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VOLUME 33, NUMBER (1), 2025
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IIUM Law Journal
Vol. 33, Number (1), 2025
Table of Contents
NO.
TITLE
PAGE
NUMBER
1.
JURISDICTIONAL OVERLAP BETWEEN THE MALAYSIAN
COMPETITION COMMISSION AND THE SECURITIES COMMISSION IN
MERGER REVIEW
Mohd Radhuan Arif Zakaria, Mushera Bibi Ambaras Khan, Nasarudin
Abdul Rahman, Ahmad Muhyiddin Yusof
01-34
2.
REFORMING SOCIAL SECURITY PROTECTION FOR PLATFORM
WORKERS IN MALAYSIA’S DIGITAL LABOUR PLATFORMS
Siti Suraya Abd Razak, Siti Fazilah Abdul Shukor
35-64
3.
SEEKING CONSENT? THE LEGAL CHALLENGES IN CONSULTING
INDIGENOUS PEOPLES FOR HYDROELECTRIC DAM PROJECTS
Izawati Wook, Rohaida Nordin, Muhamad Sayuti Hassan, Nur Khalidah
Dahlan
65-102
4.
EXPLORING THE APPLICATION OF OCCUPATIONAL SAFETY AND
HEALTH LEGISLATION TO GRAPHENE AS A NANO MATERIAL IN
THE MEDICAL SECTOR
Kamal Halili Hassan, Nuraidil Nabilah Arabi
103-132
5.
THE NECESSITY OF CHILD CARE SERVICE AGREEMENTS IN
MALAYSIA: A LEGAL ANALYSIS
Sairun Syakira Saiman, Sheela Jayabalan, Daleleer Kaur Randawar
133-166
6.
ALTERNATIVE DISPUTE RESOLUTION (ADR) IN RESOLVING
COMMUNITY DISPUTES IN PAKISTAN: LEARNING FROM
MALAYSIA’S EXPERIENCE
Ihtesham Ullah Khan, Nurah Sabahiah Mohamed, Sodiq Omoola
167-200
7.
CORRUPTION IN LAND ADMINISTRATION IN NIGERIA: LEGAL
ISSUES AND CHALLENGES
Busari Morufu Salawu
201-238
8.
HARMONISATION OF THE LAW RELATING TO CRIMINAL
ACCOUNTABILITY OF YOUNG OFFENDERS
Mazlena Mohamad Hussain, Nasimah Hussin
239-264
9.
SERVICE DEMANDS ON THE LOCAL AUTHORITIES IN MALAYSIA:
BALANCING OBLIGATIONS AND BUDGET CONSTRAINTS
Nik Ahmad Kamal Nik Mahmod
265-292
10.
COMBATING CRYPTOCURRENCY LAUNDERING BY ORGANISED
CRIME GROUPS THROUGH AN EFFECTIVE REGULATORY
FRAMEWORK
Sankul Kabra, Saira Gori
293-324
11.
TRANSFORMATION OF INDONESIA'S LEGISLATIVE ELECTION
SYSTEM: NEW ORDER VS REFORM ERA IN CONSTITUTIONAL LAW
Dwanda Julisa Sistyawan, Loso Judijanto, Suhaila Zulkifli, Randy Vallentino
Neonbeni, Muhammad Husni Abdulah Pakarti
325-375
33 (1) 2025 IIUMLJ 01 - 34
The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License.
JURISDICTIONAL OVERLAP BETWEEN THE MALAYSIAN
COMPETITION COMMISSION AND THE SECURITIES
COMMISSION IN MERGER REVIEW
Mohd Radhuan Arif Zakaria*
Mushera Bibi Ambaras Khan**
Nasarudin Abdul Rahman***
Ahmad Muhyiddin Yusof****
ABSTRACT
The introduction of merger control provisions through the proposed
amendment to Malaysia’s Competition Act 2010 (Act 712) represents a
pivotal development in the country’s competition law framework.
Merger control is a fundamental component of competition regulation
globally, ensuring that business consolidations do not create
monopolistic structures that harm market competition and consumer
welfare. Many jurisdictions, including those in Southeast Asia, have long
implemented such measures, and Malaysia’s adoption of merger review
aligns it with international best practices. However, implementing this
amendment raises critical concerns regarding jurisdictional overlaps
between the Malaysian Competition Commission (MyCC) and the
Securities Commission (SC). Both regulatory bodies have oversight
* Senior Lecturer, Centre of Foundation Studies, University of Technology
MARA, Selangor Branch, Dengkil Campus, 43800 Dengkil, Malaysia.
E-mail: radhuan@uitm.edu.my (Corresponding Author).
** Professor, Ahmad Ibrahim Kulliyyah of Laws, International Islamic
University Malaysia, Selangor, PO Box 10, 50728 Kuala Lumpur,
Malaysia. E-mail: mushera@iium.edu.my
*** Associate Professor, Ahmad Ibrahim Kulliyyah of Laws, International
Islamic University Malaysia, Selangor, PO Box 10, 50728 Kuala Lumpur,
Malaysia. E-mail: nasarudin@iium.edu.my
**** Senior Lecturer, Centre of Foundation Studies, University of Technology
MARA, Selangor Branch, Dengkil Campus, 43800 Dengkil, Malaysia.
E-mail: ahmadmuhyiddin4@uitm.edu.my
[Received: 10 March 2025, Accepted: 01 May 2025, Published: 28 May 2025]
2 IIUM LAW JOURNAL VOL. 33 (1) 2025
responsibilities that may intersect, leading to potential enforcement
inefficiencies, procedural delays, and disruptions to merger transactions.
Without clear coordination mechanisms, businesses may face regulatory
uncertainty, hindering investment and economic growth. This study
examines the potential jurisdictional challenges and explores how
effective inter-agency collaboration can be achieved. Employing a
mixed-method approach that integrates doctrinal legal analysis with
comparative insights from India and Singapore, this paper identifies
three key issues: differences in legal definitions, information asymmetry,
and conflicting timelines. Based on these findings, the study proposes
institutional coordination mechanisms and the harmonisation of
procedural timelines to enhance inter-agency collaboration. These
recommendations aim to promote regulatory clarity, minimise
enforcement conflicts, and foster a competitive yet business-friendly
economic environment, ultimately strengthening Malaysia’s competition
law enforcement and economic governance.
Keywords: Competition, Securities, Jurisdictional Overlap,
Coordination, Cooperation.
PERTINDIHAN BIDANG KUASA ANTARA SURUHANJAYA
PERSAINGAN MALAYSIA DAN SURUHANJAYA SEKURITI
DALAM SEMAKAN PENGGABUNGAN
ABSTRAK
Pengenalan peruntukan kawalan penggabungan melalui pindaan yang
dicadangkan terhadap Akta Persaingan Malaysia 2010 (Akta 712)
merupakan perkembangan penting dalam rangka kerja undang-undang
persaingan di negara ini. Kawalan penggabungan adalah komponen asas
dalam peraturan persaingan di peringkat global, yang bertujuan
memastikan bahawa penyatuan perniagaan tidak mewujudkan struktur
monopoli yang boleh menjejaskan persaingan pasaran dan kesejahteraan
pengguna. Banyak bidang kuasa, termasuk di Asia Tenggara, telah lama
melaksanakan langkah-langkah ini, dan penerimaan semakan
penggabungan oleh Malaysia sejajar dengan amalan terbaik
antarabangsa. Namun, pelaksanaan pindaan ini menimbulkan
kebimbangan kritikal mengenai pertindihan bidang kuasa antara
Suruhanjaya Persaingan Malaysia (MyCC) dan Suruhanjaya Sekuriti
(SC). Kedua-dua badan berkuasa mempunyai tanggungjawab
pemantauan yang mungkin bertindih, yang boleh mengakibatkan
ketidakcekapan penguatkuasaan, kelewatan prosedur, dan gangguan
terhadap transaksi penggabungan. Tanpa mekanisme penyelarasan yang
Jurisdictional Overlap in Merger Review 3
jelas, perniagaan mungkin menghadapi ketidakpastian peraturan, yang
boleh menjejaskan pelaburan serta pertumbuhan ekonomi. Kajian ini
meneliti cabaran bidang kuasa yang berpotensi dan meneroka bagaimana
kerjasama antara agensi dapat dilaksanakan dengan lebih berkesan.
Dengan menggunakan pendekatan kaedah campuran yang
menggabungkan analisis doktrinal undang-undang dengan perbandingan
daripada India dan Singapura, kajian ini mengenal pasti tiga isu utama:
perbezaan dalam definisi undang-undang, asimetri maklumat, dan
percanggahan garis masa. Berdasarkan penemuan ini, kajian ini
mencadangkan mekanisme penyelarasan institusi dan harmonisasi
prosedur bagi meningkatkan kerjasama antara agensi. Cadangan ini
bertujuan untuk memperjelaskan peraturan, mengurangkan konflik
penguatkuasaan, serta mewujudkan persekitaran ekonomi yang
kompetitif dan mesra perniagaan, sekali gus mengukuhkan
penguatkuasaan undang-undang persaingan dan tadbir urus ekonomi di
Malaysia
Kata Kunci: Persaingan, Sekuriti, Pertindihan Bidang Kuasa,
Penyelarasan, Dan Kerjasama.
INTRODUCTION
The effort to introduce merger control into the Malaysian Competition
Act 2010 was initiated by the Malaysian Competition Commission
(MyCC) in 2022. This initiative was pursued through a proposal to
amend the Act.
1
As part of this process, MyCC held a public
consultation to gather feedback and opinions on the inclusion of merger
control provisions.
2
The motivation to incorporate merger control into the Act was
driven by two key factors: internal and external. Internally, MyCC
lacked the authority to intervene in merger transactions that could
significantly lessen competition in the market. Additionally, the
number of inquiries, complaints, and observations on mergers and
1
Salient Points of the Proposed Amendments to the Competition Act 2010
(Act 712), Malaysian Competition Commission, 2022, 3,
https://www.mycc.gov.my/sites/default/files/Salient Points of the
Proposed Amendments of Act 712 %5B25.4.22%5D.pdf.
2
Public Consultation, Malaysian Competition Commission, 2022,
https://www.mycc.gov.my/public-consultation.
4 IIUM LAW JOURNAL VOL. 33 (1) 2025
acquisitions rose sharply from 9 in 2020 to 45 in 2021.
3
This increase
likely raised concerns within MyCC, prompting the need to address the
regulatory gap.
Externally, the push to incorporate merger control into the Act
is driven by Malaysia's commitment to international economic treaties,
such as the ASEAN Economic Community (AEC), the Comprehensive
and Progressive Agreement for Trans-Pacific Partnership (CPTPP),
and other agreements.
4
These treaties generally encourage member
countries to adopt comprehensive competition laws, with merger
control being a key mechanism for addressing anti-competitive
practices. Moreover, most Southeast Asian countries, including
Singapore, Brunei, Vietnam, and the Philippines, have already
integrated merger control into their competition laws.
5
Malaysia
remains one of only 20 out of 140 countries with a competition law
framework that lacks a merger control regime.
In Malaysia, takeovers and merger transactions are subject to
review by multiple regulatory bodies, reflecting the country’s multi-
agency approach to economic regulation. Currently, the assessment of
potential anti-competitive effects in mergers falls under the jurisdiction
of sector-specific regulators, such as the Malaysian Aviation
Commission (MAVCOM) and the Malaysian Communications and
Multimedia Commission (MCMC). MAVCOM is responsible for
regulating mergers in the aviation sector under Section 54 of the
Malaysian Aviation Commission Act 2015, ensuring that airline
consolidations do not lead to market distortions such as monopolistic
3
Consultation Paper on the Proposed Amendment to the Competition Act 2010
(Act 712), Malaysian Competition Commission, 2022, 13,
https://www.mycc.gov.my/sites/default/files/Consultation Document for
the Proposed Amendments of Act 712 %5B25.4.22%5D.pdf.
4
Consultation Paper on the Proposed Amendment to the Competition Act 2010
(Act 712), 15.
5
Handbook of Competition Policy and Law in ASEAN for Business 2017 lists
down the merger control regimes in the region of Southeast This was
stated in one ASEAN report which lists down the merger control regimes
in the region of Southeast Asia, which are Competition and Consumer
Commission of Singapore, Philippine Competition Commission, Vietnam
Competition Authority, Indonesia Commission for the Supervision of
Business Competition, Competition Commission of Brunei Darussalam,
Myanmar Competition Commission, Office of Trade Competition
Commission of Thailand.
Jurisdictional Overlap in Merger Review 5
pricing or reduced consumer choice.
6
Similarly, MCMC oversees
mergers in the communications and multimedia sectors under Section
133 of the Malaysian Communications and Multimedia Commission
Act 1998, aiming to maintain fair competition among
telecommunications and broadcasting companies while fostering
technological innovation and consumer access to services.
7
In contrast, the Securities Commission Malaysia (SC) primarily
oversees the capital markets, which are defined under Section 2 of the
Malaysian Capital Markets and Services Act 2007 to include securities
and derivatives markets. A key responsibility of the SC is to ensure that
the takeover and merger activities do not harm the interests of minority
shareholders, particularly in the target companies. This aligns with
General Principle 2 of the Malaysian Code on Take-overs and Mergers
2016. Furthermore, the SC is tasked with promoting transparency,
preventing market manipulation, and maintaining investor confidence
in Malaysia’s financial markets, as mandated by Section 15 of the
Securities Commission Act 1993.
With the MyCC emerging as the primary authority for enforcing
merger control under the proposed Section 10A of the Competition Act
2010,
8
a more structured approach to competition enforcement is being
established. However, as the MyCC expands its regulatory oversight,
the risk of jurisdictional overlaps with existing sectoral and financial
regulators, particularly the SC, increases. While previous studies have
explored challenges related to overlapping jurisdictions between the
competition regulators and sectoral-specific regulators,
9
this paper
specifically examines the jurisdictional overlaps between the MyCC,
6
MAVCOM Guidelines on Substantive Assessment of Mergers, Malaysian
Aviation Commission (Kuala Lumpur, 2018),
http://www.mavcom.my/wp-content/uploads/2018/04/Guidelines-on-
Substantive-Assessment-of-Mergers.pdf.
7
MCMC Guidelines on Mergers and Acquisitions, Malaysian
Communications and Multimedia Commission (Kuala Lumpur, 2019),
www.mcmc.gov.my.
8
Salient Points of the Proposed Amendments to the Competition Act 2010
(Act 712), 10.
9
Geeta Gouri, “Interface Between Competition Commission of India and
Sectoral Regulators,” in A Commissioner’s Primer to Economics of
Competition Law in India, ed. Geeta Gouri (Singapore: Palgrave
Macmillan, 2023), 207.
6 IIUM LAW JOURNAL VOL. 33 (1) 2025
as the competition regulator, and the SC, as the securities regulator.
This focus is particularly significant given that securities regulators
play a vital role in maintaining market integrity, protecting investors,
and ensuring transparency, objectives that often align with or
complement those of competition authorities.
This paper critically analyses the potential challenges arising
from jurisdictional overlaps between the MyCC and the SC in merger
reviews, employing doctrinal and comparative analyses. This study
also aims to identify best practices for enhancing regulatory
coordination by examining regulatory frameworks in other
jurisdictions. Ultimately, the findings will contribute to the
development of a structured framework for inter-agency cooperation,
ensuring that Malaysia’s merger control regime is both effective and
efficient in promoting fair competition while safeguarding the interests
of investors and shareholders.
LITERATURE REVIEW
Academic literature predominantly emphasises the jurisdictional
overlap between generic competition authorities and sector-specific
regulatory bodies. Beyond their core regulatory responsibilities, some
sector-specific regulators are also empowered to enforce competition
rules within their respective industries effectively.
Peterson et al. highlighted that over the past few decades, several
heavily regulated markets, including telecommunications, energy, and
transportation, have undergone partial liberalisation.
10
Despite
deregulation, these markets often remained subject to both sector-
specific regulations and general competition laws.
11
As a result, many
countries experienced overlapping jurisdictions where competition
10
Geoff Petersen, Morelle Bull, and Morelle Dermody, “Evolution and
Revolution in Infrastructure Access Regimes: Australia’s Sector-Specific
Regulation and Its Challenges,” in Competition Law and Economics in
Australia, Volume I: The Competition Law System: Context, Law, and
Economics, ed. Julie Clarke et al., 1st ed. (London: Routledge, 2025), 28.
11
Petersen, Bull, and Dermody, "Evolution and Revolution in Infrastructure
Access Regimes: Australia’s Sector-Specific Regulation and Its
Challenges," 29.
Jurisdictional Overlap in Merger Review 7
policy intersected with sectoral regulation.
12
In Malaysia, the MyCC
serves as the primary authority overseeing competition matters.
13
In
contrast, enforcement of competition laws in specific sectors is
delegated to agencies such as the MAVCOM and the MCMC.
14
Dabbah highlights that the interplay between sectoral regulators
and competition authorities varies widely across jurisdictions.
15
Barros
provided examples of coordination practices in several countries. In
Denmark, sector-specific authorities may be required to seek the
opinion of the competition authority. In France and Germany,
regulatory bodies are required to share information with each other,
although in Germany, the sectoral regulator has the discretion to take
the lead in initiating action.
16
In Italy and Sweden, the competition
authority is given priority and may consult the sectoral regulator when
necessary.
17
Conversely, in the Netherlands and the United Kingdom,
decision-making involves explicit coordination, requiring both
regulatory bodies to act concurrently.
18
In the United States,
jurisdiction is shared between the Department of Justice and the
Federal Communications Commission (FCC) for the
telecommunications and media sectors, as well as with the Federal
Energy Regulatory Commission (FERC) in the energy sector.
19
12
Maher M. Dabbah, “The Relationship between Competition Authorities and
Sector Regulators,” The Cambridge Law Journal 70, no. 1 (2011): 113.
13
Nasarudin Abdul Rahman, Mohd Aidil Tupari, and Haniff Ahamat, “Merger
Control Regime in Malaysia : Past, Present and Way Forward,”
International Islamic University Malaysia Law Journal 32, no. 2
(2024):124.
14
Abdul Rahman, Tupari, and Ahamat, “Merger Control Regime in Malaysia :
Past, Present and Way Forward,”121.
15
Dabbah, “The Relationship between Competition Authorities and Sector
Regulators,” 114.
16
Pedro P. Barros and Steffen H. Hoernig, “Sectoral Regulators and the
Competition Authority,” Review of Industrial Organization 52, no. 3
(2018): 452, https://doi.org/10.2307/48722390.
17
Barros and Hoernig, “Sectoral Regulators and the Competition Authority,”
452.
18
Barros and Hoernig, “Sectoral Regulators and the Competition Authority,”
452.
19
Barros and Hoernig, “Sectoral Regulators and the Competition Authority,”
452.
8 IIUM LAW JOURNAL VOL. 33 (1) 2025
The complexity of coordination stems from the differing
objectives and ultimate goals of competition law and sectoral
regulation. Sectoral regulation pursues broader objectives that extend
beyond the scope of competition law. While competition authorities
focus solely on anti-competitive conduct, sector-specific regulators
oversee their respective markets, which includes but is not limited to
addressing anti-competitive concerns.
20
Furthermore, competition
authorities primarily rely on ex-post measures, with the exception of
merger control, whereas sectoral regulation generally adopts an ex-ante
approach.
21
In other words, the former intervenes after anti-competitive
harm has occurred, while the latter acts to prevent such harm before it
arises.
The differences between these two regulatory approaches arise
from their distinct methods of addressing issues. Competition law
primarily depends on market mechanisms, resorting to legal measures
only in response to market failures.
22
In contrast, sectoral regulation
relies on regulatory bodies and anticipates more frequent and often
significant interventions, viewing such actions as essential to
consistently achieving the desired regulatory outcomes.
23
Overlaps often arise in the relationship between competition
authorities and sectoral regulatory bodies, particularly in areas such as
market definition and the assessment of market power. Under
competition law, these steps are essential for identifying potential
anticompetitive concerns. In sectoral regulation, they play a pivotal
role in resolving various issues, such as determining interconnection
obligations for operators in industries like telecommunications.
24
20
Cansu D. Burkhalter, Legal and Regulatory Framework of European Energy
Markets: Competition Law and Sector-Specific Regulations (Berlin,
Germany: Tectum Publication, 2020), 89.
21
Antonio Manganelli and Antonio Nicita, The Governance of Telecom
Markets: Economics, Law and Institutions in Europe (London, United
Kingdom: Palgrave Macmillan, 2020), 57.
22
Parcu Pier, Monti Giorgio, and Botta Marco, The Interaction of Competition
Law and Sector Regulation: Emerging Trends at the National and EU
Level (United Kingdom: Edward Elgar Publishing, 2022), 13.
23
Pier, Giorgio, and Marco, The Interaction of Competition Law and Sector
Regulation: Emerging Trends at the National and EU Level, 14.
24
Manganelli and Nicita, The Governance of Telecom Markets: Economics,
Law and Institutions in Europe, 59.
Jurisdictional Overlap in Merger Review 9
In terms of pricing, the methodologies used in sectoral regulation
to establish interconnection or access fees significantly influence
competitive dynamics in downstream markets, particularly affecting
price competition.
25
When it comes to remedies, both behavioural and
structural measures are utilised by competition enforcement and
sectoral regulation, although competition authorities often favour
structural remedies.
26
Behavioural remedies are rules that control how
a company acts, like stopping unfair practices or requiring access to
services. Structural remedies change the setup of a company, such as
selling part of the business to reduce market power.
27
Moreover, the
objectives of sectoral regulation, such as technical, economic, and
access regulation, align with those of competition law, particularly in
prioritising consumer protection and welfare.
28
A key issue with the concurrent approach is the potential for
jurisdictional overlap between sector regulators and the competition
authority. Industry participants occasionally raise concerns about
inadequate collaboration between the relevant sectoral regulator and
the competition authority. For instance, the British Airports Authority
(BAA) voiced concerns about the involvement of both the Office of
Fair Trading (OFT) and the Civil Aviation Authority (CAA) in the
investigation of UK airports, alleging insufficient communication
between the two agencies.
29
25
Nico Roehrich and Mark Armstrong, “Interconnect Outcomes: To Impose
or Negotiate - The Experiences of Singapore, Hong Kong, South Korea
and Australia,” Emerald Insight, 2002,
https://doi.org/10.1108/14636690210426622.
26
Benjamin Lörtscher and Frank Maier-rigaud, “On the Consistency of the
European Commission’s Remedies Practice,” in Remedies in EU
Competition Law: Substance, Process and Policy, ed. Damien Gerard and
Assimakis Komninos (Netherlands: Wolters Kluwer, 2020), 55.
27
Lörtscher and Maier-rigaud, “On the Consistency of the European
Commission’s Remedies Practice,” 53.
28
Manganelli and Nicita, The Governance of Telecom Markets: Economics,
Law and Institutions in Europe, 57.
29
Jackie Holland and Aurora Luoma, “Decision-Making Powers and
Institutional Design in Competition Cases: The Application of
Competition Rules by Sectoral Regulators in the United Kingdom,”
Competition Policy International, 2014, https://www.pymnts.com/cpi-
posts/decision-making-powers-and-institutional-design-in-competition-
10 IIUM LAW JOURNAL VOL. 33 (1) 2025
Coordination and cooperation between competition authorities
and sectoral regulators face three principal limitations and challenges.
30
First, it must be acknowledged that not all sectoral regulators are
statutorily mandated to actively promote competition. Second,
potential legal restrictions on the sharing of confidential information
between competition authorities and sectoral regulators require careful
consideration. Third, sectoral regulators frequently demonstrate a
strong adherence to the strict application of their statutory mandates.
Building on the observations above, existing scholarly works
have largely highlighted the challenges arising from overlapping
jurisdictions between competition regulatory bodies and sector-
specific regulators. In the Malaysian context, this issue involves the
MyCC and sector-specific regulators such as MAVCOM and MCMC.
Given the recognised difficulties in coordination and cooperation
between competition regulators and sector-specific regulators, similar
challenges are likely to arise between MyCC, the competition
regulator, and SC, the securities regulator. Therefore, this paper aims
to address this research gap by evaluating the potential challenges of
coordination in overlapping jurisdictions during merger reviews
conducted by MyCC and SC.
POTENTIAL CHALLENGES IN JURISDICTIONAL
OVERLAP BETWEEN MYCC AND SC
Effective coordination and cooperation among regulators with
overlapping jurisdictions in merger assessment is essential to facilitate
the smooth completion of cross-border takeovers and mergers in
Malaysia. A lack of coordination and cooperation among regulatory
bodies could delay the merger process, creating unfavourable
conditions for foreign acquirers.
Prior to examining the potential challenges in jurisdictional
overlap, it is important to clarify where such overlaps arise between the
Malaysian Competition Commission (MyCC) and the Securities
Commission (SC). In Malaysia, the SC has jurisdiction over mergers
cases-the-application-of-competition-rules-by-sectoral-regulators-in-the-
united-kingdom/.
30
Gouri, “Interface Between Competition Commission of India and Sectoral
Regulators,” 210.
Jurisdictional Overlap in Merger Review 11
involving unlisted public companies with more than 50 shareholders
and net assets of at least RM15 million, as well as listed business trusts
and listed real estate investment trusts (REITs), in accordance with
Rule 1.09 of the Malaysian Rules on Take-overs, Mergers and
Compulsory Acquisitions. In contrast, the MyCC, as the national
competition regulator, has broad authority to enforce competition rules
across all enterprises, irrespective of their public or private status, as
outlined in the proposed Section 10B of the Malaysian Competition
Act 2010.
31
Consequently, coordination between the MyCC and SC
primarily applies to cases involving unlisted public companies that
meet the SC’s thresholds, listed business trusts, and listed REITs.
The potential challenges arising from jurisdictional overlap
between the MyCC and SC include differences in legal definitions,
information asymmetry, and timeline conflicts, as illustrated in Figure
1 below.
Figure 1: Potential Challenges of Overlapping Jurisdiction Between
MyCC and SC
Differences in Legal Definitions
A significant challenge in certain jurisdictions stems from the use of
identical terminology across various takeover and merger regulations,
even though these terms often carry distinct meanings within different
regulatory frameworks. For example, the term "control" is defined
differently in Singapore's regulatory instruments. Under Rule 11 of the
Singapore Code on Take-overs and Mergers, "control" is referred to as
"effective control," defined as the holding, or aggregate holdings, of
31
Salient Points of the Proposed Amendments to the Competition Act 2010
(Act 712), 11.
Potential
Challenges
Differences in
Legal Definitions
Information
Asymmetry
Timeline Conflict
12 IIUM LAW JOURNAL VOL. 33 (1) 2025
shares carrying 30% or more of a company's voting rights, irrespective
of whether this shareholding confers de facto control. In contrast,
Section 54 (3) of the Singapore Competition Act 2004 defines "control"
as the ability to exert decisive influence over an enterprise's activities,
whether through ownership of assets, rights, or by influencing the
enterprise's composition, voting, or decision-making processes.
Similarly, in Malaysia, "control" is subject to varying
definitions. Section 216 of the Malaysian Capital Market and Services
Act 2007 defines it as the acquisition or holding of, or entitlement to
exercise or control, voting shares or voting rights exceeding 33% (or
another percentage prescribed in the Code) in a company, regardless of
how this is achieved. However, under the Proposed Amendment to the
Competition Act 2010, "control", as defined in the proposed Section
10B, refers to the ability to exercise decisive influence over another
enterprise through rights, contracts, or any other means, whether
individually or in combination.
32
Based on the definitions above, determining control in the
context of merger control assessment requires a more detailed
evaluation compared to its determination in the context of takeovers
and mergers. In merger control, the concept of control is subjective,
relying on the extent of decision-making power the acquirer can
exercise. Conversely, under takeover and merger rules, control is
defined objectively, based on the percentage of voting rights held by
the acquirer. These differences in definitions and concepts arise from
the distinct objectives of the respective rules. The primary aim of
merger control is to prevent mergers that may negatively impact market
competition, whereas takeover and merger rules are designed to ensure
shareholders can benefit from premium payments when exiting the
company.
Determining control in the context of merger regulation requires
a more detailed and flexible assessment than in takeovers and mergers.
This difference exists because each set of rules serves a different
purpose. In merger regulation, control is assessed based on how much
influence an acquiring company can have over the target company’s
32
Salient Points of the Proposed Amendments to the Competition Act 2010
(Act 712), 12.
Jurisdictional Overlap in Merger Review 13
decisions.
33
This influence can come from various factors, such as the
ability to appoint board members, shape business strategy, or influence
financial decisions, even if the acquirer does not hold a majority of the
voting shares. The reason for this flexible approach is that competition
authorities need to examine whether a merger could harm competition
in the market, even if control is achieved indirectly.
On the other hand, takeover and merger rules define control
more clearly and objectively, usually based on a specific percentage of
voting rights. For example, if a company acquires a certain percentage,
often 33 percent or more, it is automatically considered to have
control.
34
This clear-cut approach ensures transparency and legal
certainty, as companies and shareholders know exactly when certain
legal obligations, such as making a mandatory offer to minority
shareholders, apply.
The reason for these different approaches is that merger control
focuses on protecting competition in the market, preventing deals that
could reduce consumer choice or lead to unfair pricing.
35
Meanwhile,
takeover and merger rules are designed to protect shareholders,
particularly minority shareholders, by ensuring they receive fair
treatment and compensation when a company changes hands.
36
These
differences highlight why control must be assessed differently
depending on whether the focus is on competition or shareholder rights.
33
Ioannis Kokkoris, Public Interest Considerations in US Merger Control: An
Assessment of National Security and Sectoral Regulators (United
Kingdom: Oxford University Press, 2024), 13.
34
Umakanth Varottil, “Comparative Takeover Regulation and the Concept of
‘Control,’” Singapore Journal of Legal Studies, 2015, 208.
35
Nasarudin Abdul Rahman and Haniff Ahamat, Competition Law in Malaysia
(Selangor, Malaysia: Sweet & Maxwell Asia, 2016), 17.
36
Mushera Ambaras Khan, Suzana Norlihan Alias, and Hnadi Muhtah, “The
Future of Mandatory Takeover Offer: A Case Study on Malaysia,” in
Proceedings of the Second International Conference on the Future of
ASEAN (ICoFA) 2017, ed. Ahmad Nizan Mat Noor, Zeti Zuryani Mohd
Zakuan, and Suryani Muhamand Nor, vol. 1 (Singapore: Springer Link,
2019), 490.
14 IIUM LAW JOURNAL VOL. 33 (1) 2025
However, differences in legal definitions can pose challenges to
the regulators, as demonstrated by the Indian case of the Jet-Etihad
acquisition.
37
On April 24, 2013, Etihad Airways, an airline based in
the United Arab Emirates, entered into an investment agreement with
Jet Airways, a publicly listed Indian company, to acquire 24% of its
equity shares. The Jet-Etihad transaction required review by both the
Securities and Exchange Board of India (SEBI) and the Competition
Commission of India (CCI).
38
The Ministry of Finance of India sought the opinions and views
of SEBI regarding the Jet-Etihad transaction. In response, SEBI
concluded that, on the surface, the acquisition did not appear to result
in a change of control and, therefore, did not trigger an open offer
requirement under the Indian Takeover Code.
39
However, SEBI
reserved the right to reassess the transaction if other regulators,
particularly the CCI, determined that Etihad had gained control of Jet
under the provisions of the Indian Competition Act 2002.
The CCI exercised its authority to review the Jet-Etihad
acquisition after the merging parties submitted a notification. The CCI
concluded that Etihad had indeed acquired control over Jet. During the
review, the issue of control was pivotal in determining whether the
parties could be exempted from being reviewed. The CCI ultimately
determined that Etihad had gained control of Jet, making the
acquisition subject to its review. Nevertheless, the CCI approved the
transaction, concluding that it did not have an anti-competitive impact
on the market.
40
37
Rajat Sethi, Simran Dhir, and Dhruv Agarwal, “Defining Control: A Study
of The Jet-Etihad Case,” National Law School of India Review 27, no. 2
(2015): 196.
38
Madhavi Singh, “The Competition for India’s Antitrust Jurisdiction:
Competition Commission Versus Sectoral Regulators,” Journal of
Antitrust Enforcement 11, no. 1 (2023): 193.
39
SEBI’s Order: In the Matter of Acquisition of Shares of Jet Airways,
Securities and Exchange Board of India, 2014,
https://www.sebi.gov.in/sebi_data/attachdocs/1399545948533.pdf.
40
CCI’s Order on the Acqusition of Shares of Jet Airways by Etihad,
Competition Commission of India, 2014,
http://164.100.58.95/sites/default/files/C-2013-12-144 Majority.pdf.
Jurisdictional Overlap in Merger Review 15
Consequently, SEBI initiated a review of the Jet-Etihad
acquisition to assess whether the requirement to make an open offer
under the Code of Takeovers had been triggered. SEBI ultimately
concluded that Etihad had not acquired "control" over Jet.
41
If the definitions of control in both competition and securities
regulation had exhibited minimal variation, the SEBI would have been
more inclined to initiate the review process promptly, rather than
waiting for other regulatory bodies to first determine control. The
absence of a clear and consistent definition has contributed to
unnecessary delays in the review process, potentially undermining
investor confidence.
42
Moreover, inconsistencies in defining key
regulatory terms may lead investors to question the overall coherence,
transparency, and predictability of the local legal framework.
43
When
regulatory definitions vary significantly across different legal domains,
it can create ambiguity regarding compliance obligations, enforcement
mechanisms, and the extent of regulatory oversight
Information Asymmetry
Asymmetrical information may lead to inefficiencies for regulators in
carrying out their roles, particularly in merger reviews. This issue often
arises in two specific situations, which are incomplete notification to
regulators and selective information submission.
Incomplete Notification to Regulators
The parties to the merger may notify only one regulatory body, such as
the takeover and merger authority, while neglecting to inform another
crucial regulator, like the competition authority. This lack of
communication can severely impair the regulatory process, as
regulators may not have access to all the information necessary to
conduct timely or comprehensive reviews.
41
SEBI’s Order: In the Matter of Acquisition of Shares of Jet Airways
42
Shweta Nimwal, Ekta Nimwal, and Korra Anand Nayak, “CCI vs SEBI: An
Analysis of Overlapping Regimes in India,” Indian Journal of Law and
Legal Research 5, no. 1 (2023): 1.
43
Nimwal, Nimwal, and Nayak, Shweta Nimwal, Ekta Nimwal, and Korra
Anand Nayak, “CCI vs SEBI: An Analysis of Overlapping Regimes in
India,” 1.
16 IIUM LAW JOURNAL VOL. 33 (1) 2025
Without early and adequate intervention, the competition
authority may find itself in a position where it is unable to prevent the
merger or impose the necessary remedial measures, potentially
resulting in irreversible harm to market competition. This issue was
notably evident in the decision in the decision by the Competition and
Consumer Commission of Singapore (CCCS) regarding Uber’s
acquisition of Grab’s shares in Southeast Asia.
44
In this case, the
merging parties did not notify the CCCS for merger review.
Consequently, the Commission initiated a motu proprio review only
after the merger had already been finalised, leaving little room for
effective intervention. The CCCS ultimately determined that the
merger infringed the prohibition on mergers that could have anti-
competitive effects. However, the CCCS was limited to imposing a
directive and a financial penalty, as it was no longer feasible to unwind
the merger.
45
If the merger had been notified at an earlier stage, the
CCCS could have prevented it from being consummated.
Furthermore, delays in the merger review process can result in
the loss of critical evidence that may be necessary for an effective
investigation. A pertinent example of this can be found in the case of
the U.S. Federal Trade Commission's (FTC) review of the merger
between Genzyme and Novazyme.
46
The FTC had decided to close its
investigation on the merger of Genzyme and Novazyme. The FTC's
decision not to challenge this merger was based on evidence of the
merger's lack of anticompetitive effects and synergisation of the
companies realised two years after the merger. If the merger had been
examined before consummation, the FTC would have recommended
44
Notice of Infringement Decision: Sale of Uber’s Southeast Asian Business
to Grab in Consideration of a 27.5% Stake in Grab (No. 500/001/18)
Competition and Consumer Commission of Singapore (Singapore, 2018),
https://www.cccs.gov.sg/-/media/custom/ccs/files/public-register-and-
consultation/public-consultation-items/grab-uber-id-24-sep-
2018/20180924-infringement-decisiongrab-uber-merger--
publiccleanfinal.pdf?la=en&hash=A773B37C629F7CFFDB453D9C45
ADC237B51779A7.
45
Notice of Infringement Decision: Sale of Uber’s Southeast Asian Business
to Grab in Consideration of a 27.5% Stake in Grab (No. 500/001/18),326.
46
Genzyme Corporations’s Acquisition of Novazyme Pharmaceuticals Inc.
(File No. 021-0026), Federal Trade Commission, accessed November
28,2023,https://www.ftc.gov/system/files/documents/public_statements/
418511/harbourgenzymestmt.pdf.
Jurisdictional Overlap in Merger Review 17
against it due to its anti-competitive effect.
47
This case highlights the
critical importance of conducting merger reviews in a timely manner,
ensuring that key evidence is preserved before substantial changes in
market dynamics occur.
Selective Information Submission
In another scenario, the merging parties choose to notify both
regulatory bodies but provide comprehensive and detailed information
exclusively to one authority, while submitting incomplete or
insufficient details to the other.
48
This disparity in the quality and depth
of information provided may hinder the latter authority's ability to
conduct a thorough and effective merger review. Without all the
necessary information, the authority’s ability to evaluate the merger
fully is limited, which could lead to poor regulatory outcomes.
Timeline Conflict
Compliance with regulatory assessments requires all parties to strictly
observe deadlines set by regulatory bodies. Adhering to these timelines
facilitates a smooth transaction process and minimises disruptions that
could hinder its completion. Likewise, regulators must meet their own
evaluation deadlines to prevent uncertainty among investors.
49
The Malaysian Rules on Take-overs, Mergers, and Compulsory
Acquisitions establish a comprehensive framework governing
corporate takeover processes. Appendix 1 of the regulation provides a
detailed breakdown of the takeover timeline, including key phases and
associated deadlines, offering essential guidance for both offeror and
target companies navigating the complexities of the process. Figure 2
illustrates the takeover offer timeline as outlined in Appendix 1, while
47
Andreea Cosnita-Langlais and Jean-Philippe Tropeano, “Ex Post or Ex
Ante? On the Optimal Timing of Merger Control,” HAL Open Science,
no. 22 (2013): 2.
48
Mohd Radhuan Arif Zakaria, “Regulating Cross-Border Take-Overs and
Mergers in Malaysia Post ASEAN Economic Community” (International
Islamic University Malaysia, 2024), 250,
https://studentrepo.iium.edu.my/entities/publication/b1cd4f20-7e66-
4a5e-8f44-9ca1cd1e0a19.
49
Nimwal, Nimwal, and Nayak, “CCI vs SEBI: An Analysis of Overlapping
Regimes in India,” 3.
18 IIUM LAW JOURNAL VOL. 33 (1) 2025
Table 1 explains each stage in more detail, along with the relevant
rules.
Figure 2: Take-over Offer Timeline from Appendix 1 of the Rules on
Take-overs, Mergers, and Compulsory Acquisitions
Up to 21
days from T
D + 60
D + 81
D + 95
D + 21
D + 39
D + 42
D + 46
D + 4 mths
Offer announced (T)
Last date a take-over offer may be accepted by
offeree shareholders
Last date for all other conditions to be met or
waived
Last day to satisfy 90% requirement for CA
Last date for acceptance condition to be met
Last day for posting revised offer
Right to withdraw becomes exercisable
Last date for release of sensitive information
First possible closing date
Independent advice circular posted
Offer document posted (D)
Up to 10
days from D
Jurisdictional Overlap in Merger Review 19
Table 1: Description and Applicable Rules for Each Phase of the Take-over
Offer (Figure 2)
Days
Description
T
The offeror publicly announces its intention to make a
take-over offer. The notice also must be sent to the board
of the target company, the Securities Commission (SC)
and Bursa Malaysia (if either offeror or target is listed in
stock exchange)
D (T+21)
The offer document must be sent to the target company's
board and its shareholders within a period of 21 days from
the announcement date.
D + 10
The appointed independent adviser is required to provide
an independent advisory circular to both the offeree board
and the offeree shareholders.
D + 21
The earliest day a take-over offer can be closed for
acceptance, The offeror must maintain the availability of a
take-over offer for acceptance for a minimum duration of
21 days from the initial posting date of the offer document.
D + 39
After the 39th day from posting the offer document, the
target's board of directors should avoid releasing important
information about trading results, profit or dividend
predictions, and asset valuations.
D + 42
Shareholders who have accepted the offer can withdraw
their acceptance starting 21 days after the initial closing
date of the offer if the offer has not become unconditional
as to acceptances by that time.
D + 46
The offeror must send a written notification of the revised
take-over offer to all offeree shareholders, including those
who have already accepted the initial take-over offer, by
the 46th day from the posting date of the offer document
D + 60
A take-over offer will expire on the 60th day after the offer
document was sent to shareholders if the condition has not
been met by 5:00 PM on that day.
D + 81
All conditions must be met no later than 21 days after the
60th day following the dispatch of the offer document to
the target company's shareholders
20 IIUM LAW JOURNAL VOL. 33 (1) 2025
D + 95
The target company’s shareholders have the option to
accept the take-over offer from the day the offer document
is sent until the closing of the take-over offer. However,
this period must not exceed 95 days from the offer
document's dispatch
D + 4
months
The final day for the offeror to make compulsory
acquisition, if the offeror has obtained acceptances for at
least nine-tenths of the nominal value of the offer shares.
Meanwhile, MyCC is mandated to complete merger assessments
within 120 days to evaluate potential anti-competitive effects.
50
Its
review process consists of two phases: Phase 1 is a preliminary review
lasting 40 working days, which begins upon submission of a complete
application, and mergers without significant competition concerns are
approved at this stage.
51
If concerns remain, Phase 2 follows with an
extended 80-working-day review involving a detailed analysis of the
merger’s implications.
52
Figure 3 visually summarises this process.
50
Salient Points of the Proposed Amendments to the Competition Act 2010
(Act 712), 14.
51
Consultation Paper on the Proposed Amendment to the Competition Act
2010 (Act 712), 23.
52
Consultation Paper on the Proposed Amendment to the Competition Act
2010 (Act 712), 23.
Jurisdictional Overlap in Merger Review 21
Figure 3: MyCC Merger Assessment Timeline
TIMELINE FOR THE ASSESSMENT OF ANTICIPATED MERGERS THAT ARE MANDATORILY
NOTIFIED TO THE MyCC
Mandatory Notification Of
The Anticipated Merger To
MyCC Before The
Anticipated Merger Is
Consummated
40 Working Days
80 Working Days
Phase 1 Review Period
Phase 2 Review Period
In depth assessment to determine if an anticipated merger, if
consummated will cause SLC effect in the market
Anticipated Merger
Transaction Exceed the
Threshold
Transaction
Cleared
Enterprises can consummate
their merger
Merger or anticipated merger that does not exceed the threshold can
voluntarily notify the Commission and will not be subjected to the 120
working days merger assessment period
Transaction
Cleared
Transaction
Blocked
Transaction Cleared with
Commitment
Enterprises can
consummate their merger
Transaction blocked due
to SLC concerns
Enterprises will be
prohibited from
consummating the
anticipated merger
The transaction was approved with a commitment that
addresses the SLC concerns that have been identified
Enterprises can consummate their merger
If necessary
22 IIUM LAW JOURNAL VOL. 33 (1) 2025
However, challenges may arise when delays in one regulatory
body’s review process hinder the parties' ability to meet the timelines
set by another regulatory authority. This situation often occurs when a
regulatory body extends its assessment period due to various factors,
such as the need to collect additional evidence, conduct further market
analysis, or address unforeseen complexities in the case.
53
Such delays
are particularly prevalent in the context of competition regulation,
where the competition authority is required to conduct a
comprehensive assessment. For instance, the competition regulator
must evaluate counterfactual scenarios to determine the likely state of
the market in the absence of the merger, analyse potential barriers to
entry that could affect market competition, and assess the extent of
countervailing buyer power that might mitigate anticompetitive effects.
These factors contribute to the complexity and time-intensive nature of
the competition regulator’s review process.
Consequently, delays in the competition regulator’s assessment
may prevent the parties from complying with the timelines set by the
securities regulator. As a result, the merging parties may face risks such
as penalties for non-compliance, increased transaction costs, or even
the abandonment of the merger.
WAY FORWARD FOR MYCC AND SC
Differences in legal definitions, information asymmetry, and timeline
conflicts may present significant challenges for both merging entities
and regulatory bodies, complicating the process of expediting takeover
and merger transactions. These issues can raise red flags, leading to
unnecessary delays in such transactions.
54
Such delays may, in turn,
create negative perceptions among investors about Malaysia’s appeal
as a destination for cross-border takeover and merger activities.
Harmonising differences in legal definitions remains impractical
due to the varying enforcement objectives of regulatory bodies.
Competition regulators review mergers to assess whether they have an
anti-competitive effect on the market. Under the proposed Section 10B
53
Zakaria, “Regulating Cross-Border Take-Overs and Mergers in Malaysia
Post ASEAN Economic Community,” 253.
54
Sethi, Dhir, and Agarwal, “Defining Control: A Study of The Jet-Etihad
Case,” 196.
Jurisdictional Overlap in Merger Review 23
of the Malaysian Competition Act 2010, "control" refers to having a
decisive influence over another enterprise. This broad definition allows
regulators to scrutinise arrangements that may not involve outright
ownership but still facilitate coordinated anti-competitive behaviour.
In contrast, securities regulators review mergers to ensure that the
interests of minority shareholders in the target company are protected.
"Control" under Section 216 of the Capital Market and Services Act
2007 refers to holding a 33% stake in the target company. This level of
ownership may pose risks to minority shareholders, including squeeze-
outs, unfair related-party transactions, and the dilution of minority
voting power.
However, to address the challenges of information asymmetry
and timeline conflict, this paper proposes that regulatory bodies
establish institutional mechanisms for inter-agency cooperation and
harmonise procedural timelines. This approach is illustrated in Figure
4 below.
Figure 4: Proposed Solutions to Challenges of Overlapping Jurisdiction
Institutional Mechanism for Inter-Agency Cooperation
It is essential to establish best practices for coordination and
cooperation between the MyCC and SC to reduce information
asymmetry and avoid unnecessary delays in merger completion. It is
worth noting that Malaysia established a Special Committee on
Competition for this purpose. This committee comprises various
regulators, including the MyCC, SC, Malaysian Communications and
Multimedia Commission (MCMC), the Energy Commission (EC), the
National Water Services Commission (SPAN), the Central Bank of
Malaysia (BNM), the Intellectual Property Corporation of Malaysia
Information
Asymmetry
Institutional Mechanism
for Inter-Agency
Cooperation
Timeline Conflict
Harmonised Procedural
Timeline
24 IIUM LAW JOURNAL VOL. 33 (1) 2025
(MyIPO), the Companies Commission of Malaysia (SSM), and the
Malaysian Aviation Commission (MAVCOM).
55
This Special Committee functions as a collaborative platform
where key regulators from various sectors across the country come
together to discuss and address competition-related issues. It plays a
crucial role in monitoring market developments, identifying
challenges, and formulating strategies to enhance fair competition.
Furthermore, the committee seeks to establish greater alignment and
consistency among competition-related provisions within sector-
specific legislation. By fostering regulatory harmonisation, the
committee aims to create a more predictable and efficient legal
framework that benefits businesses, consumers, and the overall market
ecosystem.
56
While Malaysia has already established such a committee,
examining the structure and collaborative practices between
Singapore’s Competition and Consumer Commission (CCCS) and the
Monetary Authority of Singapore (MAS) could offer valuable insight.
One of the key cooperation platforms established is the Community
of Practice for Competition and Economic Regulations
(COPCOMER).
57
Since its inception in 2013, COPCOMER has served
as an inter-agency forum where the CCCS, sector-specific competition
regulators, and various government entities come together to share
insights, best practices, and experiences related to competition and
regulatory matters. This platform is designed to promote the
development of effective regulatory and competition policies, drawing
on both local expertise and international standards. MAS is one of the
government agencies that actively supports and participates in
COPCOMER's collaborative initiatives.
55
News Release: First Special Commitee Meeting on Competition on Post
Pandemic, Malaysian Competition Commission, accessed February 22,
2024,https://www.mycc.gov.my/sites/default/files/pdf/newsroom/NEWS
Release - First Special Committee Meeting On Competition Post
Pandemic.pdf.
56
News Release: First Special Commitee Meeting on Competition on Post
Pandemic
57
Zakaria, “Regulating Cross-Border Take-Overs and Mergers in Malaysia
Post ASEAN Economic Community,” 292.
Jurisdictional Overlap in Merger Review 25
The CCCS takes the lead in organising regular activities under
COPCOMER, which include:
i. Annual Regulators' Luncheons or Teas: These events bring
together senior representatives to discuss current and emerging
competition and regulatory challenges facing Singapore.
ii. Half-day Seminars: Focused sessions aimed at sharing insights
and experiences on contemporary competition and regulatory
issues in Singapore.
iii. Periodic Newsletters: Distributed to raise awareness of key
global developments in competition and regulatory matters.
iv. Specialised Training Sessions: Tailored programs designed to
equip participants with the technical knowledge and skills
needed for policy analysis and assessments in competition and
regulatory areas.
58
Cross-training opportunities provide another valuable platform
for collaboration. In 2017, the Competition and Consumer Commission
of Singapore (CCCS) assigned a senior staff member to undertake an
extended placement at the Monetary Authority of Singapore (MAS),
offering them direct exposure to financial sector issues. These
initiatives foster a deeper mutual understanding and appreciation of
competition and regulatory perspectives between the staff of both
agencies.
59
The strong collaboration between CCCS and MAS is also
reflected at the highest levels of CCCS's organisational structure. Since
its establishment in 2006, the CCCS board, consisting of the Chairman
and Commission Members, has consistently included a representative
from MAS.
60
58
“Working Party No. 2 on Competition and Regulation: Co-Operation
between Competition Agencies and Regulators in the Financial Sector -
Note by Singapore,” Organisation for Economic Co-operation and
Development (OECD), 2017,
https://one.oecd.org/document/DAF/COMP/WP2/WD(2017)25/en/pdf.
59
Zakaria, “Regulating Cross-Border Take-Overs and Mergers in Malaysia
Post ASEAN Economic Community,” 294.
60
Working Party No. 2 on Competition and Regulation: Co-Operation between
Competition Agencies and Regulators in the Financial Sector - Note by
Singapore.
26 IIUM LAW JOURNAL VOL. 33 (1) 2025
Given that sector regulators like MAS possess a deeper
understanding of their respective industries and associated policies, it
is crucial for CCCS to collaborate closely with them to assess the
competitive impacts of mergers effectively.
61
In cases where mergers
fall within MAS's purview, CCCS must consider MAS's policy
priorities to provide informed advice that supports MAS's overarching
objectives while addressing potential competition concerns. To this
end, CCCS and MAS engage with one another early in the merger
assessment process and maintain open communication channels to
facilitate the exchange of perspectives between the agencies.
62
Harmonisation of Procedural Timelines
As discussed above, one of the key challenges in overlapping
jurisdictions between merger regulators is the conflict of timelines for
deal completion. This raises important questions, such as: What
happens to the SC’s review timeline if there is a delay in the MyCC’s
review process? Could a delay by MyCC potentially stall SC’s review?
To address this issue, it is crucial to establish a clear and coordinated
timeline outlining the interaction between MyCC and SC. This timeline
should be incorporated into the SC's Rules on Takeovers, Mergers, and
Compulsory Acquisitions to provide investors with greater clarity and
ensure that takeover transactions proceed without unnecessary delays.
A comparable framework could be observed in Appendix 3 of
the Singapore Code of Takeovers and Mergers, which details the
procedures for mergers, including the interaction between MAS and
CCCS in merger assessments.
63
Under this framework, the offeror is
given the option to either include or exclude a pre-condition in a
takeover offer. The pre-condition refers to CCCS clearance, which
61
Zakaria, “Regulating Cross-Border Take-Overs and Mergers in Malaysia
Post ASEAN Economic Community,” 295.
62
Working Party No. 2 on Competition and Regulation: Co-Operation between
Competition Agencies and Regulators in the Financial Sector - Note by
Singapore.
63
The Singapore Code on Take-Overs and Mergers,Monetary Authority of
Singapore, 2019, https://www.mas.gov.sg/-
/media/mas/resource/sic/the_singapore_code_on_take_overs_and_merge
r_24-january-2019.pdf.
Jurisdictional Overlap in Merger Review 27
determines whether the offer may proceed. This flexibility aligns with
CCCS’s voluntary notification system.
If the offeror opts to include the pre-condition, the takeover offer
will only commence after CCCS clearance is obtained. This approach
ensures that the timelines of MAS and CCCS do not overlap, thereby
avoiding potential delays in the review process. If the offeror does not
incorporate the pre-condition into the mandatory takeover offer, the
process must be halted if CCCS proceeds to a Phase 2 Review or issues
an order prohibiting the offeror from acquiring voting rights in the
target company.
64
At this point, the mandatory takeover offer lapses.
However, the obligation to make a mandatory offer under the
Singapore Code of Take-overs and Mergers remains in effect. Should
CCCS issue a favourable decision, the mandatory offer must be
reinstated as soon as practicable, on the same terms and at a price no
less than the original offer.
Conversely, if CCCS issues an unfavourable decision following
the Phase 2 Review, the mandatory takeover obligation lapses. In such
cases, CCCS will issue an order requiring the offeror or acquirer to
reduce their voting rights in the target company to less than 30%, or to
a level below the 1% acquisition limit within six months prior to
incurring the mandatory offer obligation.
65
Similarly, a voluntary
takeover offer will lapse if CCCS delivers an unfavourable decision at
the conclusion of the Phase 2 Review.
66
In the event of a delay in the Phase 1 review, the Council may
consider extending the offer timeline by designating the day following
CCCS’s announcement of the Phase 1 review decision as the new "Day
39," with corresponding adjustments to the Final Day Rule.
67
Figure 5
below summarises the interplay between CCCS and MAS in merger
procedure.
64
The Singapore Code on Take-Overs and Mergers, 197.
65
The Singapore Code on Take-Overs and Mergers, 197.
66
The Singapore Code on Take-Overs and Mergers, 197.
67
The Singapore Code on Take-Overs and Mergers, 197.
28 IIUM LAW JOURNAL VOL. 33 (1) 2025
Figure 5: The Interplay between MAS and CCCS in Merger Procedure
Regulatory authorities must ensure they have the capacity to
complete their assessments within the timeframes outlined in the
relevant regulations. However, if one regulatory body faces challenges
in meeting these deadlines, it is its responsibility to promptly notify the
other regulatory body about the delay. For example, if the competition
regulatory body needs additional time to obtain relevant information
from the merging parties, it should inform the takeover regulatory
authority. This would allow the takeover authority to adjust the
compliance deadline for the merging parties accordingly.
Jurisdictional Overlap in Merger Review 29
CONCLUSION
The introduction of merger control provisions through the proposed
amendment to Malaysia’s Competition Act 2010 represents a
significant advancement in the nation’s efforts to promote equitable
market competition. This reform aligns Malaysia’s regulatory
framework with international standards, curbing the risk of undue
market dominance by large corporations. However, this progress
introduces a potential challenge: overlapping oversight responsibilities
between the MyCC and SC, which may result in regulatory ambiguity,
procedural inefficiencies, and duplication of efforts if not
systematically addressed.
This study adopts a dual-method approach, combining doctrinal
analysis of Malaysia’s legislative framework with comparative insights
from other jurisdictions. Drawing on these comparative examples, the
study proposes two key reforms to strengthen coordination between the
MyCC and SC: (1) institutional mechanisms for inter-agency
cooperation, and (2) harmonisation of procedural timelines.
These recommendations aim to streamline merger review
processes, enhancing efficiency and predictability without diluting
safeguards against anti-competitive practices. By minimising delays,
Malaysia can foster investor confidence, ensuring mergers are neither
obstructed by regulatory inefficiencies nor permitted to create harmful
monopolies. Achieving this balance is essential to cultivating a
regulatory environment that concurrently promotes fair competition
and sustainable economic growth.
30 IIUM LAW JOURNAL VOL. 33 (1) 2025
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33(1) 2025 IIUMLJ 35 - 64
The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License
REFORMING SOCIAL SECURITY PROTECTION FOR
PLATFORM WORKERS IN MALAYSIA’S DIGITAL
LABOUR PLATFORMS
Siti Suraya Abd Razak
Siti Fazilah Abdul Shukor
ABSTRACT
Digital labour platforms in Malaysia have seen rapid growth, providing
flexible employment options for workers across sectors. However,
platform workers lack social security protection while performing their
work due to their informal employment status. The current study
explores the existing regulatory framework for social security protection
in Malaysia and the issues faced by platform workers. It also highlights
improvements that should be made to the Employment Act 1955 and the
Employee Social Security Act 1969. The study employs qualitative
method, in the form of semi-structured interviews conducted with
platform workers and relevant authorities, in order to get their views in-
depth on issues surrounding social security protection in digital labour
platforms. The findings reveal that platform workers are susceptible to
work-related injuries without appropriate compensation and retirement
benefits due to gaps in the current legal framework. This study provides
valuable insights for policymakers in devising social security protection
for platform workers. The paper recommends the inclusion of ‘platform
worker’ and ‘gig worker’ as employees under section 2 of the
Employment Act 1955.
Senior Lecturer, Faculty of Management, Universiti Teknologi Malaysia,
81310 Johor Bahru, Johor, Malaysia, E-mail: sitisuraya@utm.my
(Corresponding Author).
Assistant Professor,Teh Hong Piow Faculty of Business and Finance,
Universiti Tunku Abdul Rahman, Jalan Universiti, Bandar Barat,31900
Kampar, Perak, Malaysia, E-mail: sitifazilah@utar.edu.my
[Received: 29 September 2024, Accepted: 6 May 2025, Published: 28 May 2025]
36 IIUM LAW JOURNAL VOL. 33 (1) 2025
Keywords: Social Security, Digital labour platform, Digital economy,
Platform workers, Gig workers, Occupational Safety.
MEREFORMASI PERLINDUNGAN KESELAMATAN
SOSIAL UNTUK PEKERJA PLATFORM DI PLATFORM
PEKERJAAN DIGITAL DI MALAYSIA
ABSTRAK
Platform pekerjaan digital di Malaysia menunjukkan pertumbuhan
pesat, serta menyediakan pilihan pekerjaan yang fleksibel kepada
pekerja merentas sektor. Walau bagaimanapun, pekerja platform tidak
mendapat sebarang perlindungan keselamatan sosial semasa
melaksanakan pekerjaan, disebabkan oleh status pekerjaan yang tidak
formal. Kajian ini meneroka rangka perundangan undang-undang
perlindungan keselamatan sosial sedia ada di Malaysia dan isu yang
dihadapi oleh pekerja platform. Kajian ini juga mengetengahkan
penambahbaikan yang perlu dilaksanakan terhadap Akta Pekerjaan 1955
dan Akta Keselamatan Sosial Pekerja 1969 Kajian ini menggunakan
kaedah kualitatif dalam bentuk temu bual separa berstruktur dengan
pekerja platform dan kementerian untuk mendapatkan pandangan
mereka yang mendalam tentang isu-isu berkaitan perlindungan
keselamatan sosial untuk pekerja platform. Kajian ini mendapati bahawa
pekerja platform terdedah kepada kecederaan semasa bekerja tanpa
mendapat pampasan, serta bekerja tanpa pelan persaraan dan tidak
mendapat faedah yang sewajarnya kerana kekurangan perlindungan
keselamatan sosial dalam rangka kerja perundangan sedia ada. Kajian ini
memberikan memberi input yang baik kepada penggubal dasar dalam
menyediakan perlindungan keselamatan sosial untuk pekerja platform.
Kertas ini mencadangkan agar 'pekerja platform' dan 'pekerja gig'
dikategorikan sebagai pekerja di bawah seksyen 2 Akta Kerja 1955.
Kata Kunci: Keselamatan Sosial, Platform Pekerjaan Digital, Ekonomi
Digital, Pekerja Platform, Pekerja Gig, Keselamatan Pekerjaan.
Reforming Social Security Proection for Platform Workers 37
INTRODUCTION
In the age of digital transformation, information and communication
technology has led to changes in various industries and businesses.
This phenomenon has grown rapidly and led to the rise of the digital
economy in various parts of the world. The digital economy has
transformed how individuals work, providing flexible employment
opportunities across sectors. Malaysia has experienced promising
growth in the digital labour platform with the emergence of various
digital platforms such as Grab, InDrive, AirAsia Ride Driver, MyRide,
EzCab, Grabfood, Foodpanda, ShopeeFood, Bekal, Bungkusit,
Shoppe, Lazada, Freelancer.com, Upwork, Fiver and many more. The
digital labour platform provides flexible work arrangements, enabling
workers to decide how they complete their tasks, unlike conventional
employment.
This adaptability opens job opportunities for vulnerable groups
such as disabled individuals, young people, and women. The digital
labour platform seems to be on the rise with the demand and supply of
the present labour market.
1
According to the Malaysian Centre for the
Fourth Industrial Revolution (4IP Centre) study, around 19% of
platform workers plan to work on platforms for the long term.
2
Additionally, it is reported that 80% of platform workers in Malaysia
are 25 years old and above, with a large segment in the 25 to 34 age
group, and 60% of them have a diploma or higher qualification.
3
The rise of digital labour platforms in the Malaysian
employment landscape comes with significant challenges. Platform
workers struggle with labour rights issues such as inconsistent wages
1
Geoffrey Williams, “Don’t Kill the Gig Economy,” Free Malaysia Today,
accessed February 3, 2024, September 18, 2024,
https://www.freemalaysiatoday.com/category/opinion/2024/02/03/dont-
kill-the-gig-economy/
2
S. Joan Santani, “19% of Gig Workers Plan to Make it a Long-Term Career
– Study,” New Straits Times, accessed June 20, 2024, September 18, 2024,
https://www.nst.com.my/business/corporate/2024/06/1066123/19-pct-
gig-workers-plan-make-it%C2%A0-long-term-career-study%C2%A0
3
Santani, “19% of Gig Workers Plan”
38 IIUM LAW JOURNAL VOL. 33 (1) 2025
and lack of job security.
4
Platform workers receive wages based on the
number of units they produce or tasks they perform as per the piece-
rate system
5
.This payment system can increase efficiency and
productivity, but it also may take a toll on their health.
6
More
importantly, platform workers are disqualified from claiming any
compensation and benefits from their platform providers in case of
injuries or deaths.
P-hailing
7
riders and e-hailing
8
drivers are more vulnerable to
accidents than other road users because they are pressured to meet tight
deadlines, deliver orders within specific periods, and earn bonuses
based on their delivery speed. There are a lot of fatalities and injuries
among e-hailing drivers and p-hailing riders. Malaysia has the highest
rate of road fatalities, and 50% contributed by motorcyclists.
9
Factors
that lead to road or traffic accidents such as riding dangerously or
recklessly, road conditions, and crashes resulting from other vehicles.
10
Moreover, the motorcyclists are weaving in and out of traffic,
disregarding traffic signals, exceeding speed limits, displaying a
reckless disregard for safety, and even neglecting their helmet safety.
11
Inexperienced riders, persons working extended hours or covering
4
Nurfarahin Harun, et al.,“An Experimental Measure of Malaysia’s Gig
Workers Using Labor Force survey,” Statistical Journal of the IAOS 36(4)
(2020): 969–977, accessed 25 September,2024.
5
Shamzaeffa Samsudin, et al., “Exploring Health Status of Gig Workers:
Advancing Social Protection Initiative”, (Paper presented at 9th Annual
ECOFI Symposium 2023, Malaysia, November 9, 2023).
6
Mary E. Davis and Eric Hoyt, “A Longitudinal Study of Piece Rate and
Health: Evidence and Implications for Workers in the US Gig Economy,”
Public Health 180 (2020): 1-9, accessed 25 September,2024.
7
P-hailing refers to the delivery of food, drink and parcels using an online in-
order app.
8
E-hailing or electronic hailing refers to service provided to book public
transport services through electronic applications
9
World Health Organisation. (2023). Global Status Report on Road Safety.
WHO. https://www.who.int/publications/i/item/9789240086517
10
Arafat, Md Eaysir, Grégoire S. Larue, Sebastien Demmel, Andry
Rakotonirainy, and Sepehr Ghasemi Dehkordi. "Evaluating interventions
for phone distracted pedestrians in a virtual reality environment."
Transportation research part F: traffic psychology and behaviour 98
(2023): 354-367.
11
Yesuiah, “Urgent Action Needed”
Reforming Social Security Proection for Platform Workers 39
greater distances, and those dependent on p-hailing as their sole
revenue source, had significantly elevated levels of these hazardous
practices.
12
The government has taken appropriate steps to reduce road
accidents in Malaysia, but the number keeps increasing. Ministry of
Transport mentioned that 6,443 people died in road accidents in 2023
and two-thirds or 4,880 involved motorcyclists.
13
P-hailing riders
prefer to use motorcycles as it is convenient and cheap in fuel
consumption.
14
According to the Malaysian P-Hailing Riders
Association, an average of three to four road accidents are reported a
week involving p-hailing riders in the country due to fatigue.
15
Their
informal employment status denies them the right to claim
compensation from platform providers, worsening their situation.
Thus, an immediate reformation must be done to the existing social
security protection regulatory framework in the digital labour platform.
This effort is important to pave the way for Malaysia in becoming the
regional lead in the digital economy and to achieve inclusive,
responsible and sustainable socioeconomic development as stated in
MyDIGITAL.
16
One of the identified key thrusts in MyDIGITAL is to
build agile and competent digital talent through ensuring gig workers
are protected in terms of their social protection and rights at the
workplace.
This study explores the existing social security protection legal
framework in Malaysia and the issues faced by platform workers in
claiming social security protection from the platform providers.
Existing research on social security has predominantly focused on
traditional employment contexts, leaving knowledge gap concerning
12
Abdullah, Muhammad Safizal, Adi Anuar Azmin, and Muhammad Asyraf
Mohd Kassim. "Risky Riding Behaviours among p-Hailing Riders in
Malaysia: Implications for Business Operations and Workforce Safety in
the Gig Economy." International Journal of Business and
Technopreneurship (IJBT) 15, no. 1 (2025): 51-68.
13
Shamsudin, “Death by Roads,”
14
Junaid Ibrahim, Martin Carlvaho and Terrence Tan, “Over 1,200 Accidents,
112 Deaths Involving Food Delivery Riders Since 2018,” The Star, April
4, 2023, accessed September 18, 2024,
https://www.thestar.com.my/news/nation/2023/04/04/over-1200-
accidents-112-deaths-involving-food-delivery-riders-since-2018
15
Ibrahim, et al., “Over 1,200 Accidents”
16
Malaysia Digital Economy Blueprint, Economic Planning Unit, Prime
Minister’s Department.
40 IIUM LAW JOURNAL VOL. 33 (1) 2025
platform workers. Further research is necessary to understand how
current policies might adapt to ensure comprehensive coverage and
identify practical mechanisms for integrating platform workers into
inclusive social protection systems that address their distinct socio-
economic challenges. It also highlights improvements that should be
made to the Employment Act 1955 to enhance social security
protection for platform workers. The first part of this article explains
the qualitative method employed in this study to reach the research
objectives. Thereafter, it explores the existing literature on the digital
labour platform and social security protection in Malaysia.
Additionally, the article discusses the challenges platform workers face
in claiming social security protection and analyses the current
regulatory framework on social security protection in digital labour
platforms. In the final part of the paper, research objectives of this study
are revisited and improvements to the Employment Act 1955 and the
Employee Social Security Act 1969 suggested. Reforming social
security protection would ensure sustainability of the digital labour
platform ecosystem in Malaysia.
RESEARCH METHODOLOGY
This research adopts a qualitative approach to collect and analyse
descriptive data, exploring individuals' attitudes, beliefs, motivations
and social realities which is suitable to achieve the objective of this
research.
17
Specifically, an in-depth interview is used to explore the
experience of platform workers in claiming social security protection
from platform providers while working digital labour platforms. Four
platform workers working in location-based platforms were
interviewed in this study. Four platform workers are sufficient for this
qualitative study due to data saturation, meaning additional interviews
would yield minimal or no new insights. Additionally, interviews with
the ministry officers and a representative from a government-linked
company were conducted to get their insights on the existing regulatory
framework on social security protection for platform workers and the
17
Aspers Patrick and Ugo, Corte, “What Is Qualitative in Qualitative
Research,” Qualitative Sociology, Springer. 42(2) (2019): 139–160,
accessed 2 September 2024.
Reforming Social Security Proection for Platform Workers 41
way forward. The data collected from the interview were then
transcribed and the discussion was themed using thematic analysis.
Besides, content analysis of the Employment Act 1955 and the
Employees Social Security Act 1969 was adopted to review the
loopholes in the provisions that contributed to the issue of social
security protection for platform workers.
DIGITAL LABOUR PLATFORM
The International Labour Organisation (ILO) has categorised the
digital labour platform into two broad groups, online web-based, where
work is outsourced through an open call to a geographically dispersed
crowd. For example, a person who performs tasks online, remotely, or
in person like freelancing, tutoring, coaching and proofreading and
editing services.
18
The second category of digital labour platforms is
known as location-based platforms. These platforms allocate work to
individuals in a specific geographical area, typically to perform local,
service-oriented tasks such as in the e-hailing and p-hailing sectors.
19
While platform providers refer to business entities that adopt a digital
platform in providing services to customers through the service of
platform workers. In Malaysia, digital labour platforms are dominated
by location-based platforms, constituting 77% of digital labour
platforms registered with the Malaysia Digital Economy Corporation.
20
Workers in digital labour platforms are known as platform workers,
and the terms are interchangeably known as gig workers. This is
because gig workers mostly use digital platforms to perform work. A
gig worker is defined as a person in temporary or freelance work,
18
MyDigital Corporation and Ipsos Malaysia, “What Gig Workers Really
Want: Understanding Gig Workers’ Work and Welfare Preferences in
Malaysia,” A Whitepaper by Malaysia Centre for the Fourth Industrial
Revolution.
19
Digital Labour Platform, International Labour Organisation, accessed
September 19, 2024, https://www.ilo.org/digital-labour-platform#news
20
Ghorpade Yashodhan, et al., “Informal Employment in Malaysia: Trends,
Challenges and Opportunities for Reform” World Bank, Washington, DC.
42 IIUM LAW JOURNAL VOL. 33 (1) 2025
especially an independent contractor engaged on a freelance or on-
demand basis for a job that has uncertainty.
21
Workers prefer to work in the digital labour platform because
of flexibility, supplemental income and accessibility. The digital labour
platform gives autonomy to platform workers to have freedom in
deciding their time and location as well as provides a balance between
work and personal commitments. Besides, it is a source of additional
income to the platform worker’s financial security. It gives
accessibility to platform workers to enter the digital economy without
barriers in terms of education, skills, age, sex, and experiences.
Notably, platform workers are more likely to have higher education
qualifications, with at least a diploma and beyond. The non-location-
based platform workers show a higher prevalence of knowledge-
intensive compared to location-based platform workers.
SOCIAL SECURITY PROTECTION IN MALAYSIA
According to the International Labour Organisation, social security
protection refers to a system of contribution-based for health, pension
and unemployment protection.
22
Social security is a fundamental
human right under the Universal Declaration of Human Rights 1948
and the International Covenant on Economic, Social and Cultural
Rights 1966. Every person is entitled to social security that protects
them from the consequences of life events that can lead to economic
hardship.
23
Social security protection plays an important role in
reducing poverty and inequality in society by providing financial
assistance to vulnerable groups, such as the elderly, disabled
individuals, and low-income families. It also promotes well-being of a
person through benefits like maternity leave and child allowances.
Providing access to medical services for workers without facing
financial difficulties is crucial for maintaining health of a person.
21
Oxford Dictionary, Oxford University Press, accessed September 20, 2024,
https://www.oed.com/search/dictionary/?scope=Entries&q=gig+workers
22
About the Rights to Social Security and Human Rights, United Nations,
accessed September 20, 2024, https://www.ohchr.org/en/social-
security/about-right-social-security-and-human-rights
23
United Nations. “About the Rights”
Reforming Social Security Proection for Platform Workers 43
Additionally, social security protection is important for vulnerable
groups such as persons with disabilities to support their ability to live.
In Malaysia, the Employee Social Security Act 1969 (ESSA) is
the main statute that regulates social security protection for workers. It
provides a comprehensive framework for social security protection for
employees in various contingencies such as sickness, maternity,
disability, and death. ESSA provides benefits to workers under Part V
of the Act which covers occupational disease, temporary or permanent
disability benefits, claim benefits, dependant benefits, funeral benefits,
education benefits, medical benefits and others. Social Security
Organisation (SOCSO) is established to administer two types of social
protection schemes, namely the Employment Injury Scheme and the
Invalidity Scheme.The Employment Injury Scheme protects an
employee against accident or an occupational disease arising out of and
in the course of his employment, while the Invalidity Scheme provides
24-hour coverage to an employee who suffers from invalidity or death
due to any cause and not related to his employment.
24
The protection
under SOCSO gives protection to employed workers, foreign workers,
domestic workers, self-employed workers, and housewives.
Social security protection for platform workers is essential to
ensuring fair labour practices and economic stability in the evolving
digital economy. The establishment of comprehensive social security
systems for platform workers contributes significantly to social equity.
The digital economy must evolve inclusively, providing fair conditions
to all participants regardless of employment structure. The next section
discusses issues confronted by platform workers in claiming social
security protection while working on digital labour platforms.
Ineligibility of Platform Workers for Social Security Protection
Determining employee classifications is important since it determines
the contracting parties' respective roles and the applicability of
common laws or regulations regarding employment.
25
Workers in
24
Definition of Employment Injury Scheme and Invalidity Scheme,
Pertubuhan Keselamatan Malaysia (PERKESO), accessed March 20,
2025 at https://www.perkeso.gov.my/en/
25
Raja Raziff Raja Shaharuddin, et al., “The Concept of Rights and Protection
to Employees: A Comparative Overview,” International Journal of
Islamic Thought 4(1) (2013): 58–64, accessed September 1, 2024.
44 IIUM LAW JOURNAL VOL. 33 (1) 2025
Malaysia can claim for social security protection under the ESSA if
they work under a contract of service with the employer. This can be
observed through the provision under the ESSA which defines an
employee as:
“Any person who is employed for wages under a contract of service
or apprenticeship with an employer, whether the contract is
expressed or implied or is oral or in writing, on or in connection
with the work of an industry to which this Act applies and
(i)who is directly employed by the principal employer on any work of,
or incidental or preliminary to or connected with the work of, the
industry, whether such work is done by the employee on the
premises of the industry or elsewhere;
(ii)who is employed by or through an immediate employer on the
premises of the industry or under the supervision of the principal
employer or his agent on work which is ordinarily part of the work
of the industry or which is preliminary to the work carried on in or
incidental to the purpose of the industry; or
(iii)Whose services are temporarily lent or let on hire to the principal
employer by the person with whom the person whose services are
so lent or let on hire has entered into a contract of service”
26
From the provision, it can be understood that the contract of
service is an important element to be proved. Only employees under
the ESSA shall be insured by the employer.
27
In the case of Liang Jee
Keng v Yik Kee Restaurant Sdn Bhd
28
a worker suffered an injury to his
left arm when it got entangled in a meat mincing machine.
Consequently, he underwent an above-the-shoulder amputation. The
court ruled that he was considered an employee under the ESSA and
the employer is obliged to pay contribution for the employee. This is
because he met the requirements to be considered as an ‘insured
person’ at the time of the accident. In Lian Ann Lorry Transport &
Forwarding Sdn Bhd v Govindasamy
29
, the Federal Court ruled:
“That the duration and nature of an employment, be it temporary or
permanent, is immaterial for the purpose of determining the
existence of a contract of service. As long as there exists a
26
Section 2(5) of the Employee Social Security Act 1969
27
Section 5 of the Employee Social Security Act 1969
28
(2002) 2 Malayan Law Journal 650
29
(1982) 2 Malayan Law Journal 232
Reforming Social Security Proection for Platform Workers 45
relationship of a master and servant or that of an employer and
employee, the law will infer a contract of service existing between
them, notwithstanding the fact that the service or the employment is
intended by the person in the position of master to be temporary or
of a short duration only. And the law will imply the existence of
such relationship where a person is hired by another as an integral
part of the latter’s business.”
According to the case, the most important factor to determine the
eligibility of a person to be insured is for the worker to be under a
contract of service. The length of the contract is immaterial. In the
context of this study, the question further arises of whether a platform
worker is under a contract of service while working on a digital labour
platform. The word ‘contract of service’ is not defined under the ESSA.
However, it is defined under the Employment Act 1955 (EA). The EA
provides basic employment rights for workers under contract of
service.
30
Due to the absence of specific meaning of contract of service
under ESSA, it is proposed that ESSA to be read together with EA since
EA provides for such definition. A contract of service is defined as:
“Any agreement, whether oral or in writing and whether express or
implied, whereby one person agrees to employ another as an
employee and that other agrees to serve his employer as an
employee and includes an apprenticeship contract”.
31
A contract of service creates a relationship between employer
and employee where the employee agrees to provide his services to the
employer on terms of remuneration. In addition, the employee is also
subject to the control and direction of the employer.
32
The employer
cannot change any of the terms and conditions of employment that have
been originally set except with the permission and consent of the
employer. Any terms and conditions that are less favourable than the
relevant provisions under the EA are illegal, null, and void. On the
other hand, a contract for service, also known as a contract for
30
Zuraini Ab Hamid, et al., “Rights of Migrant Workers under Malaysian
Employment Law,” Journal of East Asia International Law 11 (2) (2018):
359–360, accessed September 1, 2024.
31
Section 2 of the Employment Act 1955.
32
Fauziah Mohd Safar, Siti Farhana Hasnudin and Noor Saidatul Natrah
Saaidun, "The Elements of a Genuine Fixed-Term Contract: A Review on
Malaysian Legal Framework." International Journal of Law, Government
and Communication 7 (28) (2022): 263–272.
46 IIUM LAW JOURNAL VOL. 33 (1) 2025
independent work, is an agreement whereby one party hires the
services of the other as an independent contractor, not as its permanent
employee. Unlike a contract of service in which a worker would be
under the close supervision and control of the principal as an employee
would, a contract for service puts the independent contractor under
limited supervision and control. The employer doesn’t have to provide
or pay for the tools, equipment, and materials that the independent
contractor uses, and this person has considerable independence or so-
called autonomy in accomplishing the tasks.
