Brief Description of the Country and Its National/State Government

Structure
Demography
Located in the heart of tropical South East Asia, Malaysia straddles the South
China Sea. Peninsular Malaysia is at the tip of mainland South East Asia
while 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 of
the eleven states of Kelantan, Terengganu, Pahang, Johor Melaka, Negeri
Sembilan, Selangor, Perak, Kedah, Penang and Perlis. In East Malaysia,
Sabah has an area of 73,709 square kilometres while Sarawak, with an area of
124, 445 square kilometres is the larger. In total land area, Malaysia is about
the size of Myanmar, two-thirds that of Thailand, one sixth of Indonesia and
one-third of the United Kingdom of Great Britain.
With an estimated Gross National Product (GNP) of about US$35,958 million
in 1989 and per capita GNP of about US$2790, the World Bank classifies
Malaysia as one of the Middle Income Economies. In this position, Malaysia
ranks alongside Mexico, South Africa, Poland and South Korea (World Bank
1994). The GNP per capita has risen from US$1,710 in 1981 to US$3,140 in
1993 (World Bank 1995). The Malaysian development paradigm has
undergone a radical shift from a traditionally strong public sector presence in
social 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 that
strongly emphasizes industrial development (Abdul Rahman 1990:2). This
structural transformation is evident in the massive increase of the contribution
of the manufacturing sector with regards to GDP from a mere 20 per cent in
1980 to 35 per cent in 1996. This accelerated trend is in contrast with the
trend posted by the agricultural sector's contribution to GDP that continued to
decline from 23 per cent in 1980 to 13 per cent in 1996 (EPU 1996: 14). One
can 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 be
reality by the turn of the century (Tan 1993: 57). Applying this vision to a
longer-term prediction, Malaysia is expected to become an industrial nation
by the year 2020.
The rate of urbanization tends to correlate significantly with economic
growth. One inevitable consequence of this structural change and the
consequent rapid economic growth that has averaged an impressive 8 per cent
per annum in the past decade, has been the increasing urbanization of the
country. 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). The
impact of rapid growth and urbanization is naturally reflected in the number
of people living in local authority areas. According to a study made by the
Ministry 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 an
increase in the problems, needs and complexities relating to urban
governance.
It has created a new set of challenges that entail an enhancement in the
capacity and capability of the Malaysian local authorities. These problems
demand new approaches, strategies as well as practical and effective answers
and 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
1
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
2
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 4.6
Terengganu 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)
1
Based on the Population and Housing Census of 1991
2
Includes Wilayah Persekutuan Labuan
Local authorities must be prepared for adjustments in meeting the challenges
related to growing urbanization. Such a transformation is already evident.
Like local authorities in other countries, particularly those in advanced
economies, 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. It
achieved Independence from the British colonial rule on the 31st August of
1957. At its birth the new nation promulgated a Federal Constitution. The
inclusion of Sabah, Sarawak and Singapore into the federation in 1963
resulted 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, theDewan Rakyat (the House of
Representatives) and the Dewan Negara (the Senate). As prescribed under
Article 32 (2) of the Federal Constitution, the Yang di Pertuan Agong has a
five-year term and is appointed by the Conference of Rulers from the rulers of
nine states in the Peninsula. Melaka, Penang, Sarawak and Sabah do not have
rulers but governors appointed every four years by the King. The King does
not preside in Parliament but may address the two houses as and when
necessary. Article 181 of the Federal Constitution, sets out the executive
authority 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 number
of members of Parliament. The Cabinet is collectively responsible to
Parliament.
Administratively, Malaysia is organized along a three-tier type of
government: federal, state and local government. In carrying out its duties as
enumerated in the Federal and Concurrent Lists of the Federal Constitution,
the federal government has established a number of ministries (currently they
number 24), departments and agencies. The latter also include public
enterprises, statutory bodies and corporations. The Cabinet is the highest
coordinating executive body of all government activities and interests. Two
national councils - the National Economic Council (NEC) and the National
Security Council (NSC) - headed by the Prime Minister assist the Cabinet in
the discharge of its functions. The NEC is the highest council responsible for
coordinating all development programmes while the NSC is responsible for
national security.
To improve and enhance coordination within the government machinery, the
Federal Constitution provides further avenues of federal influence over the
state governments. Such influence is exercisable over matters that are even
listed under the state list of the Constitution. The three other national
councils, the National Council for Local Government (NCLG) under article
95A, the National Land Council (NFC) under Article 91 and the National
Finance Council (NFC) under Article 108, are chaired by the Prime Minister
or his appointee. Representatives both from the federal and state governments
sit in these committees.
In addition to the Constitutional provisions, there are various other official
coordinating forums. These include periodical meetings between the Prime
Minister and the Chief Ministers of the states, the Federal-State Liaison
Committee (FSLC) and the National Development Planning Committee
(NDPC). The Chief Secretary to the federal government chairs the last two
committees, which comprise the respective state secretaries and other senior
government officials. The NDPC is the highest body formulating and
coordinating economic development policies in the country. Its secretariat is
jointly held by the Economic Planning Unit (EPU) and the Implementation
and Coordination Unit (ICU) of the Prime Minister's Department.
At the state level, the Ruler is supreme. He acts on the advice of the State
Executive Council (EXCO) that is chaired by the Menteri Besar or Chief
Minister. In the states where there is no hereditary ruler, a governor is
appointed by theAgung to be the state's ceremonial head as in the case of
Penang, Melaka, Sarawak and Sabah. In distinct contrast to the arrangement
in the federal government, all the states have unicameral legislatures. These
are 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 federal
competency, as underlined by Schedule IX of the Federal Constitution.
