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1.1 Brief history of the Act

Land Acqusition Act 1960 was firstly enacted in 1960 with (Act No 34 of 1960) and has been
revised in 1992 (Act 486 w.e.f 18th March 1992). Act 486 containing eight parts with 70 sections.
According to Act 486, Land Acquisition Act is an act relating to the acquisition of land, the
assessment of compensation to be made on account of such acquisition, and other matters incidental

Land Acquisition Act 1960 (referred as L.A) is one of the method used by the government to
coordinate and to develop land for the purpose of public and what to be considered as beneficial to the
economy. L.A. is or ‘compulsory purchase’ done to gazette and acquire the land for any means
purposes that benefits the country. The owners of the land involved have to surrender or in the case of
L.A. have to sell their land to the government. Stipulated in Section 3 of the referred Act, three main
purposes of a land to be acquired are a) for any public purpose (may not be argued); b) by any person
or corporation for any purpose which in the opinion of the State Authority is beneficial to the
economic development of Malaysia or any part thereof or to the public generally or any class of the
public; c) for the purpose of mining or for residential, agricultural, commercial, industrial or
recreational purposes or any combination of such purposes. Hence, the affected land of the so-called
compulsory acquisition will later named as ‘Scheduled Land’ under Section 8 after the gazette and
sufficient information has been supplied to the interest holder or the owner of the land.

The Act is also acts as a tool for the Government to acquire a land. It stipulates all legal
procedures for the public authority especially the State Authority in acquiring any land for any public
purpose development. Such compulsory acquisition by the State Authority would also be the better
choice for the interested owner rather than selling the land to the private developer for the public
purpose development which is mostly profit motivated and bound to developer’s sole benefit.

Though the acquisition of the Scheduled Land is certain, the owner possesses the right to
submit the objections which to be made with regard to a) The measurement of land, b) The amount of
the compensation, c) The persons to whom it is payable; and d) The apportionment of the
compensation. The owner may submit the objections of the above issues complete with sufficient
support and proper documentation to prove that a justification shall be obtained before the transfer of

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the ownership takes place in the final stage of the acquisition process. Land acquisition involves the
compulsory acquisition of land which often against the will of the land owners. Historically, the
courts seem to have surrendered to the presence that the adequacy requirement may be achieved by
giving sufficient monetary rewards in exchange.


2.1 Land Acquisition Process and Procedures

The Act helps the government to acquire
lands from the owner with adequate compensation LAND ACQUISITION PROCESS IN
to be paid to the land owners. In L.A. the land
owner shall be in the same state as prior to the Department /Applicant’s Agency
acquisition of the land (in terms of compensation)
without suffering any loss or damage. There shall Approval By State Authority
be no contest and the government has the full right
to acquire one’s land. However there are subject
Gazette Notification under Section 4 (that
that the land owners may contest and that is the land is likely to be acquired)
total amount of compensation. The compensation
of the land is derived from valuation made
Gazette Notification under Section 8 (the
referring to the market price of the land at the date declaration of intended acquisition for public
of Gazette under Section 8 of Land Acquisition
Act 1960 without considering any potential
appreciation, speculation of future value and Issuance of Report and Valuation by JPPH
future conversion of land use and zoning.
Enquiry by Land Administrator under
Section 12
Land ownership is protected by the
Federal Constitution of Malaysia. The ownership
is indefeasible and therefore no ownership of land Written Award by Land Administrator in
(Form G)
can be denied and it holds the full interest upon
the land. All dealings to be made on the land is
upon the will of the owner. Hence, only by using Notice of Formal Possession of the Land in
Land Acquisition Act 1960, with the correct (Form K)

purpose in accordance to the act can the land Figure 1: Brief land acquisition process in Malaysia

acquisition be done. The act solves the conflicts

and issues with landownership and landowners’ reluctance to offer their land for development
(Omar & Ismail, 2005). State Government is responsible to issue the acquisition Gazette in according

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to the respective State Land Rules. Federal Government and any non-governmental body may also
acquire a certain land through the state government in relation to the earlier mentioned purposes.

2.2 Responsibilities of the Government

Provision in National Land Code 1965 (NLC 1965) and Article 13 of the Federal Constitution
provides that “a) no person shall be deprived of property save in accordance with law and b) no law
shall provide for the compulsory acquisition or use of property without adequate compensation”
(Federal Constitution, Ismail Bin Omar, 2007). When there is any acquisition of the land, State
Authority is required by law to pay an adequate compensation. However, the term of adequate
compensation is not clearly defined in the law (Omar & Ismail,2005). Persons involved can attend the
enquiry conducted by the Land Administrator to claim for compensation. Persons involved who are
not satisfied with the compensation awarded may file an appeal to the Land Administrator within 6
weeks from the date of Form G. The compensation must be adequate in order to ensure that the land
owner involved in the land acquisition will not bear any loss. However, the compensation is mostly
influenced by the category of land use stated in the Title.

