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4.0 CONCEPT OF DECENTRALISATION
Decentralization refers to the transfer of decision-making from the central level to a sub-
national authority. The aim is to transfer power and resources to a level that is closer, better
understood and more easily influenced by local people. This should result in gains in
efficiency and appropriateness of service delivery, as well as better governance and greater
accountability. By creating the conditions for more inclusive and transparent operations,
decentralization enhances citizen participation in local governance, allowing communities to
take responsibility for their own development.

4.1 DEFINING DECENTRALIZATION

The word “decentralization” is indicative of the presence of something at the centre, from
which it may be dispersed. Most individuals and governments favour the concept of
decentralization as it implies the hope of cracking open the blockages of an inert central
bureaucracy, curing managerial constipation, giving more direct access for the people to the
government and the government to the people, and stimulating the whole nation to
participate in national development plans (Mawhood, 1991).

4.1.1 Decentralisation as defined by Maddick

Maddick (1966) defines decentralization as consisting of two types- devolution and
deconcentration.

Devolution
Devolution—central government’s transfer of administrative and financial decision-
making authority to local governments that have clear and legally recognized
jurisdictions within which they provide public services to constituents they are
accountable to.

It is also referred to as a legal conferring of powers to discharge specified or residual

powers upon formally constituted local authorities. A local authority is a subunit of
government, controlled by a local council which is authorised by central government
to pass ordinances having a local application, levy local taxes or hire labour and
within specified limits specified by central government, vary central government
policy in applying it locally.

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 Deconcentration
“Delegation of authority adequate for the discharge of specified functions to staff of a
central department who are situated outside central headquarters “.

Assignment of certain functions to the agents of Central or State goverments in the

field due to the difficulty of governing from the centre. Examples are the district office
and registration departments.

4.1.2 Definition by Brian Smith

Smith (1985 ) differentiates two forms of decentralization.

Devolution – where the authority to make certain decisions in some spheres of public
policy is delegated by law to sub national territorial assemblies (eg. Local authorities).

Deconcentration – delegation of authority to make administrative decisions on behalf

of the Central administration to public servants working in the field responsible for
government policies within their territories (eg. district office, health department).

4.1.3 Definition by Fesler

Fesler (1965) argued it was important to distinguish between devolution and
deconcentration in analyzing local government systems, and in describing patterns of
"decentralization" reforms. Devolution refers to the distribution (or re-distribution) of
authority to make decisions and to take action by local governments independently of
central administrative oversight. Central governments might retain overall legal
control (equal protection under the laws, voting eligibility, allocating authority to raise
revenue, ensuring general law and order, and regulating fraud and corruption) and
the authority to alter local government powers. Within those boundaries, devolution
exists if local entities have substantial authority to hire, fire, tax, contract, expend,
invest, plan, set priorities, and deliver the services they chose.

Deconcentration, in contrast, occurs when local entities act largely as the local
agents of central governments, manage personnel, and expend resources allocated
to them by central government authorities. Deconcentration refers to essentially the
redistribution of central resources to localities on the sufferance of those central
authorities.

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4.1.4 Definition by Mawhood
Mawhood (1991) on the other hand makes a distinction between decentralisation and
deconcentration.

Decentralisation is the creation of bodies separated by law from the centre, in which
local representatives are given formal powers to decide on a range of public matters
(same as devolution). Their area of authority is limited but within that area, the right
to make decisions is entrenched by law and can only be altered by new legislation.
They have resources which, subject to State limits, are spent and invested at their
own discretion. In the case of deconcentration, they are basically government
agencies or bodies with no specific financial or administrative powers.

In other words for Mawhood, devolution and decentralization are the same concept
but deconcentration is not part of decentralization. The reason for this is because for
decentralization to occur, there must be some form of transfer of power to local
authorities. Deconcentration on other hand, does not involve any transfer of power to
local bodies.

4.1.5 How is decentralization defined in the Malaysian context?

In the Malaysian case, we can refer to decentralisation as encompassing both
devolution and deconcentration. In other words, in the Malaysian case, Brian Smiths
definition is applicable here.

Devolution here refers to the transfer of formal powers through an act of parliament
to bodies created by law. These bodies have financial and administrative powers and
functional autonomy. They are legal entities with the power to sue and be sued and
can enter into a legal contract. They also have the discretion to spend their money
and to make policies for the benefit of their community.

