state and district levels;

Developmental functions



As opposed to mandatory functions of the local authorities, the developmentfunctions are considered "discretionary" under the Local Government Act,1976. Even though local authorities could be regarded as an importantinstrument for local socioeconomic modernization, the lack of financial and physical capacity limits the extent and functions that they can provide. This is

particularly the case with district councils.

In the face of rapid growth and the pressure to fulfil multiple needs of thelocal citizens and the private sector community, the scope of functions andresponsibilities of local authorities are expanding every day. The increase inthe rate of industrialization, trade, commerce and development of modernservices not only pushes the demand for urban space but also that of urbansupport services. With an increasing concentration of people and industries inurban areas, the functions and responsibilities of local authorities too havesignificantly expanded. This requires local authorities in Malaysia to performmultifarious roles that include:

Efficient service delivery functions and employment generation; The normal system maintenance function for public places, drainage

and sewerage, market places and crematorium, road maintenance andstreet-lighting, landscaping and maintenance, public health andsanitation;

The development planning and control and management functions(building control, land-use planning, development, creation ofindustrial estates etc.);

The promotion of tourism and urban renewal beautification programmes; and

Infrastructure development and support facilities which couldfacilitate industrial development and other local-based economicdevelopment initiatives.

More important, this expansion of functions raises one fundamental issue:How can local authorities become an effective machinery to facilitate nationalgrowth and enhance the nation's competitive edge? In essence, localauthorities must now play a more effective role in urban planning,development control and managing the urban system and its environment.Such a role is important to ensure uninterrupted growth and sustainabledevelopment within the context of maintaining national competitiveness inthis era of economic globalization. Besides, it imposes not only financial butalso administrative pressures on local authorities. These pressures come in theform of new demands and challenges to increase and improve delivery ofurban services. The challenges also pose important and strategic questionsregarding their roles at local, national and global levels. One of thesechallenges is in the management of local government finance.

Local Government Finances



Given the rapid growth in population and increasing rate of urbanization,local government finance has assumed increasing importance in localgovernment management. This is because financial management determinesthe efficiency and effectiveness of local authority operations. Withoutadequate funding, it is difficult for local authorities to fulfill their duties as

provider of services and act as a facilitator of socioeconomic growth at thelocal level. However, finance is always a major constraint that localauthorities face. Given that finance is critical to local authority management,it is imperative that local authorities develop a good financial administrationsystem. Such financial management will ensure that funds are collected,allocated and disbursed in an efficient manner. Local government finance inMalaysia includes, amongst other things, matters pertaining to expenditureand income as well as inter-government fiscal transfers. Local governmentexpenditure can be divided into two categories: development expenditure andoperating expenditure. Development expenditure involves a heavy capitaloutlay and includes expenditure on the construction of buildings, houses,

offices etc. Operating expenditure is spent on short-lived items such asstationery, equipment, salaries, manpower services, etc. In general, it ismainly used for the purpose of maintaining services.

Table 4. Share of Expenditure Items of Local Authorities in 1994

Expenditure items Percentage

Emoluments

Services and supplies

Capital expenditures

Grants and compulsory

Contributions

Others

38.24

39.51

9.23

-

7.88

5.14

Total 100.0

Source: Mohd. Afandi Ismail (1995)

Although the above table indicates only the expenditure items of the localauthorities in 1994, the expenditure profile has remained constant over the past decade and even remains unchanged today. Emoluments, services andsupplies comprise the main part of expenses (78 per cent). With little surplus



funds and no grants - a matter especially critical to district councils - localauthorities need to obtain loans and other sources of funding to finance theiroperating and development expenditures. The weak financial position of mostlocal authorities remains one of the serious impediments to the greaterefficacy of local authorities in providing more services and development at

the local level. As a result, efforts by the federal government - throughdisbursement of funds such as annual equalization grants - to fill the gap between the fiscal need and fiscal capacity is deemed necessary.

Table 5. Financial Position of Local Authorities (1991 and 1992)

State Population(000)

Amountneeded(000 $)

Revenue(000 $)

Shortfall(000s $))

Equalizinggrant 1991

(000 $)

Equalizinggrant 1992

(000 $)

Johor 965 97,495 56,470 41,026 4,168 6,360

Selangor 1,107 153,631 89,090 64,541 8,412 12,726

Kelantan 723 98,197 15,400 82,788 8,279 12,418

Penang 1,082 101,889 56,684 45,205 4,521 6,781

NegeriSem.