33
Platform workers are not subject to the control and direction of
the platform provider. Platform workers have the freedom to choose
when and where they perform the work by accepting tasks through the
apps. Therefore, platform workers are known as independent
contractors having a contract for service with the platform provider.
34
Consequently, a platform worker is not eligible for social security
protection under the ESSA. This is supported by a recent case involving
e-hailing driver in Malaysia who claims unfair dismissal from the
platform provider. In the case of Loh Guet Ching v. Menteri Sumber
Manusia and Ors
35
the court stated that there is no legal provision in
Malaysia that acknowledges an e-hailing driver as a ‘workman’. In
Malaysia, the relationship between platform workers and platform
providers is governed by contractual terms set by the platform provider,
which primarily protects the provider’s interests. Since platform
workers are generally classified as independent contractors rather than
employees, platform providers are not legally obligated to contribute
to SOCSO or EPF on their behalf.
Physical and Psychological Hazards in Digital Labour Platforms
Platform workers face a range of workplace hazards due to the nature
of their work and the environments they operate in. They are prone to
33
Suhana Saad, et al., “Use of Local Labour in Oil Palm Agriculture,”
International Journal of Academic Research in Business & Social
Sciences 11 (2021):9, accessed August 28, 2024.
34
Siti Suraya Abd Razak, et al., "Young Workers on Digital Platform Work:
A Review of Rights and Protection in Malaysia." (paper presented at the
International Conference on Business and Technology, November 21,
2023) Springer Nature.
35
[2022] Malayan Law Journal Unreported 2503
Reforming Social Security Proection for Platform Workers 47
physical and psychological hazards while working in a digital labour
platform. Platform workers are exposed to physical health issues like
musculoskeletal problems.
36
A study shows that there is a prevalence
of back pain among food delivery riders due to the weight of the
delivery bag and bad posture while riding a motorcycle.
37
Long hours
of working without a break and may cause chronic back pain due to
prolonged periods of sitting, riding a motorcycle and poor posture.
Working in the digital labour platform can lead to overwork and cause
exhaustion among platform workers. Due to unstable income, they are
pressured to meet tight deadlines and maintain ratings for high
payment.
38
Platform workers work in irregular working hours which
may cause sleep disorders and eventually cause other health related
problems and increase the risk of accidents and injury.
Besides, the mental health of platform workers is also affected
due to these scenarios. The absence of a traditional workplace and co-
workers might lead to feelings of loneliness. Platform workers often
face financial instability, job insecurity, and the stress of navigating
digital platforms for tasks. It can lead to anxiety, depression, or burnout
among the platform workers. Besides, the lack of social interaction and
support systems also may cause mental health issues because platform
workers are working remotely and alone. Moreover, study proves that
job insecurity may impede one's thinking and behaviour (Dahl &
Pierce, 2019). Irregular working hours, volatility in income, and lack
of safety monitoring in the long term may adversely impact the health
and well-being of the platform workers.
39
36
Louzado-Feliciano, Paola, et al., "Characterizing the Health and Safety
Concerns of US Rideshare Drivers: A Qualitative Pilot Study." Workplace
Health & Safety 7 (2022): 310-318, accessed August 28, 2024.
37
Nurul Izzah Abdul Samad, et al., "Prevalence of Back Pain Among Food
Delivery Riders in Kota Bharu, Kelantan: A Preliminary Study," Journal
of Energy and Safety Technology 5 (2022): 52-60, accessed August 28,
2024.
38
Khaizie Sazimah et al., “Policies Improving the Well-Being of Gig Workers
in Malaysia,” Information Management and Business Review 16, 1
(2024): 182-189, accessed August 28, 2024.
39
Samsuddin et al, “Exploring Health Status”
48 IIUM LAW JOURNAL VOL. 33 (1) 2025
Lack of Employment Injury Benefits for Platform Workers
As mentioned in the earlier part of this article, this research has
managed to conduct an in-depth interview with four platform workers
working in a location-based platform. In this part, the focus is given on
the results of the interviews with the respondents about social
protection. Respondent 1 is a female platform worker, shared her
experience where she was involved with an accident while on her way
to the customer’s house for babysitting service:
“I had a rear-end accident on my way to the customer’s house and
that accident had caused injuries to my arm. I pay the medical
treatment on my own because the company does not cover any
injury compensation.”
Many platform workers are prone to motor vehicle accidents as
they spend a significant amount of time on the road like p-hailing and
e-hailing workers. Studies have found that p-hailing and e-hailing
workers have higher rates of motor vehicle accidents compared to
traditional employees (Bergström, 2018; Burgard, 2019; Ahmad et al.,
2024). According to Respondent 2, a food delivery rider:
“I've been hit by a car during food delivery and suffered a broken
pelvis. I had to stop delivering for 4 months. I had to pay the
treatment cost on my own because I don’t have any insurance. It
was a hard time for me to pay my bills as I was unable to work for
a long time.”
A similar experience was also shared by Respondent 3, a young
platform worker who is also a university student working as food
delivery rider:
“I was once involved in an accident with another food delivery rider.
I suffered fractured shoulder from that accident. Unfortunately, the
rider who hit me ran away. The injury was so severe that I had to
take an emergency leave from my studies. The medical treatment
cost was so high. I had to withdraw first from studying at my
university because I had to undergo series of treatment.”
While according to Respondent 4, a food delivery rider, he has
experienced many accidents. One of the minor accidents he recounted
occurred during a traffic jam at peak hour when a van changed lanes
without giving a signal and hit his vehicle from behind. He suffered
several injuries, and his motorcycle was damaged. Despite all the
misfortunes he has encountered, which include both minor and major
Reforming Social Security Proection for Platform Workers 49
accidents, he has never claimed compensation from the delivery
company. Instead, he claimed directly to the other party in the accident.
It can be observed that all respondents experienced accidents and
suffered injuries while working as platform workers. All respondents
also bear the cost of medical treatment from their own pocket due to
the lack of insurance protection from the platform provider.
In some instances, some platform providers provide their own
insurance protection for its workers, this can be supported through a
statement by Respondent 4:
“The company does provide insurance protection for its employees,
known as Group Personal Accident insurance. This program offers
free, exclusive insurance for drivers to ensure they are protected
while working. I am aware of this protection and that the coverage
is automatically provided during the online sign-up process on the
app, with no additional documentation required.”
However, the platform workers choose not to claim from the
platform provider due to its lengthy and complicated process. The
procedure involves going to the nearest healthcare centre. Then, the
complainant needs to lodge a police report and to the company support
team. After making a report, injured riders need to provide all the
necessary documents as evidence in order to receive the compensation,
and all the claim reports must be submitted no later than 30 days after
the accident occurred. Only then will they have to wait for claim
approval to finally receive compensation.
According to Respondent 3:
“There are indeed many riders who do not claim compensation
because of its tedious and complicated process. Many riders do not
have enough money and resources to pay for those costs in advance,
so they mostly decide not to.”
“We really hope that the process of claiming compensation would
be faster because most riders do not have enough money of their
own to cover all those costs, especially the hospital bills. The
process could be immediately settled without much hustle, so that
all the riders who experience accidents while working, whether just
small or huge injuries, will be able to claim their well-deserved
compensation to cover all the costs.”
The complicated and time-consuming insurance claims process
are the barrier in compensation claims for platform workers. By
50 IIUM LAW JOURNAL VOL. 33 (1) 2025
simplifying the process, it could assist the platform worker to claim
compensation.
NATIONAL INITIATIVES
The government's initiatives are important to provide a sustainable and
decent work environment in the digital labour platform. In 2017, the
Malaysian government introduced the Self-Employment Social
Security Scheme (SKSPS), administered by the SOCSO. It provides a
social security protection to self-employed individuals, including
platform workers. SKSPS provides medical benefits, permanent
disability benefits and corpse management benefits, among others.
40
SKSPS, established under the Self-Employment Social Security Act
2017 offers medical, temporary and permanent disablement, and
dependents’ benefits, which the government covers 90% of the
contribution costs, with the remaining 10% funded by companies.
41
Grab’s participation in the SKSPS programme was laudable as it paid
a 10% contribution for its 180,000 drivers and delivery partners, a
move he encouraged other platforms to emulate.
42
According to Dato’
Sri Dr Mohammed Azman Aziz Mohammed, Group Chief Executive
Officer of SOCSO, “through the collaboration with Grab, SOCSO not
only aims to increase social security coverage to Grab partners and
their family, but also raise awareness on prevention, safety, and health
at work”.
43
Platform workers can voluntarily contribute to this scheme,
which provides coverage for accidents or injuries incurred during
work, allowing platform workers to contribute to limited insurance
40
Saimah et al., “Policies”
41
FMT Reporters, “Malaysia Mulls Automatic Social Security Registration for
Gig Workers Targets One Million Registrations By Year-End,” Free
Malaysia Today, accessed September 18, 2024, https://hr.asia/top-
news/malaysia/malaysia-mulls-automatic-social-security-registration-
for-gig-workers-targets-one-million-registration-by-year-end/
42
FMT Reporters, “Malaysia Mulls”
43
Grab Malaysia extends partnership with PERKESO to support top partners’
self-contributions, Grab Malaysia, last modified November 2, 2023,
https://www.grab.com/my/press/others/grab-malaysia-extends-
partnership-with-perkeso-to-support-top-partners-self-contributions/
Reforming Social Security Proection for Platform Workers 51
coverage voluntarily. SOCSO extends legal protection to platform
workers through the Self-Employment Social Security Scheme under
the Self-Employment Social Security Act 2017. The platform worker
is known as a self-employed person and is eligible for the benefit under
the Act if he/she has registered with the Organisation and has paid the
contributions under the Act. With the contribution made, the platform
workers are entitled to claim benefits arising from a self-employment
injury, or personal injury caused by an accident or an occupational
disease during the self-employment activity carried out by the platform
workers. Moreover, the government has also conducted a program to
support the youth in the gig economy and the young workers are
supported with insurance coverage. The initiatives by the government,
SOCSO and other agencies give benefits to platform workers for the
long term. A study shows that young platform workers are willing to
contribute a certain percentage of their income toward social protection
contributions, indicating their interest in financial security and social
protection.
44
According to Respondent 6, a ministry official:
“We have launched a program in 2021 to support youth in gig
economy. Young platform workers that joined our program will be
protected under insurance while they work in the digital labour
platform.”
Apart from that, platform workers often face unstable and
unpredictable incomes due to the temporary and on-demand nature of
their work, leading to financial insecurity. Platform workers live on a
daily income without the ability to save for future needs or
emergencies. This financial insecurity can lead to debt, difficulty
meeting basic needs and long-term poverty. Thus, the Malaysian
government has initiated voluntary contributions of i-Saraan through
the EPF, which can enjoy the benefit of full-time KWSP.
45
This
initiative is to encourage platform workers to save and accumulate
funds. It also provides increasing tax relief for contributions up to
RM4,000. In addition, platform workers could make contributions to
private retirement schemes focused on savings and investment by one
voluntary effort. This scheme is applicable for both employed and self-
employed, and platform workers fall under the categories of self-
44
Abd Razak et al., Young Workers”
45
Saimah, et al., “Policies”
52 IIUM LAW JOURNAL VOL. 33 (1) 2025
employed. This scheme is supplemented for retirement savings with a
well-structured and regulated environment.
However, the participation of platform workers remains low due
to a lack of awareness, financial constraints, and the voluntary nature
of these schemes. Despite the subsidies provided by the government to
enhance social security protection for platform workers, yet the
schemes are focused on self-contribution which makes the workers
reluctant to contribute. In the long term, the social security scheme
could be stagnant because of platform workers' myopia or lack of
information.
46
Platform workers should be aware that social security protection
which includes savings, insurance, and retirement plans, are essential
for safeguarding individuals and families from unforeseen hardships
and fostering long-term financial sustainability. Platform workers
should take the opportunity provided by the government and make a
self-contribution for their better lives in the future. Those initiatives are
initiated by the government to safeguard their financial vulnerability
due to job insecurity and income in the long term. Thus, individuals
need to have knowledge of financial literacy towards their financial
security to address financial challenges in the long term. Studies have
proven that platform workers with high financial literacy, are
significantly more likely to be willing to pay for social protection
schemes compared to low financially literate platform workers.
47
Platform workers with a strong understanding of financial matters are
much more inclined to contribute to social protection programmes.
48
An initiative to tackle the well-being of platform workers should
also be taken to ensure that they are equipped with the skills and
knowledge needed to succeed in the digital labour platform.
49
Most
46
Salmie Jemon, et al., “A Knight Without Shining Armour: The Paradox of
Being a Gig Worker in Malaysia”, International Journal of Academic
Research in Business and Social Sciences 11(11) (2021): 262 – 269,
accessed September 26, 2024.
47
Ng Jia Jia, et al., “Examining Youth’s Willingness to Pay For Social
Protection Schemes: Evidence From Malaysian Economy,” (Paper
presented at 9th Annual ECOFI Symposium 2023, Malaysia, November
9, 2023)
48
J.J. Ng, et al., “Examining Youth”
49
Saimah, et al., “Policies”
Reforming Social Security Proection for Platform Workers 53
importantly, to promote prevention measures on work safety and health
of e-hailing drivers and p-hailing riders. The Department of
Occupational and Safety and Health (DOSH) has promoted prevention
and health measures through the "Vision Zero" campaign, which is the
development of modules or additional promotion guides for work
safety and health for platform workers.
50
A mandatory training about
health and safety, as well as to have basic education and awareness
pertaining to workplace hazards are vital for platform workers.
IMPROVING THE SOCIAL SECURITY PROTECTION FOR
PLATFORM WORKERS
From the above discussion, it can be observed that the emergence of
digital labour platforms has created new opportunities for income
generation. However, the precariousness of platform workers,
especially regarding social security protection, has stunted the
sustainability of the ecosystem. This section revisits the research
objectives of the study. The first objective of this study was to explore
the existing social security protection legislation in Malaysia. This
study finds that the Employee Social Security Act 1969 (ESSA) is the
main statute that regulates social security protection for workers,
however, the ESSA will only cover workers under a contract of service.
Due to the absence of a specific meaning of contract of service under
the ESSA, it is assumed that the ESSA to be read together with the EA
since the EA provides definition on contract of service. Unfortunately,
the employment contract entered between platform worker and
platform provider is not considered as contract of service due to its
criteria that lacks control element by the employer. Thus, due to this
situation platform worker is not eligible for social security protection
under the ESSA.
Additionally, the second objective of this study was to explore
issues faced by platform workers in claiming social security protection.
This study finds that the main issues confronted by the platform
workers are firstly, on their employment status as independent
contractors which disqualified them from claiming for employment
rights, Secondly, on the issue of physical and psychological hazards
faced by them while working on the digital labour platform without
50
Saimah, et al., “Policies”
54 IIUM LAW JOURNAL VOL. 33 (1) 2025
proper compensation for their injuries. These issues have withdrawn
the platform workers interest to work in the digital labour platform.
The third objective of this study was to explore the strategies to
improve the social security protection in Malaysia specifically for
platform workers For a start, it is recommended to categorise ‘platform
worker’ and ‘gig worker’ as an employee under section 2 of the EA.
Categorising a platform worker as an employee will establish an
employee and employer relationship between the platform provider
and the platform worker. It is aimed that their contractual relationship
is defined as a contract of service so that platform workers can enjoy
the basic labour rights under the act. Besides that, the inclusion of the
word platform worker as a category of worker in the Employment Act
1955 will also solve the issue of social security protection coverage for
platform workers. This opinion is supported by Respondent 7, an
officer from a government-linked company which stated that:
“A proper definition of platform workers in the legislation is
important to solve the issue of labour rights and social security
protection of platform workers. The position of platform workers
and the relationship with the platform provider are currently not
clear.”
According to the Human Resource Minister, a new employment
law to protect platform workers is being drafted.
51
The bill comprises
four aspects: definitions, wages and salaries, grievance mechanisms
and social protection. He also mentioned that “a detailed assessment of
establishment and operational costs will be carried out to ensure that
all financial aspects are carefully and comprehensively taken into
account”. The bill was drafted to safeguard the welfare and rights of
platform workers in the developing platform economy. It will also
ensure fair compensation and legal recognition, as well as address
issues faced by platform workers. According to Respondent 5, a
ministry officer, he stated that:
51
Junaid Ibrahim, Martin Carlvaho and Khoo Gek San, “Proposed gig workers
law to be tabled by year-end, says Human Resources Ministry,” The Star,
June 26, 2024, accessed on September 18, 2024,
https://www.thestar.com.my/news/nation/2024/06/26/proposed-gig-
workers-law-to-be-tabled-by-year-end-says-human-resources-ministry
Reforming Social Security Proection for Platform Workers 55
“Flexibility in working is the main attraction for platform workers.
They are not hoping for extensive labour rights protection except for
a stable payment system in the platform. Thus, we have to take into
consideration on this factor when regulating the platform workers
so as not to distort the platform economy and drawing away the
investors.”
The regulations or policies introduced by the government for the
platform economy must take into consideration of the interest of the
platform workers and the investors of the industries. Many countries
have taken steps to reform their regulatory framework on employment
to accommodate the digital labour platform. In New Zealand, the Court
of Appeal has released a landmark judgment that will reform the rights
of platform workers.
52
In an appeal case between Uber and First Union,
the court dealt with the issue of whether Uber drivers are employees of
the Uber companies for the purpose of New Zealand employment law.
Section 6 of the Employment Relations Act 2000 (ERA) requires the
court to determine whether the four Uber drivers were, in reality,
employed by the Uber companies to do work for hire and reward under
a contract of service. The Appeal Court agreed with the decision of the
Employment Court deciding that the Section 6 requirement was met.
The court in its judgment stated that:
“The real nature of the relationship between the four drivers and
Uber was that the drivers were employees of the Uber companies at
times when they were logged into the Uber driver app. They were
not carrying on their own independent transport service businesses
during these periods.”
The court decision has allowed the Uber drivers to claim labour
rights under the ERA from the Uber companies. The court's
interpretation of the word ‘employees’ has extended the employment
rights coverage to platform workers.
In India, the definition of gig workers and platform workers is
included in the newly introduced Code of Social Security 2020 (the
Code).
53
The term gig worker is defined as:
52
Rasier Operations BV, Uber Portier BV, Uber BV, Portier New Zealand
Limited & Rasier New Zealand Limited v E TU Incorporated & First
Union Incorporated [2024] NZCA 403.
53
“New Social Security Measures for Gig and Platform Workers: What You
Need To Know”, Legality Simplified, accessed September 25, 2024,
56 IIUM LAW JOURNAL VOL. 33 (1) 2025
“A person who performs work or participates in a work arrangement
and earns from such activities outside of traditional employer-
employee relationships.”
Platform work is interpreted as:
“A work arrangement outside of a traditional employer employee
relationship in which organisations or individuals use an online
platform to access other organisations or individuals to solve
specific problems or to provide specific services or any such other
activities which may be notified by the Central Government, in
exchange for payment”
While the word platform worker is defined as “a person engaged
in or undertaking platform work.” The inclusion of the words platform
work and platform worker in the Code confers power upon the
government to provide welfare schemes for the platform workers. The
Code aims to provide platform workers with various benefits such as
Life and Disability Cover, Accident Insurance, Health and Maternity
Benefits and Old Age Protection.
54
In Indonesia, there is also an urgent requirement to expand the
regulations to provide access to social security protection for platform
workers.
55
Currently, the status of platform workers in Indonesia is still
unclear and sometimes the relationship is referred to as a partnership
agreement which disqualifies the platform worker from claiming for
social security protection.
56
Apart from that, in Singapore, instead of
inserting platform workers in the existing law, a new employment
https://www.legalitysimplified.com/new-social-security-measures-for-
gig-and-platform-workers-what-you-need-to-
know/#:~:text=The%20Code%20on%20Social%20Security%2C%2020
20%2C%20aims%20to%20provide%20gig,accidents%20that%20occur
%20while%20working.
54
Rudra Srivastava and Aman Gupta “Gig Workers and Platform Workers:
The Code on Social Security 2020”, Sighania & Partners.
55
Pratomo Devanto Shasta, et al., . "Gig Workers In The Digital Era In
Indonesia: Development, Vulnerability And Welfare." In Proceedings of
the 2023 Brawijaya International Conference (BIC 2023), vol. 294, p. 47.
Springer Nature, 2024.
56
Hadiati, Dian, et al., "Legal Relationship Between Platform Service
Providers and Online Transportation Driver as Gig Workers (Platform
Workers)." International Journal of Islamic Education, Research and
Multiculturalism (IJIERM) 5, no. 3 (2023): 751-771.
Reforming Social Security Proection for Platform Workers 57
status of “platform workers” will be created. Through this effort,
Singaporean platform providers will need to provide some basic
benefits for example, pension, compensation for work-related injuries,
medical insurance and collective bargaining right to their workers.
57
Based on the above analysis, it can be observed that New
Zealand, Singapore and India have taken steps to reform their legal
framework on social security to adapt to the ecosystem of the digital
labour platform. New Zealand is taking a judicial approach in
interpreting the contract of service to include the platform workers.
While in India, the legislation has been amended to include platform
workers and gig worker as a type of worker that is eligible to claim for
social security protection similar to other types of employees. Both of
these countries are suitable to be adapted to Malaysia's legal
frameworks as they share similar traits as countries with common law
legal systems.
In Malaysia, currently there is no judicial decision that
interprets platform worker as under a contract of service.
58
The
Malaysian government is introducing a specific law to provide social
security protection for the gig workers which is known as Gig Workers
Bill following the model from Singapore. However, platform providers
stated that with the introduction of the Bill, there is a significant risk
that the proposed law could unintentionally disrupt the gig economy
industry.
59
It is recommended that the EA to include the interpretation
of platform workers and gig workers under Section 2 of the EA so that
platform workers can claim for social security benefits. Reforming the
legislation is vital to adapt with the changing labour market and to
protect platform workers in the digital labour platform landscape.
57
Advisory Committee on Platform Workers. (2022) Strengthening
Protections for Platform Workers. Available from:
https://www.mom.gov.sg/-/media/mom/documents/press-
releases/2022/strengthening-protections-for-platform-workers-report.pdf
58
See the case on Loh Guet Ching v. Menteri Sumber Manusia and Ors
59
FMT Reporters, “Gig Workers Bill needs to be refined, say platforms,”
FMT, February 27, 2025, accessed on 18 March, 2025
https://www.freemalaysiatoday.com/category/nation/2025/02/27/gig-
workers-bill-needs-to-be-refined-say-platforms/
58 IIUM LAW JOURNAL VOL. 33 (1) 2025
CONCLUSION
The rise of the gig economy in Malaysia has brought significant
opportunities for workers, but it has also exposed major gaps in social
security protection. Platform workers, who often operate without the
safety nets enjoyed by traditional employees, face financial instability
and vulnerability in the absence of comprehensive social security
protections. While the government and private sector have taken steps
to address these issues, much more needs to be done. Ensuring the long-
term welfare of platform workers requires introducing mandatory
contributions to social security protection schemes. Besides, the
government may encourage platform providers to voluntarily protect
platform workers in terms of social protection benefits. Social security
protection benefits should expand the coverage to include healthcare
and other form of essential benefits. The policymaker should reform
the regulations with the aim to protect the rights of this growing
segment of the workforce. With the proper regulations and policies,
Malaysia can build a more inclusive and resilient labour market, one
that safeguards the well-being of platform workers in an increasingly
digital economy.
ACKNOWLEDGEMENT
The authors acknowledge the Ministry of Higher Education (MOHE)
under Fundamental Research Grant Scheme (FRGS) grant number
FRGS/1/2023/SSI12/UTM/02/2 for funding this research.
The authors acknowledge the Universiti Teknologi Malaysia, UTM
FR, cost number Q.J130000.3829.23H51 for funding this research.
Reforming Social Security Proection for Platform Workers 59
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33 (1) 2025 IIUMLJ 65 – 102
The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License.
SEEKING CONSENT? THE LEGAL CHALLENGES IN
CONSULTING INDIGENOUS PEOPLES FOR
HYDROELECTRIC DAM PROJECTS
Izawati Wook
Rohaida Nordin
Muhamad Sayuti Hassan
Nur Khalidah Dahlan
ABSTRACT
The consultation process with indigenous communities in large-scale
development projects remains a contested issue, particularly in projects
involving the relocation of the communities and compensation. This
paper examines the challenges in the consultation process in the context
of hydroelectric dam construction, taking the example of the Nenggiri
Dam project in Malaysia which is currently under construction. Through
a doctrinal legal analysis, this study argues that, with the current
Malaysian legal framework recognising the customary land rights of the
indigenous communities in the country, it is a legitimate expectation that
the consultation process observes the principle of Free, Prior, and
Informed Consent (FPIC). This is entailed from the fiduciary duty of the
Associate Professor, Faculty of Syariah and Law Universiti Sains Islam
Malaysia, Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan, Malaysia.
Email: izawati@usim.edu.my (Corresponding Author).
Associate Professor, UKM Faculty of Law, Universiti Kebangsaan
Malaysia 43600, UKM Bangi, Selangor Darul Ehsan, Malaysia.
Email: rohaidanordin@ukm.edu.my
Senior Lecturer, UKM Faculty of Law, Universiti Kebangsaan Malaysia
43600, UKM Bangi, Selangor Darul Ehsan, Malaysia.
Email: sayutihassan@ukm.edu.my
Senior Lecturer, Malaysian and Comparative Law Centre, UKM Faculty
of Law, Universiti Kebangsaan Malaysia 43600, UKM Bangi, Selangor
Darul Ehsan, Malaysia. Email: nurkhalidahdahlan@ukm.edu.my
[Received: 10 March 2025, Accepted: 01 May 2025, Published: 28 May 2025]
66 IIUM LAW JOURNAL VOL. 33 (1) 2025
state authority in protecting indigenous land rights under the legal
framework in Malaysia. The position of FPIC under the international
legal standards, including the United Nations Declaration on the Rights
of Indigenous Peoples (UNDRIP) and other instruments, and its
relevance to the Malaysian legal framework are also discussed. The
paper further highlights gaps in the legal framework, which lacks clear
mechanisms to enforce FPIC as a binding legal obligation. This paper
argues for stronger legal protections and policy reforms to ensure
meaningful participation of indigenous communities in decision-
making. This could be done through formal integration of FPIC into
national legislation, and the establishment of independent oversight
bodies. By addressing these legal and procedural shortcomings,
Malaysia can move towards a more equitable and sustainable approach
in development projects affecting the indigenous peoples.
Keywords: Indigenous Peoples, Social Equity, Free; Prior and Informed
Consent (FPIC), Consultation, Hydroelectric Dam.
KE ARAH PERSETUJUAN? CABARAN UNDANG-UNDANG
DALAM PERUNDINGAN ORANG ASAL BAGI PROJEK
EMPANGAN HIDROELEKTRIK
ABSTRAK
Proses perundingan dengan komuniti orang asal dalam projek
pembangunan berskala besar kekal menjadi isu yang dipertikaikan,
terutamanya dalam projek yang melibatkan penempatan semula
komuniti dan pampasan untuknya. Kertas kerja ini mengkaji cabaran
dalam proses perundingan dalam konteks pembinaan empangan
hidroelektrik, mengambil contoh projek Empangan Nenggiri di Malaysia
yang kini dalam pembinaan. Melalui analisis undang-undang doktrin,
kajian ini berhujah bahawa, dengan rangka kerja perundangan Malaysia
semasa yang mengiktiraf hak tanah adat masyarakat orang asli di negara
ini, adalah jangkaan yang sah bahawa proses perundingan mematuhi
prinsip Izin, Maklum Awal, Bebas dan Telus (IMABT). Ini berpunca
daripada kewajipan fidusiari pihak berkuasa negeri dalam melindungi
hak tanah orang asal di bawah kerangka undang-undang di Malaysia.
Kedudukan IMABT di bawah piawaian undang-undang antarabangsa,
termasuk Deklarasi Pertubuhan Bangsa-Bangsa Bersatu mengenai Hak
Orang Asli dan instrumen lain yang berkenaan, serta perkaitan dengan
kerangka perundangan Malaysia juga dibincangkan. Kertas kerja ini
menyerlahkan jurang dalam kerangka undang-undang sedia ada, yang
tidak mempunyai mekanisme yang jelas untuk menguatkuasakan
The Legal Challenges in Consulting Indigenous Peoples 67
IMABT sebagai kewajipan undang-undang yang mengikat. Makalah ini
mencadangkan agar perlindungan undang-undang yang lebih kukuh dan
pembaharuan dasar perlu dibuat bagi memastikan penyertaan bermakna
komuniti orang asal dalam pembuatan keputusan bagi projek
pembangunan yang memberi kesan besar kepada mereka. Ini boleh
dilakukan melalui penggubalan peruntukan undang-undang yang sesuai
dalam perundangan negara, dan penubuhan badan pengawasan bebas.
Dengan menangani kelemahan undang-undang dan prosedur ini,
Malaysia boleh bergerak ke arah pendekatan yang lebih saksama dan
mapan dalam projek pembangunan yang memberi kesan kepada orang
asal.
Kata Kunci: Orang Asal, Keadilan Sosial, Prinsip Izin, Maklum Awal;
Bebas dan Telus (IMABT), Perundingan, Empangan Hidroelektrik.
INTRODUCTION
The consultation process with indigenous communities in large-scale
development projects has long been a contested issue, including in the
construction of hydroelectric dam projects. While dams contribute to
renewable energy generation, flood mitigation, and water supply, they
often result in severe consequences for indigenous communities,
including relocation, the loss of the communities’ ancestral lands, and
disruption of their socio-economic conditions.
1
Last year, in September
2024, the Ipoh High Court ordered Perak Hydro Renewable Energy
Corporation Sdn Bhd and Conso Hydro RE Sdn Bhd to immediately
cease development and vacate an area designated for a hydroelectric
dam project, which affected the Orang Asli communities from six
villages in Ulu Geruntum, Gopeng, Perak. The court found that the
project, initiated in 2012, infringed upon the ancestral lands of the
communities without their consent, and that state and federal
authorities, including the Perak government and the Department of
1
Rebecca Minardi, The Impacts on Livelihoods and Social Capital from Dam-
Induced Resettlement: A Global Review (Michigan State University,
2019); S Robert Aiken and Colin H Leigh, "Dams and indigenous peoples
in Malaysia: Development, displacement and resettlement," Geografiska
Annaler: Series B, Human Geography 97, no. 1 (2015); Fadzilah Majid
Cooke et al., "The limits of social protection: the case of hydropower dams
and indigenous peoples' land," Asia & the Pacific Policy Studies 4, no. 3
(2017)..
68 IIUM LAW JOURNAL VOL. 33 (1) 2025
Orang Asli Development, had breached their fiduciary duties by
allowing the encroachment.
2
This raises fundamental concerns about the legal protection of
the indigenous peoples, especially the right to self-determination,
which relates to the rights to land that they live in, and the right to
participation in decision-making relating to development and dam
construction.
The protection of the rights of indigenous peoples has been a
primary focus not only under the international legal framework but also
the law at the national level. In Malaysia, the recognition of the rights
of indigenous peoples to their customary land is an established legal
principle. The principle also embodies the principle of fiduciary duty
of the state to the indigenous peoples to protect their interests. As such,
any decision affecting the indigenous peoples’ customary land must be
on the basis of the legal recognition and protection of the communities’
land rights which, among others, requires meaningful consultation with
the affected communities before the decisions are made, with adequate
compensation upon the taking of the land.
At the international level, legal instruments such as the United
Nations Declaration on the Rights of Indigenous Peoples (UNDRIP)
3
and International Labour Organisation (ILO) Conventions concerning
Indigenous and Tribal Peoples in Independent Countries (ILO
Convention No. 169) 1989 (ILO Convention)
4
emphasise the
importance of Free, Prior, and Informed Consent (FPIC) as a
fundamental principle in projects that impact indigenous territories.
The FPIC principle requires that affected communities have the
autonomy to accept or reject development projects affecting their land
and livelihoods. However, many states, including Malaysia, lack a
2
Ivan Loh, "High Court rules in favour of Gopeng Orang Asli group in hydro
dam project case," The Star, 9 September 2024 2024,
https://www.thestar.com.my/news/nation/2024/09/09/high-court-rules-
in-favour-of-gopeng-orang-asli-group-in-hydro-dam-project-case.
3
"United Nations Declaration on the Rights of Indigenous Peoples, GA Res
61/295, UN GAOR, 61st sess, Agenda Item 68, UN Doc A/RES/61/295,
adopted 13 September 2007," (2007).
4
"International Labour Organisation's (ILO) Convention concerning
Indigenous and Tribal Peoples in Independent Countries 1989, opened for
signature 28 June 1989, 1650 UNTS 383 (entered into force 5 September
1991)."
The Legal Challenges in Consulting Indigenous Peoples 69
clear legal framework that enforces FPIC as a binding obligation,
leading to inconsistencies in consultation practices.
This paper examines the challenges in the consultation process
with indigenous peoples in the context of hydroelectric dam
construction, taking the example of the consultation process conducted
involving the Orang Asli community affected by the Nenggiri Dam
project in the state of Kelantan, Malaysia. The Nenggiri hydropower
electric dam is currently under construction, which began in June 2022,
by TNB Power Generation Sdn Bhd (TNB Genco), under the approval
of the Ministry of Energy and Natural Resources (MENR). The project,
which aims to generate hydroelectric power of up to 600GWh of clean
energy annually, to increase renewable energy capacity in the country
upon its completion in 2027. The hydroelectric power plant seeks to
mitigate downstream areas from floods and provide a pure and raw
water supply for irrigation.
RESEARCH METHODOLOGY
This paper is based on a qualitative research method that integrates
legal doctrinal research and empirical perspectives. Doctrinal legal
research is adopted to analyse the position of the relevant law and
policy at both national and international levels. This approach is to
assess the legal position on consultation of the indigenous peoples and
FPIC in such development projects under the Malaysian legal
framework and its international legal obligations. It explores key legal
issues, including the fiduciary duty of the state in protecting indigenous
land rights, and the procedural requirements in consultation to obtain
the FPIC. Doctrinal legal research is a traditional approach in legal
studies that focuses on analysing legal rules and principles. This
method systematically presents the rules governing a specific legal
area, examines their interrelationships, clarifies complex legal issues,
and may offer insights into potential future developments. It also
involves comprehensive background reading to identify primary and
secondary legal sources, followed by the synthesis of relevant issues to
form a preliminary conclusion on the state of the law.
5
5
Terry Hutchinson, Researching and Writing in Law, 3rd ed. (Pyrmont:
Thomson Reuters, 2010).
70 IIUM LAW JOURNAL VOL. 33 (1) 2025
Additionally, the research also conducted two focus group
discussions with the representatives of the affected communities to
capture the opinions and perspectives of the communities involved on
their experience and aspirations in the consultation process. This
complements information obtained from published reports and news.
The significance of this study lies in its focus on the issues facing
indigenous peoples and the impact of development projects on their
lives. It also highlights the importance of adhering to the principles of
FPIC to mitigate the effects on marginalised indigenous communities.
DAM CONSTRUCTION AND ITS IMPACT ON INDIGENOUS
PEOPLES
Dams are undeniably significant in providing clean energy through the
generation of hydropower, water supply, flood mitigation mechanisms,
and offering recreational opportunities. However, large-scale dam
construction projects have historically resulted in adverse effects on
indigenous communities who had been living in the areas and had to
be relocated to other areas. As they have deep cultural, spiritual, and
economic ties to their ancestral lands, the resettlement caused by such
projects often leads to social, economic, and cultural disruptions that
threaten indigenous ways of life.
Hydroelectric projects typically require large tracts of land,
leading to flooding of villages, agricultural fields, and culturally
significant sites. This results in the loss of land tenure and forces
communities to relocate to government-assigned resettlement areas,
which often lack the resources and environmental conditions necessary
for sustaining their traditional livelihoods. For example, the Batang Ai
Dam in Sarawak displaced thousands of Iban people, while the Murum
Dam forced approximately 10,000 Penan and Kenyah people to
relocate, severing their connection to hunting, fishing, and traditional
subsistence farming.
6
Similarly, the Temenggor Dam in Perak
submerged large parts of the Orang Asli Jahai homeland, resulting in
6
Aiken and Leigh, "Dams and indigenous peoples in Malaysia: Development,
displacement and resettlement."
The Legal Challenges in Consulting Indigenous Peoples 71
declining socio-economic conditions, loss of food security, and
disruptions to their traditional knowledge systems.
7
The submersion of sacred sites, burial grounds, and ritual spaces
due to dam construction also results in an irreparable loss of cultural
heritage. Indigenous cultures are deeply tied to land, rivers, and forests,
which serve as sources of spiritual identity, traditional knowledge, and
communal heritage. Many indigenous communities believe that their
spiritual connection to the land is permanent, making displacement not
only a physical loss but also a cultural and identity crisis.
8
This is also
the concern in the case of the Nenggiri Dam which threatens to flood
ancestral burial sites and culturally significant sites such as Gua Cha, a
site with archaeological and spiritual significance to the Temiar Orang
Asli.
9
Besides, resettlement to a new area often leads to economic and
social marginalisation. Many indigenous communities depend on
farming, fishing, and forest resources for their livelihoods. However,
resettlement areas are often unsuitable for agriculture, lack access to
clean water, and are distant from traditional hunting or fishing
grounds.
10
Furthermore, governments and project developers often
7
Ronzi Mohd Yusoff, Sharina Abdul Halim, and Joy Jacqueline Pereira,
"Impak Pembinaan Empangan Temenggor Ke Atas Sosioekonomi
Komuniti Orang Asli Jahai Di Rancangan Pengumpulan Semula Air
Banun, Perak," Asian People Journal (APJ) 5, no. 1 (2022).
8
Andrea Schapper and Frauke Urban, " Large dams, norms and Indigenous
Peoples," Development Policy Review 39 (2021).
9
Humaira’ Aishah and Asmawi Ibrahim, "Land Acquisition of Indigenous
Community Based on Sustainable Strategies for the Construction of the
Hydro-Electric Dam Nenggiri Gua Musang Kelantan," International
Journal of Academic Research in Business and Social Sciences 14, no. 8
(2024),https://kwpublications.com/papers_submitted/11188/landacquisit
ion-of-indigenous-community-based-on-sustainable-strategies-for-the-
construction-of-the-hydro-electric-dam-nenggiri-gua-musang-
kelantan.pdf.; Bernama, "Nenggiri hydroelectric dam: Over 1,000 Orang
Asli affected by construction to be relocated in 2026, says TNB," Malay
Mail, 21 August 2024 2024,
https://www.malaymail.com/news/malaysia/2024/08/21/nenggiri-
hydroelectric-dam-over-1000-orang-asli-affected-by-construction-to-be-
relocated-in-2026-says-tnb/147700.
10
See, e.g., Peter Ho, Nor-Hisham Bin Md Saman, and Heng Zhao,
"Credibility and the Social Function of Property: A Saga of Mega-Dams,
72 IIUM LAW JOURNAL VOL. 33 (1) 2025
promise compensation and alternative livelihood programmes, such as
rubber plantations and cash-based economies. However, these
initiatives frequently fail due to a lack of long-term sustainability,
limited land access, and insufficient job opportunities. For example, the
resettlement of Orang Asli communities after the Temenggor Dam
project resulted in widespread unemployment, school dropouts, and
increased dependence on government aid, as their traditional
knowledge and skills did not align with the imposed economic
system.
11
It has also been reported in many studies that when indigenous
peoples are relocated under government initiatives due to development
projects such as the dam construction or the conversion of land into
large-scale plantations, their socioeconomic status is further
marginalised, and their cultural integrity is compromised.
12
These
communities, once self-sufficient, often become reliant on government
assistance for survival. Several issues have been identified in such
resettlement schemes, including the absence of formal land ownership
recognition for the Orang Asli, inadequate implementation of
development plans, limited opportunities for direct participation in
plantation schemes managed by appointed corporations, lack of job
Eviction, and Privatization, as Told by Displaced Communities in
Malaysia." Land 13, no. 8 (2024): 1207.," Land 13, no. 8 (2024); Yusoff,
Halim, and Pereira, "Impak Pembinaan Empangan Temenggor Ke Atas
Sosioekonomi Komuniti Orang Asli Jahai Di Rancangan Pengumpulan
Semula Air Banun, Perak."
11
Yusoff, Halim, and Pereira, "Impak Pembinaan Empangan Temenggor Ke
Atas Sosioekonomi Komuniti Orang Asli Jahai Di Rancangan
Pengumpulan Semula Air Banun, Perak."
12
Ma'rof Redzuan and Zahid Emby, "Orang Asli: Pembangunan dan Ekologi
Hutan (Orang Asli: Development and Forest Ecology)," in Orang Asli:
Isu, Transformasi dan Cabaran (Orang Asli: Issues, Tranformasi and
Challenges), ed. Ma'rof Redzuan and Sarjit S. Gill (Serdang: Putra
University of Malaysia, 2008); Omar Mustaffa, "Rancangan
Pengumpulan Semula (RPS) Masyarakat Orang Asli: Pencapaian dan
Cabaran (Resettlement Scheme for the Orang Asli Communities:
Achievement and Challenges," in Orang Asli: Isu, Transformasi dan
Cabaran (Orang Asli: Issues, Transformation and Challenges), ed.
Ma'rof Redzuan and Sarjit S. Gill (Serdang: Putra University of Malaysia,
2008); Yusoff, Halim, and Pereira, "Impak Pembinaan Empangan
Temenggor Ke Atas Sosioekonomi Komuniti Orang Asli Jahai Di
Rancangan Pengumpulan Semula Air Banun, Perak."
The Legal Challenges in Consulting Indigenous Peoples 73
opportunities within these schemes, and significantly low income in
relation to the scale of land involved.
13
Furthermore, for communities
whose lands are surrounded by large-scale plantations or situated near
mining activities, access to traditionally used resources is disrupted,
soil fertility deteriorates, and water sources become contaminated.
14
For instance, the Nenggiri Dam compensation package includes RM10
million for crop loss, resettlement land allocations, and infrastructure
development. However, concerns have been raised regarding delays in
land gazettement, lack of secure land tenure, and failure to restore
economic self-sufficiency.
15
Additionally, dams also significantly alter natural ecosystems
which affects the indigenous communities' access to food, water, and
medicinal plants.
16
The flooding of forests also contributes to
biodiversity loss, soil degradation, and disruption of local
microclimates. These circumstances lead to difficulty for the
communities living in the new area to adapt to their new environments.
Dam projects may also cause water pollution from sediment
accumulation and upstream agricultural activities. In the case of the
Nenggiri Dam, the community representatives have raised concerns
about pollution from logging and palm oil plantations, which could
contaminate drinking water sources and harm aquatic life. Poor water
quality can lead to health issues, including waterborne diseases and
13
Mustaffa, "Rancangan Pengumpulan Semula (RPS) Masyarakat Orang Asli:
Pencapaian dan Cabaran (Resettlement Scheme for the Orang Asli
Communities: Achievement and Challenges."; Yusoff, Halim, and
Pereira, "Impak Pembinaan Empangan Temenggor Ke Atas
Sosioekonomi Komuniti Orang Asli Jahai Di Rancangan Pengumpulan
Semula Air Banun, Perak."; Aiken and Leigh, "Dams and indigenous
peoples in Malaysia: Development, displacement and resettlement."
14
Aiken and Leigh, "Dams and indigenous peoples in Malaysia: Development,
displacement and resettlement.".
15
Bernama, "Nenggiri hydroelectric dam: Over 1,000 Orang Asli affected by
construction to be relocated in 2026, says TNB."; Tan Zhai Yun, "Social:
A blind spot in the transition?," The Edge Malaysia, 2024, June 17 2024,
https://theedgemalaysia.com/node/715527.
16
Alla Yousra Mohamed Khir and Lee Liu, "Impacts of dams on the
environment: a review," International Journal of Environment,
Agriculture and Biotechnology 6, no. 1 (2021); Liam J Zarri et al., " The
evolutionary consequences of dams and other barriers for riverine fishes,"
BioScience 72, no. 5 (2022).
74 IIUM LAW JOURNAL VOL. 33 (1) 2025
malnutrition, particularly among vulnerable groups such as children
and the elderly.
17
NENGGIRI HYDROELECTRIC DAM PROJECT AND THE
CONSULTATION PROCESS
The developers of the Nenggiri Hydroelectric Dam have publicly
emphasised their commitment to engaging with and consulting affected
communities. The consultation process was led by UKM Pakarunding
Sdn Bhd, a consultancy firm appointed to conduct social and
environmental impact assessments. As part of this process, the firm
conducted a Public Acceptance Survey in 2015 and 2018, which
reportedly showed an increase in community approval from 69.5% to
80% among residents of Pos Pulat, Pos Tohoi, and Kampung Kuala
Wias, the villages directly affected by the project. In addition to these
assessments, UKM Pakarunding facilitated engagement sessions and
discussions on socio-cultural concerns related to the dam’s
construction.
18
The project developer, TNB Power Generation Sdn Bhd
(TPGSB), collaborated with federal and state agencies, including the
Department of Orang Asli Advancement (Jabatan Kemajuan Orang
Asli - JAKOA), to implement resettlement plans and economic
compensation programmes. Reports indicate that over thirty
engagement sessions were held between 2014 and 2022, involving
village heads, community representatives, and NGOs such as
SUHAKAM (Malaysian Human Rights Commission). These
discussions primarily focused on the anticipated benefits of the dam,
including flood mitigation, improved water access, and job
opportunities during the construction phase, as well as the
compensation package for the relocation. A compensation plan
amounting to RM216 million has been allocated for the affected Orang
17
Aishah and Ibrahim, "Land Acquisition of Indigenous Community Based on
Sustainable Strategies for the Construction of the Hydro-Electric Dam
Nenggiri Gua Musang Kelantan."
18
Business Today, "Govt Ensures Orang Asli Welfare Amid Nenggiri Dam
Project," April 1, 2024 2024,
https://www.businesstoday.com.my/2024/04/01/govt-ensures-orang-asli-
welfare-amid-nenggiri-dam-project/.
The Legal Challenges in Consulting Indigenous Peoples 75
Asli communities, covering land allocation and infrastructure
development. Each family will receive 800 square feet of land, and the
new settlements will be equipped with essential amenities, including
housing, schools, and healthcare facilities. To support families during
the transition period, an allowance of RM683 per household will be
provided for five years.
19
Despite these engagements, several points of concern were
raised by the Kelantan Network of Orang Asli Villages,
20
and other
advocacy groups about the lack of transparency and the absence of
FPIC. Community leaders argued that the negotiation process was
neither comprehensive nor conducted in good faith. They claimed that
critical information about the dam’s long-term impact was not fully
disclosed to the affected communities.
21
One major concern was the
submersion of ancestral burial sites, including Gua Cha, a prehistoric
cultural landmark. According to JKOAK, this issue was not properly
communicated during early consultations.
22
The scope of the consultation process was also questioned, as it
only included Kuala Wias, Pos Pulat and Pos Tohoi, while other
affected communities were excluded. Indirectly affected villages, such
as Kampung Angkek in Kuala Betis, were not involved in early
discussions, despite concerns about potential downstream flooding and
pollution from nearby logging and plantation activities. The lack of
inclusivity in the consultation process raised doubts about whether all
affected Orang Asli had been given a fair opportunity to voice their
concerns.
19
Qistina Nadia Dzulqarnain, "Nenggiri Dam: RM216 mil compensation for
Orang Asli, says minister," The Vibes.com 2022,
https://www.thevibes.com/articles/news/67309/nenggiri-dam-rm216-
mil-compensation-for-orang-asli-says-minister.
20
Jaringan Kampung Orang Asli Kelantan (JKOAK).
21
Yun, "Social: A blind spot in the transition?."
22
Yun, "Social: A blind spot in the transition?."
76 IIUM LAW JOURNAL VOL. 33 (1) 2025
Another criticism of the consultation process was its narrow
focus on economic compensation. While the resettlement package
included provisions for rubber plantations and new housing, it did not
consider the deep cultural and spiritual connections the Orang Asli had
with their ancestral lands. The loss of sacred sites, including ancestral
graves and ritual spaces, was not adequately addressed. A study by
Aishah & Ibrahim
23
found that the affected communities fear losing
their heritage lands, sacred sites, and traditional livelihoods tied to
forest resources. Similarly, the Heritage Impact Assessment (HIA)
conducted for the project acknowledged the submersion of Gua Cha
but framed it as a salvage operation rather than a cultural loss. The
assessment focused on recovering artifacts and human remains instead
of preserving the site itself.
24
This approach ignored the community’s
spiritual connection to the cave.
Besides, the community representatives also warned of an
increase in human-wildlife conflict. Deforestation and habitat loss due
to the dam's construction have displaced wildlife, causing animals like
elephants and tigers to encroach upon Orang Asli villages. Incidents
have been reported where wildlife destroyed crops and, in some cases,
caused injuries and fatalities among villagers.
25
The Centre for Orang Asli Concerns (COAC), a civil society
advocating for the Orang Asli community, also criticised the
consultation process for lacking genuine engagement. Referring to an
engagement session involving NGOs conducted in 2023, the
resettlement agreement was said to be presented only via PowerPoint,
making it difficult for participants to follow.
26
Additionally, they stated
that they were not given physical copies of the agreement for proper
review and understanding. The consultation meeting also did not allow
23
Aishah and Ibrahim, "Land Acquisition of Indigenous Community Based on
Sustainable Strategies for the Construction of the Hydro-Electric Dam
Nenggiri Gua Musang Kelantan."
24
New Straits Times, "Over 71,000 Prehistoric Artefacts Discovered,
Removed in Nenggiri Valley," August 15, 2024 2024,
https://www.nst.com.my/news/nation/2024/08/1095496/over-71000-
prehistoric-artefacts-discovered-removed-nenggiri-valley.
25
Yun, "Social: A blind spot in the transition?."
26
Colin Nicholas, COAC Comments on the Proposed TNB-Nenggiri Dam
Resettlement and Compensation Plans, Center for Orang Asli Concerns
(2023).
The Legal Challenges in Consulting Indigenous Peoples 77
for a thorough discussion of the legal and financial implications of the
resettlement. Another concern raised was the lack of community-wide
participation, as discussions were mainly held with selected
representatives rather than the entire community.
27
COAC emphasised
that meaningful consultation should respect the Orang Asli’s right to
self-determination and should be conducted through culturally
appropriate mechanisms.
To be effective, consultation processes must engage Indigenous
communities in ways that acknowledge their traditional governance
structures and spiritual connections to land. Structural barriers to
meaningful engagement must also be addressed. Given the weak legal
protections for Indigenous land rights in Malaysia, the power
imbalance in negotiations does not favour the Orang Asli.
Another concern raised on the consultation process was land
ownership and tenure security over the resettlement land. The affected
communities repeatedly brought up this issue, both during
consultations and in discussions with researchers. However, it was not
addressed properly, possibly because corporate negotiators lacked the
authority to make commitments regarding land ownership.
Furthermore, delays in gazetting the resettled lands as Orang Asli
reserves in past projects created distrust.
THE POSITION OF INDIGENOUS PEOPLES’ LAND IN
MALAYSIA
The Concept of Indigenous Peoples in Malaysia
The Federal Constitution accords a special status to indigenous
communities in Malaysia. They are the Malays, whom are defined
broadly as individuals who profess Islam, habitually speak the Malay
language, and adhere to Malay customs; the Natives of Sabah and
Sarawak, referring to members of ethnic communities in these states as
specified under Article 161A (6); and the Aboriginal Peoples, also
known as the Orang Asli, referring to the aboriginal communities of
Peninsular Malaysia. The term Orang Asli has been widely used in
27
Nicholas, Colin. COAC Comments on the Proposed TNB-Nenggiri Dam
Resettlement and Compensation Plans.
78 IIUM LAW JOURNAL VOL. 33 (1) 2025
policy statements since the 1980s and has gained general acceptance
among these communities.
The term ‘indigenous peoples’ is commonly used in
international legal instruments to describe distinct groups originating
from a specific territory, who are generally marginalised compared to
the majority population. Although there is no universally accepted
legal definition, four key criteria are widely recognised in identifying
indigenous peoples: historical priority in the occupation and use of a
specific territory; cultural distinctiveness, which is voluntarily
maintained; self-identification as a distinct group, along with
recognition by other groups or state authorities; and a history of
marginalisation, subjugation, dispossession, exclusion, or
discrimination, whether past or ongoing.
28
The UNDRIP, which is an important international instrument
endorsed by the majority of nations, including Malaysia, establishes
self-identification as a fundamental criterion, allowing indigenous
groups to define their identity or membership based on their customs
and traditions. UNDRIP also emphasises shared historical experiences
of marginalisation. The use of the term peoples (plural) signifies
recognition of organised societies with distinct identities rather than
mere groupings with shared racial or cultural traits.
Based on these characteristics, the indigenous peoples of
Malaysia are generally recognised as the Orang Asli in Peninsular
Malaysia and the natives of Sabah and Sarawak, who are numerical
minorities and fulfil the above criteria. Collectively, these communities
are often referred to as Orang Asal, a term reflecting their status as the
indigenous peoples of Malaysia. As seen in the context of Peninsular
Malaysia, indigenous communities that form a majority and hold
significant political and economic influence may not necessarily be
classified as indigenous peoples under international law. However, this
does not negate the fact that the majority of indigenous communities
28
"Erica-Irene A. Daes, Final Report of the Special Rapporteur on the Rights
of Indigenous Peoples, Prevention of Discrimination and Protection of
Indigenous Peoples: Indigenous Peoples’ Permanent Sovereignty over
Natural Resources, 56th sess Agenda Item 5(b) (provisional agenda), UN
Doc E/CN.4/Sub .2/2004/30 (13 July 2004). "
http://www1.umn.edu/humanrts/demo/IndigenousSovereigntyNaturalRe
sources_Daes.pdf.
The Legal Challenges in Consulting Indigenous Peoples 79
are indigenous to the land within the framework of national law and
policy.
The Malaysian Law and the Land of the Indigenous Peoples
The law in Malaysia, mainly through court decisions, recognises the
land rights of the Orang Asli and natives of Sabah and Sarawak who
have occupied certain lands for an extended period. This recognition is
a well-established and binding principle of common law, based on the
doctrine of stare decisis.
In many cases such as Adong bin Kuwau v Government of the
State of Johor [1997] 1 MLJ 418 and Sagong Tasi v Government of the
State of Selangor [2002] 2 MLJ 591, Superintendent of Lands &
Surveys Miri Division v Madeli bin Salleh [2008] 2 MLJ 677 and
Director of Forest, Sarawak & Anor v TR Sandah Tabau & Ors and
other appeals [2017] 3 CLJ which were among the earliest cases
involving Orang Asli and natives land claims, the customary land rights
of the indigenous communities have been judicially recognised. In the
cases involving the Orang Asli, the communities sought court
declarations that their customary lands acquired by state authorities
were their customary lands and applied for compensation orders. The
courts, in all these cases, ruled that the Orang Asli communities in the
disputed areas held customary rights over the land, and ordered
compensation for their acquisition.
These judicial decisions were found upon consideration of the
relevant constitutional provisions, certain statutory laws such as the
National Land Code, the relevant state land legislation, as well as
specific statutes concerning the Orang Asli, particularly the Aboriginal
Peoples Act 1954 (Act 134).
The nature and scope of land rights recognised by the courts
include lands occupied by the communities over an extended period,
not only for residential purposes or subsistence farming, such as
growing fruit trees, but also for commercial cash-based cultivation,
including rubber and oil palm plantations. This is based on the practice
of the community, integral to their custom and traditions. In Sangka bin
Chuka & Anor v District Land Administrator Mersing, Johor [2016] 8
MLJ 289, the court held that the customary land rights of the affected
Orang Asli community extend beyond lands occupied for settlement
and rubber cultivation. These rights also encompassed areas used for
80 IIUM LAW JOURNAL VOL. 33 (1) 2025
forest produce collection and hunting. The reasoning behind this
decision was that such activities had been continuously practiced and
were integral to the customs and traditions of the community. They also
formed the primary source and essence of their very existence and
would continue to be essential to their future livelihood. The failure to
protect these rights was deemed a threat to their customs, traditions,
and overall survival.
In the case of Eddy bin Salim v Iskandar Regional Development
Authority [2017] 1 LNS 822, the court not only recognised rights over
land occupied for a significant period but also acknowledged non-
exclusive customary rights over areas used for traditional activities.
This included:
"The surrounding waters in which their customary activities are
being carried out. Hence, a claim for native customary rights over
lands covering rivers, streams within the boundaries of the land used
by them for fishing and gathering of produce of such waters should
be claimable but subject to proof."
As such, the High Court in Eddy Salim distinguished between
land rights based on exclusive ownership and non-exclusive customary
rights over water areas commonly used for livelihood purposes.
These cases align with other judicial decisions. For instance, in
Government of the State of Selangor v Sagong Tasi [2005] 6 MLJ 289,
the Court of Appeal held that Orang Asli customary land rights, as
recognised under common law, extended to lands they occupied and
had direct control over, including areas used for settlement and
agricultural activities. Similarly, in Mesara Long Chik v Director of
Land and Mines, Pahang [2018] 1 LNS 1009, the High Court
recognised the plaintiff's customary land rights over a piece of land
cultivated with fruit trees, the produce of which was sold for cash
income. In this case, the plaintiffs, a Semoq Beri subgroup of the
Sen'oi, sought a declaration of ownership and interest over
approximately 12 acres of land in Maran, in the state of Pahang,
Malaysia. They also requested the return of the land or, alternatively,
compensation for its loss.
Although they had moved away from the area, they frequently
returned, particularly during the fruit season, to harvest and sell the
produce. In fact, they had applied for land grants from the state
authorities in 1985 and 1989 but received no response. Subsequently,
The Legal Challenges in Consulting Indigenous Peoples 81
in 2005, a temporary license was issued by the state authorities to an
individual who proceeded to clear the land.
In addition, in Mohamad bin Nohing v State Land and Mines
Office, Pahang [2013] 5 MLJ 268, the Semelai community in Pahang
filed a judicial review application based on the principle of common
law recognition of customary land rights. The High Court found that
their exclusive occupation and continuous use of the land established
their legal rights over it. The court also recognised that the Semelai had
transitioned from mere subsistence activities to cash-based endeavours
such as rubber and oil palm cultivation, as well as small-scale trading.
This shift did not affect the status of their customary land rights.
Therefore, based on the discussed court decisions, the actual practices
of the community are crucial in determining the nature and scope of
Orang Asli land rights.
Besides, the Orang Asli land recognised as customary land by
the courts is not limited to land gazetted under the Aboriginal Peoples
Act 1954 and the National Land Code (Section 62). In the cases of
Sangka bin Chuka & Anor v District Land Administrator Mersing,
Johor [2016] 8 MLJ 289; Government of the State of Selangor v
Sagong Tasi [2005] 6 MLJ 289; and Director General of the
Department of Orang Asli Affairs v Mohamad bin Nohing [2015] 6
MLJ 527, the courts recognised that Orang Asli land ownership is not
confined to land gazetted under Act 134 but also extends to other areas
not officially gazetted. The courts affirmed that the customary land of
the Orang Asli communities involved constitutes ownership with full
and beneficial interest, which can be inherited and passed down from
generation to generation.
Furthermore, if customary land rights have been established and
proven, gazettement under other statutes, such as the Forestry
Act/Enactments or Malay Reserve Land Enactments, does not
automatically extinguish Orang Asli customary land rights, unless the
reservation is inconsistent with their continued occupation and use of
the land. However, any extinguishment of Orang Asli customary land
must be carried out in accordance with legal provisions or by executive
authority permitted under the law, and compensation must be paid
(Superintendent of Lands & Surveys Miri Division v Madeli bin Salleh
[2008] 2 MLJ 677). Similarly, in Mohamad bin Nohing v State Land
and Mines Office, Pahang [2013] 5 MLJ 268, the gazettement of Malay
Reserve Land and the establishment of a plantation project by Felcra
82 IIUM LAW JOURNAL VOL. 33 (1) 2025
on Semelai customary land were deemed unlawful, as they constituted
encroachment on Orang Asli land. The court ordered the degazettement
of the Malay Reserve Land and the removal of Felcra from the disputed
land. This decision was upheld by the Court of Appeal in Director
General of the Department of Orang Asli Affairs v Mohamad bin
Nohing [2015] 6 MLJ 527. This is also reflected in the Act 134, in
which regardless of conflicting provisions, Orang Asli retain the right
to reside in reserved areas such as forest reserves and lands declared as
Malay Reserve Land (Sections 6 & 7).
The Fiduciary Duty to the Indigenous Peoples
Established under the common law discussed in the foregoing, also
includes the principle of fiduciary duty of the government towards the
indigenous peoples which is fundamental in the recognition of the
indigenous peoples’ land rights. The fiduciary duty principle
establishes that the government has a special obligation to act in the
best interests of the indigenous peoples, particularly in matters
affecting their land ownership, access, and usage (Sagong bin Tasi v
Government of the State of Selangor [2002] 2 MLJ 59; Bato' Bagi v
Government of the State of Sarawak (2011) 6 MLJ 297). This principle
is fundamental and must be carefully considered in any policy
decisions affecting Orang Asli land rights.
In Khalip Bachik & Another v Director of Land and Mines,
Johor & Others [2013] 5 CLJ 639, the court held that the first
defendant’s delay of over ten years in gazetting the land, without
justification, constituted a breach of fiduciary duty toward the
plaintiffs. The defendant failed to provide any explanation for the delay
despite an earlier commitment to gazette the land. The court
emphasised that once such a commitment is made, it must be fulfilled,
particularly since the plaintiffs had been displaced from their
settlement since 1993.
A similar ruling was made in Sangka bin Chuka & Anor v
District Land Administrator Mersing, Johor [2016] 8 MLJ 289, where
the court found that the respondents had breached their fiduciary duty
by failing to ensure that the entire customary land was gazetted as an
Orang Asli Reserve or, at a minimum, not incorporated into the Endau
Rompin National Park despite long-standing awareness of the Orang
Asli community’s presence in the area.
The Legal Challenges in Consulting Indigenous Peoples 83
In addition, in Eddy bin Salim v Iskandar Regional Development
Authority [2017] 1 LNS 822, the High Court in Johor Bahru reaffirmed
the government’s fiduciary duty to protect the welfare and interests of
indigenous communities, particularly their land rights. The court
rejected the argument that the term ‘welfare’ in the Federal
Constitution should be narrowly interpreted to exclude land rights or
gazettement obligations. Justice Teo Say Eng stated:
I agree with the Plaintiffs that it is clear that our Malaysian Courts
have recognised that Government stands in a fiduciary position to
protect the interest of the natives (See Bato Bagi case - Federal
Court). The content of the fiduciary duties has been described in
many ways. But in essence, the duty to protect the welfare of the
aborigines includes their land rights, and not to act in a manner
inconsistent with those rights and further to provide remedies where
an infringement occurs: See Sagong Tasi case.
On this basis, the court ruled that both the Director General of
JAKOA (Fifth Defendant) and the Federal Government (Sixth
Defendant) had breached their fiduciary duty toward the plaintiffs.
The Federal Court, in the case of Superintendent of Lands &
Surveys Miri Division v Madeli bin Salleh [2008] 2 MLJ 677, outlined
key fiduciary responsibilities, including the protection of the
community’s welfare, particularly their land rights. The fiduciary
relationship arises from constitutional and legal provisions granting
special status to the indigenous communities, which impose a duty on
the government to safeguard their interests. This duty is further
reinforced by the establishment of government agencies such as
JAKOA to protect Orang Asli welfare; as well as policies and legal
frameworks governing Orang Asli affairs.
A fiduciary relationship exists when one party, i.e., in this
context, the government, has discretionary authority over matters
significantly affecting another party’s interests, i.e., the indigenous
peoples. This relationship can arise through laws, agreements, or even
by necessity, without requiring explicit consent from the affected party.
A fiduciary must act in the best interest of the beneficiaries. The
decisions affecting Orang Asli land must align with fiduciary
obligations. Even where the state has legislative authority, any law that
diminishes or disregards the indigenous community’s land rights may
be deemed a breach of fiduciary duty.
84 IIUM LAW JOURNAL VOL. 33 (1) 2025
As part of its fiduciary duty, the government must consult the
affected communities before making decisions that impact their rights.
In Sagong Tasi, the High Court cited Justice Toohey in the Australian
case Mabo v Queensland (No 2) (1992) 175 CLR 1, which held that
indigenous consent is essential when actions threaten or extinguish
land rights. The US Supreme Court, in Worcester v State of Georgia
31 U.S. (6 Pet.) 515 (1832), affirmed that indigenous land rights
include exclusive rights to negotiate land sales with the state. In Mabo,
Justices Dean and Gaudron rejected the idea that state authorities could
unilaterally extinguish indigenous land rights or redefine them in a way
that disregards original ownership. A similar approach is seen in
Canada, where consultation is a key factor in determining whether a
fiduciary breach is justified. In certain cases, indigenous interests must
be upheld even when land rights have not been fully proven but are
supported by strong evidence.
Arguing for procedural fairness, Chief Justice Richard
Malanjum of the Federal Court in Bato' Bagi v Government of the State
of Sarawak (2011) 6 MLJ 297 emphasised:
Essential justice and procedural fairness require that a public
decision-maker ensures such rights are protected before making any
decision affecting indigenous communities.
This principle highlights that the indigenous communities must
have a voice in decisions concerning their land, in line with
fundamental principles of justice and fairness. Any decision affecting
the communities’ land must ensure the recognition and legal protection
of the communities’ land rights; and consultation with affected
communities before any decisions are made.
THE PROTECTION OF INDIGENOUS PEOPLES AND DAM
CONSTRUCTION UNDER INTERNATIONAL LAW
The rights of the indigenous peoples have been given central emphasis,
especially in international law, particularly in development projects
such as dam construction. With the increasing impact of international
legal principles on Malaysian legal and policy frameworks, the
guidelines and standards for protecting the rights and interests of
indigenous communities under the international instruments are
relevant.
The Legal Challenges in Consulting Indigenous Peoples 85
In the context of dam constructions, the international law
emphasises the rights of indigenous peoples to FPIC before such a
project is carried out. For instance, the UNDRIP, the main document
regarding the rights of indigenous peoples, prohibits the removal of
indigenous peoples from their lands or territories without their free,
prior, and informed consent (FPIC) (Article 10). States are also
required to consult and cooperate in good faith with indigenous peoples
to obtain their FPIC before adopting and implementing legislative or
administrative measures that may affect them; before the approval of
any project affecting indigenous lands, territories, or resources (Article
19); and in projects involving development, utilisation, or exploitation
of resources in areas occupied by the indigenous peoples (Article 32).
Similar requirement of FPIC is also required under the
International Labour Organisation (ILO) Conventions concerning
Indigenous and Tribal Peoples in Independent Countries (ILO
Convention No. 169) 1989. The treaty which specifically focuses on
the rights of indigenous and tribal people requires governments to
consult with indigenous peoples. The consultation process must be
made upon decision making involving legislative or administrative
measures that may affect the indigenous peoples directly, through
appropriate procedures with their representative institutions (Article 6).
It is also affirmed under the ILO Convention that the indigenous
peoples have the right to decide their own priorities for the
development project due to the effect that the project entails on their
lives, beliefs, institutions, and spiritual well-being, as well as the lands
they occupy or use (Article 7). Recognising the right of the indigenous
peoples to the land that they live in, the ILO Convention also requires
participation of the indigenous peoples in the management of the
natural resources found on their land (Article 15).
Furthermore, the FPIC is specifically required in situations
which the indigenous peoples are to be removed from their customary
land. The places to which they are moved must be of at least similar
quality and legal status to their places of origin. The government must
also negotiate with the indigenous peoples and seek their participation
regarding the development of natural resources and soil with good faith
(Article 2, 15, 16 ILO Convention No 169).
Although Malaysia is not a party to the ILO Convention No 169,
the convention is significant to be considered as it shapes legal
discourse, influences indigenous rights advocacy, and sets a global
86 IIUM LAW JOURNAL VOL. 33 (1) 2025
standard that Malaysia is often compared against. Besides, although the
soft law instrument such as the UNDRIP is merely persuasive in nature,
and thereby carries no legal force, it has been argued that the principles
declared in the UNDRIP is a legal concept and, as such, is a source of
international law that, according to Article 38 of the Statute of the
International Court of Justice should be implemented by the Court.
29
Apart from the international law instruments which specifically
elaborate on the rights of the indigenous peoples as discussed above,
the World Commission on Dams (WCD) 2000 Report provides a
comprehensive assessment of the impacts of dam projects worldwide.
The report recognises that, while dams have significantly contributed
to human development by supplying water, irrigation, flood control,
and electricity, these benefits often come at a high cost. Many large-
scale dam projects have led to severe social and environmental
consequences, including the displacement of communities, loss of
livelihoods, and ecological degradation.
30
Specifically, the report stated
that,
The WCD Knowledge Base indicates that the poor, other vulnerable
groups and future generations are likely to bear a disproportionate
share of the social and environmental costs of large dam projects
without gaining a commensurate share of the economic benefits.
Specific cases include: … Indigenous and tribal peoples and
vulnerable ethnic minorities have suffered disproportionate levels
of displacement and negative impacts on livelihood, culture and
spiritual existence; ….
31
Recognising these challenges, the WCD report introduces a set
of core values, including equity, sustainability, efficiency, participatory
decision-making, and accountability, to guide future dam planning and
implementation. The report outlines seven strategic priorities to ensure
29
Muhamad Sayuti Hassan et al., "Free, Prior, and Informed Consent (FPIC)
and the Right to Self-Determination: A Case Study of Indigenous Peoples
in ASEAN Member States, pp. . , 2025," in Routledge Handbook of the
UN Sustainable Development Goals Research and Policy, ed. Ranjula
Bali Swain and Peter Dobers (Routledge, 2025).
30
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making (London: Earthscan, 2000),
https://awsassets.panda.org/downloads/wcd_dams_final_report.pdf.
31
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making, p 130.
The Legal Challenges in Consulting Indigenous Peoples 87
that decisions regarding dams are equitable and sustainable.
32
Among
the priorities most relevant to the indigenous peoples are the emphasis
on the importance of meaningful participation and the FPIC to ensure
that indigenous voices are genuinely considered in dam planning and
decision-making; and recognising entitlements, that is, affirming
indigenous peoples’ customary land rights and access to fair
compensation and benefit-sharing. Another priority outlined is
sustaining rivers to acknowledge the deep cultural, spiritual, and
economic ties that indigenous communities have with river
ecosystems, calling for the protection of their traditional livelihoods
and environmental heritage.
33
In sum, the WCD report advocates for a rights and risks
approach in assessing the impacts of dam projects. Moving beyond
traditional cost-benefit analyses, the framework recognises all
legitimate stakeholders, including indigenous communities affected by
dam construction, and emphasises the need to respect and protect their
rights. To support this approach, the report outlines criteria and
guidelines for good practices in planning, design, construction,
operation, and decommissioning of dams. These guidelines aim to
enhance decision-making, improve project outcomes, and mitigate
negative consequences for affected communities and the
environment.
34
A key recommendation of the WCD report is stakeholders
participation throughout the project lifecycle. It stresses the importance
of inclusive and participatory decision-making, ensuring that all
stakeholders, particularly marginalised and affected communities, have
a meaningful voice in the process. Transparency and public access to
information are highlighted as essential for building trust and
accountability. The report also emphasises the need for comprehensive
environmental and social impact assessments to identify potential risks
and implement effective mitigation measures. It calls for stronger
32
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
33
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making, p 214.
34
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
88 IIUM LAW JOURNAL VOL. 33 (1) 2025
protections for ecosystems and cultural heritage sites that may be
impacted by dam construction.
35
The WCD report further recommends benefit-sharing and
compensation mechanisms to ensure that local communities receive
fair and adequate compensation for any negative impacts while also
gaining access to benefits generated by the projects. The report
underscores the importance of addressing historical injustices and
providing reparations where necessary. Among others, the report calls
for the formal acknowledgement of past harms and the establishment
of mechanisms to provide reparations, which may include financial
compensation, restoration of livelihoods, land restitution, or social
development programmes.
36
Additionally, the WCD report encourages exploring alternatives
to large dams, such as demand-side management, upgrading existing
infrastructure, and considering smaller-scale or non-structural
solutions.
37
To ensure compliance, the report calls for robust
monitoring mechanisms to uphold agreed-upon standards and
commitments throughout the lifespan of dam projects. These include
independent and transparent monitoring bodies involving
representatives from affected communities, civil society, government,
and technical experts to provide oversight. Besides, public access to
information is also crucial to ensure that monitoring results,
compliance reports, and performance evaluations are accessible and
understandable to all stakeholders, especially affected communities.
38
By implementing these principles, the WCD report aims to transform
the approach to dam development, promoting sustainable and equitable
solutions while minimising negative social and environmental impacts.
Besides, in the context of climate change, the United Nations
Framework Convention on Climate Change (UNFCCC)
39
and the Paris
35
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
36
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
37
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
38
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
39
United Nations Framework Convention on Climate Change, (1992).
The Legal Challenges in Consulting Indigenous Peoples 89
Agreement (2015),
40
both of which Malaysia is a party to, promote
hydropower as a low-carbon energy source to reduce reliance on fossil
fuels. However, large-scale dam projects must align with indigenous
rights and sustainability principles. Article 7.5 of the Paris Agreement
emphasises the importance of traditional knowledge and indigenous
participation in climate adaptation efforts.
41
This recognition
emphasises the need for inclusive decision-making when implementing
climate solutions that impact indigenous communities.
The UNFCCC also requires that, to ensure accountability,
climate finance mechanisms, such as the Green Climate Fund (GCF),
must comply with FPIC standards and adhere to environmental
safeguards before financing hydropower projects.
42
The UNFCCC also
encourages the exploration of alternative renewable energy sources,
including solar, wind, and micro-hydropower, which provide cleaner
energy solutions without the social and ecological costs associated with
large dams.
43
To this, balancing clean energy development with
indigenous rights is essential for achieving sustainable and just climate
action. Policies must integrate climate resilience, environmental
protection, and human rights, ensuring that renewable energy
transitions do not come at the expense of indigenous communities and
their livelihoods.
44
For instance, the First Nations Major Projects
Coalition (FNMPC) in Canada supports Indigenous communities in
securing ownership stakes in large-scale energy projects, including
solar farms and mineral developments. By promoting Indigenous
equity participation, the coalition ensures that First Nations are not only
economically empowered but also have a meaningful voice in
decisions that impact their lands and resources. This approach fosters
a model of inclusive and equitable development, aligning economic
40
United Nations, Paris Agreement (United Nations Framework Convention
on Climate Change) (2015),
https://unfccc.int/sites/default/files/english_paris_agreement.pdf..
41
United Nations, Paris Agreement.
42
United Nations, United Nations Framework Convention on Climate Change.
43
United Nations, United Nations Framework Convention on Climate.
44
Melanie Zurba and Anastasia Papadopoulos, "Indigenous participation and
the incorporation of indigenous knowledge and perspectives in global
environmental governance forums: a systematic review," Environmental
Management 72, no. 1 (2023).
90 IIUM LAW JOURNAL VOL. 33 (1) 2025
progress with the protection of Indigenous rights and self-
determination.
45
Summarily, ensuring the protection of indigenous peoples' rights
in dam construction and climate policies requires strong adherence to
international legal principles, particularly the FPIC framework. While
hydropower development plays a role in climate mitigation, it must be
balanced with sustainability principles, social equity, and
environmental protection to prevent displacement and ecological harm.
The FPIC of Indigenous Peoples in Decision Making
The principle of FPIC and other participation rights are derived from
the right to self-determination, which is the founding principle of
indigenous peoples’ rights. In the context of large-scale development
projects such as dam construction, which often result in the acquisition
of ancestral land and forced relocation, this right is critical. The right
of indigenous peoples to self-determination refers to the inherent right
to freely determine their political status and pursue their economic,
social, and cultural development.
46
This right, considered as
fundamental to protecting their identity, culture, and autonomy in the
face of external pressures, allows indigenous communities to make
decisions about their lands, resources, governance, and way of life
according to their traditions and aspirations.
47
In other words, FPIC is
one of the manifestations of the right to self-determination of
indigenous people through participation in the decision-making
process.
45
Bryan Walsh, "Want More Clean Energy Projects? Give Communities a
Stake," Time, June 27, 2024 2024, https://time.com/6992183/clean-
energy-canada-community-ownership/.
46
Hassan et al., "Free, Prior, and Informed Consent (FPIC) and the Right to
Self-Determination: A Case Study of Indigenous Peoples in ASEAN
Member States, pp. . , 2025.".
47
Terry Mitchell et al., "Towards an Indigenous-Informed Relational
Approach to Free, Prior, and Informed Consent (FPIC)," International
Indigenous Policy Journal 10, no. 4 (2019),
https://www.jstor.org/stable/48767144; Tara Ward, "The Right to Free,
Prior and Informed Consent: Indigenous Peoples' Participation Rights
within International Law," Northwestern Journal of International Human
Rights 10, no. 2 (2011).
The Legal Challenges in Consulting Indigenous Peoples 91
Within international human rights jurisprudence, the FPIC is
legally based on property rights, cultural rights, and the right to non-
discrimination. These legal foundations are particularly important in
cases where dam projects threaten to displace indigenous communities,
disrupt their cultural landscapes, and impair access to traditional
resources. Dams such as the Nenggiri project in Malaysia illustrate how
such developments can profoundly affect indigenous rights if the FPIC
is not effectively implemented.
This principle requires that the indigenous peoples are fully
involved in every process of decision making transparently and
independently. The FPIC ensures that indigenous communities have
the authority to grant or withhold consent for projects proposed on their
ancestral territories, thereby safeguarding their cultural integrity,
livelihoods, and traditional knowledge. This principle mandates that
consent must be given freely, without coercion; prior to the initiation
of any activities; and based on full disclosure of information regarding
the nature, scope, and potential impacts of the proposed projects.
48
The
effective implementation of FPIC is crucial in promoting equitable and
respectful partnerships between indigenous populations, governments,
and developers, ensuring that development initiatives do not
compromise the rights and well-being of indigenous communities.
