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Impact Assessment and Project Appraisal

ISSN: 1461-5517 (Print) 1471-5465 (Online) Journal homepage: http://www.tandfonline.com/loi/tiap20

Devolution of environmental regulation:


environmental impact assessment in Malaysia
P. A. Memon
To cite this article: P. A. Memon (2000) Devolution of environmental regulation: environmental
impact assessment in Malaysia, Impact Assessment and Project Appraisal, 18:4, 283-293, DOI:
10.3152/147154600781767295
To link to this article: http://dx.doi.org/10.3152/147154600781767295

Published online: 20 Feb 2012.

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Impact Assessment and Project Appraisal, volume 18, number 4, December 2000, pages 283293, Beech Tree Publishing, 10 Watford Close, Guildford, Surrey GU1 2EP, UK.

Environmental regulation
Devolution of environmental regulation:
environmental impact assessment in Malaysia

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P A Memon

Based on an empirical case study surrounding


the fragmentation of a hitherto apparently cohesive national environmental impact assessment (EIA) system in Malaysia, this paper
argues that effectiveness of planning tools such
as EIA cannot be isolated from wider issues of
governance. Integration of environmental and
developmental objectives in decision-making by
using tools such as EIA poses important political implications. This is because state institutions do not function independently from the
rest of society and influential interest groups
within it. A political will and willingness openly
to debate development proposals by a vibrant
civil society able to access information are prerequisites for tools such as EIA to be effective.

Keywords: environmental regulation; environmental impact


assessment; Malaysia

P A Memon is in the Division of Environmental Management and


Design, Lincoln University, Canterbury, New Zealand; E-mail
memona@kea.lincoln.ac.nz.
The author takes full responsibility for the views expressed in
this paper. He is grateful to James Dawos Mamit, Controller of
Environmental Quality, Sarawak and Professor Murtedza
Mohamed (University of Malaysia, Sarawak) for discussing the
Malaysian EIA system and to Alan Ambury for assistance with
data collection.

Impact Assessment and Project Appraisal December 2000

NTEGRATION OF ENVIRONMENT and development in decision-making has emerged as a


dominant theme in the recent debate on sustainable development (IUCN 1991; Dwivedi and
Vajpeyi, 1995). Effective environmental regulation
of public- and private-sector development initiatives
is necessary to promote ecological and social wellbeing in the particular context of the developing
world and environmental impact assessment (EIA) is
seen as an essential tool for this purpose. However,
experience in designing effective EIA systems as
an instrument for environmental planning and
management in developing countries has been
variable.
For this reason, there is growing cognisance of the
significance of the wider institutional dimensions of
environmental management as a determinant of EIA
effectiveness. These institutional dimensions relate
broadly to the political and related administrative
arrangements for EIA including allocation of responsibilities between national and sub-national levels of
jurisdiction, inter-governmental relationships, coordination and co-operation amongst agencies and
stakeholder participation in the EIA process in an
open civil society. The objective of this paper is to
examine the recent changes to the Malaysian EIA
system from this perspective.
Malaysia, a federal state (Figure 1), was one of the
second generation of Asian countries to adopt EIA
formally compared to countries such as the Philippines and Thailand which adopted EIA legislation in
1977 and 1978 respectively. Until recently, EIA in
Malaysia has been a federal government responsibility. This situation has changed during the last few
years with the peripheral, resource-rich states of
Sarawak and Sabah having enacted impact

1461-5517/00/040283-11 US$08.00 IAIA 2000

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Devolution of environmental regulation: EIA in Malaysia

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Figure 1. Malaysia

assessment procedures for natural resource management and it is possible that other states may follow
suit. At the moment, other states only have a limited
role to administer preliminary EIA reports under the
jurisdiction of the federal government. The discussion
will focus on the circumstances which have precipitated this trend towards devolution of EIA and the implications of fragmentation of a hitherto unitary
national system in terms of its effectiveness.
Institutional arrangements
There is a substantial body of recent literature focused
on EIA which advocates the development of EIA systems particularly suited to the needs of developing
countries (for example, Lim, 1985; Biswas and
Agarwala, 1992; Strmquist, 1992; Ebisemiju, 1993;
Wood, 1995; Boyle, 1998; Glasson et al, 1999). A
major consideration in the development of institutional arrangements for an effective EIA system is the
extent to which responsibility for environmental decision-making should be centralised or decentralised
(Doern and Conway, 1994; Doyle and Kellow, 1995;
Harrison, 1996; Holland et al, 1996).
There are manifest advantages in a centralised or
unitary EIA system in a developing country. Such a
system would ensure consistency in terms of applying
uniform national standards and norms and avoid
inter-jurisdictional competition amongst states or
provinces to attract development at the expense of environmental considerations. It would enable effective
use of limited human resources with capability to administer EIA procedures.
A unified national system recognises a legitimate
public interest across jurisdictions in terms of participation in EIA decision-making, for instance, when
making submissions during the preparation of EIA reports. However, by the same token, a unified national
EIA system would need to ensure that it does not become too centralised and top-down and that there are
adequate opportunities for public participation in
decision-making. It could be argued that an ideal arrangement is for responsibility to be shared between
284

