TOPIC 2

THE SYSTEM OF
DECENTRALIZATION AS
PRACTICED IN MALAYSIA

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

1.Define decentralization
2.Explain types of decentralization
3.Define decentralization as in the Malaysian context
4.Discuss role of the district officer in local
administration
5.Explain the federal and state controls over local
government 2
 Contents
1. Define decentralization
2. Explain types of decentralization
3. Define decentralization as in the Malaysian
context
4. Discuss role of the district officer in local
administration
5. Explain the federal and state controls over local
government 3
(c)NursyahidaZulkifli, UiTM(Kelantan)
 CONCEPT OF DECENTRALISATION
• Delegation of power/authority from higher to lower organization often
accomplished by the creation of small and self-managed organizations units.

• 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.

• Ensure the effectiveness in administrating not only in central part, but also to
grass-root like urban area, village and town country. This level gave the power to
individuals who involved in district level to administer their own area.
• By creating the conditions for more inclusive and transparent operations,
4 for
enhances citizen participation, and allowing communities to take responsibility
their own development.
 DEFINITION OF DECENTRALIZATION

Maddick (1966) defines decentralization as consisting of TWO TYPES-

1.Devolution—central government’s transfer of administrative and

financial decision-making authority to LG that have clear and legally
recognized jurisdictions within which they provide public services to
constituents they are accountable to.

2.Deconcentration - “Delegation of authority adequate for the discharge

of specified functions to staff of a central department who are situated
outside central headquarters”. 5
Smith (1985 ) differentiates TWO FORMS of decentralization:

1.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).

2.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, registration department).
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(c)NursyahidaZulkifli, UiTM(Kelantan)
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- distribution (redistribution) of authority to make decisions and to
take action by LG independently of central administrative oversight.
– Central govt. might retain overall legal control (equal protection under the laws,
regulate fraud and corruption) and the authority to alter the LG power.

•Deconcentration- redistribution of central resources to localities on the

sufferance of those authorities.
– Occurs when local entities act largely as local agents of central governments,
manage personnel, and expand resources allocated to them by central govt.
authorities.
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Mawhood (1991) define 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).
•deconcentration, they are basically government agencies or bodies with
no specific financial or administrative powers.

Devolution and decentralization are the same concept but deconcentration

is not part of decentralization.
•Why? – decentralization must be some form of transfer of power to local
government, but deconcentration does not involve any transfer of power to
local bodies.

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 How is decentralization defined in the Malaysian
context?
Brian Smiths definition is applicable for Malaysia.
1)Devolution - 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 sue and can enter into a
legal contract.
 Have discretion to spend their money and to make policies for the benefits of
their community.
2)Deconcentration - delegation of authority to agents of central and state governments
at the local level.
o Do not have any specific financial and administrative powers.
o They act on behalf of the higher levels of govt. and can only do as instructed.
o Execute the policies decided by the higher levels if govt. 9
Deconcentration

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 TYPES OF DECENTRALIZATON
1) Devolution
• Devolution is the formal assign of power from federal government to
the local government unit
• It is a transfer of power through specific law from federal government
to local government (Ninth Schedule, FC)
• It is part of federal government
• In pursuing tasks and power, the local government has limited area
of administration
• It has a financial autonomy
• The delegation of power is very formal because have a specific law
to follow
• It encourages the participation of people in the government
administration and able to settle the adopt problem. Allow people to
learn and understand the full process of political decision-making 11
2. Deconcentration
•It is process which the central and state government delegates their
power and functions in decision making, without specific law but nearly
for administration
•The officer at the branch has the responsibility to implement the plans,
activities/outlines by the Federal Government, according to function
•To reduce the burden of federal government
•Concentrate in specializatio tasks

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(c)NursyahidaZulkifli, UiTM(Kelantan)
• Types of deconcentration:

1. Prefectoral deconcentration (e.g. the district office).

– District Officer (D0) is a provider of various types of services to
the people as requested by the State Govt. For example, DO
provides land, social and community development services to
the local community.
2. Functional deconcentration refers to state and federal
government agencies that provide a very specific service to the
people.
– E.g. The Ministry of Housing and Local Govt. (MHLG),
Registration Department, Public Works Department, Health
Department.

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Types of Deconcentration (cont.)
• Both prefectoral and functional deconcentration do not have any
specific powers that LG has.

• Which powers?
i. Financial autonomy- budget from Federal/State govt.
ii. Administrative autonomy- cannot hire and terminate their own staffs.
All vacancies are filled by respective State/Federal commission [e.g.
State Service Commission)
iii. They are not a body corporate- they are only extension of the
government machinery.
iv. Only implement policies made by higher levels of govt.
v. Cannot make by-laws. 14
 DIFFERENCES BETWEEN DEVOLUTION AND DECONCENTRATION
DECONCENTRATION DEVOLUTION

Do not have financial & administrative Have financial & administrative autonomy
autonomy.

Not a body corporate but only extensions of A body corporate- power to sue and be sued.
the government machinery.

Only implement policies made by higher Can make its own policy
levels of government.