Therefore, the state legislature is the centre of democratic policy. The
Executive Committee, or the EXCO, is the Federal Cabinet equivalent at the
state level and is the highest coordinating body on all matters of interest in the
state. Coordination and supervision are carried out through a committee
system where the heads are members of the state legislature.
The next layer in the government hierarchy, which is at the local level, is the
district administration. The British formalised district administration
nationwide. Today it still is the prominent administrative machinery at district
level, for both the state and the federal governments. The District Officer
(DO) heads the district council; in that capacity he is also the Land Revenue
Collector and President of most district councils. In the former Federated
Malay States such as Selangor and Perak as well as the former states of the
Straits Settlements such as Penang and Melaka, the DO is a senior federal
officer from the elite Administrative and Diplomatic Service. In the states of
Sabah 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 administrative
officer in a district is further enhanced by virtue of the fact that he is the most
senior 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 the
various district committees most of which the District Officer chairs. The two
most important committees are the District Development Committee and
District Action Committee. They include all the heads of governments and
agencies at the district level such as the District Council, Agricultural
Department and Public Works Department. Although no statute provides for
these consultation committees, administratively, they constitute an important
machinery to monitor and coordinate all development proposals and activities
in 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 Ninth
Schedule, the Federal Constitution stipulates local government to be a subject
under the State List. Hence, all local authorities fall under the exclusive
jurisdiction of the state governments. Following an amendment to the Federal
Constitution, the government enacted, under Article 95A, the National
Council for Local Government to advise and coordinate the local authorities
in matters especially pertaining to legal and major policy issues (Malaysia
1986: 79-80). Within this formal framework, the Town and Country Planning
Act further enhances the relationship of a local authority with other local
institutions (Malaysia 1976). This Act also classifies local authority into two
groups: municipality for large towns and district council for small urban
centres. Under Section 5 of the Act, a local authority is the local planning
authority and thus the authority that approves and controls all planning and
development applications in its area. Besides the District Action Committee,
the local authority, which incorporates the heads of the technical departments
who are either councilors or ex-officio members, especially in full council
meetings, 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 former
colonies, 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 local
government objectives and style and has been deeply influenced by British
precedents". Hence, it is only logical and inevitable that early forms of local
authorities introduced in Malaya tended to be modelled along their British
institutions. A cursory look into the laws governing the local authorities in
Malaysia, particularly during its formative stage, would show that most of
these local government statutes were based on English laws. However, with
the accretion of time, local government authorities in Malaysia have evolved
into a system having its own identity, characteristics and laws that reflect the
socioeconomic and political environment of the country. In Malaysia (at that
time 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 the
responsibility for planning and implementing urban development. This laid
the foundation for the establishment of local government in this country.
Local councils were later set up in Malacca and other Federated and
Unfederated Malay States including those in Sabah and Sarawak. To
operationalize the setting up of town boards and local councils as well as
holding local elections, the British formulated various types of legislation.
The Local Authorities Elections Ordinance (1950) for instance, granted the
town councils the power to organize elections. In another case, the Local
Councils Ordinance (1952) was formulated to provide power to local
residents to establish local councils if it was deemed necessary. At the end of
colonial period, there were 289 local councils in Malaya (Malaysia 1972).
After Independence in 1957, when the Federal Constitution came into
existence, local government outside the federal territory was placed under the
state list.
The Post-Independence period of the sixties was a turbulent one for local
government authorities in Malaysia. Internal administrative and political
problems facing the local councils and the violent confrontation against the
newly-formed Malaysian federation by Indonesia in 1964, led to the
suspension of local government elections. This suspension was executed
through the enactment of two regulations: the Emergency (Suspension of
Local Government Elections) Regulations (1965) and the Emergency
(Suspension of Local Government Elections) Amendments Regulations
(1965). Since then, local governments in Malaysia were never to experience
another election again even though the local government system in Malaysia
has undergone a lot of positive changes. Tenant, writing in 1973, commented
that: "Elective local government was a late colonial intrusion which did not
flourish within the Malaysian political system" (Tenant 1973: 365). Another
writer, Norris (1978:8), remarked that: "The Malayan environment was and
remains unfavourable to large scale devolution".
The problems faced by local government authorities in the sixties were
further compounded by the existence of various types of local councils as
well as by the complexity of the application of a number of different
ordinances, enactments, bylaws, rules and regulations. By the early seventies,
the proliferation of local government units had resulted in a large number of
local administrations and entities. For Peninsular Malaysia alone there were
374 such local governments. Hence, the government felt a need to reexamine
and reform the local government system in Malaysia to improve its working.
A Royal Commission was established in 1965, but only managed to submit its
report to the federal government in December 1969. The report was only
released 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 and
Sarawak included). Based on its recommendations, the report paved the way
for 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 environment
of the local authorities in Malaysia and gave a pragmatic analysis of the issue
of 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 for
Malaysian local government is of considerable political significance. A
restructured local government system should provide local authorities new
impetus to move beyond the traditional role of garbage collection and sanitary
inspection or general maintenance functions to those of urban development
and management".