the different tiers of government, based on a system of


checks and balances in the EIA process.
Institutional arrangements for EIA in a particular
country are shaped by the distribution of power and
functions between different tiers of government and
the complex interplay of political interests they represent. With the exception of countries such as Singapore, environmental regulation functions in many
nation states are shared between the central and
sub-national levels of government. Challenges of
integrated environmental management are compounded in federal states such as Nigeria and Malaysia where inter-governmental relationships are
constitutionally defined. Issues relating to jurisdiction
over environmental management functions are often
politically controversial on account of their broader
implications for access to, and allocation of, natural
resources in growth-oriented, increasingly market-driven societies.
The discussion of the Malaysian situation in this
paper exemplifies some major political and related
administrative challenges in undertaking effective environmental regulation within the recent policy phase
of deregulation and market expansion, which are only
now beginning to be acknowledged adequately in the
environmental planning and management literature
(Memon and Gleeson, 1995; Gandy, 1997; Rangan,
1997; Clark, 1998; McDermott, 1998).
Federal environmental impact procedures

The Malaysian federal EIA requirements have been in


operation now for 12 years within the framework of
the Environment Quality Act 1974 (EQA), which was
enacted in 1974 as the major federal environmental
statute; a new Department of Environment (DOE)
was established to implement this statute. The need
for better environmental management was formally
endorsed in the Third Malaysia Plan (Government of
Malaysia, 1976) and the EQA is the basic instrument
for achieving national environmental objectives.
During the first ten years of its administration,
emphasis was put on curbing pollution by means of
Impact Assessment and Project Appraisal December 2000

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Devolution of environmental regulation: EIA in Malaysia

regulations gazetted under the Act. The emphasis on


control of pollution and the taking of remedial actions
was a reflection of the magnitude of environmental
pollution problems and increasing public concerns.
During the 1970s and 1980s, wastes from agro-based
industries (palm oil and rubber) were major problems.
It was not until 1987 that EIA procedures were introduced under the EQA to emphasise the importance
of preventative controls. Once again, this action was a
response to the increasing magnitude of environmental problems in Malaysia as a consequence of greater
emphasis on growth-oriented structural adjustment
programmes and liberalisation of the economy.
Privatisation has been strongly encouraged since the
early 1980s within the framework of the five-year
national development plans, and liberal investment
policies were introduced by the federal government to
attract foreign capital.
The shift from raw material production to manufacturing as the basis of the countrys economy
became evident in the 1970s, and the rate of industrialisation and urbanisation has accelerated since
then. Between 1960 and 1990, real GDP (gross
domestic product) increased sevenfold, at an annual
growth rate of 6.8%. Manufacturing now accounts for
over 30% of GDP and 60% of exports. Together with
the benefits of development have come negative environmental impacts and cumulative environmental
degradation (Sani, 1993).
The Malaysian EIA procedures are modelled on
the National Environmental Policy Act 1969 (NEPA)
framework in the United States. The Environmental
Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987 was gazetted as a project planning tool for new projects or the expansion of
existing ones. Section 34A of the Environmental
Quality (Amendment) Act 1985 requires anyone who
intends to undertake a prescribed activity to first conduct a study to assess the likely environmental impacts that will occur from that activity and the
mitigating measures that need to be undertaken.
The Environmental Quality (Prescribed Activities)
(EIA) Order 1987 specifies some 19 categories of

Figure 3. Federal EIA reports according to prescribed


activities, Malaysia, 19881998
Source: Department of the Environment, personal
communication

activities requiring EIA reports prior to implementation (DOE, 1987). The EIA procedure is shown in
Figure 2. EIA reports submitted to the DOE by project
proponents are reviewed by special technical panels
comprising individuals from government agencies,
universities, the private sector and non-governmental
organisations (DOE, 1992).
It has taken considerable effort on the part of the
DOE to improve the understanding and acceptance of
the EIA requirements by state and federal agencies
and private-sector developers. The Department has
gradually established offices in state capitals to promote more effective co-ordination with state government bureaucracy and developers and the processing
of EIA reports has been progressively decentralised to
these regional DOE offices since 1993. The Malaysian system has been portrayed as a working example
of decentralisation of EIA activities among participants and tiers of government and an effective
mechanism for inter-governmental and inter-agency
co-operation (Ebisemiju, 1993; Sani, 1993).
In this respect, the Malaysian federal EIA system
may be described as gradually tending towards a functionally decentralised model from its centralised

Figure 4. Federal EIA reports by state, 19881998


Figure 2. Federal EIA procedures, Malaysia

Impact Assessment and Project Appraisal December 2000

Source: Department of the Environment, personal


communication

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Devolution of environmental regulation: EIA in Malaysia


Table 1. Federal EIA reports according to type of report and state, 1998 and 1999
Type of report
Pre-assessment
State