287 29,762 22,914 6,848 1,070 1,808

Pahang 251 47,515 23,541 23,973 2,635 4,143

Malacca 489 51,035 17,990 33,045 3,304 4,957

Terenggnau 381 43,979 12,068 31,911 3,277 5,018

Kedah 1,132 143,431 16,415 127,016 12,702 19,052

Perak 931 98,638 46,737 51,901 6,020 9,403

Perlis 61 7,805 2,497 5,307 531 796Total 7,409 873,367 359,806 513,562 54,918 83,462

Source: Ministry of Housing and Local Government

To meet the fiscal needs as represented by the expenditures required to meetthe multifarious, but essential services provided by the local authorities, it isimperative that local authorities upgrade their revenue generating capacity.Theoretically, a local government derives its income from three main sources:rents and fees for services, grants/subsidies given by the central or stategovernment (also known as inter-governmental fiscal transfers) and localtaxation. In addition, some local authorities also receive grants in lieu of rates(assessment rates of government property). Other sources of revenue includemiscellaneous forms of charges and fees such as licenses, payment forvarious forms of services, rental penalties and compounds as well as interest.Legal provisions with regard to revenue collection are spelt out by Part 5 ofSection 39 of the Local Government Act (1976) in Peninsular Malaysia,while the states of Sarawak and Sabah are governed by their respective



ordinances. These include, the Local Government Ordinance (1961) of Sabahand Chapter 117 of the Local Authority Ordinance (1948), Volume 5 of theSarawak Law, the Local Authority (Rating) Regulations, the KuchingMunicipal Ordinances (1988) and the City of Kuching North Ordinance(1988) of Sarawak.

The Ministry of Housing and Local Government, classifies the sources ofincome for the local authorities into six groups, namely:

Assessment rates (inclusive of contribution in-lieu-of rates); Licenses; Rentals; Government grants (inclusive of road grants); Car parking charges, planning fees, compounds, fines and interests;

and Loans (from government and/ or financial institutions).

Table 6. Breakdown of Sources of Local Authority Revenue in 1994

Revenue by Source Percentage

Assessment rates 47.38

Grant-in-aid of rates 3.60

Rentals from holding 5.27

(Licenses 5.97

Fees, charges and services 20.1

Grants (federal and state) 17.07

Other tax revenue other than assessment 0.50

Total 100

Source: Mohamed Affandi Ismail (1995)"Usaha Untuk MempertingkatkanPunca Hasil PihakBerkuasa Tempatan di Semenanjung Malaysia, (paper

prepared for the Ministry of Housing and Local Government)

In Malaysia, the major source of revenue is the assessment rate (47 per centfor Peninsular Malaysia). In 1786, the East India Company introduced theconcept of rating with the establishment of the Prince of Wales Islands (PulauPinang). Section 130 of the Local Government Act (1976) stipulates that ratesare to be imposed upon the improved value of the holding. Improved valuewas defined as: "The price that an owner willing and not obliged, to sell



might reasonably expect to obtain from a willing purchaser with whom he has been bargaining for the sale and purchase of the holding". The Act allows astate authority the discretion to opt for annual rental or market value as a basis for rate assessment. The state of Johor, for example, has opted for sucha valuation. Collection from the government for its property takes the form of

contribution in-aid-of-rates or grants. In 1993, the federal governmentcontributed a sum of RM 32,440,700 to local authorities in the form of in-aid-of rates increasing to RM 44,544,800 in 1995 (MHLG 1996). Assessmentrates have been the most lucrative source of revenue. However, over-dependence on this cause has had a negative impact upon local authorityfunctions. Phang (1997:26) notes that: "Heavy reliance and dependence uponassessment do not allow local authorities to fulfill their obligatory functionsor serve as agents of growth and development (...) consequently, they needother sources of income".

Another source of revenue for local authorities is fees from licenses issued by

local authorities for trading activities within its jurisdiction. These leviesconstitute about five per cent of the total revenue collected by localauthorities in Peninsular Malaysia. Rentals are charges or fees imposed uponusers for renting local authority properties. Charges are revenues received forservices rendered by local authorities such as fees for planning applications,dislodging of septic tanks, fees for burial facilities and charges for refusecollection. Fines and compounds imposed by local authorities for offencessuch as littering, dumping of household refuse, hawking without a validlicense and illegal parking within the local authority area forms other sourcesof revenue. Besides, interest and investment earnings are an important sourceof revenue especially for richer councils that place their funds in financialinstitutions or realize them through investment activities. The same applies tointer-governmental fiscal transfers that are necessary if local authorities are tofulfill their obligatory duties. These can be categorized as follows:

Launching grants; Annual equalization grants; Development project grants; Road maintenance and drainage grants; and Balancing grants.

Launching grants are an inducement for a state government to restructure itslocal authorities. These are provided only once and are usually used to purchase new equipment for the purpose of service extensions or to undertakeinfrastructure development projects. The Local Government Division of theMinistry of Housing and Local Government approves of the utilization ofthese grants and authorizes their annual disbursements. The formula used forcomputing the launching grant is based on the land area and population of thelocal authority. The Ministry of Housing and Local Government staggers outthe disbursement of the launching grant over several years to enable local



authorities to spread out their expenditure on capital items. The annualequalization grant replaced the annual grant in 1991. The annual grant wascalculated on the basis of the population size and the revenue that theauthority was expected to collect. The maximum annual grant payable wasfixed at RM 107,000.

In contrast, the annual equalization grant is a grant to compensate or equalizethe difference between fiscal capacities and fiscal needs of a local authority.Fiscal capacities are revenue sources of a local authority and fiscal needs areits expenditures. Certain criteria are used in determining fiscal needs and aformula is used to calculate the equalization grant for each local authority(Phang, Chee and Yahya 1988). Based on this exercise, total grants to localauthorities for 1991 were raised from RM 9 to RM 54.9 million that had been previously allocated to all 94 local authorities in Peninsular Malaysia. In1992, the total grant was RM 83 million and the minimum amount received by any local authority was RM 215,000 annually (NST 20 April 1992). The

Annual Equalization Grant is given by the federal government to localauthorities in Peninsular Malaysia through their state governments inaccordance with the State Grants (Maintenance of Local Authorities) Act 181and 245. Local authorities in Sabah and Sarawak do not receive this grantsince they are not governed by the provisions of the Local Government Act(1976) but are guided by their respective Local Government Acts andOrdinances.

