Ong: Reform Federal Land Commissioner's Office, land-owning govt departments, statutory bodies, MOF Inc firms to better manage land and property assets

• There is surprisingly little policy guidance at the level of the Federal Government on how to manage this land. The Federal Land Commissioner Act 1957, which spells out the responsibilities of the commissioner, has only eight articles, and was last amended in 1988.
• In a time when the Government of Malaysia is facing serious fiscal challenges, the proper usage and monetisation of Federal Government land and property could be one of the long-term solutions to provide an additional and more sustainable revenue stream and, at the same time, provide more protected spaces including parks and community infrastructure to the larger public.

Media statement by Dr Ong Kian Ming (pictured), the Member of Parliament (MP) for Bangi, on Wednesday (Sept 21):

What do the RM50 billion debts incurred by Pembinaan PFI Sdn Bhd, the RM100 million post retirement “gift” to former prime minister Datuk Seri Najib Razak and the RM2 billion land purchase by Bank Negara Malaysia (BNM) in 2017 all have in common? All these cases involved transactions of land owned by the Federal Government of Malaysia. While these scandals merit investigation and discussions on their own, they point to a larger issue of federal land management and planning policy that has received very little public attention. What are the current policies in place to manage land assets owned by the Federal Government, either through the Federal Land Commissioner (FLC) or through individual ministries or agencies, including the terms and conditions by which these lands are sold? Are there policies which can be put in place to convert some of these lands into public spaces or if they are to be sold, to ensure that such sales are done in a transparent manner so as to maximise the revenue received by the Federal Government?

In 2014, I wrote about how 186 parcels of land belonging to the FLC were used in a complex series of transactions to allow Pembinaan PFI, a 100% Minister of Finance Inc (MOF Inc)-owned company, to borrow RM30 billion from the Employees Provident Fund (EPF) and Retirement Fund Inc (KWAP). C4, an anti-corruption non-governmental organisation, subsequently published a detailed report with useful recommendations for reform. At the end of 2019, it was revealed that a piece of prime government land in Kuala Lumpur worth an estimated RM60 million was given to Najib as part of his prime ministerial “retirement” package, with another RM40 million of government funds set aside for the construction of a residence. In 2017, the Cabinet made a decision to sell a price of government land to BNM for RM2 billion with the proceeds being used to pay off part of 1Malaysia Development Bhd's (1MDB) debts.

According to a recent paper by Anesh Ganason and Afriq Farhan Abdul Rahim, the Federal Government owns a total of 28,944 titled lands covering 686,000 hectares and a total of 5,505 lots of reserve lands covering 14,000 hectares. The total land area of approximately 700,000 hectares is the size of Kuala Lumpur, Melaka and Negeri Sembilan combined. This includes developed land that is currently occupied by schools, clinics, hospitals and police stations, and undeveloped land covering almost 5,000 hectares broken up into 947 lots of land. The combined value of these land and property assets may amount to RM2 trillion, using a conservative estimate.

There is surprisingly little policy guidance at the level of the Federal Government on how to manage this land. The Federal Land Commissioner Act 1957, which spells out the responsibilities of the commissioner, has only eight articles, and was last amended in 1988.

The Department of the Director General of Land and Mines (JKPTG) manages the land owned by the FLC in conjunction with the federal ministries and agencies which are using the land. A search of the website of JKPTG shows how statutory bodies, corporations which are majority Malaysian-owned, and organisations registered under the Registrar of Societies can simply write to this department to propose a lease agreement for land and property owned by the FLC. Of course, submitting an application does not guarantee approval. But the lack of clear guidelines and lack of a proper and transparent application process raise questions that the approval of such applications is subject to corruption and abuse.

The Pavilion shopping mall in Jalan Bukit Bintang, which was previously the Bukit Bintang Girls' School, was sold to a local developer in 1999 for an undisclosed sum. One wonders how much this property could have fetched in an open tender when economic conditions after the Asian Financial Crisis had improved. This is just one example out of many educational institutions that were forced to move to make way for private property development in financial dealings with the Federal Government that were not fully transparent. Even in cases where the value of the land transaction is known, such as the land-swap agreement between S P Setia Bhd and the Ministry of Health involving the building of an integrated health and research institute in Setia Alam in exchange for 21 hectares of prime land in Jalan Bangsar, questions remain with regard to the value of such land-swap deals. For example, there was no independent valuation done on the value of the two pieces of land exchanged.

The FLC should not be a passive player in the management of federal land and property. Its capabilities should be enhanced, so that it can draw out proper plans and strategies for land use and management in the areas where it holds assets. The Federal Land Property Division under the Department of the Federal Director General of Land and Mines should be converted into a statutory board, and provided with sufficient resources to make it similar to the Urban Redevelopment Authority in Singapore, which has a long and impressive track record of land planning and management. Proper planning on the part of an enhanced FLC would allow the Federal Government to have a more sustainable flow of revenue from the sale and lease of federal land and property, provide greater transparency on these agreements, and allow for public value-enhancing propositions, such as setting aside land for public spaces with the agreement and consent of private-sector players who want to lease and use federal land and property.

This kind of model can also be used for other government agencies which own land and property, which can be enhanced for commercial and public returns. The Railway Assets Corporation (RAC), which owns much of the physical assets including land and stations used by KTM, is one such example. Prasarana Malaysia Bhd and Mass Rapid Transit Corp Sdn Bhd (MRT Corp), which own land and property assets in and near the LRT, Monorail and MRT stations, are also examples.

Some of the land owned by the FLC can also be put in a public trust, such as the trust established by Khazanah Nasional Bhd to own and manage Taman Tugu in the heart of Kuala Lumpur.

In a time when the Government of Malaysia is facing serious fiscal challenges, the proper usage and monetisation of Federal Government land and property could be one of the long-term solutions to provide an additional and more sustainable revenue stream and, at the same time, provide more protected spaces including parks and community infrastructure to the larger public.

Dr Ong Kian Ming, MP for Bangi
Sept 21, 2022