Chapter 8

Decentralization and Local

Governance in Malaysia

8.1 Introduction

Throughout Malaysia’s administrative reforms and institution-building process, local government and decentralization have seldom been issues of priority. Indeed, the history of Malaysia’s administrative reforms has always evolved around modernizing its civil service and laying the foundation for political stability and economic development of the nation. Decentralization, local autonomy, and local self-government were presumed inherent in the administrative structure, but were seldom the highlight of Malaysia’s institution building and public administration reform strategies.

The government’s quest for economic and administrative development has to be carried out mindful that the nation is multi-ethnic, multi religious, and multi-cultural. Logically, any development undertaken should therefore be based on democratic notions of good governance

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and administrative modes for effective governance.1 In Malaysia, this oftentimes gives rise to a decision confl ict regarding the kind of governance to use; whether to adopt good governance, which can be interpreted as the global “desired” objective, or effective governance, which seems to be the “feasible” mode for practical implementation. Again, the country’s composition of “multi-ism” is a perpetual reminder of the necessity of maintaining peace in the nation rather than individual liberty within the confi nes of its unique democratic institution.

The theory and practice of development administration in Malaysia has thus far been based on the premise that “effective governance” should have priority over “good governance” as the intensity of plural and communal politics may get in the way of national development. The key to Malaysia’s economic development and growth propensity is very much dependent on racial harmony and the government will not be willing to compromise this just to achieve some of the objectives of good governance. Some examples of recent events that occurred in the capital, Kuala Lumpur, attest to this rationale.

From September to December 2007, street demonstrations and rallies were organized for three different concerns in various locations. The first was staged by the lawyers’ march to highlight their concerns about the erosion of the rule of law and human rights in Malaysia. The second protest, organized by the Coalition for Clean and Fair Elections, known by its acronym Bersih, on November 10, 2007, was against the conduct of elections and seeking electoral reforms; and the third was a single-cause demonstration to highlight the plight of the ethnic Indians, organized by the Hindu Rights Action Force (Hindraf) on November 25, 2007.2 The use of water cannons and teargas by police to immediately disperse these street demonstrations and rallies exemplifies the government’s intolerance of such behavioral expressions and public actions. The government’s retaliation was phenomenal as some of these protesters were arrested on the spot. In the case of Hindraf, some of its members were not only arrested, but also charged under the feared internal security act.

Due to the continual internalization for harmony by the government, the majority of the Malaysian community has developed a sense of not insisting too much on democratic issues and practices. In fact, it seems to have become acceptable to have limitations on democratic freedoms and to abide by the policies of the government. The process has become so complete that the community seldom if ever questions the political statements or actions of political leaders, and the distinction between government administration and politics has become fused over time. It is therefore not surprising in Malaysia that governance based on the mode of effectiveness and feasibility is “desired” and accepted as “good” for promoting socio-economic development and growth. It is clear that “multi-ism” has become an essential concept in the administration of the central government. This perspective has also transcended to local government with consequences on its political and administrative relations with the higher tier governments, including the local community.

1“From the perspective of development administration, ‘effective or feasible’ governance refers to using government institution to make economic development feasible as an outcome of government policy and action. Good governance refers to attaining development by providing economic opportunities and social facilities that remove deprivations and fulfill economic needs, through democratic ways that enhance society’s capabilities for effective participation in the process of development.” Sri Tharan, Prospects for administrative reforms in Malaysia, Faculty of Economics and Administration, University of Malaya, Kuala Lumpur, unpublished paper, nd.

2 The Sun, December 28, 2007, p. 20; and January 2, 2008, p. 7, Kuala Lumpur.

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8.2 System of Government in Malaysia

The basic structure of the Malaysian government administrative and political machinery follows closely that of the British system. The Malaysian government has inherited from the British the principles of parliamentary democracy and incorporated them within its administration. Yet, while British influence is pronounced, the head of state, the king, is a unique Malaysian institution, being a constitutional monarch who serves a term of 5 years and acts in accordance with the advice of the cabinet. The king, known as the Yang Di Pertuan Agong, is one of the sultans or Malay rulers of the states, and is elected from among them to serve as king for a period of 5 years. Thus far, the election has taken on the form of a rotation basis among the rulers, and the king normally acts according to the advice of the prime minister and the cabinet.

