TOPIC 3

HISTORICAL DEVELOPMENT
OF THE LOCAL
GOVERNMENT SYSTEM IN
WEST MALAYSIA, SABAH AND
SARAWAK
1
Learning Outcomes

At the end of this lecture, student should be able to:

1. Trace the development of local government before and during

colonization.

2. Understand the restructuring of local government after independence.

3. Explain the reasons for the setting up of the Athi Nahappan Royal
Commission.

4. Analyse the main proposals of the Commission

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 INTRODUCTION
• The local government system in Malaysia was a legacy of British
colonization, with many of its laws derived from and modeled on
English laws.

• However, with the passing of time, many local unique social and
cultural characteristics have influenced the working of local
government in Malaysia.

• Development of local government in Malaysia varied among the

various states.

• The original purpose of setting up local government in the states that

were under direct British rule such as Penang and Malacca were for
town planning
• Whereas in the Federated and Unfederated Malay states, the main
purpose was for health and sanitary purposes. 3
 EVOLUTION OF LOCAL GOVERNMENT
IN MALAYSIA
• Malaysia inherited a British legacy in LG objectives and
administration style.
• Penang and Malacca - were the first two states to form LG.
• In Penang, British formed a Committee of Assessors in 1801
which responsible for planning and implementing urban
development.
• Local councils were later set up in Malacca and other
Federated and Unfederated Malay States including those in
Sabah and Sarawak.
• Local councils elections were also held for the first time in
Kuala Lumpur in 1955. 4
 Early development: Development in the
Straits Settlements
• 1800 –Committee of Assessors was established.
• Its initial purpose was to undertake planning and development of
Georgetown
• Members of the committee were elected from the settlers
• Chairman appointed
• 1827- Committee of Assessors was formalized.
• 1848- Municipal Committees established in Penang, Malacca and
Singapore
• 1856- Municipal Council replaced Municipal committee.
• Consisted of 5 commissioners
• 3 elected 2 appointed
• The Municipal Council became a body corporate and had legal status
• Elections held to council in 1857
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• 1857- Urban areas set up municipal council.
• Rural areas set u Rural District Council
• But members of RDC wholly appointed from the local residents
• District Officer as the Chairman

• 1888- Elected and nominated councilors were equal.

• Hence, 3 elected and 3 nominated
• 1913- Municipal council also responsible for health matters
• 1950- Local authorities election ordinance 1950.
• Increased number of councilors from 6 to 24, either wholly or partially elected
(but this ordinance only effective after 1957)
• Elections to Local councils in Penang (Georgetown) was held in 1951 and
in Kuala Lumpur in 1952.
• 1957- Penang was declared a city (first town to be declared a city in
Malaysia)

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 Early development: Development in the
Malay States
• It was mainly imposed on urban centers and mainly operated as government
departments.
• 1907- Sanitary boards established as government departments.
• its members were public officers
• It was not a body corporate
• 1930- Sanitary boards replaced by Town Boards.
• But no financial autonomy
• 1948- Town Boards were raised to the status of Municipal Councils with legal status
and autonomy
• 1950- Town Boards to be converted to Town councils.
• 1952- Local Councils Ordinance established.
• Local councils established in 1952 were supposed to fight the communist insurgency
in Malaysia and to introduce local government elections to the councils.
• 1954- Town Board granted financial autonomy status. Became a body corporate

(c)NursyahidaZulkifli, UiTM(Kelantan) 7
 History of local government elections
 The first experience in electing representatives in the
government was in 1857, when ratepayers in Penang elected
three out of five municipal commissioners of George Town.

 Unfortunately, the experiments at local democracy did not last

very long.

 In 1913, elections were abolished and the colonial government

of the Straits Settlements reverted to appointing all municipal
commissioners.
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 The Period after Independence
• The period after independence was a turbulent one for local
government in Malaysia.
– because there were too many types and numbers of local councils
and many were too small and weak financially and had lack of
administrative support.
 1958 – there were 390 Local Government:
 City Council – 1
 Municipal Council – 2
 Town Council – 32
 Town Boards – 46
 Rural District Councils – 7
 Local Councils – 302

• 1960 - Local Government Elections Act passed by Parliament. An

Election Commission was established in 1961.
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• 1960- The National Council for Local Government (NCLG) was
established. (Article 95A, Federal Constitution)
• The ROLE of the NCLG is
– to make national policies for the purpose of controlling and administering local government in
Malaysia
– to give advice to the Federal government on formulation of laws relating to local govt.
– to give advice and consultancy services to LG.

• 1962- The creation of the Amalgamated National Union of Local Authority

Employees (ANULAE). It provided a focal point for staff complaints and an
important medium of communication for local government staff

• 1964- Ministry of Local Government and Housing was established and

provided a focal point for local government research and coordination.

• 1965 – Restructuring of local government initiated with the setting up of

the Athi Nahappan Royal Commission 10
 RESTRUCTURING OF LG IN MALAYSIA AFTER
INDEPENDENCE
• Restructuring means to reorganize, review and reexamine the
structure, functions, purpose and administration of local
government.
• Categories of restructuring:
1. Physical restructuring- reducing number and types of local
government units. It also means increasing or decreasing size and
types of LG units.
2. Organizational restructuring- improving the administration,
organization and structure of LG units.
3. Financial and administrative restructuring- improving LG finances and
administrative restructuring (staffing, personnel problems).
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 Restructuring of local government
Act 171 was an important turning point in the restructuring of LG
in Malaysia.
Some important aspects of restructuring:

1)Physical restructuring
– Two types of councils set up – municipal councils in the town areas
and district councils in the rural areas( section 3 of Act 171)
– Smaller local councils were amalgamated to become larger units
(section 5).