Development project grants are funds made available to all local authoritiesfor implementing socioeconomic projects especially towards upgrading theservices provided by the local authorities in their areas of jurisdiction. Someof the projects include infrastructure projects, social facilities, cleanliness and beautification, purchase of equipment and machinery, recreational parks andsanitary projects (landfills and incinerators). The allocations for the localauthorities under the Development Project fund for 1995 was RM103,060,400. This was 4.63 per cent more than the 1994 allocation of RM98,500,010 (MHLG 1995). Under the Seventh Malaysia Plan (1996-2000),local authorities can obtain development funds for implementingsocioeconomic projects designed especially towards helpingthe Bumiputra and industrial community. Such projects include bus stations,markets, food courts and shop houses. The grants are also provided for thedevelopment of new and traditional villages within local authority areas. The purpose of this development expenditure is to bring these villages into themain stream of the local authorities' socioeconomic activities and functions(MHLG). Any allocation made for a specific project of this nature isconsidered an outright grant and does not involve any repayment by therecipient local authority. Nevertheless, in allocating funds for this purpose theemphasis is placed upon projects that would generate revenue for the localauthority and provide employment opportunities for its people. According toYahya (1987: 582), a major problem confronting the grant system as a whole



is that all the fiscal transfers are channelled through the various stategovernments and it is also doubtful whether the states pass on the Federaltransfer promptly to the relevant local authorities.

All local authorities are eligible for road maintenance grants. Roads that are

not federal roads are considered state roads and are maintained by localauthorities. Local authorities can directly claim the upkeep of such roads fromthe respective state governments. Road grants are calculated based on theaverage cost of maintaining one mile of road using the minimum qualitystandard as specified by the federal government. Each local authority has toapply to the state government for the grant. The state government, in turn, passes the application over to the Public Works Department to evaluatewhether the claims meet the standards required for maintenance and to certifyaccordingly. The list of the approved roads is then submitted to the FederalTreasury for payment of the annual maintenance grant. Drain maintenancegrants are ad hoc allocations by the Ministry of Housing and Local

Government to all local authorities to upkeep and upgrade their drains. It isnot compulsory for MHLG to provide this grant annually but nevertheless,the Ministry paid about RM 50 million in 1994 to local authorities to cleanand maintain their drains. The motive was to encourage flood mitigationactivities to prevent flash floods - arising from rapid economic development -from occurring in local authority areas.

State governments also offer financial assistance to their respective localauthorities in the form of a balancing grant. There are no formal criteria indetermining the purpose and amount of this grant. Basically, the state grant isaimed at covering deficits that arise primarily from increases in pay levelsnegotiated by the federal government for the public sector, hence the term balancing grant. Particularly for smaller councils, the financial assistancefrom balancing grants helps them finance minor projects such as markets andcommunity halls or building their offices. In general, the state fiscal transferhas been small, representing roughly 2.5 per cent of the total s expenditure(Mohd Yahya 1987). It must be emphasized that the state government plays asignificant role in local authority finance in terms of granting approval forany development project. For the bigger infrastructure projects, localauthorities are encouraged to seek loans and other forms of fiscal aids ratherthan depend on grants from central and state governments.

Scope of capital finance

Under the Local Government Act of 1976, local authority is equipped withlegal powers to borrow (Sections 42 to 49). The local authority is empoweredto borrow through mortgages, issues of stock and debentures and from federaland state governments as well as to obtain overdraft facilities from private banks. The main constraint however, is the restrictive clause in Section 41and thereafter followed by the various sections stating that all borrowing



requires the blessing and approval of the state government. As a result, thesource for borrowing has been confined only to the federal government. Theonly exception has been the city hall of Kuala Lumpur that has obtained someloans from the World Bank.

Domestic loans for local authorities

A local authority in need of a loan normally seeks the consent of the stategovernment in compliance with Section 41 of the Local Government Act of1976. Once the state government gives its approval or consent, a request for aloan is submitted to the Federal Treasury. A project brief that details the project background, needs and scope with sufficient details of financialviability is to be sent to the Federal Treasury for its assessment. If the projectis commercial in nature, the Federal Treasury could examine the loan requeststrictly from a financial point of view. The Federal Treasury also obtains itsfinance from both government revenue and from borrowing. Hence, it has to

scrutinize strictly all requests for loans to ensure an equitable distribution oflimited funds.

International loans for local authorities

Apart from domestic loans, local authorities can also finance their capital projects through international loans from the Asian Development Bank andfunding from the Japanese and Arab governments. Some of the internationalloans currently made available to the Malaysian government include loansfrom the World Bank and its subsidiaries, the International DevelopmentAssociation and International Finance Corporations.

Financial issues in local government

There are a number of financial issues facing local governments. Three majorones merit discussion: the federal (state) - local financial relationship,accountability and weak financial position of local authorities.