49
Reviewing definitions and descriptions of the FPIC by various
organisations, Mitchell elaborates that
FPIC is characterised as a set of rights that enable decision making,
which is realized free from coercion, within a community’s own
cultural framework, and with adequate time to review and assess all
information necessary to make an informed judgement on the long-
term risks and benefits of proposals. The information and processes
supporting collective community decision making as described
would enable communities to provide or withhold consent, to say
48
Rohaida Nordin and Mohd Syahril Ibrahim, "Exercising the principle of free,
prior and informed consent (FPIC) in land development: An appraisal
with special reference to the Orang Asli in peninsular Malaysia," Article,
Pertanika Journal of Social Science and Humanities 22, no. January
(2014).
49
Nordin and Ibrahim, "Exercising the principle of free, prior and informed
consent (FPIC) in land development: An appraisal with special reference
to the Orang Asli in peninsular Malaysia."
92 IIUM LAW JOURNAL VOL. 33 (1) 2025
“yes” or “no” or “yes with conditions,” and to pursue further
discussion and action regarding proposed developments.
50
The process of obtaining FPIC from indigenous communities is
guided by fundamental principles that are especially critical when
dealing with high-impact projects like dam construction, which may
permanently alter indigenous territories. Good faith negotiation is not
just a procedural ideal, but a legal and moral necessity in situations
where communities are asked to relinquish land and resettle. The FPIC
cannot be reduced to administrative formality, it must result from
sincere and inclusive dialogue, where indigenous concerns and
perspectives are fully considered and integrated into project plans.
51
Another essential principle is the recognition of indigenous
protocols, which acknowledges the importance of customary laws,
traditional governance structures, and community-based decision-
making. Indigenous peoples have their own methods of deliberation
and consensus-building, which may differ from standard legal
procedures.
52
A local example of recognising Indigenous protocols for
FPIC is the Melangkap Community Protocol developed by the Dusun
community in Sabah. This protocol outlines the community's
customary laws, decision-making processes, and expectations for
external parties seeking to engage with them.
By formalising their traditional governance structures, the
Melangkap community ensures that any development or research
activities on their lands require prior consultation and consent,
respecting their cultural norms and autonomy. This approach not only
safeguards their rights but also serves as a model for integrating
Indigenous protocols into broader legal and environmental
frameworks.
53
Respecting these governance mechanisms ensures that
50
Mitchell et al., "Towards an Indigenous-Informed Relational Approach to
Free, Prior, and Informed Consent (FPIC)."
51
Mitchell et al., "Towards an Indigenous-Informed Relational Approach to
Free, Prior, and Informed Consent (FPIC)."
52
Françoise Montambeault and Martin Papillon, "Repoliticising indigenous
participation: FPIC protocols in Canada and Brazil," The International
Journal of Human Rights 27, no. 2 (2023).
53
"Protokol Komuniti Melangkap," 2019,
https://sabc.sabah.gov.my/sites/default/files/uploads/attachments/2019-
11/Protokol-Komuniti-Melangkap.pdf..
The Legal Challenges in Consulting Indigenous Peoples 93
indigenous communities have the cultural space and autonomy to make
informed decisions in accordance with their traditions.
Informed consultation and participation are another critical
principle, ensuring that indigenous communities are actively involved
throughout the entire process, rather than being passive recipients of
information. Effective FPIC requires clear, comprehensive, and
culturally appropriate communication about the project's objectives,
potential risks, and long-term impacts. This information must be
provided in languages and formats accessible to indigenous peoples,
enabling them to make fully informed choices about whether to accept
or reject a proposed project.
54
A key cornerstone of FPIC is the prohibition of forced
relocation,
55
which directly applies to dam-related displacements.
Large dams often require the flooding of villages and agricultural
lands, making relocation unavoidable in some cases. In such scenarios,
FPIC requires that indigenous peoples voluntarily agree to resettle,
only after fair negotiations, culturally appropriate planning, and
compensation mechanisms that restore, not diminish, their quality of
life.
To maintain the integrity of the FPIC process, an independent
verification mechanism must be established to confirm that consent
was given freely, without coercion, manipulation, or misinformation.
This includes independent oversight, documentation of consultations,
and grievance redress mechanisms that allow indigenous communities
to raise concerns, challenge decisions, and seek remedies if they
believe FPIC principles were violated.
56
By adhering to these
principles, the FPIC serves as a meaningful safeguard for indigenous
rights, ensuring that development projects respect indigenous
54
Nordin and Ibrahim, "Exercising the principle of free, prior and informed
consent (FPIC) in land development: An appraisal with special reference
to the Orang Asli in peninsular Malaysia."
55
Article 10 of the United Nations Declaration on the Rights of Indigenous
Peoples (UNDRIP).
56
Dwight Newman, "Norms of Consultation with Indigenous Peoples:
Decentralization of International Law Formation or Reinforcement of
States’ Roles?" (2012).
94 IIUM LAW JOURNAL VOL. 33 (1) 2025
sovereignty, promote social justice, and uphold ethical and legal
responsibilities.
57
For consultation to be meaningful, all parties must act in good
faith and ensure that Indigenous communities have access to clear and
relevant information. Without full disclosure, consultation efforts risk
being superficial and failing to address real concerns.
58
Sufficient time
must also be allocated for Indigenous communities to review, discuss,
and provide feedback on any proposed project. When needed, the state
or corporate project proponents, particularly in complex infrastructure
projects like hydropower dams, should assist Indigenous communities
in developing their capacity to process technical and legal information
so that they are not disadvantaged by a lack of resources or expertise.
59
FPIC is a tool to achieve equity and an important step for local
communities to take on co-management roles in large development
projects.
60
Moreover, in dam construction contexts where environmental,
social, and economic stakes are high, the institution responsible for the
consultation must have the authority and willingness to alter decisions
based on community concerns. If a consultation process only gathers
opinions without the ability to change the outcome, it is not
meaningful. Decision-makers must show that they are open to
modifying plans when valid concerns are raised. The goal of
consultation should not be to impose changes upon Indigenous
communities but to respect their autonomy and ensure their rights are
57
Newman, "Norms of Consultation with Indigenous Peoples:
Decentralization of International Law Formation or Reinforcement of
States’ Roles?."
58
Nordin and Ibrahim, "Exercising the Principle of Free, Prior and Informed
Consent (FPIC) in Land Development: An Appraisal with Special
Reference to the Orang Asli in Peninsular Malaysia."
59
Newman, "Norms of Consultation with Indigenous Peoples:
Decentralization of International Law Formation or Reinforcement of
States’ Roles?.";Mara Tignino and Diego Jara, "Human rights law in the
development of hydropower projects in transboundary context," Frontiers
in Climate 6 (2024).; International Hydropower Association, How-to
Guide: Hydropower and Indigenous Peoples, International Hydropower
Association (London, 2021).
60
Nordin and Ibrahim, "Exercising the Principle of Free, Prior and Informed
Consent (FPIC) in Land Development: An Appraisal with Special
Reference to the Orang Asli in Peninsular Malaysia."
The Legal Challenges in Consulting Indigenous Peoples 95
upheld. Forced changes undermine the very purpose of consultation
and weaken Indigenous governance structures. This is also highlighted
in the WCD report that for community participation to be effective,
there must be systems in place to include their input in actual
decisions.
61
It stresses that consultation is not meaningful if it cannot
lead to changes in project plans based on community concerns.
Likewise, the International Hydropower Association’s How-to Guide
on Hydropower and Indigenous Peoples supports consultation
processes that allow indigenous feedback to shape project outcomes. It
stresses that for engagement to be meaningful, it must be able to
influence decisions, and those in charge must have the authority to
make changes.
62
In some cases, state involvement is necessary, especially when
issues raised during consultations require government intervention.
63
Matters related to land rights, environmental regulations, and legal
protections often go beyond the authority of corporate stakeholders.
When the state plays a role, it must ensure that its actions are
transparent, fair, and prioritise Indigenous rights over economic or
political interests.
64
61
World Commission on Dams, Dams and Development: A New Framework
for Decision-Making.
62
International Hydropower Association, How-to Guide: Hydropower and
Indigenous Peoples.
63
Newman, "Norms of Consultation with Indigenous Peoples:
Decentralization of International Law Formation or Reinforcement of
States’ Roles?."
64
Newman, "Norms of Consultation with Indigenous Peoples:
Decentralization of International Law Formation or Reinforcement of
States’ Roles?."; Elisa Morgera, "Under the radar: the role of fair and
equitable benefit-sharing in protecting and realising human rights
connected to natural resources," The International Journal of Human
Rights 23 (2019).
96 IIUM LAW JOURNAL VOL. 33 (1) 2025
CONCLUSION
In conclusion, the principle of FPIC is not merely a theoretical concept
but serves as vital protection, especially when development projects
like dam construction may seriously affect the lives and lands of
indigenous peoples. These principles give practical effect to the right
of self-determination by ensuring that indigenous communities are not
only consulted but are given the authority to decide whether and how
they wish to be involved in such projects. Adhering to FPIC in the
context of dam development is a measure of responsible governance
and legal integrity, consistent with the recognition of the customary
land rights of the indigenous peoples under the law in Malaysia, as well
as the protection of the indigenous peoples’ rights under the
international law which to certain extent has an impact in Malaysia.
To achieve fair, just, and sustainable outcomes for Indigenous
communities, meaningful consultation must ultimately be a
cooperative process in which all parties act in good faith, respect
Indigenous autonomy, and maintain an openness to genuine dialogue
and change. While hydroelectric dams contribute to economic growth
and energy security, they also have severe and often irreversible
consequences for indigenous communities. The impacts extend beyond
physical displacement to cultural, economic, and environmental
disruption, often exacerbated by weak consultation processes and
inadequate legal protections.
The case of the Nenggiri Dam reflects broader concerns about
the treatment of indigenous land rights and the implementation of FPIC
in Malaysia. Findings indicate that, despite relentless efforts to engage
with the affected indigenous communities, the consultation process
revealed significant shortcomings, notably the unequal footing of the
parties involved. These issues were largely a lack of formal legal
recognition of the community’s land rights and the absence of binding
regulations to enforce FPIC, which undermines the fairness of the
engagement process.
Ultimately, this paper argues for stronger legal protections and
policy reforms to ensure that the consultation process with indigenous
communities is substantive rather than procedural, by ensuring
meaningful participation of indigenous communities in decision-
making processes. Formal integration of FPIC into the national
The Legal Challenges in Consulting Indigenous Peoples 97
legislation, the establishment of independent oversight mechanisms,
and the adoption of best practices from international legal frameworks
are crucial towards a more equitable and sustainable approach to
indigenous consultation in development projects.
ACKNOWLEDGEMENT
This study was funded by Universiti Sains Islam Malaysia under
research grant number: PPPI/PENTADBIR/FSU/USIM/110124 and
partially supported by Universiti Kebangsaan Malaysia through
research grant number: GUP-2020-066. The authors would like to
express their sincere appreciation to the community members who
participated in and supported the research process. Special thanks are
also extended to the anonymous reviewers for their insightful
comments and constructive suggestions, which have significantly
contributed to the improvement of this paper
98 IIUM LAW JOURNAL VOL. 33 (1) 2025
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33(1) 2025 IIUMLJ 103 - 132
The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License.
EXPLORING THE APPLICATION OF OCCUPATIONAL
SAFETY AND HEALTH LEGISLATION TO GRAPHENE AS A
NANO MATERIAL IN THE MEDICAL SECTOR
Nuraidil Nabilah Arabi∗
Kamal Halili Hassan∗∗
ABSTRACT
Graphene, renowned for its exceptional thinness and strength, has
sparked widespread interest due to its potential applications in medical
technology, including drug delivery systems, biosensors, and advanced
medical devices. This study aims to critically evaluate the rules and
regulations surrounding the use of graphene in Malaysia's medical sector,
focusing on the Occupational Safety and Health (Use and Standard of
Exposure to Hazardous Chemicals (USECHH)) Regulations 2000.
Additionally, it examines the Occupational Safety and Health Act
(OSHA) 1994 and its 2022 amendments regarding worker exposure to
graphene. However, the novel properties raise complex regulatory
concerns. The current regulatory environment lacks clarity on how
graphene should be handled in the workplace, posing a challenge to
ensuring worker safety. To address this, the research explores both
formal legal regulations ('hard law') and informal guidelines ('soft law')
- including the nanomaterials guideline - that aim to mitigate the risks
associated with graphene exposure. Using a doctrinal and qualitative
methodology, this study conducts an in-depth legal analysis of existing
laws and guidelines. The findings reveal critical gaps in the regulatory
framework, particularly in terms of occupational safety standards for
graphene. The study underscores the urgent need for updated, more
∗ LLB candidate (Professional Year), Faculty of Law, Universiti Kebangsaan
Malaysia, Bangi, 43650, Selangor, Malaysia.
Email: a190144@siswa.ukm.edu.my
∗∗ Professor, Faculty of Law, Universiti Kebangsaan Malaysia, Bangi, 43650,
Selangor, Malaysia. Email: kamalhalili60@gmail.com (Corresponding
Author).
[Received: 23 January 2025, Accepted: 13 May 2025, Published: 28 May 2025]
104 IIUM LAW JOURNAL VOL. 33 (1) 2025
stringent policies to safeguard workers, thereby contributing to the
broader discourse on occupational health and safety in emerging
technologies.
Keywords: Graphene, Malaysia, Nanotechnology, Occupational Safety
and Health (OSH) Regulation, Risk Assessment.
MENEROKA APLIKASI PERUNDANGAN KESELAMATAN
DAN KESIHATAN PEKERJAAN TERHADAP GRAFENA
DALAM SEKTOR PERUBATAN
ABSTRAK
Grafena, yang terkenal dengan ketipisan dan kekuatannya yang luar
biasa, telah menarik minat yang meluas kerana potensi aplikasinya
dalam teknologi perubatan, termasuk sistem penghantaran ubat,
biosensor, dan peranti perubatan canggih. Kajian ini bertujuan untuk
menilai secara kritis peraturan dan undang-undang yang mengelilingi
penggunaan grafena dalam sektor perubatan di Malaysia, dengan
tumpuan khusus kepada Peraturan Keselamatan dan Kesihatan Pekerjaan
(Penggunaan dan Standard Pendedahan kepada Bahan Kimia Berbahaya
(USECHH) 2000. Di samping itu, kajian ini meneliti Akta Keselamatan
dan Kesihatan Pekerjaan (OSHA) 1994 dan pindaan 2022 mengenai
pendedahan pekerja kepada grafena. Namun, sifat baharu ini
menimbulkan kebimbangan kawal selia yang kompleks. Persekitaran
peraturan semasa kurang jelas tentang cara ‘grafena’ harus dikendalikan
di tempat kerja, yang menimbulkan cabaran untuk memastikan
keselamatan pekerja. Untuk menangani isu ini, kajian ini meneroka
kedua-dua peraturan undang-undang formal ('hard law') dan garis
panduan tidak formal ('soft law') - termasuk garis panduan bahan nano -
yang bertujuan untuk mengurangkan risiko yang berkaitan dengan
pendedahan kepada ‘grafena’. Menggunakan metodologi doktrinal dan
kualitatif, kajian ini menjalankan analisis undang-undang mendalam
terhadap undang-undang dan garis panduan yang sedia ada. Hasil kajian
menunjukkan jurang kritikal dalam rangka kerja peraturan, terutamanya
dari segi standard keselamatan pekerjaan untuk ‘grafena’. Kajian ini
menekankan keperluan mendesak untuk dasar yang dikemas kini dan
lebih ketat bagi melindungi pekerja, sekali gus menyumbang kepada
wacana yang lebih luas mengenai keselamatan dan kesihatan pekerjaan
dalam teknologi yang sedang berkembang.
Kata Kunci: Grafena, Malaysia, Teknolojinano, Peraturan Keselamatan
dan Kesihatan Pekerjaan, Pentaksiran Risik.
The Application of Occupational Safety and Health Legislation 105
INTRODUCTION
Graphene is a revolutionary nanomaterial with the potential to
transform various industries, especially in the medical sector. Its
versatility makes it valuable for applications such as drug delivery
systems, biosensors, and advanced medical devices.1 However, the
very properties that make graphene so promising also present unique
challenges, particularly concerning the occupational health and safety
(OHS) of workers who handle this material.2
In Malaysia, incorporating graphene into the medical sector
requires a careful review of existing OHS policies. As the country
advances in medical innovation, it is crucial to ensure that the
regulatory framework keeps pace with the potential risks associated
with graphene.3
This paper examines the current state of Malaysia's OSH policies
and regulations, focusing on the challenges posed by graphene and the
measures needed to protect workers while encouraging responsible
development. Currently, Malaysia’s OSH regulations lack specific
guidelines for graphene, especially in the medical sector, creating a
regulatory gap that makes safeguarding workers a challenge.
The term 'graphene' was initially referred to as a 'graphite layer'
by the International Union of Pure and Applied Chemistry (IUPAC).4
It was later redefined as 'graphene' by IUPAC. Graphene is considered
a chemical substance. Its unique properties arise from its chemical
structure, making it relevant to chemistry, materials science, and
nanotechnology. Graphene is a material derived from graphite and
1 Jiawen Song Qu et al., (2025). Graphene-based wearable biosensors for
point-of-care diagnostics: From surface functionalization to biomarker
detection, Materials Today Bio, 32: 101667.
https://doi.org/10.1016/j.mtbio.2025.101667.
2Ji Hyun Lee et al. et al. “Exposure Monitoring of Graphene Nanoplatelets
Manufacturing Workplaces.” Inhalation Toxicology 28 (6) (2016): 281–
91. doi:10.3109/08958378.2016.1163442.
3Maryam Etemadi, and Akbariah Mohd Mahdzir. “Nanotechnology in
Malaysia: A qualitative study about the current occupational health and
safety issues”, Psychology and Education 58(1) (2021): 4727-4740.
4Madhuri Sharon and Maheshwar Sharon. Graphene: An Introduction to the
Fundamentals and Industrial Applications. (John Wiley & Sons, 2015).
106 IIUM LAW JOURNAL VOL. 33 (1) 2025
composed entirely of carbon.5 Exposure level has consistently been a
primary concern in occupational safety and health for workers.
Exposure levels to graphene have been measured during the synthesis
process using a chemical vapour deposition (CVD) system without
engineering controls.6 Findings suggest that graphene exposure for
workers handling graphene-based materials (GBM) is generally very
low, however, individuals performing specific tasks face higher
susceptibility compared to those involved in routine GBM production
activities.7
A study by Wu et al suggests that there was no evidence of
potential adverse health effects under the existing workplace exposure
levels among nanomaterials handling workers, except for the increase
of antioxidant enzymes.8 Limited data exist on the health effects of
nanomaterials, including graphene, on workers. Potential risks include
inhalation,9 dermal contact, ingestion, and accidental injection. The
absence of confirmed human health impacts may suggest that current
exposure levels in controlled workplaces pose minimal immediate
5Ying W, Chao An, Yaru Guo, Yanyang Zong et al. “Highly Aligned Graphene
Aerogels for Multifunctional Composites”. Nano-Micro Lett. 16, 118
(2024). https://doi.org/10.1007/s40820-024-01357-w.
6Bengt Fadeel et al. “Safety Assessment of Graphene-Based Materials: Focus
on Human Health and the Environment”, ACS Nano 12, 11, (2018):
10582–10620. https://doi.org/10.1021/acsnano.8b04758.
7Irene Bellagamba et al., “Workers’ Exposure Assessment during the
Production of Graphene Nanoplatelets in R&D
Laboratory" Nanomaterials 10, no. 8, (2020): 1520.
https://doi.org/10.3390/nano10081520; see also Seyyed Mojtaba
Mousavi, et al.et al. “Development of Graphene Based Nanocomposites
towards Medical and Biological Applications.” Artificial Cells,
Nanomedicine, and Biotechnology 48 (1) (2020): 1189–1205.
doi:10.1080/21691401.2020.1817052.
8Wei-Te Wu, Lih-Ann Li, Tsui-Chun Tsou, Shu-Li Wang, Hui-Ling
Lee, Tung-Sheng Shih & Saou-Hsing Liou et al. “Longitudinal follow-up
of health effects among workers handling engineered nanomaterials: a
panel study”. Environ Health 18, 107 (2019).
https://doi.org/10.1186/s12940-019-0542-y
9 Michael Kendall and Stephen Holgate. “Health impact and toxicological
effects of nanomaterials in the lung”, Respirology, 19(5) (2012): 743-758.
The Application of Occupational Safety and Health Legislation 107
threats. However, this likely reflects insufficient data rather than
assured safety.10
Graphene, a notable nanomaterial is made from highly stable
carbon and is widely utilised globally.11 With a carbon bond distance
of about 0.142 nanometres and a layer height of merely 0.33
nanometres, graphene is the thinnest material discovered so far.12
Despite its slenderness, it is remarkably strong, nearly transparent, and
so densely packed that even helium, the smallest atom, cannot penetrate
it. Thus, it poses a high risk to workers exposed to graphene. Graphene
is rapidly gaining ground in medicine, with applications in detecting
and treating dangerous diseases, including cancer.13 Handling GBM
exposes workers to risks, particularly through inhalation during
production and handling. There are also concerns about skin or oral
contact with GBM. The oral exposure to GBMs, especially when used
for drug delivery, poses safety concerns. Research on genetically
modified Bacteroides ovatus strains indicated that these bacteria can
survive in the mammalian gastrointestinal tract and may exchange
genetic material with wild-type bacteria.14
This paper aims to evaluate whether graphene usage in the
medical sector aligns with Malaysia’s OSH (USECHH) Regulations
2000 and the OSH Act 1994, as amended in 2022 (Act A1648). A
significant challenge lies in the limited literature on graphene
regulation in Malaysia. Addressing this gap may require creative
10Shaira Ismail, Salina Budin, and Siti Aminah Mohd Ali. “The
nanotechnology application and workforce health and safety - a study of
the Malaysia laws, statutory regulations and guidelines on
nanotechnology”. Journal of Physics. Conference Series, 1349(1)
(2019):012031.
11Kim S. Siow. “Pengelupasan Grafit untuk Mengkomersilkan Teknologi
Grafin”. Sains Malaysiana, 46(7), (2017): 1047–1059.
https://doi.org/10.17576/jsm-2017-4607-06.
12Madhuri Sharon and Maheshwar, Sharon. Graphene: An Introduction to the
Fundamentals and Industrial Applications. (John Wiley & Sons. 2015).
13Emily Mullin. “An ultrathin graphene brain implant was just tested in a
person”, Science, (2024). https://www.wired.com/story/an-ultrathin-
graphene-brain-implant. Retrieved on May 12, 2025
14Udo Wegmann, et al,. “Use of genetically modified bacteria for drug delivery
in humans: Revisiting the safety aspect”. Sci Rep. (2017) May
23;7(1):2294. DOI: 10.1038/s41598-017-02591-6.
108 IIUM LAW JOURNAL VOL. 33 (1) 2025
applications of OSHA and its regulations or adopting a ‘soft law’
approach. A focused study on graphene regulation is thus timely and
significant.
RESEARCH METHODOLOGY
This study employs a qualitative methodology with a focus on critical
analysis. It examines graphene, a nanotechnology material, within the
context of Malaysian law. To provide a comprehensive understanding,
scientific and medical literature explain graphene's structure and
applications in the medical sector, while legal sources, including
articles and legislation, explore its regulatory status and implications
for worker safety. Key legal documents referenced include the OSH
Act 1994 and the USECHH Regulations 2000. Unstructured interviews
were also conducted with three respondents (experts) on the issue of
the regulatory application of graphene.
THE APPLICATION OF GRAPENE IN THE MEDICAL
SECTOR
The use of graphene in the medical field has garnered increasing
attention. The incorporation of graphene into nanocomposites
highlights its significant contributions to biomedical applications.
Graphene’s high mechanical strength, exceptional electrical and
thermal conductivity, and biocompatibility enhance the performance of
these nanocomposites.15 By integrating graphene, the products become
lighter while maintaining or improving their strength, making them
ideal for multifunctional biomedical applications.16
15Zulfiqar Ali, Saba Yaqoob, Jinhong Yu, Alberto D’Amore, M. Fakhar-e-
Alam. “Comparative review of processing methods for graphene-based
hybrid filler polymer composites and enhanced mechanical, thermal, and
electrical properties,” Journal of King Saud University - Science,36, ssue
10, (2024): 103457. https://doi.org/10.1016/j.jksus. 2024.103457.
16Gity Behbudi. “Mini Review of Graphene Oxide for Medical Detection and
Applications.” Journal Adv. Appl. NanoBio Tech 1,3, (2020): 63-66.
https://dormaj.org/index.php/AANBT/article/view/52.
The Application of Occupational Safety and Health Legislation 109
Graphene is applied extensively in drug and gene delivery and
cancer therapy.17 Graphene oxide (GO), with its biocompatibility,
solubility, and stability, is particularly suited for these uses. Their study
extended GO-based drug delivery beyond anticancer treatments to
include non-cancer diseases.18 Researchers developed a double cross-
linked GO hydrogel to promote the healing of diabetic ulcers.19 GO’s
unique properties make it a valuable tool for enhancing drug and gene
therapies, leading to improved patient outcomes. The potential of
graphene-based nanocarriers, such as chitosan-grafted GO, for drug
delivery and gene therapy, expanded graphene’s role in treating genetic
disorders.20 Graphene is pivotal in biosensor technology, especially for
cancer therapies.21 GO’s features make it effective in detecting lung
cancer with high accuracy.22
Graphene is gaining increasing significance in the medical field
due to its promising applications in medicine. Functionalised GO
nanocomposites have been developed for anticancer drug delivery. For
instance, gelatin and reduced GO nanosheets functionalised with folic
acid create biocompatible and biodegradable nanocarriers. These
carriers demonstrate controlled release and substantial drug-loading
17Mojtaba Hoseini-Ghahfarokhiroush Mirkiani, Naeimeh Mozaffari,
Mohamad Amin Abdolahi Sadatlu et al, “Applications of Graphene and
Graphene Oxide in Smart Drug/Gene Delivery: Is the World Still
Flat?” International Journal of Nanomedicine 15 (November) (2020):
9469–96. doi:10.2147/IJN.S265876.
18Wenxu Liu, et al. “Double cross-linked graphene oxide hydrogel for
promoting healing of diabetic ulcers”, Front. Chemistry, volume 12
(2024). | https://.org/10.3389/fchem.2024.1355646
19Wenxu Liu, et al (2024). “Double cross-linked graphene oxide hydrogel for
promoting healing of diabetic ulcers”.
20Safa A Vahab et al.” Exploring chitosan nanoparticles for enhanced therapy
in neurological disorders: a comprehensive review”. Naunyn
Schmiedebergs Arch Pharmaco, 398(3) (2025): 2151-2167. doi:
10.1007/s00210-024-03507-8.
21Anh Tuan Trong Tran et al. “Graphene and metal–organic framework hybrids for
high-performance sensors for lung cancer biomarker detection supported by
machine learning augmentation”, Nanoscale, 1: 9084-9095.
22AL-Salman, Chou-Yi Hsu, Zainab Nizar Jawad, Zaid H. Mahmoud, Faraj
Mohammed, Abdulnaser Saud, Zuhair I. Al-Mashhadani et al. “Graphene
oxide-based biosensors for detection of lung cancer: A review”, Results in
Chemistry 7 (2024): 1-22.
110 IIUM LAW JOURNAL VOL. 33 (1) 2025
capacity, with faster drug release in acidic environments like tumours,
enhancing the targeting of cancer cells while reducing side effects.23
In dentistry, graphene-silver nano powder hybrids have been
used as fillers in dental composites, improving mechanical properties
and providing antimicrobial activity.24 Such advancements
demonstrate graphene’s potential in both tissue engineering and
dentistry. Therefore, its usage in dentistry may pose a risk to workers.
Researchers examined the effects of inhaling graphene oxide and
found no immediate detrimental impacts on lung or cardiovascular
performance in a controlled human trial.25 However, they stressed the
need for further investigation to understand the effects of higher doses
or prolonged exposure. Despite its thickness being thousands of times
smaller than a human hair, graphene exhibits properties suitable for
electronics, textiles, paints, and water purification. Its potential for
targeted cancer therapeutics and implantable devices is also under
extensive study.26
Before graphene is widely adopted in medical applications,
comprehensive testing is crucial to identify any potential adverse
effects. While this study found minimal impact on pulmonary function,
arterial pressure, coagulation, and inflammation, there was a slight
indication that inhaling graphene oxide could affect blood clotting. The
findings, as cited in the literature, highlight the need for further
exploration into the safety and long-term effects of graphene exposure.
23Geentajali Singh et al., “Fabrication of chlorambucil loaded graphene- oxide
nanocarrier and its application for improved antitumor activity”.
Biomedicine & Pharmacotherapy, 129 (2020): 110443.
24Fatemeh Emadi et al., “Graphene: Recent Advances in Engineering, Medical
and Biological Sciences, and Future Prospective.” Trends in
Pharmaceutical Sciences 4, no. 3 (2018): 131-138.
25Jacks P.M. Andrews, et al. “First-in-Human Controlled Inhalation of Thin
Graphene Oxide Nanosheets to Study Acute Cardiorespiratory
Responses.” Nature Nanotechnology, 19 (2024): 705-714.
26Mehrab Pourmadadi et al., "Properties and Applications of Graphene and Its
Derivatives in Biosensors for Cancer Detection: A Comprehensive
Review" Biosensors 12, no. 5: (2020): 269.
https://doi.org/10.3390/bios1205026.
The Application of Occupational Safety and Health Legislation 111
While the previous section highlighted the medical applications of
graphene, the next section explores the occupational risks associated
with its use.
UNDERSTANDING THE RISKS OF GRAPHENE AS A
NANOTECHNOLOGY MATERIAL
Safely managing and disposing of nanomaterials is essential to prevent
respiratory risks, particularly with the growing use of graphene and its
derivatives. Regular discussions about nanomaterial safety and the
development of risk mitigation strategies are critical. Researchers
highlight that handling and processing graphene introduces health
hazards, making it essential to analyse exposure levels.27 While
measuring airborne graphene exposure in workplaces is necessary, no
single method effectively quantifies this exposure. The organic carbon
(OC) and elemental carbon (EC) approach is reliable but requires
additional characterisation techniques for precise results.
Researchers found that interviewees treated nanomaterials
(NMs) like other chemicals, ignoring their unique harmful
characteristics.28 This limited understanding results in inadequate
knowledge of both immediate and long-term health risks.
Consequently, only general safety measures are implemented.29 Their
survey revealed that current occupational safety and health (OSH)
protocols are insufficient for workplaces handling nanotechnology.
Workers, regardless of their educational background, perceived
powder-form NMs as more dangerous than liquid forms and believed
personal protective equipment (PPE) provided sufficient protection.30
27Tobias Storsjö et al. “Elemental carbon - An efficient method to measure
occupational exposure from materials in the graphene family”.
NanoImpact, 33, (2024):100499.
28Arindam Malakar et al., Nanomaterials in the environment, human exposure
pathway, and health effects: A review”, Science of tht Total Environment,
759, (2021), 143470.
29Arindam Malakar, et al.“Nanomaterials in the environment, human exposure
pathway, and health effects: A review, Science of the Total Environment”.
30Kai Savolainen et al. “Nanosafety in Europe 2015–2025: towards safe and
sustainable nanomaterials and nanotechnology innovations”. Finnish
Institute of Occupational Health, Helsinki, 2013.
112 IIUM LAW JOURNAL VOL. 33 (1) 2025
Employees’ perceptions of different types of nanomaterials influence
how they handle safety issues related to graphene.
Nanoparticles enter the body through ingestion, inhalation, skin
absorption, or injection. Once inside, they can bypass protective
barriers, accumulating in vital organs like the lungs and brain, causing
potential harm.31 Inhaled nanoparticles often deposit deep in the
respiratory tract, persisting in the body for extended periods. They may
also enter the bloodstream, spreading to other organs, potentially
affecting the heart, nervous system, and brain.32
Nanomaterials are linked to respiratory and cardiovascular
health issues and may have carcinogenic potential.33 Prolonged
exposure could lead to chronic inflammation, causing irreversible lung
tissue damage.34 This could pose a health risk to workers, raising safety
concerns for both employees and the public. The following section
examines the stance of Malaysian laws on regulating workplaces where
chemicals are extensively used.
THE MALAYSIAN OSHA 1994 AND ITS ROLE IN
REGULATING WORKPLACE CHEMICALS
The study on the legal application of graphene and nanotechnology in
Malaysia is limited.35 Several writings on this issue, however, have
31Christina Buzea, and Ivan Pacheco. “Toxicity of Nanoparticles.” In
Nanotechnology in Eco-Efficient Construction, edited by Pacheco-Torgal,
F., Diamanti, M. V., Nazari, A., and Granqvist, C. G., 2nd ed. (Cambridge:
Woodhead Publishing, 2018).
32Michael Kendall and Stephen Holgate. “Health impact and toxicological
effects of nanomaterials in the lung”, Respirology, 19(5) (2012): 743-758.
33Paul A. Schulte et al. “Occupational safety and health criteria for responsible
development of nanotechnology”. J Nanopart Res 16(1) (2014):1–17.
34Azrul Azlan Hamzah, Reena Sri Selvarajan, and Burhanoedin Yoep Majlis.
“Graphene for Biomedical Applications: A review”. Sains Malaysiana,
46(7), (2017):1125–1139. https://doi.org/10.17576/jsm-2017-4607-16.
35Maryam Etemadu, Akbariah Mohd Mahadzir, and Noorhayati Mohd Noor.
Occupational Health and Safety Risk Assessment of Nano Workplaces in
Malaysia. (2020). ResearchGate.
https://doi.org/10.20944/preprints202301.0478.v1
The Application of Occupational Safety and Health Legislation 113
been informative.36 The Occupational Safety and Health Act (OSHA)
1994, along with its accompanying regulations, including the
USECHH Regulations 2000, is Malaysia's primary tool for managing
chemicals in workplaces.37 OSHA aims to protect workers' health and
well-being by mitigating workplace hazards, as outlined in Section 4.
This framework emphasises a systematic approach to reducing risks
and ensuring safe working environments.
Although graphene is not explicitly listed in the chemical
regulations due to its recent emergence, OSHA remains applicable in
industries using graphene. The 2022 OSHA amendment mandates risk
management procedures,38 covering activities involving graphene.
Respondents interviewed in this study confirmed they use OSHA and
related regulations when handling graphene, even in the absence of
specific guidelines.39
36For example, Shaira Ismail, Salina Budin, and Sti Aminah Mohd Ali. “The
nanotechnology application and workforce health and safety - a study of
the Malaysia laws, statutory regulations and guidelines on
nanotechnology”. Journal of Physics. Conference Series, 1349(1),
(2019).012031.
37Krishna Gopal Rampal, and J Mohd Nizam. “Developing regulations for
occupational exposures to health hazards in Malaysia”. Regulatory
Toxicology and Pharmacology, 46(2), (2006): 131–135; See also Mohd
Anuar Mokhtar. “The Occupational Safety and Health (Use and Standards
of Exposure of Chemicals Hazardous to Health) Regulations 2000”.
Planter, 81, 951, (2005): 355-365;
38Aneesya Suffiya Abu Seman and Kamal Halili Hassan. “Analisis Akta
Keselamatan dan Kesihatan Pekerjaan (Pindaan) 2022: Perbandingan
Sebelum dan Selepas Pindaan serta Implikasinya terhadap Industri”,
Jurnal Undang-undang dan Masyarakat 34 (2024): 122-140.
39The researchers conducted interviews with three respondents (experts). One
respondent held the position of Deputy Director at the Centre for Research
and Instrumentation Management in a research university in Bangi,
Malaysia. The interview was held on May 13, 2024. The other respondent
is employed as a Senior Associate in a company in Kuala Lumpur,
Malaysia, specializing in Nanotechnology. The interview was held on
May 29, 2024. The third respondent, a senior officer from the Ministry of
Science, Technology and Innovation, Malaysia, was interviewed on May
9, 2025. The first and second respondents views on graphene safety
regulations indicated that OSHA 1994 and the USECHH Regulations
2000 were applied when handling graphene in the workplace. Overall, the
respondents were of the view that: “The use of graphene in medical
114 IIUM LAW JOURNAL VOL. 33 (1) 2025
The 2022 OSHA amendment introduced significant changes,
including its application to all workplaces, public and private, as stated
in Section 1(2).40 This expansion ensures equal protection for all
workers, including those in the public sector and statutory authorities.
Employer Responsibilities
Section 15 of OSHA emphasises employers' proactive duty to
anticipate and mitigate workplace risks.41 In the absence of graphene-
specific regulations, employers must adhere to general chemical safety
rules. This includes conducting risk assessments and implementing
appropriate measures to minimise risks. The general duty clause
requires employers to take all practicable steps to safeguard workers,
even for new substances like graphene.
devices shows great promise, but regulatory approval is complex and can
take years due to stringent safety requirements”, and “Laboratories
working with graphene have not reported significant health issues related
to its exposure, and toxic effects have generally not been observed. While
graphene is not considered inherently dangerous, proper handling is still
advised to minimize any potential risks”, and “There is a general lack of
awareness about graphene and its numerous benefits. Many people do not
fully understand the product or its potential applications, which creates
additional challenges in promoting its use”. The third respondent was of
the view that: “The Occupational Safety and Health Act (OSHA) 1994
applies to the handling of graphene in the workplace. The Department of
Occupational Safety and Health (DOSH) released guidelines in 2018
supporting OSHA 1994 in relation to the use of nanomaterials, including
graphene. The application of the Use and Standards of Exposure of
Chemicals Hazardous to Health (USECHH) Regulations 2000 to
graphene is also considered likely. However, a specific Permissible
Exposure Limit (PEL) for graphene has not yet been established, which
remains a regulatory gap”.
40Kamal Halili Hassan, Rozanah Ab. Rahman, and Mariani Ismail. Legal
Aspects of Industrial Safety in Malaysia. (Kuala Lumpur: Dewan Bahasa
dan Pustaka, 2024).
41Section 15 provides a general duty on the employer towards his employees.
The 2022 amendment includes a duty to provide an emergency response
procedure or plan at the workplace via section 15 (2)(f).
The Application of Occupational Safety and Health Legislation 115
A key update in the 2022 amendment is the mandatory
preparation of risk assessments under Section 18B.42 Previously
optional, this duty now carries legal force. Employers must include
graphene-related risks in these assessments to align with OSHA's self-
regulation philosophy, as inspired by the Lord Robens Committee in
England.43 This ensures employers address potential emergencies,
industrial accidents, and health threats related to graphene use.
Section 21(1) expands on these obligations, requiring
manufacturers, importers, and suppliers to ensure the safety of
workplace substances.44 This includes thorough risk assessments and
information dissemination. Precautionary measures, such as protective
equipment and limiting direct contact, remain essential due to limited
data on graphene's long-term effects.
Employee Responsibilities
Employees also bear responsibilities under OSHA, as outlined in
Section 24(1). These include cooperating with employers, using
protective equipment, and adhering to safety directives. Given
graphene’s minute carbon particles and potential health risks, workers
must handle it with care, following all safety guidelines. The 2022
amendment increased penalties for non-compliance, with fines raised
to not exceeding RM2,000 and 3 months imprisonment. These stricter
penalties emphasise the importance of adhering to occupational safety
regulations.
General Provisions and Industry Standards
Section 15(2) of OSHA outlines employers’ specific duties, such as
maintaining safe work systems, handling substances securely, and
providing training and supervision. The 2022 amendment further
42This new section provides a duty to the employer, self-employed person, and
principal to conduct and implement risk assessment.
43Kamal Halili Hassan, Rozanah Ab. Rahman, and Mariani Ismail. Legal
Aspects of Industrial Safety in Malaysia. (Kuala Lumpur: Dewan Bahasa
dan Pustaka, 2024).
44New subsection 21(1)(d) in OSHA 2022 amendment: Manufacturers or
suppliers need to provide revisions of information if there exists a new
risk in the substance.
116 IIUM LAW JOURNAL VOL. 33 (1) 2025
requires employers to implement emergency protocols, particularly
relevant for substances like graphene. By adhering to OSHA’s general
duty clause, employers can create safer workplaces, ensuring
compliance and protecting employees.
The concept of “practicable” under OSHA involves assessing the
hazard’s severity, available knowledge, mitigation options, and
associated costs. This structured approach, as highlighted in cases like
Sri Kamusan45 and Westport,46 ensures safety measures balance worker
protection with practicality and economic feasibility. Employers can
make informed decisions that align with industry standards and OSHA
requirements while safeguarding their workforce.
ALIGNING THE STANDARDS: MALAYSIA'S USECHH
REGULATIONS 2000 FOR GRAPHENE APPLICATIONS
Table 1: Provisions of USECHH Regulations 2000
Part II – Sections 5
Identification of chemical hazardous to
health
Part III – Sections 6,7, 8
Permissible exposure limit
Part IV – Sections
9,10,11,12,13
Assessment of risk to Health
Part V – Sections
14,15,16,17,18,19
Action to control exposure
Part VI – Sections 20,21
Labelling and Re-labelling
Part VII – Sections
22.23.24.25
Information, Instruction and Training
45See Kamal Halili Hassan. “Ulasan Kes: Jabatan Keselamatan dan Kesihatan
Pekerjaan lwn Sri Kamusan Sdn. Bhd. [2014] 9 CLJ 825”. Kanun: Jurnal
Undang-undang Malaysia, 8 (2) (2016): 385-388.
https://jurnal.dbp.my/index.php/Kanun/article/view/6356
46 Pendakwa Raya v Westport Malaysia Sdn Bhd [2021] MLJU 261; See also
Aneesya Suffiya & Kamal Halili, 2024. “Analisis Akta Keselamatan Dan
Kesihatan Pekerjaan (Pindaan) 2022: Perbandingan Sebelum Dan Selepas
Pindaan Serta Implikasinya Terhadap Industri”, Jurnal Undang_Undang
dan Masyarakat 34 (2024): 122-140.doi: 10.17576/juum-2024-3402-09
The Application of Occupational Safety and Health Legislation 117
Part VIII - Section 26
Monitoring of exposure at the place of
work
Part IX – Section 27
Health surveillance
Part X – Section 28
Medical removal protection
Part XI – Section 29
Warning sign
Part XII – Section 30
Record Keeping
Schedule 1
List of chemicals and its permissible
exposure limit
The USECHH Regulations 2000 set strict rules and duties for
industries to protect workers from hazardous chemicals (Table 1).
Employers are required to identify, assess, and manage the risks posed
by chemicals hazardous to health (CHH).47 This proactive approach
emphasises prevention, aiming to reduce occupational illnesses and
injuries. By aligning with international standards, the regulations
highlight the importance of systematic risk assessments and control
measures to safeguard employee health.48 A study on the compliance
status of chemical management among industries in Malaysia revealed
that 70% of workplaces inspected between 2016 and 2020 received
satisfactory grades.49 This improvement indicates the effectiveness of
systematic risk assessments and control measures in reducing
occupational health risks.
47Hazlina Yon. “The compliance status of chemical management among
industries in Malaysia: The USECHH after 20 years”. Journal of Energy
and Safety Technology, 5(1), (2022): 1-20.
https://doi.org/10.11113/jest.v5n1.99.
48Mohd Marzuki Mohamed et al., “Semi-quantitative chemical expert tool for
occupational safety and health (Use and Standards of Exposure of
Chemicals Hazardous to Health) Regulations 2000”. ACS Chemical
Health & Safety, 30(1), (2023): 9–20.
https://doi.org/10.1021/acs.chas.2c00046.
49Hazlina Yon. “The compliance status of chemical management among
industries in Malaysia: The USECHH after 20 years”. Journal of Energy
and Safety Technology, 5(1), (2022): 1-20.
https://doi.org/10.11113/jest.v5n1.99
118 IIUM LAW JOURNAL VOL. 33 (1) 2025
When it comes to nanomaterials like graphene, the regulatory
landscape becomes more complex. Unlike conventional substances,
nanomaterials have unique properties, such as higher reactivity and
potential toxicity—that challenge traditional regulatory frameworks.
While the USECHH Regulations 2000 cover "substances" and
"chemicals," graphene is not specifically mentioned. This raises
concerns about whether the regulations adequately address the unique
risks of nanomaterials.50
Graphene, widely used in the medical industry, falls under the
general category of chemical substances. However, its specific hazards
and applications might push the boundaries of what the regulations
cover51. To bridge this gap, it is crucial to closely examine the
regulatory framework, particularly Regulation 15(1) of the USECHH
Regulations. This section offers a starting point for understanding how
the regulations apply to emerging materials like graphene and how they
might need to evolve to ensure comprehensive protection. The gap in
the application of Malaysian laws to graphene arises because graphene
is not specifically mentioned in the USECHH Regulations. Although
the Schedule in the 2000 Regulations lists various chemicals, it does
not include graphene. Therefore, an amendment to the Schedule is
necessary to address this gap. Due to the absence of graphene in the
Schedule, the authority is unable to provide a permissible exposure
limit (PEL) for graphene.
Regulation 15(1) of the USECHH Regulations 2000 highlights
the importance of taking precautions when handling chemicals that
may harm workers' health. Employers must follow strict safety
measures to ensure these chemicals are managed safely. Even though
graphene is not specifically mentioned in the regulations, it is
considered a chemical substance. Therefore, it still falls under the rules
50Shaira Ismail, Salina Budin, and Siti Aminah Md Ali. The nanotechnology
application and workforce health and safety: A study of the Malaysia laws,
statutory regulations and guidelines on nanotechnology. Journal of
Physics: Conference Series, (2019): 1349, 012031.
https://doi.org/10.1088/1742-6596/1349/1/012031.
51Faris Abdullah et al., “Integration of chemical health risk assessment
(CHRA) and indoor air quality (IAQ) assessment: from a Malaysian
perspective”. International Journal of Environmental Health
Research, 34(5) (2023): 2280–2298.
https://doi.org/10.1080/09603123.2023.2243843.
The Application of Occupational Safety and Health Legislation 119
and safety measures set out in the regulations. Examining the
framework of USECHH 2000 Regulation 15(1) is crucial, even when
dealing with modern materials like graphene, as the risk is high.
Regulation 3(1)(d) of the regulations notes that they apply to all
workplaces, but with a focus on pharmaceutical use. The term
"pharmaceutical" is defined in Regulation 3(2) as any drug used by
humans for medicinal purposes. The authors argue that if graphene is
used in medicines, like for drug delivery, it must follow the same rules.
Any process that turns graphene into medicine must follow the safety
steps outlined in the regulations.
Although the regulations do not specifically address medical
uses of graphene, the general principle still applies since graphene is a
chemical substance, and it must be handled according to the guidelines
for chemicals.52 Any process involving graphene must prioritise
worker safety and follow the regulations. Findings from interviews
with three experts in Malaysia revealed that they unanimously agreed
that safety measures for handling graphene should align with the
USECHH Regulations 2000 or OSHA 1994. Uncertainty, however,
persists about how the USECHH Regulations 2000 and other
frameworks, like OSHA 1994, apply to nanomaterials such as
graphene. These regulations were not originally designed with
nanomaterials in mind, so it is unclear how effective they are for
managing the risks of substances like graphene. To help address this,
our research investigates whether additional guidelines, or "soft laws,"
can complement the current regulations. Soft laws, such as best
practices, can provide flexibility and allow regulations to keep up with
discoveries and risks related to nanomaterials. The use of soft law in
foreign jurisdictions regarding graphene safety policies may serve as a
valuable example for Malaysia to emulate.53
52Mohamad Azli Ahmad. “Medical surveillance on chemicals hazardous to
health in Malaysia”. The International Journal of Medicine and Sciences,
2(1), (2017): 27-34.
53See for examples, World Health Organization. WHO guidelines on
protecting workers from potential risks of manufactured nanomaterials.
World Health Organization, Geneva, 2017. see also Vladimir Murashov,
John Howard. The US must help set international standards for
nanotechnology. Nat Nanotechnol, 3(11) (2008): 635–636; Vladimir
Murashov et al “Regulatory approaches to worker protection in
nanotechnology industry in the USA and European Union.” Industrial
120 IIUM LAW JOURNAL VOL. 33 (1) 2025
Using Soft Law to Control Graphene
In the realm of Malaysian judicial practice, guidelines function as non-
binding instruments that serve to establish moral duties and promote
best practices.54 Although lacking in legal enforceability, these
guidelines are instrumental in shaping ethical norms and guiding
behaviour within various sectors.55 Unlike statutory laws or
regulations, guidelines are not designed to carry legal weight. Instead,
they offer practical recommendations based on industry standards,
expert opinions, and relevant legal principles. A notable characteristic
of guidelines is their adaptability to changing circumstances. They are
frequently revised to accommodate technological advancements,
evolving industry standards, and new legal developments. This
adaptability ensures that guidelines remain relevant and effective in
addressing contemporary challenges. Despite their non-binding nature,
guidelines can significantly influence decision-making and conduct
within organisations. They serve as a valuable reference for
professionals and organisations seeking to align their practices with
established norms and expectations.
Health, 49(3) (2011): 280–296; see also Bell, C., & Marrapese, M.
Nanotechnology Standards and International Legal Considerations. In V.
Murashov & J. Howard (Eds.), Nanotechnology Standards(2011): 239–
255.https://doi.org/10.1007/978-1-4419-7853-0_10;Michael Riediker, et
al. “Development of a control banding tool for nanomaterials.” Journal of
Nanoparticle Research 14(9) (2012): 1228; Vladimir Murashov et al.
“Regulatory approaches to worker protection in nanotechnology industry
in the USA and European Union.” Industrial Health, 49(3) (2011): 280–
296.
54 Lome Sossine and Charles W. Smith. “Hard Choices and Soft Law: Ethical
Codes, Policy Guidelines and the Role of the Courts in Regulating
Government”, 40 Alta. L. Rev. 867 (2002-2003): 867-892. See also the
case of Thong Foo Ching & Ors v Shigenori Ono [1998] 4 CLJ 674. The
court acknowledged that guidelines could be used to assist in the
interpretation and application of legal provisions.
55 Ketua Pengarah Jabatan Alam Sekitar & Anor v Kajing Tubek and Other
Appeals [1997] 4 CLJ 253 CA. The Federal Court clarified that guidelines
are generally not legally binding unless expressly stated in legislation.
They serve as a reference or administrative tool to assist decision-makers
in maintaining consistency and ensuring proper adherence to the policy
goal.
The Application of Occupational Safety and Health Legislation 121
The "Guideline on Control and Safe Handling of Nanomaterials"
is an important document issued by DOSH that provides critical
information about the risks associated with nanotechnology.56 It
outlines key recommendations for managing exposure to
nanomaterials, including graphene, in the workplace. This guideline is
comprehensive and covers many aspects of nanomaterial safety;
however, it does not fully address some regulatory gaps. These gaps
include the establishment of threshold values for safe exposure,
exceptions for chemicals used in research and development, and
specific requirements for Safety Data Sheets (SDS) and labelling, as
highlighted earlier.57 For instance, while the guideline provides general
safety measures for nanomaterials, it lacks specific threshold values for
graphene, making it challenging to determine safe exposure levels.
Additionally, exceptions for chemicals in research and development
can lead to inconsistent safety practices, potentially exposing workers
to higher risks. The absence of detailed requirements for SDS and
labelling further complicates the safe handling of graphene, as workers
may not have access to all necessary information about its hazards and
protective measures. Addressing these gaps through enhanced
regulations and specific guidelines for graphene can improve safety
and ensure comprehensive risk management in workplaces dealing
with this emerging nanomaterial.
To evaluate potential dangers, the guideline suggests conducting
tests on nanomaterials of utmost importance, such as graphene, by
comparing their attributes to establish their "similarity." This process
entails analysing the resemblances and disparities among
nanomaterials. If substantial disparities are detected, it suggests that the
hazard data for one substance may not be applicable to another. Due to
graphene's distinctive characteristics and diverse applications,
particularly in medical devices and semiconductors, this measure is
essential for precise risk evaluation.
56Department of Occupational Safety and Health. Guidelines on control and
safe handling of nanomaterials. Ministry of Human Resources Malaysia,
2018.
57Halila Faiza Zainal Abidin, Kamal Halili Hassan, and Zinatul Ashiqin
Zainol. “Regulating Risk of Nanomaterials for Workers through Soft Law
Approach”. NanoEthics, 14(2), (2020): 155–167.
122 IIUM LAW JOURNAL VOL. 33 (1) 2025
Moreover, the guideline recommends the utilisation of a control
banding methodology to evaluate the hazards linked to nanomaterials.
This approach, endorsed by COSHH Essentials and GoodNanoGuide,
entails classifying tasks into bands according to the degree of risk and
the necessary control measures to reduce exposure.58 By implementing
this approach, it establishes a well-organised system for handling risks
associated with nanomaterials in the workplace, guaranteeing the
presence of suitable safety procedures. Tasks related to the
manipulation of graphene can be categorised into specific risk levels
that determine the required safety measures, including ventilation
controls, personal protective equipment, and exposure monitoring.
This control banding approach is in line with well-established
standards in OSH. It highlights the significance of customised risk
management strategies for such materials and exposure scenarios.59
The purpose is to establish safeguards that effectively shield workers
from the potential dangers linked to nanomaterials, such as graphene,
by implementing controls that are commensurate with the identified
risks.
Given the dynamic nature of nanotechnology, it is recognised
that the guidelines provide only limited and incomplete information as
a single source of reference. It is advisable to supplement these
guidelines with additional pertinent international standards and
guidelines to gain a more thorough comprehension, particularly
concerning specific matters such as the properties of individual
nanomaterials like graphene, classification of hazards, preparation of
Safety Data Sheets (SDS) and labels, recommended limits of exposure,
and up-to-date tools for managing risks. Integrating knowledge from
diverse sources improves the thoroughness and precision of
occupational health and safety approaches concerning
58Gary Marchant, E. “‘Soft law’ mechanisms for nanotechnology: liability and
insurance drivers”. J Risk Res 17, 6 (2014):709–719. See also NIOSH
(2013) Occupational exposure to carbon nanotubes and nanofibres.
Current Bulletin 65. (2014) DHHS (NIOSH) Publication No. 2013-145.
https://www.cdc.gov/niosh/docs/2013-145/pdfs/2013-145.pdf. Accessed
17 June 2024.
59Stephen Finger, R, Shanti Gamper-Rabindran. “Protecting workers from
adverse chemical exposure: do voluntary standards reduce exposure?”
(2012). Available at SSRN. http://dx.doi.org/10.2139/ssrn.2070595.
The Application of Occupational Safety and Health Legislation 123
nanotechnology.60 This comprehensive approach guarantees that both
employers and employees reap the advantages of the most recent
advancements and optimal methods in the secure management of
graphene and other nanomaterials.
CONCLUSION AND RECOMMENDATIONS
The development of robust and precise government regulations to
protect workers from potential hazards associated with graphene or
nanomaterials is unlikely to occur soon. This delay can be attributed to
a variety of factors, including graphene or nanotechnology's complex
and rapidly evolving nature, which makes it difficult to establish
comprehensive and enforceable regulations. Furthermore, the wide
range of nanomaterials and their applications complicate the regulatory
landscape. While the use of OSHA and USSECH is implied and
assumed to apply to graphene as a chemical substance, it is not
explicitly stated in legislation, leading to uncertainty among many
stakeholders regarding its actual impact. Some presume that graphene,
being a chemical substance, should fall under OSHA and USECCH
regulations. While this argument appears reasonable, the lack of clear
provisions designating graphene as a chemical or derived from one
means that applying these regulations remains speculative. Current
practice generally assumes that referring to OSHA and USECHH for
graphene is the most practical approach available.
To address this regulatory gap, it is necessary to take a more
comprehensive approach to regulation, shifting away from
conventional command and control models and towards more flexible
methodologies. Implementing mechanisms such as guidelines,
industrial codes of conduct, and best practices can be a highly effective
strategy. These non-binding legal instruments can greatly enhance
stakeholders' comprehension of the potential health hazards linked to
nanomaterials. Soft law mechanisms foster trust and consensus in the
industry and regulatory communities through promoting dialogue and
collaboration.
60Halila Faiza Zainal Abidin, Kamal Halili Hassan, and Zinatul Ashiqin
Zainol. “Regulating Risk of Nanomaterials for Workers through Soft Law
Approach”. NanoEthics, 14(2), (2020): 155–167.
124 IIUM LAW JOURNAL VOL. 33 (1) 2025
Over time, these informal approaches may develop into legally
enforceable measures, establishing the foundation for future official
regulations. Soft law strategies provide a versatile and clear approach
to addressing the challenges linked to nanotechnology, including its
applications in the medical and semiconductor sectors. They offer the
necessary adaptability to keep up with fast-paced technological
progress, all while ensuring that regulatory frameworks do not hinder
innovation in these crucial fields.
This approach is particularly important in the field of
nanotechnology, as scientific understanding is constantly evolving and
there are still unknown risks to consider, especially in sectors like
medicine and semiconductors where graphene is increasingly being
used. Utilising soft law mechanisms enables regulators to easily adjust
to new information and emerging risks, guaranteeing that regulatory
frameworks stay up-to-date and efficient in light of technological
advancements.
To address this regulatory gap, the following recommendations
are proposed:
(1) Develop specific regulatory guidelines for graphene or amend the
present Guidelines. Leverage existing guidelines under OSHA
1994 and USECHH 2000, supported by DOSH, to include
graphene explicitly as a regulated nanomaterial.
(2) Amend the USECHH 2000’s Schedule to include graphene in the
chemical list.
(3) Establish Permissible Exposure Limits (PEL). The current
regulations lack defined exposure thresholds for graphene.
Developing PELs would strengthen compliance and occupational
safety.
(4) Strengthen coordination between research institutions, regulatory
bodies (e.g., DOSH, Ministry of Science, Technology and
Innovation), and industry players to streamline regulatory
development and ensure enforcement consistency.
The Application of Occupational Safety and Health Legislation 125
ACKNOWLEDGEMENT
The authors are deeply grateful to the management of the Faculty of
Law, Universiti Kebangsaan Malaysia (National University of
Malaysia) for the support rendered to the authors during the process
of researching and writing this paper.
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The IIUM Law Journal is licensed under a Creative Commons
AttributionNonCommercial 4.0 International License.
THE NECESSITY OF CHILD CARE SERVICE
AGREEMENTS IN MALAYSIA: A LEGAL ANALYSIS
Sairun Syakira Binti Saiman
Sheela Jayabala Krishnan@Jayabalan
Daleleer Kaur Randawar
ABSTRACT
The Child Care Centre Act 1984 (Act 308) and The Child Care Centre
Regulations 2012 are the primary regulative measures to protect children
in childcare facilities in Malaysia. The aim of Act 308 is to oversee the
registration, control, and inspection of the childcare centre and other
related matters connected therewith. Although regulatory measures were
established in Malaysia, child maltreatment in childcare centres remains
alarming. The childcare regulations in Malaysia provide the guidelines
for operating childcare, such as the documentation needed while running
off the services, the scope of protection towards the children, offences,
and penalties towards any maltreatment of the children, yet, the
enhancement of the protection should be extended to mitigate childcare
offences in a holistic perspective. In other countries, such as the United
States of America (USA), specifically in Texas and California, the
childcare agreement has become another protection mechanism
practised to regulate childcare services. Therefore, the purpose of this
PhD Candidate, Faculty of Law, Universiti Teknologi MARA (UiTM),
40450 Shah Alam, Selangor. Email: sairunsyakira@yahoo.com.my
(Corresponding Author).
Associate Professor Faculty of Law, Universiti Teknologi MARA (UiTM),
40450 Shah Alam, Selangor. Email: sheela880@uitm.edu.my
Associate Professor, Faculty of Law, Universiti Teknologi MARA (UiTM),
40450 Shah Alam, Selangor. Email: dolly@uitm.edu.my
[Received: 29 October 2024, Accepted: 6 May 2025, Published: 28 May 2025]
134 IIUM LAW JOURNAL VOL. 33 (1) 2025
paper is threefold: firstly, to provide insight into Malaysia’s childcare
regulations and practices; secondly, to analyse the comparative country
childcare regulations, agreements, and conventions; thirdly, to conduct
an analysis of the needs for childcare services contracts in Malaysia
being practices by using content analysis and comparative approach. As
a result, the government could opt for another legal mechanism to
mitigate child abuse and neglect in childcare centres to ensure the
comprehensiveness of the childcare regulations in Malaysia.
Keywords: Childcare Law, Childcare Services Contracts, Comparative
Childcare Regulations, Mitigate Childcare Offence.
KEPERLUAN PERJANJIAN PERKHIDMATAN PENJAGAAN
KANAK-KANAK DI MALAYSIA: SUATU ANALISIS
UNDANG-UNDANG
ABSTRAK
Akta Taman Asuhan Kanak-Kanak 1984 (Akta 308) bersama dengan
Peraturan-Peraturan Taman Asuhan Kanak-Kanak 2012 berfungsi
sebagai peraturan utama di Malaysia dalam memastikan keselamatan
kanak-kanak semasa berada di bawah jagaan pengasuh. Tujuan utama
Akta 308 adalah untuk menyediakan garis panduan berkaitan
pendaftaran, pemantauan, dan pemeriksaan pusat jagaan kanak-kanak
serta aspek lain yang berkaitan. Walaupun langkah kawal selia
diwujudkan di Malaysia, penganiayaan kanak-kanak di pusat jagaan
kanak-kanak terus membimbangkan. Sememangnya boleh dikatakan
bahawa peraturan penjagaan kanak-kanak di Malaysia menyediakan
garis panduan untuk mengendalikan penjagaan kanak-kanak, seperti
dokumentasi yang diperlukan semasa menghentikan perkhidmatan, skop
perlindungan terhadap kanak-kanak, kesalahan, dan penalti terhadap
sebarang penganiayaan terhadap kanak-kanak, namun, peningkatan
perlindungan harus diperluaskan untuk mengurangkan kesalahan
penjagaan kanak-kanak dalam perspektif yang lebih holistik. Di negara
lain seperti Amerika Syarikat (AS), khususnya di negeri Texas dan
California, perjanjian penjagaan kanak-kanak telah menjadi satu lagi
mekanisme perlindungan yang diamalkan dalam mengawal selia
perkhidmatan penjagaan kanak-kanak. Oleh itu, kertas penyelidikan ini
bertujuan pertamanya, untuk membincangkan peraturan serta amalan
penjagaan kanak-kanak di Malaysia; kedua, untuk menganalisis
peraturan, perjanjian dan konvensyen mengenai penjagaan kanak-kanak
di negara-negara yang dibuat perbandingan; ketiga, menjalankan analisis
tentang keperluan kontrak perkhidmatan penjagaan kanak-kanak di
Malaysia yang menjadi amalan dengan menggunakan pendekatan
The Child Care Service Agreements 135
analisis kandungan dan perbandingan. Secara konklusifnya, bagi
memastikan kesyumulan peraturan penjagaan kanak-kanak di Malaysia,
satu lagi mekanisme undang-undang boleh dipilih oleh kerajaan untuk
mengurangkan penderaan dan pengabaian kanak-kanak di pusat jagaan
kanak-kanak.
Kata Kunci: Undang-Undang Penjagaan Kanak-Kanak, Kontrak
Perkhidmatan Penjagaan Kanak-Kanak, Perbandingan Peraturan
Penjagaan Kanak-Kanak, Mengurangkan Kesalahan Penjagaan Kanak-
Kanak.
INTRODUCTION
The increasing trend of the working mom phenomenon has urged the
government to provide the initiative and appropriate childcare
placement, laws, and policies. The rise of working mothers in Malaysia
has prompted the government to intervene in improving childcare
facilities, policy, and law. In 2023, the Malaysian government
announced its intention to set up affordable childcare facilities and an
RM10 million allocation to register unregistered childcare facilities.
The interventions will boost the women's labour force participation rate
from 55.5% to 60%, as it tries to break down obstacles like unpaid care
work, gender discrimination, and a lack of family support to allow
mothers to go back to work.
1
Hence, it has resulted in various childcare
institutions being established to cater to such demands in centre-based
or home-based childcare services. Centre-based childcare typically
involves larger groups of children with multiple child caregivers,
whereas home-based childcare usually accommodates fewer children
with a single childcare giver.
Regardless, all childcare providers (or childcare givers) must
comply with the Child Care Centre Act 1984 (Act 308) and the Child
Care Centre Regulations (2012) while operating their services. An
additional significant legal reference concerning childcare centres in
Malaysia is a guideline issued by local authorities titled "Garis Panduan
Penubuhan Taska dan Tadika" (GP027), released in 2012 and updated
1
Ministry of Finance Malaysia. "Gov’t Moves to Get More Women into the
Labour Force." Ministry of Finance Malaysia, 2023,
https://www.mof.gov.my/portal/en/news/press-citations/gov-t-moves-to-
get-more-women-into-the-labour-force.
136 IIUM LAW JOURNAL VOL. 33 (1) 2025
in 2017. This guideline takes into account the stipulations of various
technical agencies, including local councils, the Social Welfare
Department (SWD), the Malaysian Fire and Rescue Department
(JBPM), the Malaysian Ministry of Health (KKM), and the State
Education Department (JPN).
2
As mentioned above, reflecting on these
rules shows that the Malaysian government is dedicated to creating a
safe and appropriate environment for young children. The rules seek to
improve the quality, safety, and effectiveness of childcare services.
The Child Act 2001 and the Sexual Offences Against Children
Act 2017 (Act 792) are among the key laws that will safeguard children
under the care of childcare providers. The management, parents, and
childcare providers should constantly be aware of their responsibilities
to ensure children's safety and protection by averting accidents and
injuries.
3
Although there are specific laws regulating childcare in
Malaysia, there are a number of child abuse cases caused by the giver
which have raised concerns as to whether the current laws are sufficient
to protect the well-being of children. The occurrence of child abuse
cases involving child care providers raises serious concerns about the
effectiveness of these legal measures in protecting the well-being of
children under their care.
Despite the existence of these legal frameworks, several
weaknesses persist. These include limited enforcement of regulatory
standards, insufficient background checks and training for child care
providers, and vague definitions of abuse and neglect in the law.
Moreover, the lack of mandatory reporting mechanisms and
inconsistent licensing requirements further contribute to the
vulnerability of children in care. Offences that require mitigation
include physical abuse, emotional abuse, sexual abuse, and neglect,
especially those committed by unqualified, unregistered, or
unsupervised caregivers. As highlighted in the conclusion part of the
2
Abdul Mutalib, Mashitah, Rahimah Saimin, Intan Nadia Ghulam Khan,
Abidah Abdul Ghafar, and Nik Salida Nik Saleh. “Legal Requirements of
Home-Based Childcare Centres in Malaysia; Are Childcare Providers
Aware?” Malaysian Journal of Syariah and Law 12, no. 2 (2024): 311–
23. https://doi.org/10.33102/mjsl.vol12no2.517.
3
Abashah, Aidanazima, and Che Azlan Taib. “Optimising Malaysian
Childcare Safety Performance, in Light of Management, and Babysitting
Practices.” South African Journal of Childhood Education 14, no. 1
(2021). https://doi.org/10.4102/sajce.v14i1.1529.
The Child Care Service Agreements 137
Pendakwa Raya v Lee Seet Yeng [2016], MLJU 1295, which states that,
however, because child abuse cases are increasing in numbers
nowadays, it is a social issue that should be dealt with high
importance…
4
The word mitigates the risk of the children being placed
with an unqualified childcare provider should be emphasised first. One
way to reduce the offence is to make the preventive and precautionary
theory the pillar of childcare laws and regulations. The court stated that,
because child abuse cases are increasing, it is a social issue that must
be considered as high importance.
Thus, the enhancement of the existing child care laws would be
necessary to mitigate such offences. From the above case, the court
specifically remarked that child abuse cases were on the rise and
emphasised that such cases must be dealt with utmost seriousness due
to their severe ramifications for society as a whole. This
acknowledgment provides an important jurisprudential foundation for
the evolution of Malaysia's child care law regime. The legal recognition
of child abuse as a serious social issue underscores the need for the
clarification of legal standards and responsibilities of care in the
provision of child care services.
In another country, such as the United States of America
(specifically in Texas and California), another element is highlighted
in its childcare regulations and practices, such as developing an
agreement for childcare services between parents and caregivers.
Implementing such an agreement enables the parties to follow the rules
and regulations of such matters and provide equivalent damages as
agreed. Other elements highlighted in such child care regulations and
practices include developing an agreement for child care services
between parents and child care providers,
5
which is seen as a distinctive
approach used to regulate the childcare services. Implementing the said
agreement enables the parties to follow the rules and regulations of
such matters and provide equivalent damages as agreed.
6
Here, the
childcare providers should have clear written policies in the form of an
4
Pendakwa Raya v Lee Seet Yeng [2016] MLJU 1295
5
Karageorge, Kate, and Rachel Kendall. The Role of Professional Child Care
Providers in Preventing and Responding to Child Abuse and Neglect. U.S.
Department of Health and Human Services, 2008,
www.childwelfare.gov/pubpdfs/child%20care.pdf.
6
Karageorge and Kendall, The Role of Professional Child Care Providers.
138 IIUM LAW JOURNAL VOL. 33 (1) 2025
agreement to share with parents when the childcaregiver undertakes to
provide such service.
7
A brief agreement outlining the programme's rules should be
signed by the parent and the daycare provider. Both the caregivers’ and
the parents' interests will be safeguarded by this.
8
This paper aims to
do three things: first, it will give an overview of Malaysia's childcare
laws and practices; second, it will examine the childcare laws,
agreements, and conventions of the comparative countries (California
State of America the states of California and Texas); and third, it will
analyse the requirements need for childcare service agreement in
Malaysia using a comparative and judicial approach. Therefore, this
paper has been divided into three sections: firstly, a study on the
regulative measures of childcare in Malaysia; secondly, a critical
analysis of the legal childcare practices in Texas and California USA;
and thirdly on a discussion on the analysis of the needs of childcare
services contracts in Malaysia. Finally, various research ideas will need
further investigation in future research.
RESEARCH METHODOLOGY
This research adopted the pure legal research approach, using
qualitative analysis to study the childcare law in Malaysia. With
content analysis, this research investigated the problems related to
childcare services but mainly focused on Malaysia's legal framework.
This research analyses both primary and secondary data. Content
analysis can be defined as a reproducible, systematic way of reducing
large volumes of text words into smaller content categories based on
explicit coding rules.
9
The research also utilises the comparative legal
research technique to extend this study further. The comparative legal
research technique analyses legislative text, jurisprudence, and legal
doctrines, particularly foreign law.
10
This strategy will make the study
7
Karageorge and Kendall, The Role of Professional Child Care Providers.
8
Pendakwa Raya v Lee Seet Yeng [2016] MLJU 1295
9
Abdullah, N. C. (2018). Legal Research Methodology. Subang Jaya,
Selangor: Sweet & Maxwell.
10
Majeed, N., and A. Hilal. “Approaches and Methodologies in Comparative
Legal Studies: An Abstract Framework as Methodology”. Pakistan
The Child Care Service Agreements 139
more sensitive to the social and cultural character of the law and
provide a unique perspective on how law develops and operates in
different cultures. Comparative legal research will benefit this
research, especially in legal development, where the law must be
altered, amended, and transformed.
THE REGULATIVE MEASURES OF CHILDCARE IN
MALAYSIA
As mentioned earlier, several legal provisions have been enacted in
Malaysia, such as the Childcare Centre Act 1984 (Act 308), (2) Centre
Regulation 2012, (3) Child Act 2001 (Act 611), and (4) Sexual
Offences Against Children Act 2017 (Act 792). Therefore, in this
subsection, the researcher will thoroughly discuss the critical points of
these laws as provided below.
The Child Care Center Centre Act (Act 308)
Historically, in 1983, Malaysia recognised the need for at least a
minimal standard in governing childcare services when the report on a
survey on childcare by the Social Welfare Services Department was
concluded.
11
In order to supervise childcare operations, childcare
registration under the SWD, and inspection of childcare institutions,
the government passed the Child Care Centre Act (Act 308) 1984. In
Malaysia, there are four categories of childcare facilities, which are;
(1) home childcare centre, (2) workplace childcare center is a
workplace center that accommodates ten or more children, (3)
community-based childcare centre and (4) institution-based childcare
centre.
12
The classification of childcare service facilities is essential in
Languages and Humanities Review, vol. 6, no. 3, Sept. 2022, pp. 474-88,
doi:10.47205/plhr.2022(6-III)41.
11
Rahmatullah, Bahbibi. “Overview of Early Childhood Care and Education
in Malaysia.” Hungarian Educational Research Journal 11, no. 4 (2021):
396–412. https://doi.org/https://doi.org/10.1556/063.2021.00074.
12
Abdul Mutalib, M., R. Saimin, I. N. Ghulam Khan, A. Abdul Ghafar, and N.
S. S. Nik Saleh. “Legal Requirements of Home-Based Childcare Centres
in Malaysia; Are Childcare Providers Aware of These?” Malaysian
Journal of Syariah and Law 12, no. 2 (2024): 311–23.
https://doi.org/10.33102/mjsl.vol12no2.517.
140 IIUM LAW JOURNAL VOL. 33 (1) 2025
Malaysia’s early childhood care framework, providing various options
that meet the different needs of families and communities.
Hence, parents need to be aware of childcare categorisation to
enable a good option when choosing a childcare centre for their
children. The childcare centre serves as a primary setting for fostering
an environment where children can learn various physical and
academic abilities, while also being nurtured in positive behaviours,
social skills, and resolving conflicts.
13
A well-founded childcare centre
will help the children develop their cognitive and emotional skills.
Research conducted by Richter et al. indicates that early childhood
development (ECD) includes the resources required to influence the
lives of children from birth to age 8, enabling them to survive, flourish,
and establish a strong foundation.
14
ECD consists of five essential elements: proper health,
sufficient nutrition, attentive caregiving, safety and security, and
chances for early learning.
15
Today's perspective of child care services
is viewed as an essential start-up for young children. The childcare
services are no longer focusing solely on babysitting the children. Still,
the focus has been diversified into providing an environment that can
encourage the positive development of the children, such as stimulating
sensory play through gross motor and refined skills.
16
Another essential
element that needs to be considered by the parents in choosing an ideal
childcare centre for their children is the registration of the childcare
centre under the SWD. The registration of childcare centres is essential,
and it is evident that registered centres are complying with the
13
Stevens, Sonya. “A Mixed Method Program Evaluation of Annual
Inspections Conducted in Childcare Programs in Washington State.”
Journal of Regulatory Science 8 (2020): 1–11.
https://doi.org/10.21423/jrs-v08stevens.
14
Jolley, Emma, Stevens Bechange, Mika Mankhwazi, Jenipher Mbukwa
Ngwira, Rachel Murphy, Elena Schmidt, and Paul Lynch. “Measuring the
Impact of a Training Intervention for Early Childhood Centre Staff on
Child Development Outcomes: Findings from a Cluster Randomized
Control Field Trial in Rural Malawi.” Child Care Health Dev. 48, no. 5
(2022): 736–43. https://doi.org/10.1111/cch.12981.
15
Jolley et al., “Measuring the Impact of a Training Intervention,” 737.
16
Sutapa, P.; Pratama, K.W.; Rosly, M.M.; Ali, S.K.S.; Karakauki, M.
Improving Motor Skills in Early Childhood through Goal-Oriented Play
Activity. Children 2021, 8, 994. https://doi.org/10.3390/ children8110994
The Child Care Service Agreements 141
standards and regulations outlined in Act 308 and the Child Care
Centre Regulation 2012 (CCCR 2012).
Registration matters are another essential aspect to be
highlighted when operating the childcare centre. Every childcare centre
shall be registered under Act 308 (specifically Section 4). Therefore,
the childcare giver who operates the childcare services in the centre-
based or home-based setting is obliged to register themselves with the
Director-General of DSW in the prescribed form,
17
except for home-
based childcare centres with less than four children.
18
It is deemed an
offense if a childcare centre has not yet registered itself according to
Section 6 (1) and (2) of Act 308. While Act 308 serves as Malaysia's
primary regulation for overseeing childcare centres comprehensively,
there is an exception regarding the authority to regulate specific types
of childcare
19
(involving the acceptance of a child by a family
member)
20
. This is because the Director-General of SWD of Malaysia
is responsible for healthcare facilities, care centres, and childcare
service institutions, while excluding kindergartens or nursery schools
that have registered under the Education Act 1996, and childcare
centres or children's homes established or run by the Federal or a State
Government.
The registration of the childcare centre is vital to comply with
all childcare care since it is a benchmark to ensure their services are
according to the specific laws governing childcare matters in
Malaysia.
21
It has been stated in Section 8 of Act 308 that the Director-
General of DSW will consider the following elements for application
registrations of the childcare centre in Malaysia, which are;
a) Limiting the number of children who may be received in the
particular childcare centre;
17
Section 7(1) of the Child Care Centre Act 1984.
18
Rahmatullah, Bahbibi. “Overview of Early Childhood Care and Education
in Malaysia.” Hungarian Educational Research Journal 11, no. 4 (2021):
396–412. https://doi.org/https://doi.org/10.1556/063.2021.00074.
19
Section 3(1) of the Child Care Centre Act 1984
20
Section 3(2) of the Child Care Centre Act 1984
21
Abdul Mutalib, M., et al. "Legal Requirements of Home-Based Childcare
Centres in Malaysia: Are Childcare Providers Aware of These?"
Malaysian Journal of Syariah and Law, vol. 12, no. 2, 2024, pp. 311-323.
https://doi.org/10.33102/mjsl.vol12no2.517.
142 IIUM LAW JOURNAL VOL. 33 (1) 2025
b) Ensuring the applicant or any other person being employed
at the childcare centre is fit to be served in the childcare
centre;
c) Ensuring the adequate number of staff as well as the
qualifications and experiences related to childcare matters;
d) Ensuring the childcare centre is adequately equipped with
suitable equipment and well-maintained;
e) Ensuring a suitable arrangement of children’s basic needs
such as feeding, resting, and recreation if the children are
placed more than 4 hours per day in the centre;
f) Complying with the safety, health, and sanitation of the
childcare centre; and
g) The General Director thinks that any other conditions should
be implemented in the childcare centre.
According to the explanation provided above, registering
childcare centres with the Department of Social Welfare (JKM) is
required by section 8 of the Child Care Centres Act 1984 (Act 308) to
ensure child safety and adherence to Malaysian government childcare
regulations. In Public Prosecutor v Zainuhar Che Kar [2022] 1 SMC
145 Public Prosecutor v Zainuhar Che Kar [2022] 1 SMC, the case
covers allegations of carelessness and running an unlicensed childcare
centre, as well as the legal repercussions of noncompliance with
Malaysian childcare regulatory procedures. Failure to register may
result in penalties under Section 31 (1) (a) of the Children Act 2001 (up
to RM50,000 fine, 20 years imprisonment, or both) and Section 6 (1)
of the Child Care Centre Act 1984 (Act).