1999

Johore

23

12

Kedah

10

Kelantau

Kuala Lumpur

Labuan

Melaka

Negeri Sembilan

12

Pahang

13

Perak

1998

Detailed EIA

1998

Pulau Pinang

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Risk analysis
1999

1998

1999

All reports
1998

1999

27

13

10

12

18

10

13

13

Perlis

Sabah

11

11

Sarawak

Selangor

10

10

12

Terengganu

11

10

More than one state

118

81

11

132

88

Total

Source: www.jas.sains.my/doe/egeiar01.htm

genesis. Figure 3 shows the distribution of EIA


reports for 1988 to 1998 according to the type of
prescribed activity specified in the EIA Order, with
housing, recreation and resorts, infrastructure and
quarries as the dominant categories.
Figure 4 shows the geographical distribution of
EIA reports for the same period, with Selangor and
Johor in Western Malaysia as the focus of most development activity. In Sarawak State, on the island of
Borneo in Eastern Malaysia, the majority of the EIA
reports have been related to petroleum and related industrial development projects in Bintulu region
(Rasol, 1994). The type of EIA reports by states for
1998 and 1999 is shown in Table 1.
The major constraint on the effectiveness of the
Federal government EIA procedures in Malaysia pertains to constitutional limits on its jurisdiction with respect to environmental management. Under the

In Malaysia land and water are under


the purview of the states, whose
decisions on allocation and
management of these resources tend to
be politically sensitive issues: the
federal government has to tread
warily so as not to interfere in state
matters

286

Malaysian Federal Constitution land and water are


under the purview of state governments. Each state is
empowered to enact laws on forestry, water resources,
mining, wildlife and fisheries. The management of
these resources is beyond the scope of the EQA and
the role of the DOE.
State government decisions over the allocation and
management of these resources tend to be politically
sensitive issues and the federal government has to
tread warily to avoid being perceived to interfere in
state matters. As discussed below, this is particularly
the case with the two Borneo states of Sarawak and
Sabah in Eastern Malaysia on account of their distinct
ethnic identity and the special provisions in the
Malaysian constitution when they became members
of the Federation in 1963.
A number of other EIA issues and problems have
been identified in Malaysia (Harun, 1994), and these
are comparable to those experienced in other developing countries. Examples include:
Lack of awareness of the strength of EIA as a planning tool: many still perceive it as a stumbling
block to development.
Perception that carrying out an EIA study would
delay project approval and implementation.
EIA not carried out prior to final project design, so
that issues such as siting and technology are not
considered.
Lack of base-line data on environmental quality.
Poor prediction of impacts.
Limited public participation.

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Constitutional jurisdiction over environment


The Ninth Schedule of the Malaysian Federal Constitution provides for the general distribution of legislative powers between the federal and state
governments as follows: List I (Federal List) List II
(State List) and List III (Concurrent List). In addition,
the Ninth Schedule includes list 2A (Supplement to
State List for Sabah and Sarawak) and List 3A (Supplement to Concurrent List for the States of Sabah and
Sarawak) which accord even greater control to the
two states over natural resources when Sabah and
Sarawak joined the Federation in 1963. The state of
Sarawak has exclusive jurisdiction to make laws affecting land use, forestry (which includes the removal
of timber and biomass), impounding of inland water,
diversion of rivers, electricity and the production of
electricity generated by water, and local government.
Items not enumerated in the Ninth Schedule fall under
state jurisdiction under the residual category.
As a reflection of the dependence of the Sarawak
economy on the export of natural resources coupled
with its distinctive ethnic identity, the state has over
the years zealously guarded its constitutional autonomy against perceived encroachment by the federal
government. Thus, the scope of many federal statutes
is limited in Eastern Malaysia, while the bulk of the
natural resource legislation in Sarawak comprises
state enacted laws. The jurisdiction of the majority of
natural resource federal laws does not extend to
Sarawak as these matters are in the State List or the
Concurrent List in the Federal Constitution.
During the last six years, Sarawak has been successful in partially wresting control from the federal
government of EIA procedures specifically for resource-based development projects. On the strength
of its legislative powers under Article 77 of the
Malaysian Constitution, in 1993 the state amended its
Natural Resources Ordinance 1949 to the Natural
Resources and Environment Ordinance 1993 and
established the Natural Resources and Environment
Board (NREB) to enforce the Ordinance. The purpose
of the Ordinance is to enable the state government
to promote sustainable management of natural
resources, specifically items that are enumerated in
the State List: land use, forestry, agriculture and
inland water resources. It is an enabling statute that is
implemented by making subsidiary legislation or
by cross-referencing it in other statutes which it
overrides.
The state of Sarawak has recognised that environment is not enumerated in any of the Legislative Lists
and thus comes under the residual category under
state jurisdiction. The Natural Resources and Environment Ordinance is a pre-Malaysia statute enacted
in 1949 when Sarawak was governed by the British
colonial administration which succeeded the Brook
administration in 1946. Under this Ordinance, a state
Natural Resource Board could prescribe certain activities which may injure, damage or have adverse
impact on the quality of the environment or the natural
Impact Assessment and Project Appraisal December 2000