Following the passage of the uniform Local Government Act 124 (Temporary
Provisions) in 1973 - used as temporary act in the restructuring process - the
government reviewed all basic laws that regulated the powers, duties,
responsibilities and functions of local authorities. Three parent laws were
enacted 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 Act
of 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 2
5. 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 19
14. 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 of
local 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 these
district councils have been upgraded to a higher status. These include the
Selayang Municipal Council and the Ampang Jaya Municipal Council that
were formerly respectively known as the Gombak District Council and the
Ulu 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 to
1988, the 374 local authorities that were previously in existence (consisting of
city Councils, town boards, town councils, rural and district councils) have
been restructured into 14 municipal councils and 79 district councils in
Peninsular Malaysia. In Sabah and Sarawak, the restructuring has resulted in
6 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 in
Malaysia, 23 in Sabah and 25 in Sarawak. However, due to the expansion of
service areas and administrative expediency, it is expected that more local
councils will be established or that the present districts will be upgraded to a
municipal status.
Local Government Functions
The functioning of local government is based on the principle of ultra-vires
and general competence (Mohd Yahya, 1987:466). The situation is very clear
as Hashim and Yahya (1984: 155) write that: "Local government in Malaysia
operates on the principle of ultra-vires (...) local authorities may perform
those functions as specifically enumerated in its various Acts and bylaws. It
has no general competence to undertake any activity according to
affordability (...) it cannot undertake any activity that is beyond its powers or
else 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 been
given wide powers within the Local Government Act of 1976. The functions
not only include mandatory functions but discretionary functions as well. The
mandatory functions include all critical functions such as refuse collection,
street lighting and activities pertaining to public health. Discretionary
functions include all development functions such as providing amenities,
recreational parks, housing and commercial activities. The provisions of the
Local Government Act grant local authorities the following roles ((Mohd
Yahya):
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 Malaysia
with 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 their
functions under the 1976 Act. These Acts allow the local authorities to
assume 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 local
authorities can be summarized as environmental, public, social and
developmental.
Environmental
This relates to functions of maintenance and improvement of the environment
within the area of jurisdiction. This includes obligatory services such as
cleansing, collection and disposal of solid wastes, proper drainage and
sewage, 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 waste
management system, cleaning drains and roads and the general upkeep of the
environment. The licensing of hawkers, stall holders, shop and business
operators 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 hearse
services. Besides these, they maintain fountains and arrange for lighting
public streets and other public services and provide manual labour and
facilities to state governments or the district offices to assist in the
organization of ad hoc social services at the state and district levels;
Developmental functions
As opposed to mandatory functions of the local authorities, the development
functions are considered "discretionary" under the Local Government Act,
1976. Even though local authorities could be regarded as an important
instrument 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 the
local citizens and the private sector community, the scope of functions and
responsibilities of local authorities are expanding every day. The increase in
the rate of industrialization, trade, commerce and development of modern
services not only pushes the demand for urban space but also that of urban
support services. With an increasing concentration of people and industries in
urban areas, the functions and responsibilities of local authorities too have
significantly expanded. This requires local authorities in Malaysia to perform
multifarious 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 and
street-lighting, landscaping and maintenance, public health and
sanitation;
The development planning and control and management functions
(building control, land-use planning, development, creation of
industrial estates etc.);
The promotion of tourism and urban renewal beautification
programmes; and
Infrastructure development and support facilities which could
facilitate industrial development and other local-based economic
development initiatives.
More important, this expansion of functions raises one fundamental issue:
How can local authorities become an effective machinery to facilitate national
growth and enhance the nation's competitive edge? In essence, local
authorities 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 sustainable
development within the context of maintaining national competitiveness in
this era of economic globalization. Besides, it imposes not only financial but
also administrative pressures on local authorities. These pressures come in the
form of new demands and challenges to increase and improve delivery of
urban services. The challenges also pose important and strategic questions
regarding their roles at local, national and global levels. One of these
challenges 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 local
government management. This is because financial management determines
the efficiency and effectiveness of local authority operations. Without
adequate funding, it is difficult for local authorities to fulfill their duties as
provider of services and act as a facilitator of socioeconomic growth at the
local level. However, finance is always a major constraint that local
authorities face. Given that finance is critical to local authority management,
it is imperative that local authorities develop a good financial administration
system. Such financial management will ensure that funds are collected,
allocated and disbursed in an efficient manner. Local government finance in
Malaysia includes, amongst other things, matters pertaining to expenditure
and income as well as inter-government fiscal transfers. Local government
expenditure can be divided into two categories: development expenditure and
operating expenditure. Development expenditure involves a heavy capital
outlay and includes expenditure on the construction of buildings, houses,
offices etc. Operating expenditure is spent on short-lived items such as
stationery, equipment, salaries, manpower services, etc. In general, it is
mainly 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 local
authorities in 1994, the expenditure profile has remained constant over the
past decade and even remains unchanged today. Emoluments, services and
supplies comprise the main part of expenses (78 per cent). With little surplus
funds and no grants - a matter especially critical to district councils - local
authorities need to obtain loans and other sources of funding to finance their
operating and development expenditures. The weak financial position of most
local authorities remains one of the serious impediments to the greater
efficacy of local authorities in providing more services and development at
the local level. As a result, efforts by the federal government - through
disbursement 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)
Amount
needed
(000 $)
Revenue
(000 $)
Shortfall
(000s $))
Equalizing
grant 1991
(000 $)
Equalizing
grant 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
Negeri
Sem.
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 5,307 531 796
Total 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 meet
the multifarious, but essential services provided by the local authorities, it is
imperative 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 state
government (also known as inter-governmental fiscal transfers) and local
taxation. In addition, some local authorities also receive grants in lieu of rates
(assessment rates of government property). Other sources of revenue include
miscellaneous forms of charges and fees such as licenses, payment for
various forms of services, rental penalties and compounds as well as interest.