After a certain land is Gazetted for the acquisition, it is the responsibility of the Government
to compensate the landowner as an attempt to minimize the loss of rights and interest upon the
affected land. Moreover, there are a few aspects on the landowner’s point of view shall be considered
by the Government as is compensated.

The major question is whether the amount of compensation towards the land owner is
sufficient enough to ensure that they will survive after the land acquisition take effect. The acquisition
does not only involve land but anything that been erected on it, such as house or any other type of
development will be demolished to make way for the land acquisition. The compensation may also be
varied to one another in case of ‘bulk-acquisition’ or acquisition that involved more than one piece of
land. It may be vary due to the tenure, sizes, location, terrain and category of land use (Ismail Bin
Omar, 2007).

2.3 Principles of compensation

The First Schedule of the Land Acquisition Act 1960 stipulates the principles for determining
the amount of compensation considering the post-effect of the acquisition to the owner of land. The
principles of determining the amount of compensation are as follows;
a) Market value of the land – Where the Court adjudges a certain reasonable amount of market value
in terms referring to the prevailing market rate on the date o the Gazette under Section 8 of the Act.
The issue on market value is considered as a household issue where most landowners claimed that the
amount compensated is not justifiable against the losses caused by the acquisition.

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b) Betterment – Deduction in any increase in value of the remaining land as a result of the
acquisition shall be imposed to the landowner on the basis of ‘no gain, no loss’ reason being the
acquisition of the land shall be non-profit motivated on the landowner’s point of view. Betterment
always refers to the enhance value and usage of the land. For example a road built next to the affected
land will make the land become first layer land, hence value and usage capacity is enhance.
c) Severance – The acquisition may caused a piece of land to be severed. There are a few
circumstances caused by severance where it might either be better-off, worst-off or both to the
landowner. However, a proper justification shall be made to explain the claim this issue such as the
cost to be incurred to cross the acquired land to get into the other piece of the severed land. In the
case, the Government will also consider that provision of crossover or under-pass tunnel as a
sufficient compensation rather than to compensate in terms of cash.
d) Injurious Affection – There are lands that injuriously affected due to the acquisition that causes
damages to the owner. The issues rise commonly regarding the access to the land of the neighbouring
lot for instance such as unavailability of direct access from the main road. Government will need to
consider providing the alternative and the right of way in order to make good to the affected land after
the acquisition takes place. Please refer to a court case “Boustead Estates Agency Sdn. Bhd.
(Applicant) vs Pentadbir Tanah, Baling, Kedah (Respondant)”, Government of Kedah Darul Aman
Gazette on 8, December 1994 under Gazette Notification No. 760. dated 8 December 1994. The
purpose of the acquisition and gazetted in Section 8 stated: “Tujuan Awam iaitu Cadangan
Pengambilan Balik Tanah untuk Projek Jalan Raya TimurBarat Fasa II Pakej V – Titi Karangan Ke
Kampong Kangar, Negeri Kedah Darul Aman” (www.kehakiman.gov.my/judgment/coa/latest/K-01-
e) Incidental expenses incared as a result of change of residence or place of business – Where claims
shall be submitted in order to compensate the ‘loss’ and ‘damages’ held due to the acquisition that
may affect the business of the landowner or the interest holder of the acquired land. There are also
issues on ‘recoverable period’ of business to be compensated by the Government.
f) Accommodation works – The principle of making good of the accommodation works is more on
costs to be incurred during the moving out process from the affected land.


The land owner has to start from the beginning, they have to purchase new land to
compensate their previous dispossessed land. They cannot get back their previous lifestyle where the
land was bought at a relatively low price or been passed down from their ancestor. In recent times we
see high end and expensive development especially in Kuala Lumpur. These developments
appreciating the value of land in Kuala Lumpur. Usually the amount of compensation is inadequate to
purchase new land, thus the option of purchasing a different kind of property e.g. flats, apartments,

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condominiums and terrace house will be considered. There is however in most case the compensation
will not allow them to even purchase property inside the urban area. With little amount of
compensation they can only afford to purchase property in the outskirt area which is way cheaper than
in the urban area. However, the problem mentioned above would be very minimal if the acquired land
is over-compensated. Should the land been under-compensated problem mentioned above is assured
to incurred.

When a gazetted land acquired, the common issues on severance, injurious affection,
depreciation in value, appreciation in value, under-compensated, over-compensated etc may arise.
There are also many people being affected in land acquisition process. Some of the land involved may
have been leased out where the head lessee (and its sub-lessee) may also be affected as they are also
interested upon the land. The interest may not be as significant as the land owner but in-terms of the
right of tenancy and right of usage upon the land is also being deprived. Various types of development
maybe erected on the land, development such as houses, permanent or semi-permanent structures etc,
which becomes either for settlement or for business purposes. Business activity such as food provider
using ‘warung’ or food court erected upon the land also will be demolished. The business, the good
will, patrons income will be loss altogether. Compensation towards the loss of income is however
been allocated for the involved parties.