In legal matters, the Malaysian Constitution is supreme and was a product of detailed discussions between the British government, the Conference of Rulers, and representatives of the major political parties, which represented the three major ethnic groups of Malays (Bumiputera), Chinese, and Indians, at the time of independence. At present, the population of Malaysia is around 24 million, composed of different ethnic groups existing within the paradigm of consociation politics (see Table 8.1).

The Malaysian parliament is bicameral, consisting of a Senate (upper house) and a House of Representatives (lower house). Elections to the lower house are held every 5 years on the basis of universal adult suffrage. The cabinet headed by the prime minister consists of members of the legislature and is collectively responsible to Parliament. The prime minister is also the leader of the majority party in Parliament.

At the state level, other than the states of Penang, Malacca, Sabah, and Sarawak, a Malay ruler or sultan is sovereign in the state. Generally, the rulers act on the advice of the State Executive Council. The non-sovereign states are headed by a governor, who is federally appointed for 4 years and who also acts on the advice of the respective state governments. Each state has a unicameral legislature, elections to which are held every 5 years, in most cases in tandem with elections at the federal level. The state is headed by a chief minister, also known as the Menteri Besar, and is normally leader of the party that has a majority of seats in the state cabinet.

Local government is the lowest in the governmental hierarchy of Malaysia, known as the third tier of government or the grass-root government. The position of local government in Malaysia is entrenched in the federal constitution in the sense that local government needs to have a place in the governmental structure of Malaysia. By virtue of items 4 and 5 of the Ninth Schedule of the federal constitution, local government outside the federal territories of Kuala Lumpur, Putrajaya,

Table 8.1 Malaysia: Population Size (million persons), 2005

Source: Malaysia, Ninth Malaysia Plan 2006–2010, Government Printers, Kuala Lumpur, 2006.

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and Labuan, is a subject under the State List. All local authorities outside the federal territories therefore come under the exclusive jurisdiction of each state government. This is the constitutional position. By virtue of this, the state government has wide legislative powers to control the local authorities and to ensure their proper functioning. However, through a consultative body, called the National Council for Local Government (NCLG), the federal government can exert influence to ensure that state and local authorities follow national policies. The creation of the NCLG through Article 95(A) of the federal constitution provides an effective channel through which the federal government and its agencies can exercise their influences and maintain functional links with the local authorities. The NCLG consists of representatives from the state and federal governments whereby the members meet and discuss policy matters relating to local government in Malaysia at least once a year. The policy decisions made at the NCLG bind both the federal and state government; except for those of Sabah and Sarawak who only hold observer status. It is this scenario of inter-governmental dynamics that to a certain extent determines and influences local government’s relationship and response to the community and the notion of decentralization.

With the system of government consisting of three levels, namely, the federal, the state, and the local, it is clear that each level of government operates within its legally defined borders of jurisdiction and dutifully abides by the policies of the federal government as provided for in the federal constitution. As practice over the years indicates, there is the tendency for the imposition of controls and powers by a higher tier government over a lower tier government. The reality is that this erodes local government autonomy and also disempowers the local community. However, it sustains central control and the top-down process is the antithesis to decentralization in Malaysia.