Deconcentration on the other hand refers to delegation of authority to agents of

central and state governments at the local level. These bodies do not have any
specific financial and administrative powers. They act on behalf of the higher levels of
government and can only do as instructed. They are basically executing the policies
decided by the higher levels of government.

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 Deconcentration has two types
1. Prefectoral deconcentration eg the district office. Here the District Officer is a
provider of various types of services to the people as requested by the State
governments. For example the District Officer provides land, social and
community development services to the people.

2. Functional deconcentration refers to state and federal government agencies

that provide a very specific service to the people. For example The
Registration department, Public Works Department, Health department.

Both prefectoral and functional deconcentration do not have any specific powers that
local government has.

The specific powers that they do not have are as follows;

They do not have financial autonomy. They are provided a budget from the Federal
or State government and they do not have their own sources of revenue. They are
also prevented from doing any form of business with any other organization.

They do not have administrative autonomy which means that they cannot hire and
fire their own staff. All vacancies are filled by their respective State or Federal
commissions. For eg. If there is a vacancy in the district office in Alor Gajah, the
State Service Commission is responsible to fill the vacancy.

They are not a body corporate but only extensions of the government machinery.
Hence they are not created by an Act of Parliament and do not have body corporate
status such as the power to sue and be sued. Should the public want to sue them,
they must sue the Federal or State government.

They only implement policies made by higher levels of government. Unlike local
government which is a body corporate and can make its own policies,
deconcentrated bodies cannot make their own policies.

They cannot make by laws unlike local government which can make its own by laws.

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4.1.6 Reasons for decentralization
According to the World Bank (1989, pp. 71-2) there are four arguments in favour of
decentralization, namely:
™ The first is based on the assumption that the demand for local public
services varies from place to place. Only decentralized provision of
local services will adjust to the multifaceted demands.
™ The second is efficiency. It can be argued that locally financed and
produced services will cost less.
™ The third is of a political nature. Local government is an important
training ground for democracy. Stronger regional or local governments
can control the tendency of central government to become all
powerful.
™ The fourth and last could be called institutional. Co-ordination at the
local level is necessary and local public services cannot and would not
be treated independently. Local government can co-ordinate these
services much more easily than a national government would.

4.1.6.1 Other reasons for decentralization

™ To reduce burden of Central government.
™ It speeds up decision making and faster implementation of policies
™ It creates initiative and enthusiasm of lower level officials
™ Needs and resources vary between local areas – needs of the people
in Kota Belud and Petaling Jaya vary
™ Political reasons for decentralisation- to enhance political education
and reduce feelings of remoteness
™ Political pluralism – reduces political power of a too powerful central
government.

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 4.1.7 Some Key Success Factors for Decentralization
™ Decentralization is long term and high risk, demanding strategic management.
™ Understand the problem before designing and implementing solutions.
™ Decentralization requires top executive commitment and coordination.
™ Expectations must be carefully managed.
™ Participation requires flexible approaches adapted to the local situation.
™ Decentralization is a learning process; it requires risk-taking and innovation.
™ Decentralization is cross-sectoral and requires substantial multidimensional
capacities.
™ Decentralization depends on an enabling environment.
™ Decentralization implementation should be paced and linked to other reforms.
™ Sustainable decentralized governance depends on local fiscal capacity

4.2 THE RELATIONSHIP BETWEEN THE FEDERAL,STATE

AND LOCAL GOVERNMENT
The Malaysian government system is divided into three levels - namely federal, state and
local governments (Ahmad Atory 2002; Malaysia 1999; Phang Siew Nooi 1996; Zahari
1991).

The constitution of 1957 gave the exclusive power to govern local governments to the state
except those in the federal territories. Under Item 4 in List II of the Ninth Schedule, the
Federal Constitution stipulates local government to be a subject under the State List. Hence,
all local authorities fall under the exclusive jurisdiction of the state governments.
Consequently, the state government has the right to determine types of programmes and

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policies that are suitable for their local governments. The local governments derive their
power and autonomy through the process of decentralization from the state government
Local governments in Kuala Lumpur, Labuan and Putrajaya come under the jurisdiction of
the Federal Territories Ministry. Even though local government comes under the jurisdiction
of their respective State governments, the Federal government has indirect control over local
government in Malaysia via the National Council for Local government and the Ministry of
Housing and Local Government. This is because local government is still financially weak
and receives financial grants from the Federal government.