Federal state-local financial relationship.

Local government is under the State List in the Federal Constitution. The onlyformal framework that exists is consultation through the National Council for

Local Government. It must be emphasized that the federal government dealswith local governments primarily through the MHLG. Such dealings arecarried out through the state government, in particular the State LocalGovernment Division. Federal fiscal transfers include the provision andlaunching of annual grants, minor projects grants and the contribution in-lieu-of-rate that are made through this relationship. Beyond that, the federalgovernment cannot interfere directly in the affairs of local authorities. Thefederal government is helpless even in reported cases where the state



withholds, albeit temporarily, the Federal contribution in-lieu of rates forlocal authorities or the state refusal to impose new rates based on the propertyrevaluation done by the Ministry of Finance. In essence, for implementation purposes, financial initiatives greatly depend on the state government. TheState Authority has direct financial powers over local authorities. Such

powers are also incorporated in the Local Government Act of 1976.

Accountability

Public accountability embraces all aspects of government action. In financialmanagement, the most elementary form of public accountability is therequirement that local authorities give an account of their activities to the public and provide justification of what has been done. Even at this simplelevel, only a few local authorities are able to produce the annual financialaccounts, let alone the annual reports that report on the whole range of theactivities of the local authority. Audit work is also hampered and delayed by

the inability of the local authority to produce supporting documents for theexpenditures made, accurate accounting of the expenditure and up-to-dateannual accounts.

Weak financial position of local authorities

From the above discussion, it is apparent that the financial position of mostlocal authorities in Malaysia is weak. Except for a small minority comprisingthe larger local authorities, many do not have additional income to meet thedemands and expectations of their communities. Certainly, with increasingdemands for local government functions and services, new avenues for

revenue generation must be sought to supplement the income of localauthorities. This may include sale of municipal bonds, rezoning of land fromresidential to commercial purposes or taking equity share in privatization projects.

Meeting local financial needs in the next millennium

It is estimated that by the year 2000 more than 65 per cent of Malaysians will be living in urban areas as opposed to 51 per cent in 1991. To meet the needsof these urban residents, local authorities must be able to strengthen theirfinancial capacity and search for innovative means in order to remainfinancially viable. This is an important challenge for local authorities if theyare to sustain a high level of urban services and quality of urban life in thenext millennium. The Minister of Housing and Local Government ofMalaysia suggested a number of strategies to strengthen the financing side oflocal authorities in Malaysia during his presentation at the IULA 33rd WorldCongress in Mauritius on 7 April 1997. These are elaborated upon below

Restructuring of local authority revenue sources



In view of the emergence of new issues as well as old ones such as urbancongestion, urban poverty, environmental degradations and social ills (drugabuse and AIDS) coupled with increasing demands for recreational andleisure facilities of a growing middle class and a more affluent section ofsociety, there is a need to review the revenue distribution between the Federal

and state governments. At the same time, the sources of finance in the localauthorities need to be expanded and strengthened.

Greater autonomy to revise taxes

Since local authorities are semi-autonomous entities within the stateframework, any decision to revise taxes must get the approval of therespective state governments. This in essence, discourages the localauthorities to consider a review of rates to such extent that they reflect thecost of services they provide. Even though increasing rates are linked to a broader political process, a system should be devised to take into

consideration the costs of services provided by local authorities in order toarrive at a fairer calculation of rates beneficial to all parties involved. A moredecentralized decision making should be encouraged that gives localauthorities the power to decide on the imposition of new rates.

Deregulation and privatization

In line with the government policy to reduce its involvement in the publicsector development, concrete attempts must be made to explore new waysand means to reduce the expenditure of local governments throughderegulation and privatization. This may include the deregulation of building

control by giving this task to professional bodies or privatizing cleaning andmaintenance works of parks to private contractors.

Enhancing federal and state government support

Local authorities need substantially larger allocations than normal to tackleemerging social problems in urban areas such as drug abuse, AIDS andloitering of youth. The continuous support of the federal and stategovernments is vital to manage these problems effectively. Federal and stategovernment support is also crucial in assisting local authorities to maintainand enhance the quality of services in their localities. Most of the localauthorities, especially the smaller councils are ill-equipped to combat thesesocial and urban ills on their own. Without the generous and unwaveringsupport of the federal and state governments, measures taken by localauthorities could be costly and divert scarce resources away from theirmandatory obligations.

Community support and participation



The role of community support and participation is crucial in the performanceof local authorities as it ensures the success of a particular urban programmeand can help reducing the cost of operation. To a great extent, the public can be involved in tree planting activities, recycling of wastes, reducing litter andcontrolling vandalism. In these cases, local authorities take the initiative to

link up with non-governmental organizations and schools in order to promotecommunity support and participation. Such measures will greatly enhance orimprove abilities of local authorities in discharging their duties.

Personnel Systems in Local Government

One of the guiding principles behind the setting up of the local governmentsystem is to meet the objective of administrative efficiency (Mohd Zin1987:124). It is argued that as the machinery of the government becomesdecentralized, some aspects of its functions may be more efficientlyimplemented. The Malaysian experience has demonstrated that the mere

effort to bring the decision-making process to the lowest level, is notsufficient to meet efficiency objectives. Efficiency in resource allocation andutilization depends upon the quality of the decision-making process itself.This in turn depends on the manpower, personnel and expertise available,which is another area in the management of local authorities that meritsserious attention of Federal as well as state governments.