resources of the State to require the approval of the


Board before it could be implemented. However,
these powers were not exercised until 1994.
The Natural Resources and Environment (Prescribed Activities) Order 1994 besides prescribing
certain activities which require the Boards approval,
also lays down procedures for the application for such
approvals. The federal government has removed these
activities from the ambit of the federal EIA Order
made under the Environment Quality Act in 1987
(NERB, 1995).
The process of preparing and evaluating EIA reports is parallel to that under the federal EQA statute
with one significant departure. The scope for public
participation is limited under the state EIA process
compared to the federal EIA process. The EIA reports
submitted to the NREB are evaluated by a panel of experts drawn primarily from relevant government
agencies, and the recommendations from the panel
are taken into consideration in the approval process by
the Controller of Environmental Quality.
In granting approvals to project proponents, the
NREB prescribes environmental conditions for protection and management. Project proponents must undertake in writing to the Board to comply with all the
conditions. Post-EIA monitoring is carried out by the
project proponents and the NREB secretariat. The
fundamental difference between this Sarawak order
and the federal guidelines is essentially the entitlement in the federal EQA to a copy of the EIA report by
the public and the subsequent public comments to the
Review Panel before an approval can be granted by
the Director-General. The Sarawak Order excludes
these provisions.
The NREB comprises a committee made up of
ex-officio members drawn primarily from state government ministries and departments which have
responsibilities for natural resources management.
The committee is formally responsible for charting
the policy and direction of environmental protection
and management in Sarawak. Following a 1997
amendment to the Ordinance, greater management responsibility has now been delegated to the Controller
of Environmental Quality, the head of the NREB
(Mamit, 1997).
Development of recent EIA case law
The constitutional jurisdiction of the state of Sarawak
to take over the administration of EIA from the federal
authority has proved to be a controversial issue and
has been tested recently in the Malaysian courts. The
case discussed below relates to the consent application by a Malaysian entrepreneur for the proposed
2400MW Bakun hydroelectric project which was reviewed under the new Sarawak EIA procedures. It
was alleged that the state government, with the apparent collusion of the federal government, had used the
state EIA procedures to facilitate the approval of the
controversial Bakun Hydroelectricity project on the
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The Judge noted that in the federal


guidelines, public participation is
explicitly provided for, and a valid
assessment of an EIA prepared by the
project proponent cannot be made
without some form of public
participation
upper Rajang river in the heart of the remaining vestiges of the tropical rainforests.
Credence to this view was provided by the manner
in which the amendment to the federal EQA was enacted to exempt the state of Sarawak from its purview
and the consequent confusion that arose about the
manner in which the Bakun EIA reports were reviewed. As discussed here, the Court of Appeal, however, has rejected this Machiavellian explanation in
favour of bureaucratic ineptitude within federal
government.
The Federal Cabinet of Malaysia announced in
September 1993 its approval of the proposed development of the Bakun hydroelectric project (HEP) in
Sarawak. This was to be one of the most ambitious development projects ever undertaken in South East
Asia and was designed to meet the long-term energy
requirements of the nation with the possibility of
export to the neighbouring countries. The project
comprises the creation of a reservoir, construction of a
dam, and the transmission of the generated electric
power from Sarawak to Western Malaysia by a transmission cable submerged across the South China Sea.
There has been considerable concern within and
outside Malaysia about possible environmental and
social impacts of such a large dam (Bocking, 1997).
With the support of international environmental
groups, three local native longhouse residents lodged
High Court action because the project entailed the destruction of their longhouses and ancestral burial sites
as well as land and forests which provided shelter,
livelihood, food and medicine, to which they claimed
to have a strong cultural attachment.
The EIA for the Bakun HEP was commissioned by
the project proponent on the 7th of March 1994 and
subsequent to this there were various public pronouncements by federal government that the EIA report would be made available to the public for their
comments before approval. The Minister had assured
certain public interest groups that all EIA procedures
under the federal EQA had to be complied with by the
proposed project, and public views would be considered. According to the Handbook of Environmental
Impact Assessment Guidelines (DOE, 1987), a detailed
EIA prepared by the proponent of the project must be
made available to the public, as noted earlier (Figure 2).
The public is invited to comment on the proposed
project to a Review Panel which is an independent
288