Despite the fact that Act 308 is the fundamental legislation
governing childcare in Malaysia, the Child Care Centre Regulation
2012, Child Act 2001, and Sexual Offences Against Children Act 2017
(Act 792) also serve as supplements to childcare regulations. Despite
the fact that registration is thought to maintain quality care, there is still
a serious vacuum in the control of private childcare centres' DSW
registrations.
The Child Care Service Agreements 143
Child Care Centre Regulation 2012 (CCCR 2012)
This regulation has been established by Section 23 of Act 308 to carry
out the purpose of such Act.
22
Section 23 stated that the Ministry could
make any other regulations to give effect to Act 308 without prejudice
to the generality of the preceding laws that govern the childcare centre.
This can be referred to Section 23(2) of Act 308, which has listed the
childcare matters which will be further explained in other regulations
than Act 308, such as; (1) operation and management of the childcare
centre,
23
(2) duties and responsibilities of the person registered in a
childcare centre;
24
(3) health and nutrition care
25
and (4) prescribing the
minimum equipment.
26
Thus, the CCCR 2012 is another regulation that
will fortify the reign of Act 308 in regulating matters related to
childcare in Malaysia. Thus, the Child Care Centre Regulations 2012
serve as a supplementary regulation that strengthens the enforcement
and operationalisation of Act 308 in governing matters related to child
care in Malaysia.
The CCCR 2012 mainly explains childcare matters such as
registration of childcare centre operators, managers, premises and
equipment, fire safety and prevention, records maintenance, childcare
activities, and health. The other vital issue associated with being
addressed in the CCCR 2012 is the adult-to-child ratio. The CCCR
2012 clearly states that the childcare ratio for children guides the
childcare giver. Here, the ratio for the childcare giver to the children
aged from birth until one year old is that one childcare provider looks
after three children.
27
For children aged one year and above, the ratio
is one caregiver to care for five children, while for three years old until
four years old, the ratio is one caregiver to look after ten children.
28
While having the ratio guidance stated in the CCCR 2012, it is believed
that the children receive quality services during the care of the
childcare giver, since they can be fully observed and attend to the needs
of the children.
22
Section 23(1) of the Child Care Centre Act 1984
23
Section 23(1)(a) of the Child Care Centre Act 1984
24
Section 23(1)(b) of the Child Care Centre Act 1984
25
Section 23(1)(d) of the Child Care Centre Act 1984
26
Section 23(1)(h) of the Child Care Centre Act 1984
27
Section 23(1)(h) of the Child Care Centre Act 1984
28
Section 23(1)(h) of the Child Care Centre Act 1984
144 IIUM LAW JOURNAL VOL. 33 (1) 2025
Child Act 2001 (Act 611)
The Child Act 2001 (Act 611) was enacted to safeguard children's care,
protection, and rehabilitation in Malaysia.
In 2016, Act 611 was amended to include the child registry,
Community Service Orders (CSO), family-based care, and a harsher
penalty.
29
The amendment of Act 611 on the child registry was on the
records of convicts who committed crimes against children to allow
screenings on individuals working with children as an added safety
measure.
30
Hence, it is vital to place the children in a registered
childcare centre where the General Director of the DSW will approve
those people with relevant qualifications and experience who are fit to
serve the centre. It is to ensure the safety and solace well-being of the
children while being placed with the respective childcare giver.
As illustrated in the case of Pendakwa Raya v Noor Aqilah bt
Abdul Rahman [2020], 9 MLJ 766, the respondent was charged with
two offences at the Selayang Sessions Court under Section 31(1)(a) of
the Child Act 2001 for injuring the victim's head and Section 201 of
the Penal Code for disposing of the victim's body with the intent to
conceal the victim's death. The respondent pleaded guilty
unconditionally to both offences. The trial judge accepted the
respondent's plea, found them guilty, and convicted them on both
charges. The Court imposed a sentence under Section 31(2) of the
Child Act 2001 that included imprisonment, a fine, a good behaviour
bond, and community service for the first charge.
Under section 201 of the Penal Code, the respondent was
sentenced to 18 months imprisonment from the date of conviction and
a fine of RM5,000 in lieu of six months imprisonment on the second
charge. The imprisonment sentence for both charges was to run
consecutively. However, relying on the punishment as a point to
reduce the child abuse by the child care providers alone is enough?
Thus, this research paper seeks to examine the need to develop another
mechanism to strengthen the child care legislation in Malaysia, which
29
Bernama. “Child Act (Amendment) 2016 Gazetted.” New Straits Times, 26
July 2016, https://www.nst.com.my/news/2016/07/160655/child-act-
amendment-2016-gazetted. Accessed 12 Oct. 2024.
30
Bernama, “Child Act (Amendment) 2016 Gazetted.
The Child Care Service Agreements 145
is developing a child care service agreement between parents and child
care providers.
In 2017, Malaysia enacted the Sexual Offences Against Children
Act (Act 792) to specifically address and punish sexual crimes against
children and address offenses such as child pornography, grooming,
and sexual assault, and also includes provisions for child witnesses and
individuals in positions of trust.
31
This Act supplements existing laws
concerning such offenses and aims to improve the administration of
justice for child-related cases.
32
The impetus for this legislation arose
partly from the case of Richard Huckle, a British pedophile convicted
of 71 sexual offenses against Malaysian children.
33
Huckle's arrest in
2014 revealed a collection of child pornography and evidence of sexual
abuse, leading to his life imprisonment for exploiting vulnerable
families in Malaysia.
34
The Act provides a legal framework for
prosecuting offenders and protecting child victims.
Based on the above explanation related to the childcare
regulations in Malaysia, it can be seen that there is a well-developed
legal mechanism for governing childcare matters, from the early start-
up procedure to the operation and management of the childcare centre
up to the interrelated offences and its punishment that merely happened
among the children while being placed in the respective childcare
centre. Nonetheless, concerns regarding the safety and development of
children in the hands of childcare providers continue to elicit public
concern and require further improvement. For example, the number of
31
Abdul Jumaat, Mahmud. “Swot Analysis on Child Sexual Abuse Framework
in Malaysia”. INSAF |The Journal of the Malaysian Bar 40 (1), (2024):
11-27.
https://insaf.malaysianbar.org.my/ojs/index.php/jmr/article/view/62.
32
Abdul Jumaat, “Swot Analysis on Child Sexual Abuse Framework in
Malaysia” 26.
33
Syahirah Abdul Shukor, Hendun Abd Rahman Shah, and Nurul Musa,
“Regulating Children’s Safety on the Internet: A Malaysian Perspective”
1 (2017): 152–155,
https://www.researchgate.net/publication/341626373_REGULATING_
CHILDREN'S_SAFETY_ON_THE_INTERNET_A_MALAYSIAN_PE
RSPECTIVE.
34
S. N. F. Abd Hamid, Y. Ahmad, and N. S. Tahir, “Title of the Article (if
available),” International Journal for Studies on Children, Women,
Elderly and Disabled 9 (2020): https://www.ijcwed.com/wp-
content/uploads/2020/04/PICCWED9_23.pdf.
146 IIUM LAW JOURNAL VOL. 33 (1) 2025
cases of negligence and maltreatment that result in some degree of
death for the children is increasing.
35
In 2021, the statistics reported for
child abuse in the child care centre is 217.
36
Whilst in 2022, the SWD
documented a total of 336 cases of child maltreatment across different
categories involving registered and unregistered daycare centres,
nurseries, and kindergartens was reported.
37
Based on this statement, it can be inferred that cases of child
maltreatment in childcare settings including both licensed and
unlicensed daycare centres, nurseries, and kindergartens have seen a
notable increase over the past year, rising from 217 reported cases in
2021 to 336 in 2022. Nonetheless, in 2023, the percentage of child
abuse cases by child care givers or babysitters increased by 2.68%,
bringing the total number of cases to 345.
38
This rising number of child
abuse cases by the child care providers underscores growing concerns
about the safety and well-being of children in these facilities,
emphasising the urgent need to strengthen regulations for both
registered and unregistered childcare providers in Malaysia. Thus,
enhancing the current childcare legal framework is considered
significant in establishing a stronger legislative foundation for
childcare facilities in Malaysia, particularly by improving existing laws
from the standpoint of childcare.
35
Abdul Mutalib, Mashitah, Nik Salida Suhaila Nik Saleh, and Arasy Masut
@ Masod. “Quality Enhancement of Centers in Malaysia: An Analysis on
Laws and Regulations.” Journal of Education and Social Sciences 9, no.
1 (2018): 23–28. https://www.jesoc.com/wp-
content/uploads/2018/03/KC9_203.pdf.
36
Abdullah, Siti Mastura. 217 Abuse Cases Recorded at Childcare Centres
Nationwide Last Year. New Straits Times, 27 Jan. 2022,
https://www.nst.com.my/news/nation/2022/01/767417/217-abuse-cases-
recorded-childcare-centres-nationwide-last-year.
37
Rahim, Nur Rasyidah Abd, et al. "Integrity and Child Maltreatment at Child
Care Centers: A Conceptual Paper." Advances in Social Sciences
Research Journal, vol. 11, no. 4, 2024, pp. 41–53.
https://doi.org/10.14738/assrj.114.16096.
38
Pfordten, D. Multimedia: Child Neglect and Abuse on the Rise in Malaysia.
The Star, 26 Aug. 2024,
https://www.thestar.com.my/news/nation/2024/08/26/multimedia-child-
neglect-and-abuse-on-the-rise-in-malaysia.
The Child Care Service Agreements 147
LEGAL ANALYSIS OF THE UNITED STATES OF
AMERICA’S CHILDCARE LAW
This research undertakes a comparative legal analysis of childcare
regulations, with particular emphasis on the legislative frameworks of
the United States, focusing on the states of Texas and California.The
reason for choosing these two USA. states for benchmarking is due to
their transactional regulation which is based upon the modern contract
law theory. Additionally, California’s child care regulations also
address the child care admission agreement between parents and child
care providers as outlined in the California Code of Regulations.
Transactional regulation between parents and child care providers can
also be modelled after Texas’s child care regulations, specifically the
Minimum Standards for Child-Care Centres and Minimum Standards
for Child-Care Homes. Similarly, California’s child care regulations
also address the child care admission agreement between parents and
child care providers as outlined in the California Code of Regulations.
Comparing statutes and sample cases related to the agreement in
the form of a childcare perspective is needed because different
countries practice different childcare ideologies and philosophies.
However, it can be suited to the current situation of the respective
country, yet alteration is still needed to pursuance such an act. Here, a
brief introduction to the USA's regions takes place since the USA
consists of 50 states, and all of these states have different licensing
policies on childcare services. However, this paper narrows its scope
by focusing specifically on Texas and California as benchmark models
to strengthen Malaysia’s existing childcare regulatory measures,
particularly in relation to childcare service agreements. The childcare
regulations in the USA are adopting the licensing mechanism to
regulate their childcare services, where each state is liable to oversee
the childcare operations respectively. In other words, the US federal
government delegated the power to the states to regulate their childcare
givers or providers. This section will thoroughly discuss the selected
benchmark states in the USA that have practised the childcare service
agreement as part of regulating childcare, both home-based and centre-
based.
148 IIUM LAW JOURNAL VOL. 33 (1) 2025
Childcare Law in Texas
The Texas Health and Human Services Department regulates the
childcare services in the state of Texas. As mentioned earlier, the
regulations about childcare services in the USA is under the state
government. The Federal government will only supervise and plan for
any financial aid (such as grants) to be executed by the state
government. Hence, in Texas, childcare regulations have been codified
under the state statute, namely the Human Resource Code. In this
Code, the subdivision of childcare statutes and regulations has been
stipulated in Subtitle D, which provides explicit information related to
family and child welfare and protective services.
Under Subtitle D, the childcare statutes have been extensively
discussed in Chapter 42 (Regulation of Certain Facilities, Homes, and
Agencies that Provide Child-Care Services)
39
and Chapter 43
(Regulation of Child-Care and Child-Placing Agency Administrators)
of the Human Resource Code. There are several childcare regulations
including (1) Child Care Licensing Rules, (2) Minimum Standards for
Shelter Care, (3) Minimum Standards for School-Age and Before or
After-School Programs, (4) Minimum Standards for Child-Care
Centers, (5) Minimum Standards for Child-Care Homes, (6) Minimum
Standards for General Residential Operations, (7) Minimum Standards
for Child-Placing Agencies, and (8) Minimum Standards for
Independent Foster Homes have been enacted by the Texas
government as stated in Table 2 below.
However, this study only emphasises the content of the childcare
agreement, which is obliged to be formed between parents and
childcare providers. This excludes other types of childcare centres,
such as foster care, family care, hospitalisation (or treatment) care, and
government-funded childcare services.
39
Chapter 42 of the Human Resource Code, "Regulation of Certain Facilities,
Homes, and Agencies that Provide Child-Care Services," aims to
safeguard the health, safety, and well-being of state children residing in
child-care facilities by establishing minimum standards for their safety
and protection throughout the state and by regulating the facilities through
a licensing program. The Human Resource Code's Chapter 43 (Regulation
of Child-Care and Child-Placing Agency Administrators) outlined the
licensing program, including the requirements for the licensee and the
licensing exam for daycare.
The Child Care Service Agreements 149
Table 1. The Specific Section that stated childcare service Agreements in
Texas
Childcare
Regulations
Purpose and Scope of the
Childcare Regulations
Childcare
Agreement
Minimum
Standards for
Child-Care
Centers
Under §746.101, Subchapter A
(Division 1) of the Minimum
Standards for Child Care Centers,
this standard aims to set forth the
minimum standards that apply to
child-care centres. The Minimum
Standards for Child Care Centers
shall be complied with by either
registered or unregistered
childcare centers.40
Based on the
Minimum
Standards for Child
Care Centres, the
agreement on
childcare services
has been stipulated
under Subchapter B
(Division 4),
explicitly
explaining
childcare center
operational
policies. The
agreement of the
childcare services
can be found under
§746.50341, and
§746.50542 of the
40
§746.113, Subchapter A (Division 2) of the Minimum Standards for Child
Care Centres
41
According to §746.503, Subchapter B (Division 4) of the Minimum
Standards for Child Care Centres, it is mandatory to give parents a copy
of the childcare center's operational policies. Additionally, parents must
sign a child-care enrolment agreement or other comparable documents on
or before the date of admission, which must contain at least the
operational policies mentioned in this division. This signed paper, or at
least one for each family if siblings are enrolled at the same time, must be
kept in the child's file by the creche facility.
42
The Minimum Standards for Child Care Centres' §746.505, Subchapter B
(Division 4) stipulates that any modifications to an operational policy or
a clause in the child-care enrolment agreement must be reported. Here,
any changes must be communicated in writing to parents and staff by the
childcare center's operator. Additionally, each family must sign and date
a copy of the child-care enrolment agreement or revised operational
procedures, which must be retained in the child's file.
150 IIUM LAW JOURNAL VOL. 33 (1) 2025
same subchapter
and division.
Minimum
Standards for
Child-Care
Homes
The aim of the Minimum
Standards for Child-Care Homes,
outlined in §747.101 Subchapter A
(Division 1), is to establish the
basic standards applicable to child-
care homes. Consequently, these
Minimum Standards for Child-
Care Homes are relevant to (1)
registered child-care homes, (2)
licensed child-care homes, and (3)
child-care homes as specified
under §747.117 Subchapter A
(Division 2).
According to
§747.503,
Subchapter B
(Division 4) of the
Minimum
Standards for
Child-Care Homes,
prior to a child's
admission, parents
are required to sign
a child-care
enrollment
agreement or a
similar document,
which must
encompass at least
the operational
policies stipulated
in this division. The
childcare center
must retain this
signed document in
the child's records
or, if multiple
siblings are
enrolled at the same
time, at least one
for each family.
Additionally,
§747.505 of the
same subchapter
and division
specifies that any
changes to an
operational policy
or an aspect of the
child-care
enrollment
agreement must be
The Child Care Service Agreements 151
communicated in
writing to both
employees and
parents by the
childcare center's
operator.
Furthermore, an
updated copy of the
operational policies
or child-care
enrollment
agreement must be
signed and dated
for each family and
kept in the child's
records.
Table 2 shows that childcare providers are obliged to form a
childcare service agreement with the parents. Specifically for the
childcare centre, the content of the childcare agreement shall include
provision §746.501 (a) of Subchapter B (Division 4) of the Minimum
Standards for Child-Care Centres. In contrast, the childcare operational
policies for home-based childcare can be found in §747.501
Subchapter B (Division 4) of the Minimum Standards for Child-Care
Homes. Hence, it shall also be included in the childcare agreement for
home-based childcare services. From the above childcare policies, it
can be deduced that the childcare centres' operational policies are more
comprehensive than the childcare homes' services. Along with the
procedures for avoiding and dealing with child abuse and neglect, the
provision of inclusive services for children with special care needs is a
crucial operational policy that distinguishes centre-based childcare
services from home-based ones.
152 IIUM LAW JOURNAL VOL. 33 (1) 2025
Childcare Law in California
The primary childcare law in California is regulated by the California
Child Day Care Act, codified under Division 2, Chapter 3.4 of the
Health and Safety Code of California. The California Child Day Care
Act has become the general provision for both child daycare centres
and family daycare centres in California. In accordance with Chapter
3.4, Section 1596.803.a (1) of the Health and Safety Code, the
department will charge the licensee according to the number of
children in the childcare facilities each year for the administration of
the family nursery and the childcare centre, specifically on a fee basis.
For example, the Family Day Care who have one to eight children in
their childcare premises will need to pay the annual fee to the
department, amounting to $73, whilst the Day Care Centres will pay
the annual fee to the department for one to thirty children in the
childcare centre is $242.
43
Hence, it can be concluded that the California Child Day Care
Act acted as the main childcare law in California, where the content of
the Act covered both types of childcare services. Besides the California
Child Day Care Act, the California childcare legislature has enacted a
specific and separate childcare provision for both child daycare centres
and family daycare centres. The specific provision that governs child
daycare is known as Day Care Centres, where the related sections in
the provision start from section 1596.90 to 1597.21 of Division 2,
Chapter 3.4 of the Health and Safety Code of California. The specific
provision for the family daycare centres was called Family Day Care
Homes from section 1597.30 to 1597.622 Division 2, Chapter 3.6 of
California's Health and Safety Code.
However, this study only focuses on discussing the relevant
sections about the childcare service agreement. According to Chapter
1 of the California Code of Regulation, Title 22 Section 101219a, it is
mentioned in the admission agreement of the children into the childcare
centre that “the licensee and the child's authorized representative shall
jointly complete a current individual written admission agreement for
the child. This documentation shall be maintained at the child care
centre and shall be available for review.” This statement refers to the
that This statement refers to the parents or any authorised
43
Chapter 3.4, Section 1596.803.a (1) of the Health and Safety Code
The Child Care Service Agreements 153
representative of the children enrolled in the childcare centres must
enter into childcare admission agreements with the licensees (or, in
other words, licensed childcare providers). Other important matters
about the childcare admission agreement have also been stipulated in
the California Code of Regulation, Title 22 Section 101219c to g, such
as the time frame for the child's admission agreement, which needs to
be signed by parents and childcare providers
44
, modifications to the
original child’s admission agreement,
45
keep the original copy of the
admission agreement,
46
terms and conditions of the child’s admission
agreement,
47
and termination of the child’s admission agreement.
48
However, the California Code of Regulation does not mention
that the child's admission agreement or childcare service agreement
needs to be formed between the family daycare providers and parents.
The provision of the family daycare was emphasised only on the
licensing matters, the conditions that allowed the family daycare to be
exempted from being licensed by the licensing agency, and criminal
background checking of the childcare givers (as well as childcare
providers). From the perspective of California's childcare laws and
provisions, the researcher could conclude that the point of matters
being emphasised in California's childcare regulations is the licensing
of childcare providers (both centre-based and home-based childcare
44
Title 22 Section 101219c of the California Code of Regulation, Division 12
states that the licensee, his/her designee, and the child's authorized
representative shall sign and date the child's admission agreement no later
than seven calendar days following admission.
45
Title 22 Section 101219d of the California Code of Regulation, Division 12
stated that modifications to the original admission agreement shall be
made whenever circumstances covered in the agreement change and shall
be dated and signed by the persons specified in (c) above.
46
Title 22 Section 101219e of the California Code of Regulation, Division 12
stated that the licensee should keep the original copy of the admission
agreement and give a photocopy to the child's authorized representative.
47
Title 22 Section 101219f of the California Code of Regulation, Division 12
stated that the licensee shall comply with all terms and conditions outlined
in the admission agreement.
48
Title 22 Section 101219g of the California Code of Regulation, Division 12
stated that the death of the child shall automatically terminate the child’s
admission agreement. No liability or debt shall accrue after the date of
death.
154 IIUM LAW JOURNAL VOL. 33 (1) 2025
services). The licensing of the childcare centre could be seen as an
obligation for both types of childcare providers to obtain their licenses
from the respective California childcare agency.
DISCUSSION
In this section, the discussion will highlight the critical point deduced
from past studies and how future studies can address this research
loophole. As mentioned above, the method used for this paper is a
comparative and judicial approach. Rationally, those approaches are
mainly used to identify the research's critical themes and conceptual
understanding in linking the child care services agreement between
parents and child care providers to justify the need to form a child care
service agreement between parents and child care providers. The
judicial approach adopted in this study is supported by the analysis of
relevant court decisions that demonstrate how disputes between parents
and child care providers have been adjudicated in Malaysia. Although
reported cases on child care agreements in Malaysia are relatively
scarce due to the informal nature of such arrangements, several
decisions have indirectly highlighted the legal ambiguities surrounding
child care responsibilities and liabilities.
For instance, in PP v. Noor Aqilah bt Abdul Rahman [2020] 9
MLJ 766, the Court charged the accused with two offences: one under
section 31(1)(a) of the Children Act 2001 for causing injury and the
other under section 201 of the Penal Code for disposing of a dead body
to destroy the deceased's remains.
49
This tragic incident highlights the
severe consequences of inadequate supervision and the failure of child
care providers to adhere to proper child care giving provisions (refer to
Act 308 and CCCR 2012). Other than that, in PP v Nur Fatin Nabila
bt Azmi [2023] MLJU 534,, the accused was charged under Section
31(1)(a) of the Child Act of 2001, which criminalises child abuse and
neglect. This clause imposes a punishment of up to RM50,000 in
49
Mutalib, M. A., et al. "Penambahbaikan Kualiti Pengasuhan Di Rumah Dari
Perspektif Undang-Undang." International Journal of Law, Government
and Communication, vol. 7, no. 30, 2022, pp. 22–32. DOI:
10.35631/IJLGC.730003.
The Child Care Service Agreements 155
penalties, 20 years in jail, or both.
50
As the facts of the case indicate,
the accused failed to carry out her fundamental responsibility of trust,
and abuse against children must not be condoned. The above cases
highlighted a significant weakness in Malaysia's childcare regulatory
system, including deficiencies in legislative requirements, inadequate
oversight of childcare providers, and the need for more robust legal
frameworks to protect children from both neglect and intentional harm.
As mentioned earlier, the Malaysian childcare legal framework
primarily consists of the Child Care Centre Act 1984 (Act 308) and the
Child Care Centre Regulations 2012 (CCCR 2012). Specifically, Act
308 mainly focuses on registration and physical safety requirements of
child care centres. Whilst the CCCR 2012 deals with other matters
such as; (1) operation and management of the child care centre,
51
(2)
duties and responsibilities of the person registered in a child care
centre,
52
(3) health and nutrition care
53
and (4) prescribing the
minimum equipment.
54
Thus, the Child Care Centre Regulations 2012
serve as a supplementary regulation that strengthens the enforcement
and operationalisation of Act 308 in governing matters related to child
care in Malaysia. Supporting the above legal measure, Malaysia also
refers to the other regulations for charging some of the offences related
to the abuse (such as physical and sexual assault) or death of the
children while in the hands of the child care giver. The supporting
regulations consist of the Child Act 2001, the Penal Code, and the
Sexual Offences Against Children Act 2017, which address
punishments not specified in the Child Care Centre Act 1984 and the
Child Care Centre Regulation 2012.
A comparative analysis with jurisdictions with Texas and
California reveals that, in addition to regulations on licensing and the
safety of childcare premises, formal childcare contracts are also
mandatory. These contracts typically include clear stipulations
regarding fees, hours of care, responsibilities, and liability clauses. The
absence of such requirements in Malaysia’s current childcare legal
framework creates loopholes that undermine the protection of children
in the care of childcare providers. Supporting this point, California’s
50
PP v Nur Fatin Nabila Azmi [2024] CLJU 230
51
Section 23(1)(a) of the Child Care Centre Act 1984
52
Section 23(1)(b) of the Child Care Centre Act 1984
53
Section 23(1)(d) of the Child Care Centre Act 1984
54
Section 23(1)(h) of the Child Care Centre Act 1984
156 IIUM LAW JOURNAL VOL. 33 (1) 2025
approach to childcare service agreements is illustrated in Gavin W. v.
YMCA of Metropolitan Los Angeles, 106 Cal. App. 4th 662. In this
case, a family sued a childcare provider after their child was
inappropriately touched by another child in the provider’s care. The
family alleged that the provider was aware of the other child's
behaviour and failed to take preventive measures. Although the family
had signed a release waiving their right to sue, the court held that such
releases are invalid in cases involving negligence in childcare services,
which are deemed essential for working families. The appellate court
reversed the earlier judgment and allowed the family’s claims for
negligence and breach of contract to proceed.
55
On the case of Gavin W. v. YMCA of Metropolitan Los Angeles
underscores the critical importance of legal accountability in childcare
services and highlights the limitations of liability waivers in protecting
providers from claims of negligence. The appellate court’s decision
reflects a broader public policy stance that prioritises the welfare and
safety of children over contractual disclaimers. This approach
reinforces the notion that childcare providers must uphold a high
standard of care, especially when their services are essential to working
families. It can be argued that Malaysia's childcare laws should include
similar protections to make sure that the rights of children and parents
are fully protected.
In relation to childcare service agreements between parents and
childcare providers, it can be concluded that both Texas and California
have formally implemented and codified such agreements within their
respective childcare regulations. However, several other U.S. states
have yet to include childcare agreements as part of their statutory
provisions or regulations. For benchmarking purposes, Texas and
California have been selected due to the differences in the terms and
conditions incorporated in their respective childcare service
agreements. In Texas, the childcare agreement is addressed under
Section §746.503, Subchapter B (Division 4) of the Minimum
Standards for Child Care Centres, where the agreement is explicitly
referred to as a “child care agreement.” Texas adopts a comprehensive
55
Gavin W. v. YMCA of Metropolitan Los Angeles, 106 Cal. App. 4th 662,
131 Cal. Rptr. 2d 168, 2003 Cal. App. LEXIS 279, 2003 Daily Journal
DAR 2157, 2003 Cal. Daily Op. Service 1693 (Cal. Ct. App., 2nd Dist., 2
Feb. 2003).
The Child Care Service Agreements 157
and holistic approach, requiring providers—whether centre-based or
home-based—to enter into formal agreements with parents. These
agreements vary based on the type of childcare service and include
specific terms and conditions tailored to the service model.
California, on the other hand, refers to the childcare agreement
as an “admission agreement,” governed by Chapter 1 of the California
Code of Regulations, Title 22, Section 101219(a). This provision
mandates that the licensee and the child’s authorised representative
jointly complete a current, individual written admission agreement.
According to Section 101219(b)(1) – (7), the agreement must include
key elements such as:
a) services to be provided,
b) operational hours,
c) childcare service fees, and
d) terms regarding any modifications to the agreement.
However, California’s admission agreement requirement applies
exclusively to child daycare centers and does not extend to other types
of childcare services. Moreover, the state’s regulatory framework
focuses more on licensing and operational standards than on the
establishment of formal childcare service agreements. Nevertheless,
California's regulations require childcare providers to consistently
maintain satisfactory standards in both facilities and operations.
This discussion highlights the legal significance of childcare
service agreements and underscores the need for comprehensive
arrangements between parents and providers. To enhance the legal
framework in Malaysia, it is recommended that amendments be made
to the Child Care Centre Act 1984 (Act 308) and the Child Care Centre
Regulations 2012 (CCCR 2012). Specifically, a clause concerning
childcare service agreements should be formally introduced, with
existing regulations expanded to include provisions that encourage and
require such agreements between parents and providers. This would
help establish clear expectations and protections for all parties involved
in the childcare sector.
158 IIUM LAW JOURNAL VOL. 33 (1) 2025
Recommendation to Enhance the Child Care Centre Act 1984 (Act
308)
The Child Care Centre Act 1984 prescribes the general outline and
legislative requirements of running child care centres. It gives the
enforceability elements, standards, and overall responsibilities to be
fulfilled by parents and child care providers. The provisions related to
the Child Care Services Agreement between parents and child care
providers has been stipulated in Table 2 below:
Table 2 Suggested Draft Related to the Child Care Services Agreement
Between Parents and Child Care Providers in Act 308
Child Care Services Agreement
Part X – Child care Services Agreement
(i) Purpose and Scope
(ii) Child care Services Agreement:
(a) Definition of Child care Services Agreement
(b) Mandatory Elements: The key mandatory elements such as the
basic structure of the agreement, including the details of the
child, provider, scope of services, and fees, can be mandated
by the Act as overarching requirements.
(iii) Responsibilities of Child care Providers
(a) Provision of Care: The Act should define the responsibilities
of child care providers in ensuring the quality of care and
services.
(b) Monitoring and Reporting: Providers are obligated to keep
records and report incidents, which fall under the broader
regulatory responsibilities of child care centers under the Act.
(c) Compliance with Regulations: This section falls directly under
the jurisdiction of the Act as it deals with compliance with
national laws and general provisions.
(iv) Dispute Resolution
The Child Care Service Agreements 159
(a) Mediation: The Act should establish the legal framework for
handling disputes, including the requirement to attempt
mediation before pursuing legal action.
(v) Enforcement
(a) Non-Compliance: This is an enforcement-related section,
making it appropriate for the Act.
(b) Penalties: It details penalties and enforcement measures, such
as suspension or termination of enrollment, as well as
penalties for non-compliance by child care providers.
The Child Care Center Regulation 2012 provides detailed rules
and criteria for child care centers, laying down procedures and steps of
operation, and specific measures of safety. The Regulation will contain
the following provisions:
Table 3 Suggested Draft for a New Part related to Child care Services
Agreement between Child care Providers and Parents under the Child Care
Center Regulation 2012
Child Care Services Agreement
Part X – Child care Services Agreement
(i) Mandatory Elements: Specific details about the content of the
agreement (e.g., hours of operation, health and safety
protocols, refund policies) could be further expanded upon in
the Regulation, providing clear standards for what must be
included in every child care services agreement.
(ii) Health and Safety Protocols: The regulation can expand on
the health and safety aspects, ensuring compliance with
detailed standards such as sanitation practices, emergency
procedures, and any specific health requirements.
(iii) Fees and Payment Terms: Regulations can include specific fee
structures, payment timelines, and terms that child care
centers must follow in providing clear financial agreements
with parents.
160 IIUM LAW JOURNAL VOL. 33 (1) 2025
(iv) Responsibilities of Child care Providers (under the
Regulation)
(v) Provision of Care and Compliance: Detailed guidelines on
how providers should deliver services in practice, including
minimum standards for supervision, educational
programming, safety measures, and staffing.
(vi) Monitoring and Reporting: Regulations should specify the
process for record-keeping, required forms, and how the
reporting to parents should occur, including incident reports
or changes in the child's well-being.
(vii) Responsibilities of Parents or Guardians: The Regulation
should clarify the obligations of parents, including providing
necessary information about their child (medical history,
allergies, etc.), cooperating with providers, and adhering to the
agreement's terms (e.g., paying fees on time).
(xi) Non-discriminatory Practices: The child care provider must
make reasonable adjustments to enable the full participation
of children with disabilities in all activities and services, and
they cannot be excluded from any of these activities because of
their impairment. (If applicable)
The components of a childcare agreement should be tailored to
reflect the differences between home-based and centre-based childcare
services. Home-based childcare, due to its limited space, facilities, and
staffing, may not be able to offer certain services—such as specialised
equipment for children with special needs, dedicated breastfeeding
rooms, field trips, or water-based activities. Despite these limitations,
essential elements that ensure inclusive protection for children can still
be incorporated into the agreement. In contrast, centre-based childcare
services, with greater space, more extensive facilities, and a larger
workforce, should include more comprehensive terms in their
agreements. To reinforce this practice, a specific clause in the
regulations should mandate that parents and childcare providers enter
into a formal childcare agreement at the time of the child’s enrolment.
In conclusion, the scope of childcare law should be broadened to
not only prioritise the protection, safety, and health of children but also
The Child Care Service Agreements 161
to consider the rights of parents and childcare providers. One potential
solution is the introduction of a legally binding agreement between
parents and childcare providers. Such a contract would clearly define
key elements of the childcare arrangement, including fees, the
responsibilities of both parties, and any prohibited actions. These terms
should be established and agreed upon before and during the child’s
enrollment in either home-based or center based childcare facilities.
CONCLUSION
In conclusion, to stimulate the check and balance of childcare law in
Malaysia, the collective point of view of the protection, safety, and
health of the parties involved in childcare services must be considered
(including the protection of the childcare givers and parents). Indeed,
children are the most vulnerable group who need the most protection
from the laws, parents, and childcare givers. However, the other
childcare service stakeholders also need protection, as they possess the
right to be protected. In this paper, the researcher found that the new
loophole required further study in the future to uphold the rights and
protection of the other parties involved directly in such services. The
mechanism that could be approached in this issue was a legally binding
agreement that should be formed between parents and childcare givers
as the researcher has benchmarked with the other country that implies
this method, referring to the United States of America (specifically in
California and Texas).
In accordance with Title 22 Section 101219 of Chapter 1 of the
California Code of Regulation, the licensee and the child's authorised
representative must work together to complete a current individual
written admission agreement for the child before the child can be
enrolled in the childcare facility. Instead of protecting the children in
terms of the facilities and providing a qualified childcare giver, another
step has been taken by these two states: they are protecting the parents
and childcare givers in terms of the do’s and dont’s while receiving the
respective childcare centre. Any agreement breach leads to termination
or other relevant punishment based on the agreement made between the
parties.
162 IIUM LAW JOURNAL VOL. 33 (1) 2025
Therefore, the childcare service agreement is one of the
mechanisms (other than obliging the childcare provider to get
registered under the Social Welfare Department, qualification of the
childcare givers, and excellent childcare premises) that should be
explored more in the future to ensure that holistic childcare regulations
and systems in Malaysia can be achieved.
ACKNOWLEDGEMENT
I wish to express my heartfelt appreciation to everyone who has played
a role in the completion of this research paper. Firstly, I am immensely
grateful to Associate Professor Dr Sheela A/P Jayabalan and Associate
Professor Daleleer Kaur Randawar for their exceptional guidance,
support, and expertise throughout this endeavour. Their valuable
insights and constructive criticism have been crucial in molding this
work. Finally, I would like to acknowledge my family and colleagues
for their understanding, patience, and unwavering encouragement.
Their confidence in my abilities has been an incredible source of
motivation.
The Child Care Service Agreements 163
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The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License.
ALTERNATIVE DISPUTE RESOLUTION (ADR) IN
RESOLVING COMMUNITY DISPUTES IN PAKISTAN:
LEARNING FROM MALAYSIA’S EXPERIENCE
Ihtesham Ullah Khan
Nurah Sabahiah Mohamed
Sodiq Omoola
ABSTRACT
Disputes are ubiquitous in human societies, spanning across individuals,
families, tribes, and nations. In Pakistan, various provinces have
developed traditional dispute resolution mechanisms: the Jirga system
for the Pushtoon community, Panchayat for Punjabis, Faislo among
Sindhis, and Balochi Jirga for Balochis. These systems, rooted in
cultural practices, have historically facilitated justice and harmony.
However, they have faced criticism for their reliance on unwritten rules,
informal structures, and violations of human and women's rights. This
article explores the nature of these traditional systems in Pakistan,
analysing their methods of dispute resolution and their effectiveness in
administering justice. The study adopts a qualitative methodology, using
doctrinal and library-based legal research, along with a comparative
analysis of community dispute resolution in Pakistan and Malaysia. It
also proposes recommendations for enhancing these systems, drawing
insights from Malaysia's successful community mediation programmes.
Unlike Pakistan, Malaysia has formalised community mediation under
Ph.D Candidate, Ahmad Ibrahim Kulliyyah of Laws, International Islamic
University Malaysia, Selangor, PO Box 10, 50728 Kuala Lumpur,
Malaysia. E-mail:ihteshamkhan044@gmail.com (Corresponding Author)
Assistant Professor, Legal Practice Department, Ahmad Ibrahim Kulliyyah
of Laws, International Islamic University Malaysia, Selangor, PO Box 10,
50728 Kuala Lumpur, Malaysia. E-mail: sabahiah@iium.edu.my
Assistant Professor, Legal Practice Department, Ahmad Ibrahim Kulliyyah
of Laws, International Islamic University Malaysia, Selangor, PO Box 10,
50728 Kuala Lumpur, Malaysia. E-mail: sodiq_omoola@iium.edu.my
[Received: 18 November 2024, Accepted: 06 May 2025, Published: 28 May 2025]
168 IIUM LAW JOURNAL VOL. 33 (1) 2025
the Department of National Unity and National Integration since 1969,
achieving positive outcomes in dispute resolution. The article suggests
that Pakistan should establish a legal framework to regulate community
mediation, ensuring adherence to human rights and justice standards. By
integrating lessons from Malaysia's approach and emphasising the role
of government bodies in justice administration, the traditional dispute
resolution systems in Pakistan can be strengthened for greater
effectiveness and fairness in resolving disputes.
Keywords: Traditional Dispute Resolution, Community Mediation,
Human Rights Standards, Legal Framework.
PENYELESAIAN PERTIKAIAN ALTERNATIF (ADR)
DALAM MENYELESAIKAN PERTIKAIAN KOMUNITI DI
PAKISTAN: PENGAJARAN DARIPADA PENGALAMAN
MALAYSIA
ABSTRAK
Pertikaian adalah perkara yang lazim berlaku dalam masyarakat,
merangkumi individu, keluarga, suku, dan juga bangsa. Di Pakistan,
pelbagai wilayah telah membangunkan mekanisme penyelesaian
pertikaian tradisional: sistem Jirga bagi masyarakat Pushtoon,
Panchayat bagi masyarakat Punjabi, Faislo dalam masyarakat Sindhi,
dan Jirga Balochi untuk masyarakat Balochi. Sistem-sistem ini, yang
berakar umbi dari amalan budaya, dari segi sejarahnya memberi
kemudahan kepada pelaksanaan keadilan dan keharmonian.
Walaubagaimanapun sistem ini sering menerima kritikan kerana ianya
berdasarkan kepada peraturan yang tidak bertulis, struktur yang tidak
formal, dan pelanggaran hak-hak asasi manusia serta hak-hak wanita.
Artikel ini mengkaji amalan sistem tradisional ini di Pakistan,
menganalisis kaedah-kaedah penyelesaian pertikaian yang dilaksanakan
dan keberkesanannya dalam melaksanakan keadilan. Kajian ini
menggunakan metodologi kualitatif dengan pendekatan penyelidikan
perundangan doktrinal dan berbentuk perpustakaan, serta analisis
perbandingan antara Pakistan dan Malaysia. Artikel ini juga
mengemukakan cadangan untuk meningkatkan pelaksanaan sistem ini
dengan merujuk kepada kejayaan program mediasi komuniti di
Malaysia. Berbeza dengan Pakistan, Malaysia telah memformalisasikan
mediasi komuniti di bawah Jabatan Perpaduan Negara dan Integrasi
Nasional sejak tahun 1969, yang menghasilkan hasil positif kepada
penyelesaian pertikaian. Artikel ini juga mencadangkan agar Pakistan
membentuk rangka kerja undang-undang untuk mengawal selia
ADR in Resolving Community Disputes in Pakistan 169
pelaksanaan mediasi komuniti, memastikan pematuhan terhadap hak-
hak asasi manusia dan juga piawaian keadilan. Dengan mengambil
pengajaran daripada pendekatan Malaysia dan mengintegrasikannya
dengan pemerkasaan peranan badan-badan kerajaan dalam pentadbiran
keadilan, sistem penyelesaian pertikaian tradisional di Pakistan akan
dapat diperkukuhkan untuk memberi kesan yang lebih efektif dan adil
kepada penyelesaian pertikaian.
Kata Kunci: Penyelesaian Pertikaian Tradisional, Mediasi Komuniti,
Piawaian Hak Asasi Manusia, Rangka Kerja Undang-Undang.
INTRODUCTION
Pakistan consists of four provinces, i.e., Khyber Pakhtunkhwa, Punjab,
Sindh and Balochistan. Accordingly, it has a multi-racial population.
Punjabis mainly live in Punjab; Pushtoons live in Khyber Pakhtunkhwa
and some parts of Balochistan; Sindhis and Muhajirs live in Sindh; and
Balochi tribes live in Balochistan. Interestingly, each of these ethnic
groups has its own way of settling disputes among the members of the
community. Punjabis resolve their disputes in the community through
Panchayat
1
,
2
Pushtoons resolve conflicts by Jirga
3
system
4
, Sindhis
resolve disputes through Faislo
56
and Balochis resolve conflicts
1
Abid Ghafoor Chaudhry, Aftab Ahmed, Shaheer Ellahi Khan, and Sajjad
Hussain, "Perception of Local Community and Biradari on Panchayat: An
Exploratory Anthropological Study of Biradari in Village Saroki, District
Gujranwala, Pakistan," Advances in Anthropology 4, no. 2 (2014): 54.
2
Panchayat a village council, “Panchayat” literally means assembly (yat) of
five (panch) wise and respected elders chosen and accepted by the village
(local) community.
3
The literal meaning of Jirga is “assembly” or “gathering” of the party for the
solution of a dispute and it is a type of autonomous body. According to
Pashto descriptive dictionary, the term Jirga is an original Pashto word,
and it is a common traditional word used for a gathering of few or many
people.
4
Sherzaman Taizi, Jirga System in Tribal Life (Peshawar: Area Study Centre
University of Peshawar, 2007), 3.
5
Hussain, Ghulam, Anwaar Mohyuddin, and Firdous Mahesar, “Conflict
Resolution Mechanism in Rural Sindh: Rationalizing Life-world of
Peasants”, Voice of Intellectual Man-An International Journal, 3, no. 2
(2013): 35-36.
6
A local term used to describe the meaning of Jirga in Sindh. The word faislo
has various meanings, encompassing the resolution of a dispute, a
170 IIUM LAW JOURNAL VOL. 33 (1) 2025
through Baluchi Jirga. In West Malaysia, there are three main ethnic
groups; Malay, Chinese, and Indian, and the culture is well diverse.
Traditionally, these groups resolved their community conflicts through
mediation.
7
In ensuring national unity and stability, the government of
Malaysia has introduced many programmes to strengthen relationships
amongst these ethnic groups and to avoid disputes amongst them. The
aim was also for these ethnic groups to resolve their conflict peacefully.
The most crucial step which was taken by the government was the
establishment of the Department of National Unity and National
Integration (DNUI) in 1969.
8
The most significant step taken by the Malaysian government
through the DNUI was the founding of “Peaceful Neighbourhood”
(Rukun Tetangga) programme. This programme was initiated to create
social unity among society members. The main purpose of this
programme, in the beginning, was the safety of residents. The
government then endorsed a legal framework for this programme and
gazetted it under the Peaceful Neighbour Regulating 1975 (PU (A)
279/75)
9
. In 1984, the organisation focused on how to enhance
relationships amongst various ethnic groups in Malaysia. Later, the
community mediation programme was introduced in the year 2008 and
has become more devolved.
10
Further, in the year 2011, the focus of
the Peaceful Neighbourhood Programme was further enhanced. The
main significance of the Peaceful Neighbourhood Programme is to help
the community resolve disputes peacefully and to avoid ethnic clashes
with the objective of maintaining harmony in the community.
11
settlement, a decision and a judgment. Faislo system can be used in an
extended family system, in the village community, and in the larger
birathari or qaum (tribe).
7
Barbara Watson Andaya and Leonard Y. Andaya, A History of Malaysia
(Macmillan: International Higher Education, 2016), 42-43, 187.
8
Nora Abdul Hak Hanna Aambaras Khan, Community Mediation in Malaysia
(Kuala Lumpur: Dewan Bahasa dan Pustaka, 2018), 82.
9
Peaceful Neighbour Regulation 1975, Malaysia.
10
Hanna Ambaras Khan and Nora Abdul Hak, "Community Mediation in
Malaysia: A Step Forward," Malayan Law Journal 1 (2014): 3.
11
Nora Abdul Hak and Hanna Khan, "Empowering Communities Through
Mediation in Malaysia: Issues and Challenges," paper presented at the
International Conference on Law and Society 1 (ICLAS 1), jointly
organized by Facultas Hukum, Universitas Muhammadiyah Yogyakarta
ADR in Resolving Community Disputes in Pakistan 171
This article endeavours to examine in detail the practice of
community mediation in Malaysia alongside the traditional methods of
dispute resolution in Pakistan's provinces. It aims to analyse and
compare the legal frameworks, operational mechanisms, and outcomes
of mediation practices in both countries. By juxtaposing the structured
approach of Malaysia's community mediation with the traditional
systems in Pakistan, this study seeks to elucidate similarities,
differences, and potential areas for constructive development.
Moreover, it aims to draw lessons from Malaysia's experiences to
propose recommendations for enhancing the effectiveness and fairness
of dispute resolution practices in Pakistan. Through this comparative
exploration, the article aims to contribute to scholarly understanding
and policy recommendations for advancing peaceful dispute resolution
and societal harmony in Pakistan.
METHODOLOGY
To achieve the objectives of this research, a qualitative research
methodology has been adopted. The study primarily employs a
doctrinal, or library-based, legal research approach. This method is
rooted in the examination of primary legal sources, particularly
relevant national legislations of Malaysia.
In addition to doctrinal analysis, the research incorporates a
comparative analysis approach, which enables a systematic
comparison between different legal frameworks, practices, or systems
relevant to the subject matter. This approach enhances the depth and
breadth of the study by identifying similarities, differences, and best
practices across jurisdictions or contexts.
Secondary sources also play a vital role in this research and
include legal textbooks, scholarly journals, published law reports, and
academic articles. To ensure comprehensive literature coverage,
various reputable databases and research tools have been utilised, such
as Just Peace International, ProQuest, HeinOnline, the IIUM online
database, LexisNexis, Google Scholar, and similar platforms offering
access to both primary and secondary legal resources.
and Harun M Hashim Law Centre, Ahmad Ibrahim Kuliyyah of Laws,
International Islamic University Malaysia, 2013, 7.
172 IIUM LAW JOURNAL VOL. 33 (1) 2025
THE CONCEPT OF COMMUNITY MEDIATION
As community mediation falls under the broader category of
Alternative Dispute Resolution (ADR), it is important to outline the
concept. ADR refers to processes where disputes are resolved privately
with the help of a neutral third party, outside the formal court system.
12
It includes methods such as mediation, arbitration, fact-finding panels,
and settlement conferences.
13
ADR offers disputants a faster, cost-
effective alternative to litigation by facilitating direct dialogue and
resolution in a less formal setting.
14
Community mediation is a method of resolving disputes by
adopting a mediation process to solve neighbourhood disputes. In
community mediation, both disputant parties sit together in the
presence of a community mediator whose duty is to act as a neutral
third party and he will assist them in clarification of issues as well as
problems and to know about their opinions as well as to find solutions
to the problems. In other words, community mediation is a mediation
procedure adopted by parties to the disputes to resolve their disputes
within their community.
15
In the view of Liebman, community
mediation is related to disputes between neighbours in the community
such as noisy neighbours, boundary disputes, trees and gardens
maintenance near boundaries, installing CCTV cameras pointed at
neighbours’ houses, children’s problems between two neighbour
families,
16
parking in an uncooperative way, doing renovation work
which damaged neighbouring property
17
and so on.
12
Henry J. Brown and Arthur L. Marriot Q.C, ADR Principles and Practice,
2nd ed. (London: Sweet & Maxwell, 1999), 12.
13
Katherine Stone, Private Justice: The Law of Alternative Dispute Resolution,
University Casebook Series (New York: Foundation Press, 2000), 5.
14
Mohammad Naqib Ishan Jan and Ashgar Ali Ali Mohamed, Mediation in
Malaysia: The Law and Practice (Selangor, Malaysia: LexisNexis
Malaysia Sdn Bhd, 2010), 2-3.
15
Naqib and Ashgar, Mediation in Malaysia, 157–58.
16
Sarah Clark, “The Most Common Neighbourhood Disputes”
https://www.problemneighbours.co.uk/common-neighbourhood-
disputes.html (accessed 15 March 2025).
17
Heizel T, "5 Annoying Things Your Malaysian Neighbours Do That You
Can Sue Them For," Ask Legal, https://asklegal.my/p/5-things-your-
ADR in Resolving Community Disputes in Pakistan 173
It also covers disputes between groups and organisations in the
community.
18
According to the National Association for Community
Mediation (NACM), community mediation provides a positive process
for resolving disputes between people, groups, and organisations.
Moreover, the NACM provides a comprehensive concept that
community mediation is created to strengthen the relationship between
people and groups as well as facilitate communication among them to
solve disputes in a proper way. Community mediation is an alternative
to avoid any lengthy litigation, violence, and confrontation between the
parties. Likewise, the purpose of community mediation is to strengthen
the relationship between individuals and groups and make strong
connections between them as well as create a peaceful environment for
members of the community. Moreover, the NACM further explained
that mediation is used for resolving disputes between people within the
same community by local council bodies.
19
Community mediation can be divided into two distinct phases
based on its scope and application. The first phase addresses
fundamental neighbourhood issues that specifically involve disputes
between neighbours. In contrast, the second phase expands the
definition to include broader disputes that may arise between groups
and organisations as a result of neighbourhood disputes. From these
definitions, community mediation is defined as a method of dispute
resolution utilising mediation processes to address conflicts within a
neighbourhood. This approach can also be extended to encompass
disputes between larger groups and organisations, providing an
alternative to potentially destructive confrontations and violence. The
primary goals are to preserve individual interests, strengthen
relationships, and foster connections among individuals and groups.
However, effective implementation of community mediation relies
heavily on government support through a comprehensive departmental
structure. This support should encompass financial resources,
dedicated offices and centres, training programs for mediators, and a
Malaysian-neighbours-do-that-you-can-sue-them-for (accessed March
30, 2025).
18
John Gray, Moira Halliday, and Andrew Woodgate, Responding to
Community Conflict (New York: York Publishing Services Ltd, 2002),10.
19
“National Association for Community Mediation," Official Website,
Louisville, KY 40255, U.S.A., http://www.nafcm.org/about/purpose
(accessed March 30, 2025).
174 IIUM LAW JOURNAL VOL. 33 (1) 2025
solid legal framework. Such infrastructure is essential to meet the
diverse needs of community mediation and ensure its efficacy in
resolving disputes and promoting social harmony.
THE LAW AND PRACTICE OF COMMUNITY
MEDIATION IN MALAYSIA
Understanding the historical background and practice of community
mediation among Malaysia's diverse ethnic groups is crucial. In West
Malaysia, three main ethnic groups, Malay, Chinese, and Indian,
contribute to a richly diverse cultural landscape. Mediation practices
vary significantly across these groups, necessitating an exploration of
how each resolves community conflicts through mediation. This article
delves into the historical evolution and contemporary practice of
community mediation in West Malaysia, spanning periods before and
after colonisation. By examining these historical contexts, the study
aims to illuminate the cultural nuances and adaptive strategies
employed by each ethnic group in their mediation practices. Such
insights are essential for comprehending the effectiveness and
relevance of community mediation in Malaysia's multicultural
society.
20
20
Barbara Watson Andaya and Leonard Y. Andaya, A History of Malaysia
(Macmillan: International Higher Education, 2016), 42-43, 187.
ADR in Resolving Community Disputes in Pakistan 175
The History of Community Mediation Among the Malays, Chinese
and Indian
The term “Malay” in West Malaysia basically includes the ethnicities
of the Javanese, Banjarese, Bugis who migrated to Malaysia in 1850.
21
Today, these ethnicities are considered as Malay in Malaysia which
has been described in Article 160 of the Federal Constitution 1957 of
Malaysia.
22
In the Malay community, cooperation among members is
considered a fundamental duty. Within the kampung (village) setting,
it is customary for villagers, whether neighbours or not, to collaborate
and collectively manage their agricultural lands. Malays are inherently
sentimental and empathetic by nature, striving to avoid conflicts, speak
diplomatically, and refrain from hurting others' feelings. They often
prefer to resolve disputes by appointing a third-party mediator. This
quality of good manners is considered a divine gift within the Malay
society, deeply embedded in their cultural values and societal norms.
23
In the Malay community, when conflicts arise between
members, there is a strong communal pressure to promptly resolve the
dispute. The preferred method of resolution involves engaging a
neutral third party, such as a religious leader (Imam), village head
(Ketua Kampung), or appointed community leader (Penghulu).
24
This
approach is favoured because Malays typically prefer to keep conflicts
confidential, limiting their disclosure to family members or a select few
individuals within the community. Thus, involving respected figures
like Imams or village leaders helps maintain privacy while ensuring
effective and amicable resolution of disputes within the community.
25
The examination of the roots and rules of community mediation and
21
Nora Abdul Hak and Hanna Ambaras Khan, "Mediation as a Means in
Resolving Community Disputes in Peninsula Malaysia: A Historical
Perspective" (2013), 3.
22
Federal Constitution 1957 (Reprint 2017), no. November (1957): 450,
https://doi.org/JW516221-18-09-2010 (accessed July 2, 2024).
23
Jim Baker, Crossroads: A Popular History of Malaysia and Singapore, 2nd
ed. (Singapore: Marshall Cavendish International Asia Pte Ltd, 2008), 26.
24
Sa’odah Ahmad, Rojanah Kahar, and Muslihah Hasbullah, "Knowledge,
Attitude and Practice of Community Mediators in Malaysia," Kajian
Malaysia (early view, 2021), 6.
25
Nora Abdul Hak and Hanna Ambaras Khan, "Mediation as a Means in
Resolving Community Disputes in Peninsula Malaysia: A Historical
Perspective" (2013), 4-5.
176 IIUM LAW JOURNAL VOL. 33 (1) 2025
mediators in the Malay community delves into their historical practices
of peaceful conflict resolution, which endured even during the
colonisation of Melaka by the Portuguese and later the Dutch. The
traditional dispute resolution mechanisms of the Malays were
preserved during the colonisation by the Portuguese and the Dutch.
26
27
The British colonisation period started gradually. Firstly, they
took over the control of Penang in 1786, and then in 1909 they acquired
full control over all states in Malaysia. In the British era, they started
to get involved in state administration through their representatives.
They limited the power of the King and started to establish the court
system, and they made a general framework for religious courts. The
implementation of British law was initiated in 1807. The first charter
was in Penang. The second implementation was to extend the
jurisdiction of courts to Penang, Melaka, and Singapore. The method
of the court system of British was adopted by Malaysia after
independence until the time when the Malaysian judiciary system
introduced the concept of court annexed mediation.
28
The Chinese mainly settled in Malaysia during the British
colonisation period and later grew to be the second-largest population
of West Malaysia. The discussion here is limited to how the Chinese
resolved their conflict before and after colonisation in the Malay land.
In Chinese communities, the Kapitan
29
has particularly important duty
26
R. H. Hickling, Malaysian Law (Selangor: Pelanduk Publication (M) Sdn
Bhd, 2001), 147-148.
27
Mohamed Nurah Sabahiah, "Mediation in the New Dispute Resolution
Landscape: A Case for the Enhancement of Its Application in Malaysia"
(Ph.D. thesis, University of Malaya, 2013), 46-50.
28
Abdul Hak, Khan, "Mediation as a Means in Resolving Community
Disputes," 7-8.
29
Kapitan Cina also spelt Kapitan China or Capitan China (English: Captain
of the Chinese; Chinese: 華人甲必丹; Dutch: Kapitein der Chinezen) was
a high-ranking government position in the civil administration of colonial
Indonesia, Malaysia, Singapore, Borneo and in the Philippines. Office
holders exercised varying degrees of power and influence: from near-
sovereign political and legal jurisdiction over local Chinese communities,
to ceremonial precedence for community leaders. Corresponding posts
existed for other ethnic groups, such as Kapitan Arab and Kapitan Keling
for the local Arab and Indian communities respectively. Heng Pek K.,
Chinese Politics in Malaysia: A History of the Malaysian Chinese
Association (Oxford: Oxford University Press, 1988), 14.
ADR in Resolving Community Disputes in Pakistan 177
to resolve conflicts. The public refers the problems to the Kapitan for
resolving disputes as he is the leader of the community. The Kapitan
was authorised to deal with police in a criminal matter and has judicial
power in civil matters before the honourable courts. The Kapitan was
the employee of the government to represent their people.
Nevertheless, the post became permanently administrative under the
British colonial era just like the head man (Penghulu) of the Malay
community.
30
In Chinese communities, the practice of mediation derives from
a longstanding tradition of conflict resolution that originated in China.
Chinese mediation shares similarities with Western mediation
procedures, where a neutral third party intervenes to facilitate the
voluntary settlement of disputes and restore peace among conflicting
parties. This method has served as a primary means of resolving
disputes for thousands of years in China. Initially, mediation was
employed to address minor conflicts such as family disputes, marital
issues, and land disputes. At the community level, mediation processes
were typically overseen by neighbours and respected elders. This
grassroots approach to mediation underscored the importance of local
wisdom and communal harmony in resolving interpersonal conflicts
within Chinese society.
31
In Malaysia, the traditional Chinese
community lived in clans (Kongsi). Kongsi may be explained as groups
because when the Chinese migrated to Malaya they gathered around
their different clans and created groups. Consequently, they made the
clans’ houses by sharing the expenses and the donations from rich
immigrants. The clan house served as an office to help their people with
whatever problems they were facing. This keeps harmony among the
Chinese communities through the mediation of inter-clan conflicts.
32
Hence, the Kapitan and Kongsi play especially important role in
mediation and resolving conflicts in society.
30
Ching-Hwang Yen, The Chinese in Southeast Asia and Beyond:
Socioeconomic and Political Dimensions (Singapore: World Scientific
Publishing Co. Pte Ltd, 2008), 137, (accessed march 2, 2025).
31
Yang Zhang, "Mediation Model Differences between China and Australia
and Their Possible Collaboration," Journal of Interdisciplinary Conflict
Science 1, no. 1 (2015): 46-58.
32
Yongkyun Chung, "Combining Arbitration with Mediation: Two Cultures
of China and Malaysia," Journal of Arbitration Studies 26 (2016): 149.
178 IIUM LAW JOURNAL VOL. 33 (1) 2025
The Indians in West Malaysia were the people brought from the
Indian subcontinent by the British administration during the British
colonial period.
33
This discussion focuses exclusively on how Indians
in Malaysia historically resolved conflicts through mediation. During
the British colonial era, many Indians migrated to Malaya
34
to work as
government officials or on plantations. Most of these migrants were
Hindus, who established temples and shrines for religious practices.
The management of Hindu places of worship in Malaysia followed the
traditional Panchayat system, which originates from India and
translates to "an assembly of five elected by villagers." This system
mirrors the governance structure used in numerous Indian village
republics, emphasising local governance and community decision-
making in matters related to religious and social affairs.
35
For Indians in Malaya, the method of Panchayat was adopted
because they liked to resolve the conflicts peacefully. The Panchayat
members’ duties were to discuss the issues of the community members
in front of both disputants and to make a verdict related to the issues.
The foundation of Panchayat was unknown. Some scholars understood
that Panchayat started in temples for social organisation and later
became a dispute resolution body.
36
Hence, in resolving disputes at the
Indian community level, they adopted mediation tools or the settlement
of a dispute by referring the dispute to the mediator of their choice or
the Panchayat.
Malaysia, with its diverse multi-religious and multi-racial
population, provides an ideal environment for the practice of
mediation. Various religions such as Islam, Hinduism, Buddhism, and
others promote conciliation and settlement, laying the foundation for
mediation practices. Historical studies indicate that mediation has long
been the preferred method for resolving disputes among Malaysians.
Across the different ethnic groups Malays, Chinese, and Indians
mediation or conciliation involving a neutral third party, such as a
33
Khan, "Mediation as a Means in Resolving Community Disputes," 18.
34
Now known as Malaysia
35
Mahatma Gandhi and Ramachandra Krishna Prabhu, Panchayat Raj
(Ahmedabad: Navajivan Publishing House, 1959), 3, (accessed April 2,
2025).
36
Hanna Binti Ambaras Khan, "Legal Framework and Structure of
Community Mediation in Malaysia: A Proposal" (Ph.D. thesis,
International Islamic University Malaysia, 2017), 77.
ADR in Resolving Community Disputes in Pakistan 179
village headman, clan leader, or respected elder, has been customary.
The primary objective during these times was to maintain harmonious
relationships within the community. These historical insights
underscore the cultural significance of mediation in Malaysia,
encouraging modern communities to consider mediation as a preferred
approach to resolving disputes rather than resorting to formal court
proceedings.
THE ROLE OF DNUI IN PROMOTING COMMUNITY
MEDIATION IN MALAYSIA
The Malaysian government has implemented numerous initiatives and
programs aimed at fostering national unity and preventing disputes
through peaceful means. Government departments, high authorities,
and ministries have taken proactive measures to mitigate and prevent
future conflicts. A pivotal step in this direction was the establishment
of the Department of National Unity and Integration (DNUI) in 1969.
37
This department plays a crucial role in promoting harmony and
cohesion among Malaysia's diverse population, implementing policies
and initiatives that aim to strengthen social bonds and prevent inter-
communal tensions. When the tragedy of 13 May 1969 happened, the
King declared an emergency on 15 May 1969 under Article 150 of the
Federal Constitution of Malaysia.
38
That declaration of emergency
allowed the National Operational Council to find possible solutions to
resolving the issues of conflict among ethnicities in Malaysia. Under
the work of the National Operational Council on 01 July 1969, the
(DNUI was established to discourse matters regarding rebuilding social
harmony and unity in the country.
The mission of the DNUI was to foster unity and integration
among Malaysia's diverse ethnic groups, facilitating interaction and
understanding between them. Despite incidents like the ethnic tensions
of 13 May, which marked a significant upheaval in the country, earlier
disputes had also posed challenges. Recognising the profound impact
on the economy, politics, and national harmony, the government
37
Nora Abdul Hak and Hanna Aambaras Khan, Community Mediation in
Malaysia (Kuala Lumpur: Dewan Bahasa dan Pustaka, 2018), 82.
38
Federal Constitution, “Federal Constitution 1957 (Reprint 2010).” Article
150: Proclamation of emergency
180 IIUM LAW JOURNAL VOL. 33 (1) 2025
addressed these issues with utmost seriousness. Consequently, the
DNUI was established under the auspices of the Prime Minister's
Office, underscoring its pivotal role in promoting stability and unity
across Malaysia.
39
The most major step taken by the Malaysian government through
the DNUI was the founding of the programme “Peaceful
Neighbourhood” (Rukun Tetangga). This programme was initiated to
create social unity among society members. The main purpose of this
programme, in the beginning, was the safety of residents. The
government gave a legal framework to this programme and gazetted
under the Peaceful Neighbour Regulating 1975 (PU (A) 279/75)
40
to
give certain powers to Peaceful Neighbourhood Programme. In 1984,
the organisation focused on how to enhance the relationships between
various ethnic groups in Malaysia. Later, the community mediation
programme was more devolved and applied in 2008.
41
However, in
2011, the focus of Peaceful Neighbourhood Programme was further
improved to develop the community. The main significance of
Peaceful Neighbourhood Programme is to help in resolving disputes in
the community and avoid ethnic clashes to maintain harmony in the
community.
42
The government's commitment to the DNUI underscores its
significance, as the program was placed under the direct control of the
Prime Minister's Office. This highlights the importance attached to the
DNUI's mission. Under its auspices, the DNUI launched an
experimental initiative known as community mediation, as part of the
Peaceful Neighbourhood Programme, implemented in selected
39
Aizat Khairi, "Peace-Building in Malaysia: Study on the National Unity and
Integration Department (DNUI) Programmes Perdamaian Di Malaysia:
Kajian Program-Program Di Jabatan Perpaduan Negara Dan Integrasi
Nasional (DNUI)," Jurnal Sultan Alauddin Sulaiman Shah 3 (2016): 94.
40
Peaceful Neighbour Regulation 1975 Malaysia.
41
Hanna Ambaras Khan and Nora Abdul Hak, "Community Mediation in
Malaysia: A Step Forward," Malayan Law Journal 1 (2014): 3.
42
Nora Abdul Hak and Hanna Khan, "Empowering Communities Through
Mediation in Malaysia: Issues and Challenges" (paper presented at the
International Conference on Law and Society 1 (ICLAS 1), jointly
organized by Facultas Hukum, Universitas Muhammadiyah Yogyakarta,
and Harun M Hashim Law Centre, Ahmad Ibrahim Kuliyyah of Laws,
International Islamic University Malaysia, 2013), 7.
ADR in Resolving Community Disputes in Pakistan 181
jurisdictions. The aim was to foster harmony and integration within
society, particularly in residential areas.
Furthermore, analysis has revealed that the primary aim of this
programme was to train selected community members as mediators
within their residential areas. These mediators would function as
neutral third parties, facilitating the resolution of conflicts. The concept
of community mediation and the training of local mediators emerged
as an experimental project originating from DNUI, driven by the
recognition that a significant portion of community tensions stemmed
from intra-ethnic conflicts. This initiative sought to address such issues
by empowering community members to actively engage in dispute
resolution processes.
Legal Frameworks in Malaysia - The Peaceful Neighbour Act 2012
The Community Mediation programme in Malaysia was initiated by
the DNUI in 2007 as a pilot project. The programme was first
implemented in the states of Selangor, Penang, Johor, and the Federal
Territory of Kuala Lumpur, targeting areas with high crime rates and
significant cultural diversity. By 2008, the programme was extended to
other states across Malaysia.
43
In 2012, the Peaceful Neighbour Act
was presented in the Malaysian Parliament, and it was later passed and
gazetted on 22 June 2012. Section 8 of the Peaceful Neighbour Act
2012
44
spells out the duties and roles of the mediation committee
provides mediation services to the community and resolves conflicts or
any other issues among society members. Section 8(d)
45
stipulates that
community mediation services are provided to settle disputes among
community members. Thus, the committee shall try its best to settle the
issues of community members. Some commentators view
46
that the
Malaysian government took a good approach by introducing
community mediation with a comprehensive legal framework. This
programme helps the public to resolve their issues amicably.
43
Kahar, rojanah. “Knowledge, Attitude and Practice of Community
Mediators in Malaysia.” Kajian Malaysia, 2022, 54.
44
See Section 8 Rukun Tetangga Act, 2012 (Act No. 751 of 212).
45
See Section 8(d) Rukun Tetangga Act, 2012 (Act No. 751 of 212).
46
Observation of the researcher
182 IIUM LAW JOURNAL VOL. 33 (1) 2025
Section 7
47
provides for the appointment of mediators. Section 7
(1) states that it is the right of parties to appoint a mediator for
mediation: Section 7(1) states as follows:
“A director shall within thirty days from the date of the designation
of an area under section 5 or within such longer period as prescribed
by the Director General appointed in respect of the Area Rukun
Tetangga Area committee which shall consist such number of
persons comprising residents, persons who have interest in the area
and other persons, as may be approved by the director”.
The Rukun Tetangga Area Committee shall consist of the
following members as provided in section 7(2) as follows:
The director shall after consultation with the member of the
Committee, appoints from amongst the said members;
(a) A chairman;
(b) A deputy chairman;
(c) A secretary;
(d) An assistant secretary; and
(e) A treasurer.
From the above analysis, it is evident that a highly responsible
team has been established for the Rukun Tetangga Area Committee.
The various positions within the committee are crucial for achieving
productive results. However, the specific structure of the centre and
office is not delineated in the current Act. Therefore, it is strongly
recommended that the Act include provisions detailing professional
training requirements, office setup, and funding specifics. These
additions would ensure clarity and effectiveness in the operations of
the Rukun Tetangga Area Committee, enhancing its capacity to
successfully fulfil its objectives of promoting harmony and resolving
conflicts within communities.
47
See Section 7 Rukun Tetangga Act, 2012 (Act No. 751 of 212).
ADR in Resolving Community Disputes in Pakistan 183
Section 7(3) provides the disqualification of a member from
Rukun Tetangga Area Committee as follows:
(a) a person shall be disqualified from being appointed as a member
of Rukun Tetangga Area Committee if;
(b) he has not attained the age of eighteen years;
(c) he has undischarge bankrupt;
(d) he has been convicted for an offence and sentenced to
imprisonment for a term of not less than one year or fine of not
less than two thousand ringgit or to both;
(e) he is not a citizen or a permanent resident or
(f) he is unsound mind or is otherwise incapable for performing his
duty;”.
Several observations for improvement have been identified in
this section of the Act. Merely setting the minimum age at 18 may not
suffice; consideration should also be given to maturity and practical
work experience. The strictness of the imprisonment clause is
noteworthy; even if an individual receives a one-year sentence and
demonstrates the potential to serve effectively as a mediator, they are
currently ineligible. Therefore, this aspect requires careful
reconsideration. Additionally, the citizenship requirement needs
revision, particularly since Malaysia serves as an international business
hub attracting many foreign nationals. Extending access to community
mediation services to these individuals is crucial for promoting
inclusivity and effective conflict resolution within Malaysia's diverse
community.
Training of Community Mediators
In Malaysia, the training of community mediators is the responsibility
of the National Integration Research and Training Institute. IKLIN
operates under the DNUI, which is part of the Ministry of National
Unity. This institute is responsible for developing and implementing
training programs aimed at equipping community mediators with the
necessary skills to effectively resolve disputes. The training programs
provided by IKLIN have evolved over time to incorporate
contemporary mediation practices and to align with international
standards. In conducting the training, IKLIN collaborates with certified
184 IIUM LAW JOURNAL VOL. 33 (1) 2025
trainers. The training modules cover mediation techniques, ethical
considerations, and cultural competencies, ensuring mediators are
well-prepared to handle a variety of community disputes.
48
The training begins with an introduction to the fundamental
principles of community mediation, emphasising the role of the
community mediator within the mediation process. It also aims to
familiarise participants with the objectives of the Peaceful
Neighbourhood Programme, thereby aligning the training with broader
goals of community harmony and conflict resolution.
49
The negotiation process of the mediation under the community
mediation programme is controlled by the mediator and it is free of
charge. However, there is no fee imposed on any party at any mediation
meeting and the mediator receives no payment. Currently, the
community mediator works under the community mediation operating
procedure, which is governed by the DNUI. According to the followed
procedure, the mediator studies and understands the case, negotiates
the problem and has meetings with both parties to resolve disputes
amicably.
50
Mediation Act 2012
The enactment of mediation legislation was aimed not only at
promoting and raising public awareness of the mediation process, but
also at aligning Malaysia with global developments in alternative
dispute resolution. Additionally, the legislation sought to establish a
clear and consistent legal framework, thereby addressing concerns
around the legitimacy and formal recognition of mediation as a viable
method for resolving disputes. The Malaysian Mediation Act 2012
48
Policy Brief Launch and Webinar on ‘Mainstreaming Mediation as an
Alternative Form of Conflict Resolution in Malaysia.’” INITIATE.MY.
Accessed April 15, 2025. https://initiate.my/event/policy-brief-launch-
and-webinar-on-mainstreaming-mediation-as-an-alternative-form-of-
conflict-resolution-in-malaysia/, pp. 5, 7.
49
Hanna Ambaras Khan and Nora Abdul Hak. "Community Mediation in
Malaysia: A Step Forward." International Journal of Business, Economics
and Law 4, no. 4 (2014): 57–64.
50
Khan, "Legal Framework and Structure of Community Mediation," 95
ADR in Resolving Community Disputes in Pakistan 185
(MMA 2012) was enacted to institutionalise and acknowledge
mediation as a recognised form of ADR.
51
The Act was passed by the House of Representatives on 2 April
2012 and by the Senate on 7 May 2012. It received royal assent on 18
June 2012, was gazetted on 22 June 2012, and officially came into force
on 1 August 2012.
52
The long title of the Act states that it aims to
promote and encourage mediation by providing a structured process,
thereby facilitating the fair, speedy, and cost-effective resolution of
disputes. This legislation represents a significant step in formalising
mediation practice in Malaysia, aligning with international ADR
standards and reinforcing public trust in mediation as a legitimate
dispute resolution mechanism.
The MMA 2012 defines mediation as a voluntary process
whereby a mediator facilitates communication and negotiation between
disputing parties to assist them in reaching a mutually acceptable
agreement. The objectives of the Act include:
(a) promoting, encouraging, and facilitating the fair, prompt, and
cost-effective resolution of disputes through mediation;
(b) safeguarding the confidentiality of mediation proceedings and
protecting the privileged nature of communications exchanged
during the process;
(c) providing flexibility for the implementation and testing of
various mediation approaches; and
(d) preserving the adaptable and non-restrictive nature of
mediation.
53
51
Rahmat, Nur Ezan, Daleleer Kaur Randawar, Aishah Mohd Nor, and Faridah
Hussain. "Certification and Mediation Training for the Mediators in
Malaysia." Malaysian Journal of Social Sciences and Humanities
(MJSSH) 7, no. 11 (2022): 1–8, p 4.
52
Mediation Act 2012 (Act 749), Laws of Malaysia, Kuala Lumpur: The
Commissioner of Law Revision, Malaysia.
53
Rahmat et al., "Certification and Mediation Training for the Mediators in
Malaysia," 4.
186 IIUM LAW JOURNAL VOL. 33 (1) 2025
The MMA outlines the duties of mediators and laws related to
the mediation process.
54
The code of ethics and principles regarding the
conduct of community mediators were also furnished. The seven-basic
codes of ethics are stated below:
1. The mediator should be neutral and not in favour of any
disputant party.
2. The mediator keeps his trust and focuses on his duty honestly
and does not use the power and position which is given by the
DNUI for personal advantage.
3. Conducting the duty responsibly.
4. The mediators should commit to their work.
5. The mediators should devote and willing to admit the
responsibility and to work for the betterment of a peaceful
society.
6. The mediators should be competent in their work and always
obey the rules, and be on time for the mediation sessions.
7. The mediators should be professional, continuously progressing
their abilities and knowledge and provide effective services to
the community”.
55
It can be seen that the Act provides clear guidelines on the duties
and ethics of a mediator in conducting a mediation session.
It is observed that community mediators have to undergo
trainings that assist them in conducting mediation sessions effectively.
The training course is structured into two parts: the first part aims to
educate and refine participants' skills, while the second part focuses on
mediator training and the intricacies of the mediation process. The
topics covered include mediation steps, mediator protocols, and
techniques which are essential for a successful mediation.
Additionally, the course includes understanding a comprehensive code
54
Laws of Malaysia Act 751, Rukun Tetangga Act 2012. Section 5-6-9-10-11.
55
Jabatan Perpaduan Negara dan Integrasi Nasional (Perpaduan), "Community
Mediators Rules Department of National Unity and Integration," Pusat
Pentadbiran Kerajaan Persekutuan, 62250 Putrajaya,
https://www.perpaduan.gov.my/en/community/community-
mediator/code-ethics (accessed March 20, 2025).
ADR in Resolving Community Disputes in Pakistan 187
of ethics which are designed to guide mediators in maintaining
professionalism and ethical conduct throughout their mediation
practice. This training framework aligns with the objectives of the
MMA, which seeks to promote fair, efficient, and confidential dispute
resolution through a structured legal framework, thereby reinforcing
the legitimacy and credibility of community mediation in Malaysia.
The DNUI's endeavours to promote community mediation are
highly commendable. The department successfully accomplished its
objectives of fostering tranquillity in the community and establishing a
streamlined mechanism for citizens to address and settle disputes.
Malaysia has achieved a commendable position on the Global Peace
Index's list of peaceful countries in 2024. Malaysia was also ranked as
the most peaceful country in Southeast Asia, the third safest in Asia
Pacific and 10th safest in the world ranking. This ranking was issued by
the Global Peace Index 2024.
56
TRADITIONAL DISPUTE RESOLUTION PRACTICE OF
JIRGA, PANCHAYAT AND FAISLO IN PAKISTAN
The term Jirga literally means an 'assembly' or 'gathering' which is
convened to resolve disputes and functions as an autonomous decision-
making body. According to the Pashto descriptive dictionary, Jirga is
an original Pashto word traditionally used to refer to a gathering of
several or many individuals. The word Jirga is also used in other
languages like Mongolian, Turkish, and Persian that is interrelated with
the word circle. Nevertheless, the word Jirga is “a rich traditional code
of Pushtoon nation where the tribal peoples gather for traditional Jirga
and sit in a large circle to resolve conflicts and take collective verdicts
related to social issues”.
57
Normally, the Jirga gathers in Hujra (Hujra
56
"The 2024 Global Peace Index (GPI)," New Straits Times, June 2024,
https://www.nst.com.my/news/nation/2024/06/1064151/malaysia-ranks-
10th-most-peaceful-nation-2024-global-peace-index (accessed March 2,
2025).
57
Barakatullah Advocate and Imran Ahmad Sajid, “Jirga System in Pakhtun
Society: An Informal Mechanism for Dispute Resolution,” Pakistan
Journal of Criminology 5, no. 2 (July-Dec 2013): 45
188 IIUM LAW JOURNAL VOL. 33 (1) 2025
is a public place and it is as old as the history of Pushoon)
58
or in
villages, at a mosque, or any open ground in the community. All
honourable elders or greybeards (Speen Geeri) are considered suitable
for the membership of Jirga. Nevertheless, for the effective
implementation of the verdict by Jirga, the members should have good
community status, reputation, and financial standing.
59
In Pushtoon society, Jirga is a unique institution as it works as a
council, an assembly, or both. Fundamentally, Jirga is a gathering of
elders of the tribes, powerful chiefs, and religious leaders who are
engaging in the resolution of conflicts among the disputants of the
community.