Recruitment, selection and promotion

Under the Local Government Act (1976) every local authority is given the power to recruit personnel to carry out its functions. However, the state

government has to approve the budget and the reasons for recruitment. Giventhis discretion, local authorities can appoint their own staff, exercise controland execute disciplinary action and undertake other personnel functions suchas training, promotion and pension matters as far as these are approved of bythe state government. As a result of the implementation of local governmentreform, local councils are now bodies appointed by the state authorities.Similarly the chief executives, i.e. mayor for a city council; president formunicipal or district councils, are also appointed by the state. The exceptionis the City of Kuala Lumpur, which is headed by the Commissioner for theCity of Kuala Lumpur. The Local Government Act (1976) provides for theappointment of not less than eight and not more than twenty-four councilorsand a mayor or a president to sit on the full council of a local authority. Theorganization of local authorities remains the same as before the restructuringexercise, except for the fact that the state authorities appoint the mayor or president, as is also the case with the secretary who is the chief administrativeofficer of the council. Other employees of the council are employed directly by the local authority concerned.

Concerning the appointment of a mayor or a president to head a particular



council, some state governments such as Kelantan and Trengganu, opted toappoint a politician from the ruling party in the states instead ofadministrators from state services. In such cases, the deputy mayor or president will be chosen from among the administrators. In other states suchas Pahang, Perak and Melaka, the mayor or president and secretary are picked

amongst the officers of the Malaysian Administrative and DiplomaticService. Other categories of personnel in a local authority belong to that particular authority from the beginning to the end of their career. Given thislifetime tenure, local authorities must employ the right personnel.

The recruitment process is considered most important in the public service asit determines the type of individual taken into the service. If the recruitment processes are weak, it will lead to a mismatch between recruited personneland the job requirements. Such mismatching will seriously hinder theefficient functioning of local authorities. In this respect, one must note thatlocal authority posts in Malaysia, can be divided into permanent and

pensionable, permanent and non-pensionable, temporary, contract andsupernumerary posts. In the case of temporary posts, it can be for specific periods or on a month-to-month basis. Each category of posts differs in manyways from the other in their terms and conditions of service. Thesedifferences in turn, may have implications; one of which is that each categoryis subjected to different recruitment styles and regulations. Recruitment inlocal governments is based on the principle of merit. The aim of the meritsystem is to appoint candidates on the basis of their intellectual ability, personality, potentiality and where relevant, their professional or technicalskills in relation to the requirements of the posts to be filled. To achieve thisobjective, local government (through its board) is charged with theresponsibility of performing its functions with independence, integrity andimpartiality. In this case, each local authority will have its own board whosefunctions are to appoint, confirm, place on the permanent or pensionableestablishment, transfer and exercise disciplinary control over members in theservice. The recruitment process to fill a vacant post involves five differentstages:

Clearance from the state government, the Treasury and the PublicService Department for filling the posts;

Recruitment procedure; Offer of appointment; Probationary period; and Confirmation of appointment.

The selection exercise is not an elaborate part of the recruitment exercise forthe local authorities. It is based on the scheme of service for a particular job.Some require professional qualifications while others entail pre-postingcourses and examination. For the purpose of mobility in the localgovernment, the career of its civil servants is determined by the scheme of



service of the various classes of jobs. An officer is recruited to the lowestgrade in a scheme of service and not to a particular post. An officer who isholding a post in a certain grade is eligible for promotion to a higher gradewithin the same scheme of service to which he belongs.

In case of promotion, a Promotion Board conducts all exercises whenever avacancy occurs in a higher grade in the scheme. As with appointment procedures, the promotion exercise has also adopted the interview method ofassessing the candidate's suitability. In all cases annual performance andspecial confidential reports are taken into account. Whatever the method, the prime consideration is that all promotions are based on merit. This principle isunambiguously stated in General Order 50 Chapter A that defines merit asconsisting of two factors: efficiency shown by an officer in the performanceof his/her duties and personal qualities including qualifications andexperience related to the post to be filled. Unsuccessful candidates are giventhe right to appeal against the decision to a Special Appeals Committee.

Before an officer is promoted to a higher grade, he is normally required tooccupy a higher post or a higher grade in an acting capacity so as todetermine his/her suitability for promotion. An officer who fails to be promoted is usually allowed to continue acting until the next promotingexercise is held. When an officer is acting in view of a promotion, he or sheenjoys all the privileges of the higher grade.

Many of the complaints and dissatisfaction voiced by local authority personnel relate to promotion and prospects of their service in that particularlocal authority. Firstly, the prospect of promotion depends on the availabilityof posts at the higher grade within that organization. If there is no vacancy, anofficer will have to stay and stick to a particular job for a long time until anew post at a higher grade is created. The ability of the local authority tocreate new posts not only depends on the workload of the authority but alsoon its financial capacity. Related to this is the problem of horizontal mobility.A person employed by a local authority will have to work in the authority hewas originally recruited into until he retires. He cannot be transferred toanother local authority of his choice through filling a similar post or bymutual transfer without losing his seniority and other privileges. Attempts arenow being made to set up a Local Government Service at state level. This isto facilitate officers from an authority to fill a post - either by way of transferor promotion - in another authority without having to lose seniority and other privileges. The state of Selangor has already developed the system.