body of experts and representatives of interested organisations appointed to review an EIA report and to
evaluate the environmental and developmental costs
and benefits to the community. The Review Panel
makes recommendations to the Director-General for
his/her consideration and decision on project approval.
Large-scale hydroelectric power generation and
transmission projects are listed as a prescribed activity under the EQA. However, on 27 March 1995, the
Federal Minister of Environment exempted resource
development projects in Sarawak from the ambit of
the EQA and made this exemption retrospective from
the 1st of September 1994. The explanation given for
this was that the state of Sarawak had enacted the Natural Resources and Environment (Prescribed Activities) Order 1994 about that time (August 1994).
Contrary to public expectations, the project applicant claimed in April 1995 that the first segment of the
EIA submitted by his company had been approved by
the Sarawak state and he intended to commence preparatory works which involved clearing 69,000 hectares of forest. The plaintiffs insisted on a right to a
copy of the EIA report and to be heard and make
representations under the rights granted to them by the
EQA and all the subsidiary legislation related thereto,
while the defendants denied this.
The High Court Judge found that the nucleus of the
plaintiffs challenge was on the validity of the federal
Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Amendment Order
1995 in relation to the procedural aspects of its enactment. This piece of subsidiary legislation came into
force on the 1st of September 1994 although it was
only gazetted on the 20th of April 1995. The High
Court found no provision in the EQA to permit the
Minister to make any amendments retrospectively.
The Judge noted in his decision that in the federal
guidelines, public participation, in the form of obtaining a copy of the EIA report, commenting on it, and
making representation, is explicitly provided for, and
a valid assessment of an EIA prepared by the project
proponent cannot be made without some form of public participation. This process is mandatory and the
entitlement to a copy of the EIA report and the option
to comment on it becomes a public right. The Amendment Order which repealed this law and therefore affected the rights of the plaintiffs was declared invalid.
He concluded that, since the very essence of EQA
is to formulate measures that shall be taken to prevent,
reduce or control adverse impacts on the environment, public participation was necessary because the
interaction between people and their environment is
fundamental to the concept of [environmental] impact and it was
indeed mandatory for the authorities to hear the
views of the public first before granting its approval It makes a mockery of the whole issue
to say that the EIA can be approved first and
if the public had any constructive ideas, they
can submit later. This certainly is illogical,
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deprivation of good sense and sound reasoning.


(High Court Judgement, page 34)
The High Court declared the Federal Amendment
Order invalid and directed the project proponent to
comply with the EQA 1974. The federal government
and the state of Sarawak appealed against this decision to the Court of Appeal.
The High Court had treated the Amendment Order
as the focal point of the case. The Court of Appeal
changed the focus of deliberations from the validity or
otherwise of a federal or state law to a much narrower
question of interpretation of the Federal Constitution
in relation to the applicability of the EQA to Sarawak
(Court of Appeal Judgement, page 23). Since the
place where the power is to be generated is land and
water, and thus the environment in question lies
wholly within the legislative and constitutional province of the state of Sarawak, it concluded that the state
has exclusive authority to regulate by legislation, the
use of it in such manner as it deems fit.
On the strength of this reasoning, the Court of
Appeal has accepted the appellants argument that the
Sarawak Ordinance co-exists with the EQA, each operating within its own sphere based on the constitutional authority of the state of Sarawak to regulate by
legislation those components of the environment that
fall within its domain. The Judge concluded that
[in] my judgement, Parliament, when it passed
the EQA, did not intend, and could not have intended, to regulate so much of the environment
as falls within the legislative jurisdiction of
Sarawak. (Court of Appeal Judgement, page
24)
He agreed with the submission of the Senior Counsel
that the Amendment Order was made
not for the purpose of cutting the ground from
under the feet of the respondents as suggested by
their Counsel, but for the purpose of making it
abundantly clear to all concerned that the 1987
order was not, for constitutional reasons, meant
to apply to Sarawak. (Court of Appeal Judgement, page 24)
Effect of court decision
While it has cleared the statutory hurdles and some aspects of the project are in the implementation phase,
the ultimate completion of the Bakun dam is uncertain
at this stage on account of the recent economic crisis
in Asia. In hindsight, it is ironic that economic uncertainty is much more effective than environmental
regulation instruments such as EIA in determining
the fate of large-scale development projects with significant environmental impacts.
One can only speculate as to why the Bakun project
applicant chose in the first place to seek consent under
the state rather than the federal EIA procedures. Apart
Impact Assessment and Project Appraisal December 2000