Legal provisions with regard to revenue collection are spelt out by Part 5 of
Section 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 Sabah
and Chapter 117 of the Local Authority Ordinance (1948), Volume 5 of the
Sarawak Law, the Local Authority (Rating) Regulations, the Kuching
Municipal Ordinances (1988) and the City of Kuching North Ordinance
(1988) of Sarawak.
The Ministry of Housing and Local Government, classifies the sources of
income 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 Mempertingkatkan
Punca 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 cent
for Peninsular Malaysia). In 1786, the East India Company introduced the
concept of rating with the establishment of the Prince of Wales Islands (Pulau
Pinang). Section 130 of the Local Government Act (1976) stipulates that rates
are to be imposed upon the improved value of the holding. Improved value
was 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 a
state 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 such
a valuation. Collection from the government for its property takes the form of
contribution in-aid-of-rates or grants. In 1993, the federal government
contributed 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). Assessment
rates have been the most lucrative source of revenue. However, over-
dependence on this cause has had a negative impact upon local authority
functions. Phang (1997:26) notes that: "Heavy reliance and dependence upon
assessment do not allow local authorities to fulfill their obligatory functions
or serve as agents of growth and development (...) consequently, they need
other 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 levies
constitute about five per cent of the total revenue collected by local
authorities in Peninsular Malaysia. Rentals are charges or fees imposed upon
users for renting local authority properties. Charges are revenues received for
services rendered by local authorities such as fees for planning applications,
dislodging of septic tanks, fees for burial facilities and charges for refuse
collection. Fines and compounds imposed by local authorities for offences
such as littering, dumping of household refuse, hawking without a valid
license and illegal parking within the local authority area forms other sources
of revenue. Besides, interest and investment earnings are an important source
of revenue especially for richer councils that place their funds in financial
institutions or realize them through investment activities. The same applies to
inter-governmental fiscal transfers that are necessary if local authorities are to
fulfill 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 its
local authorities. These are provided only once and are usually used to
purchase new equipment for the purpose of service extensions or to undertake
infrastructure development projects. The Local Government Division of the
Ministry of Housing and Local Government approves of the utilization of
these grants and authorizes their annual disbursements. The formula used for
computing the launching grant is based on the land area and population of the
local authority. The Ministry of Housing and Local Government staggers out
the disbursement of the launching grant over several years to enable local
authorities to spread out their expenditure on capital items. The annual
equalization grant replaced the annual grant in 1991. The annual grant was
calculated on the basis of the population size and the revenue that the
authority was expected to collect. The maximum annual grant payable was
fixed at RM 107,000.
In contrast, the annual equalization grant is a grant to compensate or equalize
the difference between fiscal capacities and fiscal needs of a local authority.
Fiscal capacities are revenue sources of a local authority and fiscal needs are
its expenditures. Certain criteria are used in determining fiscal needs and a
formula is used to calculate the equalization grant for each local authority
(Phang, Chee and Yahya 1988). Based on this exercise, total grants to local
authorities 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. In
1992, 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 local
authorities in Peninsular Malaysia through their state governments in
accordance with the State Grants (Maintenance of Local Authorities) Act 181
and 245. Local authorities in Sabah and Sarawak do not receive this grant
since they are not governed by the provisions of the Local Government Act
(1976) but are guided by their respective Local Government Acts and
Ordinances.
Development project grants are funds made available to all local authorities
for implementing socioeconomic projects especially towards upgrading the
services provided by the local authorities in their areas of jurisdiction. Some
of the projects include infrastructure projects, social facilities, cleanliness and
beautification, purchase of equipment and machinery, recreational parks and
sanitary projects (landfills and incinerators). The allocations for the local
authorities under the Development Project fund for 1995 was RM
103,060,400. This was 4.63 per cent more than the 1994 allocation of RM
98,500,010 (MHLG 1995). Under the Seventh Malaysia Plan (1996-2000),
local authorities can obtain development funds for implementing
socioeconomic projects designed especially towards helping
the Bumiputra and industrial community. Such projects include bus stations,
markets, food courts and shop houses. The grants are also provided for the
development of new and traditional villages within local authority areas. The
purpose of this development expenditure is to bring these villages into the
main stream of the local authorities' socioeconomic activities and functions
(MHLG). Any allocation made for a specific project of this nature is
considered an outright grant and does not involve any repayment by the
recipient local authority. Nevertheless, in allocating funds for this purpose the
emphasis is placed upon projects that would generate revenue for the local
authority and provide employment opportunities for its people. According to
Yahya (1987: 582), a major problem confronting the grant system as a whole
is that all the fiscal transfers are channelled through the various state
governments and it is also doubtful whether the states pass on the Federal
transfer 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 local
authorities. Local authorities can directly claim the upkeep of such roads from
the respective state governments. Road grants are calculated based on the
average cost of maintaining one mile of road using the minimum quality
standard as specified by the federal government. Each local authority has to
apply to the state government for the grant. The state government, in turn,
passes the application over to the Public Works Department to evaluate
whether the claims meet the standards required for maintenance and to certify
accordingly. The list of the approved roads is then submitted to the Federal
Treasury for payment of the annual maintenance grant. Drain maintenance
grants are ad hoc allocations by the Ministry of Housing and Local
Government to all local authorities to upkeep and upgrade their drains. It is
not compulsory for MHLG to provide this grant annually but nevertheless,
the Ministry paid about RM 50 million in 1994 to local authorities to clean
and maintain their drains. The motive was to encourage flood mitigation
activities to prevent flash floods - arising from rapid economic development -
from occurring in local authority areas.