Ethical behaviour and employee discipline

For the purpose of achieving the objectives set by the local government, personnel should be informed or reminded about accepted standards of workethics and conduct so as prevent any undisciplined behaviour that maydiscredit the local authorities' services. Even though disciplinary problems are



not of serious concern to local authorities, its increasing trend can have anegative impact on their efficiency and effectiveness. Recognizing theimportance of discipline, high ethical standards and productivity, a number ofapproaches have been adopted by many government agencies including localauthorities since the late seventies. Among others, these initiatives include the

introduction of a Punch Clock, Name-Tag, Code of Ethics in the PublicService, Manual of Office Procedure, Desk Files, Quality Control Circles anda Productivity Measurement Programme.

As part of the public sector reform in Malaysia, local authorities are alsoinvolved in the development of productivity and quality management programmes initiated in 1989. Local authorities like other public agenciesmust be proactive in the delivery of quality services, more market-driven andcustomer oriented in their dealings with the public. To implement these programmes, the government has encouraged public agencies to adopt a totalquality management approach, the establishment of a Client's Charter and the

implementation of ISO 9000 standards. To reinforce these efforts towardscreating and sustaining a culture of quality, the government has also launcheda number of awards such as Efficiency Service Awards, Public SectorInnovation Awards, Quality Control Circles Awards, the Prime Minister'sQuality Award and Public Service Quality Awards as part of the incentive package for public agencies.

Implementation of a new remuneration system

In an effort to improve the remuneration packages given to public sectoremployees, the government has introduced a new remuneration system in

1992. Like other public agencies, local authorities have adopted this systemthat provides local government personnel with a new, more flexible andattractive remuneration package of wages, allowances and other incentives. Iteliminates several levels of hierarchy existing in many government agenciesand encourages promotion and salary movements based on merit and performance (Ahmad Sarji 1992:3). In essence the new system has introducedmajor changes in the salary and allowance structure as well as in other areasof personnel administration and management. These include reducing the sizeof local government personnel, promoting organizational restructuring andemphasizing training of public sector personnel.

Training programmes

Like many other Asian countries, the government is the largest employer inthe country. If we add the number of posts in the armed forces and the policeto the public service employment figure, we will find that one out of every 14 persons in the country is an employee in the public sector. Out of the 831,049 posts created by the federal government about 58,041 (7 per cent) are inLocal Governments.



Table 7. Posts in Public Sector Agencies* (1990-1995)

Type of service 1990 1995**

Federal service 508,800 552,848

Federal statutory bodies 143,964 99,060State service 101,143 97,905

State statutory bodies 24,965 23,195

Local authorities 58,235 58,041

Total 837, 107 831,049

* Excluding the Police and Armed Force** Figures for August 1995Source: Seventh Malaysia Plan, 1996-2000

As discussed in the previous section, the new remuneration system placesgreat emphasis on the crucial role of training and its impact on the performance of local government personnel. The objective of training is notonly to upgrade knowledge and skills, but to develop the right kind of attitudeand mind-set among civil servants towards the assimilation andinternalization of positive values and work ethics to support public sectorreforms. Training also enables civil servants to cope with increasing jobdemands and to achieve greater levels of performance.

The Public Services Department, through its Training Division and the

National Institute of Public Administration (INTAN), is responsible for planning and conducting training programmes for public sector personnelincluding those from the local government sector. At the Ministry of Housingand Local Government, the training component is being handled by theDepartment of Local Government that has a small training unit. Nevertheless,all local authorities are encouraged to set up their own training units anddevelop their own training programmes as part of the human resourcedevelopment effort. The city hall of Kuala Lumpur for instance, has its owntraining institute. This effort includes the provision of training opportunitiesfor all levels of local government personnel such as the lower levelcomprising clerical, technical and other support groups, the executive and

subprofessional groups which form the middle management and the topmanagement level covering the administrative, professional and non- professional groups. As part of the continuing efforts to produce localgovernment personnel of high caliber, many local authorities throughoutMalaysia have adopted a number internal as well as external of trainingstrategies.

Internal training



Comprises of departmental training to provide technical and/or practicalknowledge and ability in specific working fields through training programmesdeveloped by the department concerned as well as on the job training that isconducted while performing regular job activities.

External training

Personnel may join training programmes organized by othernational/international bodies or may be attached to certain local municipaland agencies (training by assignment).

While the National Institute of Public Administration (INTAN) fulfills mostof the training needs of local authorities in the fields of executivedevelopment, management, information technology, finance, language andcommunication, media technology and training of trainers, there are other public agencies that also provide training for local government personnel.

These include the Public Works Training Institute (IKRAM), the Institute ofPublic Health, the National of Public Health, the National Valuation Institute(INSPEN) and local universities and various state governments that conducttraining through their own training outfits.