4.3 FEDERAL AND STATE CONTROLS OVER LOCAL

GOVERNMENT
4.3.1 Federal controls over local government
There are two main controls by Federal government over local government. These
are through the
1. National Council for Local Government (NCLG)
2. Ministry of Housing and Local Government

4.3.1.1 NCLG
Following an amendment to the Federal Constitution, the government
enacted, under Article 95A, the National Council for Local Government to
advise and coordinate the local authorities in matters especially pertaining to
legal and major policy issues (Malaysia 1986: 79-80).

Membership of this council consist of a federal cabinet minister as the chair, a

representative from each state governments as well as no more than 10
representatives of the federal government and they meet and discuss policy
matters relating to local government at least once a year. The chairman is the
Prime Minister or Deputy Prime Minister. The decisions made by the council
are binding on Federal and state governments except Sabah and Sarawak

Although its role is to be consulted in the matters of law governing local

authorities, this 1960 constitutional amendment also provided the chair a
casting vote thus gave the federal government a big clout on local
government.

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 The NCLG can be seen as a forum for federal, state and local governments to
coordinate policies and laws relating to local government. The creation of this
body is to make sure that all policy making in all three spheres of government
is tightly integrated and coordinated. For eg. at the last NCLG 55th meeting
held on 25th September, 2006, which was chaired by the Deputy Prime
Minister, the following resolutions were made:
1. All local authorities must seek the opinion of the public before making
any decisions affecting them.
2. Local authorities to set up one-stop centres for quick approvals for
developers using the build and sell concept. Under this concept,
developers will collect a 10% deposit and complete the construction of
the house before collecting the rest of the money.
3. All public buildings must have disabled-friendly facilities
4. All multi-storey car parks must install closed-circuit television cameras.

4.3.1.2 The Ministry of Housing and Local Government

Commonly known as the Kementerian Perumahan dan Kerajaan Tempatan
(KPKT) in Malay . It was first established on May 24, 1964 as the Ministry of
Local Government and Housing. The Ministry was renamed the Ministry of
Housing and Local Government on July 18, 1978, a result of merger between
Ministry of Housing and Rural Development and the Department of Local
Government. The main functions are provision of adequate housing for all
citizens; planning and implementation of KPKT policies; setting up of local
authorities; provision of efficient fire and rescue services and strengthening
and implementation of the Town and Country Planning Act 1976.

It is responsible for local government legislation in Peninsular Malaysia. It is

also responsible for the development of local government policy and the
implementation of all local government functions. It oversees overall
development of local government in Malaysia and they can direct state
governments to pursue federal government policies. They are also
responsible for improving the whole local government system with the aim of
increasing the effectiveness and efficiency of local government. In 2004, the
Ministry appointed Universiti Malaya as a consultant to revamp the entire
local government system in Malaysia

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4.3.2 State controls over local government
4.3.2.1 Controls under the Local Government Act, 171.
State control over local government are mainly through the Local Government
Act, 171. These controls are as follows:

1. Financial Controls
This can be seen through
S. 39 - Revenue of local authority
S. 41 - Raising of loans by local authority
S. 42 - Power to issue bonds
S. 46 - Power to borrow for special purposes
S. 47 - Loans by government
S. 49 - Overdrafts from banks
S. 55 - Where the budget needs approval of state government.
S. 56 - Supplementary estimates need approval of state
S. 60 - Audit of accounts to be tabled in state legislative assembly
S.130 - Basis of assessment of rates to be decided by state and any
increase in rates need approval of state authority

2. Administrative Controls
S. 3 - Declaration and determination of status of local authority
areas
S. 4 - Change in name, status and alteration of boundaries
S. 5 - Merger of two or more local authorities

S. 9 - Power of State authority to issue directions

S.10 - Appointment of councilors
S.16 - List of offices which show a full list of posts, numbers and
types must be sent to state authority. Any reduce in rank of
category A officer’s appointment must be approved by state
authority
S.26 - Votes of majority decisive but in case of conflict, state
authority can intervene
S.102 - All by laws must be approved by state government

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 S.165 - Transfer of functions to state authority if it feels that the local
authority cannot carry out its functions properly. If it appears
to the State authority to be necessary or desirable in the
public interest that any function of a local authority or of an
employee of such local authority should be forthwith
transferred from such local authority or such employee, the
State authority may by order published in the Gazette
transfer such functions to the Menteri Besar.

4.3.2.2 Controls under the Town and Country Planning Act

Under the Town and Country Planning Act, 1976 – all local authorities have to
prepare a Structure Plan for their local areas once in 5 years. This plan will
show the land use of the area. This plan needs the approval of the state
authority. The plans also need to be exhibited at public places for a month for
the public to give their views.