State governments also offer financial assistance to their respective local
authorities in the form of a balancing grant. There are no formal criteria in
determining the purpose and amount of this grant. Basically, the state grant is
aimed at covering deficits that arise primarily from increases in pay levels
negotiated by the federal government for the public sector, hence the term
balancing grant. Particularly for smaller councils, the financial assistance
from balancing grants helps them finance minor projects such as markets and
community halls or building their offices. In general, the state fiscal transfer
has 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 a
significant role in local authority finance in terms of granting approval for
any development project. For the bigger infrastructure projects, local
authorities are encouraged to seek loans and other forms of fiscal aids rather
than depend on grants from central and state governments.
Scope of capital finance
Under the Local Government Act of 1976, local authority is equipped with
legal powers to borrow (Sections 42 to 49). The local authority is empowered
to borrow through mortgages, issues of stock and debentures and from federal
and state governments as well as to obtain overdraft facilities from private
banks. The main constraint however, is the restrictive clause in Section 41
and thereafter followed by the various sections stating that all borrowing
requires the blessing and approval of the state government. As a result, the
source for borrowing has been confined only to the federal government. The
only exception has been the city hall of Kuala Lumpur that has obtained some
loans from the World Bank.
Domestic loans for local authorities
A local authority in need of a loan normally seeks the consent of the state
government in compliance with Section 41 of the Local Government Act of
1976. Once the state government gives its approval or consent, a request for a
loan is submitted to the Federal Treasury. A project brief that details the
project background, needs and scope with sufficient details of financial
viability is to be sent to the Federal Treasury for its assessment. If the project
is commercial in nature, the Federal Treasury could examine the loan request
strictly from a financial point of view. The Federal Treasury also obtains its
finance from both government revenue and from borrowing. Hence, it has to
scrutinize strictly all requests for loans to ensure an equitable distribution of
limited 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 and
funding from the Japanese and Arab governments. Some of the international
loans currently made available to the Malaysian government include loans
from the World Bank and its subsidiaries, the International Development
Association and International Finance Corporations.
Financial issues in local government
There are a number of financial issues facing local governments. Three major
ones 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 only
formal framework that exists is consultation through the National Council for
Local Government. It must be emphasized that the federal government deals
with local governments primarily through the MHLG. Such dealings are
carried out through the state government, in particular the State Local
Government Division. Federal fiscal transfers include the provision and
launching of annual grants, minor projects grants and the contribution in-lieu-
of-rate that are made through this relationship. Beyond that, the federal
government cannot interfere directly in the affairs of local authorities. The
federal government is helpless even in reported cases where the state
withholds, albeit temporarily, the Federal contribution in-lieu of rates for
local authorities or the state refusal to impose new rates based on the property
revaluation done by the Ministry of Finance. In essence, for implementation
purposes, financial initiatives greatly depend on the state government. The
State 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 financial
management, the most elementary form of public accountability is the
requirement that local authorities give an account of their activities to the
public and provide justification of what has been done. Even at this simple
level, only a few local authorities are able to produce the annual financial
accounts, let alone the annual reports that report on the whole range of the
activities of the local authority. Audit work is also hampered and delayed by
the inability of the local authority to produce supporting documents for the
expenditures made, accurate accounting of the expenditure and up-to-date
annual accounts.
Weak financial position of local authorities
From the above discussion, it is apparent that the financial position of most
local authorities in Malaysia is weak. Except for a small minority comprising
the larger local authorities, many do not have additional income to meet the
demands and expectations of their communities. Certainly, with increasing
demands for local government functions and services, new avenues for
revenue generation must be sought to supplement the income of local
authorities. This may include sale of municipal bonds, rezoning of land from
residential 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 needs
of these urban residents, local authorities must be able to strengthen their
financial capacity and search for innovative means in order to remain
financially viable. This is an important challenge for local authorities if they
are to sustain a high level of urban services and quality of urban life in the
next millennium. The Minister of Housing and Local Government of
Malaysia suggested a number of strategies to strengthen the financing side of
local authorities in Malaysia during his presentation at the IULA 33rd World
Congress 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 urban
congestion, urban poverty, environmental degradations and social ills (drug
abuse and AIDS) coupled with increasing demands for recreational and
leisure facilities of a growing middle class and a more affluent section of
society, 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 local
authorities need to be expanded and strengthened.
Greater autonomy to revise taxes
Since local authorities are semi-autonomous entities within the state
framework, any decision to revise taxes must get the approval of the
respective state governments. This in essence, discourages the local
authorities to consider a review of rates to such extent that they reflect the
cost 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 to
arrive at a fairer calculation of rates beneficial to all parties involved. A more
decentralized decision making should be encouraged that gives local
authorities 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 public
sector development, concrete attempts must be made to explore new ways
and means to reduce the expenditure of local governments through
deregulation and privatization. This may include the deregulation of building
control by giving this task to professional bodies or privatizing cleaning and
maintenance works of parks to private contractors.