60
The institution of Jirga is informal, but due to strong
tribal tradition, it has formal effects on the Pushtoon community. Jirga
acts as a judicial institution in which disputes and problems are
presented, and in the end, a penalty is imposed, or a reward is given.
61
The above examination reveals that the Jirga is deeply ingrained
in Pashtun society, functioning as a principal institution shaping the
lives of individuals and their tribes. It stands as an exclusive
mechanism for resolving disputes and fostering consensus across all
facets of Pashtun life. The Jirga operates multifariously, serving as a
social body, judicial court, watchdog, democratic legislative body, and
diplomatic mission simultaneously.
The current panchayat system in Punjab Pakistan is a type of
justice system usually practised in the subcontinent, Pakistan, India,
and Bangladesh. The term panchayat means “assembly of five”
(punch). The panchayats comprised respected, honourable, and wise
elders accepted by the local village. There are different forms of
panchayat assemblies, and these forms work to settle disputes among
58
Mughal B. Khan, Abdul R. Ghumman, and Hashim N. Hashmi, “Social and
Environmental Impact of Hujra,” Environmental Justice 1, no. 4 (2008):
195-196
59
Barakatullah Advocate and Imran Ahmad Sajid, "Jirga System in Pakhtun
Society: An Informal Mechanism for Dispute Resolution," Pakistan
Journal of Criminology 5, no. 2 (2013): 45-46.
60
Muhammad Hassan Ahmad, Ihtesham Ullah Khan, and Mohammad Naqib
Ishan Jan, "Jirga and Dispute Resolution in Khyber Pakhtunkhwa: A
Critical Analysis," Journal of Islamic Law Review 15, no. 1 (June 2019):
63-79,
61
Ali Wardak, "Jirga—A Traditional Mechanism of Conflict Resolution in
Afghanistan," Institute of Afghan Study Centre, 2003, 3-4.
ADR in Resolving Community Disputes in Pakistan 189
individuals of the society as well as settle disputes between different
villages. The panchayat system is part of the Indian legal system in
many states, including Karnataka, Kerala, Tamil Nadu, Rajasthan,
Maharashtra, and West Bengal.
62
While in Pakistan, the panchayat
system is an informal justice system. In Pakistan, the panchayat system
is a self-rural government system, and the idea was taken from the
Mughal government even before.
63
This system has been a source of
justice for a very long time in the Mughal era where there were different
kinds of courts which were dealing with different cases. These
panchayat types of institutions were known as blessings for the poor
people in rural areas rather than a threat. The system was bound to solve
problems relating to local administration and domestic disputes.
64
Historically, in Punjab Pakistan, panchayat gained popularity
for the settlement of community disputes at the village level to sidestep
violence. The traditional panchayat always tried to prove its worth by
providing timely and speedy justice to people. Furthermore, currently,
there are different types of panchayat in different areas of Punjab that
are functional in diverse positions, which are, Intra-village or village
Panchayat; Inter-village Panchayat; Biradari Panchayat; Local
Panchayat; Gram Panchayat; Kath of villagers; Hawaili/Daara
Panchayat; Baithak Panchayat; Family Panchayat; Political
Panchayat; Tharra Panchayat; Bathha Panchayat;
65
The dispute resolution mechanism, especially the traditional
Faislo system which is called Jirga and Panchayat in other provinces
of Pakistan is an important part of the traditional inter-village and intra-
village conflict resolution mechanism in Sindh Pakistan. The
traditional institution of faislo functions for decision-making and
62
Pandey, Mukesh Kumar, and Ashutosh Sinha. "Panchayati Raj System and
Rural Development in India: A Critical Study." International Journal of
Development Research 11, no. 03 (2021): 45165–45168.
63
Muhammad Rahmatullah Farooqi, Haq Nawaz Anwar, and Falak Sher, "A
Comparative Study of Panchayat System and State’s Judicial System in
Punjab, Pakistan," Journal of Organizational Behaviour Research 4, no.
2 (2019): 142-149
64
S. R. Sharma, Mughal Government and Administration (Bombay: Hind
Publisher, 1965).
65
Riaz Ahmad Muazzmi and Aneela Sultana, "Ethnography of Panchayat:
Cases of Khula from Mandi Baha-Ud-Din," Global Regional Review 5,
no. 1 (2020): 76-83.
190 IIUM LAW JOURNAL VOL. 33 (1) 2025
dispute resolution which occurs at different village levels and places
which are, family ‘inside the house through mutual negotiation by
family members’, kinship at Otaq,
66
by noble and aged elders of
kinship. Kinship is also conducted at a mosque or shrine of Pir ‘on oath
by spiritual leader, at Maikhana ‘hashish smoking place by mystic
peasants through lengthy elaborated dialogue, or at Dero in
sharecropping during Batai ‘by a landlord, landowners, farmers, and
sharecroppers’. It is also conducted at the local inter-village, which is
tribal level ‘at big landlord’s or feudal’s bungalow’ and in the court of
law by a judicial magistrate.
67
The institution of the traditional Faislo system which is an
informal judicial body at the village level constitutes a decision-making
body to resolve conflicts depending upon the context of the conflict. If
the matter of conflict is in an internal family within the village, then
members from the same families and kinship will be the parties to the
dispute resolution. In internal family matters, the participation of
Wadera (landlord) of the village is not necessary. If the conflict is more
serious like honour killing, murder, etc, then two different bradaris
(tribes) together with a mediator (a feudal or tribal elder, sardar)
constitute a large conflict resolution body (Bradari) to solve the
matter.
68
66
"Otaq," at times also referred to as "Autaq," serves as a multifaceted haven—
a guest room, a place for communal gatherings, and a sacred space
exclusively designated for men. Here, individuals, including guests and
foreigners, congregate on special occasions or specific days. Historical
Research on Otaq Culture in Sindh, available from
https://www.researchgate.net/publication/376489643_Historical_Resear
ch_on_Otaq_Culture_in_Sindh [accessed March 14, 2025].
67
Ghulam Hussain, Anwaar Mohyuddin, and Firdous Mahesar, "Conflict
Resolution Mechanism in Rural Sindh: Rationalizing Lifeworld of
Peasants," Voice of Intellectual Man—An International Journal 3, no. 2
(2013): 38.
68
Ghulam Hussain, Anwaar Mohyuddin, and Firdous Mahesar, "Conflict
Resolution Mechanism in Rural Sindh: Rationalizing Lifeworld of
Peasants," Voice of Intellectual Man—An International Journal 3, no. 2
(2013): 35-54.
ADR in Resolving Community Disputes in Pakistan 191
HUMAN RIGHTS INCIDENTS IN TRADITIONAL DISPUTE
RESOLUTION IN PAKISTAN
In Pakistan, the traditional system lacks proper control and a legal
framework, leading to numerous incidents in various regions.
Traditional members often base their practices on personal
interpretations, resulting in frequent issuance of unlawful verdicts
under the guise of custom and tradition. “The example in this
connection is of Maryam Bibi who was stoned to death in Khanewal, a
district of Punjab. Reports from the media say, 25 years-old Maryam
Bibi, mother of five, was mowing grass on the fields of a local landlord
who reportedly forced her to submit to his sexual advances. When she
declined the landlord levelled accusations against the woman and took
the case to a local panchayat, who ordered the woman to be stoned to
death. The order was carried out at her home in the early hours of July
18. Her husband, Sarfaraz, was kidnapped, but later recovered.”
69
As a result of the absence of a well-defined framework, facilities,
established regulations, and trained government mediators, several
occurrences have occurred that constitute a breach of national laws and
fundamental human rights. An example of a tragic accident can be seen
during a Jirga proceeding. On 20 September 2021. In this incident, “at
least nine (9) people were killed and sixteen (16) were injured as
participants of a jirga opened fire at each other in Barawal tehsil of
Upper Dir, Khyber-Pakhtunkhwa. The incident occurred during a
meeting held to resolve a dispute related to the construction of a road
at Ganu Cham, tehsil Barawal. The attendees first engaged in a brawl
but took out guns and began firing at each other shortly after”.
70
On 3
April 2023, another incident happened and in detail was reported as
follows “Gujrat Pakistan Punjab: The death toll in the firing incident at
a village Panchayat reached five as a critically injured man succumbed
to his wounds at Kharian civil hospital. Police stated that the shooting
occurred during a dispute over a financial matter at the residence of
69
Allah Nawaz, "Jirga and Panchayat as the Precursor to Honour Killing in
Pakistan," Dialogue 15, no. 1 (2020): 105.
70
The Express Tribune Staff Reporter, "Nine Killed, 16 Injured in Clash
During Jirga in Upper Dir," The Express Tribune, September 20, 2021,
https://tribune.com.pk/story/2321086/nine-killed-16-injured-in-clash-
during-jirga-in-upper-dir (accessed April 5, 2025).
192 IIUM LAW JOURNAL VOL. 33 (1) 2025
Fazal Hussain, adding that other aspects of the incident are also under
investigation. Further investigation is underway with no arrest so far.
71
There have been numerous cases across different areas of
Pakistan where the traditional system is utilised to settle disputes,
leading to significant human rights violations.
72
These incidents occur
because the government lacks proper control over the traditional
dispute resolution mechanisms through a formal legal framework.
Traditional practices such as Jirga, Panchayat, and Faislo continue to
operate with societal acceptance, despite their perpetuation of cruel and
un-Islamic rituals. The examples cited above are from previous years,
and there are likely many more cases that go unreported. The
government must take decisive action against these violations and
institute regulations to oversee and regulate the traditional practice
systems effectively.
COMPARISON BETWEEN COMMUNITY MEDIATION IN
MALAYSIA AND TRADITIONAL DISPUTE RESOLUTION IN
PAKISTAN
Historically, Malaysia and Pakistan have both practised traditional
methods of alternative dispute resolution for centuries. Malaysia's
cultural diversity, encompassing Malays, Chinese, and Indians,
manifests in distinct approaches to conflict resolution. Malays often
seek resolution through neutral third parties such as religious leaders
(Imam), village headmen (Ketua Kampung), or community leaders
(Penghulu). Chinese communities traditionally refer to Kapitans, who
act as community leaders in resolving disputes. Indian communities in
Malaysia, influenced by their historical roots in the Indian
subcontinent, continue to practise traditional dispute-resolution
methods. Indian Hindus, for instance, historically use the Panchayat
system for resolving disputes. Similarly, in Pakistan's four provinces,
the traditional systems of Jirga, Panchayat, and Faislo serve as
71
The Dawn News Staff Reporter, "Panchayat Firing Death Toll Reaches
Five," The Dawn News, April 14, 2023,
https://www.dawn.com/news/1747468 (accessed April 5, 2025).
72
Muhammad Hassan Ahmad and Ihtesham Ullah Khan, "A Legal Framework
for the Jirga Community Mediation in Khyber Pakhtunkhwa," Islamic
Law Review 3, no. 3 & 4 (Autumn/Winter 2019): 10,11.
ADR in Resolving Community Disputes in Pakistan 193
established mechanisms for resolving disputes. Pakistani communities,
like those in Malaysia, exhibit diversity, with these systems typically
involving gatherings of tribal elders, influential chiefs, and religious
leaders tasked with resolving conflicts among community members.
In comparing the legal frameworks for community mediation
between Malaysia and the traditional dispute resolution system in
Pakistan, significant differences are evident. Malaysia has developed a
legal framework for community mediation, whereas Pakistan has yet
to establish such legislation. Malaysia's approach includes
comprehensive legislation supporting community mediation practices,
contrasting with Pakistan where researchers have identified no specific
legislation for community mediation.
73
An important historical context
is that both Malaysia and Pakistan gained independence from British
colonial rule, with Pakistan gaining independence earlier than
Malaysia.
In Malaysia, the DNUI was established to enhance social
harmony and unity, focusing on developing the structure of community
mediation. Conversely, Pakistan lacks a similar departmental structure
dedicated to promoting community mediation. Since 1975, Malaysia
has implemented the Peaceful Neighbourhood Programme under the
DNUI to foster social unity and harmony among society members. This
initiative is further strengthened by the MMA, which provides a formal
legal framework to promote, regulate, and legitimise mediation
practices across the country. In contrast, Pakistan's traditional dispute
resolution systems operate without government oversight and a formal
legal framework. While Malaysia's system continues to evolve and
actively supports community mediation initiatives, Pakistan remains in
urgent need of a comprehensive legal framework to formalise and
regulate community mediation practices.
Due to the lack of control and a formal legal framework,
numerous incidents have occurred in different areas of Pakistan
involving the traditional dispute resolution system. Traditional
members often interpret and practice it according to their
understanding, occasionally leading to unlawful verdicts justified in the
name of custom and tradition. It is crucial to emphasise that the sanctity
of human life surpasses any adherence to custom or tradition. The
73
Ihtesham Ullah Khan, Nurah Sabahiah, and Sodiq Omoola, “Legal Status
and Future of Mediation in Pakistan,” JL & Soc. Pol’y (2024), 17-18.
194 IIUM LAW JOURNAL VOL. 33 (1) 2025
examples mentioned are just a glimpse of the unjust judgments
rendered by the traditional system, with many more cases going
unreported by the media or law enforcement. Despite its deep roots in
Pakistani communities, the government bears the responsibility to
bring the traditional system under a comprehensive legal framework.
Currently, Pakistani statutes do not provide formal regulation for the
traditional system. Establishing such a framework is essential to
harness its potential as a positive force for peaceful communication and
conflict resolution within society. This regulatory step is vital not only
to prevent further incidents as described but also to ensure the
traditional system operates effectively, upholding justice and
community cohesion.
The DNUI centres and area centres under the Peaceful
Neighbourhood Programme share significant similarities with the
traditional dispute resolution system in Pakistan while also displaying
differences in certain aspects. Initially, both DNUI and traditional
systems function within communities to resolve disputes. In Pakistan,
the traditional system traditionally convenes parties in communal
settings to discuss and resolve issues. Similarly, DNUI trains mediators
who may establish centres or facilitate meetings through departmental
support to aid in dispute settlement. DNUI also incorporates customary
roles akin to Ketua Kampung or Penghulu, who preside over
community gatherings to address matters. However, DNUI has
modernised these practices over time, refining and advancing its
systems to enhance effectiveness in facilitating peaceful resolutions
within communities.
The main distinction between DNUI centres in Malaysia and
traditional centres in Pakistan lies in their operational framework. In
Malaysia, DNUI centres operate within a legal structure, ensuring
accountability and oversight. Conversely, traditional dispute resolution
centres in Pakistan function based on traditional principles without
regulatory oversight from governmental departments. Malaysia has
continually enhanced its traditional dispute resolution centres by
introducing new structures and improvements aimed at delivering
optimal services. In contrast, Pakistan's traditional centres require
focused government attention to integrate them within a formal
departmental structure. This step is crucial to enhance efficiency,
transparency, and effectiveness in resolving disputes within Pakistani
communities.
ADR in Resolving Community Disputes in Pakistan 195
In Malaysia, the training of community mediators is conducted
by the National Integration Research and Training Institute,
highlighting a more advanced approach in this field. Mediators
undergo comprehensive training to acquire skills and expertise,
enabling them to effectively engage in dispute resolution. In contrast,
traditional mediators in Pakistan do not have access to dedicated
training centres. This disparity underscores a significant difference in
the level of professional preparation and capability between the
Malaysian and Pakistani systems for mediation and conflict resolution.
CONCLUSION
The study on community mediation in Malaysia and the traditional
practice of dispute resolution in Pakistan helps in establishing a
structure of community mediation for Pakistan as there is no practice
of community mediation under government supervision and it depends
heavily on the traditional way of dispute resolution. However,
Malaysia has taken an important step in starting a formal community
mediation programme under the DNUI. The reports of the community
mediation programme in Malaysia are very impressive and the people
took an interest in solving their issues with the easy method and to
avoid the lengthy procedures of courts. Pakistan needs to look into the
application of ADR mechanisms.
In conclusion, to enhance the practices of traditional dispute
resolution in Pakistan, several crucial steps are recommended. Firstly,
codifying the rules governing traditional proceedings is imperative as
a legal framework for promoting structured dispute resolution.
Secondly, establishing a dedicated department equipped with resources
and a comprehensive structure for community mediation, akin to
Malaysia's DNUI established in 1969, is essential. This would provide
the necessary institutional support for effective operations.
Thirdly, addressing the informal nature of proceedings, which
lack written protocols or standardised terms, is crucial. Government
intervention to provide a binding legal framework for the traditional
system would ensure consistency and accountability in its practices.
While the traditional system serves as an alternative to the formal
judiciary in Pakistani communities, uncertainties in procedural
structure and mediator skills can lead to societal challenges, including
196 IIUM LAW JOURNAL VOL. 33 (1) 2025
human rights violations and decisions conflicting with Islamic
principles and existing laws.
By implementing these recommendations, Pakistan can
strengthen its traditional system, aligning it with legal standards and
enhancing its role in fostering community harmony and justice. This
approach not only respects local customs but also safeguards
fundamental rights and promotes adherence to legal norms, thereby
contributing to a more equitable and stable society.
ADR in Resolving Community Disputes in Pakistan 197
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The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License
CORRUPTION IN LAND ADMINISTRATION IN NIGERIA:
LEGAL ISSUES AND CHALLENGES
Busari Morufu Salawu
ABSTRACT
Corruption is a phenomenon which has spread into all sectors of Nigerian
public life. Many research efforts on corruption focused on financial and
political issues, while less attention has been paid to corruption in land
in Nigeria. This study gives an overview of corruption in Nigeria. It
examined corruption in land administration under Nigeria’s Land Use
Act 1978 and how this stultifies sustainable development in land use and
planning. Efforts of Nigeria’s Federal Government in combating this
trend were discussed, while issues and challenges militating against the
efforts were interrogated. The doctrinal research approach, relying on
primary and secondary sources, was adopted. The primary source
consisted of statutes (Constitution of the Federal Republic of Nigeria
1999, Land Use Act 1978, transparency laws such as Corrupt Practices
and other Related Offences Act 2000 and Economic and Financial
Crimes Commission (Establishment) Act 2004, etc.) and the case law
while the secondary source included journal articles, textbooks,
conference proceedings and the internet. Findings reveal that land
administration in Nigeria was faced with myriads of problems such as
plural land tenure systems, multiple property legislations, weak and
(sometimes insincere) implementation of land policy. It also highlights
that although the Nigerian government has enacted comprehensive
transparency and anti-corruption laws, their effectiveness has been
undermined by persistent official corruption, rent-seeking behaviour and
the constitutional immunity granted to certain public officials. It
concluded that while the Land Use Act 1978 and other relevant property
LLB, LLM, PhD: Lecturer, Department Public and International Law,
Faculty of Law,Osun University, Osogbo, Osun State, Nigeria E-mail:
busari.salawu@uniosun.edu.ng (Corresponding Author).
[Received: 26 September 2024, Accepted: 13 May 2025, Published: 28 May 2025]
202 IIUM LAW JOURNAL VOL. 33 (1) 2025
legislations should be reformed to clog corruption holes, these laws
should be implemented strictly for national development.
Keywords: Land Access, Land Administration, Land Corruption,
Executive Immunity, Rule of Law.
RASUAH DALAM PENTADBIRAN TANAH DI NIGERIA:
ISU DAN CABARAN PERUNDANGAN
ABSTRAK
Rasuah merupakan satu fenomena yang telah menular ke dalam semua
sektor kehidupan awam Nigeria. Kajian ini memberikan gambaran
keseluruhan mengenai rasuah di Nigeria. Ia meneliti rasuah dalam
pentadbiran tanah di bawah Akta Penggunaan Tanah Nigeria 1978 dan
bagaimana ia menghambat pembangunan mampan dalam penggunaan
dan perancangan tanah. Usaha-usaha Kerajaan Persekutuan Nigeria
dalam memerangi trend ini turut dibincangkan, sementara isu dan
cabaran yang menghalang usaha-usaha tersebut diteliti. Pendekatan
penyelidikan doktrinal, yang bergantung pada sumber primer dan
sekunder, telah digunakan. Sumber primer terdiri daripada statut
(Perlembagaan Republik Persekutuan Nigeria 1999, Akta Penggunaan
Tanah 1978, undang-undang ketelusan seperti Akta Amalan Rasuah
2004 dan Akta Suruhanjaya Jenayah Ekonomi dan Kewangan 2004, dan
lain-lain) dan undang-undang kes, manakala sumber sekunder
merangkumi artikel jurnal, buku teks, prosiding persidangan dan
internet. Hasil kajian menunjukkan bahawa pentadbiran tanah di Nigeria
menghadapi pelbagai masalah seperti sistem pemegangan tanah yang
pelbagai, pelbagai perundangan harta tanah, pelaksanaan dasar tanah
yang lemah dan (kadang-kadang tidak ikhlas). Ia juga menumpukan
perhatian bahawa perundangan ketelusan dan anti-rasuah yang
diluluskan oleh Kerajaan Nigeria adalah komprehensif, tetapi
pelaksanaannya telah dicemari oleh rasuah pegawai, tingkah laku
mencari keuntungan peribadi dan kekebalan perlembagaan yang sedia
ada. Kajian ini menyimpulkan bahawa sementara Akta Penggunaan
Tanah 1978 dan perundangan harta tanah lain yang berkaitan perlu
direformasi untuk menutup ruang lingkup rasuah, undang-undang ini
harus dilaksanakan dengan tegas demi pembangunan negara.
Kata Kunci: Akses Tanah, Pentadbiran Tanah, Rasuah Tanah,
Kekebalan Eksekutif, Kedaulatan Undang-Undang.
Corruption in Land Administration in Nigeria 203
INTRODUCTION
The importance of land to people cannot be underestimated. It has both
physical and spiritual values to the people as it has been conceived to
have a generational value: it belongs to the dead, the living and the yet
unborn.
1
Perhaps, this explains the reason for the unending communal
conflicts existing among communities in Nigeria. Examples of these
are rural land conflicts between farmers and herdsmen, in many parts
of Nigeria; communities of Ife and Modakeke,
2
Ifon and Ilobu in Osun
States,
3
and inter-communal land conflicts in Benin City,
4
among
others. Apart from its spiritual essence, land is a major economic
resource upon which the sustenance of the people resides. More than
70% of Nigerians’ rural dwellers are either farmers or in the
agricultural value chain, estimated to be in excess of USD85 billion.
5
Land is the basis of rural land conflicts between farmers and herdsmen,
in many parts of Nigeria; communities of Ife and Modakeke,
6
Ifon and
Ilobu in Osun States,
7
and inter-communal land conflicts in Benin
City,
8
among others. However, the phenomenon of corruption which is
1
Kolawole A. Owolabi, Because of our future, the Imperative for an
Environmental Ethic for Africa, (IFRA Nigeria, 2022). DOI:10:
4000/books.infra.3572
2
J.O. Toriola, “The Ife/Modakeke Crisis: An Insider View,” Ife PsychologIA,
9(3) (2001), 21 – 29.
3
Adeolu Adeyemo, “Ifon/Ilobu Crisis: Five Feared Killed as Communities
Review Hostility,” Tribune Online, January 30, 2024, accessed May 30,
2024, <www.tribuonlineng.com>.
4
Justin Eduriere Agheyisi, “International land conflicts in Benin City, Nigeria:
Exploring the Root Causes in the Context of Customary Land Supply,”
Land Use Policy 83 (2019), 532-542
5
Olaoluwa Oloyede, ‘Fundamentals of the Nigerian Agricultural Value
Chain’. Babban Gona (2020), accessed April 23,2024, <
https://babbangona.com/author/olaoluwa/ >.
6
J.O. Toriola, “The Ife/Modakeke Crisis: An Insider View,” Ife PsychologIA,
9(3) (2001), 21 – 29.
7
Adeolu Adeyemo, “Ifon/Ilobu Crisis: Five Feared Killed as Communities
Review Hostility,” Tribune Online, January 30, 2024, accessed May 30,
2024, <www.tribuonlineng.com>.
8
Justin Eduriere Agheyisi, “International land conflicts in Benin City, Nigeria:
Exploring the Root Causes in the Context of Customary Land Supply,”
Land Use Policy 83 (2019), 532-542
204 IIUM LAW JOURNAL VOL. 33 (1) 2025
pervasive in Nigeria’s environment, is gradually having harmful effects
on the management and control of land in Nigeria. Various incidences
of corruption under the customary land holdings and the Land Use Act
1978 exist to make land unalluring for economic transactions,
9
such as
mortgage and sale.
Although the 2019 Report of the United Nations Office on
Drugs and Crime (UNODC) shows a significant decrease in the
prevalence of bribery from the first report in 2016, the police officers
and land registry officers were the top three corrupt officials especially
in the North-Central, North-west and South-East zones of Nigeria.
10
In
addition, a high risk of corruption exists in Nigeria’s land
administration, which has made the ease of doing business very
difficult in the nation.
11
Corruption on land ranges from ‘gifts or
facilitation payments to obtain a construction permit’, allocation of
land for political patronage and the unwholesome activities of
traditional title holders (Omo Onile) in land transactions.
12
In all,
corruption in Nigeria is forecast to cost up to 37% of GDP by 2030 if
immediate corrective actions are not taken.
13
This paper is conducted due to the awareness that many research
efforts have been focused on financial and political corruption, while
less attention has been paid to investigations on corruption in land in
Nigeria, despite the importance of land as a national resource. The
outcome of this paper would contribute to the literature in the study,
promote knowledge on the achievement of the Sustainable
9
Adamu Bala, Menare Royal Mabakeng and Terwase Tosin Youngu,
“Corruption of Land Administration in Sub Sahara Africa: Reports from
Nigeria and Namibia” (Paper Presented at the FIG Congress 2022:
Volunteering for the future – Geospatial Excellence for a Better Living,
Warsaw, Poland, 11 – 15 September 2022).
10
UNODC, Corruption in Nigeria: Patterns and Trends Second Survey in
Corruption as Experienced by the population. December 2019, accessed
May 24, 2024, <https://www.unodc.org>.
11
GAN Integrity, ‘Sub-Sahara Africa: Nigeria at Risk Report’ November 4,
2020, accessed May 24, 2024 <ganintegrity.com/country-
profiles/Nigeria/land-administration>.
12
Kolawole A. Owolabi, Because of our future
13
Pricewater House Coopers, “Impact of corruption on Nigeria’s economy.”
accessed May 24,2024 <https://www.pwc.com>.
Corruption in Land Administration in Nigeria 205
Development Goals and ensure transparency and probity in the
Nigerian property sector.
Based on the above, the objectives of the paper are to:
(a) undertake an overview of corruption in land administration in
Nigeria,
(b) discuss legal and institutional efforts to combat corruption in
the real property sector, and
(c) identify and appraise challenges to the efforts to combat
corruption.
The study adopted a doctrinal research method which relied on
primary and secondary sources of information gathering. The primary
source made use of statutes such as the Land Use Act (LUA)
14
,
Economic and Financial Crimes Commission (Establishment)Act
2000, Corrupt Practices and other Related Offences Act 2000,
15
etc.,
and case law, while the secondary source made use of textbooks,
journal articles, newspapers, conference proceedings and the internet.
OVERVIEW OF CORRUPTION IN LAND ADMINISTRATION
IN NIGERIA
Etiology of Land Corruption
Corruption is a complex human behaviour that has engaged the
attention of scholars from time immemorial. It is a concept that is
incapable of easy explanation, as no one theory can explain its
complexity.
16
According to the United Nations Office of Drugs and
Crimes (UNODC), a meaningful approach to the understanding of
corruption is multifaceted.
17
It is a phenomenon which has engaged the
attention of scholars in different parts of the world because no society
14
Cap L5, Law of the Federation of Nigeria (LFN)2004.
15
Cap 407 LFN 2004.
16
UNODC, ‘Global Resource for Anti-Corruption Education and Youth
Empowerment’ accessed April 30, 2024,
<https://www.grace.unodc.org>.
17
This includes. principal agent theory, collective action theory, institutional
theory and resource curse theory
206 IIUM LAW JOURNAL VOL. 33 (1) 2025
is totally free from it.
18
However, it is pervasive in Nigeria, not because
its people differ from others globally, but because the atmosphere in
Nigeria grows and nurtures corruption.
19
Factors such as leadership styles, lack of rule of law, poor wages
of public service workers,
20
non-equitable income distribution, poverty
and under-employment
21
have been attributed to this trend. Other
factors include transparency, probity and accountability,
22
culture,
ethnicity, and religion contribute largely to the sustenance of the
phenomenon. A public official who goes home with the national
minimum wage of ₦30,000 (before tax) (equivalent of USD20.85) in a
month, with a university professor earning not more than ₦450,000
(USD312.81) at the rate of 1492.52 to a dollar
23
in a month, while the
political office holders (the executive, legislative and judiciary) earn
“fat salary.”
24
Various forms of corruption abound to sustain the living
standards of the public officer. The devaluation of the national currency
has made the current minimum wage unrealistic, while a realistic
minimum wage has not been fixed.
25
Nigeria is a nation rich in natural resources including vast arable
land which can support its population. Land is a key national resource
for national development. Corruption affecting land resource will,
therefore, negatively impact people’s livelihood and cripple the
18
Mojeed Olujinmi A. Alabi, “Political Parties in the fight against
Corruption,”. in Yusuf O. Ali (ed.). Anatomy of Corruption in Nigeria:
Issues, Challenges and Solutions (Yusuf O. Ali. 2016), 203-227
19
Daluda D. Phillip, “Corruption as a Bane for Underdevelopment in Nigeria:
Issues and Challenges,” International Affairs and Global Strategy, 15
(2013), 76 – 83.
20
Daluda D. Phillip, “Corruption as a Bane for Underdevelopment in Nigeria:
Issues and Challenges,”
21
Yusuf O. Ali, ‘The fight against corruption in Nigeria Myth or Reality?’ In
Yusuf O. Ali (ed.) Anatomy of Corruption in Nigeria: Issues, Challenges
& Solutions (Yusuf O. Ali, 2016), 1 – 32.
22
Daluda D. Philip, 78.
23
XEAPP, accessed June 5,2024, < https://www.xe.com>.
24
XEAP
25
Adebayo Folorunso-Francis, Dirisu Yakubu, Henry Falaye et al, Minimum
Wage Talks: Labour Considers N100,000 as Tinubu Issues Ultimatum.
Punch, June 5, 2024, accessed June 5, 2024, <https/www.punchng.com>.
Corruption in Land Administration in Nigeria 207
economy.
26
In a cross-border study conducted on the indices of
corruption on land in Sub-Sahara Africa, it is observed that lack of
transparency, observation of the rule of law and probity in land
management and control, has, on many occasions led to communal
conflicts, denial of people the opportunities to earn their livelihoods
through farming. It also leads to the expropriation of land in favour of
some sections of the society, either in government, or those who are
friends of those in government. Furthermore, the study notes that
regulations and institutions for land administration and control have
been affected by the menace of bribery and corruption, which should
be discouraged.
27
.
Corruption in real property market is a common phenomenon
bedevilling the country.
28
Factors encouraging corruption in this sector
are a lack of viable and transparent mortgage system, no visible anti-
corruption policy specifically targeted to the real estate sector, prestige
associated with property ownership,
29
ineffective land registries
manned by public officers prone to corruption due to poor wages and
salaries, and the greed and materialism of the political leaders.
30
In its follow up report, Inter-Governmental Action Group
against Money Laundering in West Africa (GIABA) noted substantial
noncompliance with due process in where “untraceable financial
channels including Forex dealers, hawaladars and cash couriers” still
26
Adamu Bala, Menare Royal Mabakeng and Terwase Tosin Youngu,
‘Corruption of Land Administration in Sub-Saharan Africa: Reports from
Nigeria and Namibia’ FIG Congress 2022, Warsaw, Poland, 11-15
September 2022
https://www.fig.net/resources/proceedings/fig_proceedings/fig2022/pape
rs/ts03e/TS03E_bala_mabakeng_et_al_11648.pdf accessed 7 May 2025.
27
Adamu Bala, Menare Royal Mabakeng and Terwase Tosin Youngu,
‘Corruption of Land Administration in Sub-Saharan Africa: Reports from
Nigeria and Namibia’
28
Joseph Oyewale Oyedeji and Abiodun Kazeem Sodiya, “Corruption in Real
Property Market in Nigeria: Factors and Solutions” Journal of
Management and Corporate Governance, 7 (2) (2014), 46 - 60
29
Joseph Oyewale Oyedeji and Abiodun Kazeem Sodiya, “Corruption in Real
Property Market in Nigeria: Factors and Solutions”
30
UNODC, Second Report 2018.
208 IIUM LAW JOURNAL VOL. 33 (1) 2025
dominate real property markets in West Africa.
31
Its operation lacks
reliable data, which makes monitoring very difficult and allows all
forms of illegal funds to enter and be used in the market, due to its
informality.
32
Furthermore, the investment in real estate ensures value
appreciation in an economy in which local currencies depreciate at a
very rapid rate, though the unstable exchange rate of the naira to
foreign currency.
The observation of GIABA in 2025 on money laundering in
West Africa reflects the continuing rampage of corruption. The real
estate market remains informal, cash-based which leaves no
opportunity for an audit trail and promotes corruption, while the
Nigerian economy still allows the movement and use of “untraceable
cash” through many unofficial channels, despite the recent bank
reforms involving the linking of the National Identification Number
(NIN) to bank accounts.
33
In Nigeria, real estate has been identified as one of the most
patronised routes to get illegal funds back into the financial system, as
it “doesn’t have a name that shows on it, unless someone puts it.”
34
Many of those involved in the use of the real estate sector to launder
funds are public servants, politicians, public officers in the executive
arm, the legislature and the judiciary. Chuka Uroko cited a report in
the Dubai property market which linked 800 luxury properties valued
at ₦146 billion to Nigeria’s political elite.
35
Furthermore, the Federal High Court in Nigeria has recently
granted interim forfeiture of funds and properties of the former
Governor of the Central Bank of Nigeria, Godwin Emefiele who has
been undergoing trial in Nigerian courts, to the Economic and Financial
31
GIABA, ‘GIABA Member States Technical Assistance Needs 2025
(GIABA,2024) https://www.giaba.org/technical-assistance/3439__giaba-
member-states-technical-assistance-needs-for-2025.html, accessed 5
May 2025.
32
GIABA, ‘GIABA Member States Technical Assistance Needs 2025
33
GIABA, ‘GIABA Member States Technical Assistance Needs 2025
34
Chuka Uroko, “Why Real Estate Attracts Lot of Illicit funds,” Business Day,
June 28, 2022, accessed May 25, 2024, https://www.businessday.ng.
35
Chuka Uroko, “Why Real Estate Attracts Lot of Illicit funds,”
Corruption in Land Administration in Nigeria 209
Crimes Commission (EFCC).
36
In other cases, real estates have been
forfeited in various parts of the federation.
37
The EFCC has prosecuted
many high-profile cases of real property laundering in Nigeria. In the
report compiled by the Human Resource Development Agenda
(HEDA), Nigeria was ranked fifth in global property and money
laundering.
38
The HEDA report revealed that in an analysis of 125
cases involving allegations of money laundering against Nigerian
public officials between 2015 and 2020, at least USD2.3 trillion was
laundered in the United States of America’s estate sector.
Allison Diezani Madueke, a former Nigerian Minister of
Petroleum Resources topped the list.
39
In a similar vein, EFCC had
seized 753 duplexes in Abuja believed to have been the products of
money laundering.
40
Although the Nigerian law allows the prosecution
through an action-in-rem (an action against the property rather than
individuals),
41
it is widely believed that the concealment of the owner
of the estate is part of the government’s insincerity in the war against
money laundering.
42
36
Ameh Ejekwonyilo, “Court Confiscates $4.7million, #830m, Multimillion
Properties Traced to Emefiele,” Premium Times, 24 May 2024,
http://www.premiumtimesng.com, accessed 24 May 2024.
37
Oluyinka Olutola Olajire “Money laundering and underdevelopment in
Nigeria: A Criminological Re-appraisal.” Redeemers University Journal
of Management and Social Sciences, 6(11) (2023), accessed May 25,
2024, www.minimss.com .
38
HEDA, ‘Nigeria Ranked Fifth in Property and Money Laundering as Diezani
Leads the Ring’ (HEDA, 21 July 2022) https://hedang.org/nigeria-ranked-
5th-in-property-and-money-laundering-as-diezani-leads-the-ring/
accessed 6 May 2025.
39
HEDA, ‘Nigeria Ranked Fifth in Property and Money Laundering as Diezani
Leads the Ring’
40
Solomom Odeniyi, ‘Why We Concealed Owner of Seized 753-Duplxex
Abuja Estate’s Identity-EFCC’ (Lagos, Punch 3 December 2024) <
https://punchng.com/why-we-concealed-owner-of-seized-753-duplex-
abuja-estates-identity-efcc/> accessed 6 May 2025,
41
Advance Fee Fraud Act 1995, Cap A6, LFN 2004. S.17.
42
Solomom Odeniyi, ‘Why We Concealed Owner of Seized 753-Duplxex
Abuja Estate’s Identity-EFCC’
210 IIUM LAW JOURNAL VOL. 33 (1) 2025
Money Laundering as a Typology of Corruption on Land
Money laundering is a major crime in the property industry worldwide.
It has been noted to contribute to Nigeria’s underdevelopment. Its
continued spread has been attributed to the loopholes existing in the
regulatory framework and the lack of commitment of the leaders in the
public and private sectors of the economy, many of whom embark on
it. Money laundering thrives where public officers (including those of
regulatory agencies) are corrupt, the institutions are weak and corrupt,
people have an insatiable crave for materialism, and the socio-cultural
and religious values overlook its incidences.
43
This situation is a line of the countries in Sub-Sahara Africa of
which Nigeria is a part despite the evidence of money laundering cases
involving foreign collaborators, Nigeria has weak capacities at its
disposal to fight these global crimes. Hence, money laundering and
other global financial crimes have become fully entrenched in Nigeria,
and they have a very grave impact on the Nigerian economy. The feeble
attempts of the government to fight these crimes further expose the
nation to the international community as a nation where there is no
transparency, probity and rule of law when it comes to combatting
financial crimes.
44
The anti-graft agencies are hamstrung by the executive (and
sometimes, the legislature and the judiciary) through undue delay(s) of
investigation and the unwholesome actions of some members of the
bar.
45
Cases of the politically exposed persons in Nigeria with land and
real estate with billions of dollars in foreign countries such as Dubai,
United Kingdom and United States of America exist, while the efforts
of the Economic and Financial Commission (EFCC) to investigate,
prosecute and obtain conation if such persons appear to be stalled by
43
Olajire “Money laundering and underdevelopment in Nigeria: A
Criminological Re-appraisal.”
44
K.K. Eleja, “The Bar in the vanguard of War against Corruption,” in Yusuf
O. Ali (ed.). Anatomy of Corruption in Nigeria: Issues, Challenges &
Solutions (Yusuf O. Ali, 2016) 163 - 202
45
Ngenegbo Emmanuel, ‘Corruption and Access to Justice in Nigeria’ (Enugu,
The Sun 18 November 2024) < https://thesun.ng/corruption-and-access-
to-justice-in-nigeria-2/> accessed 6 May 2025.
Corruption in Land Administration in Nigeria 211
the lack of the political will of the Nigerian elites including the
members of the bar and bench.
46
Nigeria’s Land Policy
The Nigerian land policy is complex as it is woven around the multiple
tenure systems – customary land law, Received English doctrine of
estates and the Land Use Act 1978 (LUA).
47
The Received English
doctrine of estates is part of the Received law in Nigeria. Its
applicability is subject to the availability of domestic legislation and
local circumstances.
48
The Interpretation Act 1962 provides:
2) Such imperial laws shall be in force so far only as the limits of
the local jurisdiction and local circumstances shall permit and
subject to any federal law.
3) For the purpose of facilitating the application of the said
imperial laws they shall be read with such formal alteration not
affecting the substance as to names, localities, officers, persons,
moneys penalties and otherwise as may be necessary to render
the same applicable in the circumstance.
49
Most land policies and principles under the Received law have
been replaced by the provisions of the LUA, and the operation of the
customary land tenure law, subject to the LUA.
50
Subject to the above,
statutes like the Frauds Act 1611, Conveyancing Act 1881 etc., and
principles of common law and doctrines of equity apply in
conveyancing practices in existence in England prior to 1 January
1900. The LUA introduces the uniform land tenure to Nigeria, while it
upholds and recognises the existing land tenure systems (customary
land tenure and the Received English doctrine of estates).
51
These have
introduced some complexities to the administration and control of land
in Nigeria.
46
Ngenegbo Emmanuel, ‘Corruption and Access to Justice in Nigeria’
47
Adefi M.D. Olong, Land Law in Nigeria (2nd Edition, Malthouse Ltd, 2011),
34.
48
Interpretation Act 1962 Cal 17, Cap LFN 2004, S.32.
49
Interpretation Act 1962 Cal 17
50
LUA, S. 36.
51
Land Use Act 1978, Cap L5, LFN 2004, Ss 34 & 36
212 IIUM LAW JOURNAL VOL. 33 (1) 2025
Land is defined variously by scholars. Those definitions reflect
the interdisciplinary value of land as a resource upon which the
existence of man depends and around which the ecosystem is built. It
is a habitat for the living things, including man who live on it and are
buried within it. The classical and neoclassical economists see land as
a free gift of nature that man does nothing to bring into existence: its
supply is fixed, and all man’s productive efforts depend on it.
52
In law, it is a concept that consists of corporeal and incorporeal
hereditaments.
53
While a corporeal hereditament consists of non-
tangible aspects of the land, which are interests and rights that go with
the land, a corporeal hereditament is the physical and tangible aspect
of the land, including the earth surface, all things affixed to it (including
buildings), all things naturally on it (including oceans and seas), all
things under it such as gold, bitumen, crude oil etc, as well as those
things above it.
54
This definition reflects the common law conception
of land of quicquid plantatur solo solo cedit, which has been held to be
the same as the conception of land under the indigenous customary land
tenure.
55
The statutory definition of land under the Property and
Conveyancing Law (PCL)
56
appears to capture this essence when it
states:
Land includes land of any tenure, buildings or parts of buildings
(whether the division is horizontal, vertical or made in any other
way) other corporeal hereditaments, and an easement, right,
privilege or benefit in, over, or derived from land.
57
The definitions of land point to its immense value as an
immovable property whose values are stable; its supply is stable and
rights emanating from it are expansive. Hence, rights on land include
ownership and possession, legal and inequitable rights, corporeal and
52
Thomas Malthus, (First) Essay on Population (1798) (New York Macmillan
1986) 65.
53
Adewale Taiwo, The Nigerian Land Law (Revised Edition, Ababas Press
Ltd.,2011), 65-68.
54
Lewis v Bankole (1908) NLR 82.
55
Francis v Ibitoye (1936) 13 NLR.
56
Property and Conveyancing Law, Cap 100, Law of Western Nigeria 1959,
S. 2.
57
Property and Conveyancing Law, Cap 100
Corruption in Land Administration in Nigeria 213
incorporeal rights etc. The existence of these rights makes it suitable
for economic transactions and it, therefore, attracts land speculation
and incidences of illicit investment through money laundering.
Customary Land Tenure
Customary land has been defined as “the customs and usages
traditionally observed among the indigenous African peoples and
which form part of the culture of those peoples”
58
This definition
indicates that it is the law that is transmitted over generations and
thereby represents the thoughts, decisions and values of the ancestors.
59
It therefore, encompasses the customs and usages of the people, and “a
mirror of the accepted usage.”
60
However, over the years, with the
effects of colonisation, neo-colonisation and globalisation, customary
law is changing rapidly to accommodate contemporary customs and
values.
It is dynamic and responsive to cultural dynamics and varies
from one community to another. There is no single customary land
tenure throughout Nigeria, but it is used as a blanket description of the
indigenous land practices in heterogeneous Nigeria.
61
It is a system of
landholding which exhibits corporate land ownership of the
community and the family, while the individual landholding which
emanates from modern trends and the economic emancipation of the
individual arises from new patterns of economic activity.
62
Therefore,
the position expressed by Lord Haldane, in Amodu Tijani v Secretary
of Southern Nigeria
63
remains relevant. It states:
The next fact which it is important to bear in mind in order to
understand native land law is that the notion of individual ownership
is quite foreign to native ideas. Land belongs to the community, the
village or the family, never to the individual. This is a pure native
custom along the whole length of this coast, and wherever we find,
58
R.B. Mpeke, Customary Law and the New Millenium (Lovedale Oress,
2003), 3.
59
R.B. Mpeke, Customary Law and the New Millenium
60
Owonyin v Omotosho (1961) All NLR 309 at 309.
61
Michael Takim Otu, Customary Land Law in Nigeria: Law and Practice
(Princeton & Associates, 2022), 146-147.
62
B.O. Nwabueze, Nigerian Land Law (Nwamife Publishers, 1982), 35-36.
63
(1952) 14 WACA 404.
214 IIUM LAW JOURNAL VOL. 33 (1) 2025
as in Lagos, individual owners, this is again due to the introduction
of English ideas.
64
Due to an effluxion of time, corporate ownership is giving way
to individual ownership due to several factors, which include increased
need of land for economic activities, breakdown of communal and
kinship relations and rapid urbanisation and industrial developments,
65
agricultural mechanisation and food security etc. Corporate land
ownership in customary land tenure has, however, been criticised by
learned commentators and the courts who reasoned that the idea of the
family/communal/ownership started with individual ownership
through the founder of the community who was a settler or conqueror.
66
They argued that current incidences of individual land ownership under
customary law are a confirmation of the customary practices before the
British colonial intervention.
The rules of management and control of land under customary
tenure have been modified by the Land Use Act 1978
67
which is the
primary legislation in land control and management in Nigeria. despite
the LUA, lands in rural areas in Nigeria are mainly administered
through customary land law. The Act saves and allows the existing
laws when it states:
All existing laws relating to the registration of title to, or interest in,
land or the transfer of title to or any interest in land shall have effect,
subject to such modifications (whether by way of addition,
alteration or omission) as will bring those laws into conformity with
this Act or its general intendment.
68
These modifications accommodate the customary land tenure in
the policy of the LUA. The principles of customary land tenure are
therefore imported into the Act. The customary tenure allows
discriminatory land use and access in favour of communal and family
members. This continues as an incident of the communal law under the
LUA. Each member of the community or family has an equal right to
64
(1952) 14 WACA 404.
65
Adewale Taiwo, The Nigerian Land Law (Revised Edition, Princeton &
Associates, 2016), 12.
66
Niki Tobi, Sources of Nigerian Law (MIJ Publishers, 1996) 80; Coker v
Sanyaolu (1983) 3SC 124.
67
Cap L5, LFN 2004, S. 48
68
LUA, S. 48
Corruption in Land Administration in Nigeria 215
a portion of land to build or farm,
69
while the stranger is not entitled to
a portion of the communal land, to build or farm as of right.
70
Anybody
who is not a member of the community can only be granted customary
tenancy.
71
The stranger cannot acquire ownership of the land, and
cannot appropriate land for personal use, unlike a member of the
community.
72
A large scale investment involving the use of land is not
therefore possible under these strict tenurial principles. The alternative
is to go by gifts and other forms of patronage to the chiefs and the
family heads and other principal members who have powers over land
allotment in the rural settings.
In Sub-Sahara Africa, large scale corruption has been reported
on rural land.
73
These transnational land investors acquire the land in
a shady manner.
74
This illicit land acquisition is fuelled by lack of
proper documentation and registration of titles in Nigeria.
75
Hence,
many farmers have been thrown out of their lands by these investors
who purchased lands through the communal leaders, thus infringing
citizens’ rights to have access to land to live and farm.
76
69
Adewale Taiwo, 175
70
Adewale Taiwo, 143
71
Lasisi v Tubi (1974) 1 All NLR (Pt. 11)
72
Nieves Zuniga, Land Corruption Topic Guide (Transparency International,
2018) 8, accessed June 1, 2024,
https://www.transparencyinternational.org, accessed 12 May 2024;
Andrea Staeritz, Land Corruption in West Africa (Transparency
International, 2024)
https://images.transparencycdn.org/images/2024_Report_LandCorruptio
nWestAfrica_EN.pdf, accessed 6 May 2025.
73
GIABA, ‘GIABA Member States Technical Assistance Needs 2025
(GIABA,2024).
74
Olivier De Shutter, Tainted Lands: Corruption in Large-Scale Land Deals
Report of the International Accountability Roundtable, 2012), 8.
75
Segun Adewole, ‘Real Estate Used for Money Laundering, Illicit Financial
Flows-ICPC’(Lagos, Punch 2 November 2021) <
https://punchng.com/real-estate-used-for-money-laundering-illicit-
financial-flows-icpc-chairman/> accessed 6 May 2025.
76
Akintunde Otubu,’The Land Use Act and Land Administration in 21st
Century Nigeria: Need for Reforms’ (2018) (9)(1) Afe Babalola J. of Sust.
Dev. Law and Policy, 80
https://jsdlp.ogeesinstitute.edu.ng/index.php/jsdlp/article/view/306,
accessed 6 May 2025.
216 IIUM LAW JOURNAL VOL. 33 (1) 2025
According to the Transparency International, land corruption in
the rural areas takes many dimensions such as the payment of bribery
in cash or in kind for the acquisition and registration of property and
the exclusion of those who cannot afford the payment of bribes.
77
Land
corruption inhibits the proper implementation of land laws, leaving the
citizens unprotected and vulnerable to abuse.
78
Effects of land
corruption in the rural areas include food insecurity, deepening
poverty, increasing rural economic inequality and gender inequality.
79
Women in some communities have to accept levirate marriages in order
to be allowed to farm on the land of their late husbands.
80
Land Use Act
81
The Land Use Act (LUA) was introduced to the land management and
control in Nigeria to harmonise the pre-existing land tenures
(customary land tenure; estate tenure under the Received English Law,
the Land Tenure Law 1962 (LTL)
82
in northern Nigeria) and ensure
that citizens have access to lands for whatever purpose for integrated
and sustainable national development. In Nkwocha v Governor of
Anambra State & Ors,
83
Kayode Eso JSC, while delivering the lead
judgement underscored the effect of LUA when it was held
The tenor of the Act as a single piece of legislation is the
nationalization of all lands, in this country by vesting its ownership
in the State leaving the individual with an interest in land which is
a mere right of occupancy, and which is the only right protected in
his favour by law after the promulgation of the Act.
77
Anni Arial and others, ‘Corruption in Land Sector’ Working Paper,
Transparency International, April 2011, https://www.transparency.org, 2.
78
Anni Arial and others, ‘Corruption in Land Sector’
79
Nieves Zuniga.
80
Marcella Villareal. Changing Customary Land Rights and Gender Relations
in the Context of HIV/AIDS in Africa, (Paper Presented at Colloque
International Conference, Montpellier, May 16 – 19, 2006) <
https://gsdrc.org/document-library/changing-customary-land-rights-and-
gender-relations-in-the-context-of-hivaids-in-africa/> accessed 6 May
2025.
81
1978 Cap L5, LFN 2004
82
No 25 of 1962
83
(1983) UNJLR 719
Corruption in Land Administration in Nigeria 217
In fulfilling its function as the grundnorm on land management
and control, all lands in Nigeria are vested in the State Governors, who
hold the land in trust for all Nigerians.
84
Furthermore, its policy
includes state ownership of lands, the dichotomy of lands into rural and
urban lands,
85
creation of a system of statutory right of occupancy to
be granted by the Governors
86
in rural and urban areas and the
customary right of occupancy in rural Nigeria by the local
government.
87
However, the customary rights in rural areas do not exceed 500
hectares for farming and 5000 hectares for grazing.
88
Any grant above
this threshold is to be referred to the Governor.
89
The Governor
reserves the right to declare any part of the State as urban,
90
thus
effectively removing the appropriating powers of the local government,
even in the rural areas. Other aspects of the land policy under the LUA
are the issuance of certificate of occupancy, consent for alienation,
revocation of rights and compensation.
91
The policy of land
administration under the LUA gives expansive powers to the
Governors of States to appropriate and always expropriate. These
powers are absolute because the Governors are in-charge of dispute
resolution through the Land Use and Allocation Committee at the State
level and the Land Allocation and Advisory Committee for the local
government appropriation of rural lands. The Governor appoints the
members of these committees, and they perform their duties under the
Governor’s direction.
92
The Act ousts the jurisdiction of courts to investigate the vesting
of all lands in the Governor; the right of occupancy; the right of a local
government to grant a customary right of occupancy or “the amount or
adequacy of any compensation paid or to be paid under this Act.”
93
The
84
LUA, Section 1
85
LUA, Section 2(1)
86
LUA, Section 5
87
LUA, Section. 6(1)
88
LUA, Section 6 (2)
89
LUA
90
LUA, Sections 2
91
LUA, Sections 9, 10, 21, 22, 28 and 29 generally.
92
LUA, Section 2(2) & (4)
93
LUA, Section 47
218 IIUM LAW JOURNAL VOL. 33 (1) 2025
Act further accommodates the pre-existing tenures and affirms their
validity, while creating deemed grants.
94
The LUA’s effect was greater in southern Nigeria which
operated customary land tenure and the English doctrine of estate.
95
The objectives of making the law were as set out by the Land Use Panel
1977, namely: to formulate a uniform land policy in the country; obtain
lands for development with reasonable ease, and promote, operate and
encourage a more buoyant and productive agricultural system.
96
The question is, has LUA achieved the cardinal objectives for
which it has been enacted? It has had positive impacts on making land
available for national development in any part of Nigeria.
97
It has also
brought sanity into property development and gives an insight into
property construction and planning.
98
It also advocates security of
tenure and land rights of the citizens as an important foundation of
economic development.
99
It insists on, and creates land titles which are
ingredients of collateralisation for obtaining loans from credit
institutions.
100
Although the LUA through its policy and principles, strive to
make land available for economic and commercial developments, its
success has been limited by pervasive corruption in land administration
in Nigeria. The land use planning which involves zoning is susceptible
to corruption because there is a high tendency of modifications and
adjustments to satisfy the demand for specific sites for development.
101
94
LUA, Sections 34 and 36
95
R.N. Nwabueze, ‘Alienation under the Land Use Act and Express
Declaration of Trust in Nigeria’ (2009) 51(1) Journal of African Law, 59-
89
96
Uwakwe Abugu, Land Use and Land Reform in Nigeria: Law and Practice
(Immaculate Prints, 2012)
97
M.B. Nuhu, “Land Reform in Nigeria: The Nigerian Institution of Estate
Surveyors and Valuers’ Perspectives-Challenges and Prospects,”
(Presented at the FIG Working Week 2011, Marrakech, Morrocco, 18 –
22 May 2011) 1 – 10.
98
M.B. Nuhu, “Land Reform in Nigeria: The Nigerian Institution of Estate
Surveyors and Valuers’ Perspectives-Challenges and Prospects,”
99
Adewale Taiwo, The Nigerian Land Law, 219.
100
LUA, Section 5. See also sections 9 and 10, for Certificate of Occupancy
101
M. Pacione, ‘Global Perspectives (Routledge, 2001), accessed June 1,
2001, <https://doi.org/10.432419780203023525-16 >.
Corruption in Land Administration in Nigeria 219
In Nigeria, developers bypass land use provisions and urban master
plans to erect buildings that are not specified for the zones.
102
In a descriptive study examining corruption in land services
which used Nigeria as a case study, Badiora and Bako
103
found that
instances of bribery, fraud, conflict of interest, favouritism, nepotism
and clientelism marred land services in Nigeria and that plans were
altered and some bureaucratic procedures circumvented on the altar of
corruption.
104
The authors further reported that political figures and
administrations were the major actors in land use and planning
corruption and that legal technicalities in planning statutes and low
accountability also contribute to corruption in land matters. These
findings coincided with the outcome of the Third Survey on corruption
carried out by the UNODC which indicted public land registries as
culpable of bribery and other forms of corruption.
105
In the same vein, Transparency International reports that
corruption occurs in urban land administration globally through bribing
politician to obtain land approvals, manipulation of land registries by
developers to eject people and grab their land, use and allocation of
land to political supporters.
106
The report identifies areas of land
corruption to include policy making, legal systems, grant of land titles,
102
Ibid
103
Wumi Badiora and Abdullateef Iyanda Bako, “The illicit and Illegal sides
of the Nigerian Public Administration: Corruption in Town Planning and
Land Services,” in I.O. Aransi, I.O. Fayomi-Awodele, A.O Hassan and
S.O. Nofiu, Contemporary Issues in Public Administration, A Fetschrift
in Honour of Professor (Bar) Ishaq Sola Omoleke (Department of Public
Administration, Obafemi Awolowo University Ile-Ife, Nigeria,2020),
299-236
104
Wumi Badiora and Abdullateef Iyanda Bako, “The illicit and Illegal sides
of the Nigerian Public Administration: Corruption in Town Planning and
Land Services,” Ibid
105
UNODC, Corruption in Nigeria: Patterns and Trends; Third Survey as
Experienced by the Population (July 2024)
<https://track.unodc.org/uploads/documents/corruption/Publications/202
5/UNODC_Corruption_in_Nigeria_-_patterns_and_trends_2024.pdf>
accessed 6 May 2025.
106
Nieves Zuniga, Land Corruption Reform Topic Guide (2018); Andrea
Staeritz, Land Corruption in West Africa (Transparency International,
2024).
220 IIUM LAW JOURNAL VOL. 33 (1) 2025
dichotomization of land (eg. urban/rural dichotomy under LUA),
107
land sales and leasing, enforcement of land rights and remedies for
compensation.
Although these observations are global, it is instructive to note
that they describe land corruption in Nigeria. The policy on land use is
controlled by the Governor who possesses absolute powers to
appropriate and expropriate land.
108
These powers are sometimes
deployed in a non-transparent manner to favour political supporters or
punish political opposition.
109
Furthermore, the co-existence of formal
and customary laws and rights in Nigeria breeds corruption in the legal
gaps created by the friction between the two legal systems. An example
of this is the continued operation of the customary land tenure law in
the policy of deemed grants that derogate from the objective of the
LUA.
It allows an undeterminable tenure, as opposed to the
determinable nature of actual grants in the LUA. These windows have
been used by the public officials, politicians, and land speculators to
manipulate the good intention of the Act because a large proportion of
rural and urban land still operate under the deemed grants. Such lands
operate without proper documentation and therefore, cannot be traced
at the land registry.
110
In addition, public officials deliberately backdate
the date of the grants to make them pre-existing land alienation, to
benefit from the indeterminable tenure of deemed grants.
111
These
corrupt acts make lands unavailable to citizens and investors who
genuinely want to use the land for chronic and commercial
developments.
107
Nieves Zuniga, Land Corruption Reform Topic Guide
108
Section 1, LUA
109
Nicholas K. Tagharino, et al, ‘Compensation for Expropriate Community
Farmland in Nigeria: An In-Depth Analysis of the Laws and Practices
Related to Land Expiration for the Lekki Free Trade Zone in Lagos,”
(2018) 7(2) Land, accessed June 1,2024
<https://doi.org10.3390/land7010023>..
110
Section 36(3) LUA stipulates that land documentation will be required upon
the application of the occupier or the holder.
111
Dayo Benson and Bartholomew Madukwe,”C of O’. Lagos AG Condemns
Usage of Backdated Documents,” Vanguard (May 23, 2013), accessed
June 1, 2024. < https://www.vanguardngr.com>.
Corruption in Land Administration in Nigeria 221
Sections 21 and 22 of the LUA provide for the consent of the
local government and the Governor for the alienation of land. these
sections have generated a lot of controversies and have engaged the
attention of Nigerian courts for decades.
112
The undue delays in the
grant of consent, high cost of processing and general lack of political
will to set workable rules for obtaining consent of the Governor and
that of the local government have bred corruption.
Decisions in Savannah Bank v Ajilo
113
and Union Bank of
Nigeria v Ayodare & Sons
114
where borrowers were allowed to avoid
the consent procured, promoted corruption in land transactions in
Nigeria. In Union Bank of Nigeria v Ayodare the apex court followed
its judgement in Savannah Bank v Ajilo
115
and thereby prevented the
sale of the mortgaged property. In the two cases, the Supreme Court
excluded the equitable principle of “ex turpi causa non oritur actio”
116
espoused in Bucknor – Mclean v Inlaks Ltd
117
to prevent the fraud. The
confusion this could cause was exemplified in Awojugbagbe Light
Industries v Chinukwe
118
where the consent perfection was delayed for
five years. Onu JSC stated that:
“… I need only to remark in passing that it is inequitable and
morally despicable, after obtaining a loan and after utilizing the
same to now turn round and allege that the agreement (Exhibit E)
between it and the grantor of the loan, i.e the 2nd respondent, is null
and void.”
119
LAND INSTITUTIONAL EFFORTS TO COMBAT
CORRUPTION IN LAND IN NIGERIA
Anti-corruption legislations and agencies which are set up as part of
the strategies to fight corruption in Nigeria have, as part of their
112
Savannah Bank v Ajilo (1989) 1 NWLR (Pt 97); Union Bank v Ayodare
(2007) 13 NWLR (Pt. 1032)
113
Savannah Bank v Ajilo (1989) 1 NWLR (Pt 97);
114
Savannah Bank v Ajilo (1989) 1 NWLR (Pt 97);
115
Savannah Bank v Ajilo (1989) 1 NWLR (Pt 97);
116
This means that “from an immoral consideration, an action does not arise”
117
(1980) 8-11 SC1
118
(1995) 4 NWLR (Pt. 390) 379
119
(1995) 4 NWLR (Pt. 390)
222 IIUM LAW JOURNAL VOL. 33 (1) 2025
mandate, the objective of fighting corruption in land administration and
control for sustainable national development. The provisions of these
laws in combating the menace in the land administration are appraised
are assessed in this section of the paper.
Constitution of the Federal Republic of Nigeria (CFRN) 1999
120
The CFRN 1999 is the most important legal document in Nigeria. it
regulates the affairs of the nation. Any law which contradicts the
constitution is to the extent of its contradiction, null and void.
121
The
CFRN 1999 is an anti-corruption legislation which aims to curb all
forms of corrupt activities in the nation. It provides for asset disclosure,
regulations governing the offer and reception of gifts for members of
the executive and other public officials.
The Constitution makes provision for the Code of Conduct of
Public Officers.
122
This Code prohibits the involvement of public
officers in corrupt practices. Section 8 specifically states that:
No person shall offer a public offer any property, gift or benefit of
any kind as an inducement or bribe for the granting of any favour or
the discharge in his favour of the public officer’s duties.
Other sections of the Code prohibit abuse of powers, or any
arbitrary use of powers to confer advantage on oneself, or the family,
political proteges, or anybody whatsoever at the expense of the State.
123
This Code is strict, and an effective implementation of its content will
prevent the Governors who are citizens’ trustees in land administration
from eschewing any conduct that would violate the constitutional
provision. However, the Code of Conduct for Public Officers is not
strictly implemented, due to a lack of political will on the part of the
trustee.
124
120
(As amended) Cap C23LFN 2004.
121
AG Abia v AG Federation (2002) 6 NWLR (Pt. 763) 264.
122
Fifth Schedule, CFRN 1999, Part 1.
123
Fifth Schedule, CFRN 1999, Sections 6, 7, 9, 10.
124
I.A. Umezulike, “The Land Use Act: More than Two Decades after and
Problems of Adaptive Strategies of Implementation, (Being a Lecture
Delivered at College of Law, Igbinnedion University, Okada, March 4,
2004).
Corruption in Land Administration in Nigeria 223
In addition, two anti-corruption agencies are established by the
constitution, namely: the Code of Conduct Bureau (CCB)
125
and the
Code of Conduct Tribunal.
126
The CCB is saddled with the powers to
receive public officers’ asset declarations and investigate any
allegation of breach of the Public Officers Code.
127
The Code of
Conduct Tribunal (CCT) is a tribunal clothed with judicial power and
headed by a judge of a superior court of record. An appeal from the
decision of the CCT lies as of right to the Court of Appeal.
128
In view
of the serious views of the legislature on corruption, the constitutional
provisions relating to the prerogative of mercy do not apply to any of
the punishments imposed by the CCT.
129
The CCB and CCT are further
strengthened with the enactment of the Code of Conduct Bureau and
Tribunal Act.
130
A cardinal function of the CCB under the Act is to
prohibit a public officer’s conflict of interest in the performance of his
duties and responsibilities
131
and forbids him from maintaining or
operating a foreign account.
132
No public officer should accept gifts or
benefits of any kind on account of the performance of his duties,
133
while a public officer shall not embark on abuse of office, or any act
prejudicial to the rights of any other person.
134
The CFRN 1999 merely provides an enabling legal environment
for the Bureau to receive declarations by public officers; examines the
declaration and retains custody of such declaration and makes them
available for inspection to ensure compliance with the Code of Conduct
Bureau and Tribunal Act 1999 (CCBTA).
135
The constitutional provisions and CCBTA provide the basis for
the control of public sector corruption in land administration and
control in Nigeria. The two statutes have combined efforts to regulate
land and property rights of public officials by ensuring that the
125
Third Schedule, CFRN 1999 (As amended).
126
Fifth Schedule, Part 1, B. 15, CFRN 1999 (as amended).
127
Fifth Schedule, Part 1 S. 12.
128
Fifth Schedule, Part 1, Section 18(4).
129
Fifth Schedule, Section 18(7).
130
Cap A15, LFN 2004
131
Code of Conduct Bureau Cap A15 LFN 2004 Section 5.
132
Code of Conduct Bureau Cap A15 LFN 2004, Section 7.
133
Code of Conduct Bureau Cap A15 LFN 2004, Section 10.
134
Code of Conduct Bureau Cap A15 LFN 2004, Section 13.
135
Part 1, Fifth Schedule, CFRN 1999.
224 IIUM LAW JOURNAL VOL. 33 (1) 2025
properties acquired are within their incomes and do not emanate from
illicit sources.
Economic and Financial Crimes Commission.
The EFCC Establishment Act
136
establishes the Economic and
Financial Crimes Commission (EFCC). It endows it with the powers to
enforce the provisions of the Act; investigates all financial crimes such
as “advance fee fraud, money laundering, counterfeiting, illegal charge
transfers, futures market fraud, fraudulent encashment if negotiable
instruments, computer credit card fraud, contract scam, etc; co-
ordinates and enforces all economic and financial crimes and enforcing
powers conferred on any other person or authority.
137
The Commission
has the overall power to investigate and prosecute all economic and
financial crimes in Nigeria to ensure that they do not go unpunished.
The Act creates offences in relation to terrorism, false
information, retention of proceeds of criminal conduct and offences
relating to economic and financial crimes and penalties.
138
Section 18
which provides for offences relating to economic and financial crimes,
subsumes offences relating to land corruption and their investigations.
It states that
(1) A person who-
(a) engages in the acquisition, possessions or use of the property,
knowing at the time of its acquisition, possession or use that
such property was derived from any offence under this Act.
(b) engages in the management, organisation or financing of any of
the offences under this Act.
(c) engages on the conversion, transfer of any property knowing
that such property is derived from any offence under this Act;
or
(d) engages in the concealment or disguise of the true nature,
source, location, disposition, movement, rights with respect to
136
Cap EI, LFN 2004
137
Cap EI, LFN 2004Section 6
138
Cap EI, LFN 2004, Sections 14 - 18
Corruption in Land Administration in Nigeria 225
or ownership of property, knowing that such property is derived
from any offence under this Act, commit an offence under this
Act and is liable on conviction to the penalties provided in sub-
section (2) of this section.
139
The EFCC has investigated and successfully prosecuted many
corruption offences in land and real property matters in Nigeria. For
instance, the Federal High Court has ordered the final forfeiture of a
USD37.5 million property in Banana Island allegedly belonging to
Diezani Allison- Madueke,
140
while the 753 duplexes in Abuja have
also been forfeited to the government,
141
The EFCC has warned real
estate agents to desist from assisting corrupt Nigerians in laundering
proceeds of crime.
142
This has become necessary in view of the rampant
cases of money laundering in the sector, especially by the politically
exposed persons.
143
The legal framework provided by the Act for the
operation and effectiveness of EFCC is robust, and it has contributed
to fight corruption on land in Nigeria.
The Corrupt Practices Act and Other Related Offences Act 2000
(ICPC)
144
The Act is the only anti-corruption law in Nigeria which deals
extensively with the definition, conception, investigation and
presentation of corruption in all its ramifications in Nigeria. It defines
corruption to include bribery, and other related offences, dealing with
such matters which includes “(a) any purchase, sale, loan, charge,
mortgage, lien, pledge, caveat, transfer, delivery, assignment,
subrogation, transmission, gift, donation, trust, settlement, deposit,
withdrawal, transfer between accounts, or extension of credit.”
145
The
139
Cap EI, LFN 2004
140
EFCC, ‘Court Orders Final Forfeiture of Diezani’s $37.5 Banana Island
Property’
141
Taofeek Oyedokum, EFCC secures Final Forfeiture of Abuja Estate with
753 Duplexes. Apartments’ (Lagos, BusinessDay, 3 December 2024)
142
EFCC, “EFCC Warns Real Estate Agents against Money Laundering,”
(September 20, 2023), <https//www.efcc.gov.ng > accessed 4 June 2024.
143
EFCC, Setting the Records Straight or Investigation of Humanitarian
Ministry, accessed 4 June 2024, <https://www.efcc.gov.ng>.
144
Corrupt Practices and Other Related Offences Act
145
Corrupt Practices and Other Related Offences Act, Section 2.
226 IIUM LAW JOURNAL VOL. 33 (1) 2025
Act addresses public sector fraud involving public officials on diverse
issues.
It establishes the Independent Corrupt Practices and other
Related Offences Commission (ICPC) with ample powers to receive,
investigate complaints and prosecute offenders. It has the duty of
giving anti-corruption education and enlightenment to Ministries,
Departments and Agencies (MDAs), schools and the public towards
anti-corruption stance.
146
It also enlists public support in fighting
corruption.
147
The Act specifically forbids the fraudulent acquisition of
property when it states that:
Any person who receives anything which has been obtained by
means of any act constituting a felony or misdemeanor, or by means
of any act done at a place outside Nigeria, which if it had been done
in Nigeria would have constituted a felony or misdemeanor and
which is an offence under the laws in force in the place where it was
done, knowing the same to have been so obtained, is guilty of a
felony.
148
The penalty for fraudulent receipt of property as provided for in
the above section is imprisonment for a term not exceeding five (5)
years.
149
Through the ICPC established by the Act, the war against
corruption has been sustained through the prosecution of the
offenders, education of the citizens and socialisation of the youths.
150
CHALLENGES TO THE GOVERNMENT'S EFFORTS TO
COMBAT CORRUPTION ON LAND
Despite the comprehensive legal regime on the war against corruption
in Nigeria, the menace persists on many fronts, especially in the crime
in land and estate. This section will address these challenges.
146
Corrupt Practices and Other Related Offences Act, Section 10.
147
Corrupt Practices and Other Related Offences Act, Section 18(f).
148
Corrupt Practices and Other Related Offences Act, Section 16.
149
Corrupt Practices and Other Related Offences Act, Section 27
150
Corrupt Practices and Other Related Offences Act, Section 10
Corruption in Land Administration in Nigeria 227
Weak Law Implementation and Judicial Limitations
Nigeria has a long list of anti-corruption statutes, out of which four,
namely: The CFRN 1999 (as amended), Money Laundering Act 2011,
EFCC Act and ICPC Act 2004 have been examined. The provisions of
the anti-corruption statutes on fraudulent practices forbid corrupt
practices in land transactions and estate dealings.
151
Apart from the
provisions of anti-corruption laws, land tenure laws governing land
transactions such as customary law and the Land Use Act 1978 and
case law have been examined.
The question that then arises, from the foregoing paragraph, is,
despite the ample laws and case law, why is it that land corruption and
fraudulent activities on estates persist? First, is the poor attitude of the
government to corruption in public service governance. Governors, as
land trustees, are not transparent in discharging their duties of land
management under the LUA.
152
Also, the anti-corruption laws suffer
from weak implementation. This allows public sector corruption to
thrive in the public sector with collaborations from the bar, the bench
and financial institutions.
153
Excessive Executive Powers
Furthermore, the institutional frameworks of these laws have not been
fully implemented, thus allowing public officials to take advantage of
them. For example, the procedures to be followed in procuring
Governor’s approval in Section 22 of the LUA are left to State
Governors to determine, with the consequence that a request for
approval is unduly delayed,
154
unjustly denied or outrightly rejected.
This has slowed down economic use of land, either for food production,
estate development or as the security of a loan.
Furthermore, the LUA makes provision for the revocation of a
right of occupancy for public purposes. But the details of the procedure
151
See Section 15 Corrupt Practices Act; Section 18 EFCC Act; Section 6,
Money Laundering Act etc.
152
Pat Onukwuli, “Broad Powers of State Governors under the Land Use Act,
1978 and Land Governance in Nigeria,” (Presented at Annual World Bank
Conference on Land and Poverty, Washington DC, March 19-23, 2018).
153
GIABA, op. cit
154
See Awojugbagbe Light Industries v PN Chinukwe.
228 IIUM LAW JOURNAL VOL. 33 (1) 2025
for public purposes stated in section 51 LUA have never been done,
thus giving opportunities for public officials to take advantage of the
opaque provisions.
155
In Awojugbagbe Light Industries v Chinukwe & Ors,
156
it took
the mortgagor five years to secure the Governor’s consent. The
mortgage deed was endorsed in 1980 but the consent was not granted
until October 1985 due to the delay in the Governor’s approval. Delays
in obtaining the Governor’s consent breed corruption in the land
registries, where public officials take bribes to help the grantors
“lobby” for the release of their approval.
Furthermore, the framework for anti-corruption legislations such
as ICPC and EFCC comprise the nominees of the executive arm of the
government. Out of 16 members of the EFCC Board, only the
appointments of the Chairman and Secretary pass through the Senate
confirmation,
157
where the 14 others are nominees of the executive arm.
Other members are the ex-officio members representing the interest of
the executive arm on the Board. With the composition of the EFCC
Board, its independence as an anti-corruption body is in doubt.
Compared to the EFCC, the ICPC Board is appointed by the
Chief Justice of the Federation, subject to the confirmation of the
Senate.
158
Perhaps, the origin of the two Boards (EFCC and ICPC)
appears to reflect in their stability since inception. It is suggested that
the EFCC Act be reformed in a way to ensure that a truly independent
Governing Board be created to reposition it for the enormous challenge
of combating financial and economic fraud.
Corrupt Bureaucracy and Opaque Procedures
An essential prerequisite for effective implementation of any land
reform legislation is the existence of a competent, incorruptible and
well-motivated bureaucracy.
159
The role of public service in ensuring
security of title, grant of the Governor’s approval, revocation and an
155
See Awojugbagbe Light Industries v PN Chinukwe
156
(1993) 1 NWLR (Pt. 270) 485.
157
EFCC Act, Section 2(1).
158
EFCC Act, Section 2(3)
159
Uwakwe Abugu, Land Use and Reform in Nigeria: Law and Practice
(Immaculate Prints, 2012)
Corruption in Land Administration in Nigeria 229
effective compensation regime is cardinal. Nigeria’s public service
may not be up to these tasks for several reasons. First, the self-serving
interests of the officials who fraudulently secure allocation of land in
urban and rural areas invest the proceeds of crimes in land and estates
in urban centres and allow the proceeds of crimes to be invested to
finance mortgages, inhibit their performance of duties required.
160
Also, the bad incentives in the form of salaries and remuneration paid
to the public service workers make them vulnerable to corruption.
More importantly, the public sector in Nigeria appears to have lacked
accountability, transparency and probity in its performance.
161
Lack of Proper Land Data and Documentation
In Nigeria, land is not properly documented. The land registries do not,
in most cases, possess correct and up to date information reflecting the
owner of the grant, the purpose for which it has been granted and the
quantum of land the grantee has held cumulatively. Hence, the position
of the Land Use Act 1978 in Sections 34 and 36 delimiting the quantum
of undeveloped land that an individual could own in urban and rural
areas could not be enforced due to inadequate information. The
maximum pre-existing undeveloped urban land that an individual
could hold while transitioning to the LUA is half a hectare.
162
This rule
cannot be implemented due to a lack of records. In addition, through
the connivance of public officials and unscrupulous solicitors, land
documents are forged through backdating to allow illicit holding of
land titles.
Ouster of Courts’ Jurisdiction
Section 47 of the LUA ousts the jurisdiction of the courts from making
inquiries on any question relating to the vesting of all lands in a State
in the Governor, or his power to grant the right of occupancy. The same
thing applies to the powers of all local government or any question
concerning the adequacy of compensation payable under the Act.
160
GIABA
161
Yusuf O. Ali, ‘The Fight against Corruption in Nigeria – myth or reality’?
In Yusuf O. Ali, Anatomy of Corruption in Nigeria: Issues, Challenges and
Solutions, 1 - 31
162
LUA, Section 34 (2)
230 IIUM LAW JOURNAL VOL. 33 (1) 2025
Although these provisions cannot stand in the face of contradictions
with the constitution, they are soft grounds for corrupt Governors to
tread on to perpetuate corruption on land
RECOMMENDATIONS
Promoting Transparency and Reducing Bureaucratic Corruption
Equitable access to land resources is inhibited by pervasive corruption
in the real estate sector through the activities of various stakeholders,
including the Governor designated as a trustee of land in the state.
Althoughthe anti- corruption laws have ample provisions for the
prevention of land corruption, money laundering and other vices,
weak implementation has marred their performances. The composition
of the governing boards of the EFCC and ICPC commissions should
be strengthened through the amendment of their establishment sections
to include technocrats, representatives of the global anti-corruption
agencies and financial transparency groups such as GIABA,
Transparency International and the local professional bodies for
effective implementation of the laws. The current composition of the
boards which are populated in favour of public officials and politicians
may not assist with the war. This will promote transparency, reduce
money laundering and other forms of public service corruption on land.
Strengthening of institutional Frameworks
The LUA is the single, most important enactment on land in Nigeria.
However, it lacks implementation guidelines to ensure its smooth
implementation. Despite the uniform tenure introduced by the law, the
implementation strategies differ. Although the LUA is designed to
operate nationally under the superintendence of the State Governors,
each state is left to its own whimsicalness in its implementation despite
the clear provision in its Section 48 that the National Council of State
should formulate regulations for this. These have led to delays in the
implementation of the land policy. A uniform Land Use Regulations
should be developed by the National Council of States, saddled with
these responsibilities by Section 46 of the LUA.
