LAND ACQUISITION ACT 1960

1.0 INTRODUCTION

1.1 Brief history of the Act

Land Acqusition Act 1960 was firstly enacted in 1960 with (Act No 34 of 1960) and has been

revised in 1992 (Act 486 w.e.f 18th March 1992). Act 486 containing eight parts with 70 sections.

According to Act 486, Land Acquisition Act is an act relating to the acquisition of land, the

assessment of compensation to be made on account of such acquisition, and other matters incidental

thereto.

Land Acquisition Act 1960 (referred as L.A) is one of the method used by the government to

coordinate and to develop land for the purpose of public and what to be considered as beneficial to the

economy. L.A. is or ‘compulsory purchase’ done to gazette and acquire the land for any means

purposes that benefits the country. The owners of the land involved have to surrender or in the case of

L.A. have to sell their land to the government. Stipulated in Section 3 of the referred Act, three main

purposes of a land to be acquired are a) for any public purpose (may not be argued); b) by any person

or corporation for any purpose which in the opinion of the State Authority is beneficial to the

economic development of Malaysia or any part thereof or to the public generally or any class of the

public; c) for the purpose of mining or for residential, agricultural, commercial, industrial or

recreational purposes or any combination of such purposes. Hence, the affected land of the so-called

compulsory acquisition will later named as ‘Scheduled Land’ under Section 8 after the gazette and

sufficient information has been supplied to the interest holder or the owner of the land.

The Act is also acts as a tool for the Government to acquire a land. It stipulates all legal

procedures for the public authority especially the State Authority in acquiring any land for any public

purpose development. Such compulsory acquisition by the State Authority would also be the better

choice for the interested owner rather than selling the land to the private developer for the public

purpose development which is mostly profit motivated and bound to developer’s sole benefit.

Though the acquisition of the Scheduled Land is certain, the owner possesses the right to

submit the objections which to be made with regard to a) The measurement of land, b) The amount of

the compensation, c) The persons to whom it is payable; and d) The apportionment of the

compensation. The owner may submit the objections of the above issues complete with sufficient

support and proper documentation to prove that a justification shall be obtained before the transfer of

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the ownership takes place in the final stage of the acquisition process. Land acquisition involves the

compulsory acquisition of land which often against the will of the land owners. Historically, the

courts seem to have surrendered to the presence that the adequacy requirement may be achieved by

giving sufficient monetary rewards in exchange.

2.0 APPLICATION AND POWER OF THE ACT

2.1 Land Acquisition Process and Procedures

The Act helps the government to acquire

lands from the owner with adequate compensation

to be paid to the land owners. In L.A. the land

owner shall be in the same state as prior to the

acquisition of the land (in terms of compensation)

without suffering any loss or damage. There shall

be no contest and the government has the full right

to acquire one’s land. However there are subject

that the land owners may contest and that is the

total amount of compensation. The compensation

of the land is derived from valuation made

referring to the market price of the land at the date

of Gazette under Section 8 of Land Acquisition

Act 1960 without considering any potential

appreciation, speculation of future value and

future conversion of land use and zoning.

Land ownership is protected by the

Federal Constitution of Malaysia. The ownership

is indefeasible and therefore no ownership of land

can be denied and it holds the full interest upon

the land. All dealings to be made on the land is

upon the will of the owner. Hence, only by using

Land Acquisition Act 1960, with the correct

purpose in accordance to the act can the land

acquisition be done. The act solves the conflicts

and issues with landownership and landowners’ reluctance to offer their land for development

(Omar & Ismail, 2005). State Government is responsible to issue the acquisition Gazette in according

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LAND ACQUISITION PROCESS IN MALAYSIA

Department /Applicant’s Agency

Approval By State Authority

Gazette Notification under Section 4 (that land is likely to be acquired)

Gazette Notification under Section 8 (the declaration of intended acquisition for public purpose)

Issuance of Report and Valuation by JPPH

Enquiry by Land Administrator under Section 12

Written Award by Land Administrator in (Form G)

Notice of Formal Possession of the Land in (Form K)

Figure 1: Brief land acquisition process in Malaysia

to the respective State Land Rules. Federal Government and any non-governmental body may also

acquire a certain land through the state government in relation to the earlier mentioned purposes.

2.2 Responsibilities of the Government

Provision in National Land Code 1965 (NLC 1965) and Article 13 of the Federal Constitution

provides that “a) no person shall be deprived of property save in accordance with law and b) no law

shall provide for the compulsory acquisition or use of property without adequate compensation”

(Federal Constitution, Ismail Bin Omar, 2007). When there is any acquisition of the land, State

Authority is required by law to pay an adequate compensation. However, the term of adequate

compensation is not clearly defined in the law (Omar & Ismail,2005). Persons involved can attend the

enquiry conducted by the Land Administrator to claim for compensation. Persons involved who are

not satisfied with the compensation awarded may file an appeal to the Land Administrator within 6

weeks from the date of Form G. The compensation must be adequate in order to ensure that the land

owner involved in the land acquisition will not bear any loss. However, the compensation is mostly

influenced by the category of land use stated in the Title.