Enhancing federal and state government support
Local authorities need substantially larger allocations than normal to tackle
emerging social problems in urban areas such as drug abuse, AIDS and
loitering of youth. The continuous support of the federal and state
governments is vital to manage these problems effectively. Federal and state
government support is also crucial in assisting local authorities to maintain
and enhance the quality of services in their localities. Most of the local
authorities, especially the smaller councils are ill-equipped to combat these
social and urban ills on their own. Without the generous and unwavering
support of the federal and state governments, measures taken by local
authorities could be costly and divert scarce resources away from their
mandatory obligations.
Community support and participation
The role of community support and participation is crucial in the performance
of local authorities as it ensures the success of a particular urban programme
and 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 and
controlling vandalism. In these cases, local authorities take the initiative to
link up with non-governmental organizations and schools in order to promote
community support and participation. Such measures will greatly enhance or
improve 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 government
system is to meet the objective of administrative efficiency (Mohd Zin
1987:124). It is argued that as the machinery of the government becomes
decentralized, some aspects of its functions may be more efficiently
implemented. The Malaysian experience has demonstrated that the mere
effort to bring the decision-making process to the lowest level, is not
sufficient to meet efficiency objectives. Efficiency in resource allocation and
utilization 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 merits
serious 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. Given
this discretion, local authorities can appoint their own staff, exercise control
and execute disciplinary action and undertake other personnel functions such
as training, promotion and pension matters as far as these are approved of by
the state government. As a result of the implementation of local government
reform, local councils are now bodies appointed by the state authorities.
Similarly the chief executives, i.e. mayor for a city council; president for
municipal or district councils, are also appointed by the state. The exception
is the City of Kuala Lumpur, which is headed by the Commissioner for the
City of Kuala Lumpur. The Local Government Act (1976) provides for the
appointment of not less than eight and not more than twenty-four councilors
and a mayor or a president to sit on the full council of a local authority. The
organization of local authorities remains the same as before the restructuring
exercise, 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 administrative
officer 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 to
appoint a politician from the ruling party in the states instead of
administrators from state services. In such cases, the deputy mayor or
president will be chosen from among the administrators. In other states such
as Pahang, Perak and Melaka, the mayor or president and secretary are picked
amongst the officers of the Malaysian Administrative and Diplomatic
Service. Other categories of personnel in a local authority belong to that
particular authority from the beginning to the end of their career. Given this
lifetime tenure, local authorities must employ the right personnel.
The recruitment process is considered most important in the public service as
it determines the type of individual taken into the service. If the recruitment
processes are weak, it will lead to a mismatch between recruited personnel
and the job requirements. Such mismatching will seriously hinder the
efficient functioning of local authorities. In this respect, one must note that
local authority posts in Malaysia, can be divided into permanent and
pensionable, permanent and non-pensionable, temporary, contract and
supernumerary 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 many
ways from the other in their terms and conditions of service. These
differences in turn, may have implications; one of which is that each category
is subjected to different recruitment styles and regulations. Recruitment in
local governments is based on the principle of merit. The aim of the merit
system is to appoint candidates on the basis of their intellectual ability,
personality, potentiality and where relevant, their professional or technical
skills in relation to the requirements of the posts to be filled. To achieve this
objective, local government (through its board) is charged with the
responsibility of performing its functions with independence, integrity and
impartiality. In this case, each local authority will have its own board whose
functions are to appoint, confirm, place on the permanent or pensionable
establishment, transfer and exercise disciplinary control over members in the
service. The recruitment process to fill a vacant post involves five different
stages:
Clearance from the state government, the Treasury and the Public
Service 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 for
the local authorities. It is based on the scheme of service for a particular job.
Some require professional qualifications while others entail pre-posting
courses and examination. For the purpose of mobility in the local
government, 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 lowest
grade in a scheme of service and not to a particular post. An officer who is
holding a post in a certain grade is eligible for promotion to a higher grade
within the same scheme of service to which he belongs.
In case of promotion, a Promotion Board conducts all exercises whenever a
vacancy occurs in a higher grade in the scheme. As with appointment
procedures, the promotion exercise has also adopted the interview method of
assessing the candidate's suitability. In all cases annual performance and
special confidential reports are taken into account. Whatever the method, the
prime consideration is that all promotions are based on merit. This principle is
unambiguously stated in General Order 50 Chapter A that defines merit as
consisting of two factors: efficiency shown by an officer in the performance
of his/her duties and personal qualities including qualifications and
experience related to the post to be filled. Unsuccessful candidates are given
the right to appeal against the decision to a Special Appeals Committee.
Before an officer is promoted to a higher grade, he is normally required to
occupy a higher post or a higher grade in an acting capacity so as to
determine his/her suitability for promotion. An officer who fails to be
promoted is usually allowed to continue acting until the next promoting
exercise is held. When an officer is acting in view of a promotion, he or she
enjoys 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 particular
local authority. Firstly, the prospect of promotion depends on the availability
of posts at the higher grade within that organization. If there is no vacancy, an
officer will have to stay and stick to a particular job for a long time until a
new post at a higher grade is created. The ability of the local authority to
create new posts not only depends on the workload of the authority but also
on 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 he
was originally recruited into until he retires. He cannot be transferred to
another local authority of his choice through filling a similar post or by
mutual transfer without losing his seniority and other privileges. Attempts are
now being made to set up a Local Government Service at state level. This is
to facilitate officers from an authority to fill a post - either by way of transfer
or 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 work
ethics and conduct so as prevent any undisciplined behaviour that may
discredit the local authorities' services. Even though disciplinary problems are
not of serious concern to local authorities, its increasing trend can have a
negative impact on their efficiency and effectiveness. Recognizing the
importance of discipline, high ethical standards and productivity, a number of
approaches have been adopted by many government agencies including local
authorities since the late seventies. Among others, these initiatives include the
introduction of a Punch Clock, Name-Tag, Code of Ethics in the Public
Service, Manual of Office Procedure, Desk Files, Quality Control Circles and
a Productivity Measurement Programme.