from the size of the venture, this project is distinctive


because it was conceived as the first private-sector
hydroelectric power project in Malaysia. Hitherto,
electric power generation and supply has been undertaken by SESCO, a statutory corporation owned by
the state. The recent move to deregulate the Malaysian
economy, including the electricity sector, created the
opportunity for the Bakun project as a private-sector
initiative and the contract to build and operate the
dam was awarded to a Sarawak-based business
consortium.
Ostensibly, the manifest advantage of the Sarawak
EIA procedures from the applicants perspective was
that they offered a faster track, since the right to obtain
and make submissions on the EIA report was denied
to those opposed to the project. Yet this factor could
not possibly have weighed so heavily on the minds of
the federal and state governments, simply because it
was not such a big hurdle to cross. Those concerned
about the dams environmental impacts could have
been given the opportunity to have their say as a token
gesture and the project could still have been granted
approval.
It would appear that the desire on the part of the
Sarawak business and political lite to manage their
own affairs was at least as significant a factor as the
desire for fast-track approval when the decision was
made to seek consent under the state EIA procedures.
The federal government has been sympathetic recently to some degree to such aspirations in Sarawak.
Historically, Sarawak has served as a resource-rich
hinterland, exporting timber, oil and gas, while other
sectors of its economy have remained relatively under-developed. Even though it is not visibly Malay
dominated, the current political regime in Sarawak
enjoys the tacit support of the federal government.
Scant regard for environmental justice
While the constitutional right of the two Borneo states
to regulate by legislation aspects of the environment
that fall within their constitutional domain is now unquestionable, there are aspects of the Court of Appeal
decision which are arguable. These concerns relate to
the role of judiciary in developing countries such as
Malaysia in helping to provide guidance on how environmental concerns should be addressed in the development planning process.
The Appeal Court has demonstrated in its decision
scant regard for the issues of environmental justice by
rejecting the finding of the High Court that the
longhouse applicants had vested rights under the federal EQA which were denied to them under the
Sarawak EIA Order. Even though it may have been
correct in its ruling in this respect in a strict legal
sense, it could, nevertheless, have encouraged or recommended to the Sarawak government to amend its
EIA Order to make provision for public participation
comparable to the federal provisions. The Appeal
Court had ample opportunity to do this, since the Federal EIA Order and Guidelines are quite explicit about
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Devolution of environmental regulation: EIA in Malaysia

the importance of citizen involvement as fundamental


to the exercise of evaluating impacts.
The Appeal Court decision reflects a very conservative stance on the right of Malaysian citizens to participate in environmental decision-making. This case
may act as a precedent to hamper the development of a
vibrant participant democracy in Malaysia. The Appeal Courts implicit rationale is that participant democracy is not appropriate in the particular cultural,
political and economic context of the present Malaysian society. Such views reflect the perspectives of
the lite in many Asian countries that generally
discourage disagreement with decisions made by
those elected to govern and emphasise the tradition of
consensual decision-making in Asian societies. The
activities of environmental NGOs are still frowned
upon as a luxury that developing countries can ill
afford.
The Appeal Court decision also reflects a lack of
understanding of environment as an holistic concept
and the need for integrated approaches to environmental planning and management in Malaysia.
Federal as well as state government bureaucracies in
Malaysia are characterised by a strong sectoral approach to public administration, with limited lateral
co-ordination between the activities of different agencies. This is a reflection of the predominance of an
economic emphasis in planning and implementing
development projects. The Appeal Court took a simplistic approach when it defined the environment of
the Bakun project as the land and river on which the
project is to be carried out (Court of Appeal Judgement, page 17). It ignored the fact that the project is
also located within social and cultural space.
EIA in Sarawak
Notwithstanding its role in the controversy surrounding the proposed Bakun dam, Sarawak state
government has made ostensible progress within the
last five years in developing institutional capability
for environmental management within the state
bureaucracy.
The situation in Sarawak today is that the NREB is
a functioning environmental agency within the state
government bureaucracy. It has been relatively well
resourced by the State Treasury and has developed a
strong profile, in no small measure due to the efforts
of the Controller of Environmental Quality (the chief
executive of NREB). While the federal DOE office in
Sarawak has a staff of less then 20, all based in a single
office in the state capital of Kuching, the NREB has a
staff of over one hundred, based in Kuching and in the
regional office in Miri in the Northern region while a
second regional office in Sibu in the Central region is
expected in the very near future.
A recent amendment has established the office of
the NREB Controller as a statutory position with
wider powers to give a specific directive or order to
any individual to carry out the protection and
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enhancement of the environment, including the conduct of EIA for development activities that are not
prescribed in the Order or are below the minimum size
required in order to protect the environment. While
the threat of political interference is always there, the
Board has also been given more effective enforcement powers, including specific powers to investigate
offences. During its six-year term of office the NREB
has evaluated over 250 EIA reports. A number of development projects have either been rejected, abandoned, given alternative sites or reduced in coverage
and size (Mamit, 1997).
Apart from the threat of challenge to its political
clout, there are a number of procedural weaknesses in
the EIA system now in place in Sarawak. The most
glaring omission is lack of provision for public participation under the state EIA procedures. The state government justifies this policy on the strength of the
argument that existing channels of electoral democracy provide ample opportunities for people to have
their say. The tradition of participant democracy is
weak in Sarawak and there is manifest need to support
the development of institutions for local governance.
Administering two parallel procedures for EIA in
Sarawak necessitates close consultation between the
DOE and the NREB to avoid the duplication of authority that now exists. Co-ordination is facilitated by
the fact the head of the regional DOE office in
Sarawak is a member of the NREB. Nevertheless, it
would be useful to find out the views of developers on
ways to achieve greater co-ordination. One possibility
is for the two agencies to be located under the same
roof or close by.
The absence of a framework for environmental
planning at a regional (catchment) level and on a local
(urban) level in Sarawak is a major constraint on the
effectiveness of the federal as well as state EIA procedures. Because EIA is administered essentially as a
project-based tool, its ability to anticipate and manage
cumulative impacts is limited.
The other major drawback of the current dual EIA
procedures is that a number of activities which may
impact on the environment, such as shifting agriculture and certain types of timber harvesting, fall outside the ambits of both federal and state procedures.
Not all activities which have significant environmental impacts come in the purview of the lists of
prescribed activities for reasons of the limited scale or
the type of project activity being proposed. As noted