Extent of Public Participation

The important role public participation plays in the management of a particular locality is universally accepted even though the extent and degreeof participation may vary from one country to another or amongst localauthorities themselves. In Malaysia, participation can take many forms and

levels of involvement. According Phang and Nooi (1989: 65-68), the termcovers at least four general features that are by no means exhaustive, butseem to imply a system of representative or participatory democracy in localgovernance:

Consultation, where the council identifies an issue and seeks publicresponse;

Direct involvement or power sharing, where the community is a fullmember in the decision making body;

Community action, where groups put forward their own demands; and Community self-management, where groups have control over

facilities and resources.

Public participation in local government activities in Malaysia depends on anumber of factors: types of local government - municipal or district - localleadership and finance or resources. In most cases, the public will participatein local authority-driven activities. For example, the Municipal Council ofPetaling Jaya recently launched a river clean up campaign near Sungei Arasquatter settlement areas as part of its river beautification programme (The



Star 1997). However, there are instances too where programmes arecommunity-driven and local councils will assist residents with logisticsupport through the loan of their lorries and equipment. Corporate bodies orlocal politicians sponsor the provision of refreshments during suchcommunity self-help programmes. The activities where public participation is

most common are those related to maintenance and routine services such asclearing rubbish from drains and along roads in housing estates and clearingunwanted vegetation along riverbanks as part of the "Love Your RiverCampaign", a national effort promoted by the government. Some of theseresident associations may assume the role of a local pressure group in voicingthe people's concerns on issues affecting them such as new traffic routing andcongestion and proposals to increase population in a particular area througherecting high-density condominiums.

Another other important avenue to participate in the running of a localauthority is through councilors appointed by the government taking part in

local councils. According to the Local Government Act (1976), theappointment of councilors is done: "From amongst persons the majority ofwhom shall be persons ordinarily resident in the local authority area who, inthe opinion of the State Authority, have wide experience in local governmentaffairs or who have achieved distinction in any profession, commerce orindustry, or are otherwise capable of representing the interests of theircommunities in the local authority area (Malaysia 1976: 18)". Section 10 ofthe Act stipulates that number of councilors in a particular council may rangefrom not less eight to not more than twenty-four. Even though the stategovernment control them, the councilors may be viewed as representatives ofthe area from where they hail or representing various business communitiesor interest groups. The councilors provide a channel of communication between the local government and the local residents. They sometimes act asmediator in times of disputes over land matters and environmental issues suchas dust problems caused by lorries ferrying earth and noise made bydevelopers working overtime.

Rapid socioeconomic development and the emergence of a larger middleclass also saw the proliferation of interest and pressure groups and non-governmental organizations (NGOs). Voluntary welfare-orientedorganizations, citizen watch groups, consumer and neighbourhoodassociations and environmental protection societies want local authorities toacknowledge the contribution these bodies can make to solve a range ofissues pertaining to urban management such as environmental pollution, beautification, improving the quality of life of residents and preserving theheritage of the community. In Petaling Jaya for instance, a voluntaryorganization is being formed to help with the planting of trees in BukitGasing to replace those that were burnt by an irresponsible section of thesociety.



Under tight financial constraints facing the country, local authority cannot beexpected to be responsible for such community services all the time. This iswhere the community and other voluntary organizations play a crucial role. Itwill also allow the local council to rechannel its resources to improving itsservices in other areas such as squatter and traffic improvement schemes. The

element of public participation has also been incorporated in the Town andCountry Planning Act particularly with regard to the preparation of theStructure Plan. According to Section 13, in preparing the Plan, local planningauthorities must consider representations from the public. In this case,adequate publicity and access to both the draft Structure and Local Planswould have to be made available to the general public. Under the Act, theState Planning Committee would receive all objections from the publicagainst the Structure Plan and a public local inquiry would be formed to studythese objections and suggestions. Both the plans may be changed andmodified after taking into consideration the views of the public. In thiscontext, the Town and Country Planning Act of 1976 may be viewed as an

important cornerstone in the history of the development of physical planningwhereby the role of public participation is formally recognized.

As the level of education and affluence rises, local authorities must recognizethat public participation has an important role in the decision-making processof a locality. The public or residents are more likely to know of their rightsand hence would be in position to assert them if the need arises. In view ofthe growing expectations and the general demands of the local population,local governments must be responsive to meet public needs by harnessing theuntapped reservoir of talent and resources of the communities in many oftheir activities. Through better and effective local government-citizeninteraction and participation, a win-win situation could be created in which all parties, such as the local authority, residents and business communities inMalaysia, could gain from holistic partnership.

The Way Ahead

Rapid economic growth, population increase and urbanization thatcharacterize most countries in the Asia-Pacific region impact inevitably onthe urban environment. The emergence of new issues and problems posesnew challenges to traditional ways of managing urban areas. It entails newapproaches, strategies as well as practical and effective answers and solutionsfrom local authorities. Greater globalization of the economy, acceleratedadvances of information technology, greater demands for accountability ofresults and the need to foster closer public and private collaboration posetremendous challenges to national as well as local governments. One of theemerging issues arising is whether Malaysian local authorities, particularlythe smaller ones, will have the capacity and capability to assume new roles tomeet new challenges. In the future, local authorities must move from amaintenance-oriented administration to being a facilitator, pacesetter and



regulator of socioeconomic development in order for them to contributeeffectively towards the nation's competitiveness.