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Restructuring of local government
2) Organisational restructuring
 Councilors appointed by state government. Number of
councilors from 8 – 24 (section 10)
 Elections to local government cease to have any effect
(section 15)
 Functions of local authorities increased from purely
maintenance to development oriented.(section 72 and
101)
 A local authority shall be a body corporate and shall
have perpetual succession and a common seal ( section
13)
 Local councils may sue and be sued, acquire, hold and sell
property (section 13)
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Restructuring of local government
3) Financial Restructuring
• Local councils finances improved- specific revenue
were allocated to them (section 39)
• Local councils have the power to recover arrears in
case of ratepayers who default in their payment
(section 148)
• Local councils could borrow money from federal or
state governments or from other financial
institutions (section 41 and 47)
• Local councils can make advances by way of overdraft
(section 49)
• Local councils have the power to issue mortgages or
debenture stock (section 42)

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Restructuring of local government
4) Administrative Restructuring
• The State government can issue directions to
local government (section 9)
• Local councils can make by-laws (section 102)
• Local councils can hire their own staff and
became a closed service (section 16)
• Local councils have the power to provide for
discipline for their staff (section 17)
• A committee system of administration set up –
committees comprised heads of departments and
councilors

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 Why was restructuring to LG done in
Malaysia?
Restructuring was initiated in 1965 by the govt. due to the following:

•The number and types of LG units were too many.

•Most councils could not provide basic services due to lack of finance
and administrative staff.
•The councilors were inefficient and politically motivated and corruption
was rampant.
•Staffing constraints especially lack of professionals such as valuers and
town planners
•Financial administration was poor, record keeping bad, and high arrears
•There were too many laws relating to local government in Malaysia.
•Lack of communication between LG and higher levels of government.
•There were 7 types of LG unites- most had no financial and
administrative autonomy. E.g. town board, municipal, city council and local
council.
•Management system was weak.

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 OUTCOMES OF RESTRUCTURING
PROCESS
LG reduce into 2 types which are District Council and Municipal
Council
Reduced the number and size through amalgamation.
Standardized the law.
Appointing councillors.
Enhancing financial autonomy through increased revenue and
loans.

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 Royal Commission of Inquiry 1965 (also known as
Athi Nahappan Royal Commission)
• In 1965 the Athi Nahappan Royal Commission was set up to examine
and restructure the entire LG system in West Malaysia.

• Objectives:
– to investigate if the present system of Local Government serves any useful
purpose
– to report on the above matters and to make such recommendations, taking into
account the adequacy of existing laws with regard to local authorities

• The commission finish a complete investigation four years later and

sent its report to the federal cabinet in December 1969 but its report
was only released to the public two years later due to the state of
emergency declared in Malaysia in 1969.

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Main recommendations
1. That every inch of the country should be covered by a local authority
2. That every householder in a Local authority should be required to pay a
nominal contribution of not less than $1 per annum in lieu of rates (in
UK it is called a poll tax)
3. There should be one single law applicable to all local authorities and
every state should enforce the law within 6 months.
4. A local authority should be decentralized and be an autonomous body
corporate consisting of fully elected members with financial and
administrative autonomy but subject to the control by state authority.
5. Elections process to choose representatives for LG will be maintained.
Every LA should have representatives that call Council. The members
in that council must be chosen by the locals in that local authority for
every three years. 19
 Main recommendations
6. Abolished all bodies, boards and councils, to be replaced by one Management
Board.
7. Suggest that the higher authority and the executive officers in LA act as a
secretary. Local secretary will become as a Chief Executive and Chief
Administrator. This role is to replace District officer. It has a role as a ‘Town
Clerk’ and ‘Town Country’ in England.
8. There should be Regional Inspectorates in local government.
9. There should be a State Commissioner of local government in each state.
10. That a state committee for local government should be established in each state
to exercise the functions of the state in relation to local government.
11. A local government tribunal should be set up to deal with complaints from public.
12. A ward committee should be set up in every ward of a local authority
13. All trade and business registered under the Registration and Business Ordinance
1956 should be required to pay a license fee annually.

* REJECTED proposal by Minority committee. 20

 ANALYSING THE MAIN PROPOSALS OF THE
COMMISSION
1. The government set up two committees to look into the
recommendations
– A Main committee which agreed with most of the recommendations
made by Athi Nahappan
– A Minority committee which was made up of Development
Administration Unit and Economic Planning Unit officials from the
Federal government central agencies. This committee did not accept
most of the recommendations made by Athi Nahappan.

2. Federal government accepted the report of the Minority committee.

• considered too drastic and not suitable for a newly developing country like
Malaysia
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 WHY?
(Reasons why these proposals were REJECTED by the Govt.)

• Democracy was still a new concept and people were not politically mature to understand
democracy. Anyway, people were still apathetic towards democracy and will not go to vote.
• Elections are too costly to be held at the local level since elections are already held at the
Federal and State level.
• The publics are politically apathetic and will not take an interest in local affairs via elections.
• Elections held to local councils will create political instability and will not help to achieve unity
among the races
• Focus on socio-economic developments- Malaysia was a newly independent state.
• District Officer was an important traditional institution in the government hierarchy and cannot
be abolished.
• The Management Board was considered unnecessary, it would act as a policy making body
just like the Federal cabinet.
• The poll tax was also not a good idea since the people already have too many taxes to pay.
• Not necessary to have a state commissioner and regional inspectorates to control local
government.
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END OF CHAPTER 3

THANK YOU

(c)NursyahidaZulkifli, UiTM(Kelantan) 24