4.3.3 Effects of these controls on local government

What are the effects of these controls on local government ?
1. It restricts their financial autonomy of local authorities since they
cannot spend as they wish and cannot increase taxes as they like.
2. Local government’s administrative autonomy is also restricted since
they cannot hire and fire their own staff especially for group A.
3. State authorities can issue directions to local authorities and instruct
them to do as they wish. For example. asking local authorities to install
CCTVs in public places and helping state authorities to curb the sale of
illegal VCDs are all not functions of local authorities but have to be
carried out.
4. It slows down the decision making process because whatever project
or programs that they want to carry out need approval of state
government.
5 It prevents decentralisation at the local level and local authorities
become more like deconcentrated bodies and cannot practice full
devolution and be independent.
6. If local authorities are controlled by opposition parties as in the case of
Kelantan, it will create conflict with the Federal government.

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4.4 THE ROLE OF THE DISTRICT OFFICER IN LOCAL
ADMINISTRATION

4.4.1 History of the evolution of the “District Officer”

The District deals specifically with the position of the District Officer. While before
World War II, the District officer had to give most of his time to his functions as
Magistrate and as Collector of Land Revenue, there has been a decline in that work
and an increased involvement in development and security especially after
independence.

The early merdeka period also saw a decline of the District Officer’s position due to
the setting up of technically specialized services and the expansion of elected,
politically orientated local councils. The District Officer according to the Athi
Nahappan Royal Commission was a colonial legacy and should be abolished
because the DO ( as he is normally called) was "associated with paternalism and
autocracy of colonial rule".

But after 1969, the institution was once again rejuvenated due to the increasing
importance of security issues in view of the revival of communist activities. This was
also because of the development programmes, and the stress on national unity after
the inter-ethnic riots of 1969, closely linked with the Second Malaysia Plan (which
aims at creating more economic opportunities for the Malays), which in turn led to
government efforts "to de-politicize Malaysian politics and to emphasize
administrative solutions to political problems". For the D.O., as for the Federal
government, the priorities are to overcome communism and communalism and to
carry out the national development plans.

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 4.4.2 Present day role of DO
The District Officer (DO) heads some of the smaller district councils as its President
although this practice is now slowly dying because of the difficulty of the DO heading
both the district office and the district council at the same time.

In the former Federated Malay States such as Selangor and Perak as well as the
former states of the Straits Settlements such as Penang and Melaka, the DO is a
senior federal officer from the elite Administrative and Diplomatic Service. In the
states of Sabah and Sarawak and the former Unfederated Malay States such as
Kedah, Terengganu and Kelantan, the DO is a senior officer from the respective
State Civil Service. The position of the District Officer as the chief administrative
officer in a district is further enhanced by virtue of the fact that he is the most senior
officer in the district and answers directly to the state secretary.

The District Officer is responsible for the development of the district as a whole.
Coordination of the various development activities is done through the various district
committees most of which the District Officer chairs. The two most important
committees are the District Development Committee and District Action Committee.
They include all the heads of governments and agencies at the district level such as
the District Council, Agricultural Department and Public Works Department. Although
no statute provides for these consultation committees, administratively, they
constitute an important machinery to monitor and coordinate all development
proposals and activities in the district.

As head of each district office, the district officer is the representative of the State
government at the district level. He has the responsibility of overseeing directly the
operation of the district. He is also charged with implementing and coordinating the
execution of district programmes, ensuring that the advice of the state government is
properly followed up, and promoting residents' participation in district affairs. In
addition, he is required to maintain close liaison with different sectors of the
community and reflect their concerns and problems to the Government. It is his duty
to ensure that district problems are resolved promptly through inter-departmental
consultation and cooperation. Also, he acts as a link between the district office and
other departments at the local level such as the local councils and other government
agencies and facilitates communication between them.

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 The district officer is also involved with the community at every level. He has a role to
mediate in the resolution of disputes between corporate bodies and residents. He
operates a public enquiry service to enable the community to have easy access to
services and information provided by government. In emergency situations, the
district officer is responsible for coordinating various departments’ efforts on the
ground for ensuring the effective provision of relief services.

In sum, the D.O. is now also becoming a kind of ombudsman, a mediator between
the government and the people, and an upholder of standards of integrity in
administration. There is an increasing need for such a figure where development
projects are being put into effect: not only as a coordinator, but also as a figure who
can harness public opinion and mobilize support.

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