As part of the public sector reform in Malaysia, local authorities are also
involved in the development of productivity and quality management
programmes initiated in 1989. Local authorities like other public agencies
must be proactive in the delivery of quality services, more market-driven and
customer oriented in their dealings with the public. To implement these
programmes, the government has encouraged public agencies to adopt a total
quality management approach, the establishment of a Client's Charter and the
implementation of ISO 9000 standards. To reinforce these efforts towards
creating and sustaining a culture of quality, the government has also launched
a number of awards such as Efficiency Service Awards, Public Sector
Innovation Awards, Quality Control Circles Awards, the Prime Minister's
Quality 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 sector
employees, the government has introduced a new remuneration system in
1992. Like other public agencies, local authorities have adopted this system
that provides local government personnel with a new, more flexible and
attractive remuneration package of wages, allowances and other incentives. It
eliminates several levels of hierarchy existing in many government agencies
and encourages promotion and salary movements based on merit and
performance (Ahmad Sarji 1992:3). In essence the new system has introduced
major changes in the salary and allowance structure as well as in other areas
of personnel administration and management. These include reducing the size
of local government personnel, promoting organizational restructuring and
emphasizing training of public sector personnel.
Training programmes
Like many other Asian countries, the government is the largest employer in
the country. If we add the number of posts in the armed forces and the police
to 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 in
Local 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 99,060
State 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 1995
Source: Seventh Malaysia Plan, 1996-2000
As discussed in the previous section, the new remuneration system places
great emphasis on the crucial role of training and its impact on the
performance of local government personnel. The objective of training is not
only to upgrade knowledge and skills, but to develop the right kind of attitude
and mind-set among civil servants towards the assimilation and
internalization of positive values and work ethics to support public sector
reforms. Training also enables civil servants to cope with increasing job
demands 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 personnel
including those from the local government sector. At the Ministry of Housing
and Local Government, the training component is being handled by the
Department of Local Government that has a small training unit. Nevertheless,
all local authorities are encouraged to set up their own training units and
develop their own training programmes as part of the human resource
development effort. The city hall of Kuala Lumpur for instance, has its own
training institute. This effort includes the provision of training opportunities
for all levels of local government personnel such as the lower level
comprising clerical, technical and other support groups, the executive and
subprofessional groups which form the middle management and the top
management level covering the administrative, professional and non-
professional groups. As part of the continuing efforts to produce local
government personnel of high caliber, many local authorities throughout
Malaysia have adopted a number internal as well as external of training
strategies.
Internal training
Comprises of departmental training to provide technical and/or practical
knowledge and ability in specific working fields through training programmes
developed by the department concerned as well as on the job training that is
conducted while performing regular job activities.
External training
Personnel may join training programmes organized by other
national/international bodies or may be attached to certain local municipal
and agencies (training by assignment).
While the National Institute of Public Administration (INTAN) fulfills most
of the training needs of local authorities in the fields of executive
development, management, information technology, finance, language and
communication, 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 of
Public Health, the National of Public Health, the National Valuation Institute
(INSPEN) and local universities and various state governments that conduct
training 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 degree
of participation may vary from one country to another or amongst local
authorities themselves. In Malaysia, participation can take many forms and
levels of involvement. According Phang and Nooi (1989: 65-68), the term
covers at least four general features that are by no means exhaustive, but
seem to imply a system of representative or participatory democracy in local
governance:
Consultation, where the council identifies an issue and seeks public
response;
Direct involvement or power sharing, where the community is a full
member 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 a
number of factors: types of local government - municipal or district - local
leadership and finance or resources. In most cases, the public will participate
in local authority-driven activities. For example, the Municipal Council of
Petaling Jaya recently launched a river clean up campaign near Sungei Ara
squatter settlement areas as part of its river beautification programme (The
Star 1997). However, there are instances too where programmes are
community-driven and local councils will assist residents with logistic
support through the loan of their lorries and equipment. Corporate bodies or
local politicians sponsor the provision of refreshments during such
community self-help programmes. The activities where public participation is
most common are those related to maintenance and routine services such as
clearing rubbish from drains and along roads in housing estates and clearing
unwanted vegetation along riverbanks as part of the "Love Your River
Campaign", a national effort promoted by the government. Some of these
resident associations may assume the role of a local pressure group in voicing
the people's concerns on issues affecting them such as new traffic routing and
congestion and proposals to increase population in a particular area through
erecting high-density condominiums.
Another other important avenue to participate in the running of a local
authority is through councilors appointed by the government taking part in
local councils. According to the Local Government Act (1976), the
appointment of councilors is done: "From amongst persons the majority of
whom shall be persons ordinarily resident in the local authority area who, in
the opinion of the State Authority, have wide experience in local government
affairs or who have achieved distinction in any profession, commerce or
industry, or are otherwise capable of representing the interests of their
communities in the local authority area (Malaysia 1976: 18)". Section 10 of
the Act stipulates that number of councilors in a particular council may range
from not less eight to not more than twenty-four. Even though the state
government control them, the councilors may be viewed as representatives of
the area from where they hail or representing various business communities
or interest groups. The councilors provide a channel of communication
between the local government and the local residents. They sometimes act as
mediator in times of disputes over land matters and environmental issues such
as dust problems caused by lorries ferrying earth and noise made by
developers working overtime.