With regards to these challenges as well as the capability and need to reformto remain effective, the Prime Minister commented that: "Given these rapid

changes in the world economy, the public service must be prepared toconfront new sets of challenges in the 21st Century (...). Continuous effortsmust therefore be made to review the public service so as to be in line withthe current needs and times. We need to look into new ways and means toimprove and enhance the capability of our public service (Mahathir 1995:12)". As part of the national efforts to reform the public service in meetingthe current needs and times, local governments together with other publicagencies have been undertaking a number of reform programmes based on aseries of strategies. These reform efforts are intended to create excellence inthe public service based on the core values of quality, productivity,innovation, integrity, accountability, discipline and professionalism and

include:

The provision of customer oriented services; Improvements to systems and procedures; Greater use of information technology; Strengthening relationships with the private sector; Improvements to the organizational structure and human resource

management; Enhancing accountability and discipline; and Enculturation of values and excellence.

As instruments of national development, local governments in Malaysia havechanged fundamentally, albeit slowly from a service provider to a facilitatorof growth. Besides, local governments have assumed a more developmentalrole in creating an enabling environment for businesses to thrive and forcitizens to prosper. In the age of rapid urbanization and globalization, theability to manage change and fast-paced development is an importantimperative for local government. This entails continuous capability andcapacity-building efforts, reforms, innovations and the willingness to learnfrom others.

References

Byrne, T., Local Government in Britain, Penguin Books, Middlesex, 1983

Chee, S and Phang, S. N., The Role of Residents, Non-Governmental

Organizations and Quasi-Public Agencies in Local Government in Malaysia,Comparative Studies of Public Administration, EROPA Local GovernmentCentre, Tokyo, 1992



Davey, J. J., Elements of Urban Management , UNDP/UNCHS/World BankUrban Management Programme, the World Bank, Washington D.C., 1993

Department of Local Government, Various Reports on Local Authorities in

Peninsular Malaysia, Ministry of Housing and Local Government, Malaysia,

1994

Department of Statistics, Preliminary Count Report Areas 1991, KualaLumpur, Malaysia 1992

Goldsmith and eds., Local Government , International Perspectives in UrbanStudies, Jessica Kingley Publishers, London, 1993

Hubert, J. B. A., Cultivating the Grass-Roots: Why Local Governments

atters, IULA, The Hague, 1990

Local Government Development Foundation and Konrad AdenauerFoundation, A Guide to Organizing Municipal Action Team (MAT), ThePhilippines, 1993

Mahathir, M., Message for National Seminar on Public Service: New

Strategic Dimensions for the 21st Century, Malaysian AdministrativeModernization and Management Planning Unit, Prime Minister's Department, National Institute of Public Administration and Commonwealth Associationfor Public Administration and Management (CAPAM), Malaysia, September1995

Report of the Royal Commission on the Remuneration and Conditions ofService in Local Authorities and Statutory Authorities, Volume I and II,Government Printer, Kuala Lumpur, Malaysia 1972

Report of the Royal Commission of Inquiry to Investigate into the Workings o

Local Authorities in West Malaysia, Government Printers, Kuala Lumpur,Malaysia, 1972

Fifth Malaysia Plan 1986-1990, Government Printers, Kuala Lumpur,Malaysia, 1985

Ministry of Finance, Economic Report 1994-1995, National Printers Ltd.,Kuala Lumpur, Malaysia, 1994

Seventh Malaysia Plan 1996-2000, National Printers Ltd., Kuala Lumpur,Malaysia, 1996

Mohamed Afandi, Local Government Restructuring in Peninsular Malaysia:

Review of the Local Authority Function and Capacity, in Planning and



dministration, Volume 16 No. 2, Autumn, IULA, The Hague, 1989

Mohd. Zin, M., Personnel Management and Training in Local GovernmentSystem in Malaysia, EROPA Seminar on Personnel Management in LocalPublic Service, Eastern Regional Organization for Public Administration and

Ministry of Home Affairs, Government of Japan, Tokyo, April 1987

Nik Hashim Hj. Ibrahim, Environmental and Urban Management: A

Regional Framework for Action, Leadership Seminar on Environmental andUrban Management, Institute of Sultan Iskandar, Johor, August 1993

Rondinelli, D., Decentralizing Urban Development Programmes, USAID,1990-1993

Norris, M. W., Local Government in Peninsular Malaysia, David GreenPrinters, Kettering, Northants, 1980

Rustam Abbas, Local Economic Development in Intermediate UrbanCentres: The Potential Role for Local Government in Malaysia, UnpublishedPh.D Thesis, University of Birmingham, 1995

Selva, T., A Valley Choked with all Things, The Star, August 1993

Tan Sri Mahmud Taib, Training in Capacity-Building For Local Government

Officials in Malaysia, EROPA Conference on New Trends in PublicAdministration for the Asia-Pacific Region: Decentralization, Tokyo, Japan,September 1995

Tennant, P., The Decline of Elective Local Government in West Malaysia,Asian Survey, April 1973

Go to the beginning of the document

http://www.unescap.org/huset/lgstudy/country/malaysia/malaysia.html#top





Documents

Brief Description of the Malaysia Local Government