The absence of a framework for


environmental planning at a regional
(catchment) level and on a local
(urban) level in Sarawak is a major
constraint on the effectiveness of the
federal as well as state EIA procedures

Impact Assessment and Project Appraisal December 2000

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Devolution of environmental regulation: EIA in Malaysia

above, a recent amendment to the Sarawak Ordinance


enables the Controller to review any project, irrespective of size.
There are a number of state natural resource statutes, particularly those for forestry or mining, which
have, as one of their objectives, to mitigate and regulate the detrimental environmental impact of particular activities. However, environmental protection is a
subsidiary objective of these statutes in relation to the
overriding one of facilitating the utilisation of natural
resources.
A drawback of such statutes and organisations
which combine conflicting environment and development objectives, is that decision-making about environmental concerns is internalised, within a
predominantly development-oriented agency and
therefore it lacks transparency and accountability. For
a number of reasons, it becomes difficult for such an
agency to give adequate consideration to its environmental responsibilities. This is an important issue in
Sarawak, since the state is the biggest landowner and
developer. Now that the state EIA procedures are in
place, it would be appropriate to relocate the environmental provisions in these statutes within the Natural
Resources and Environment Ordinance.
Broader implications
This review of recent changes in inter-governmental
jurisdiction over EIA in Malaysia poses a number of
important questions for the direction of development
of EIA as an environmental management tool in Malaysia in the wider context of the changing role of the
national and sub-national state in environmental management in an increasingly market-driven economy.
We can characterise the development of the Malaysian EIA system as progressing from its inception in
1987 as a centralised federal system towards a functionally decentralised model during the last few years
and more recently towards hierarchical decentralisation or devolution under shared federal/state jurisdiction. The recent case law discussed here has affirmed
the constitutional right of the Borneo states to enact
their own environmental regulation instruments, such
as EIA for managing natural resources independent of
the federal government statutory controls. To what
extent this case law has established a precedent for the
peninsular states in Western Malaysia to follow the
example of Sarawak and Sabah is open to conjecture
at this stage.
There is no doubt that those states in Western Malaysia which perceive themselves as relatively economically disadvantaged, on account of their
peripheral position and poor resource endowment,
may harbour similar aspirations. However, while
Western Malaysian states also exercise significant
control over natural resources within the framework
of the federal Malaysian constitution, their situation
differs in a number of important respects. They do not
enjoy the degree of relative political autonomy within
Impact Assessment and Project Appraisal December 2000

the Malaysian federation as the Borneo states do.


Moreover, Western Malaysia is more closely integrated within federal bureaucracy which was inherited from the British colonial administration in 1957.
For example, while Sarawak and Sabah have their
own separate agencies for irrigation and drainage and
for public works, in Western Malaysia these services
are provided by federal government employees
seconded to state agencies.
Politically, Malay ethnic interests exercise a strong
dominance in Western Malaysia while the Eastern
Malaysian population is ethnically more plural and
the Malay influence is less clearly apparent. The federal state inter-relationship is not as tense on the Peninsula as it is in Borneo. On account of these factors,
Western Malaysian states may not find it as easy to
break away from federal environmental regulation instruments such as EIA.
Nevertheless, a trend towards functional decentralisation and devolution of environmental regulation has gathered increasing momentum in many parts
of the world during the last decade (Memon, 1993;
Rangan, 1997; Kivell et al, 1998) and further changes
in intergovernmental jurisdiction over EIA in Malaysia should not come as a particular surprise. The current policy paradigm, which has emerged in response
to the severe financial crises faced by many third
world countries, has been aimed towards restructuring their economies by gradually dismantling
earlier protectionist policies, diminishing the role of
government, and allowing greater administrative and
political autonomy to states in federal systems and
to other forms of sub-national jurisdictions in unitary
systems.
The neo-liberal political lobby has been a powerful
ally in opposing strong environmental regulation
through public intervention in favour of voluntary
compliance and market mechanisms (Memon and
Gleeson, 1995; Gandy, 1997; McDermott, 1998).
Thus, for, example, the authors of a recent paper on effectiveness of pollution regulation in South and
Southeast Asia make a strong case for a decentralised
regulatory policy based on informal regulation built
on local arrangements, consistent with a model of local equilibrium pollution which reflects community
differences, the market value of the environment and
insights from conventional environmental economics
(Hettige et al, 1996).
The trend towards decentralisation and devolution
raises questions about the effectiveness of the role of
the central and sub-national state in environmental
management. In the Malaysian case, we can debate
the relative merits of the recent developments to devolve EIA away from the direct jurisdiction of the federal government. We could argue that one of the
manifest advantages of the federal government in Malaysia exercising a key role in EIA and other forms of
environmental regulation is that the process is relatively secure from political interference by
state-based developmental interests. This is a legitimate concern in developing countries because quite
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Devolution of environmental regulation: EIA in Malaysia

often the line between politics and business is blurred.


