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Can I own a Malay Reserve Land?

The concept of Malay Reservation was introduced via the Malay Reservation Enactment 1913 (“1913 Enactment”). The 1913 Enactment was repealed by the Malay Reservation Enactment 1933 which was subsequently reviewed and republished in year 1935 as the Malay Reservation Enactment (FMS Cap 142). FMS Cap 142 applies to the Federated Malay States, consisting of the states of Perak, Pahang, Negeri Sembilan and Selangor, and is still in force today. FMS Cap 142 has also been extended to the Federal Territory of Kuala Lumpur with effect from 1st February 1974.

Apart from the Federated Malay States, Penang and Malacca, all other states in Peninsular Malaysia have their own enactments (“Enactments”) to govern Malay Reservation, as listed below:

  • Malay Reservation Enactment Kelantan 1930 (“Kelantan Enactment”);

  • Malay Reservation Enactment Kedah 1931 (“Kedah Enactment”);

  • Malay Reservation Enactment Perlis 1935 (“Perlis Enactment”);

  • Malay Reservation Enactment Johore 1936 (“Johore Enactment”); and

  • Malay Reservation Enactment Terengganu 1941 (“Terengganu Enactment”).

It must be noted that each Enactment has its own sections and provisions which may not be the same as the other Enactments. However, their primary objective is effectively the same, which is to prevent the disposal of lands being declared as Malay Reservation to a non-Malay.

Who is a Malay?

While it is not difficult to ascertain if an individual is a Malay or otherwise, nonetheless, definitions of a Malay can be found in the respective Enactments. In general, a Malay refers to a person belonging to any Malayan race who habitually speaks the Malay language and professes the Muslim religion.

What about entities such as Company/ Body Corporate/ Institution?

Apart from FMS Cap 142 and the Terengganu Enactment, the other enactments do not define a Malay Company. Section 2 of the FMS Cap 142 provides that any company registered under the Companies Enactment shall be deemed to be a Malay so long as every member is a Malay and the transfer of shares therein is restricted by the Articles of Association to Malays. Therefore, a company in the Federated Malay States and Terengganu may properly own a Malay Reserve Land provided that the aforesaid conditions are satisfied.

What are the restrictions/ prohibitions?

In essence, where a land has been declared as a Malay Reserve Land and owned by a Malay, it shall not be alienated, transferred, charged, leased or otherwise disposed to any person not being a Malay; otherwise it would be rendered null and void.

In the case of Jamaluddin bin Jaafar v Affin Bank Bhd and another appeal [2016] 12 MLJ 88, a third party charge was registered on the property of the Appellant in favour of Affin Bank as security for loan granted to another company. On default of the loan, Affin Bank obtained a judgment in default (“JID”) and subsequently filed a bankruptcy petition and obtained a bankruptcy order against the Appellant. The Appellant sought to set aside the JID and bankruptcy order on the basis that the third party charge had contravened the Kedah Enactment since Affin Bank is not a Malay. The Court of Appeal held that as Affin Bank is a non-Malay, it is prohibited by the Kedah Enactment from holding any right or interest, including as chargee, in the Malay Reserve Land which had been charged to the bank by the Appellant.

It must be noted that the Enactments only prohibit disposal of lands from a Malay to a non-Malay. Therefore, even if a land has been declared as part of Malay Reservation but it was never owned by a Malay, this prohibition will not apply and the land can still be disposed by a non-Malay owner to other non-Malays.

In the case of Tan Hong Chit v Lim Kin Wan [1964] 30 MLJ 113, a piece of land in the Malay Reservation area in Kelantan was registered under the name of a non-Malay who had acquired it prior to the creation and/ or declaration of the Malay Reservation. It was held by the Federal Court that a non-Malay can transfer the land to any other non-Malay and any subsequent transfer or charge to a non-Malay can be effected without the need to obtain an approval from the Ruler-in-Council.

Similarly, in the case of Ooi Poh Ean & Anor v Lembaga Pembangunan Langkawi [2018] 2 MLJ 769, a company known as Pen Pen Sdn Bhd (“Pen Pen”) was required by the Respondent to acquire two double-storey houses (“Properties”) on the latter’s behalf. Pen Pen then bought the Properties from a developer, known as Landrise Development Sdn Bhd (“Landrise”). Pen Pen subsequently sold the Properties to the Appellants. The Respondent sought to invalidate the sale of the Properties to the Appellants inter alia on the basis that the Properties were declared as Malay Reserve Land and its disposal to the Appellants, being non-Malay, had contravened the Kedah Enactment. The Court of Appeal held that as the lands were never owned by a Malay (i.e. Landrise and Pen Pen were non-Malay), the disposal to the Appellants was not in contravention of the Kedah Enactment.