Rapid socioeconomic development and the emergence of a larger middle
class also saw the proliferation of interest and pressure groups and non-
governmental organizations (NGOs). Voluntary welfare-oriented
organizations, citizen watch groups, consumer and neighbourhood
associations and environmental protection societies want local authorities to
acknowledge the contribution these bodies can make to solve a range of
issues pertaining to urban management such as environmental pollution,
beautification, improving the quality of life of residents and preserving the
heritage of the community. In Petaling Jaya for instance, a voluntary
organization is being formed to help with the planting of trees in Bukit
Gasing to replace those that were burnt by an irresponsible section of the
society.
Under tight financial constraints facing the country, local authority cannot be
expected to be responsible for such community services all the time. This is
where the community and other voluntary organizations play a crucial role. It
will also allow the local council to rechannel its resources to improving its
services in other areas such as squatter and traffic improvement schemes. The
element of public participation has also been incorporated in the Town and
Country Planning Act particularly with regard to the preparation of the
Structure Plan. According to Section 13, in preparing the Plan, local planning
authorities must consider representations from the public. In this case,
adequate publicity and access to both the draft Structure and Local Plans
would have to be made available to the general public. Under the Act, the
State Planning Committee would receive all objections from the public
against the Structure Plan and a public local inquiry would be formed to study
these objections and suggestions. Both the plans may be changed and
modified after taking into consideration the views of the public. In this
context, the Town and Country Planning Act of 1976 may be viewed as an
important cornerstone in the history of the development of physical planning
whereby the role of public participation is formally recognized.
As the level of education and affluence rises, local authorities must recognize
that public participation has an important role in the decision-making process
of a locality. The public or residents are more likely to know of their rights
and hence would be in position to assert them if the need arises. In view of
the growing expectations and the general demands of the local population,
local governments must be responsive to meet public needs by harnessing the
untapped reservoir of talent and resources of the communities in many of
their activities. Through better and effective local government-citizen
interaction and participation, a win-win situation could be created in which all
parties, such as the local authority, residents and business communities in
Malaysia, could gain from holistic partnership.
The Way Ahead
Rapid economic growth, population increase and urbanization that
characterize most countries in the Asia-Pacific region impact inevitably on
the urban environment. The emergence of new issues and problems poses
new challenges to traditional ways of managing urban areas. It entails new
approaches, strategies as well as practical and effective answers and solutions
from local authorities. Greater globalization of the economy, accelerated
advances of information technology, greater demands for accountability of
results and the need to foster closer public and private collaboration pose
tremendous challenges to national as well as local governments. One of the
emerging issues arising is whether Malaysian local authorities, particularly
the smaller ones, will have the capacity and capability to assume new roles to
meet new challenges. In the future, local authorities must move from a
maintenance-oriented administration to being a facilitator, pacesetter and
regulator of socioeconomic development in order for them to contribute
effectively towards the nation's competitiveness.
With regards to these challenges as well as the capability and need to reform
to remain effective, the Prime Minister commented that: "Given these rapid
changes in the world economy, the public service must be prepared to
confront new sets of challenges in the 21st Century (...). Continuous efforts
must therefore be made to review the public service so as to be in line with
the current needs and times. We need to look into new ways and means to
improve and enhance the capability of our public service (Mahathir 1995:
12)". As part of the national efforts to reform the public service in meeting
the current needs and times, local governments together with other public
agencies have been undertaking a number of reform programmes based on a
series of strategies. These reform efforts are intended to create excellence in
the 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 have
changed fundamentally, albeit slowly from a service provider to a facilitator
of growth. Besides, local governments have assumed a more developmental
role in creating an enabling environment for businesses to thrive and for
citizens to prosper. In the age of rapid urbanization and globalization, the
ability to manage change and fast-paced development is an important
imperative for local government. This entails continuous capability and
capacity-building efforts, reforms, innovations and the willingness to learn
from 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 Government
Centre, Tokyo, 1992
Davey, J. J., Elements of Urban Management, UNDP/UNCHS/World Bank
Urban 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, Kuala
Lumpur, Malaysia 1992
Goldsmith and eds., Local Government, International Perspectives in Urban
Studies, Jessica Kingley Publishers, London, 1993
Hubert, J. B. A., Cultivating the Grass-Roots: Why Local Governments
Matters, IULA, The Hague, 1990
Local Government Development Foundation and Konrad Adenauer
Foundation, A Guide to Organizing Municipal Action Team (MAT), The
Philippines, 1993
Mahathir, M., Message for National Seminar on Public Service: New
Strategic Dimensions for the 21st Century, Malaysian Administrative
Modernization and Management Planning Unit, Prime Minister's Department,
National Institute of Public Administration and Commonwealth Association
for Public Administration and Management (CAPAM), Malaysia, September
1995
Report of the Royal Commission on the Remuneration and Conditions of
Service 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 of
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:
A Review of the Local Authority Function and Capacity, in Planning and
Administration, Volume 16 No. 2, Autumn, IULA, The Hague, 1989
Mohd. Zin, M., Personnel Management and Training in Local Government
System in Malaysia, EROPA Seminar on Personnel Management in Local
Public 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 and
Urban 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 Green
Printers, Kettering, Northants, 1980
Rustam Abbas, Local Economic Development in Intermediate Urban
Centres: The Potential Role for Local Government in Malaysia, Unpublished
Ph.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 Public
Administration 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