Thus, critics may be tempted to question the motives
of sub-national jurisdictions that may seek to adopt
and administer their own environmental regulation
instruments.
For this reason, a number of authors writing about
EIA in developing countries recommend that a precondition for the development of an effective EIA
system is the establishment of an independent
national environmental agency. Such an agency
should have considerable political influence over sectoral agencies through placement in the office of the
President or Prime Minister or a high profile ministry
with responsibility for national economic planning
and budgetary control (Ebisemiju, 1993).
This high-profile arrangement places the agency in a
strong position to exercise its controlling, supervisory
and co-ordinating roles in environmental matters,
and guarantees adequate funding for its operations. It
is also deemed desirable because of the multi-sector
character of EIA (Ebisemiju, 1993). Political clout,
authority and legal power are seen as essential in the
context of circumstances in developing countries to
enforce compliance with environmental laws and
regulations.
However, recent experience in Malaysia relating to
the decision-making processes for the Bakun dam
points to the dominance of the strong developmental
interests within federal government bureaucracy. The
federal government has shown itself to be just as vulnerable as the states in this respect, even raising the
spectre of possible collusion between the two. Neither
the federal or state governments function independently of markets. Furthermore, in contrast to the situation in developed western societies where the
judiciary has played a significant role in helping to accord greater consideration to environmental values in
the public policy process, this is not necessarily the
case in newly developing countries such as Malaysia.
It may make good sense to have a uniform national
system for EIA for other reasons. For example, in a
country where institutional capability is lacking, it is
more effective and economic for a single national
agency to undertake such a role instead of a number of
poorly resourced state jurisdictions replicating one
another. Institutional capacity is a prerequisite for
sustainable development. International investors may
find it more convenient to operate within such a
national system, where there is less opportunity for
them to play off one state against another. Fragmentation of environmental regulation within Malaysia may
also make it difficult to address environmental problems such as air pollution which transcend state
boundaries.
On the other hand, a central government environmental agency may lack the resources needed to carry
out its functions effectively in developing countries
which are geographically extensive with a diverse and
differentiated civil society. In the Malaysian case, the
Federal Department of Environment has had relatively limited resources to undertake its functions,
292

especially in the peripheral regions in the two Borneo


states. Partly because of its control over natural resources, the Sarawak state by comparison has been
able to devote more resources to put in place an operational EIA system even though this may have been
precipitated by the events surrounding the proposed
Bakun dam.
Conclusions
To integrate environment and development effectively in the policies and practices of a country, it is essential to develop and implement integrated,
enforceable and effective laws and regulations
through appropriate legal and regulatory policies,
instruments and enforcement mechanisms at the
national, state and local levels, and to enforce compliance with the laws, regulations and standards that
are adopted (IUCN, 1991). Countries need also to
establish judicial and administrative procedures for
legal redress and remedy of actions affecting environment and development that may be unlawful or
infringe on human and environmental rights. Properly
mandated, empowered and informed communities
can contribute to decisions that affect them and play
an indispensable part in creating a securely-based
sustainable society.
This paper has argued that integration of environmental and developmental objectives in decision-making by using tools such as EIA has strong
political overtones, because state institutions do not
function independently from the rest of society and influential interest groups within it. A political will and
willingness openly to debate development proposals
by a vibrant civil society able to access information
are a pre-requisite for environmental management
tools such as EIA to be effective. This is not to deny a
role for the central or local state in market-led societies in promoting ecological sustainability or a call for
the withdrawal of the state from natural resource management in favour of community level control as the
alternative means for promoting sustainable forms of
social organisation and resource use (Rangan, 1997,
page 2130).
The critical question for environmental scholars,
activists, and policy makers is not whether the state
should or should not be involved in promoting sustainable development. Rather, as Rangan rightly
points out, the challenge is to articulate strategies for
moving towards sustainable regional development
within the recent policy phase of deregulation and
market expansion in developing countries, addressing
the need both for economic development and ecological sustainability.
Viewed from this stance, the recent development of
state-based EIA procedures parallel to the federal EIA
procedures in Malaysia should not be dismissed as unwarranted fragmentation of a hitherto apparently cohesive functional system. On the contrary, it could be
argued that it provides the basis for the development
Impact Assessment and Project Appraisal December 2000

Devolution of environmental regulation: EIA in Malaysia

of a potentially more effective system of environmental regulation in tune with the needs of Malaysia
as a diverse and differentiated society.
Other peripheral states in Malaysia may follow the
path of Sarawak and Sabah; the challenge for the DOE
is to collaborate with the states by providing leadership as well as ensuring some degree of uniformity of
practice within different sub-national jurisdictions.
Indeed, as noted earlier, other states have now started
to exercise a limited administrative input to preliminary EIA reports and collaboration with the DOE is
imperative for achieving future effectiveness.

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