After a certain land is Gazetted for the acquisition, it is the responsibility of the Government

to compensate the landowner as an attempt to minimize the loss of rights and interest upon the

affected land. Moreover, there are a few aspects on the landowner’s point of view shall be considered

by the Government as is compensated.

The major question is whether the amount of compensation towards the land owner is

sufficient enough to ensure that they will survive after the land acquisition take effect. The acquisition

does not only involve land but anything that been erected on it, such as house or any other type of

development will be demolished to make way for the land acquisition. The compensation may also be

varied to one another in case of ‘bulk-acquisition’ or acquisition that involved more than one piece of

land. It may be vary due to the tenure, sizes, location, terrain and category of land use (Ismail Bin

Omar, 2007).

2.3 Principles of compensation

The First Schedule of the Land Acquisition Act 1960 stipulates the principles for determining

the amount of compensation considering the post-effect of the acquisition to the owner of land. The

principles of determining the amount of compensation are as follows;

a) Market value of the land – Where the Court adjudges a certain reasonable amount of market value

in terms referring to the prevailing market rate on the date o the Gazette under Section 8 of the Act.

The issue on market value is considered as a household issue where most landowners claimed that the

amount compensated is not justifiable against the losses caused by the acquisition.

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b) Betterment – Deduction in any increase in value of the remaining land as a result of the

acquisition shall be imposed to the landowner on the basis of ‘no gain, no loss’ reason being the

acquisition of the land shall be non-profit motivated on the landowner’s point of view. Betterment

always refers to the enhance value and usage of the land. For example a road built next to the affected

land will make the land become first layer land, hence value and usage capacity is enhance.

c) Severance – The acquisition may caused a piece of land to be severed. There are a few

circumstances caused by severance where it might either be better-off, worst-off or both to the

landowner. However, a proper justification shall be made to explain the claim this issue such as the

cost to be incurred to cross the acquired land to get into the other piece of the severed land. In the

case, the Government will also consider that provision of crossover or under-pass tunnel as a

sufficient compensation rather than to compensate in terms of cash.

d) Injurious Affection – There are lands that injuriously affected due to the acquisition that causes

damages to the owner. The issues rise commonly regarding the access to the land of the neighbouring

lot for instance such as unavailability of direct access from the main road. Government will need to

consider providing the alternative and the right of way in order to make good to the affected land after

the acquisition takes place. Please refer to a court case “Boustead Estates Agency Sdn. Bhd.

(Applicant) vs Pentadbir Tanah, Baling, Kedah (Respondant)”, Government of Kedah Darul Aman

Gazette on 8, December 1994 under Gazette Notification No. 760. dated 8 December 1994. The

purpose of the acquisition and gazetted in Section 8 stated: “Tujuan Awam iaitu Cadangan

Pengambilan Balik Tanah untuk Projek Jalan Raya TimurBarat Fasa II Pakej V – Titi Karangan Ke

Kampong Kangar, Negeri Kedah Darul Aman” (www.kehakiman.gov.my/judgment/coa/latest/K-01-

38-1998.pdf).

e) Incidental expenses incared as a result of change of residence or place of business – Where claims

shall be submitted in order to compensate the ‘loss’ and ‘damages’ held due to the acquisition that

may affect the business of the landowner or the interest holder of the acquired land. There are also

issues on ‘recoverable period’ of business to be compensated by the Government.

f) Accommodation works – The principle of making good of the accommodation works is more on

costs to be incurred during the moving out process from the affected land.

3.0 IMPLICATION AND COMMON SCENARIO

The land owner has to start from the beginning, they have to purchase new land to

compensate their previous dispossessed land. They cannot get back their previous lifestyle where the

land was bought at a relatively low price or been passed down from their ancestor. In recent times we

see high end and expensive development especially in Kuala Lumpur. These developments

appreciating the value of land in Kuala Lumpur. Usually the amount of compensation is inadequate to

purchase new land, thus the option of purchasing a different kind of property e.g. flats, apartments,

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condominiums and terrace house will be considered. There is however in most case the compensation

will not allow them to even purchase property inside the urban area. With little amount of

compensation they can only afford to purchase property in the outskirt area which is way cheaper than

in the urban area. However, the problem mentioned above would be very minimal if the acquired land

is over-compensated. Should the land been under-compensated problem mentioned above is assured

to incurred.

When a gazetted land acquired, the common issues on severance, injurious affection,

depreciation in value, appreciation in value, under-compensated, over-compensated etc may arise.

There are also many people being affected in land acquisition process. Some of the land involved may

have been leased out where the head lessee (and its sub-lessee) may also be affected as they are also

interested upon the land. The interest may not be as significant as the land owner but in-terms of the

right of tenancy and right of usage upon the land is also being deprived. Various types of development

maybe erected on the land, development such as houses, permanent or semi-permanent structures etc,

which becomes either for settlement or for business purposes. Business activity such as food provider

using ‘warung’ or food court erected upon the land also will be demolished. The business, the good

will, patrons income will be loss altogether. Compensation towards the loss of income is however

been allocated for the involved parties.