Corruption in Land Administration in Nigeria 231
Improving Land Registry and Documentation
Land registries have been identified as where corruption and
inefficiency thrive due to corrupt public officials, obsolete record
keeping methods and undue delay from the executive arm. Hence, they
should be upgraded with modern facilities for the collection, storage
and retrieval of accurate information. The global development in data
management could be harnessed in this regard. Doing this will expose
illicit operators’ identities and source(s) of their funds. Through these,
investing in the products of corruption will be difficult, if not
impossible, as sources of funds, the identities of the vendors and the
nature of their occupations will no longer be hidden, as in the case of
753 duplexes in Nigeria whose ownership is still shrouded in mystery.
Legal Reforms
The LUA has been variously criticised by scholars and jurists as having
introduced confusing principles and policies into the land
administration in Nigeria. Some provisions of the LUA, such as
sections 21 and 22 on consent provisions, Section 28 on the revocation
of land rights, Section 29 on compensation and Section 47 on ousting
the jurisdiction of courts. These should be amended to whittle down the
absolute powers of the Governors and restore constitutional rights to
property in Nigeria. Doing these will reduce the bureaucratic
bottlenecks and public service corruption which appear imbued in the
LUA.
Public Enlightenment
A cardinal method of tackling corruption is through youth socialisation
and enlightenment. Hence, enlightenment campaigns embarked upon
by various anti-money laundering commissions such as the ICPC and
EFCC in MDAs and educational institutions should be sustained.
These could foster the culture of due process and transparency which
could go a long way in positive socialisation to the rule of law and
citizenship values.
232 IIUM LAW JOURNAL VOL. 33 (1) 2025
CONCLUSION
This paper focused on land corruption in Nigeria, legal issues and
challenges. It was noted that this perpetuated poverty, unemployment
and food insecurity. It deepened the economic crisis and promoted
money laundering. Despite the robust anti- corruption laws, challenges
of weak implementation and judicial limitations, excessive use of
executive powers, lack of land data and documentation and the
continued operation of corrupt bureaucracy perpetuate corruption in
Nigeria.
The findings of the study are as follows. First, Weak
implementation of various due process enactments such as the Money
Laundering Act, EFCC Act, and ICPC Act by the executive and
judicial arm substantially derogates from the war on corruption in
Nigeria. The composition of the governing boards of the bodies
established by these Acts is populated by public officials, most of
whom are players in land corruption. Second, the absolute dominion of
the Governor in land matters put the governor, and his cronies in public
office, at an advantage in manipulating land tenure rules in their favour.
The Nigerian bureaucracy is mostly corrupt due to inadequate
incentives and payment of abysmally low wages that predispose them
to corruption. The public servants (including land registry officials)
therefore become collaborators to corrupt public officials who
manipulate land administration procedures for the investment of illegal
money.
Furthermore, a lack of proper land data and documentation
makes the investment of illicit funds in the real estate sector, thereby
promoting corruption. Finally, some provisions of the LUA, such as
consent, revocation, compensation clauses and ousting of court’s
jurisdiction in Sections 21 and 22, 28 29 and 47 respectively promote
executive recklessness, and thereby breed corruption. Winning the war
on corruption is important for national development. The policy
framework behind the LUA which is to provide equitable access to all
Nigerians will be achieved without hindrance. Also, the current spate
of food insecurity, unemployment, and ethno-religious tensions would
subside, as citizens would have due access to land resources dominated
by corrupt investors. These findings are central to policy and
institutional reforms on land in Nigeria.
Corruption in Land Administration in Nigeria 233
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The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License.
HARMONISATION OF THE LAW RELATING TO
CRIMINAL ACCOUNTABILITY OF YOUNG OFFENDERS
Mazlena Mohamad Hussain
Nasimah Hussin
ABSTRACT
Modernisation and changes in values and way of life have greatly
affected the minds of the youth. Hence, the number of crimes they
commit has increased tremendously. The pertinent issue would be
whether or not these young offenders can be criminally liable for their
actions. To prove the liability of a criminal offender, the law requires that
the offender must have reached the age of criminal responsibility,
otherwise, he may be excused from any criminal liability. The principle
is known as doli incapax, an irrebuttable presumption that a child below
a certain specified age is presumed to be incapable of committing a
crime. This is not only to safeguard the interest of the child but also to
ensure that only those who possess a guilty mind (mens rea) shall be
responsible for the crimes committed. This principle can be found both
in the civil and Shari’ah legal frameworks. This paper adopts a doctrinal
study of existing primary and secondary materials relating to criminal
liabilities of young offenders from both civil and Islamic laws and
ventures into the possibilities of the two laws being harmonised.
Statutory provisions, case law and other legal literature pertaining to the
topic are examined. Comparative legal research methodology is also
This paper is a revised version of a conference paper presented at the 5th
International Conference of Shariah and Civil Law 2023.
Assistant Professor, Department of Civil Law, Ahmad Ibrahim Kulliyyah of
Laws, International Islamic University Malaysia, Selangor, PO Box 10,
50728 Kuala Lumpur. Email: mazlena@iium.edu.my (Corresponding
Author).
Associate Professor, Department of Islamic Law, Ahmad Ibrahim
Kulliyyah of Laws, International Islamic University Malaysia, Selangor,
PO Box 10, 50728 Kuala Lumpur. Email: nasimah@iium.edu.my
[Received: 07 July 2024, Accepted: 17 May 2025, Published: 28 May 2025]
240 IIUM LAW JOURNAL VOL. 33 (1) 2025
adopted in this research. Findings show that there are great similarities
between the two laws as far as criminal accountability of young
offenders are concern – a) criminal liability depends ability to understand
the nature and consequence of the act b) young offenders below certain
age are excused from criminal liability c) young offenders who are found
committing crimes cannot be treated as adult offenders d) if a young
offender is found responsible for a crime, the court in issuing judgment
must always put his best-interest as a priority (e) it is possible to
harmonise the two laws since both share great similarities.
Keywords: Harmonisation, Criminal Liability of Young Offenders, Doli
Incapax, Shari’ah Law, Civil Law.
HARMONISASI UNDANG-UNDANG YANG BERKAITAN
DENGAN TANGGUNG JAWAB JENAYAH PESALAH MUDA
ABSTRAK
Pemodenan dan perubahan nilai serta cara hidup telah mempengaruhi
minda para remaja. Justeru, jumlah jenayah yang dilakukan oleh
golongan muda telah meningkat dengan ketara. Isu yang timbul di sini-
sama ada pesalah muda ini boleh dikenakan tanggungjawab jenayah atas
perbuatan mereka. Untuk membuktikan liabiliti pesalah jenayah,
undang-undang memperuntukkan bahawa pesalah mestilah mencapai
umur tanggungjawab jenayah. Jika pesalah di bawah umur
tanggungjawab jenayah, dia boleh dikecualikan daripada sebarang
liabiliti jenayah. Prinsip ini dikenali sebagai doli incapax, anggapan yang
tidak dapat disangkal bahawa kanak-kanak di bawah umur tertentu
dianggap tidak mampu melakukan jenayah. Prinsip ini bukan sahaja
untuk menjaga kepentingan kanak-kanak tetapi juga untuk memastikan
bahawa hanya mereka yang mempunyai niat jahat (mens rea) akan
bertanggungjawab ke atas jenayah yang dilakukan. Prinsip ini boleh
dilihat dalam rangka kerja perundangan sivil dan Shari’ah. Kertas kerja
ini merupakan kajian doktrin yang menyelidik sumber primer dan
sekunder sedia ada yang berkaitan dengan liabiliti jenayah pesalah muda
dari kedua-dua undang-undang Malaysia dan Islam serta meneroka
kemungkinan kedua-dua undang-undang itu boleh diselaraskan.
Peruntukan undang-undang, kes-kes dan literatur undang-undang lain
yang berkaitan dengan topik ini dianalisa. Metodologi kajian undang-
undang perbandingan juga diguna pakai dalam penyelidikan ini. Hasil
kajian menunjukkan bahawa terdapat persamaan yang jelas antara
kedua-dua undang-undang berkaitan liabiliti jenayah pesalah muda – a)
liabiliti jenayah bergantung kepada keupayaan untuk memahami sifat
Harmonisation of Law on Criminal Liability Young Offenders 241
dan akibat perbuatan itu b) pesalah muda di bawah umur tertentu
dikecualikan daripada liabiliti jenayah c) pesalah muda yang didapati
melakukan jenayah tidak boleh dianggap sebagai pesalah dewasa d) jika
pesalah muda didapati bertanggungjawab terhadap sesuatu jenayah,
mahkamah dalam mengeluarkan penghakiman hendaklah sentiasa
mengutamakan kepentingannya e) kedua-dua rangka perundangan
tersebut boleh diharmonikan kerana mempunyai banyak persamaan.
Kata Kunci: Harmonisasi, Tanggungjawab Jenayah Pesalah Muda, Doli
Incapax, Undang-Undang Shari’ah, Undang-Undang Sivil.
INTRODUCTION
The maxim actus non facit reum nisi mens sit rea requires an accused
person to possess both the actus reus (guilty act) and mens rea (guilty
mind) before he can be criminally responsible for a crime. The primary
mechanism for designating blame or culpability is through the fault
element.
1
However, section 6 of the Malaysian Penal Code clearly
provides that all offences shall be subject to the general defenses
provided in Chapter IV of the said Code. In other words, the general
defenses in Chapter IV can be used to rebut the elements of mens rea
of an accused. If an accused successfully proves to the court that at the
time of the commission of the crime, the main reason he committed the
offences is because of any one of the defenses in Chapter IV, then he
shall be exempted from any liability. Among the defenses available in
Chapter IV is the defense of infancy under sections 82 and 83.
2
The
exception of children below the age of ten is based on the principle of
doli incapax. This maxim provides an irrebuttable presumption that a
child below a certain age is irrebuttably presumed to be incapable of
committing a crime. Cases such as Ba Ba Sein
3
, Wali Muhammad
4
and
Marsh vs. Loader
5
are examples to illustrate that children below a
certain age are totally protected by the law against any criminal
1
Stanley Yeo, Neil Morgan & Chan Wing Cheong, Criminal Law in Malaysia
and Singapore. 3rd ed. (Singapore: LexisNexis, 2018), 45.
2
Section 82 provides for the liability of children under the age of 10 and
section 83 provides for liability of those who are above 10 but below 12.
3
King v Ba Ba Sein (1938) Rangoon High Court, p. 400.
4
E v. Wali Mohamed (1926) AIR 677
5
Marsh v. Loader 14 CNBS 535
242 IIUM LAW JOURNAL VOL. 33 (1) 2025
liability. Before going any further, it is important for us to first
understand who a child is?
6
The understanding of who a child is will
help us to understand the criminal liability of children.
METHODOLOGY
This paper adopts doctrinal research by analysing legal provisions
and cases related to criminal liabilities of young offenders from the
civil law and Islamic law perspectives and ventures into possibilities of
the two laws being harmonised. The research is mainly library-based
research. Data is obtained through the collection and compilation of
written sources. Statutory provisions, case law and other legal literature
pertaining to the topic are examined. The Qur’an and Sunnah (in light
of the legal exegesis and interpretation of the two sources) are analysed
to derive the basic principles governing the issue of criminal liabilities
of young offenders. A thorough examination of fiqh literature of the
four Sunni scholars and their disciples on the subject matter is carried
out and the principle of “tarjih” is used to determine the strongest and
practicable opinion. Similarly, the secondary and tertiary sources are
examined. Contemporary books and journals are also analysed. Apart
from literature, data are also collected from unpublished materials such
as seminar papers, theses, etc. Comparative legal research
methodology is also adopted in this research.
DEFINITION OF A CHILD UNDER INTERNATIONAL
LEGAL FRAMEWORK
Locke and Bentham, two famous jurists regarded children as those who
are incapable of calculating actions, lack a certain amount of reason
and understanding, and can neither be free as adults or as their equals.
7
Hence, it is important to examine the definition of a child or minor or
infant
8
under the international framework to determine whether or not
6
The term ‘child’ is sometimes interchangeably referred to as ‘minor’ or
‘infant’.
7
Jeremy Bentham, An Introduction to the Principles of Morals and
Legislations (Kitchener: Batoche Books, 1781), 74-80.
8
The terms ‘child’, ‘infant’ and ‘minor’ will interchangeably be used
throughout this article.
Harmonisation of Law on Criminal Liability Young Offenders 243
the law in Malaysia is consistent with the international legal
framework. The term ‘child’ is defined under many international
conventions; however, the most important ones as far as criminal
accountability is concerned are the following definitions:
a) UN Convention on the Rights of the Child (UNCRC)
The UN Convention on the Rights of the Child (UNCRC) is an
important, legally binding agreement signed by 196 countries (as of 12
July 2022) which outlines the fundamental rights of every child,
regardless of their race, religion or abilities. The Convention contains
the idea that children are not objects who belong to their parents and
for whom decisions are made, or adults in training. Childhood is the
time for a child to grow, learn, play, develop and flourish with dignity.
The Convention is based on four main principles; non-discrimination,
right to life, survival and development, doing what is right for the
children and meaningfully engaging and respecting children’s views.
This Convention had a significant impact on the children, as many
governments have made efforts to better safeguard the lives and the
interests of young children.
Article 1 of the convention defines children as those who are
below the age of 18. This age limit is actually applicable in most
countries. Age is usually determined based on the date of birth. In
Malaysia, the birth certificate is the ipso facto proof of the age of a
person. Article 3 mentions that the best interest of the child must be a
top priority in all decisions and actions that affect the children. This is
consistent with the objective of the Convention itself that is to provide
safeguards for the physical, psychological and emotional interests of
every child, including ensuring the welfare and rights of a child. As far
as juvenile justice is concerned, Article 40 provides that a child who is
accused or found guilty of breaking the law must be treated with dignity
and respect. It should be borne in mind that the concept of criminal
justice is to ensure the rights of an accused person be he a minor or an
adult.
9
They have the right to legal assistance and a fair trial that takes
account of their age. The Article also mentions that it is the
government’s responsibility to set a minimum age for children to be
tried in a criminal court and the government must manage a justice
9
Peter Joyce & Wendy Laverick, Criminal Justice: An Introduction, 4th ed.
(London: Routledge, 2022), 435-474.
244 IIUM LAW JOURNAL VOL. 33 (1) 2025
system that enables children who have been in conflict with the law to
reintegrate into society.
b) Standard Minimum Rules for the Administration of Juvenile
Justice [The Beijing Rules] (UN) 1985
10
The Beijing Rules provide the minimum standard of rules for juvenile
justice. The objectives of the Rules are, among others, to ensure that
the interests of young offenders within the criminal justice system are
well taken care of by the state members. The Rules are also to reduce
the interference by law, and fair and humane treatment of a teenager in
conflict with the law; the principle of proportionality (limitation of
punitive sanctions) and the individualisation of the responsibility of
minors etc.
11
Rule 2.2 defines a juvenile as a child or young person who, under
the respective legal systems, may be dealt with for an offence in a
manner which is different from an adult. In fact, the Rules emphasise
that there should not be any discrimination between young offenders
who have committed minor or major offences. The fact remains,
regardless of the type of offences committed by a young offender, a
child shall be treated as a child.
12
It is worth noting that the age limit of
a child may differ from one country to another. Thus, the age of
juvenile offenders may range from seven to eighteen years of age,
depending on the law of each state member.
13
Both the UNCRC and the Beijing Rules provide clear guidelines
as to who are children and what are the rights of children. Hence,
member states should be using the guidelines for their legal framework
and when introducing any policies regarding the welfare and wellbeing
10
From here onwards will be known as the Rules.
11
Olga Shirokova-Murarash, “Improvement of The Juvenile Justice System
Under the Minimum UN Standard Rules (Beijing Rules),”
in International Relations, 5 (2020), 118.
12
Ursula, Kilkelly & Stefaan, Pleysier, Rights of the Child in the Child Justice
System, Youth Justice, 23(2) (2023), 135-139. See also Nessa, Lynch &
Ton, Liefaard, “What is left in the ‘too hard basket’? Developments and
challenges for the rights of children in conflict with the law,” in The
International Journal of Children’s Rights 28(1) (2020), 89–110.
13
The Minimum UN Standard Rules for the Administration of Juvenile Justice
(Beijing Rules).
Harmonisation of Law on Criminal Liability Young Offenders 245
of children. The difference in the age limit of children between one
country to another is not so great. Regardless of the age limits, both
UNCHR and the Beijing Rules recognise the importance of ensuring
the welfare and interests of children even when they become offenders.
LEGAL FRAMEWORK OF CRIMINAL ACCOUNTABILITY
OF YOUNG OFFENDERS IN MALAYSIA
Malaysia, a country that was once under the colonisation of the British,
inherited the English laws. Consequently, it is of no surprise that quite
a substantial number of statutes that are implemented in Malaysia
found their origin in English law. There are great similarities between
the law in England and the law in Malaysia, particularly statutes drafted
and passed by the English government when the Malay States were
colonised. Statutes passed in the olden days, such as the Penal Code of
Malaysia adopted the Indian Penal Code which was drafted by the first
Law Commission of India under the chairmanship of Lord Thomas
Babington Macaulay. In fact, the Penal Code of Malaysia is pari
materia with the Penal Code of India.
Definition of Children in Malaysia
There are a few definitions of who is a ‘child’ under Malaysian law.
The most important definition as far as criminal accountability of
children is concerned, would be the definition of a child under the Child
Act 2001 (Act 611). Section 2 of Act 611 defines a child as (a) a person
under the age of eighteen years and (b) in relation to criminal
proceedings, means a person who has attained the age of criminal
responsibility as prescribed in section 82 of the Penal Code [Act 574].
According to section 82 of the Penal Code, nothing is an offence if it is
done by a child below the age of ten. The court, in considering the
liability of the child, will consider his age at the time of the commission
of the crime. The section provides an irrebuttable presumption to young
offenders based on the principle of doli incapax. The Age of Majority
Act 1971 (Act 21) in the amendment [A1] of section 3 of the Age of
Majority Act 1971 provides that the age of majority in Malaysia is
above eighteen years. It means, one who has not celebrated their
eighteenth birthday shall be considered a minor. These definitions are
246 IIUM LAW JOURNAL VOL. 33 (1) 2025
consistent with the definitions of children as provided by Article 1 of
UNCHR and Rule number four of the Beijing Rules.
14
Age of Criminal Accountability in Malaysia
The age limit for criminal accountability is provided in the main statute
dealing with criminal law, that is the Penal Code [Act 574]
a) Section 82 of the Penal Code – absolute protection
The age of criminal accountability in Malaysia is provided under
section 82 of the Penal Code [Act 574]. The section states – nothing is
an offence if it is done by a child under the age of ten years. This
provision is in line with the maxim of doli incapax as found under
English law. The age of a person is based on his or her date of birth,
and that can easily be proven by the birth certificate. This is an
irrebuttable presumption; meaning that it provides total exemption
from any criminal liability as long as the crime is committed by a child
who is below the age of ten. The behaviour, attributes or mischief of
the child is not a consideration under section 82. It provides absolute
protection to the child against any criminal liability. At this age, a child
is considered innocent, immature and decent. Therefore, he shall not be
made criminally liable.
15
Even though there have been some
suggestions that the age limit should be reviewed, considering that
today’s children are much wiser compared to the past, the age limit
remains till now.
b) Section 83 of the Penal Code – conditional protection
On the other hand, by virtue of section 83, a child above ten but below
twelve may be excused from any criminal liability if at the time of the
commission of the crime he has not attained sufficient maturity of
understanding to understand the nature and quality of his act. The
burden of proof, as provided under section 105 of the Evidence Act, is
14
See Nasimah Hussin & Hanifah Haydar Ali Tajuddin. “An Islamic
Perspective on Preventing Sexual Abuse against Children”, in IIUM Law
Journal 29(S1) (2021), 153-176.
15
Anita Abdul Rahim & others, “School Students Committing Crime: The
Position Under the Malaysian Criminal Law.” Full Paper Proceeding
ITMAR, Vol.1, (2014), 542-549.
Harmonisation of Law on Criminal Liability Young Offenders 247
on the child offender. He needs to prove that at the time of the
commission of the crime, he had not attained sufficient maturity of
understanding. The maxim applicable for section 83 is doli capax - that
is a child is assumed to be capable of committing an offence unless he
can prove to the court that at the time of commission of the crime, he
has yet to attain sufficient maturity of understanding.
The issue of whether or not the child has attained sufficient
maturity of understanding is a question of fact. The court in deciding
as such usually will take into consideration factors such as the report
regarding the child offender prepared by the welfare officer, the act of
the child before and after the commission of the crime, his motive (if
any), his demeanor during the trial and also his criminal record (if
any).
16
If a child is capable of having a motive, the court has a basis to
infer that he has attained sufficient maturity of understanding as malitia
supplet aetatum.
17
In the case of PP v. Lim Ah Leng,
18
the accused has been
convicted twice before he was convicted and punished with a two-year
imprisonment for another offence at the age of 24 years old. The
Magistrate referred the case to the Higher Court to confirm the two-
year imprisonment sentence. However, Ong Hock Sim J. reduced the
sentence to one year imprisonment, stating that the court will not
consider his first conviction of theft when he was only 10 years old.
The judge was of the opinion that there was a possibility that he had
not attained sufficient maturity of understanding when he committed
the offence.
16
Molly Cheang, Criminal Law of Malaysia and Singapore: Principles of
Liability, (Kuala Lumpur: Professional (Law) Books Publishers, 1990),
86. See also Yeo, Morgan & Cheong, 864 – 866. See also Ulla Mahapatra
[1950] A.I.R (Cut) 293, C (A minor) v DPP [1996] AC 1.
17
The legal maxim "malitia supplet aetatem" translates to "malice supplies
age." It means that the presence of malice (a malicious intent or bad faith)
can make a person responsible for a wrongful act, even if they are
underage.
18
[1967] 1MLJ 284, See also Muhamad Zakwan Bin Zainuddin v Public
Prosecutor anor appeal [2019] MLJU 1462.
248 IIUM LAW JOURNAL VOL. 33 (1) 2025
c) Section 113 of the Evidence Act – absolute protection
Section 113 provides an irrebuttable presumption pertaining to liability
of boys below the age of thirteen in rape cases. Since rape in Malaysia
is a gender specific offence, that is only a man is capable of committing
rape, section 113 uses the term ‘boy’. Under this section, in addition to
the accused in rape cases as provided by section 375 of the Penal Code
must be a man, the age of the accused must be above the age of 13.
Since this section provides an irrebuttable presumption, any boy under
thirteen years of age will be absolutely protected by this section. The
irrebuttable presumption of exempting boys below certain age from
criminal liability of rape has been criticised as it does not reflect the
actual current situation where young boys are having sexual
experiences at very young age. This presumption has been abolished in
some places such as England and New South Wales. The abolishment
of ‘doli incapax’ is part of the government’s effort to combat youth
crimes.
19
Based on the above discussion, it can be concluded that except
for the offence of rape, the age of criminal responsibility in Malaysia
is above ten. Any child offender who is above the age of ten but below
eighteen may be found liable by the court for committing any offence.
The law in Malaysia is consistent with the international legal
framework on young offenders’ criminal accountability.
20
However, the procedures and punishments provided for young
offenders are different compared to those procedures and punishments
provided for adult offenders. The procedures will be briefly discussed
in the following discussion.
19
Taylor, L, Elliot & Quinn’s Criminal Law, 12th ed. (England: Pearson Pub,
2018), 352-353.
20
Randawar, D.K., Ikhsan, M.I. & Monil, F. “Sentencing Child Offenders in
Malaysia: When Practice Meets Its Purpose”, in International Journal of
Academic Research in Business and Social Sciences 12(7) (2022), 1226-
1236.
Harmonisation of Law on Criminal Liability Young Offenders 249
Procedures Governing Young Offenders in Malaysia
The criminal procedures regarding young offenders in Malaysia are
governed by Part X of the Child Act 2001.
21
A child who is accused of
committing any offence shall not be arrested, detained or tried except
in accordance with the Child Act.
22
Unlike adult offenders who are
tried in an open court, child offenders will have their trial in a closed
court known as the Special Court for Children.
23
The Court for
Children has the jurisdiction to hear all cases regarding child offenders
except for offences punishable with death. The only exception to this
rule, is if the child committed the offence with an adult offender. As
such the trial will be conducted in an open court.
24
However, the young
offender will still be treated as a young offender, not as an adult.
The Child Act also provides that the identity of the child offender
or any information that may lead to the identification of the child
offender shall remain confidential. Hence, no information about the
identity of the child offender can be published in any newspaper,
magazine or any medium be it hard copy or digital.
25
Terms such as
‘conviction’ or ‘sentence’ shall not be used in relation to any child
offender.
26
The court shall instead use the term ‘upon finding of guilt’
and ‘an order made upon finding of guilt’ respectively.
27
Section 91 also provides jurisdiction of the court in making any
necessary order for the child offenders. The orders that may be made
by the court are as follows:
- if a Court for Children is satisfied that an offence has been proved the
Court shall, in addition to any other powers exercisable by virtue of this
act, have power to —
21
The Child Act 2001 was amended in 2016. The Act provides for the
protection, care and rehabilitation of children. The Act repealed Juvenile
Courts Act 1947 [Act 90], Women and Young Girls Protection Act 1973
[Act 106] and Child Protection Act 1991 [Act 468].
22
Section 83(1), Child Act 2001.
23
Section 83(1), Child Act 2001. The court shall consist of a Magistrate, and
he will be assisted by two advisers appointed by the Minister. The adviser
must be of one male and one female.
24
Section 83(4), Child Act 2001
25
Section 15, Child Act 2001
26
Section 91(2), Child Act 2001
27
Section 91(2), Child Act 2001
250 IIUM LAW JOURNAL VOL. 33 (1) 2025
(a) admonish and discharge the child;
(b) discharge the child upon his executing a bond to be of good
behaviour and to comply with such conditions as may be
imposed by the Court;
(c) order the child to be placed in the care of a relative or other fit
and proper person— (i) for such period to be specified by the
Court; and (ii) with such conditions as may be imposed by the
Court;
(d) order the child to pay a fine, compensation or costs;
(e) make a probation order under section 98;
(f) order the child to be sent to an approved school or a henry
Gurney school;
(g) order the child, if a male, to be whipped with not more than ten
strokes of a light cane—
(i) within the Court premises; and
(ii) in the presence, if he desires to be present, of the parent or
guardian of the child;
(h) impose on the child, if he is aged fourteen years and above and
the offence is punishable with imprisonment and subject to
subsection 96, any term of imprisonment which could be
awarded by a sessions Court.
The Act also provides restrictions on the order of imprisonment
for child offenders below the age of fourteen
28
and the death penalty
for young offenders below the age of eighteen.
29
In lieu of the death
penalty, the child may be detained in prison at the pleasure of the Yang
Di- Pertuan Agung or Ruler of the State, depending on where the crime
was committed. The rule not to sentence a child to death is a general
rule applicable in almost every part of the world. However, as usual,
for every general rule there must be an exception. The court in Lim
Hang Seoh v. PP
30
held that the general rule is not applicable in cases
tried under the Essential (Security Cases) Regulation (ESCAR) 1975.
Regulation 3 of the ESCAR provides that where a person is accused or
28
Section 96, Child Act 2001.
29
Section 97, Child Act 2001.
30
[1978] 1 MLJ 68.
Harmonisation of Law on Criminal Liability Young Offenders 251
charged with security offences under the Regulation, he shall be dealt
with and tried in accordance with the provisions in the Regulations,
regardless of his age. With the new trend of improving the protection
of children, it is doubtful that the present court would have followed
the decision made in Lim Hang Seoh.
In cases such as Pendakwaraya v Chong Waijun
31
and
Pendakwaraya v Pesalah Kanak-kanak
32
the courts emphasised the
concept of proportionality in sentencing young offenders. A rigid or
excessive punishment risks undermining the rehabilitative objectives.
In fact,, juvenile offenders should not be classified as the worst
offenders or treated as adult offenders.
33
In the case of PP v. SAK (the child),
34
a young offender who was
below 18 was charged for statutory rape. The court considered all
evidence, including the child’s demeanour during the trial, his
advisor’s and probationary reports, before deciding the most
appropriate sentence for him. He was sent to the Henry Gurney School
till he reached the age of 21. Meanwhile, in Zawawi Salleh JC (now
FCJ) in Pendakwa Raya v. Muhamad Abdul Rahim bin Adnan
35
had
aptly spelt out the dilemma in considering the appropriate order for a
child who is found guilty of an offence. His Lordship remarked, in
making an order against a child, the Court “should have its eye for the
future”. The decision-making process inevitably attracts conflict of
perspectives between the Court, the prosecution, the defence, the
probation officer, the psychologist and other parties, for there are
various determinative factors that exist.
Similarly, Ismail Ibrahim JC, in PP v. I.I.I.
(Child Offender)
36
observed:
“It is not an easy task to impose a sentence on a child offender, as
the court must always bear in mind the fact that a
child offender lacks the maturity of adults. At the same time the
court must also ensure that it does not send a wrong message to the
public that a child offender will normally receive a lesser sentence
31
[2025] MLJU 514
32
[2023] MLJU 476
33
Roper v Simmons (03-633) 543 U.S. 551 (2005)
34
[2021] MLJU 1707.
35
[2008] 7 MLJ 883.
36
[2016] 1 LNS 1102
252 IIUM LAW JOURNAL VOL. 33 (1) 2025
compared to an adult accused person charged with the same offence,
more so in cases where the offence committed is a serious offence.
It is for the said reasons, the court would have to evaluate the child's
background through the probation report before imposing a
sentence on the child.
Visu Sinnadurai J in Public Prosecutor v Nazarudin Bin Ahmad
& 2 Ors.
37
also made the same observation pertaining to the
punishment of the young offenders. Thomas in his book, on Principles
of Sentencing, 1st edition, relating to public interest and
the young offender.
38
He pointed out that in the case of
a young offender, there can hardly ever be any conflict between the
public interest and that of the offender. The public has no greater
interest than that he should become a good citizen. The difficult task of
the Court is to determine what treatment gives the best chance of
realising that object. That realisation is the first and by far the most
important consideration.
The above discussion proves that the criminal justice system in
Malaysia provides special procedures and punishments for young
offenders. The purpose of the special procedures and punishment is not
to discriminate against young and adult offenders but rather as an
acknowledgement that young offenders should be treated in
accordance with their age and maturity. Their interest and welfare must
always be given priority without compromising the public interest.
LEGAL FRAMEWORK OF CRIMINAL ACCOUNTABILITY
OF YOUNG OFFENDERS UNDER THE SHARI’AH LAW
Similar to the civil law, the Shari’ah law also provides certain
principles pertaining to criminal accountability of young offenders.
The Qur’an, in Surah al-Nisa, 4:98, clearly mentions: “Except the weak
ones among men, women and children who cannot devise a plan, nor
are they able to direct their way”. This verse shows that a child is not
37
[1993] 2 CLJ 543
38
Thomas, D. A., & Radzinowicz, L. Principles of sentencing: the sentencing
policy of the Court of Appeal Criminal Division (Vol. 27). (London:
Heinemann, 1970), 5-6. See also Brooks, T. (Ed.), Juvenile Offending, 1st
ed. (London: Routledge, 2014), https://doi.org/10.4324/9781003424086
Harmonisation of Law on Criminal Liability Young Offenders 253
capable of having a guilty mind as they are not able to think and devise
any act.
39
Basis of Criminal Accountability
In Islam, one who intentionally commits an unlawful act shall bear the
consequence of their act. Once the elements of a crime of which he has
been accused are established, the offender shall be punished
accordingly. In other words, he must be accountable for his act. There
are three bases for criminal accountability in Islam; a) the act done is
unlawful, b) the act is done willfully or voluntarily (ikhtiyar) and c) the
offender is an adult who is of sound mind capable of distinguishing
right and wrong in his actions (idrak). Whether or not an act is
unlawful, it shall be prescribed by the law.
40
There are three types of
offences in Islam known as hudud
41
, qisas
42
and taa’zir.
43
In the
absence of any one of these three bases, an offender shall not be liable
39
See also Surah al-Nisa, 4:6 and Surah al-An’am, 6:152
40
Awdah, ‘Abd al-Qadir, al-Tashri’ al-Jina’i al-Islami, vol.i, 13th ed. (Beirut:
Muassasah al-Risalah, 1994), 402. See also Farid Sufian Shuaib et.al.,
Halsbury’s Laws of Malaysia: Islamic Law, reissue 14(2) (Singapore:
LexisNexis, 2016), 253.
41
Hudud or singular Hadd are crimes punishable with a fixed punishment
imposed as a right of the public, or known as the right of Allah s.w.t. The
punishments for these offences are specifically mentioned in the Holy
Quran and the Sunnah of the Prophet Muhammad (s.a.w.). The Hudud
crimes are zina (adultery or fornication) qazf (false accusation of zina),
theft, robbery, drinking intoxicants, apostasy and rebellion. Since the
punishment is fixed, the courts do not have any discretion to change or
reduce the punishment. See Awdah,79.
42
Qisas is a crime punishable with punishments prescribed by Allah s.w.t. in
the Holy Quran and the Sunnah of the Prophet (s.a.w.). The offences under
Qisas are homicide and causing bodily injuries to another. However, since
it is considered as the right of an individual, the victim or his family have
the right to choose whether to inflict punishment as prescribed by Islam
or to pardon the offender. Victims also have the right to demand
compensation known as Diyat. See Awdah, 79.
43
Taazir are crimes other than the ones prescribed as hudud or qisas and are
punishable with punishments decided by the courts. The judges are given
the discretion to decide the punishment that they think suits best for the
crime committed. See: Awdah,79.
254 IIUM LAW JOURNAL VOL. 33 (1) 2025
for committing the offence. Islam only provides criminal
accountability for one who is indeed accountable for their act.
Mental capacity is a vital element of criminal accountability.
Even if the crime is committed intentionally by the offender, the first
thing that must be determined by the court is whether or not the
offender has the mental capacity to understand the nature and
consequences of their act. If he is able to understand the nature and
consequence of his act, then only he shall be criminally responsible and
be punished accordingly. Nevertheless, the degree of ability to
understand may differ from one person to another depending on factors
such as one’s age and experience. Consequently, Islam provides
different categories of offenders based on their ability to understand.
44
Age of Criminal Accountability in the Shari’ah Law
In the Shari’ah law, the stages of a person’s life as far as his ability to
understand is divided into three main stages. The stages are as follows:
a) Sabiyy ghayr mumayyiz – absence of understanding
This stage begins as soon as one is born until they reach the age of
which he is capable of distinguishing between the good and bad. Islam
does not specify the actual age for this, as the ability to understand may
differ from one child to another. Nevertheless, for better
implementation and uniformity of the law, the Muslim jurists limit the
age of sabiyy ghayr mumayyiz to seven years of age.
45
The age limit is
based on the average occurrence. A child under the age of seven is
given absolute immunity from any criminal responsibility by the
Shari’ah law. This is based on a hadith of the Prophet (s.a.w.) that
states:
“Three persons are excused from responsibilities; a child until he
attains the age of puberty; a sleeping man until he is awake and an
insane until he becomes sane”
46
44
Awdah, 601. See also Bahnasi, al-Mas’uliyyah al-Jina’iyyah fi al-Fiqh al-
Islami, 3rd ed. (Cairo: Dar al-Shuruq, 1984), 271.
45
‘Awdah, 601, Bahnasi, 271.
46
Abu Dawud, Sulayman bin al-Ash’ath al-Sajastani, Sunan Abi Dawud,
(Beirut: Dar Ibn Hazm, 1998), Hadith no.4402.
Harmonisation of Law on Criminal Liability Young Offenders 255
Based on the hadith, in general a child cannot be held liable for
committing the offence until he attains the second stage as below.
b) Sabiyy Mumayyiz – infirm understanding
At this stage, the child is already able to distinguish between right and
wrong, good and bad. However, the ability is not a full ability. This
stage begins at the age of seven till he reaches the age of puberty. The
age-limit for puberty is also different from one jurist to another.
Mazhabs al-Shafi’is, Hanbali and some of the followers of Imam Malik
fixed the age limit from seven to fifteen. Imam Abu Hanifah however,
set the age of puberty to be eighteen.
47
The dominant opinion of the
Maliki school is similar to Imam Abu Hanifah’s view, while some limit
it to nineteen.
48
A child who is mumayyiz can be criminally liable. However,
their criminal liability differs from the liability of adult offenders,
especially in cases involving the commission of offences under hudud
and qisas. In such cases, they shall be disciplined with ta’zir
punishment. The usual punishments are either reprimand or light
beatings.
49
Even though to a certain extent they may be punished under
ta’zir but they will not be considered as criminals. A hadith by the
Prophet (s.a.w.) that states: “Teach your children to perform prayer
when they reach the age of seven and beat them (for failure to perform
prayer) by the age of ten.”
50
is the basis on the age limit and punishment
set for criminal liability of those who are mumayyiz.
c) Baligh – full power of understanding
This stage is when the child is able to understand and distinguish every
action properly and completely. At this stage, he is known as baligh wa
rashid (a mature person). The actual age of puberty is not specifically
mentioned in primary sources, however it is said to start when sexual
47
In another report he fixed it at nineteen years old for boys and seventeen
years old for girls.
48
‘Awdah, al-Tashri’ al-Jina’i al-Islami, 601, Bahnasi, al-Mas’uliyyah al-
Jina’iyyah, 271. See also Anwarullah, The Criminal Law of Islam (Kuala
Lumpur: A.S. Noordeen, 2008), 19.
49
‘Awdah, 602, Bahnasi, 275.
50
Abu Dawud, Sunan, Hadith No.495.
256 IIUM LAW JOURNAL VOL. 33 (1) 2025
maturity occurs i.e. the start of menstruation for females and
autoerotism for males.
51
Once a person reaches the age of puberty, they
can be criminally responsible for their act since they are considered to
have fully understood the consequences of the criminal act that he
has committed.
Age of Criminal Accountability of Young Offenders under the
Shari’ah Law in Malaysia
In Malaysia, matters regarding criminal matters are considered as
federal matters as listed in the Federal Constitution.
52
Nevertheless, the
Federal Constitution also provides that matters related to the Shari’ah
law are considered state matters. Consequently, each state has
legislated laws pertaining to Islamic matters.
53
Section 51 of the Syariah Criminal Offences (Federal
Territories) Act 1997 (Act 559) provides: nothing is an offence which
is done by a child who is not baligh. The term baligh is interpreted in
section 2 of the Act as having attained the age of puberty under the
Shari’ah law. There is no age limit prescribed in the interpretation of
baligh. However, section 2 of the Syariah Criminal Procedure (Federal
Territories) Act 1997 (Act 560) defines a youthful offender as any
offender who is above the age of ten and below the age of sixteen years
old. If this provision is to be considered, it means a child is considered
as a baligh once he reaches the age of sixteen. The Syariah High Court
in Syarie Prosecutor v Siti Nurazniza binti Kamaruddin
54
held that the
accused was found guilty of committing sexual intercourse out of
wedlock when she was 15 years old. The judge decided that she be
fined RM2700 and ordered her to be of good behaviour for a period of
6 months and to attend the court for a counselling session every 3
months.
51
MS Islam, Criminal Accountability and Juvenile Offenders: A Study Under
Islamic Principles, International Law and Children Act, 2013,3(2) Int J
Ethics SocSci (2015), 51.
52
Ninth Schedule of Malaysia Federal Constitution. The Federal Constitution
is considered as the supreme law of Malaysia.
53
See Nasimah Hussin. “Juvenile Delinquency in Malaysia: Legal Framework
and Prospects for Reforms”, in IIUM Law Journal, 15 (2007), 197-214.
54
Jurnal Hukum Vol. 32 (1). JH (1432H)) March 2011M, 141-153.
Harmonisation of Law on Criminal Liability Young Offenders 257
Section 128(1) of Act 560 provides that when any youthful
offender is convicted before any court of any offence punishable with
fine or imprisonment, such court shall instead of imposing any
imprisonment sentence in default of payment of the fine or passing a
sentence of imprisonment: a) order such offender to be discharged after
due admonition if the court shall think fit; or b) order such offender to
be delivered to his parents or guardian, relative or any other person
executing a bond with a surety, as the court may require, that he will
be responsible for good behaviour of the offender for any period not
exceeding twelve months or without requiring any person to enter into
any bond, make an order in respect of such offender ordering him to be
of good behaviour for any period not exceeding two years and
containing directions to such offender which the court shall think fit to
give.
In addition, the court may also use its discretion to impose fines
not exceeding two hundred ringgits upon the parents or guardians if the
court is of the opinion that the parents have neglected the child or did
not take proper care of the child.
Overall, we can see that the position of a young offender under
the Shari’ah law is very similar to the criminal law implemented in
Malaysia.
COMPARATIVE ANALYSIS BETWEEN THE CIVIL LAW
AND SHARI’AH LAW
Based on the above-mentioned discussion, there are similarities and
differences between the law of young offenders’ criminal
accountability under the civil and Shari’ah law. It is interesting to
observe that the civil and Shari’ah law have so much in common. The
similarities are as follows:
a) Similarities
Both laws recognise that:
i. admonish and discharge the child;
258 IIUM LAW JOURNAL VOL. 33 (1) 2025
ii. Criminal accountability of children depends on the age of the
child at the time of the commission of the crime. As we can see
both Islamic law and Civil law prescribe the age of criminal
liability, albeit the differences in the age limit. This proves that
both laws acknowledge that children within certain age limits,
being young and have not developed proper mental faculty to
discern the good and bad of their act should be excused from any
criminal liability.
iii. Children below a certain age are incapable of understanding the
nature and consequences of their actions. Consequently, they
should not be made liable or responsible for the crimes that they
have committed. Both laws acknowledge that children within a
certain age are indeed incapable of understanding the nature and
quality of their act.
iv. In all cases involving children, utmost priority should be given
to the interest of the young offenders. The fact that both laws
excused children within a certain age from criminal
accountability and provide various methods to treat young
offenders indicated that young offenders are indeed special and
different from adult offenders.
v. There are certain similarities in terms of punishments that can be
imposed upon children such as admonishment or a bond of good
behaviour. The purpose of the ‘punishment’ is actually to
discipline and rehabilitate the child offender. This proves that
the laws acknowledge that at a young age, what the young
offenders need are actually proper discipline and opportunity to
become better.
We can see all the above clearly enumerated by the provisions
in sections 82 and 83 of the Penal Code and Muslim jurists. As far as
the age limit of a child is concerned in Islam, there are slight differences
among the jurists, but that is understandable as the difference in age
limit to criminal accountability could also be found under the criminal
law of each country.
Harmonisation of Law on Criminal Liability Young Offenders 259
The exemption of a child from any criminal liability is also stated
in Syariah Criminal Offences (Federal Territories) Act 1997 (Act 559).
Summarily, both laws recognise that children within a certain
age are incapable of understanding the nature of their actions. Hence,
it is not fair if criminal liability is imposed on such children. This is in
line with the principle of actus non facit reum nisi mens sit rea and
section 6 of the Penal Code that all offences shall be subjected to the
exceptions in Chapter IV.
If a child is accused of committing a crime, he has the right to
raise the defence of infancy as provided in the Chapter. If the defence
is not available to him, the court must still consider his youth and young
age in sentencing.
b) Differences
The differences between the two laws are:
i. The age limit of criminal accountability under Malaysian
criminal law is clearly mentioned in the Penal Code i.e. above
ten. There is also provision for liability of children over ten and
below twelve under section 83. Under the Shari’ah law in
Malaysia, for example in Act 559, the age limit is not
specifically prescribed, but rather the term baligh is used. The
term is rather vague and is open to various interpretations. In
addition, the term baligh that is closely associated with sexual
maturity, may have caused misinterpretations in determining
the criminal accountability of a young offender.
The different age limits also indicate that there is no
standardisation pertaining to the age of young offenders. This
may cause injustice to the young offenders as they will be
treated differently, depending on which law that actions are
taken against them. The age-difference may also cause
confusion among members of the society as to who actually
should be considered as ‘children’ or young offenders’ and
what is the age of criminal accountability.
260 IIUM LAW JOURNAL VOL. 33 (1) 2025
ii. Under the existing criminal law, the criteria to be adhered to in
order to determine whether a child has attained sufficient
maturity of understanding can be found mostly in decided cases.
But it is not as such under the Shari’ah law in Malaysia. To a
certain extent, this is understandable as the offences prescribed
under Act 559 are very limited and children are seldom accused
of such offences under the Act.
However, there may be a need to specify the specific criteria of
the various types of young offenders in future, considering that
the number of cases involving child offenders is on the rise
iii. The procedures governing young offenders and the
punishments that may be imposed upon them under the Child
Act are very comprehensive compared to the provisions under
Act 559. Considering that there is a special court for children
governing matters regarding them may reflect the seriousness
of the state in ensuring the rights and interest of children are
adequately protected.
Hence, it is strongly suggested that a special court for children
is also established to deal with matters related to children. It will
also help to amend Act 559 to be more comprehensive by
specifying the types of punishment or methods available for
young offenders.
iv. Since managing matters regarding young offenders may
involve several enforcement agencies, for example, the police,
welfare departments and the courts, it is proposed that the
related agencies should work hand in hand on this matter. This
is to ensure that the young offenders can be treated as fairly as
possible. Their interest and welfare must always be given
utmost priority.
Harmonisation of Law on Criminal Liability Young Offenders 261
CONCLUSION
The principles of criminal and juvenile justice ensure that the rights of
all young offenders are properly protected. It is understandable that
sometimes these young offenders commit crimes because they lack the
maturity to appreciate their actions. There must be some flexibility in
the law when dealing with young offenders. They are going to continue
our legacy in the future. The law must be responsible to guide and lead
them to the right path if they are found to have strayed away.
Mental capability must be a determining factor in deciding the
liability of a criminal offender. If the offender does not have the
ability to understand and comprehend his actions, then he needs to be
excused from any liability. The main aspiration is to balance the
rights of young offenders to be treated in accordance with their age
and the right of the public to have a safe life.
55
Society needs to play a
more active role in ensuring the rights of children are well
protected.
56
It is good to observe that there is not much difference
between the criminal law and Shari’ah law in Malaysia. This proves
that both laws have been in co-existence for many years.
Despite some differences between the existing criminal law and
Malaysian Shari’ah law, we can see that the gist of both laws
regarding criminal accountability of young offenders is the same i.e.
young offenders who have not attained sufficient maturity of
understanding must be excused from liability. Any differences (if
any) can always be improved by the harmonisation of the civil and
Shari’ah law.
55
Rod Morgan, Children's Rights and the Minimum Age of Criminal
Responsibility: A Global Perspective. By Don Cipriani (Farnham:
Ashgate, 2009, 232), The British Journal of Criminology, Volume 50,
Issue 5, September (2010), 990-991. https://doi.org/10.1093/bjc/azq044
accessed 12 May, 2024.
56
Abdul Hadi Zakaria, “Juvenile Delinquency: Its Relationship to the Family
and Social Support”, in Caring Society Emerging Issues and Future
Directions Ed. (Kuala Lumpur: ISIS,1990).
262 IIUM LAW JOURNAL VOL. 33 (1) 2025
It is time for the Malaysian Shari’ah law to be properly codified
for better implementation and uniformity. Efforts must be made for
both laws to be synchronous. First, there must be a proper discussion
on how the age limit for criminal liabilities of children can be
standardised in both laws. In addition, there must also be proper
guidelines on how to determine the maturity and degree of
understanding of a child. The guideline when ready may be applied by
both courts.
REFERENCES
Abdul Hadi Zakaria. “Juvenile Delinquency: Its Relationship to the
Family and Social Support”, in Caring Society Emerging Issues
and Future Directions (ed.). Kuala Lumpur: ISIS, 1990.
Abu Dawud, Sulayman bin al-Ash’ath al-Sajastani. Sunan Abi Dawud.
Beirut: Dar Ibn Hazm, 1998.
Allen, Michael J. Textbook on Criminal Law. London:Blackstone Press
Ltd., 1991.
Anita Abdul Rahim & others. “School Students Committing Crime:
The Position Under the Malaysian Criminal Law”. Full Paper
Proceeding ITMAR, Vol.1. 2014, 542-549.
Anwarullah. The Criminal Law of Islam. Kuala Lumpur: A.S.
Noordeen, 2008.
Awdah, ‘Abd al-Qadir. Al-Tashri‘al-Jina’i al-Islami, Vol.1. 13th ed.
Beirut: Muassasah al-Risalah, 1994.
Bahnasi, Ahmad Fathi. Al-Mas’uliyyah al-Jina’iyyah fi al-Fiqh al-
Islami, 3rd ed. Cairo: Dar al-Shuruq, 1984.
Bentham, J. An Introduction to the Principles of Morals and
Legislation. Kitchener: Batoche Books, 1781.
Farid Sufian Shuaib et.al. Halsbury’s Laws of Malaysia: Islamic Law,
reissue 14(2). Singapore: LexisNexis, 2016.
Halsbury’s Laws of Malaysia, vol. 14. Kuala Lumpur: Malayan Law
Journal, 2002.
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Joyce, Peter. & Laverick, Wendy. Criminal Justice: An Introduction.
4th ed. London: Routledge, 2022.
Kilkelly, U., & Pleysier, S. Rights of the Child in the Child Justice
System. Youth Justice, 23(2). 2023, 135-139.
https://doi.org/10.1177/14732254231185820
Lynch, N., & Liefaard, T. “What is Left in the “Too Hard Basket”?
Developments and Challenges for the Rights of Children in Conflict
with the Law”. The International Journal of Children's
Rights, 28(1), 2020, 89-110.
Molly Cheang. Criminal Law of Malaysia and Singapore: Principles
of Liability, Professional (Law). Kuala Lumpur: Books Publishers,
1990.
Mohd. Shariff & Asidah Ali. Alman Criminal Law in Malaysia.
International Law. Petaling Jaya: Book Services, 2012.
Morgan, R. Children's Rights and the Minimum Age of Criminal
Responsibility: A Global Perspective. By Don Cipriani
(Farnham: Ashgate, 2009). The British Journal of Criminology.
Volume 50, Issue 5, September 2010.
Nasimah Hussin & Hanifah Haydar Ali Tajuddin. An Islamic
perspective on preventing sexual abuse against children. IIUM
Law Journal, 29 (S1), 2021, 153-176.
Nasimah Hussin. Juvenile Delinquency in Malaysia: Legal Framework
and Prospects for Reforms. IIUM Law Journal, 15, 2007, 197-
214.
Randawar, D.K., Ikhsan, M.I. & Monil, F. “Sentencing Child
Offenders in Malaysia: When Practice Meets Its Purpose”.
International Journal of Academic Research in Business and
Social Sciences. 12(7), 2022.
Shirokova-Murarash, O. Improvement of The Juvenile Justice System
Under the Minimum Un Standard Rules (Beijing
Rules). International Relations, 5, 2020, 117.
Standard Minimum Rules for the Administration of Juvenile Justice
[The Beijing Rules] (UN), 1985.
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Taylor, L. Elliot and Quinn’s Criminal Law. 12th ed. England: Pearson
Pub., 2018.
Yeo, Stanley, Morgan, Neil & Chan, Wing. Cheong. Criminal Law in
Malaysia and Singapore, 3rd ed. Singapore: LexisNexis, 2018.
33 (1) 2025 IIUMLJ 265– 292
The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License.
SERVICE DEMANDS ON THE LOCAL AUTHORITIES IN
MALAYSIA: BALANCING OBLIGATIONS AND BUDGET
CONSTRAINTS
Nik Ahmad Kamal Nik Mahmod
ABSTRACT
Within the federalist framework that consists of the Federal government and
the states, there exists a third level of administration, the local government,
which administers the towns and cities as provided by federal law and serves
the people in municipalities, providing services and amenities for conducive
living. Employing doctrinal methodology using a descriptive and critical
analytical approach, the paper delves into the complex situation of the local
authority (LA). On the one hand, it is expected to carry out its functions
effectively. Nevertheless, it needs to be improved by overcoming financial
constraints that limit its ability to undertake projects that benefit the people.
The paper will specifically examine two aspects of LA’s power: the statutory
mandatory and non-mandatory powers. These powers have profound
implications on LA’s functions and duties, particularly from the perspectives
of LA’s financial capabilities in fulfilling these mandatory and discretionary
responsibilities. Statutory duties open LA to judicial control, while LA’s
political and moral obligations to provide services open LA to public criticism.
Indeed, it is a tricky balance, and the existing statutory and political framework
may not provide a conducive environment for LA to prosper.
Keywords: Local Authorities, Local Government Act, Financial Constraints,
Judicial Review, Accountability.
The paper was first presented at the National Conference on Local
Government, Organized by the Current Law Journal, 10-11 August 2023,
Kuala Lumpur.
Professor, Faculty of Law, Multimedia University, Jalan Ayer Keroh Lama,
75450 Bukit Beruang, Melaka, Malaysia.
Email: nik.ahmadkamal@mmu.edu.my / nnikmahmod@gmail.com
(Corresponding Author).
[Received: 24 October 2024, Accepted: 16 May 2025, Published: 28 May 2025]
266 IIUM LAW JOURNAL VOL. 33 (1) 2025
PERMINTAAN PERKHIDMATAN DARIPADA PIHAK
BERKUASA TEMPATAN: MENGIMBANGI PERLAKSANAAN
TANGGUNG JAWAB DAN KEKANGAN BAJET
ABSTRAK
Dalam kerangka federalisme yang merangkumi kerajaan Persekutuan dan
kerajaan negeri, wujud satu lagi tahap pentadbiran ketiga iaitu kerajaan
tempatan, yang mentadbir bandar dan kawasan perbandaran seperti yang
diperuntukkan oleh undang-undang persekutuan dan berperanan memberikan
perkhidmatan serta kemudahan kepada masyarakat untuk kehidupan yang
lebih selesa. Menggunakan metodologi doktrinal dengan pendekatan
deskriptif dan analisis kritikal, artikel ini meneliti situasi kompleks pihak
berkuasa tempatan (PBT). Di satu pihak, PBT diharapkan melaksanakan
fungsinya dengan berkesan. Namun begitu, pencapaian ini memerlukan
penambahbaikan dengan mengatasi kekangan kewangan yang menghadkan
keupayaannya untuk melaksanakan projek yang memberi manfaat kepada
rakyat. Artikel ini akan memberi tumpuan khusus kepada dua aspek kuasa
PBT: kuasa mandatori dan tidak mandatori yang diperuntukkan secara
statutori. Kuasa-kuasa ini mempunyai implikasi besar terhadap fungsi dan
tanggungjawab PBT, terutamanya dari sudut keupayaan kewangan PBT dalam
melaksanakan tanggungjawab wajib dan budi bicara tersebut. Tanggungjawab
statutori mendedahkan PBT kepada kawalan kehakiman, manakala
tanggungjawab politik dan moral PBT untuk menyediakan perkhidmatan pula
membuka ruang kepada kritikan awam. Sesungguhnya, ini merupakan suatu
keseimbangan yang rumit, dan kerangka perundangan serta politik sedia ada
mungkin tidak menyediakan persekitaran yang kondusif untuk PBT
berkembang maju.
Kata Kunci: Kerajaan Tempatan, Akta Kerajaan Tempatan, Kekangan
Kewangan, Semakan Kehakiman, Akauntabiliti.
Service Demands on the Local Authorities 267
INTRODUCTION
Federalism in Malaysia is centred on distributing legislative and
executive powers between the federal and state governments, detailed
by the Ninth Schedule of the Federal Constitution (FC) (article 76 FC).
The third level of administration, the local government, administers the
towns and cities as provided by federal law and serves the people in
municipalities, providing services and amenities for conducive living.
Local government matters are listed in the state list; thus, it gives the
state the power and control over local government. Nonetheless, by
article 95A of the FC, there shall be a National Council for Local
Government (NCLG) to formulate in consultation with the Federal
Government and State Governments a national policy for the
promotion, development, and control of local government throughout
the Federation and the administration of any laws relating to it (article
95A (3) FC). The Federal Government and State Governments shall
follow the policy. Under this objective, various statutes were
promulgated.
This paper delves into the complex situation of the local
authority (LA). On the one hand, it is expected to carry out its functions
effectively. Nevertheless, it needs to be improved by overcoming
financial constraints that limit its ability to undertake projects that
benefit the people. The paper will specifically examine two aspects of
LA’s power: the statutory mandatory and non-mandatory powers.
These powers have profound implications on LA’s functions and
duties, particularly from the perspectives of LA’s financial capabilities
in fulfilling these mandatory and discretionary responsibilities. The
paper will also consider the moral and statutory obligations that LA
must meet and how its ability to carry out its functions effectively is
contingent on its financial capacity, a critical issue that this paper aims
to address.
RESEARCH METHODOLOGY
The paper dwells on the issues using doctrinal methodology and
employs descriptive and critical analysis methods to discuss the main
points. The research method focuses on the primary statute, the Local
Government Act 1976. It also analyses court decisions on LA’s general
268 IIUM LAW JOURNAL VOL. 33 (1) 2025
and specific powers. The purpose of analysing the relevant statutory
powers and the way the courts interpret these powers is to find the
balance between the duty imposed by the statutes on LA to carry out
its statutory duties and the reality that they must face in the event of
a lack of funding to carry out those duties. The legal materials are
evaluated first, using primary sources, namely statutes and case law,
and then secondary sources to analyse the various methods used by LA
to secure financial resources to undertake their statutory tasks.
The sources of legal materials used consist of primary legal
materials, secondary legal materials, and non-legal materials. Legal
materials are collected through literature study, internet browsing, and
scientific article review. The presentation of legal materials is
systematically arranged in the form of narrative text descriptions,
tables, and charts. The method of analysis of legal materials used is
qualitative normative analysis.
REGULATING LOCAL GOVERNMENTS
Statutes that regulate local governments include the Local Government
Act 1976 (Act 171), Town and Country Planning Act 1976 (Act 172),
etc. Act 171 imposes on LA responsibilities for cleanliness, general
health conditions, amenities, and the general well-being of their
residents, and they manage and control land planning and development
within their local jurisdictions. Despite relying substantially on federal
funding, local government authorities have exclusive jurisdiction over
land planning and development in the states. The states are the central
authority over their local governments, and local government policies
and styles inevitably differ between them. Despite the promulgation of
Act 171 and the establishment of the NCLG to promote uniformity in
the administration of town and country planning law in the states,
inconsistencies continue. In 2002, the National Physical Planning
Council was established to ensure coordination in implementing rules
and regulations to promote sustainable development and overcome
regional economic imbalances.
1
1
Ainul Jaria Maidin and Bashiran Begum Ali, “Powers of the local authority
in regulating land planning and development control: Wither control”
Journal of the Malaysian Institute of Planners 7 no. 1 (2009), 133-147.
Service Demands on the Local Authorities 269
THE MANDATORY AND DISCRETIONARY POWERS OF
LOCAL AUTHORITIES
LA has mandatory and discretionary powers provided by statutes. For
instance, section 63 of Act 171 states that an LA shall have the general
control and care of all places within the local authority area which have
been or shall be at any time set apart and vested in the local authority
for the use of the public or to which the public shall at any time have
or have acquired a common right. However, section 64 states that LA
may:
(a) make, construct, layout, or set apart new public places; and
(b) widen, open, enlarge, or otherwise improve any such public
place-making due compensation per the provisions of any
written law to the owners and occupiers of any land, houses, or
buildings required for any such purpose or which are injuriously
affected thereby.
While having control over public places and creating new places
is mandatory, LA is not obliged to make or construct any new public
places or erect new buildings in public places for general purposes.
Regarding food, sanitation, and nuisance, LA has the power to carry
out and maintain services and erect and maintain buildings for these
purposes. However, LA is not required to fulfill those obligations.
Section 72 empowers LA to act, but the provision does not require LA
to carry it out. On the other hand, section 80 must take steps to remove,
put down, and abate all nuisances of a public nature within the local
authority area on public or private premises. It may proceed at law
against any person committing any such disturbances for the abatement
thereof and damages.
Nonetheless, refuse collection, street lighting, public health, and
other services are expected out of LA for the ratepayers who pay taxes
to LA to obtain those services. Interestingly, in section 94, LA may
provide suitable places within or outside the local authority area for
burial grounds or crematoria and shall make proper provisions for
maintaining the same. The wording suggested that LA is not required
to provide burial grounds and crematoria. However, once these
facilities are built, LA will be obliged to maintain them. Thus, basic
amenities such as parks, housing, and commercial activities are
discretionary. However, as LA is established to serve its ratepayers and
270 IIUM LAW JOURNAL VOL. 33 (1) 2025
provide the amenities and services to the people, LA has a moral
obligation to carry out its functions in the best way possible.
Other roles that LA plays are also critical to the community, such
as planning authority, licensing authority, taxation, undertaking to
build houses, commercial constructions (market, hawker centres),
urban planning and management functions, traffic management, and
public utilities.
FINANCIAL RESOURCES AND REVENUE
According to section 39 of Act 171, LA's source of revenue is as
follows:
(a) all taxes, rates, rents, license fees, dues, and other sums or
charges payable to the local authority by the provisions of this
Act or any other written law.
(b) all charges or profits arising from any trade, service, or
undertaking carried on by the local authority under the powers
vested in it.
(c) all interest on any money invested by the local authority and all
income arising from or out of the property of the local authority,
movable and immovable, and
(d) all other revenue accruing to the local authority is from the
Government of the Federation or of any State or from any
statutory body, other local authority, or any other sources such
as grants, contributions, endowments, or otherwise.
Andrew Harding’s study highlights the scarcity of accurate, up-to-date
data on LA finances
2
, He further elaborates that LA’s sources of
income are as follows:
3
local taxation in the form of property assessments or the
equivalent (about 51%).
rents and fees for services and licenses (about 32%); and
2
Harding, Andrew, “A baseline study of local government in West Malaysia,”
NUS Law Working Paper No 2022/14, (2022) 1-41, 12.
3
Harding, “A Baseline Study,” 12.
Service Demands on the Local Authorities 271
fiscal transfers from state and federal governments, for
example, for road maintenance or specific development
projects (about 17%).
Harding states that the Ministry of Housing and Local Government
(MHLG) has classified local government’s sources of revenue (i.e.,
those falling under (a) and (b) above) into six categories, namely:
4
a) assessment rates.
b) fees for licenses and permits.
c) rentals.
d) government grants.
e) car parking charges, planning fees, compounds, fines, and
interest.
f) loans (from higher levels of government/ financial institutions).
Under the Ninth Schedule of the FC, only Parliament can pass
laws to levy central taxes such as income, export, and road taxes.
Comparatively, the federal government obtains more revenue than the
states. LAs rely on taxes and non-taxes revenue, and more often than
not the operational costs exceed the revenue that they have obtained.
The various sources include property taxes, business licenses,
entertainment taxes, and other local fees.
5
In 2013, it was reported that
the proportion of total government revenue collected by local
governments was relatively small, at 3.4%.
6
Property assessment tax
remains LA’s primary revenue source. Since Act 171 sets a ceiling of
35% of the annual value or 5% of the value-added of a property, the
amount of collectable revenue depends on the property’s level of
physical development.
7
4
Harding, “A Baseline Study,” 12.
5
Assessment rate is the main revenue of Las, which contributes more than half
of the total local revenue. See Elina Mohd, Zainul Amin Ayub, Haslinda
Mohd Anuar, “Administrative and enforcement issues in collecting
arrears in local authorities in Malaysia” International Journal of
Innovation, Creativity and Change, 13 no. 2 (2020), 947-957, 947.
6
Harding, “A Baseline Study,” 13.
7
Harding, “A Baseline Study,” 13.
272 IIUM LAW JOURNAL VOL. 33 (1) 2025
PFI/PPP FOR LOCAL GOVERNMENT
The Local Government Act 1976 (LGA) empowers local authorities to
implement local infrastructure, but the main challenge is often the lack
of funding to carry it out.
8
One possible way is for local authorities to
seek the partnership of the private sector to help finance the local
authority’s infrastructure projects.
9
LA is prohibited from participating in business. However, LA
can establish joint ventures with the private sector based on the public-
private partnerships (PPP) principle or the Private Financing Initiative
(PFI). PPP/PFI is a way of providing financial mechanisms for projects
that are beyond LA's financial capability.
10
Maryadi Hasan and Dani
Salleh found that PFI is a method of procurement in which the public
sector uses the capacity of the private sector to deliver public
infrastructure and services; however, it is still based on the
specifications set by the public sector.
11
The authors referred to the UK
specification of PPP/PFI as follows:
In the conceptual explanation, PFI can be explained as the public
sector entering a long-term contract with the private sector companies,
in which through a contractual agreement, the private sector is
responsible for establishing, building, operating, maintaining, and risk
involving the assets based on the output specification set by the
government.
12
The Ninth Malaysia Plan in 2006 introduced the PFI given the
various successes in other countries and, first and foremost, to alleviate
the financial burden the public sectors face in carrying out mandatory
statutory developmental duties and the discretionary projects mandated
by the statute. From the LA point of view, PFI has provided an impetus
to provide infrastructures and services to the taxpayers within their
jurisdiction. The main objective is to reduce the financial and
8
Hassan Maryadi and Dani Salleh, “Identify Factors Influencing and Barriers
to The Adoption of the Private Finance Initiative in Local
Government in Malaysia” International Journal of Law,
Government and Communication, 9 no. 3 (2018), 69-82, 70.
9
Hassan and Salleh, “Identify Factors,” 70.
10
Hassan and Salleh, “Identify Factors,” 70
11
Hassan and Salleh, “Identify Factors,” 70.
12
Hassan and Salleh, “Identify Factors,” 70
Service Demands on the Local Authorities 273
administrative burdens in providing public assets and services. The
EPU Report 2006 stated that PFI aimed to improve efficiency and
productivity, facilitate economic growth, reduce the size of the public
sector, and help meet the national economic policy target. The key
factors that make PFI important are:
13
…the reactive strategy is mainly due to pressure by the public to
reverse earlier public-sector expansion and a monopolistic
approach, especially in the provision of public assets and delivery
of services (Rashid, 2012). Another reason to use PFI is to involve
the private sector more efficiently and effectively in the realization
of public infrastructure and creating long-term financial security
The Critical Success Factors (CSF) of PFI, according to various
studies, include a well-established legal framework, stable political
situation, strong economy and good local economic growth, strong
capital market, an efficient and quick negotiation and procurement
process, the presence of concrete and clear procurement framework
that may expedite tendering process, complexities of PFI project
financing requires experience and knowledgeable team members,
clarity of funding system to ensure smooth servicing of debt, the ability
for the LA to sustain the PFI because it is expensive and has a long
period of payment, LA personnel must have good working knowledge
of the PFI. Overall, LA must carry out the project.
14
On the other hand, studies found that the most influential factor
in PFI procurement is economic uncertainty, which mainly concerns
LA's financial capability. LA may need to rely on the state government
to provide funding. PFI procurement projects require a guarantor; in
this respect, the state government must guarantee the projects. When
the economy is not good, the state may have problems as a guarantor.
They may seek help from the Federal Government, but if they are
opposition-controlled, political issues crop up.
15
The study by Muryadi and Dani indicated that the PFI model is
less applicable in Malaysia due to various factors such as knowledge,
understanding, and experience of the whole concept. The study
confirmed previous studies, among others, that knowledge and
13
Hassan and Salleh, “Identify Factors,” 71.
14
Hassan and Salleh, “Identify Factors,” 73.
15
Hassan and Salleh, “Identify Factors,” 73.
274 IIUM LAW JOURNAL VOL. 33 (1) 2025
experience are the most influential factors.
16
The PFI executed in
Malaysia is technically inconsistent with the fundamental PFI
concept
17
, Malaysia’s PFI projects suffer from hasty, imprecise
planning.
On the other hand, the weaker LA may find it challenging where
the properties in its jurisdiction are lower in value, and the LA is often
still strapped for financial resources. Thus, LA relies heavily on state
and federal funding for its mandatory and discretionary activities.
Regarding the federal grant, the possibility of political patronage plays
a significant role.
18
The following are the available federal grants for LA:
19
(a) Annual equalisation grants channeled by the federation to the
state for its LAs by the State Grant (Maintenance of Local
Authorities) Act 1981.
(b) Launching grants for the LA restructuring exercise, which is
based on several factors, such as the size of the LA, land area,
population, and expected revenue.
(c) Development project grants for socio-economic projects such
as infrastructure, social facilities, cleanliness and beautification,
equipment and machinery purchases, recreational parks, and
sanitary projects.
(d) Balancing grants are grants the state gives to cover rising
operational expenditures or to utilise for minor development
projects.
(e) License fees are the primary revenue source through levying
fees for trading activities within the LA jurisdiction.
(f) Fees and service charges that LA may impose for activities and
facilities for the local community, such as processing fees under
the TPCA, car parking, etc.
(g) Federal funding is usually provided for needy areas, especially
rural ones.
16
Hassan and Salleh, “Identify Factors,” 73.
17
Hassan and Salleh, “Identify Factors,” 76.
18
Harding, “A Baseline Study,” 12.
19
Harding, “A Baseline Study,” 12.
Service Demands on the Local Authorities 275
THE ROLE OF THE NATIONAL FINANCE COUNCIL (NFC)
By article 108(4), the federal government is required to consult the
NFC on matters about the making of federal grants to the states; the
assignment of the whole or any portion of the proceeds of the federal
government to the states; the annual loan requirements of the federation
and the states and the exercise by the federation and the states of their
borrowing powers; and the making of loans to any of the states. Even
though the NFC’s role is purely consultative, the fact that the Prime
Minister is the chairman, and the memberships include people from the
states, the Council may assert strong influence on the decision to give
loans to the states. NFC meets annually, but three states or more may
request NFC to organise a meeting.
PRIVATISATION
The classic case of privatisation in LA is the privatisation of the
cleansing services. Cleansing services such as garbage collection,
cleanliness of drainage and waterways, and health and food safety are
among LA's most critical activities and duties. R. Thillainathan and
Kee-Cheok Cheong observe that the public-private partnerships are as
follows:
20
Then, the 1990s saw Malaysian privatisation efforts that were
part of Vision 2020, in which the private sector was to be the driving
force. To this end, the privatisation policies were given a fillip with the
publication of the Privatisation Master Plan 1991. But it was in the 9th
Malaysia Plan (2006–2010) that PFIs came into their own. In the Plan,
strategies to streamline privatisation efforts, including approval
procedures, emphasising performance standards, focusing on
implementation and strengthening the institutional framework, and
increasing Bumiputera participation were implemented. Under the
Tenth Malaysia Plan (2011-2015), the PFI concept was given a
20
Thillainathan R, Cheong, Kee-Cheok, “Malaysian Public-Private
Partnerships – Incentivising private Sector Participation or facilitating
rent-seeking” Malaysian Journal of Economic Studies, 56 no. 2 (2019),
177–200, 180.
276 IIUM LAW JOURNAL VOL. 33 (1) 2025
makeover with greater clarity of rules that qualified its PFI projects as
“new wave” PFIs.
21
Harding referred to Singaravelloo, who said:
22
PFI have evolved over time in Malaysia, from the context of
traditional privatisation involving both parties to the outsourcing of
public services to the private partners through the awarding of
contracts, to one that expects strong financial capacity from the
private sector (during the Ninth Malaysia Plan), and on to one that
shares the risks and burdens and better returns (in the Tenth
Malaysia Plan).
The authors correctly identified three means of privatisation: the
traditional privatisation initiative, outsourcing of public services, and
awarding contracts to the private sector to carry out certain services. In
September 2011, by the Urban Cleansing Management Act 2007, the
federal government delivered urban cleansing services by a company
appointed by the government in eight West Malaysian states and the
federal territories. Opposition-controlled states did not accept the deal
and continued to appoint their contractors. However, Harding
succinctly and correctly concluded that privatisation was a problem in
Malaysia. He said:
23
Privatisation in the sphere of local government services has not
succeeded in solving the problems with these services, while also
spawning other problems. The story of urban cleansing does not show
that there is a genuine alternative to providing a secure financial basis
for local services. As a microcosm of decentralisation, local initiative
and community commitment seem more likely to improve services
than mega-fixes at the federal or even state level. Clean and consistent
water supply and waste collection continue to be problems in many
parts of the country.
21
Samer Shahedza Khairuddin and Khairuddin Abdul Rashid, “Quantity
surveyors and their competencies in the provision of PFI services”
Malaysian Construction Research Journal, 18 no. 1 (2016), 153-165.
22
Harding, “A Baseline Study,” 19. Singaravelloo, K, “Fostering public-
private partnership in a win-win situation: The experience of a Malaysian
local government” in Montanheiro L, and Spiering, M (eds), Public and
Private Sector Partnerships: The Enterprise Governance (Sheffield
Hallam University, 2013).
23
Harding, “A Baseline Study,” 20.
Service Demands on the Local Authorities 277
AUTONOMY
It is difficult to disagree that the states in Malaysia do not enjoy a
measure of autonomy in the existing federal set-up.
24
The federation is
so centralised that Malaysia is called a ‘quasi-federation’ rather than a
genuine one. Sabah and Sarawak have a measure of autonomy, but not
in Peninsular Malaysia.
25
In that light, local governments do not enjoy
much autonomy.
Article 95A of the Constitution established the National Council
for Local Government (NCLG) to promote, develop, and control local
governments and, in turn, control the laws and policies that the states
can make on local government.
26
The NCLG dictates state laws and
policies on local governments to justify uniform laws and policies for
LA in the country. The composition of NCLG, which includes the
Prime Minister, Menteri Besar, Chief Ministers, and ten other
representatives of the Federal Government, is very influential. The
Prime Minister chairing the NCLG determines its agenda and direction,
and ultimately, the NCLG agenda and interests reflect those of the
federal government.
27
Harding correctly argued that article 95A was introduced via an
amendment to the constitution and could be unconstitutional based on
the fundamental structure doctrine enunciated by various Federal Court
judgments recently. NCLG, according to Harding, may be considered
“quite improper in a federal system, as it can be said to trespass on
states’ rights, which include powers in respect to local government.”
28
Even though Article 95A provides for formulating policies on the local
government after consultation with the states, the federal government
always has the upper hand.
24
Harding, “A Baseline Study,” 23.
25
Harding, “A Baseline Study,” 23.
26
Harding, “A Baseline Study,”24.
27
Harding, “A Baseline Study,” 27.
28
Harding, “A Baseline Study,” 23.
278 IIUM LAW JOURNAL VOL. 33 (1) 2025
LOCAL AUTHORITY’S SCOPE OF POWERS AND JUDICIAL
REVIEW
The cardinal principle in the exercise of statutory power is that any act
that exceeds the scope of the power is ultra vires, i.e., an action that
goes beyond the powers given by statute. LA may also exceed its power
if the act or decision is beyond what is reasonably incidental to the
statutory powers that it enjoys.
29
The question of standing or locus standing (the right to sue) to
apply for judicial review is provided by Order 53 Rule 2(4), Rules of
Court that, among other things, provide that the applicant must
establish that he/she is ‘adversely affected’ by the decision of the LA.
In the case of Government of Malaysia v Lim Kit Siang,
30
The Supreme
Court, by majority, decided that Lim Kit Siang's private right was not
affected by the remedy of injunction. Therefore, he had no locus standi
to apply for an injunction. In 2012, Order 53 was amended to include
the words ‘adversely affected’ person—the Federal Court in MTUC &
Ors. v Menteri Tenaga, Air dan Komunikasi & Anor
31
decided that the
‘adversely affected’ person test includes an applicant who must at least
must show he has a real genuine interest in the subject matter. The
applicant does not need to show an infringement of private rights or the
suffering of special damage.
In The Guat Hong v. Perbadanan Tabung Pendidikan Tinggi
Nasional
32
it was stated that “a genuinely aggrieved person who has
been adversely affected by a 'decision ' which fell into a 'grey' area, so
to speak, that is, where amenability to judicial review was in doubt if
at all, ought to be heard before she or he was shut out from the
supervisory jurisdiction of the court. "
LA has broad discretionary powers to carry out planning and
development control to ensure residents' comfort.
33
The role that the
Local Government Act 1976 (Act 171) imposes on the LA covers
29
Maidin and Ali. 2009. “Powers of the local authority in regulating land
planning and development control: Wither control” Journal of the
Malaysian Institute of Planners, 7 no.1 (2009), 133-147, 143.
30
[1988] 2 MLJ 12.
31
[2014] 3 MLJ 145.
32
[2018] 2 CLJ 762.
33
Maidin and Ali, “Powers of Local Authority,” 142.
Service Demands on the Local Authorities 279
health, sanitary conditions, amenities, and the general well-being of its
residents. It also includes matters on land planning and development
control. Act 171 was promulgated to promote uniformity in policy and
laws for LA throughout the country. However, it is regulated by states
with diverse political affiliations and administrative approaches, and
such uniformity is difficult to achieve. In 2002, the National Physical
Planning Council was established to introduce some kinds of
coordination in implementing planning laws in the states to promote
“development and overcome regional economic imbalances.”
34
Two other significant Acts that govern the LAs are the Town and
Country Planning Act 1976 (Act 172) and the Street, Drainage and
Building Act 1974. Quoting Mohamed Afandi, Maidin, and Ali
correctly observed that the provision of the related local government
laws empowers the local authorities to carry out a whole range of
functions limited only by their ambitions and resources.
35
LA's
significant functions include environmental, public, social, and
developmental. As statutory bodies, LAs are subject to the law that
established them and hold a legal status to sue and be sued. From public
health to housing and commercial activities, LA carries out
multifarious functions, including urban planning and management
functions, traffic management and control, and public utilities. Where
Act 172 does not apply, the State Director assumes the role of the local
planning authority. The Federal Territory has its legislation, the Federal
Territory (Planning) Act 1982 (Act 267). Sabah and Sarawak are
regulated by other legislation and are not bound by Act 172.
Section 5 of Act 172 lays down the following functions of LA, namely:
(a) To regulate, control, and plan the development and use of all
lands and buildings within its area.
(b) To undertake, assist in, and encourage the collection,
maintenance, and publication of statistics, bulletins,
monographs, and other publications relating to town and
country planning and its methodology; and
(c) To perform other functions as the State Authority or the
Committee may occasionally assign to it.
34
Maidin and Ali, “Powers of Local Authority,” 135.
35
Maidin and Ali, “Powers of Local Authority,” 136.