The land acquisition may make a piece of land becomes smaller or being acquired entirely
(the land). For the smaller land size the usage may not be as useful as before the acquisition and the
value of the land has depreciated. There are cases where the land owner asks the government to
acquire the whole land as the remaining land does not retain any value or usage. The boundaries and
setback of the land is changed drastically and may cause the remaining land to be redeveloped
altogether. In certain case the building has to be partially demolished and the usage and purpose of the
development is not applicable anymore. The outcome of some land acquisition is we can see that
there is no adequate setback within the land.

However, although there are many negative outcomes of the land acquisition towards the land
owner, sub-lessor and sub-lessee, positive impact has also emerge from this procedure.
Redevelopment and development according to plans made by the government through agencies such
as Town Planning Department, Local Authority and etc can be executed without any barrier and
constraints form the land owners. Land Acquisition Act cannot be contest in the court as the
government has the absolute power and authority to ‘compulsory purchase’ the land. However land
owners may appeal for higher compensation through court in the Land Office.

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Development on the acquired land is crucial for the public interest. Without land acquisition,
it is possible for the government to conduct series of development on the particular land. The
surrounding area of the acquired land may experience a rise in value. This is due to the development
erected on the acquired land. Public purposes developments such as Highways (Taman Subang
Bestari), LRT lines (Kampung Baru), port (Port of Tanjung Pelepas) etc will contribute to economic
growth and for the public benefits.


Land Acquisition Act 1960 acts as a vital tool for the government to develop a certain land.
The land owners are protected by law in terms of the compensation and rights to object and appeal.
There are pros and contras in implementing land acquisition. It may not satisfy the affected few, but it
benefits to the general members of public in future. In addition, there are also advantages and
disadvantages of having the Act as per below table;

Advantages Disadvantages
The advantages are seen to be bound on The landowners are seen as the worse-off party
Government’s point of view. after the acquisition.
As a government tool to assemble land in Complicated procedures, time consuming and
resolving the land supply problems for may be expensive on cost for the landowners.
To avoid situation where individual landowners Compensation may be seen as ungenerous and
can frustrate development by refusing to sell. usually not up to the expectation of the land
Compensation based on the market value Serious encroachment of right towards an
satisfies the adequate compensation. individual property.
Time saving on acquisition part and lesser Mostly are not welcomed by the landowners.
problems to the acquiring body.
To avoid the land owners to hold out an Always opposed by the affected landowners.
unreasonable purchase for the land.
(Anuar Alias and Md Nasir Daud )

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

Discrepancy claims on the amounts compensated usually takes place and some of the claimant may
not know the valid ground and the provisions of the Law where it seems like the loss will always be
on the landowners’ side apparently. Foremost, sufficient information and knowledge to contest the
judicial decision is crucial to avoid further frustration and losses.

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1) Book
a. Laws of Malaysia, Act 486 - Land Acquisition Act 1960, Percetakan Nasional
Malaysia Berhad (2006).

2) Journals
a. Payment of Adequate Compensation for Land Acquisition in Malaysia, Anuar Alias
and Md Nasir Daud, University of Malaya, Pacific RIM Property Research Journal,
Vol. 12, No. 3.
b. A Critical Assessment of Provisions of the Federal Constitution With Regard To
Federal State Relationship on Land Law, Adibah Awang, University Teknologi
Malaysia (2008).
c. Omar and Ismail, (2005), Discrepancies in Defining Adequate Compensation in Land
Acquisition: A Case Study in Malaysia, 1st REER Conference and General Meeting,
UTM City Campus, K.Lumpur, 6-7 September 2005.

3) Dissertation
a. Discrepancy in determining the amount of adequate compensation for land taken in
land acquisition projects – A case study in malacca with reference to the land
acquired for Kolej Universiti Teknikal Kebangsaan Melaka, Ismail Bin Omar, Fakulti
Kejuruteraan Dan Sains Geoinformasi, Universiti Teknologi Malaysia (2007).

4) Others
a. Brochure - Valuation for Land Acquisition, Valuation and Property Services
Department via www.jpph.gov.my, accessed on 20 March 2011.
b. Website - “Boustead Estates Agency Sdn. Bhd. (Applicant) vs Pentadbir Tanah,
Baling, Kedah (Respondant)”, Government of Kedah Darul Aman Gazette on 8,
December 1994 under Gazette Notification No. 760. dated 8 December 1994. The
purpose of the acquisition and gazetted in Section 8 stated: “Tujuan Awam iaitu
Cadangan Pengambilan Balik Tanah untuk Projek Jalan Raya TimurBarat Fasa II
Pakej V – Titi Karangan Ke Kampong Kangar, Negeri Kedah Darul Aman” via
www.kehakiman.gov.my/judgment/coa/latest/K-01-38-1998.pdf, accessed on 20
March 2011.

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