8.3 Defining Local Government in the Context of Malaysia

Throughout Malaysia’s history, there have been attempts to def ine local government and also efforts to restructure its local government system to give it precision and body. As stated in the Report of the Royal Commission of Enquiry to Investigate into the Workings of Local Authorities in West Malaysia, “There is no precise definition of the term ‘local government’ though many of us do know what it means and portends [1].” Basically, this sums up the knowledge and level of understanding of local government. Ultimately, the Report of the Royal Commission had to refer to John J. Clarke’s [2] definition in explaining local government in this country [3]. Briefly, the concepts of local government according to Clarke mean:

(1)A government confined to local affairs assigned to it by a superior government to which it is subordinate and subject to its control and supervision

(2)It is autonomous to the extent to what is granted by the superior government

(3)It is representative or non-representative in character

(4)It is a separate legal entity with powers to sue and be sued

(5)It functions in a defined area to which it provides services

However, as events begin to unfold in this country, such as independence, Sabah and Sarawak joining Malaya to form the nation-state Malaysia, and suspension of local elections, these influence Malaysia’s system of government and administration, thereby warranting local government to be defined accordingly and what is understood based on a generic definition appear a misnomer for Malaysia; it lacked a precise definition. Yet, there were no immediate attempts to justify local government’s position and the Royal Commission that recommended a restructuring of Malaysia’s

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decision-making remains at national level [10].”This situation is further reinforced by the central government’s control over major resources and wealth of the country.

Whereas the states still have some semblance of autonomy in their relationship with the federal government, the local government’s position is a paradox as it is under the jurisdiction of the state government yet, it also yields to federal control. The process of decentralization that was supposed to delegate a degree of autonomy and independence to local government when it was restructured in the early 1970s became instead the route to recentralization. Through the enactment of a series of by-laws and regulations, many traditional functions have been removed or privatized. For instance, the election of local representatives has been removed and traditional functions such as providing for water, electricity, sewerage, and bus services have been privatized. The outcome is a local government that resembles another government department carrying out administrative functions. The position of local government in a federal system is shown in Figure 8.1.

At the local level, although local government is a state responsibility, however, through the NCLG, local government is made to feel the powers of the central government. Under the provision of the federal constitution Article 95(A), the decisions of the NCLG are binding on all state governments. The NCLG can formulate policies and advise on matters pertaining to local government, and all states, with the exception of Sabah and Sarawak, need to comply with these regulations. The NCLG has almost equal federal and state representation composed of all state chief ministers, the minister of housing and local government, and senior ministry officials from the said ministry as well as other central ministries; and observers from the two East Malaysian states of Sabah and Sarawak. However, it is ironic that this committee, which essentially deals with local government matters, is not represented by any of the chiefs and presidents of the local authorities or their secretaries. This situation weakens local government and reaffirms the process of recentralization. The policy decisions made by the NCLG bind both the federal and state governments. The Ministry of Housing and Local Government, a central ministry in charge of local government, can advice, a role that is only as strong as the expertise and financial resources at its disposal. Through the various federal laws concerning local government, such as the Local Government Act 1976 (Act 171) [11], the Town and Country Planning Act (Act 172) [12], and the Street, Drainage and Building Act 1974 (Act 133) [13], central control is further reinforced and intensified. The raison d’etre for perpetuating this type of federal-local relations is to ensure uniformity of law and order, policy implementation, advice, and provision of technical and financial assistance, which states have long been unable to provide their local government. It is rather unfortunate that for these reasons, local government has to endure the loss of its autonomy and certain powers.

Historically, state-local relations in Malaysia had been eventful, leading to the reform of local government in the early 1970s [14] with subsequent federal interventions whenever the occasion demands especially in financial and political matters [15]. Consequently, local government in Malaysia is left to fend for itself as most times, states are seldom in a position to assist the local authorities, they themselves relying on the federal government for financial and political support [16]. Under such circumstances, there are concerns regarding the status of local government, its diminishing local autonomy and decentralization. There is, of course, the uncertainty of local government’s ability to sustain the challenges of a community that demands more transparency and accountability; a reflection of loss of powers felt by the community at the local level. In essence, the local community senses the erosion of local autonomy and central government further imposing its authority over local government. This concept of recentralization appears to be the trend in local government’s relationship with the upper tier governments. As the process continues, it also influences local government’s relationship with its local community. In Malaysia, the traditional “top-down” process in communicating with the local community has in fact been further entrenched, in contrast to the “bottom-up” approach.

© 2011 by Taylor and Francis Group, LLC

© 2011 by Taylor and Francis Group, LLC