The land acquisition may make a piece of land becomes smaller or being acquired entirely

(the land). For the smaller land size the usage may not be as useful as before the acquisition and the

value of the land has depreciated. There are cases where the land owner asks the government to

acquire the whole land as the remaining land does not retain any value or usage. The boundaries and

setback of the land is changed drastically and may cause the remaining land to be redeveloped

altogether. In certain case the building has to be partially demolished and the usage and purpose of the

development is not applicable anymore. The outcome of some land acquisition is we can see that there

is no adequate setback within the land.

However, although there are many negative outcomes of the land acquisition towards the land

owner, sub-lessor and sub-lessee, positive impact has also emerge from this procedure.

Redevelopment and development according to plans made by the government through agencies such

as Town Planning Department, Local Authority and etc can be executed without any barrier and

constraints form the land owners. Land Acquisition Act cannot be contest in the court as the

government has the absolute power and authority to ‘compulsory purchase’ the land. However land

owners may appeal for higher compensation through court in the Land Office.

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Development on the acquired land is crucial for the public interest. Without land acquisition,

it is possible for the government to conduct series of development on the particular land. The

surrounding area of the acquired land may experience a rise in value. This is due to the development

erected on the acquired land. Public purposes developments such as Highways (Taman Subang

Bestari), LRT lines (Kampung Baru), port (Port of Tanjung Pelepas) etc will contribute to economic

growth and for the public benefits.

4.0 CONCLUSION

Land Acquisition Act 1960 acts as a vital tool for the government to develop a certain land.

The land owners are protected by law in terms of the compensation and rights to object and appeal.

There are pros and contras in implementing land acquisition. It may not satisfy the affected few, but it

benefits to the general members of public in future. In addition, there are also advantages and

disadvantages of having the Act as per below table;

Advantages Disadvantages

The advantages are seen to be bound on Government’s point of view.

The landowners are seen as the worse-off party after the acquisition.

As a government tool to assemble land in resolving the land supply problems for development.

Complicated procedures, time consuming and may be expensive on cost for the landowners.

To avoid situation where individual landowners can frustrate development by refusing to sell.

Compensation may be seen as ungenerous and usually not up to the expectation of the land owners.

Compensation based on the market value satisfies the adequate compensation.

Serious encroachment of right towards an individual property.

Time saving on acquisition part and lesser problems to the acquiring body.

Mostly are not welcomed by the landowners.

To avoid the land owners to hold out an unreasonable purchase for the land.

Always opposed by the affected landowners.

(Anuar Alias and Md Nasir Daud )

Table 1: Advantages and disadvantages of the Land Acquistion Act 1960 Powers

Discrepancy claims on the amounts compensated usually takes place and some of the claimant may

not know the valid ground and the provisions of the Law where it seems like the loss will always be

on the landowners’ side apparently. Foremost, sufficient information and knowledge to contest the

judicial decision is crucial to avoid further frustration and losses.

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5.0 REFERENCES

1) Book

a. Laws of Malaysia, Act 486 - Land Acquisition Act 1960, Percetakan Nasional

Malaysia Berhad (2006).

2) Journals

a. Payment of Adequate Compensation for Land Acquisition in Malaysia, Anuar Alias

and Md Nasir Daud, University of Malaya, Pacific RIM Property Research Journal,

Vol. 12, No. 3.

b. A Critical Assessment of Provisions of the Federal Constitution With Regard To

Federal State Relationship on Land Law, Adibah Awang, University Teknologi

Malaysia (2008).

c. Omar and Ismail, (2005), Discrepancies in Defining Adequate Compensation in Land

Acquisition: A Case Study in Malaysia, 1st REER Conference and General Meeting,

UTM City Campus, K.Lumpur, 6-7 September 2005.

3) Dissertation

a. Discrepancy in determining the amount of adequate compensation for land taken in

land acquisition projects – A case study in malacca with reference to the land

acquired for Kolej Universiti Teknikal Kebangsaan Melaka, Ismail Bin Omar, Fakulti

Kejuruteraan Dan Sains Geoinformasi, Universiti Teknologi Malaysia (2007).

4) Others

a. Brochure - Valuation for Land Acquisition, Valuation and Property Services

Department via www.jpph.gov.my, accessed on 20 March 2011.

b. Website - “Boustead Estates Agency Sdn. Bhd. (Applicant) vs Pentadbir Tanah,

Baling, Kedah (Respondant)”, Government of Kedah Darul Aman Gazette on 8,

December 1994 under Gazette Notification No. 760. dated 8 December 1994. The

purpose of the acquisition and gazetted in Section 8 stated: “Tujuan Awam iaitu

Cadangan Pengambilan Balik Tanah untuk Projek Jalan Raya TimurBarat Fasa II

Pakej V – Titi Karangan Ke Kampong Kangar, Negeri Kedah Darul Aman” via

www.kehakiman.gov.my/judgment/coa/latest/K-01-38-1998.pdf, accessed on 20

March 2011.

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