280 IIUM LAW JOURNAL VOL. 33 (1) 2025
PLANNING PERMISSION
In the case of planning permission, the vast power of the LA includes
any functions that are supplemental, incidental, or consequential to any
of its unique functions. It also includes doing all such things as
necessary or expedient in carrying out its planning functions under the
Act. Act 172 requires a local plan to elaborate on the policies and
proposals in the structure plan. A local plan comprises written
statements and diagrams that outline the detailed planning and how to
execute and implement the proposals in a local planning authority's
structure plan.
36
The local planning authority must confirm that the
proposed local plan generally conforms to the state's structure plan.
There have been instances where planning permission was
refused even though the development applied for did not contravene
the development plan. In Chong & Co. Sdn. Bhd. v Majlis Perbandaran
Pulau Pinang.
37
It was decided that even if the development in respect
of which permission was applied would not contravene any provision
of the structure plan, planning permission could be validly refused on
account of the provisions that the planning authority thinks are likely
to be made in any development under preparation or to be prepared or
the proposals relating to those proposals. In Perbadanan Pengurusan
Sunrise Garden Kondominium v Sunway City (Penang) Sdn Bhd & Ors
and Another Appeal,
38
the Federal Court reiterated the right to a
reasoned decision as part of the right to be heard.
On another occasion, in the case of Tetuan Sri Bangunan Sdn.
Bhd. V Majlis Perbandaran Pulau Pinang,
39
approval for the erection
of a building does not amount to the approval of the development plan.
It was held that the directions made by the local planning authority do
not exclude the right of the planning authority to disprove the planning
permission. In the case, the court held that directions made by the local
planning authority under section 21(3) of Act 172 are not a decision
made under section 22(3) of Act 172. LA may also use the power under
these provisions to impose unreasonable and unjust conditions that may
aggrieve the applicant with no right of appeal, for instance, under
36
Maidin and Ali, “Powers of Local Authority,” 137.
37
[2000] 5 MLJ 130.
38
[2023] MLJU 98.
39
[2007] 2 MLRA 187.
Service Demands on the Local Authorities 281
section 21(3) of Act 172.Where the development involves the erection
of a building, the local planning authority may give written directions
to the applicant in respect of any of the following matters:
(a) the level of the building's site.
(b) the line of frontage with neighboring buildings.
(c) the elevations of the building.
(d) the class, design, and appearance of the building.
(e) the class, design, and appearance of the building.
(f) the setting back of the building to a building line.
(g) access to the land on which the building is to be erected; and
(h) any other matter that the local planning authority considers
necessary.
The only recourse is judicial review. Otherwise, the applicant
must amend and submit the plan within a specified period. Failure to
submit on time is deemed to be an application withdrawal. An appeal
can only be made against a decision under section 22(3) of Act 172,
where the local planning authority decides on the application for
planning permission and either approves it, approves it subject to
conditions, or rejects it altogether.
It is pertinent that the LA consults other government agencies
and statutory bodies while approving the planning application. This
ensures that the development plan complies with statutory
requirements and relevant government regulatory agencies, such as the
fire department and the building inspectors. In Bencon Development
Sdn Bhd v Majlis Perbandaran Pulau Pinang,
40
The court held that the
MPPP should have obtained technical advice from other relevant
government departments before approving the planning application.
Nonetheless, Act 172 does not provide a specific mode for consultation
or the authority to consult. By implication, LA is given the discretion
to decide the consultation mode and consider input.
41
40
[1999] MLJU 91.
41
Maidin and Ali, “Powers of Local Authority,” 140
282 IIUM LAW JOURNAL VOL. 33 (1) 2025
Another important aspect of planning permission is consultation
with the adjoining neighbour of the proposed development to make
objections. Section 21 Act 172 enables such objection only if ‘the
proposed development is located in an area in respect of which no local
plan exists for the time being.’ The planning authority must serve notice
in writing to the owners of the neighbouring lands, informing them of
their right to object to the application and to state their grounds of
objection within 21 days of the date of service of the notice. Such
owners may also demand a hearing of their objections.
Harding correctly observed that much of Peninsular Malaysia is
covered by a local plan; the section has no effect in such areas, severely
limiting even this already narrow right of public participation.
42
In the
Federal Territory of Kuala Lumpur, no notice of a planning application
to adjoining owners is required. Ainul and Bashiran proposed that it
would help ensure proper planning practice if adjoining neighbours
could participate in the decision-making process irrespective of
whether there is a local plan.
43
In the case of Datin Azizah bte Abdul Ghani
44
, the court decided
that the duty to inform adjoining owners remained despite the statutory
silence. According to section 22 of the Federal Territory Planning Act
1982, the mayor must consider ‘material considerations’ in making his
decision on a planning application as the provision states the planning
authority must consider any objections as part of its duty to ‘take into
consideration such matters as are in its opinion expedient or necessary
for proper planning.’ In Perbadangan Pengurusan Trellises v Datuk
Bandar Kuala Lumpur,
45
Public participation has become more
significant in the Kiara Green case. The Court of Appeal decided that
the mayor’s decision was invalid because of a conflict of interest and
the absence of evidence that the residents’ concerns had been
considered. Also, the mayor breached an implied duty to explain his
decision.
42
Harding, “A Baseline Study,” 36.
43
Maidin and Ali, “Powers of Local Authority,” 143.
44
[1992] 2 MLJ 393.
45
[2023] 3 MLJ 829.
Service Demands on the Local Authorities 283
Harding rightly observed that the Court of Appeal decision was
significant as it entrenches the principle of public participation in
planning decisions.
46
Also, the definition of a ‘neighbour’ is minimal
under section 21, and the Court of Appeal’s expansion of the term is
much welcomed. According to section 21, ‘neighbour’ includes:
(a) registered owners of lands adjoining the land to which the
application relates.
(b) the registered owners of land which would be adjoining but for
being separated by any road, lane, drain, or reserve land not
more expansive than twenty meters; and
(c) registered landowners inside a cul-de-sac, within 200 meters
from a proposed development within the same cul-de-sac and
sharing the same access road.
With the Court of Appeal decision, more ‘neighbours’ can
participate in planning proceedings, making it easier for people to raise
their objections. As Harding rightly puts it, the expansion of
‘neighbour’ participation tends to benefit urbanites but not those in
rural areas because the extent of public participation is ultimately
dependent on civil society, which is an urban phenomenon.
47
The Federal Court, on appeal, decided to uphold the Court of
Appeal decision. In Datuk Bandar Kuala Lumpur v Perbadanan
Pengurusan Trellises & Ors. In other appeals,
48
the question of locus
standi under O53 r2 ROC, the threshold question is whether the person
is ‘adversely affected' by the DO.
Whether a person is ‘adversely affected’ remains a question or
issue for the court to determine regarding the grievance's factual and
legal matrix. The legal matrix refers to relevant legislation that is
subsisting and applicable at the material time (para 373).
The Federal Court further elaborates that the applicant must
show that he has been ‘adversely affected’ rather than showing a
‘genuine interest to meet the threshold requirement for standing to sue
(para 439). The Federal Court concurs with the Court of Appeal that
46
Harding, “A Baseline Study,” 37.
47
Harding, “A Baseline Study,” 37.
48
[2023] 5 CLJ 167 (FC).
284 IIUM LAW JOURNAL VOL. 33 (1) 2025
the respondents do not have to fall within the categories of landowners
set out in rule 5(3) of the planning rules (para 371).
Section 23 Act 172 provides for an appeal against the planning
authority's decision. It states that an appeal may be made to the Appeal
Board within one month of the decision's communication date. In this
regard, it is appropriate for the applicant to appeal to the Appeal Board
rather than apply for judicial review. However, there seems to be some
leeway as the court allows judicial review applications even though the
applicant has not appealed to the Board against the decision. The
Federal Court in Majlis Perbandaran Pulau Pinang v. Syarikat
Bekerjasama-Sama Serbaguna Sungai Gelugor Dengan Tanggungan
49
decided that if an applicant in judicial review proceedings can
demonstrate an element of illegality in the decision-making process, he
does not need to exhaust his statutory right of appeal before embarking
upon the judicial review exercise.
Also, in the Asia Pacific Education Holdings Sdn Bhd v. Ketua
Pengarah Hasil Dalam Negeri,
50
the High Court decided that a
domestic remedy is not a bar to judicial review where there is a clear
case of illegality, irrationality, unreasonableness, and lack of
jurisdiction in the decision-making process.
REGULATING LA'S DISCRETIONARY POWER
An important principle of judicial review is the challenge against
statutory decision-making based on abuse of discretion. It is the
reasonableness test pronounced by the House of Lords in the case of
Associated Provincial Picture House Limited v Wednesbury
Corporation,
51
Lord Greene MR, in his famous judgment, said that any
conditions imposed in planning permission by the LA must be
reasonable based on an objective test that a reasonable man considers
the discretionary power exercised reasonable. In the context of section
21 (3)(g) of Act 172, the condition imposed by “the local planning
authority considers necessary for purposes of planning” must fulfill the
reasonableness test.
49
[1999] 3 CLJ 65.
50
[2022] 1 LNS 1442.
51
[1948] 1 KB 223.
Service Demands on the Local Authorities 285
The ’reasonableness test’ has been expanded into the
‘proportionality’ test, which is much broader in scope and application.
In Council of Civil Service Unions v Minister for Civil Service,
52
the
House of Lords (per Lord Diplock) explained that the proportionality
principle is summarised as ‘not only that power must be used for a
legitimate purpose, but it must also be proportionate in scope and
effect.’ Wan Azlan and Nik Kamal rephrased it, ‘There must be a degree
of balance between the objective in the exercise of power, the manner
to achieve it, and the ends to be aimed for.’
53
In De Freitas v Permanent
Secretary of Ministry of Agriculture, Fisheries, Lands and Housing,
54
Lord Clyde said:
Whether: (i) the legislature objective is sufficiently important to
justify limiting a fundamental right; (ii) the measures designed to
meet the legislative objective are rationally connected to it; and (iii)
the means used to impair the right or freedom are no more than is
necessary to accomplish the objective.
Vernon Ong J succinctly restated the principle in Laguna De Bay
Sdn Bhd v Majlis Perbandaran Subang Jaya,
55
where he elaborates that
judicial review is classified into the following grounds, namely:
(a) Illegality- where the decision-maker must correctly understand
the law that regulates his decision-making power and must give
effect to it. Whether he has par excellence is a justiciable
question to be decided, in the event of a dispute, by those
people, the judges, by whom the state's judicial power is
exercisable.
(b) Irrationality- what can be succinctly referred to as 'Wednesbury
unreasonableness' by now. It applies to a decision so outrageous
in its defiance of logic or accepted moral standards that no
sensible person who had applied his mind to the question could
have arrived at it.
(c) Procedural impropriety – whether there is any violation of
procedure described in the Constitution, legislation, or
regulations.
52
[1985] AC 374.
53
Wan Azlan Ahmad and Nik Ahmad Kamal Nik Mahmod, Administrative
Law in Malaysia (Thomson, Sweet & Maxwell, 2006), 89.
54
[1999] 1 AC 69.
55
[2014] 7 MLJ 545.
286 IIUM LAW JOURNAL VOL. 33 (1) 2025
In Dr. Benjamin George & Ors. v Majlis Perbandaran Ampang
Jaya & Ors,
56
it was held that the conditions imposed by the planning
authority on an application for planning permission under section 21
(3) of Act 172 were reasonable. The conditions must also relate to the
development proposal report and the layout plans.
57
In Chong & Co.
Sdn. Bhd. In Majlis Perbandaran Pulau Pinang, the court affirmed the
local planning authority's right to impose conditions as it "thinks fit.”
58
The absence of an appeal against the decision made under
section 21(3) Act 172 means that the only recourse is by way of judicial
review. Appeal is available for decisions made under section 22(3),
which provides for the decision-making process by the planning
authority. The appeal to the decision is provided for under section
23(2). While the decision made by the LA is appealable, it is a trite law
that the planning application should be disposed of as soon as possible
to avoid delay. A decision made by the planning authority means not
only a decision to allow planning application but also a decision to
disapprove it. Once a decision is made, the appeal procedure is
triggered. The Planning Appeal Board is only to hear the appeal on a
decision but not to hear the appeal under section 21(3).
In Pengarah Tanah dan Galian, Wilayah Persekutuan v Sri
Lempah Enterprise Sdn. Bhd,
59
The court decided whether the
condition imposed by the planning authority on the landowner was
valid. Adopting the reasonableness principle on the exercise of
discretionary power, the court laid down the following principles to
determine the validity of planning (the approving authority does not
have an uncontrolled discretion to impose whatever conditions it likes.
the valid conditions must fairly and reasonably relate to the
permitted development.
the approving authority must act reasonably, and planning
conditions must be reasonable, and
56
[1995] 3 MLJ 665.
57
Maidin and Ali, “Powers of Local Authority,” 143.
58
See also Perbadanan Pengurusan Trellises case [2023] 5 CLJ 167.
59
[1979] 1 MLJ 135.
Service Demands on the Local Authorities 287
the approving authority is not at liberty to use its power for an
ulterior object, however desirable that object may seem to be in
the public interest.
Thus, it is pertinent that the planning authority considers all the relevant
aspects of the application and disregards irrelevant matters.
In Majis Perbandaran Pulau Pinang v Syarikat Bekerjasama
Serbaguna Sungai Gelugor dengan Tanggungan,
60
the local planning
authority imposed a planning condition about a development project to
include building affordable housing accommodation. The Federal
Court, in deciding whether the conditions imposed were permissible,
applied the following tests:
(a) They must be imposed for a planning purpose, not an ulterior
motive.
(b) They must fairly and reasonably relate to the development
permitted; and
(c) They must not be perverse ("so unreasonable that no reasonable
authority could have imposed them").
Applying those tests, the court found that the condition
requiring the developer to build affordable houses was permissible and
consistent with the structure plan as per section 8(4) of Act 172.
Secondly, the condition imposed was not ultra vires as it was
reasonably related to the development permitted.
In Rethina Development Sdn. Bhd. v Majlis Perbandaran
Seberang Perai, Butterworth,
61
The main question was whether the
planning authority was empowered under the law to impose monetary
contributions to the local council for the planning permission to build
flats and shophouses in a housing scheme and a requirement to do
landscaping and plant trees. The developer agreed with the requirement
to pay a monetary contribution to the Council. On the monetary
contribution to the Council and the requirement to plant trees and
landscaping work, the court decided in favor of the developer on the
ground that these conditions do not come within the meaning of 'any
other matter' in section 21 (3) of Act 172 which the local planning
authority considers necessary for planning. The local planning
60
[1996] 3 CLJ 335.
61
[1990] 2 MLJ 111.
288 IIUM LAW JOURNAL VOL. 33 (1) 2025
authority is not empowered in law to demand payment of monetary
contribution for landscaping and tree planting instead of the
requirement imposed on the developer. In these circumstances, the
Council was ordered to refund all the monies collected from the
developer.
These cases show that local authorities must exercise their
discretion judiciously. Misuse of power, albeit in good faith, is open to
challenge in court. Wide and insecure words such as that of section
21(3) invite critical evaluation by the court to determine its suitability
and reasonableness. However, the courts often refrain from reviewing
the planning authorities' decisions because such decisions involve
policy consideration, and 'the courts do not possess knowledge of the
policy considerations which underlie such decisions'.
62
The concern
can be seen in the Sri Lempah case, where the court held that the court
is not an appellate authority with more powers than the approving
authority but merely a judicial authority authorized to examine whether
the approving authority has acted outside the statutory powers. Further,
no court should pretend that it knows more or better about town
planning than town planners themselves.
63
Procedural fairness includes the planning authority's duty to
make a reasoned decision. In Doody v Secretary of State for the Home
Department,
64
the House of Lords indicated that the duty is implied. In
Malaysia, in Hong Leong Equipment Sdn Bhd v Liew Fook Chuan,
65
the Court of Appeal decided that the right to a reasoned decision is part
of the fundamental rights under articles 5 and 8 of the Constitution. The
Federal Court decision of Majlis Perbandaran Pulau Pinang v Syarikat
Bekerjasama-Sama Serbaguna Sungai Gelugor reiterated the planning
authority's duty to give a reason for its decision. Edgar Joseph Jr FCJ
said:
We endorse the principle enunciated by the Privy Council in
Stefan…and we say that in exceptional circumstances of this case
and having regard to the trends towards increased openness in
matters of government and administration as a matter of fairness,
reasons should have been given by the Council as to why it was
imposing the disputed condition and thus, resiling from the original
62
Maidin and Ali, “Powers of Local Authority,” 146.
63
Maidin and Ali, “Powers of Local Authority,” 146.
64
[1993] 3 All ER 92.
65
[1996] 3 AMR 3181.
Service Demands on the Local Authorities 289
approval of planning permission which was free from any pricing
condition.
SUBSTANTIVE FAIRNESS
It is argued that substantive fairness as a ground of judicial review
entails the court exercising its residual power to review an
administrative decision and strike it down on the ground that the
decision is substantively unfair, submitted that it is an independent
ground of judicial review, where the court may enter the merits of the
administrative decision and test such decision for fairness and quash it
for being an unfair decision.
66
Sudha Pillay submitted that the doctrine of substantive fairness
as a ground of judicial review may be traced back to the earlier decision
handed down by the Court of Appeal in Tan Tek Seng v Suruhanjaya
Perkhidmatan Pendidikan & Anor.
67
Gopal Sri Ram JCA, handing
down the court's decision, held that the punishment imposed by the SPP
had to be fair and just. In this context, the learned judge said:
Thus, the requirement of fairness, which is the essence of Art 8(1),
when read together with Art 5(1), ensures not only that a fair
procedure is adopted in each case based on its facts but also that a
fair and just punishment is imposed according to the facts of a
particular case.
In Sugumar Balakrishnan v Pengarah Imigresen Negeri Sabah dan
Pihak Berkuasa Negeri case, Gopal Sri Ram JCA observed that:
68
Article 8(1) of the Federal Constitution strikes at the heart of
arbitrariness in public decision-making and imposes a duty upon a
public decision-maker to act fairly …The result of the decision in
Rama Chandran and the cases that have followed it is that the duty
to act fairly is recognized to comprise of two limbs: procedural
fairness and substantive fairness. Procedural fairness requires that
when arriving at a decision, a public decision-maker must adopt a
fair procedure. The doctrine of substantive fairness requires a public
66
See Sudha CKG Pillay, ‘The emerging doctrine of substantive fairness – A
permissible challenge to exercising administrative discretion?’ Malayan
Law Journal, 3 no. 1 (2001), 1-21.
67
[1996] 2 AMR 1617, 1655.
68
[1998] 3 MLJ 289, 323.
290 IIUM LAW JOURNAL VOL. 33 (1) 2025
decision-maker to arrive at a reasonable decision and to ensure that
the punishment he imposes is not disproportionate to the
wrongdoing complained of. It follows that if in arriving at a public
law decision, the decision-maker metes out procedural fairness, the
decision may nevertheless be struck down if it is found to be unfair
in substance. (emphasis added)
According to the Court of Appeal in Sugumar Balakrishnan,
administrative decisions may be assessed as substantially fair or
otherwise based on procedural and substantive fairness. On substantive
fairness, the Court of Appeal said two questions must be answered:
whether the decision is reasonable or proportionate. Sudha Pillay
observed that the fact that the court outlined substantive fairness in
terms of unreasonableness and proportionality lends weight to the
inference that the court did not intend substantive fairness to constitute
an independent ground of judicial review but only as a label to denote
the existing grounds of unreasonableness and proportionality.
69
The Federal Court disagreed with Tan Tek Seng’s decision and
Sugumar Balakrishnan’s case. In Sugumar’s case, the Federal Court
took the view that the exclusion clause in section 59A of the
Immigration precluded the exercise of judicial review as Parliament
had intended it. As interpreted by the court, the broad meaning of the
word ‘life’ in Article 5(1) is too broad and does not apply in all
circumstances. It is a very cogent approach taken by the Court of
Appeal in Sugumar to introduce the doctrine of substantive justice to
ensure that the effects of Article 5(1) and Article 8(1) are felt in
administrative justice.
70
Nonetheless, the substantive justice approach
is a strong justification created by the Court of Appeal to justify the
exercise of judicial review against administrative action.
NEEDS VS CAPABILITY
There is always a justification that LA cannot fulfill its public
obligations due to financial constraints. Even if a court of law adjudges
that the LA has failed in its statutory duty, its incapability to carry it out
matters. On the other hand, LA is politically and morally obliged to
provide the needed facilities for the people within its jurisdiction. Thus,
69
Sudha CKG Pillay, “The Emerging Doctrine,” 4.
70
[2002] 3 AMR 2817.
Service Demands on the Local Authorities 291
it is essential that LA persevere and, at its best, ensure that services and
facilities are provided to the public. As much as a contractual duty they
owe to their ratepayers, LA is responsible for protecting the people in
their local jurisdiction from any harm due to poor upkeep of
infrastructure within its purview and control.
CONCLUSION
Whether it is a statutory or moral obligation, LAs are there to carry out
their functions and provide the public with the required and optional
amenities. Despite facing several financial constraints, LAs work hard
to fulfill their obligations. In that light, LAs must strive to obtain as
many resources as possible to ensure that services are rendered in the
best ways possible. Despite those efforts, shortcomings and weak
management may have caused slacking in services and poor decision-
making at various levels. The development of judicial review to
challenge the LA’s decision-making process seems encouraging,
except that sometimes the courts have become unpredictable. Other
means of check and balance, such as political and social pressure, may
be relied upon. Unfortunately, the balancing act through such means is
also unpredictable and uncertain.
292 IIUM LAW JOURNAL VOL. 33 (1) 2025
REFERENCES
Ainul Jaria Maidin and Bashiran Begum Mubarak Ali, “Powers of the
local authority in regulating land planning and development
control: Wither control” Journal of the Malaysian Institute of
Planners, 7 no. 1 (2009), 133-147.
Andrew Harding, “A baseline study of local government in West
Malaysia” NUS Law Working Paper No 2022/14, (2022), 1-41.
K. Singaravelloo, “Fostering public-private partnership in a win-win
situation: The experience of a Malaysian local government” in
Montanheiro L, and Spiering, M (eds), Public and Private Sector
Partnerships: The Enterprise Governance, (Sheffield Hallam
University, 2013).
Maryadi Hassan and Dani Salleh, “Identify Factors Influencing and Barriers
to The Adoption of the Private Finance Initiative in Local
Government in Malaysia” International Journal of Law,
Government and Communication, 9 no. 3 (2018), 69-82, 70.
Maryadi Hassan and Dani Salleh, “Private Finance Initiative in Local
Government in Malaysia” International Journal of Law,
Government and Communication, 9 no. 3 (2018), 69-82.
Sudha CKG Pillay. 2001. ‘The emerging doctrine of substantive
fairness – A permissible challenge to exercising administrative
discretion?’ Malayan Law Journal 1 no. 3(2001), 1-21.
Thillainathan Ramasamy, Cheong, Kee-Cheok. 2019. “Malaysian
Public-Private Partnerships – Incentivising private Sector
Participation or facilitating rent-seeking” Malaysian Journal of
Economic Studies: 56(2), 177–200.
Wan Azlan Ahmad, Nik Ahmad Kamal Nik Mahmod, Administrative
Law in Malaysia (Thomson, Sweet & Maxwell, 2006) 1-331.
33(1) 2025 IIUMLJ 293 - 324
The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License
COMBATING CRYPTOCURRENCY LAUNDERING BY
ORGANISED CRIME GROUPS THROUGH AN EFFECTIVE
REGULATORY FRAMEWORK
Sankul Kabra
Saira Gori
ABSTRACT
Money laundering has long been a major issue for governments, law
enforcement agencies, and financial institutions around the globe. As
technology advances, so too do money laundering methods, presenting
new challenges for authorities and financial entities. Organised Crime
Groups (OCGs) are increasingly exploiting digital platforms,
cryptocurrencies, and virtual assets to disguise illicit funds while
maintaining anonymity and complicating their transactions. This article
analyses the problem of cryptocurrency laundering by the OCGs and
various tactics employed by the OCGs to cover their trails. This article
also in-depth discusses the international instruments such as the United
Nations Convention against Transnational Organised Crime and
Financial Action Task Force recommendations on the prevention of
cryptocurrency laundering. The special focus of this paper is on the legal
framework regarding cryptocurrency laundering in the United States,
European Union and Malaysia. The findings of the paper suggest that
there is a regulatory framework present in these jurisdictions but their
regulations are not subject specific and regulatory powers have been
PhD Scholar, Gujarat National Law University, Attalika Avenue,
Knowledge Corridor, Koba, Gandhinagar, Gujarat - 382421, India. Email:
sankulphd202021@gnlu.ac.in (Corresponding Author).
Assistant Professor, Gujarat National Law University, Attalika Avenue,
Knowledge Corridor, Koba, Gandhinagar Gujarat - 382421, India . Email
: s.gori@gnlu.ac.in
[Received: 26 August 2024, Accepted: 6 May 2025, Published: 28 May 2025]
294 IIUM LAW JOURNAL VOL. 33 (1) 2025
granted to the authorities that are not specialised and skilled to tackle the
problem of combating cryptocurrency laundering by OCGs.
Keywords: Cryptocurrencies, Money Laundering, Organised Crime
Groups.
MEMERANGI PENGUBAHAN WANG KRIPTO OLEH
KUMPULAN JENAYAH TERANCANG MELALUI
KERANGKA UNDANG-UNDANG YANG BERKESAN
ABSTRAK
Pengubahan wang haram sudah sekian lama menjadi isu utama bagi
kerajaan, agensi penguatkuasaan undang-undang, dan institusi
kewangan di seluruh dunia. Seiring dengan kemajuan teknologi, begitu
juga kaedah pengubahan wang haram, telah menimbulkan cabaran
baharu bagi pihak berkuasa dan entiti kewangan. Kumpulan Jenayah
Terancang (OGS) semakin bijak mengeksploitasi platform digital, mata
wang kripto, dan aset maya untuk menyembunyikan dana haram dengan
mengekalkan ketanpanamaan dan merumitkan transaksi mereka. Artikel
ini menganalisa masalah pengubahan wang haram mata wang kripto oleh
Kumpulan Jenayah Terancang (OCG) dan pelbagai taktik yang
digunakan oleh OCG untuk menutupi jejak mereka. Artikel ini juga
membincangkan secara mendalam instrumen antarabangsa seperti
Konvensyen Pertubuhan Bangsa-Bangsa Bersatu Menentang Jenayah
Terancang Transnasional dan rekomendasi Pasukan Petugas Tindakan
Kewangan (FATF) mengenai pencegahan pengubahan wang haram mata
wang kripto. Tumpuan khusus kertas kerja ini adalah pada kerangka
undang-undang mengenai pengubahan wang haram mata wang kripto di
Amerika Syarikat, Kesatuan Eropah dan Malaysia. Dapatan kertas kerja
ini mencadangkan bahawa terdapat kerangka undang-undang di dalam
bidang kuasa ini tetapi undang-undang ini tidak tertumpu kepada subjek
tertentu dan kuasa pengawalseliaan telah diberikan kepada pihak
berkuasa yang tidak khusus dan berkemahiran untuk menangani masalah
memerangi pengubahan wang haram mata wang kripto oleh OCG.
Kata Kunci: Mata Wang Kripto, Pengubahan Wang Haram, Kumpulan
Jenayah Terancang.
Combating Cryptocurrency Laundering 295
INTRODUCTION
In recent years, the rise of cryptocurrencies has transformed the
financial landscape, offering unprecedented opportunities for
innovation and financial inclusion. However, this technological
advancement has also presented new challenges, particularly in the
realm of financial crime. One of the most pressing issues is the use of
cryptocurrencies for money laundering by organised crime groups
(OCGs). Cryptocurrencies are digital assets that utilise cryptographic
methods to secure and authenticate transactions and to regulate the
issuance of new units. These assets generally function on decentralised
systems known as blockchains, which ensure secure and transparent
transactions without requiring a central authority such as a bank.
1
When cryptocurrency is transferred, the transaction is logged on the
blockchain, which acts as a public ledger maintained and shared by
numerous computers globally.
2
Transactions are validated and
processed by a network of users known as “miners”, who receive new
cryptocurrency units as compensation for their work.
3
Money laundering (ML) has been a persistent global issue for
decades. It involves concealing the origins of illegally acquired funds
to make them appear legitimate. This practice allows OCGs to benefit
from their illicit gains while hiding the financial trail that could lead to
their detection and prosecution. Traditionally, ML relied on physical
cash transactions and intricate networks of intermediaries. However,
the advent of the digital age has transformed financial transactions,
introducing new opportunities and challenges for those engaged in
money laundering.
1
European Parliament. "Regulation (Eu) 2023/1114 of the European
Parliament and of the Council of 31 May 2023." edited by European
Parliament: Official Journal of the European Union, (2023).
2
Al-Tawil, Tareq Na’el. "Anti-Money Laundering Regulation of
Cryptocurrency: UAE and Global Approaches." Journal of Money
Laundering Control (2022).
3
European Council. "Digital Finance: Agreement Reached on European
Crypto-Assets Regulation (Mica)." June 30 2022,
https://www.consilium.europa.eu/en/press/press-
releases/2022/06/30/digital-finance-agreement-reached-on-european-
crypto-assets-regulation-mica/.
296 IIUM LAW JOURNAL VOL. 33 (1) 2025
Organised crime is defined as the commission of serious
offenses by a group of individuals working together with the goal of
achieving financial or monetary gain. Traditional OCGs typically have
intricate structures with established hierarchies and specific roles
assigned to each member.
4
Historically, these groups have received
support from local politicians and rely on corrupt practices to avoid
problems with law enforcement agencies.
5
The OCGs often operate in
a covert and decentralised manner, with distinct crews or cells
responsible for different criminal activities. This compartmentalisation
helps keep the group’s activities hidden.
6
The structure of these groups
serves to protect them from law enforcement efforts and minimise the
risk of infiltration or betrayal.
7
To ensure a unified understanding of
organised crime among member states, the United Nations Convention
against Transnational Organised Crime was established. This
convention defines an OCG as a “structured group of three or more
individuals working together to commit crimes for financial gain,
either directly or indirectly”.
8
Cryptocurrencies, with their pseudonymous and decentralised
nature, provide a veil of anonymity that can be exploited for illicit
activities. The OCGs adept at leveraging sophisticated financial
mechanisms, have increasingly turned to digital currencies to obscure
the origins of their illicit funds.
9
By utilising various techniques such
as layering, mixing services, and cross-border transactions, these
groups can effectively mask their financial activities and evade
4
Lampe, Klaus Von. "Definitions of Organized Crime." (2019).
http://www.organized-crime.de/organizedcrimedefinitions.htm.
5
Greco, Fulvio, and Gianpiero Greco. "Organised Crime: Underground
Economy and Regulations to Combat Cybercrime." European Journal of
Political Science Studies. Vol. 4 Issue (1). (2020) .doi:
https://doi.org/10.46827/ejpss.v4i1.935
6
Caparini, Marina. UN Police and the challenges of organised crimec.
Stockholm International Peace Research Institute. (2019)
7
Leukfeldt, E Rutger, Edward R Kleemans, and Wouter P Stol. "A typology
of cybercriminal networks: from low-tech all-rounders to high-tech
specialists." Crime, Law and Social Change, Vol. 67 Issue 1. (2017) 21-
37. doi: https://doi.org/10.1007/s10611-016-9662-2
8
United Nations Secretariat. United Nations Convention Against
Transnational Organized Crime and the Protocols Thereto. (2005).
9
Engeler, Sara Maria, and Stefano Balietti. Cryptocurrencies, Rational Choice,
and Organized Crime. (2021)
Combating Cryptocurrency Laundering 297
traditional regulatory and enforcement measures.
10
To combat this
growing threat, governments, financial institutions, and regulatory
bodies are ramping up their efforts. This involves enhancing regulatory
frameworks, improving transaction monitoring systems, and fostering
international cooperation. By adopting advanced technologies like
blockchain analytics and implementing stricter Know Your Customer
(KYC) and Anti-Money Laundering (AML) regulations, stakeholders
aim to disrupt the financial operations of organised crime and maintain
the integrity of the cryptocurrency ecosystem.
11
The literature on combating money laundering through
cryptocurrencies by the OCGs is very limited, and there are no papers
discussing the applicability of international and domestic laws of
leading jurisdictions in combating the said problem. This article aims
to analyse the problem of money laundering through cryptocurrencies
by the OCGs and analyse the legal framework applicable for combating
this problem. This paper also throws light on FATF recommendations,
International Conventions and analysis of domestic laws in the US,
European Union and Malaysia to combat the problem of money
laundering through cryptocurrencies by the OCGs. In a first of its kind,
this paper analyses international conventions and domestic laws of the
US, Europe and Malaysia that can curb the problem of money
laundering through cryptocurrencies by the OCGs.
RESEARCH METHODOLOGY
This paper employs a descriptive analytical approach. The study will
adopt a multidimensional approach, and examine relevant legislation,
scholarly literature, and data to assess measures for combating
cryptocurrency laundering by the OCGs. The exploratory research into
existing literature i.e. books, journals, articles, etc. shall provide a
deeper understanding of the concept, nature and best practices for
tackling cryptocurrency laundering. The descriptive analytical
10
Engeler, Sara Maria, and Stefano Balietti. Cryptocurrencies, Rational
Choice, and Organized Crime. (2021)
11
Al-Tawil, Tareq Na’el. "Anti-Money Laundering Regulation of
Cryptocurrency: UAE and Global Approaches." Journal of Money
Laundering Control (2022).
298 IIUM LAW JOURNAL VOL. 33 (1) 2025
approach is best suited for the study due to a lack of research on the
topic, and no papers throwing light on FATF recommendations,
international conventions and domestic laws of the US, Europe and
Malaysia regarding the problem of money laundering through
cryptocurrencies by the OCGs.
Cryptocurrencies and ML by the OCGs
The scale of ML involving cryptocurrencies is immense. The total
value of cryptocurrency received by illicit addresses in 2023 was USD
46.1 billion. In 2024, there was a drop in value received by illicit
addresses to USD 40.9 billion. However, the data for 2024 is
preliminary and the data could easily surpass the USD 51 billion
mark.
12
Cryptocurrencies were partially designed to reduce transaction
costs, a feature evident in their various built-in characteristics. While
some argue that cryptocurrencies involve high information and control
costs, it is generally true that cryptocurrency transactions are cheaper
and faster than those conducted with fiat currencies due to the absence
of intermediaries between buyers and sellers.
13
However, these same
features have also been exploited by the OCGs for ML. Specifically,
three aspects of cryptocurrencies significantly reduce transaction costs
for such illicit activities.
Firstly, cryptocurrencies’ decentralised structure allows users to
transfer value directly to each other without the involvement of third
parties. As discussed earlier, traditional anti-money laundering
measures often focus on monitoring intermediaries who facilitate
transactions to prevent illicit transfers.
14
The absence of intermediaries
in cryptocurrencies disrupts this approach, and the lack of face-to-face
12
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025) https://www.chainalysis.com/blog/2025-
crypto-crime-report-introduction/.
13
Zakarneh, Shadi Khaled, Zaer Qaroush, and Ammar Dawabsheh.
"Cryptocurrencies advantages and disadvantages: a review."
International Journal of Applied Sciences and Smart Technologies Vol. 4
Issue 1.1-20. (2022)
14
Budish, Eric B. "Trust at Scale: The Economic Limits of Cryptocurrencies
and Blockchains." University of Chicago, Becker Friedman Institute for
Economics Working Paper (2022).
Combating Cryptocurrency Laundering 299
interaction in cryptocurrency transactions further complicates the
process of identifying the parties involved.
15
Secondly, although every
transaction is recorded and traceable on the blockchain, there is no
direct link to the individuals or organisations behind those transactions.
Cryptocurrencies operate in a pseudonymous environment, where only
the public key, an arbitrary sequence of numbers, is visible, while the
private key remains concealed.
This makes it extremely challenging to associate a real-life
identity with a cryptocurrency's address.
16
For instance, person X is
assigned “xxxxbb2234” as a public key, and he sends 0.5 Bitcoin to
person Y, who has a public key as “yyyyaa5566”. The blockchain will
record that 0.5 Bitcoin was transferred from xxxxbb2234 to
yyyyaa5566, but those particular public keys belong to person X and
Y will not be known to anyone. Therefore, KYC regulations, discussed
in the later part of the paper, become important to associate a public
key/information with a particular real life person. Additionally, users
can easily create multiple electronic wallets, each with different public
addresses, complicating investigations into potential money laundering
activities.
17
Lastly, Cryptocurrencies’ transaction speed and ease of use offer
significant advantages over traditional methods of money laundering,
such as cash. Unlike physical paper money, which has limitations
related to weight and size, cryptocurrencies can be stored in large
quantities on a simple USB device and transferred to anyone
worldwide within minutes. The flexible nature of cryptocurrency
transactions also facilitates the evasion of regulatory measures by
allowing users to divide a large transaction into smaller ones.
18
15
Zakarneh, Shadi Khaled, Zaer Qaroush, and Ammar Dawabsheh.
"Cryptocurrencies advantages and disadvantages: a review."
International Journal of Applied Sciences and Smart Technologies Vol. 4
Issue 1.1-20. (2022)
16
Kabra, Sankul, and Saira Gori. 2023. "Drug trafficking on cryptomarkets and
the role of organized crime groups." Journal of Economic Criminology
2:100026.
17
Budish, Eric B. "Trust at Scale: The Economic Limits of Cryptocurrencies
and Blockchains." University of Chicago, Becker Friedman Institute for
Economics Working Paper (2022).
18
Nuryyev, Guych, David W Savitski, and John E Peterson. "The
300 IIUM LAW JOURNAL VOL. 33 (1) 2025
ML plays a crucial role for OCGs engaged in trafficking
activities on cryptomarkets. These groups produce large amounts of
cryptocurrencies, which they convert into cash. To disguise the illegal
origin of these funds, they must launder the money, making it appear
as if it were earned legitimately. This process often involves a
convoluted series of financial transactions, moving money across
various accounts and jurisdictions, which complicates the tracing of the
funds’ origins. ML enables the OCGs to continue their illicit operations
and conceal the profits derived from drug trafficking.
19
The OCGs on
the dark web are adept at laundering cryptocurrencies, which can be
quickly moved between accounts and are challenging to trace.
20
These
groups often employ “professional enablers” such as lawyers,
accountants, and bankers to obscure their illicit funds.
The OCGs sometimes hold onto the cryptocurrencies they
receive from cryptomarket transactions as investments. These crypto
assets are used to finance other illegal activities, both online and
offline.
21
Cryptocurrencies not retained as investments are laundered
and integrated into the legitimate economy. For example, Dutch law
enforcement discovered that a cryptomarket moderator used his
connections to exchange bitcoins for physical cash.
22
In April 2023, an
Indian gang leader was sentenced to eight years and ten months in
prison for drug trafficking through online channels on EncroChat and
microeconomics of cryptocurrencies." The Economics of
Cryptocurrencies. (2020).
19
Gilmour, Paul Michael. "Reexamining the anti-money-laundering
framework: a legal critique and new approach to combating money
laundering." Journal of Financial Crime. (2022) doi:
https://doi.org/10.1108/jfc-02-2022-0041
20
Budish, Eric B. "Trust at Scale: The Economic Limits of Cryptocurrencies
and Blockchains." University of Chicago, Becker Friedman Institute for
Economics Working Paper (2022).
21
Greco, Fulvio, and Gianpiero Greco. "Organised Crime: Underground
Economy and Regulations to Combat Cybercrime." European Journal of
Political Science Studies. Vol. 4 Issue (1). (2020) .doi:
https://doi.org/10.46827/ejpss.v4i1.935
22
Kruisbergen, Edwin W, Eric R Leukfeldt, Edward R Kleemans, and Robert
A Roks. "Money talks money laundering choices of organized crime
offenders in a digital age." Journal of Crime and Justice Vol. 42 Issue 5.
(2019). 569-581. doi: https://doi.org/10.1080/0735648x.2019.1692420
Combating Cryptocurrency Laundering 301
admitted to money laundering charges in the United Kingdom’s
Guilford Crown Court.
23
In East and Southeast Asia, Point running syndicates, or ‘moving
ants,’ are a significant tool for ML, leveraging numerous individuals,
often unemployed youth, who provide their bank accounts and create
front companies to obscure the origins and destinations of stolen
funds.
24
These operations involve routing money through various bank
or cryptocurrency accounts and online casinos, where it is disguised as
legitimate casino winnings.
25
Motorcades, a more sophisticated evolution of point running,
utilise advanced layering techniques to further complicate the money
trail, often collaborating across multiple groups to handle substantial
transactions more efficiently.
26
This complex system poses significant
challenges for detection and investigation due to the volume of
transactions and the cross-border nature of the schemes, necessitating
enhanced financial transparency, improved international cooperation,
and stronger regulatory frameworks to effectively combat these illicit
activities.
27
23
PTI. 2023. "Indian-origin man in UK jailed for drug smuggling, money
laundering." India Today, April 30, 2023.
https://www.indiatoday.in/world/story/indian-origin-man-uk-money-
laundering-drug-smuggling-jailed-2366455-2023-04-30.
24
United Nations Office on Drugs and Crime. Casinos, Money Laundering,
Underground Banking, and Transnational Organized Crime in East and
Southeast Asia: A Hidden and Accelerating Threat. (2024).
25
United Nations Office on Drugs and Crime. Casinos, Money Laundering,
Underground Banking, and Transnational Organized Crime in East and
Southeast Asia: A Hidden and Accelerating Threat. (2024).
26
Nimma, Sudarshan. "Money Laundering in the Cyberworld: Emerging
Trends." Part 1 Indian J. Integrated Rsch. L. Vol. 2 Issue 1. (2022).
27
United Nations Office on Drugs and Crime. Casinos, Money Laundering,
Underground Banking, and Transnational Organized Crime in East and
Southeast Asia: A Hidden and Accelerating Threat. (2024).
302 IIUM LAW JOURNAL VOL. 33 (1) 2025
As authorities have deepened their understanding of third- and
fourth-party payments, particularly following initiatives like
‘Operation Chain Break’ and similar efforts in China,
28
the OCGs have
increasingly turned to cryptocurrencies for their illegal gambling
activities, creating significant challenges for investigators.
29
In the
Philippines, licensed casinos and junket operators were found to be
heavily involved in laundering approximately USD81 million stolen in
a 2016 cyberattack linked to the Lazarus Group from the Bangladesh
Central Bank.
30
Although the funds initially passed through banks and
remittance firms, they were untraceable after reaching the casino junket
operators.
31
The emergence of cyberspace and cryptocurrencies has
opened a new front for the OCGs involved in illicit markets such as
drugs, arms, human trafficking, and sexual exploitation.
32
The DEA
alleges that global drug cartels have used Binance, the largest
cryptocurrency exchange, to launder millions of dollars, with
transactions ranging between $15 million and $40 million.
33
Binance is
reportedly cooperating with investigators as it faces scrutiny over these
allegations.
28
Nimma, Sudarshan. "Money Laundering in the Cyberworld: Emerging
Trends." Part 1 Indian J. Integrated Rsch. L. Vol. 2 Issue 1. (2022).
29
Langdale, John. "Money laundering in Australian casinos." Journal of
Money Laundering Control Vol. 26. Issue 7. (2023). 99-109. doi:
https://doi.org/10.1108/JMLC-09-2022-0136.
30
Langdale, John. "Money laundering in Australian casinos." Journal of
Money Laundering Control Vol. 26. Issue 7. (2023). 99-109. doi:
https://doi.org/10.1108/JMLC-09-2022-0136.
31
Nimma, Sudarshan. "Money Laundering in the Cyberworld: Emerging
Trends." Part 1 Indian J. Integrated Rsch. L. Vol. 2 Issue 1. (2022).
32
Paula, Ebberth L, Marcelo Ladeira, Rommel N Carvalho, and Thiago
Marzagão. "Deep learning anomaly detection as support fraud
investigation in brazilian exports and anti-money laundering." 15th IEEE
International conference on machine learning and applications. (2016).
33
Yusoff, Yusri Hazrol, Nur Ain Fatihah Azlan, Nurfarahin Nisa Mohd
Zamzuri, Nurfarhin Sufian, Sarah Nadya Rudy Kurniawan, and Razinah
Hassan. "Areas of Technology That Helps in Combating Money
Laundering: A Concept Paper." Journal of Academic Research in
Business and Social Sciences Vol. 13 Issue 5. (2023). 949-959. doi:
https://doi.org/10.6007/IJARBSS/v13-i5/16588.
Combating Cryptocurrency Laundering 303
The OCGs employ various techniques to launder the
cryptocurrencies. The widely used methods are discussed below:
Smurfing
There is a significant increase in transactions that fall just below the
USD 1,000, 3,000, and 10,000 thresholds. These amounts correspond
to various regulatory reporting requirements, suggesting that some
individuals may be structuring their payments to evade further scrutiny.
This practice, known as ‘smurfing’ in traditional finance, seems to have
been adapted to the cryptocurrency realm.
34
Intermediary Wallets
A key technique used in cryptocurrency-based money laundering is the
employment of intermediary wallets. This ‘layering’ strategy aims to
conceal the link between illegal funds and their eventual integration
into the legitimate financial system. The number of such intermediary
wallets has surged dramatically.
35
In 2023, over 1.4 million
intermediary wallets were involved in moving known illicit funds, a
significant rise from approximately 800,000 in 2022.
36
This increase
suggests that the OCGs are employing more advanced methods to
avoid detection, creating more intricate networks of wallets to hide the
movement of illicit funds.
Notably, the use of multiple intermediary wallets by illicit actors
is growing more rapidly on exchanges with KYC verification processes
34
Kolachala, Kartick, Ecem Simsek, Mohammed Ababneh, and Roopa
Vishwanathan. "SoK: money laundering in cryptocurrencies."
Proceedings of the 16th International Conference on Availability,
Reliability and Security. (2021).
35
Kolachala, Kartick, Ecem Simsek, Mohammed Ababneh, and Roopa
Vishwanathan. "SoK: money laundering in cryptocurrencies."
Proceedings of the 16th International Conference on Availability,
Reliability and Security. (2021).
36
Devanesan, Johanan. "Understanding Crypto Money Laundering, and How
to Get a Handle on It." Fintech News. (2024).
https://fintechnews.sg/98478/crypto/understanding-crypto-money-
laundering-and-how-to-get-a-handle-on-
it/#:~:text=The%20proliferation%20of%20intermediary%20wallets%20
has%20been%20remarkable.,a%20substantial%20increase%20from%20
about%20800%2C000%20in%202022.
304 IIUM LAW JOURNAL VOL. 33 (1) 2025
compared to those without such requirements. This pattern suggests
that money launderers may be refining their strategies to avoid
detection on platforms with stringent verification, possibly by using
numerous wallets to fragment their activities and circumvent detection.
Consolidation Wallets
The use of consolidation wallets, which gather and merge funds from
multiple sources, is a notable trend to monitor. In 2024, the top 100
bitcoin consolidation wallets accumulated £968 million in bitcoin from
over 14,970 separate addresses.
37
Broadening the view, more than
1,500 consolidation wallets received a combined total of £2.6 billion in
bitcoin throughout 2024, with each wallet collecting funds from at least
ten different sources.
38
This consolidation pattern may suggest efforts
to obscure the origin of funds prior to transferring them to exchanges
or other cash-out destinations.
39
Mixing Services, Privacy Coins and Bridges
Mixers, or tumblers, have experienced varying levels of popularity as
tools for money laundering. These services combine cryptocurrencies
from multiple users, complicating efforts to trace the origins of the
funds. Examples include CoinJoin, Wasabi Wallet, and Join Market.
40
The use of mixers hit a high in 2022, with over USD1.5 billion
processed in April alone.
41
37
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
38
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
39
Zhou, Fangfang, Yunpeng Chen, Chunyao Zhu, Lijia Jiang, Xincheng Liao,
Zengsheng Zhong, Xiaohui Chen, Yi Chen, and Ying Zhao. "Visual
analysis of money laundering in cryptocurrency exchange." IEEE
Transactions on Computational Social Systems. Vol. 11. Issue 1. (2024).
731-745.
40
Wronka, Christoph. "Money laundering through cryptocurrencies-analysis
of the phenomenon and appropriate prevention measures." Journal of
Money Laundering Control. Vol. 25. Issue. 1. (2022). 79-94.
41
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Combating Cryptocurrency Laundering 305
Although their use declined due to regulatory actions, some
mixers, such as Tornado Cash, have seen a resurgence in 2024,
indicating that OCGs are adapting to increased regulatory scrutiny.
42
Privacy coins, particularly Monero, have gained traction among
individuals aiming to evade detection. Monero transactions have
increased consistently, with a significant surge in March 2024 due to a
spam attack known as Black Marble.
43
The strong anonymity features of privacy coins make them
particularly appealing to the OCGs, creating substantial challenges for
law enforcement and compliance professionals.
44
Crypto bridges,
which enable the transfer of assets between various blockchain
networks, have become more frequently used for money laundering.
In January 2024, nearly USD 234 million in illicit funds were
recorded moving through these bridges, marking the highest amount to
date. This trend underscores how the OCGs are taking advantage of the
interoperability between different blockchain networks to further
conceal the movement of illicit funds.
45
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
42
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025), 31
43
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
44
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
45
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
306 IIUM LAW JOURNAL VOL. 33 (1) 2025
Darknet Marketplaces
Darknet marketplaces are hidden online platforms accessed through
specialised software such as Tor, which allow for anonymous
transactions using cryptocurrencies.
These marketplaces support the exchange of illegal goods and
services, providing a means for money launderers to convert illicit
funds into cryptocurrencies and vice versa.
46
Similar to money laundering with fiat currencies, it is
challenging to determine the exact amount of money laundered through
cryptocurrencies. Agencies such as the FBI, the European Banking
Authority, and the Financial Action Task Force of the G7 recognise
cryptocurrencies’ involvement in money laundering but lack concrete
data on the extent of the problem.
47
Silk Road was a notorious darknet marketplace operating on the
Tor network, which allowed for anonymous transactions using
cryptocurrencies. Founded in 2011 by Ross Ulbricht, who used the
alias “Dread Pirate Roberts,” Silk Road became infamous for
facilitating the trade of illegal goods and services.
Despite its efforts to remain hidden, it was seized by the FBI in
2013, and Ulbricht was subsequently convicted on multiple charges.
The case highlighted the challenges of regulating and policing the dark
web and underscored the need for a comprehensive approach to combat
digital money laundering.
48
46
Bertola, Federico. "Drug trafficking on Darkmarkets: How cryptomarkets
are changing drug global trade and the role of organized crime."
American Journal of Qualitative Research Vol. 4. Issue. 2. (2020). 27-34.
doi: https://doi.org/10.29333/ajqr/8243
47
Bertola, Federico. "Drug trafficking on Darkmarkets: How cryptomarkets
are changing drug global trade and the role of organized crime."
48
Chainalysis. "2025 Crypto Crime Trends: Illicit Volumes Portend Record
Year as On-Chain Crime Becomes Increasingly Diverse and
Professionalized." (2025)
Combating Cryptocurrency Laundering 307
The cryptocurrency laundered from 2019 to 2023 is shown below:
49
Between 2019 and 2023, the amount of cryptocurrency
laundered, exhibited a dynamic trend, starting at USD 11.1 billion in
2019 before slightly decreasing to USD 9.9 billion in 2020. This initial
stability was followed by a significant surge, with the laundered
amount more than tripling to a peak of USD 31.5 billion in 2022.
However, 2023 witnessed a substantial decline to USD 22.5 billion,
although this figure remained higher than the levels observed in the
earlier years. Considering the huge amount of cryptocurrency
laundering, it is important to analyse the applicable legal framework to
combat ‘crypto laundering’ by the OCGs.
49
Chainalysis. "Money Laundering Activity Spread Across More Service
Deposit Addresses in 2023, Plus New Tactics from Lazarus Group."
(2024). https://www.chainalysis.com/blog/2024-crypto-money-
laundering/.
0
5
10
15
20
25
30
35
2019 2020 2021 2022 2023
in USD Billions
308 IIUM LAW JOURNAL VOL. 33 (1) 2025
Legal Frameworks to Combat ‘Crypto-Laundering’ by OCGs
The legal frameworks surrounding cryptocurrencies vary widely across
different countries, reflecting a range of approaches from strict
prohibition to open encouragement. An endeavour has been made
through United Nations Convention against Transnational Organised
Crime (UNTOC) to address the transnational organised crime.
United Nations Convention against Transnational Organised Crime
The UNTOC adopted in 2000, is a comprehensive international legal
framework aimed at addressing the challenges posed by transnational
organised crime. It provides a set of tools for countries to adopt policies
and legal measures that can help combat various forms of organised
crime, including money laundering related to cryptocurrencies.
50
This
convention is particularly important in the context of cryptocurrency
laundering as digital currencies increasingly play a role in illicit
financial activities. The UNTOC can significantly aid in the fight
against cryptocurrency laundering by encouraging stronger legal
frameworks, international cooperation, and the implementation of
common standards for dealing with illicit cryptocurrency
transactions.
51
Article 1, 13, 16 and 18 provide for Cross-Border cooperation
for mutual legal assistance, extradition, and information sharing. Since
cryptocurrency transactions can span multiple jurisdictions, UNTOC’s
emphasis on international cooperation is critical for tracing and
prosecuting criminals using cryptocurrencies for illicit purposes. For
instance, the UK’s National Crime Agency (NCA) has taken down a
massive, multi-billion-dollar money laundering operation, known as
“Operation Destabilise”.
52
This network catered to a diverse clientele
50
Boister, Neil. "The cooperation provisions of the UN Convention against
Transnational Organised Crime: a ‘toolbox’ rarely used?" International
Criminal Law Review. Vol. 16. Issue 1. (2016). 39-70.
51
Boister, Neil. "The cooperation provisions of the UN Convention against
Transnational Organised Crime: a ‘toolbox’ rarely used?"
52
Chainalysis. 2024. "NCA Disrupts Multi-Billion Dollar Russian Money
Laundering Network, OFAC Sanctions Related Individuals and Entities."
(2024) https://www.chainalysis.com/blog/nca-disrupts-multi-billion-
dollar-russian-money-laundering-network-2024/.
Combating Cryptocurrency Laundering 309
of criminals, including wealthy Russians, international power players,
cybercriminals, and drug trafficking organizations. The NCA
pinpointed two Russian-speaking groups, “Smart” and “TGR”, as the
masterminds behind these activities. So far, their investigation has
resulted in 84 arrests and the seizure of over 20 million Euros in cash
and digital currencies.
53
This successful disruption was a joint effort of
signatories to the convention, including the UK’s Metropolitan Police
Service, France’s Direction Centrale de la Police Judiciaire, the US
Treasury’s Office of Foreign Assets Control, the Drug Enforcement
Agency, and the Federal Bureau of Investigation.
54
The UNTOC in Article 34 encourages nations to adopt
consistent legal measures for combating money laundering, which is
essential for managing the growing risks of cryptocurrency-related
financial crimes. For instance, Financial Action Task Force (FATF)
mandates KYC and Customer Due Diligence practices to detect and
report suspicious cryptocurrency transactions, which are applicable to
all countries irrespective of their domestic legislations.
55
The UNTOC
fosters the development of international standards, helping countries
adopt stronger cybersecurity and investigative tools to detect illicit
cryptocurrency activities.
56
For example, UNTOC’s information-
sharing mechanisms help EU law enforcement agencies, such as
Europol, to collaborate in tracking illicit cryptocurrency transactions.
This can also involve Eurojust, the EU agency for judicial cooperation,
which ensures effective prosecution across borders.
In conclusion, the UNTOC provides a vital global framework for
combating cryptocurrency laundering by promoting international
53
TRM Labs. "US DOJ Brings Charges In $230 Million Crypto-Laundering
Case." (2024) https://www.trmlabs.com/resources/blog/us-doj-brings-
charges-in-230-million-crypto-laundering-case.
54
TRM Labs. "US DOJ Brings Charges In $230 Million Crypto-Laundering
Case." (2024) https://www.trmlabs.com/resources/blog/us-doj-brings-
charges-in-230-million-crypto-laundering-case.
55
FATF. Targeted Update on Implementation of the FATF Standards on
Virtual Assets/VASPs. (2023)
56
Tennant, Ian, and Ana Paula Oliveira. "Applying the right lessons from the
negotiation and implementation of the UNTOC and the UNCAC to the
implementation of the newly agreed UN ‘cybercrime treaty." Journal of
Cyber Policy. (2024). 1-18.
310 IIUM LAW JOURNAL VOL. 33 (1) 2025
cooperation, legal harmonisation, and capacity building in law
enforcement.
Recommendations by Financial Action Task Force
The FATF has established a comprehensive set of standards to combat
money laundering and terrorist financing, and these standards
explicitly address virtual assets (including cryptocurrencies) and
virtual asset service providers (VASPs).
57
The FATF provides clear
definitions for “virtual assets” and “virtual asset service providers” to
ensure consistent application of its standards. Virtual Asset is defined
as a digital representation of value that can be digitally traded or
transferred and can be used for payment or investment purposes. VASP
includes any natural or legal person who is not covered elsewhere
under the Recommendations and as a business conducts one or more of
activities such as exchange between virtual assets and fiat currencies;
exchange between one or more other forms of virtual assets; transfer of
virtual assets; safekeeping and/or administration of virtual assets or
instruments enabling control over virtual assets and participation in and
provision of financial services related to an issuer’s offer and/or sale of
a virtual asset.
58
Recommendation 15 specifically addresses virtual assets. It
states that countries should assess and mitigate the ML risks associated
with virtual asset activities and VASPs. The FATF mandates that
VASPs should undertake Customer Due Diligence (CDD), record
keeping, Suspicious Transaction Reporting (STR), Internal Controls
and Compliance Programs and Sanctions Screening.
59
Recommendation 16: requires VASPs to obtain, hold, and transmit
originator and beneficiary information for virtual asset transfers that
exceed a certain threshold (currently USD/EUR 1,000). This is often
referred as the “Travel Rule”. This rule aims to prevent the use of
virtual assets for illicit purposes by ensuring transparency in
transactions. It requires VASPs to exchange this information with
57
FATF. Targeted Update on Implementation of the FATF Standards on
Virtual Assets/VASPs. (2023)
58
FATF. Targeted Update on Implementation of the FATF Standards on
Virtual Assets/VASPs. (2023)
59
FATF. Targeted Update on Implementation of the FATF Standards on
Virtual Assets/VASPs. (2023)
Combating Cryptocurrency Laundering 311
counterparty VASPs or other obliged entities. The implementation of
the Travel Rule for virtual assets has been a significant focus for the
FATF, and it continues to urge countries to effectively implement and
enforce it.
60
The FATF regularly updates its guidance on virtual assets to
reflect the evolving risks and technological developments in the
cryptocurrency space. Countries are expected to implement these
standards into their national laws and regulations. The FATF continues
to monitor the implementation of these standards globally and
encourages jurisdictions to prioritise their effective enforcement.
61
United States
In the U.S., the regulatory landscape for cryptocurrencies is
multifaceted, involving multiple federal and state agencies. The
Securities and Exchange Commission regulates securities and has
classified many cryptocurrencies and Initial Coin Offerings (ICOs) as
securities. In SEC v. DAO, it has been held that cryptocurrencies are
securities and therefore, they are bound by SEC regulations.
62
The
Commodity Futures Trading Commission treats Bitcoin and other
cryptocurrencies as commodities and oversees derivatives and futures
markets related to these assets.
63
Financial Crimes Enforcement
Network (FinCEN) regulates cryptocurrency exchanges and wallet
providers as money transmitters, requiring them to comply with AML
and KYC regulations. Internal Revenue Service treats cryptocurrencies
as property for tax purposes, meaning that gains and losses are subject
to capital gains tax.
64
Regulation is often decentralised, with states like
New York having their own specific frameworks, such as the
60
FATF. Targeted Update on Implementation of the FATF Standards on
Virtual Assets/VASPs. (2023)
61
FATF. Updated Guidance for a Risk-Based Approach to Virtual Assets and
Virtual Asset Service Providers. (2021).
62
Filimonov, Ihor. "Cryptocurrency Regulation: A Comparative Analysis of
the European Union and the United States." Central European University.
(2024).
63
Filimonov, Ihor. "Cryptocurrency Regulation: A Comparative Analysis of
the European Union and the United States."
64
Filimonov, Ihor. "Cryptocurrency Regulation: A Comparative Analysis of
the European Union and the United States."
312 IIUM LAW JOURNAL VOL. 33 (1) 2025
BitLicense, while others have more lenient or undefined policies. The
BitLicense is a business license that requires traders to adhere to more
rigorous AML standards. In California, regulations require Bitcoin
traders to maintain bank-like reserves to cover potential losses, while
North Carolina is still working on proposed Bitcoin regulation bills and
currently has no directives in effect.
65
The US Attorney launched a criminal prosecution against Rule
and Nysewander, who were accused of working with others to disguise
the illegal profits from online romance scams, business email
compromises, real estate scams, and other frauds by using
cryptocurrency.
66
They allegedly converted the stolen money into
cryptocurrency and sent it to accounts managed by their associates both
in the U.S. and abroad. Furthermore, when opening accounts and
communicating with banks and cryptocurrency exchanges, Rule and
Nysewander are said to have provided false information and concealed
important details. Over the course of this alleged scheme, they and their
co-conspirators are accused of laundering over USD 2.4 million. Both
these accused were convicted and could face up to 20 years in federal
prison for each money laundering count.
67
Similarly, in August 2024,
indictment was brought against Lam and Serrano for crypto-theft of
USD 230 million.
68
US prosecutors have also shown an iron fist to Binance, the
company running the largest global cryptocurrency exchange,
Binance.com. The company admitted guilt today and will pay more
than USD 4 billion to settle the Justice Department’s investigation into
violations of the Bank Secrecy Act (BSA), not registering as a money
transmitter, and the International Emergency Economic Powers Act
(IEEPA).
69
Changpeng Zhao, Binance’s Canadian founder and former
65
Filimonov, Ihor. "Cryptocurrency Regulation: A Comparative Analysis of
the European Union and the United States."
66
United States Attorney’s Office. Montana man convicted in cryptocurrency
money laundering conspiracy. (2025).
67
United States Attorney’s Office. Montana man convicted in cryptocurrency
money laundering conspiracy. (2025).
68
TRM Labs. "US DOJ Brings Charges In $230 Million Crypto-Laundering
Case." (2024) https://www.trmlabs.com/resources/blog/us-doj-brings-
charges-in-230-million-crypto-laundering-case.
69
US Department of Justice. Binance and CEO Plead Guilty to Federal
Charges in $4B Resolution. (2023).
Combating Cryptocurrency Laundering 313
CEO, also pleaded guilty to failing to implement an adequate anti-
money laundering (AML) program, which violated the BSA. As part
of the plea agreement, Zhao has stepped down as CEO of Binance.
70
Though prosecutors have been able to successfully prosecute
money launderers and cryptocurrency exchanges, there needs to be a
clearer, safer cryptocurrency market for eager investors, regulators
could establish more detailed regulations specifically designed for the
crypto industry.
71
Just as the rise of e-commerce decades ago spurred
legislative efforts resulting in the Framework for Global Electronic
Commerce, the current revolutionary nature of cryptocurrency and its
various forms necessitates similar guidance. Providing specific rules
for sales involving particular coins and crypto funds could offer much-
needed clarity.
72
Without a more developed regulatory framework,
relying solely on enforcement actions by bodies like the SEC is
insufficient to achieve their regulatory objectives. Ultimately, these
enforcement actions can negatively impact the very investors the SEC
aims to protect and hinder involvement in potentially beneficial
companies. Among the proposed legislation targeting cryptocurrency
is the Digital Asset Anti Money Laundering bill, which seeks to curb
money laundering and other criminal activities associated with
cryptocurrency by focusing on parties involved in transactions, such as
miners and validators.
73
European Union
Currently, the EU has not implemented a unified legal framework for
crypto-assets that applies across all member countries. However, the
EU Commission has put forward several proposals such as the Sixth
Anti-Money Laundering Directive (6AMLD), which would require
businesses dealing in crypto-assets to register with national authorities,
70
US Department of Justice. Binance and CEO Plead Guilty to Federal
Charges in $4B Resolution. (2023).
71
Joseph Steinbach. "An Analysis of the Current U.S. Regulatory Framework
Surrounding Cryptocurrency." Northeastern University Law Review.
(2024).
72
Joseph Steinbach. "An Analysis of the Current U.S. Regulatory Framework
Surrounding Cryptocurrency."
73
Joseph Steinbach. "An Analysis of the Current U.S. Regulatory Framework
Surrounding Cryptocurrency."
314 IIUM LAW JOURNAL VOL. 33 (1) 2025
follow anti-money laundering rules, and report any suspicious
transactions. The aim of 6AMLD is to close loopholes in the individual
laws of EU countries by creating consistent definitions for money
laundering and virtual assets throughout the EU.
74
To create a consistent way of regulating crypto-asset operations
across the European Union, the European Commission developed the
Regulation of the European Parliament and the Council on Crypto-
asset Markets and Amending Directive. This set of rules, called MiCA,
aims to establish a supervisory structure for crypto-assets, including
regulations for those who issue them, service providers, and
participants in the secondary market. Making use of these MiCA and
6AMLD, on September 19, 2024, the German Federal Criminal Police
dismantled the operational systems of 47 Russian-language
cryptocurrency exchanges that did not require identity verification (no-
KYC). This operation, known as “Operation Final Exchange,” is
notable for its extensive reach and for highlighting the critical role that
instant-swap, no-KYC exchanges play in enabling online cybercrime.
75
As the name implies, these no-KYC exchanges do not have any
apparent procedures for collecting customer identification details
before allowing deposits or withdrawals of any amount. They do not
ask for names, phone numbers, or email addresses, and they make no
effort to verify any such information before processing transactions.
76
A key weakness in the current regulatory landscape for crypto-
assets is the absence of a central authority with the specific power to
oversee and examine crypto-asset transactions. Giving the
responsibility of supervising and regulating cryptocurrencies to bodies
that do not specialise in this area diminishes the impact of these
regulations. Furthermore, a significant issue within the crypto-legal
framework is the absence of clear guidelines and prerequisites for
obtaining licenses to conduct activities involving crypto-asset
transactions.
77
74
Filimonov, Ihor. "Cryptocurrency Regulation: A Comparative Analysis of
the European Union and the United States."
75
Chainalysis. "In Large Operation, German Law Enforcement Seizes Servers
of 47 Russia-centric No KYC Exchanges." (2024).
76
Chainalysis. "In Large Operation, German Law Enforcement Seizes Servers
of 47 Russia-centric No KYC Exchanges." (2024).
77
Benson, Vladlena, Bogdan Adamyk, Anitha Chinnaswamy, and Oksana
Combating Cryptocurrency Laundering 315
Malaysia
Combating cryptocurrency laundering in Malaysia involves a
combination of legal frameworks and regulatory policies aimed at
curbing money laundering using cryptocurrencies. Anti-Money
Laundering, Anti-Terrorism Financing and Proceeds of Unlawful
Activities Act 2001 is Malaysia’s primary legislation for combating
money laundering and terrorism financing. The Act includes provisions
to prevent the laundering of proceeds from unlawful activities,
including those derived from the use of cryptocurrencies.
78
The Securities Commission (SC) is the key regulator for the
cryptocurrency and digital asset industry in Malaysia. In 2019, the SC
issued guidelines on Digital Assets to regulate ICOs, cryptocurrency
exchanges, and digital asset transactions. These guidelines include the
requirement for exchanges to comply with AML measures. The SC
also regulates Security Token Offerings to prevent illicit activities in
the digital asset space.
79
These guidelines classify specific digital
currencies and tokens as securities. This action brings these digital
assets under the authority of the SC, which means cryptocurrency
businesses face more compliance requirements, such as needing to
obtain licenses to operate legally. Those who organise coin offerings
without the necessary registration could be imprisoned for up to 10
years or fined up to 10 million Malaysian ringgit (around USD 2.5
million).
80
In 2021, the SC incorporated the crypto “Travel Rule”
requirements into Malaysia’s national regulations. This was achieved
Adamyk. "Harmonising cryptocurrency regulation in Europe:
opportunities for preventing illicit transactions." European Journal of
Law and Economics. Vol. 57. Issue 1. (2024). 37-61.
78
Sobri, Mohamad Amerzan Mohamad, and Muneer Ali Abdul Rab.
"Regulatory Frameworks for Crypto Assets: Comparative Study Between
Malaysia and Indonesia." SALAM Digest: Syariah and Law
Undergraduate Symposium. (2024).
79
Sobri, Mohamad Amerzan Mohamad, and Muneer Ali Abdul Rab.
"Regulatory Frameworks for Crypto Assets: Comparative Study Between
Malaysia and Indonesia."
80
Segeenkov, Andrey. "Legal Status Of Cryptocurrencies In Malaysia."
Forbes.com. (2024) https://www.forbes.com/sites/digital-
assets/2024/09/30/legal-status-of-cryptocurrencies-in-malaysia/.
316 IIUM LAW JOURNAL VOL. 33 (1) 2025
by amending the Guidelines on Prevention of Money Laundering and
Terrorism Financing for Reporting Institutions in the Capital Market.
81
The legal standing of cryptocurrency in Malaysia was examined
in the unreported court case of Luno Pte Ltd & Anor v Robert Ong
Thien Cheng. In this instance, the plaintiffs, who ran a digital currency
exchange, had a customer as the defendant. Due to a technical error,
the plaintiffs mistakenly sent the defendant 22.6 Bitcoins instead of the
intended 11.3 Bitcoins to his third-party e-wallet. After realising the
mistake, the plaintiffs asked for the extra 11.3 Bitcoins back, but the
defendant ignored their request. Consequently, the plaintiffs sued the
defendant to recover the 11.3 Bitcoins or its equivalent monetary
value.
82
In the initial court ruling, the defendant was ordered to return
the 11.3 Bitcoins or its value in Malaysian Ringgit to the plaintiffs. This
decision was upheld by the Sessions Court judge on appeal, and the
High Court subsequently dismissed a further appeal. A key principle
established by this first cryptocurrency case in Malaysia is that while
Bitcoin and other digital currencies are not legal tender in the country,
they are considered a form of commodity because they are bought
using real money. Furthermore, the court ruled that cryptocurrency
trading is not illegal, as it is regulated by the SC. Despite this current
legal stance, the case is now awaiting a decision at the Court of
Appeal.
83
According to the Malaysian Ministry of Finance, the use of
cryptocurrency for money laundering in Malaysia is currently not
widespread. The government’s approach to regulating cryptocurrency
involves requiring all registered digital asset exchange operators to
comply with reporting obligations under the Act of 2001.
84
Analysing
81
Notabene. "Crypto Travel Rule Regulations in Malaysia by Securities
Commission Malaysia (SCM)." (2023).
https://notabene.id/world/malaysia.
82
Ismail Nawang, Nazli, and Ida Madieha. "Cryptocurrency: An Insight into
the Malaysian Regulatory Approach." Psychology and Education
Journal. (2020). doi: 10.17762/pae.v58i2.2319.
83
Ismail Nawang, Nazli, and Ida Madieha. "Cryptocurrency: An Insight into
the Malaysian Regulatory Approach." Psychology and Education
Journal. (2020). doi: 10.17762/pae.v58i2.2319.
84
The Star. "MoF: Low instances of using cryptocurrency in money
laundering." The Star. (2024)
https://www.thestar.com.my/business/business-news/2024/12/18/mof-
Combating Cryptocurrency Laundering 317
the aforesaid recommendations of FATF in context of the Malaysian
legal landscape, the regulatory framework in Malaysia incorporates
AML standards, KYC norms, Travel Rule and is therefore, compliant
with the FATF recommendations.
CONCLUSION AND THE WAY AHEAD
Addressing the issue of cryptocurrency laundering by the OCGs is a
complex and ongoing challenge that requires a multi-layered strategy
combining technological advancements, regulatory improvements, and
industry cooperation. Cryptocurrencies present unique opportunities
for laundering illicit funds due to their pseudonymous nature and the
global, decentralised nature of blockchain technology. The OCGs
exploit these features through sophisticated laundering techniques
including smurfing (breaking down large transactions into smaller
ones), using intermediary and consolidation wallets to obfuscate
transaction trails, and leveraging mixing services, privacy coins, and
bridges to further conceal their activities. Darknet marketplaces also
play a critical role in facilitating these operations by providing
platforms for anonymous transactions.
Specific regulations are necessary to define market participant
parameters and create a framework for investigators to address bad
actors.
85
Techniques such as crypto-tracing, tactical surveillance, and
analysis of financial and tax information should be employed as well.
Cutting-edge transaction monitoring systems are essential in
combating money laundering. There is a significant increase in the use
of blockchain analytics tools, with Chainalysis Crypto Compliance
solutions screening transactions rising from under 200 million in 2018
to more than 1.4 billion in 2024. These tools employ machine learning
and artificial intelligence to identify suspicious patterns that suggest
money laundering, delivering real-time alerts to compliance teams.
86
low-instances-of-using-cryptocurrency-in-money-laundering.
85
Benson, Vladlena, Bogdan Adamyk, Anitha Chinnaswamy, and Oksana
Adamyk. "Harmonising cryptocurrency regulation in Europe:
opportunities for preventing illicit transactions." European Journal of
Law and Economics. Vol. 57. Issue 1. (2024). 37-61.
86
Benson, Vladlena, Bogdan Adamyk, Anitha Chinnaswamy, and Oksana
318 IIUM LAW JOURNAL VOL. 33 (1) 2025
There has to be Public-Private collaboration to break OCGs, networks
and combat the emerging threats can also enhance the effectiveness of
AML efforts. Combating cryptocurrency laundering requires
collaboration among various stakeholders, including financial
institutions, regulatory bodies, technology providers, and law
enforcement agencies. A united approach ensures that efforts are not
duplicated and that resources are efficiently utilised. Sharing
intelligence and best practices can also help in developing more
effective strategies for detecting and preventing crypto-laundering
activities.
The research indicates that while regulatory frameworks for
cryptocurrencies exist in the examined jurisdictions, these regulations
often lack specific focus on the unique characteristics and risks
associated with digital assets. Consequently, the authority to oversee
and enforce these regulations has frequently been assigned to bodies
that do not possess the specialised knowledge and skills necessary to
effectively combat the complex issue of cryptocurrency laundering by
the OCGs. This mismatch between the nature of the threat and the
expertise of the regulatory bodies may hinder the efficacy of current
measures in preventing and prosecuting cryptocurrency-related money
laundering activities. The lack of subject-specific regulations means
that crucial nuances of cryptocurrency transactions and the methods
employed by the OCGs might not be adequately addressed, while
entrusting oversight to non-specialised authorities can lead to
challenges in understanding the technical complexities, identifying
sophisticated laundering schemes, and implementing targeted
enforcement strategies.
In conclusion, the fight against cryptocurrency laundering by the
OCGs is ongoing and requires a comprehensive strategy. By leveraging
advanced technology, implementing adaptive regulatory measures, and
adhering to industry best practices, we can enhance our ability to detect
and prevent these illicit activities. The success of these efforts relies on
a collaborative and proactive approach that addresses both current and
emerging challenges in the cryptocurrency landscape.
Adamyk. "Harmonising cryptocurrency regulation in Europe:
opportunities for preventing illicit transactions." European Journal of
Law and Economics
Combating Cryptocurrency Laundering 319
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The IIUM Law Journal is licensed under a Creative Commons Attribution-
NonCommercial 4.0 International License
TRANSFORMATION OF INDONESIA'S LEGISLATIVE
ELECTION SYSTEM: NEW ORDER VS REFORM ERA IN
CONSTITUTIONAL LAW
Dwanda Julisa Sistyawan
Loso Judijanto
Suhaila Zulkifli
Randy Vallentino Neonbeni
Muhammad Husni Abdulah Pakarti
ABSTRACT
The transformation of the legislative electoral system in Indonesia
reflects the significant changes from the New Order to the Reformation
Era, emphasising the adaptation to national political dynamics and
democratic principles. This study examines how the legislative electoral
systems during these periods compare within Indonesia's constitutional
law context. The research adopts a normative juridical approach with
statutory, comparative, and historical methods, analysing primary and
secondary legal materials. The discussion reveals that the New Order era
was characterized by a centralized system with limited political freedom,
whereas the Reformation era introduced more inclusive and
Lecturer, Institut Islam Nahdlatul Ulama (INISNU) Temanggung,Suwandi
Street Km 01, Madureso, Temanggung, Central Java, Indonesia
Email: dwanda.js@gmail.com (Correspondig Author).
IPOSS, Jakarta, Indonesia, Email: losojudijantobumn@gmail.com
Lecturer, Universitas Prima Indonesia, Kota Medan, Sumatera Utara,
Indonesia, Email suhailazulkifli@unprimdn.ac.id
Lecturer, Sekolah Tinggi Ilmu Hukum Cendana Wangi,Tubuhue, Kota
Kefamenanu, Indonesia, Email: randyneonbeni@gmail.com
Lecturer, Sekolah Tinggi Ilmu Syariah Wal Aqidah Ash-Shofa
Manonjaya, Indonesia, Email: husnipakarti@stisa-ashshofa.ac.id
[Received: 26 August 2024, Accepted:11 May 2025, Published: 28 May 2025]
326 IIUM LAW JOURNAL VOL. 33 (1) 2025
representative electoral laws. The main findings highlight the strengths
and weaknesses of each system in realizing democratic principles and
popular sovereignty. This comparative analysis contributes to
understanding Indonesia's electoral systems' evolution and ongoing
efforts to enhance democratic governance.
Keywords: Constitutional Law, Legislative Electoral System, New
Order, Reformation Era, Comparative Study.
TRANSFORMASI SISTEM PEMILIHAN UMUM
LEGISLATIF DI INDONESIA: ORDE BARU VS ERA
REFORMASI DALAM HUKUM TATA NEGARA
ABSTRAK
Transformasi sistem pemilihan legislatif di Indonesia mencerminkan
perubahan besar dari Era Orde Baru ke Era Reformasi, menekankan
penyesuaian terhadap dinamika politik nasional dan prinsip-prinsip
demokrasi. Kajian ini meneliti bagaimana sistem pemilihan legislatif
pada tempoh-tempoh ini dibandingkan dalam konteks undang-undang
perlembagaan Indonesia. Penyelidikan ini menggunakan pendekatan
normatif yuridis dengan kaedah perundangan, perbandingan, dan
sejarah, menganalisis bahan-bahan undang-undang primer dan sekunder.