Cannot make by laws Can make its own by-laws

e.g. hospital, school, police e.g. local authorities (MPKB)

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 Reasons for Decentralization

According to the World Bank (1989, pp. 71-2) there are FOUR
ARGUMENTS in favour of decentralization, namely:

1.Demand for local public services varies from place to place.

2.Efficiency- locally financed and produced services will reduce cost.
3.Political nature- LG is an important training ground for democracy.
4.Institutional- coordination at local level is necessary and local public
services cannot and would not be treated independently. LG can coordinate
these services much more easily than the central govt.
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Reasons for Decentralization (cont)

• 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.
• 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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 Decentralization
Key Success Factors

• 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
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 THE RELATIONSHIP BETWEEN THE FEDERAL, STATE
AND LOCAL GOVERNMENT
• The Malaysian government system is divided into three levels - namely federal, state
and local governments.
• The constitution of 1957 gave the exclusive power to govern LG to the state except
those in the federal territories
• The state government has the right to determine types of programmes and policies
that are suitable for their local governments.
• The LG derive their power and autonomy through the process of decentralization from
the state government
• LG in Kuala Lumpur, Labuan and Putrajaya come under the jurisdiction of the Federal
Territories Ministry.
• Federal govt. has indirect control over LG in Malaysia via National Council for LG and
Ministry of Housing and Local Government (MHLG)- because LG is still financially
weak and receive financial grants from Federal Govt. 19
 FEDERAL AND STATE CONTROLS OVER LOCAL
GOVERNMENT
Federal controls over local government
There are two (2) main controls by Federal Government over Local
Government:
1. National Council for Local Government (NCLG)
– The govt. enacted, under Article 95A, the NCLG to advice and coordinate the
local authorities in matters especially pertaining to legal and major policy
issues (Federal Constitution)
2. Ministry of Housing and Local Government

State controls over local government

1.Control under the Local Government Act, 171
• Financial controls (e.g assessment rates)
• Administrative controls (e.g councillor appointed by State Government) 20
2.Control under the Town and Country Planning Act
1) FEDERAL CONTROLS OVER LOCAL GOVERNMENT

a) NCLG
•advise and coordinate the local authorities in matters especially
pertaining to legal and major policy issues
•Chaired by federal cabinet minister, a representative from each
state governments as well as no more than 10 representatives of
the federal government to meet and discuss policy matters
relating to local government at least once a year.
•Acted as forum for federal, state and local governments to
coordinate policies and laws relating to local government.

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Federal controls over LG: NCLG (Cont.)

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.
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b) The Ministry of Housing and Local Government (MHLG)

The MAIN FUNCTIONS of MHLG are :

1. To act as Secretariat to NCLG with the highest authority to draft and amend policies and
by-laws related to LG
2. Responsible for the development of the administrative systems of LA so as to improve its
services and capacity to execute it activities at the grass root level.
3. Responsible to monitor the activities of LA to be in line with the national policies.
4. Responsible to co-ordinate and assist in provisions of grants and funding from the
Federal Govt.
5. To provide advisory functions to LA in the financial planning and the improvements of
their financial positions.
6. provision of adequate housing for all citizens;
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 7. planning and implementation of KPKT policies;
8. setting up of local authorities;
9. provision of efficient fire and rescue services and strengthening;
10. implementation of the Town and Country Planning Act 1976;
11. oversees overall development of local government in Malaysia and they can
direct state governments to pursue federal government policies
12. 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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(c)NursyahidaZulkifli, UiTM(Kelantan)
 2) State controls over LG
State control over local government are mainly as follows:

1.Financial Controls
– 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 - 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
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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.
– 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
– S. 165-Transfer of functions to state authority if it feels that the local authority cannot
carry out its functions properly.

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 3) Controls under the Town and Country
Planning Act

• Under TCPA, 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.

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Effects of these controls on LG
• It restricts their financial autonomy of local authorities
• Local government’s administrative autonomy is also restricted
• State authorities can issue directions to local authorities and
instruct them to do as they wish.
• It slows down the decision making process
• It prevents decentralisation at the local level and local authorities
become more like deconcentrated bodies and cannot practice full
devolution and be independent.

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THE ROLE OF THE DISTRICT OFFICER (DO) IN LOCAL
ADMINISTRATION

History of the evolution of the “District Officer”

•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 Independent 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.
•After 1969, the institution was once again rejuvenated due to the
increasing importance of security issues in view of the revival of 29
communist activities.
• DO is appointed by the state authority to administer the district
• Responsible on matters pertaining to the land and peacefulness of its
area

Functions of DO:
1) Land matters – classifying the land types
2) Peacefulness – act as a magistrate regarding with land arguments
3) Supervisor – influence others related to land matters
4) General functions – coordinate various developments planning of the
district
5) To monitor and build close relationship with the people in the district
6) To implement the government policy – NDP
7) Aware the needs and demand for the development
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(c)NursyahidaZulkifli, UiTM(Kelantan)
 END OF CHAPTER 2

THANK YOU

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(c)NursyahidaZulkifli, UiTM(Kelantan)