Perbincangan menunjukkan bahawa era Orde Baru dicirikan oleh sistem
terpusat dengan kebebasan politik yang terhad, manakala era Reformasi
memperkenalkan undang-undang pilihan raya yang lebih inklusif dan
mewakili. Penemuan utama menekankan kekuatan dan kelemahan setiap
sistem dalam merealisasikan prinsip-prinsip demokrasi dan kedaulatan
rakyat. Analisis perbandingan ini menyumbang kepada pemahaman
tentang evolusi sistem pilihan raya Indonesia dan usaha berterusan untuk
meningkatkan tadbir urus demokratik.
Kata Kunci: Undang-Undang Perlembagaan, Sistem Pilihan Raya
Perundangan, Era Orde Baru, Era Reformasi, Kajian Perbandingan.
Transformation of Indonesia’s Legislative Election System 327
INTRODUCTION
In Indonesia, general elections (pilihan raya) include both legislative
and presidential elections, allowing citizens to elect representatives at
various levels of government. Legislative elections determine the
members of the People's Representative Council (Dewan Perwakilan
Rakyat or DPR), the Regional Representative Council (Dewan
Perwakilan Daerah or DPD) and regional legislative councils (Dewan
Perwakilan Rakyat Daerah or DPRD). Meanwhile, presidential
elections are held to elect the president and vice president directly.
1
The
transition from the New Order to the Reform era has significantly
transformed Indonesia's electoral landscape, promoting democratic
values such as fair representation and increased public participation.
2
Elections are a political mechanism that allows the people to
elect their representatives in the legislature and holders of executive
power, such as the president, vice president, and regional heads.
3
Elections are also essential in a democratic system, allowing citizens
to elect public officials directly.
4
Indonesia, as a democratic country,
continues to strive to improve the quality of its democracy through
enhancing the implementation of elections.
5
Elections in Indonesia are
1
Boy Anugerah, “Strengthening Democracy in Indonesia: Comparison
between Representative and Direct Presidential Election Policies,” Jurnal
Studi Sosial Dan Politik 6, no. 1 (June 30, 2022): 1–16,
https://doi.org/10.19109/jssp.v6i1.10650.
2
Muhammad Habibi, Irvanus Destavino, and Alam Mahadika, “Reflection and
Learning From the 2019 General Election and the 2020 Regional
Election: An Analysis of The Election Implementation Experience in
Indonesia,” Kybernology : Journal of Government Studies 3, no. 1
(August 18, 2023): 1–16, https://doi.org/10.26618/kjgs.v3i1.12007.
3
Satrio Alif Febriyanto and Muhammad Firman, “Napak Tilas Pemilihan
Kepala Daerah Indonesia: Korelasi Negara Hukum Yang Demokratis Dan
Amandemen UUD 1945,” JAPHTN-HAN 2, no. 1 (January 31, 2023),
https://doi.org/10.55292/japhtnhan.v2i1.65.
4
Izak R Hikoyabi, “Kemandirian, Integritas, Kapabilitas Dan Partisipatif Di
Provinsi Papua Induk Pada Pemilu 2024,” Jurnal Multidisiplin Indonesia
2, no. 3 (March 18, 2023): 436–42, https://doi.org/10.58344/jmi.v2i3.188.
5
Agung Pramafasya Putri Sima and Putu Sri Arta Jaya Kusuma, “PETUNJUK
CERDAS DAN BATASAN ETIKA: BERPARTISIPASI AKTIF DAN
BERTANGGUNG JAWAB DALAM PEMILU MELALUI
INSTAGRAM,” Diseminasi: Jurnal Pengabdian Kepada Masyarakat 6,
328 IIUM LAW JOURNAL VOL. 33 (1) 2025
an essential instrument in the democratic system, which was first
implemented in 2004.
6
Simultaneous elections, as happened in 2019,
are a crucial step in the general election process in Indonesia.
7
Elections
also play a role in creating a democratic government based on the
democratic principles embraced by the Indonesian state.
8
In Indonesia, simultaneous elections, such as those in 2019,
improve democratic processes by combining presidential, vice-
presidential, and legislative elections on the same day. This strategy
seeks to lower electoral expenses and boost efficiency while promoting
equitable representation between the executive and legislative
branches, which aligns with the principles of popular sovereignty and
transparency outlined in Pancasila and the 1945 Constitution.
9
Elections are viewed as a crucial step in strengthening democracy, as
they promote greater participation and accountability within the
political sphere system.
10
General elections are a means of choosing
leaders and a form of democracy and people's sovereignty.
11
no. 1 (March 30, 2024),
https://doi.org/10.33830/diseminasiabdimas.v6i1.7696.
6
Dwi Irawan, I Gusti Agung Ngurah Agung, and Resi Pranacitra, “Analisis
Hukum Terhadap Tindak Pidana Money Politic Dalam Undang-Undang
Pemilihan Umum,” POSTULAT 2, no. 1 (February 1, 2024): 34–39,
https://doi.org/10.37010/postulat.v2i1.1460.
7
Ratnia Solihah, “Peluang Dan Tantangan Pemilu Serentak 2019 Dalam
Perspektif Politik,” Jurnal Ilmiah Ilmu Pemerintahan 3, no. 1 (October 9,
2018): 73, https://doi.org/10.14710/jiip.v3i1.3234.
8
Muhibin, Hasani Zakiri, and Akhmad Zaki Yamani, “Penegakan Hukum
Pemilu Di Indonesia Perspektif Fikih Siyasah,” Syntax Idea 6, no. 3
(March 28, 2024): 1317–27, https://doi.org/10.46799/syntax-
idea.v6i3.3113.
9
Kadir Johnson Rajagukguk, Sofjan Aripin, and Heri Wahyudi,
“Simultaneous General Election: It Is Fair for Democracy in Indonesia,”
JIP (Jurnal Ilmu Pemerintahan) : Kajian Ilmu Pemerintahan Dan Politik
Daerah 6, no. 1 (July 26, 2021): 56–64,
https://doi.org/10.24905/jip.6.1.2021.56-64.
10
Abd. Rais Asmar et al., “The Patterns and Influences of Women’s
Legislative in Simultaneously General Elections in Indonesia,”
International Journal of Criminology and Sociology 10 (April 30, 2021):
912–20, https://doi.org/10.6000/1929-4409.2021.10.108.
11
Riski Johanes Lumban Tobing, Irma Purnamasari, and Berry Sastrawan,
“Pengukuran Pelaksanaan Kegiatan Pengawasan Pemilu Oleh Badan
Transformation of Indonesia’s Legislative Election System 329
Electionsenable the public to engage in politics and shape their
preferred government direction.
12
The election influences political
parties' dedication to bolstering their power structures within ongoing
coalitions and state affairs institutions.
13
Sumali argued that the concept of people's sovereignty also
refers to the people's power to participate in the public decision-making
process.
14
Elections serve as the gateway to establishing a democratic
process. Through elections, the people bestow a mandate upon their
representatives, as they possess sovereignty; however, they cannot
govern directly due to the complexities involved in their lives.
15
The history of the Indonesian constitution indicates that
Legislative Elections have been held 13 times from 1955 to 2024.
During the New Order period, elections were held in 1971 (with Law
No. 15 of 1969 and Law No. 16 of 1969); Year 1977 (with Law No. 4
of 1975 and Law No. 5 of 1975); Year 1982 (with Law No. 2 of 1980);
In 1987, 1992, and 1997 (with Law No. 1 of 1985 and Law No. 2 of
1985). Since the 1977 election, the number of election participants has
been limited to two parties and one workgroup (Golkar), which is
accommodated in Law No. 3 of 1975 concerning Political Parties and
Work Groups. Golkar always came out as the winner in these elections
with a percentage above 50%.
16
Upon entering the Reform Order, elections took place in 1999
under the legal framework of Law No. 3 of 1999; in 2004 with Law
No. 12 of 2003; In 2009 with Law No. 10 of 2008; In 2014 with Law
Pengawas Pemilihan Umum,” Karimah Tauhid 3, no. 4 (April 4, 2024):
4639–53, https://doi.org/10.30997/karimahtauhid.v3i4.12876.
12
Muttakin Muttakin, “Persepsi Calon Kepala Desa Terhadap Praktik Politik
Uang Dalam Pemilihan Kepala Desa Di Desa Durian Betakuk Kabupaten
Merangin,” Jurnal Perspektif, 2023,
https://doi.org/10.24036/perspektif.v6i4.810.
13
Solihah, “Peluang Dan Tantangan Pemilu Serentak 2019 Dalam Perspektif
Politik.”
14
Sumali, Reduksi Kekuasaan Eksekutif Di Bidang Peraturan Pemerintah
Pengganti Undang-Undang (Malang: UMM Press, 2001).
15
Afan Gaffar, Politik Indonesia, Transisi Menuju Demokrasi (Yogyakarta:
Pustaka Pelajar, 2006).
16
Dwanda J Sistyawan and Others, Sistem Pemilu Legislatif Di Indonesia
Potret Penyelenggaraan Pemilu Dalam Sejarah Republik Indonesia
(Pemilu 1955 Sampai Dengan 2024) (Indramayu: Penerbit Adab, 2024).
330 IIUM LAW JOURNAL VOL. 33 (1) 2025
No. 8 of 2012; and in 2019 and 2024 with Law No. 7 of 2017, where
legislative elections are held simultaneously with the election of the
President and Vice President.
17
Ramlan Surbakti argued that the
electoral system is a mechanism adopted to convert the people's votes
into governmental seats or positions.
The electoral system is designed to transform citizens' votes into
seats for state officials. This requires two software components, the
general election system and the organization of electoral processes, and
one hardware component focused on election logistics.
18
Studies on
elections must include two aspects: the electoral system (electoral
system/laws) and the electoral process (electoral processes).
19
Every electoral system comprises four primary elements: (1) the
constituency area, (2) the participation and candidacy method, (3) the
voicing model, and (4) the election formula, along with how selected
candidates are determined. Additionally, there are two choice
elements: the House of Representatives and Regional Representative
Council entry threshold (election threshold) and the scheduling pattern
for different types of elections.
20
Indonesia's elections, held every five
years, require improvement, as highlighted by ongoing legal changes.
These changes indicate that Indonesia has yet to establish an
effective election system to uphold the people's sovereignty. In this
context, the author aims to examine the election processes during the
New Order and Reform Order, contrasting the systems by analyzing
the laws that govern them. The key focus is comparing the legislative
election systems from the New Order era and the Reform Order within
the framework of Indonesia's constitutional law, alongside evaluating
the strengths and weaknesses of each system in promoting democracy
and the sovereignty of the people.
17
Dwanda Julisa Sistyawan, Pelaksanaan Pemilihan Umum Legislatif Dalam
Sistem Ketatanegaraan Republik Indonesia (Yogyakarta: Komojoyo
Press, 2021).
18
Ramlan Surbakti, Memahami Ilmu Politik (Jakarta: PT Grasindo, 2013).
19
Agus Riwanto, Hukum Partai Politik Dan Hukum Pemilu Di Indonesia
(Pengaruhnya Terhadap Penyelenggaraan Pemilu Berkualitas Dan
Sistem Pemerintahan Presidensial Efektif) (Yogyakarta: Thafa Media,
2016).
20
Ramlan Surbakti, Memahami Ilmu Politik.
Transformation of Indonesia’s Legislative Election System 331
Several journals provide relevant insights into comparing
electoral systems between the New Order and Reformasi in Indonesia.
The first is a journal by Mahpudin entitled "Democracy and the Rise
of Identity Politics: Reflections on the Journey of Indonesian
Democracy After the New Order." This journal provides a perspective
on the journey of democracy in Indonesia after the New Order era,
which can be the basis for understanding changes in the electoral
system.
21
Second, Deden Ilham Rahmani's journal "Challenges and
Harmony Between Justice and Certainty in Simultaneous Elections in
Indonesia" is significant as it explores the difficulties associated with
simultaneous elections in Indonesia, offering insights into the electoral
system's evolution from the New Order era to the Reformasi.This study
aims to analyse and compare the legislative election system in
Indonesia during the New Order and Reform eras from the perspective
of constitutional law, focusing on how changes in electoral regulations
and systems have influenced democracy and the sovereignty of the
people. The main research question addressed in this study is how the
legislative election systems differ between the two eras, and to what
extent each system supports or hinders the principles of democracy and
the implementation of popular sovereignty within the framework of
Indonesia’s constitutional law.
RESEARCH METHODOLOGY
This study uses normative juridical research, with approach methods
that include a statutory approach, a comparative approach, and a
historical approach. The specification of this study is descriptive-
analytical. The legal materials sourced include primary, secondary, and
non-legal materials. Legal materials are collected through literature
study, internet browsing, and scientific article review. Legal materials
are presented in a systematic way using narrative text descriptions. The
analysis applied to these legal materials is qualitative normative
analysis.
21
Mahpudin Mahpudin, “Demokrasi Dan Kebangkitan Politik Identitas:
Refleksi Perjalanan Demokrasi Indonesia Pasca Orde Baru,” Ijd-Demos
1, no. 1 (February 15, 2020), https://doi.org/10.31506/ijd.v1i1.1.
332 IIUM LAW JOURNAL VOL. 33 (1) 2025
ELECTORAL SYSTEM IN THE NEW ORDER ERA
During the New Order era in Indonesia, the electoral system was
marked by firm central government control through various regulations
that curtailed political freedom. The first election in this period
occurred in 1971 based on Law No. 15 of 1969 and Law No. 16 of
1969, followed by elections held every five years with continuously
updated regulations but maintaining similar principles pattern.
22
Post-
New Order democracy is dominated by a handful of oligarchic elites
who aim to accumulate wealth through political involvement by
establishing political parties or participating directly in politics.
23
Disruptive humanitarian riots marked the fall of the New Order regime.
Researchers have examined the military's involvement in elections
from the New Order era to the reform period. Indonesia's transition
from centralization to decentralization led to changes in its government
system, implementing direct local and presidential elections.
24
Elections in Indonesia represent a concrete manifestation of
democracy, enabling the populace to assert their sovereignty over the
state government.
25
Golkar's dominance in the elections during the New Order era,
which consistently achieved over 50% of the vote, stemmed from
various political strategies employed by the government. The plan
limited the number of participating parties to two political parties
alongside one Golkar party, as stipulated in Law No. 3 of 1975
regarding Political Parties and Golkar. Other parties, such as the PDI
and PPP, face obstacles and political pressures that hinder their growth
22
Arief Hidayat et al., “Kebangkitan Politik Identitas Dalam Proses
Demokratisasi Di Indonesia Pasca Orde Baru,” Kaganga Komunika
Journal of Communication Science 10, no. 1 (June 2021): 57,
https://doi.org/10.24114/jupiis.v10i1.8407.
23
Mahpudin, “Demokrasi Dan Kebangkitan Politik Identitas: Refleksi
Perjalanan Demokrasi Indonesia Pasca Orde Baru.”
24
Rira Nuradhawati, “DINAMIKA SENTRALISASI DAN
DESENTRALISASI DI INDONESIA,” Jurnal Academia Praja 2, no. 01
(February 19, 2019): 152–70, https://doi.org/10.36859/jap.v2i01.90.
25
Primandha Sukma Nur Wardhani, “Partisipasi Politik Pemilih Pemula
Dalam Pemilihan Umum,” JUPIIS: JURNAL PENDIDIKAN ILMU-
ILMU SOSIAL 10, no. 1 (June 6, 2018): 57,
https://doi.org/10.24114/jupiis.v10i1.8407.
Transformation of Indonesia’s Legislative Election System 333
and influence.
26
Discriminatory regulations in the New Order era
strengthened sentiment towards certain groups.
27
The political
landscape following the New Order is marked by oligarchic elite
control over democracy, which seeks to amass wealth through political
means.
28
The post-New Order political landscape in Indonesia is
marked by the persistence of oligarchic elite control, which continues
to shape democratic processes for wealth accumulation. Research
indicates that political elites, who often emerged from the previous
authoritarian regime, maintain significant influence over local
governance structures, thereby perpetuating their privileges and power
dynamics.
29
This elite continuity indicates that democratization has not
successfully dismantled the entrenched interests of these groups as they
skillfully maneuver through the new political landscape to protect their
economic benefits.
30
Moreover, the co-opting of grassroots movements
by these elites has historically stifled genuine political engagement
among marginalised populations, reinforcing a cycle of elite
dominance. As a result, the interaction between elite interests and
democratic institutions reveals a complex landscape where accurate
26
Mahpudin Mahpudin, “Kebangkitan Politik Identitas Dalam Proses
Demokratisasi Di Indonesia Pasca Orde Baru,” Jurnal Sosial Politik 7,
no. 2 (November 30, 2021): 148–60,
https://doi.org/10.22219/sospol.v7i2.10781.
27
Mirah Pertiwi, “Perkembangan Sentimen Anti-Tionghoa Di Indonesia,”
KAGANGA KOMUNIKA: Journal of Communication Science 3, no. 1
(June 1, 2021): 82–93,
https://doi.org/10.36761/kagangakomunika.v3i1.1062.
28
Mahpudin, “Kebangkitan Politik Identitas Dalam Proses Demokratisasi Di
Indonesia Pasca Orde Baru.”
29
M. Faishal Aminuddin and M. Fajar Shodiq Ramadlan, “Elite in Sub-
National Politics: Structure and Continuation in Post-Authoritarian East
Java, Indonesia,” Politika: Jurnal Ilmu Politik 13, no. 1 (2022): 1–22,
https://doi.org/10.14710/politika.13.1.2022.1-22.
30
Leo Agustino and Mohammad Agus Yusoff, “From New Order to
Reformasi: Indonesian Subnational Politics in the Post-New Order Era,”
Jurnal Hubungan Internasional 3, no. 1 (2014): 13–24,
https://doi.org/10.18196/hi.2014.0042.13-24.
334 IIUM LAW JOURNAL VOL. 33 (1) 2025
democratic representation remains elusive as the oligarchs exploit their
political connections to entrench their economic power further.
31
The military's role in elections from the New Order to the reform
era has garnered significant attention study.
32
Indonesia's transition
from centralization to decentralization changed the governance system,
including direct local and presidential elections.
33
Indonesia's transition from centralization to decentralization post-
Suharto in 1998 marked a significant shift in governance, empowering
regional governments through laws such as Law No. 22 of 1999 and
Law No. 32 of 2004. These reforms facilitated local autonomy,
enabling direct elections for local leaders (Pilkada) and enhancing
democratic engagement at the local level.
34
This decentralization
sought to improve governance through greater accountability and
citizen involvement, creating a more responsive administration.
35
Nonetheless, challenges persist, notably regional inequalities worsened
by local elites exploiting democratic processes for their gain.
36
This
situation underscores the difficulty of balancing local independence
31
Nankyung Choi, “Elections, Parties and Elites in Indonesia’s Local Politics,”
South East Asia Research 15, no. 3 (2007): 325–54,
https://doi.org/10.5367/000000007782717731.
32
Sarah Nuraini Siregar, “PROBLEMATIKA PROFESIONALISME
MILITER ERA REFORMASI: ‘Studi Kasus Keterlibatan TNI Pada
Pilkada Kepulauan Riau Tahun 2015 Dan Pilkada Sumatera Utara Tahun
2018,’” JWP (Jurnal Wacana Politik) 6, no. 1 (March 5, 2021): 15,
https://doi.org/10.24198/jwp.v6i1.32047.
33
Nuradhawati, “DINAMIKA SENTRALISASI DAN DESENTRALISASI
DI INDONESIA.”
34
Costantinus Fatlolon, “Toward a Politics of Inclusion: Prospects and
Problems of Civic Participation in Indonesia’s Government
Decentralization,” Melintas 38, no. 1 (2023): 1–24,
https://doi.org/10.26593/mel.v38i1.7097.
35
Agus Fatoni, “Fiscal Decentralization Dilemma in Indonesia: Between
Corruption Accountability and Probability at Local Levels,” Jurnal Bina
Praja 12, no. 1 (2020): 101–10,
https://doi.org/10.21787/jbp.12.2020.101-110.
36
Hidsal Jamil, Candra Fajri Ananda, and Ferry Prasetyia, “It Takes Two to
Tango: The Joint Effect of Democracy and Fiscal Capacity on Economic
Growth in Indonesia,” Jurnal Perspektif Pembiayaan Dan Pembangunan
Daerah 10, no. 5 (2022): 271–86,
https://doi.org/10.22437/ppd.v10i5.20816.
Transformation of Indonesia’s Legislative Election System 335
with effective management oversight.
37
Overall, the transition has been
a mixed outcome, with advancements in local democracy and
persistent governance challenges.
38
Elections in Indonesia are a
tangible manifestation of democracy, allowing the people to express
their sovereignty over the state and government.
39
ADVANTAGES OF THE NEW ORDER ELECTION SYSTEM
Political stability and administrative efficiency are two advantages of
strictly regulated general elections. Well-controlled elections can
achieve political stability, which leads to little open conflict or political
upheaval.
40
Conversely, administrative efficiency is another significant
benefit of having a limited number of political parties, simplifying the
management of the electoral administrative process.
41
From 1966 to 1998, during Indonesia's New Order era, the
government enforced stringent rules on general elections, mainly
through Law No. 3 of 1975. This law restricted political participation
to two parties and a single workgroup, Golkar. Such a framework
promoted political stability by reducing open conflict and creating
predictable electoral results, with Golkar routinely receiving more than
37
Anisah Alfada, “Does Fiscal Decentralization Encourage Corruption in
Local Governments? Evidence from Indonesia,” Journal of Risk and
Financial Management 12, no. 3 (2019),
https://doi.org/10.3390/jrfm12030118.
38
Thomas B. Pepinsky and Maria M. Wihardja, “Decentralization and
Economic Performance in Indonesia,” Journal of East Asian Studies 11,
no. 3 (2011): 337–71, https://doi.org/10.1017/S1598240800007372.
39
Nur Wardhani, “Partisipasi Politik Pemilih Pemula Dalam Pemilihan
Umum.”
40
Rekha Diwakar, “The Workings of the Single Member Plurality Electoral
System in India and the Need for Reform,” Asian Journal of Comparative
Politics 4, no. 2 (June 19, 2019): 141–61,
https://doi.org/10.1177/2057891118769166.
41
Josep M Colomer, “It’s Parties That Choose Electoral Systems (Or,
Duverger’s Laws Upside Down),” Political Studies 53, no. 1 (March 22,
2005): 1–21, https://doi.org/10.1111/j.1467-9248.2005.00514.x.
336 IIUM LAW JOURNAL VOL. 33 (1) 2025
50% of the votes.
42
The centralized control over the electoral process
also enhanced administrative efficiency, simplifying election
management due to the reduced number of participants.
43
During the New Order period, elections offered benefits such as
openness and pluralism, leading to a rise in political parties and
freedom, which fostered diverse and inclusive representation. This
shift resulted from simultaneous elections that promoted increased
political participation and awareness.
44
Elections in West Sumatra
during the New Order were relatively "calm" compared to the intense
competition seen nationally, suggesting that regional elections can also
occur without conflict.
45
Moreover, elections simultaneously offer
opportunities for broader political participation from the public,
ultimately reflecting more inclusive desires and aspirations within the
political sphere process.
46
Greater openness and participation in
elections can strengthen the existing political system, although it can
also show signs of poor governance in some cases.
47
Consequently, the
multiplicity of political parties and the increased participation in
elections during the New Order period fostered enhanced inclusivity in
political representation and elevated social awareness.New political
parties must concentrate on strategic approaches to secure victory in
elections. In Indonesia, these parties face specific challenges that
42
R. William Liddle, “Soeharto’s Indonesia: Personal Rule and Political
Institutions,” Pacific Affairs 58, no. 1 (1985): 68,
https://doi.org/10.2307/2758010.
43
Martinus Sardi and Bagus Sarnawa, “Relationship Between Political
Apointee and Bureaucracy in Civil Service System,” 2021,
https://doi.org/10.2991/assehr.k.210120.161.
44
Israr Israr, Susanto Zuhdi, and Abdurakhman Abdurakhman, “The 1977
Election and Consolidation of the New Order Government in West
Sumatra,” Paramita: Historical Studies Journal 32, no. 2 (September 29,
2022): 212–20, https://doi.org/10.15294/paramita.v32i2.29705.
45
Israr, Zuhdi, and Abdurakhman.
46
Tamgid Ahmed Chowdhury, Shahneela Naheed, and Farhana Habib Zinnia,
“Profiling Voters’ Requirements for Effective Political Campaign: A
Case on Bangladesh,” Journal of Public Affairs 22, no. 1 (February 20,
2022), https://doi.org/10.1002/pa.2293.
47
Eny Kusadarini, Anang Priyanto, and Sri Hartini, “The Process and Role of
the Judiciary in Election Administration Dispute Resolution in
Indonesia,” Jurnal Civics: Media Kajian Kewarganegaraan 18, no. 2
(October 31, 2021): 334–44, https://doi.org/10.21831/jc.v18i2.44175.
Transformation of Indonesia’s Legislative Election System 337
necessitate innovative tactics to compete effectively and succeed in
elections.
48
SHORTCOMINGS OF THE NEW ORDER ELECTION
SYSTEM
Throughout the New Order era in Indonesia, the electoral system
received rigorous monitoring and evaluation. Research indicates that
absent prominent political leaders in emerging parties diminished
public backing in the 2019 elections.
49
During this period, the
centralized education system focused on national economic
development instead of fostering diverse educational opportunities
approaches.
50
Some political parties, including Golkar, were reportedly
implicated in electoral fraud under Suharto's rule, resulting in
overwhelming victories and restricted political competition.
51
In Indonesia's New Order period, the electoral system strayed
considerably from the democratic ideals outlined in the 1945
Constitution, which upholds popular sovereignty and free elections.
Suharto's regime controlled and manipulated the political landscape,
notably through Law No. 3 of 1975, which limited political
competition and weakened democratic processes pluralism.
52
The
48
Tian Adhia Nugraha and Hening Ginanjar Mukti, “Strategi Partai Baru:
Partai Gelombang Rakyat Indonesia Menuju Elektoral 2024,” JIIP:
Jurnal Ilmiah Ilmu Pemerintahan 8, no. 2 (September 29, 2023): 99–115,
https://doi.org/10.14710/jiip.v8i2.19135.
49
Fitria Barokah et al., “Disrupsi Politik,” Nakhoda: Jurnal Ilmu
Pemerintahan 21, no. 1 (June 30, 2022): 1–13,
https://doi.org/10.35967/njip.v21i1.273.
50
Safei Safei and Hudaidah Hudaidah, “Sistem Pendidikan Umum Pada Masa
Orde Baru (1968-1998),” Jurnal Humanitas: Katalisator Perubahan Dan
Inovator Pendidikan 7, no. 1 (December 30, 2020): 1–13,
https://doi.org/10.29408/jhm.v7i1.3253.
51
Mochammad Lucky Trita Sanjaya and Moch Fuad Nasvian, “Interaktivitas
Netizen 24 Jam Pasca Deklarasi Bacapres AMIN,” EKSPRESI DAN
PERSEPSI : JURNAL ILMU KOMUNIKASI 7, no. 1 (January 31, 2024):
106–22, https://doi.org/10.33822/jep.v7i1.7169.
52
Dorodjatun Kuntjoro‐jakti, “History of Indonesian Fiscal Policy: 1945–1986
‐ the Battle for Resources ‐,” Asian Economic Journal 2, no. 1 (1988):
160–207, https://doi.org/10.1111/j.1467-8381.1988.tb00124.x.
338 IIUM LAW JOURNAL VOL. 33 (1) 2025
alleged electoral fraud committed by the Golkar party further
undermined the constitutional right to democratic representation,
turning elections into mere formalities instead of authentic expressions
of political choice.
53
The Constitution stipulates that sovereignty shall be actualized
through democratic elections; however, the governance model of the
New Order placed a greater emphasis on stability and national
development rather than on political matters and diversity.
54
This
interference with the electoral process infringed upon the constitutional
right to free participation and restricted citizens' freedom to select their
representatives. This mirrors a broader trend of political repression and
control during this time.
55
Consequently, the electoral practices of the
New Order era sharply contrasted with the democratic ideals set forth
in the 1945 Constitution.
Moreover, the evolution of the electoral system during the New
Order era (1966-1998) involved various elections and strategies by
political parties and the government.
56
The emergence of the oligarchic
elite following the New Order resulted in wealth concentration via
political strategies, affecting Indonesia's democratic landscape.
57
The
transition from the New Order era to Indonesia's democratic electoral
system has introduced notable changes and challenges. Though
advancements have been made in the electoral process, persistent
issues such as weak political leadership, a centralized education
system, electoral fraud, and the influence of an oligarchic elite continue
to impact the country’s democratic landscape. The concerns related to
53
Noam Chomsky, “Indonesia, Master Card in Washington’s Hand,”
Indonesia 66 (1998): 1, https://doi.org/10.2307/3351445.
54
Andrea Webster, “Play Politics: Policing Theatre in Indonesia,” Index on
Censorship 20, no. 7 (1991): 3–5,
https://doi.org/10.1080/03064229108535134.
55
John T. Williams, “The Political Manipulation of Macroeconomic Policy,”
American Political Science Review 84, no. 3 (1990): 767–95,
https://doi.org/10.2307/1962766.
56
Rumyati Rumyati, “EVOLUSI SISTEM PEMILU MASA ORDE BARU
(1966-1998),” KALA MANCA: JURNAL PENDIDIKAN SEJARAH 11,
no. 1 (January 1, 2023): 23–30,
https://doi.org/10.69744/kamaca.v11i1.203.
57
Mahpudin, “Kebangkitan Politik Identitas Dalam Proses Demokratisasi Di
Indonesia Pasca Orde Baru.”
Transformation of Indonesia’s Legislative Election System 339
the electoral process underscore various ongoing problems that
jeopardize democratic integrity. This is particularly visible in the
struggles of newer political parties in Indonesia, like the Perindo Party
and the Garuda Party, which failed to make significant progress in the
2019 elections, suffering from a lack of charismatic leadership and
public confidence.
58
Moreover, the centralized education system is
criticized for failing to promote democratic values essential for citizen
engagement and informed participation in voting.
59
ELECTORAL SYSTEM IN THE REFORM ERA
The Reformasi era in Indonesia, which began in 1998, significantly
altered the political landscape, particularly regarding the electoral
system. One of the primary changes during this period was the
allowance for establishing political parties and reforming the electoral
system.
60
The legal foundation for conducting general elections in
Indonesia has evolved throughout the Reformasi era, showcasing the
nation's advancing democracy process.
61
During Indonesia's Reform Era, changes to the 1945
Constitution greatly influenced the electoral system, highlighting
democratic values and the importance of popular sovereignty. The
advent of direct elections for the President, Vice President, and
58
Hatta Abdi Muhammad and Nopyandri Nopyandri, “The Failure of New
Political Parties and ID Figures: Nobility of Technocrats in Analysis of
Voting Behavior in Jambi,” JPPUMA Jurnal Ilmu Pemerintahan Dan
Sosial Politik Universitas Medan Area 9, no. 2 (September 9, 2021): 117–
28, https://doi.org/10.31289/jppuma.v9i2.4375.
59
Fernando M. Reimers, “Education and the Challenges for Democracy,”
Education Policy Analysis Archives 31 (September 19, 2023),
https://doi.org/10.14507/epaa.31.8243.
60
Esty Ekawati, “Peta Koalisi Partai-Partai Politik Di Indonesia Pada
Pemilihan Presiden Dan Wakil Presiden Pasca Orde Baru,” JPPUMA
Jurnal Ilmu Pemerintahan Dan Sosial Politik Universitas Medan Area 7,
no. 2 (November 29, 2019): 160,
https://doi.org/10.31289/jppuma.v7i2.2680.
61
Marulak Pardede, “IMPLIKASI SISTEM PEMILIHAN UMUM
INDONESIA,” Jurnal Rechts Vinding: Media Pembinaan Hukum
Nasional 3, no. 1 (April 30, 2014): 85,
https://doi.org/10.33331/rechtsvinding.v3i1.58.
340 IIUM LAW JOURNAL VOL. 33 (1) 2025
regional leaders represents a crucial move towards boosting democratic
participation and accountability.
62
Restructuring the electoral
framework to incorporate proportional representation with open-list
voting in legislative elections further promotes transparency and
empowers voters to influence their representatives directly.
63
Moreover, the establishment of independent electoral bodies, such as
the General Elections Commission (KPU) and the Election
Supervisory Board (Bawaslu), has reinforced the integrity of the
electoral process by ensuring impartial oversight and reducing electoral
malpractices.
64
These reforms align with the constitutional mandate to
uphold democratic values, as articulated in Articles 22E and 18 of the
1945 Constitution. These articles advocate for direct, general, free,
confidential, honest, and fair elections.
65
These changes reflect
Indonesia's commitment to fostering a robust democratic system that
prioritizes citizen participation and representation.
62
Askolani Jasi, Megawati Barthos, and Faisal Santiago, “Postponement
Arrangements of Election From The Perspective of The 1945 Constitution
of The Republic of Indonesia,” Jurnal Indonesia Sosial Sains 4, no. 06
(June 4, 2023): 531–35, https://doi.org/10.59141/jiss.v4i06.818.
63
Habibi, Destavino, and Mahadika, “Reflection and Learning From the 2019
General Election and the 2020 Regional Election: An Analysis of The
Election Implementation Experience in Indonesia.”
64
Sidi Ahyar Wiraguna and Zudan Arief Fakrulloh, “Legal Reforms in
Indonesia Related To ‘Presidential Threshold’ of Presidential Candidate
in Law No. 7/2017 Concerning General Elections,” Journal Of Law
Theory And Law Enforcement, 2023, 58–69,
https://doi.org/10.56943/jlte.v2i2.194; Dwanda Julisa Sistyawan et al., “A
COMPARATIVE ANALYSIS OF MECHANISMS FOR
SETTLEMENT OF ELECTION DISPUTES: Case Studies of Indonesia
and South Africa,” Al-Risalah: Forum Kajian Hukum Dan Sosial
Kemasyarakatan 24, no. 2 (2024): 36–54,
https://doi.org/10.30631/alrisalah.v24i2.1610.
65
Anna Triningsih, Arief Hidayat, and Lita A. L. W. Tyesta, “Ideal Concept
of Formal Term Application in the Dispute Settlement on Local
Government Election Results in Indonesian Constitutional Court,”
International Journal of Health Sciences, 2022, 10779–89,
https://doi.org/10.53730/ijhs.v6ns6.12897.
Transformation of Indonesia’s Legislative Election System 341
Since Reformasi began, Indonesia has effectively conducted
several concurrent elections for the presidency, parliament, and local
government officials.
66
This election has moved towards fostering a
more democratic and inclusive political landscape. Furthermore, the
Reformasi era seeks to revive long-suppressed moral values neglected
under the previous regime, particularly in the realms of politics,
society, and religion.
67
The Reformasi era in Indonesia has indeed
fostered a more democratic and inclusive political environment,
marked by a resurgence of moral values that were previously
suppressed. This transformation is evident in the increasing role of
religious institutions, such as pesantren, which have become pivotal in
promoting ethical discourse within political contexts, emphasising
morality and Islamic law in political discussions.
68
Furthermore, the
political landscape has shifted towards ethical electoral practices,
where candidates are encouraged to uphold fairness and avoid corrupt
practices, reflecting a commitment to integrity in governance.
The Reformasi period also marked the rise of gender equality
concerns across different sectors, including politics, the economy, and
social and cultural domains in Indonesia. Furthermore, the
democratization initiatives in this era impacted domestic policies and
shaped Indonesia's foreign relations, highlighting democratic
principles in the country's international approach relations.
69
During
the Reformasi era, Indonesia's democratization significantly influenced
domestic and foreign policies, emphasizing democratic principles.
66
Aziz Alfarizi and Friz Zwiki, “Keadilan Dan Kepastian Hukum Dalam
Pemilu Serentak Di Indonesia,” Advances In Social Humanities Research
2, no. 1 (January 22, 2024): 83–91,
https://doi.org/10.46799/adv.v2i1.159.
67
Toba Sastrawan Manik et al., “Eksistensi LGBT Di Indonesia Dalam Kajian
Perspektif HAM, Agama, Dan Pancasila,” Jurnal Kewarganegaraan 18,
no. 2 (September 27, 2021): 84, https://doi.org/10.24114/jk.v18i2.23639.
68
Ahmad Nabilul Maram, Ahmad Busyairi, and Muhammad Raqib Assidiqi,
“Decline of Ideology and Rise of Political Pragmatism Among Kiai in
Post-Authoritarian Indonesia,” An-Nur International Journal of Islamic
Thought 1, no. 1 (December 22, 2023): 1–15,
https://doi.org/10.62032/aijit.v1i1.15.
69
Jürgen Rüland, “Democratizing Foreign-Policy Making in Indonesia and the
Democratization of ASEAN: A Role Theory Analysis,” TRaNS: Trans -
Regional and -National Studies of Southeast Asia 5, no. 1 (January 21,
2017): 49–73, https://doi.org/10.1017/trn.2016.26.
342 IIUM LAW JOURNAL VOL. 33 (1) 2025
Domestically, enacting Law No. 22 of 1999 facilitated
decentralization, granting local governments increased autonomy and
enhancing public participation and governance accountability.
70
This
transition created a more responsive political atmosphere, encouraging
civil society involvement and advancing democratic governance. In the
post-Reformasi era, changes in voter behaviour and political party
dynamics have emerged, demonstrating a vibrant shift in voter
engagement at both central and local levels.
71
Since the post-Reformasi period in Indonesia, there has been a
notable change in voter behavior and the dynamics of political parties,
marked by higher voter turnout and a shift toward direct elections at
both central and local levels. This change has empowered voters to
select leaders based on performance instead of party affiliations,
particularly highlighted by the introduction of direct elections for
regional heads (Pilkada).
72
Such electoral reforms have cultivated
heightened political engagement and accountability among the
electorate, as citizens are now more actively involved in the democratic
process.
73
Political parties have also evolved in response to these changes.
New parties, like the Partai Solidaritas Indonesia (PSI), have emerged,
appealing to younger voters seeking political renewal.
74
Established
70
Moch Faisal Karim, “Role Conflict and the Limits of State Identity: The
Case of Indonesia in Democracy Promotion,” The Pacific Review 30, no.
3 (May 4, 2017): 385–404,
https://doi.org/10.1080/09512748.2016.1249908.
71
Danis Tri Saputra Wahidin et al., “Partai Politik Dan Perilaku Pemilih Di
Indonesia (Studi Pada Pemilu Legislatif 2009, 2014, Dan 2019),” Journal
of Government and Civil Society 4, no. 1 (April 30, 2020): 131,
https://doi.org/10.31000/jgcs.v4i1.2376.
72
H. Hasbullah, “The Provincial General Election Commission and Public
Participation: A Study of Legislation,” Al-Ishlah: Jurnal Ilmiah Hukum
26, no. 1 (2023): 15–25, https://doi.org/10.56087/aijih.v26i1.393.
73
Farizal Pranata Bahri and Megawati Barthos, “Analysis of Constitutional
Court Decision Number 01/PHPU-PRES/XVII/2019 Related to
Presidential Election Disputes,” Journal Research of Social Science,
Economics, and Management 2, no. 11 (2023),
https://doi.org/10.59141/jrssem.v2i11.471.
74
M. Faishal Aminuddin and Moh. Fajar Shodiq Ramadlan, “Match-All Party:
Pragmatisme Politik Dan Munculnya Spesies Baru Partai Politik Di
Transformation of Indonesia’s Legislative Election System 343
parties, such as the Partai Demokrasi Indonesia Perjuangan (PDI-P),
have adapted by employing populist strategies and charismatic
leadership to resonate with the electorate.
75
The competitive political
landscape in Indonesia compels political parties to address local issues
and the aspirations of voters more effectively, signifying a dynamic
shift in the country's political arena.
76
The elections following the New
Order have seen new political parties rise as alternatives to the old ones
parties.
77
Nevertheless, corruption continues to be a problem that
afflicts several political parties that have secured seats in Parliament,
including the Democratic Party, the Golkar Party, the PDI-Perjuangan
Party, the Prosperous Justice Party (PKS), and the United Development
Party (PPP).
78
In Indonesia's post-New Order political scene, new political
parties have emerged, but corruption continues to plague established
parties like the Democratic Party, Golkar Party, PDI-Perjuangan,
Prosperous Justice Party (PKS), and United Development Party (PPP).
High-profile corruption cases, such as those involving Anas
Urbaningrum and Muhammad Nazaruddin from the Democratic Party,
illustrate the party's ongoing struggles with corruption scandals that
have tarnished its reputation.
79
Similarly, Golkar's Setya Novanto was
Indonesia Pasca Pemilu 2009,” Jurnal Politik 1, no. 1 (2015),
https://doi.org/10.7454/jp.v1i1.9.
75
Dede Sri Kartini et al., “The Management of a Modern Political Party (A
Study on Recruitment Model of Indonesian Democratic Party of Struggle
(PDI-P) in West Java),” Journal of Law and Sustainable Development 11,
no. 11 (2023): e1063, https://doi.org/10.55908/sdgs.v11i11.1063.
76
Nankyung Choi, “Local Elections and Party Politics in Post-Reformasi
Indonesia: A View from Yogyakarta,” Contemporary Southeast Asia 26,
no. 2 (2004): 280–301, https://doi.org/10.1355/CS26-2E.
77
Barokah et al., “Disrupsi Politik.”
78
Ignatius Ismanto, “Perubahan Politik Dan Rent Seeking Activities [Changes
in Political and Rent-Seeking Activities],” Verity: International Relations
Journal 9, no. 17 (September 11, 2017): 53,
https://doi.org/10.19166/verity.v9i17.577.
79
Ulla Fionna and Dirk Tomsa, “Changing Patterns of Factionalism in
Indonesia: From Principle to Patronage,” Journal of Current Southeast
Asian Affairs 39, no. 1 (2020): 39–58,
https://doi.org/10.1177/1868103419896904; Rangga Eka Saputra, “Hizb
Al-’adalah Wa Al-Rafahiyah (PKS) Wa Siyasat Al-Huwiyah Al-
Islamiyah: Istiratijiyat Kawadir Al-Hizb Li Tatir Qadaya Nukhabihim Al-
344 IIUM LAW JOURNAL VOL. 33 (1) 2025
implicated in the e-KTP scandal, receiving a 15-year sentence,
highlighting systemic corruption within political structures.
80
PDI-
Perjuangan faced scrutiny due to allegations of mismanagement of
Special Allocation Funds, while PKS's former president, Luthfi Hasan
Ishaaq, was sentenced for bribery related to beef imports.
81
The PPP
also encountered corruption issues, exemplified by the arrest of its
former chairman for bribery in job appointments.
82
These cases
underscore the persistent challenge of corruption in Indonesia's
political system despite reforms and the introduction of new parties.
Elections in the Reform era in Indonesia have undergone
significant changes with the implementation of the simultaneous
election system, as happened in 2019 and regulated by Law No. 7 of
2017. This system combines legislative elections with presidential and
vice-presidential polls simultaneously, aiming to increase the
efficiency and political participation of the people. This step is
expected to positively contribute to improving women's representation
in the Indonesian parliament, as happened after the enactment of the
30% gender quota since 2003. The passage of Law No. 12 of 2003
concerning General Elections significantly impacted women's
representation in the Indonesian parliament by instituting a 30% gender
Fasadiyah Al-Maliyah,” Studia Islamika 23, no. 2 (2016): 297–333,
https://doi.org/10.15408/sdi.v23i2.3313.
80
Siti Masitoh, Syifa Fauzia Rahmah, and Teti Sobari, “Framing Analysis in
Media Information About the Case of Setya Novanto Related To
Procurement E-Ktp (Kompas and Detik),” JLER (Journal of Language
Education Research) 2, no. 2 (2019): 7–13,
https://doi.org/10.22460/jler.v2i2.p7-13; Bayu Utomo and Mas Agus
Priyambodo, “Catatan Hukum (Anotasi) Putusan Kasus Korupsi KTP
Elektronik,” J-CEKI : Jurnal Cendekia Ilmiah 2, no. 1 (2022): 79–84,
https://doi.org/10.56799/jceki.v2i1.1177.
81
Saputra, “Hizb Al-’adalah Wa Al-Rafahiyah (PKS) Wa Siyasat Al-Huwiyah
Al-Islamiyah: Istiratijiyat Kawadir Al-Hizb Li Tatir Qadaya Nukhabihim
Al-Fasadiyah Al-Maliyah.”
82
Fionna and Tomsa, “Changing Patterns of Factionalism in Indonesia: From
Principle to Patronage”; Ivan Rinaldi, Mompang L Panggabean, and
Hendri Jayadi Pandiangan, “Penegakan Hukum Terhadap Tindak Pidana
Korupsi E–Ktp Oleh Anggota Legislatif Dan Upaya Non Penal Dalam
Perspektif Kebijakan Kriminal,” Jurnal Hukum To-Ra : Hukum Untuk
Mengatur Dan Melindungi Masyarakat 7, no. 3 (2021): 410–21,
https://doi.org/10.55809/tora.v7i3.46.
Transformation of Indonesia’s Legislative Election System 345
quota.
83
Implementing simultaneous legislative and presidential
elections in Indonesia has increased women's representation in
parliament, particularly following the introduction of a 30% gender
quota in 2003. This legislative reform has been associated with a rise
in female legislators from approximately 9% in 2004 to around 18% in
2014, although the percentage of women elected to the national
parliament has declined in the most recent elections.
84
In addition, this
simultaneous election raises questions about the presidential threshold
in the Indonesian electoral system. Some have questioned its impact on
democracy and the implementation of the constitution.
85
Simultaneous elections in Indonesia have created chances for
major parties to vie in both parliamentary and presidential elections,
anticipated to bolster democracy and its consolidation in
Indonesia.
86
The presidential threshold in Indonesia, which requires
political parties to secure either 20% of seats in the DPR (People's
Consultative Assembly) or 25% of the popular vote from the previous
legislative election to nominate presidential candidates, aims to
stabilise the political landscape by limiting fragmentation among
parties.
87
The Constitutional Court of Indonesia has ruled that the
83
Ben Hillman, “Increasing Women’s Parliamentary Representation in Asia
and the Pacific: The Indonesian Experience,” Asia & the Pacific Policy
Studies 4, no. 1 (January 4, 2017): 38–49,
https://doi.org/10.1002/app5.160.
84
Nuril Khoiriyah, “A Long Road to a Gender Equality in the House of
Representatives in Indonesia,” KnE Social Sciences, July 29, 2020,
https://doi.org/10.18502/kss.v4i10.7391.
85
Dani Amran Hakim and M Yasin Al Arif, “Questioning Presidential
Threshold in Indonesia: Constitutional Analysis and Democracy
Implementation,” Veteran Law Review 7, no. 1 (May 31, 2024): 73–86,
https://doi.org/10.35586/velrev.v7i1.7591.
86
Kadir Johnson Rajagukguk, Sofjan Aripin, and Heri Wahyudi,
“Simultaneous General Election: It Is Fair for Democracy in Indonesia,”
JIP (Jurnal Ilmu Pemerintahan) : Kajian Ilmu Pemerintahan Dan Politik
Daerah 6, no. 1 (July 26, 2021): 56–64,
https://doi.org/10.24905/jip.6.1.2021.56-64.
87
Rahmat Muhajir Nugroho et al., “Comparison of Threshold Provisions for
Presidential Candidacy in Indonesia and Turkey,” in Proceedings of the
International Conference on Sustainable Innovation on Humanities,
Education, and Social Sciences (ICOSI-HESS 2022) (Paris: Atlantis Press
SARL, 2022), 24–31, https://doi.org/10.2991/978-2-494069-65-7_4.
346 IIUM LAW JOURNAL VOL. 33 (1) 2025
presidential threshold requirement, which previously required
presidential candidates to secure at least 20% of the seats in the DPR
or 25% of national votes, is unconstitutional. This decision opens the
door for any political party to propose a presidential candidate without
the need to meet a specific threshold. However, the Court emphasised
the need for further regulations to ensure the number of candidates
remains manageable for effective democracy.
88
In the context of regional head elections in Indonesia, the
government has the authority to appoint officials to fill leadership
vacancies until the simultaneous polls scheduled for November 2024.
This interim measure is crucial for maintaining governance and
continuity in local administration, especially considering that
numerous regional heads' terms are expiring. It has been noted that
approximately 269 regional heads will see their terms end,
necessitating interim appointments to ensure effective governance
during this transitional period.
89
The appointment of officials is seen as
a mechanism to prevent disruptions in local governance and maintain
public service delivery until elected officials can assume their roles.
90
Furthermore, the legitimacy of these appointments is contingent upon
strict adherence to democratic principles, highlighting the imperative
for transparency and public consultation within the selection process.
This approach underscores the equilibrium between political
accountability and the essential nature of professional governance
during electoral cycle transitions.
91
88
“The Constitutional Court’s Ruling, Numbered 62/PUU-XXII/2024”
(2025).
89
Rona Indara, “Problem of Authority For Executing Task (PLT) In The
Transitional Period of Regional Government Before and After The
Simultaneous Elections Based On Law Number 23 Of 2014 Concerning
Local Government,” International Journal Of Humanities Education and
Social Sciences (IJHESS) 3, no. 3 (2023),
https://doi.org/10.55227/ijhess.v2i3.653.
90
Riastri Haryani, “The Implementation of Simultaneous Local Elections: An
Overview of Constitutional Law and Its Impact on Democracy in
Indonesia,” SIGn Jurnal Hukum 5, no. 1 (2023): 102–13,
https://doi.org/10.37276/sjh.v5i1.262.
91
Shu Wang and Andrew Crosby, “Politics or Professionalism To the Rescue?
The Friedrich-Finer Debate in the Context of State Intervention in
Michigan,” Public Administration Quarterly 43, no. 4 (2019): 555–83,
https://doi.org/10.1177/073491491904300404.
Transformation of Indonesia’s Legislative Election System 347
ADVANTAGES OF THE ELECTORAL SYSTEM IN THE
REFORM ERA
The advantages of the reform electoral system lie in openness and
pluralism, which increase the number of political parties and political
freedom, allowing for more diverse and inclusive representation. With
simultaneous elections, people's political participation can be
improved, increasing political awareness among the public.
92
Political
participation in general elections is considered a means of democracy
that allows citizens to elect aspirational, qualified, and responsible
representatives and leaders for the welfare of the people.
93
Simultaneous elections also have the potential to affect the
commitment of political parties in permanent coalitions to
strengthening their power bases in state institutions, which is expected
to facilitate the improvement of the presidential system in Indonesia.
94
In addition, elections are essential in a democratic country because they
open up opportunities for a change of government and provide
momentum to test and evaluate the people's support for the government
in power.
95
Effective voter education empowers individuals to express
their political needs, hold the government accountable, and enhance
citizens' ability to engage with their government.
96
In the Indonesian context, general elections allow the people to
channel their political will and elect leaders who carry out political
policies simultaneously with all citizens.
97
Political parties in Indonesia
92
Solihah, “Peluang Dan Tantangan Pemilu Serentak 2019 Dalam Perspektif
Politik.”
93
Nur Wardhani, “Partisipasi Politik Pemilih Pemula Dalam Pemilihan
Umum.”
94
Solihah, “Peluang Dan Tantangan Pemilu Serentak 2019 Dalam Perspektif
Politik.”
95
TRIONO TRIONO, “MENAKAR EFEKTIVITAS PEMILU SERENTAK
2019,” Jurnal Wacana Politik 2, no. 2 (October 11, 2017),
https://doi.org/10.24198/jwp.v2i2.14205.
96
Anugrah P Telaumbanua, Marlon Marlon, and Heri Kusmanto, “Peran
Rumah Pintar Pemilu Dalam Meningkatkan Partisipasi Masyarakat Pada
Pemilu Serentak,” PERSPEKTIF 10, no. 2 (July 8, 2021): 627–43,
https://doi.org/10.31289/perspektif.v10i2.4923.
97
Efendi Susanto, “SILA KE-EMPAT PANCASILA DAN IKLIM
DEMOKRASI INDONESIA SAAT INI,” Masalah-Masalah Hukum 50,
348 IIUM LAW JOURNAL VOL. 33 (1) 2025
play an essential role in shaping democracy by accommodating public
interests and translating them into policies. The direct election of the
President and Vice President based on the principles of Pancasila
marks a step toward realizing the ideals of democracy in the country.
98
SHORTCOMINGS OF THE ELECTORAL SYSTEM IN THE
REFORM ERA
The disadvantages of a simultaneous electoral system include the
complexity of the process, which requires more complicated logistics
and preparation and raises the risk of administrative and logistical
errors. In addition, greater political freedom also brings a higher
potential for political conflict, especially if it is not balanced with
effective conflict resolution mechanisms.
99
Simultaneous elections offer advantages in terms of greater
political participation and more inclusive representation. However,
challenges such as logistical complexity and potential political
conflicts need to be carefully addressed for the electoral process to run
smoothly and for democracy to be maintained.
100
The electoral system in the reform era has undergone significant
changes, but a number of shortcomings remain that need to be
considered to ensure fairness and public trust in the electoral process.
Some key issues that must be addressed include a lack of transparency,
money politics, low gender representation, vote manipulation,
logistical problems, and a lack of political education.
101
The absence of
no. 1 (January 31, 2021): 84–93,
https://doi.org/10.14710/mmh.50.1.2021.84-93.
98
Dwanda Julisa Sistyawan and Elchin Gashimov, “Implementation of
Pancasila Democracy in Temanggung District in the General Election,”
Ilomata International Journal of Social Science 5, no. 2 (June 18, 2024):
512–27, https://doi.org/10.61194/ijss.v5i2.1172.
99
Khairul Fahmi et al., “Sistem Keadilan Pemilu Dalam Penanganan
Pelanggaran Dan Sengketa Proses Pemilu Serentak 2019 Di Sumatera
Barat,” Jurnal Konstitusi 17, no. 1 (May 6, 2020): 001,
https://doi.org/10.31078/jk1711.
100
TRIONO, “MENAKAR EFEKTIVITAS PEMILU SERENTAK 2019.”
101
Dwanda Julisa Sistyawan, “LEGAL REFORMULATION OF
LEGISLATIVE ELECTIONS IN REALIZING PANCASILA
Transformation of Indonesia’s Legislative Election System 349
transparency in the electoral process can diminish public confidence in
the election results.
102
Money politics is a big problem that pollutes the
integrity of elections and reduces fairness in the election process.
103
In
addition, low gender representation is also a challenge in achieving
gender equality in politics.
104
Vote manipulation, both in the form of
vote inflation and intimidation of voters, is also frequent and casts
doubt on the credibility of elections.
105
Logistical issues, such as late
distribution of ballots, can also reduce voter participation.
106
In
addition, the lack of public political education is also an essential factor
in the reform era's lack of an electoral system.
107
Improving voter
DEMOCRACY IN INDONESIA,” Jurnal Hukum Progresif 12, no. 2
(October 28, 2024): 120–34, https://doi.org/10.14710/jhp.12.2.120-134.
102
Yosafat Koli, David B.W. Pandie, and Nursalam Nusalam, “Transparansi
Dalam Sistem Pencalonan Pemilihan Walikota Kupang Tahun 2017,”
Jurnal Kajian Media 2, no. 2 (December 17, 2018),
https://doi.org/10.25139/jkm.v2i2.918.
103
Hardianto Hawing and Nursaleh Hartaman, “Politik Uang Dalam
Demokrasi Di Indonesia,” Journal of Social Politics and Governance
(JSPG) 3, no. 1 (July 30, 2021): 45–53,
https://doi.org/10.24076/jspg.v3i1.533.
104
Pipit Widiatmaka et al., “Peran Karang Teruna Dalam Mengantisipasi
Politik Uang dan Isu Sara untuk Mensuseskan Pemilu 2024 (Studi
Karang Taruna Karya Muda Desa Kedungjambal, Kecamatan
Tawangsari, Kabupaten Sukoharjo),” Jurnal Litbang Provinsi Jawa
Tengah 21, no. 2 (April 4, 2024): 241–55,
https://doi.org/10.36762/jurnaljateng.v21i2.1006.
105
Valian Yoga Pudya Ardhana, M. Dermawan Mulyodiputro, and Lilik
Hidayati, “Aplikasi Survei Kerawanan Pemilu Berbasis Web
Menggunakan Metode SDLC,” Insologi: Jurnal Sains Dan Teknologi 3,
no. 1 (February 28, 2024): 141–53,
https://doi.org/10.55123/insologi.v3i1.3188.
106
Wirdha Ningsih, Slamet Imam Wahyudi, and Henny Pratiwi Adi, “Analisis
Pemilihan Desain Jembatan Dengan Menggunakan Metode Analytical
Hierarchy Process (AHP),” Musamus Journal of Civil Engineering 4, no.
02 (April 30, 2022): 81–89, https://doi.org/10.35724/mjce.v4i02.4405.
107
Fitriyah Fitriyah, Laila Kholid Alfirdaus, and Dzunuwanus Ghulam Manar,
“Partisipasi Politik Dan Pemilih Muda: Konteks Pilgub Jateng 2018 Dan
Pilkada 2019 Di Kabupaten Temanggung,” Politika: Jurnal Ilmu Politik
12, no. 1 (April 27, 2021): 1,
https://doi.org/10.14710/politika.12.1.2021.1-10.
350 IIUM LAW JOURNAL VOL. 33 (1) 2025
education and promoting community involvement to reinforce
democratic principles.
108
To improve the electoral system, efforts are needed to increase
transparency, reduce the practice of money politics, increase gender
representation, prevent vote manipulation, improve logistical
problems, and improve public political education. Initiatives to
strengthen election supervisory institutions, maintain transparency,
encourage active and fair participation in elections, and prioritize
policies that support strong and inclusive democracy are urgently
needed.
109
COMPARISON AND ANALYSIS OF THE NEW ORDER AND
REFORM ELECTORAL SYSTEM
In the New Order era in Indonesia, under the leadership of President
Suharto, the electoral system was stringent, limiting the number of
political parties allowed to participate in elections. The government
actively enforces these restrictions, so only a few parties are allowed to
compete.
110
However, with the emergence of the Reform era after the
end of the New Order regime, there was a significant shift towards a
more open space for many political parties to emerge and be involved
in the electoral process.
111
This transition marks a substantial change in
the government's and political parties' involvement in Indonesia's
democratic landscape.
108
Sistyawan and Gashimov, “Implementation of Pancasila Democracy in
Temanggung District in the General Election.”
109
Valian Yoga Pudya Ardhana, M. Dermawan Mulyodiputro, and Lilik
Hidayati, “Aplikasi Survei Kerawanan Pemilu Berbasis Web
Menggunakan Metode SDLC.”
110
Achmad Farid Wadjdi, Mistiani, and Nebula F Hasani, “The Multi-
PartySystem in Indonesia: Reviewing the Number of Electoral Parties
from the Aspects of the National Defense and Security,” Journal of Social
and Political Sciences 3, no. 3 (September 30, 2020),
https://doi.org/10.31014/aior.1991.03.03.204.
111
Maemunah Maemunah, “Voting Results Concurrent Election in Indonesia
in 2019,” CIVICUS : Pendidikan-Penelitian-Pengabdian Pendidikan
Pancasila Dan Kewarganegaraan 8, no. 2 (October 12, 2020): 46,
https://doi.org/10.31764/civicus.v8i2.2860.
Transformation of Indonesia’s Legislative Election System 351
Political parties play a crucial role in strengthening democracy
in Indonesia.
112
Political parties have played an important role in
various political processes within the legislature, government, and
other state institutions, thus acting as a driving force in implementing
democracy in the country.
113
The institutionalization of the party
system, marked by the stability of competition among parties, holds
significant importance for the democratic consolidation of nations such
as Indonesia.
114
Moreover, the efforts towards democratization following the
Reform movement have significantly reshaped the political landscape
in Indonesia at both the national and local levels. The Reformasi era
has resulted in transformative changes across various dimensions of
Indonesian society, encompassing social development, legal
frameworks, press freedom, and political structures. It has also
facilitated the emergence of new political entities, including Islamic
parties.
115
Indonesia's multiethnic nature has been enforced through
112
Saharuddin, Endang Larasati, and Sri Suwitri, “Analyzing People’s Silence
Power and the Incumbent Local Party Regime in Aceh Province Regional
Head Elections in 2017,” International Journal of Research and Review
10, no. 3 (March 15, 2023): 206–26,
https://doi.org/10.52403/ijrr.20230324.
113
Nfn Efriza, “Eksistensi Partai Politik Dalam Persepsi Publik [The Existence
of The Political Parties in Public Perception],” Jurnal Politica Dinamika
Masalah Politik Dalam Negeri Dan Hubungan Internasional 10, no. 1
(May 31, 2019): 17–38, https://doi.org/10.22212/jp.v10i1.1314.
114
Andreas Ufen, “Political Party and Party System Institutionalization in
Southeast Asia: Lessons for Democratic Consolidation in Indonesia, the
Philippines and Thailand,” Pacific Review 21, no. 3 (July 4, 2008): 327–
50, https://doi.org/10.1080/09512740802134174.
115
Reztya Ridwan and Kamarudin Kamarudin, “Defense Factors of Islamic
Political Parties in Election (Comparative Study of Malaysian Islamic
Parties (PAS) in Malaysia 2013 and the Prosperous Justice Party (PKS)
Di Indonesia 2014),” in Proceedings of the First International Conference
on Administration Science (ICAS 2019) (Paris, France: Atlantis Press,
2019), https://doi.org/10.2991/icas-19.2019.86.
352 IIUM LAW JOURNAL VOL. 33 (1) 2025
democratic freedoms and regional autonomy policies, which aim to
improve people's welfare and the formation of political identities.
116
The New Order era in Indonesia, characterized by firm
government control over elections, limited the participation of political
parties, leading to a limited political landscape.
117
In contrast, the
Reformasi era ushered in a more democratic environment, giving
political parties and the public greater freedom to be involved in the
electoral process.
118
This transition fostered a more varied and
engaging political environment in which political parties and society
had a more significant influence on shaping the nation's political
direction.
119
Political parties are essential for consolidating democracy in
Indonesia, as they drive various political processes within the
government and legislature, contributing to the implementation of
democratic principles.
120
Establishing a stable party system is crucial
for strengthening democracy in countries like Indonesia. The post-1998
Reform era introduced significant shifts in Indonesian politics at both
national and local levels, fostering the rise of new political
organizations, including Islamic parties.
121
These references collectively highlight the increasing
complexity of elections in the Reform era compared to the New Order
period. The implementation of simultaneous elections, combining
116
Refly Setiawan and Sergey A. Sergeev, “Ethnic Mobility and the Formation
of Political Identity in Indonesia,” Jurnal Cita Hukum 11, no. 1 (April 30,
2023): 75–94, https://doi.org/10.15408/jch.v11i1.31571.
117
Wadjdi, ., and Hasani, “The Multi-Party System in Indonesia: Reviewing
the Number of Electoral Parties from the Aspects of the National Defense
and Security.”
118
Maemunah, “Voting Results Concurrent Election in Indonesia in 2019.”
119
Saharuddin, Larasati, and Suwitri, “Analyzing People’s Silence Power and
the Incumbent Local Party Regime in Aceh Province Regional Head
Elections in 2017.”
120
Efriza, “Eksistensi Partai Politik Dalam Persepsi Publik [The Existence of
The Political Parties in Public Perception].”
121
Ridwan and Kamarudin, “Defense Factors of Islamic Political Parties in
Election (Comparative Study of Malaysian Islamic Parties (PAS) in
Malaysia 2013 and the Prosperous Justice Party (PKS) Di Indonesia
2014).”
Transformation of Indonesia’s Legislative Election System 353
legislative and executive elections, is a significant change in the
electoral process. This shift towards simultaneous elections reflects
efforts to create a fairer and more representative electoral system,
although it requires more complicated logistical preparation.
122
The transition from the New Order to the Reform era in
Indonesia has been marked by significant challenges within its legal
and political systems, particularly regarding the influence of oligarchic
elites, the fragility of party institutionalisation, and the limitations of
legal reforms in ensuring fair elections. Despite the formal
establishment of democratic institutions, the persistence of oligarchic
structures has undermined the democratic process. Political parties,
often dominated by elite interests, have failed to fully represent the
electorate, resulting in a disconnect between political representation
and public needs.
123
This oligarchic influence is evident in the
candidate selection processes, which are frequently characterised by
centralisation and personalisation. This limits opportunities for
grassroots participation and reinforces elite control.
124
Moreover, the institutionalisation of political parties in
Indonesia remains weak. The parties that emerged post-Suharto have
struggled to develop robust organisational structures, often relying on
charismatic leadership rather than institutional frameworks.
125
This
lack of institutionalisation has resulted in a fragmented party system,
where parties frequently undergo splits and realignments, further
122
Alfarizi and Zwiki, “Keadilan Dan Kepastian Hukum Dalam Pemilu
Serentak Di Indonesia.”
123
Laode Muliawan, “Institutionalization of Political Parties on Post New
Order Authoritarianism and Its Implications for Indonesian Democracy,”
Journal of Local Government Issues 3, no. 2 (2020),
https://doi.org/10.22219/logos.v3i2.12860.
124
Andi Luhur Prianto et al., “Does Collective Action Institutionalize Rational
Choice? Candidate Selection in Indonesian Political Parties,” Journal of
Liberty and International Affairs 8, no. 3 (2022): 63–82,
https://doi.org/10.47305/JLIA2283063p.
125
Paige Johnson Tan, “Indonesia Seven Years after Soeharto: Party System
Institutionalization in a New Democracy,” Contemporary Southeast Asia:
A Journal of International and Strategic Affairs 28, no. 1 (2006): 88–114,
https://doi.org/10.1353/csa.2006.0009.
354 IIUM LAW JOURNAL VOL. 33 (1) 2025
complicating the political landscape.
126
While ostensibly democratic,
the electoral mechanisms have not effectively mitigated these issues.
Instead, they have facilitated a cycle of fragmentation and instability,
making it difficult for parties to establish a coherent policy agenda or
maintain public trust.
127
Legal reforms intended to enhance electoral integrity have also
faced significant limitations. While there have been efforts to
implement regulations to promote transparency and fairness, these
reforms have often been undermined by the elites they seek to regulate.
The electoral process remains susceptible to manipulation, with issues
such as vote-buying and money's influence in politics continuing to
pose serious challenges.
128
The interplay between these unresolved
issues highlights the complexities of Indonesia's democratic transition.
It suggests that without addressing the entrenched interests of
oligarchic elites and strengthening party institutionalisation, the
prospects for genuine democratic governance remain tenuous.
ADVANTAGES AND DISADVANTAGES OF REALIZING THE
PRINCIPLES OF DEMOCRACY AND PEOPLE'S
SOVEREIGNTY
Despite maintaining good political stability in the New Order era in
Indonesia, significant shortcomings occurred in realizing the principles
of democracy and people's sovereignty. The limitations in democracy
are evident through restrictions on the number of political parties and
firm government control over the electoral process, which leads to
unbalanced political representation and limited citizen participation in
126
Dirk Tomsa, “Party System Fragmentation in Indonesia: The Subnational
Dimension,” Journal of East Asian Studies 14, no. 2 (August 21, 2014):
249–78, https://doi.org/10.1017/S1598240800008924.
127
Ufen, “Political Party and Party System Institutionalization in Southeast
Asia: Lessons for Democratic Consolidation in Indonesia, the Philippines
and Thailand.”
128
Michael Buehler and Ronnie Nataatmadja, “Authoritarian Diasporas in
Indonesia and the Philippines: Comparative Perspectives on Elite
Survival and Defection,” Democratization 28, no. 3 (2021): 521–38,
https://doi.org/10.1080/13510347.2020.1832084.
Transformation of Indonesia’s Legislative Election System 355
the political process.
129
This situation resonates with Taylor and
Lijphart's findings, which discuss how proportional representation
systems favour small centrist parties over larger, potentially more
ideologically extreme parties. This preference contributed to the
imbalance of political representation observed during the New Order
era.
130
For instance, the New Order regime enforced strict regulations
through the Political Parties and Golkar Law (UU Nomor 3 Tahun
1975) and Election Law (UU Nomor 15 Tahun 1969), which governed
party formation, voter allocation, and the electoral process. These laws
effectively curbed the representation of larger or more radical parties,
cementing Golkar’s dominance and the representation of smaller
centrist parties aligned with the regime’s interests. Thus, Taylor and
Lijphart's findings resonate with the political reality of the New Order,
where the PR system and the corresponding legal framework
reinforced a controlled political environment, favouring smaller,
centrist parties at the expense of political pluralism.
In addition, the control provided by the government over the
electoral process is in line with the concept of a political network of
influence discussed by Peterson, highlighting the transformation of the
healthcare policy network from a rigid structure dominated by anti-
reform alliances to a more flexible network in which reform coalitions
have the potential to succeed, especially under proactive leadership.
The government's control over the electoral process aligns with
Peterson’s concept of a political network of influence. Peterson
discussed the evolution of healthcare policy networks from a rigid
structure once dominated by anti-reform alliances to a more flexible
network where reform coalitions could potentially succeed, especially
under proactive leadership. This transformation illustrates how shifts
in organized interests can significantly influence policy outcomes. A
similar pattern can be observed in Indonesia during the New Order era,
where centralized government control shaped political outcomes by
129
BAOGANG HE, “A Survey Study of Voting Behavior and Political
Participation in Zhejiang,” Japanese Journal of Political Science 7, no. 3
(December 26, 2006): 225–50,
https://doi.org/10.1017/S1468109906002349.
130
PETER J. TAYLOR and AREND LIJPHART, “Proportional Tenure vs
Proportional Representation: Introducing a New Debate,” European
Journal of Political Research 13, no. 4 (December 29, 1985): 387–99,
https://doi.org/10.1111/j.1475-6765.1985.tb00134.x.
356 IIUM LAW JOURNAL VOL. 33 (1) 2025
aligning power networks to favour the regime. This shift reflects how
changes in organized interests can affect policy outcomes, similar to
how government control influenced political outcomes in Indonesia
during the New Order.
131
The limited political representation and participation
experienced during the New Order era can also be attributed to
Togeby's discussion of grassroots participation. emphasizing how
politically engaged individuals with social resources can use grassroots
participation to complement traditional avenues of political
engagement. This suggests that in situations where formal political
channels are restricted, individuals can look for alternative ways to
participate and influence the political process.
132
The limited political
representation and participation experienced during the New Order era
can be analyzed through Togeby’s discussion on grassroots
participation. Togeby emphasizes that individuals with social resources
often find alternative ways to engage politically when formal channels
are restricted. This is particularly relevant in the context of the New
Order, where state control over formal political channels was
pervasive. Data analysis indicates that individuals and groups utilised
informal networks and community-based initiatives to circumvent
restrictions, thus creating a form of political engagement outside
traditional avenues. This finding aligns with Togeby’s argument that
grassroots participation can complement formal political institutions,
particularly in constrained political environments.
The New Order era in Indonesia, characterized by authoritarian
governance, significantly impeded democracy and the sovereignty of
the populace due to limited political representation and stringent
control over electoral processes. This period saw the entrenchment of
political elites who co-opted state mechanisms, leading to systemic
corruption and a lack of genuine democratic engagement.
133
Scholarly
131
Mark A Peterson, “Political Influence in the 1990s: From Iron Triangles to
Policy Networks,” Journal of Health Politics, Policy and Law 18, no. 2
(April 1, 1993): 395–438, https://doi.org/10.1215/03616878-18-2-395.
132
Lise Togeby, “Grass Roots Participation in the Nordic Countries,”
European Journal of Political Research, 1993,
https://doi.org/10.1111/j.1475-6765.1993.tb00374.x.
133
Jürgen Rüland, “Democratizing Foreign-Policy Making in Indonesia and
the Democratization of ASEAN: A Role Theory Analysis,” TRaNS:
Trans-Regional and -National Studies of Southeast Asia 5, no. 1 (2017):
Transformation of Indonesia’s Legislative Election System 357
discourse highlights how such political frameworks fostered the
dominance of established parties, undermining grassroots political
movements and restricting public participation.
134
However, as
conventional political channels became increasingly constrained,
grassroots participation became a crucial avenue for political
engagement, allowing marginalized voices to assert their influence.
135
This dynamic illustrates the resilience of civil society in navigating
authoritarian constraints and underscores the importance of inclusive
political frameworks for fostering genuine democratic practices in
Indonesia.
136
The Reformasi era in Indonesia marked a pivotal shift towards
greater political freedom and party pluralism, which directly enhanced
the quality of democracy and increased public participation. This
transformation was grounded in significant changes to Indonesia’s
legal framework, specifically reforms that expanded civil liberties and
institutionalized pluralistic political structures. An analysis of
Indonesia’s evolving legal environment demonstrates how these
49–73, https://doi.org/10.1017/trn.2016.26; Michael T. Rock,
“Indonesia’s Centripetal Democracy and Economic Growth,” Journal of
the Asia Pacific Economy 23, no. 1 (2018): 156–72,
https://doi.org/10.1080/13547860.2017.1387371; Edward Aspinall and
Eve Warburton, “Indonesia: The Dangers of Democratic Regression,” in
Proceedings of the Third International Conference on Social and Political
Sciences (ICSPS 2017) (Paris, France: Atlantis Press, 2018),
https://doi.org/10.2991/icsps-17.2018.1.
134
Ben Kristian Citto Laksana and Lidia Kristi Agustina, “Hollowness of
Imagination: Common Sense and Democracy,” Jurnal Ilmiah Hubungan
Internasional 18, no. 1 (2022): 14–28,
https://doi.org/10.26593/jihi.v18i1.5654.14-28.
135
Nancy Lee Peluso, Suraya Afiff, and Noer Fauz Rachman, “Claiming the
Grounds for Reform: Agrarian and Environmental Movements in
Indonesia,” Journal of Agrarian Change 8, no. 2–3 (2008): 377–407,
https://doi.org/10.1111/j.1471-0366.2008.00174.x.
136
Muhammad Habibi et al., “Democratic Political Articulation,” Proceedings
of the Tegal International Conference on Applied Social Science &
Humanities (TICASSH 2022), 2023, 50–60, https://doi.org/10.2991/978-
2-494069-09-1_8.
358 IIUM LAW JOURNAL VOL. 33 (1) 2025
reforms have contributed to reinforcing the rule of law and ensuring
greater accountability within the political system.
137
Comparison between the centralized and restricted electoral
system of the New Order and the more inclusive multiparty system of
the Reform Era, under the New Order, elections were tightly controlled
through mechanisms such as the restriction of political parties limiting
electoral participation to only three contestants and the dominance of
Golkar, reflecting an authoritarian approach aimed at ensuring political
stability. In contrast, the Reform Era introduced a more democratic
electoral design, including an open-list proportional representation
system, decentralization of power, and direct elections. However, this
shift has also brought new challenges, such as party fragmentation,
transactional politics, and gender inequality.
138
These differences not only illustrate the evolution of Indonesia’s
constitutional law but also highlight a universal dilemma in democratic
transitions: how to balance political openness with effective
governance. These findings contribute to global discourses on
democratization by demonstrating that the dismantling of an
authoritarian regime does not automatically result in a mature
democratic order; rather, it requires deliberate institutional engineering
to address structural legacies such as oligarchy and patrimonial
political culture.
139
The realization of the principles of democracy and people’s
sovereignty in Indonesia reflects a complex trajectory, from the limited
political participation and state dominance of the New Order era to the
more inclusive and pluralistic political landscape of the Reformasi era.
137
Eko Bagus Sholihin, “Why Have Anti-Offshore Tin Mining Movements
Failed in Bangka but Succeeded in East Belitung? Political
OpportunityStructures and Political Settlement in the Context of
Indonesia’s Democratic Future,” PCD Journal 8, no. 2 (March 24, 2021):
203–27, https://doi.org/10.22146/pcd.v8i2.1483.
138
Jamaluddin Jamaluddin, Ellydar Chaidir, and Efendi Ibnu Susilo,
“Application of Open Proportional System in Post Amendment
Legislative Elections Basic Law of the Republic of Indonesia Year 1945,”
Eduvest - Journal of Universal Studies 1, no. 9 (September 20, 2021):
871–84, https://doi.org/10.59188/eduvest.v1i9.207.
139
Yuki Fukuoka, “Oligarchy and Democracy in Post-Suharto Indonesia,”
Political Studies Review 11, no. 1 (January 15, 2013): 52–64,
https://doi.org/10.1111/j.1478-9302.2012.00286.x.
Transformation of Indonesia’s Legislative Election System 359
While Reformasi succeeded in expanding political freedoms and party
pluralism, new challenges such as party fragmentation, transactional
politics, and illiberal democratic practices continue to pose significant
obstacles. This underscores that democratization is not merely about
opening political access but also requires the strengthening of legal
infrastructure and institutions to sustainably safeguard democratic
principles .
CONCLUSION
The transformation of Indonesia’s legislative electoral system from the
New Order to the Reform era reflects significant legal progress toward
democracy and popular sovereignty, marked by substantial changes in
electoral laws from restrictive frameworks under Law No. 3 of 1975
and Law No. 15 of 1969 to more inclusive regulations such as Law No.
3 of 1999 and Law No. 7 of 2017. While these reforms expanded
political participation and party pluralism, challenges remain,
including the complexity of simultaneous elections, weak party
institutionalization, transactional politics, and oligarchic dominance.
Concrete measures are needed to advance democracy, including
strengthening enforcement of electoral laws, enhancing transparency
in political financing, expanding voter education, and improving
election monitoring capacity. Sustained legal and institutional reforms
are crucial to ensure accountability, address electoral vulnerabilities,
and uphold the people's sovereignty in Indonesia’s democratic
practices.
RECOMMENDATION
The transformation of Indonesia’s electoral system from the New
Order to the Reform era marks significant progress toward democracy
and popular sovereignty, yet challenges like electoral complexity,
administrative inefficiencies, and oligarchic dominance persist. To
address these, Indonesia should tighten enforcement of electoral laws
by strengthening sanctions for electoral violations and crimes and
improving coordination between oversight and judicial bodiesfeasible
within current mandates; promote transparent campaign finance
through real-time reporting and stricter audits to curb oligarchic
360 IIUM LAW JOURNAL VOL. 33 (1) 2025
influence achievable with political will and civil society support;
expand civic education through partnerships with schools and NGOs
to foster informed participation highly feasible; and enhance election
monitoring by increasing Bawaslu’s authority and encouraging citizen-
based oversight viable with legislative backing. These steps are vital to
strengthen accountability and align electoral practices with democratic
and constitutional principles.
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