Malaysia Country Profile

Land Administration

Business Corruption

According to Freedom House 2009, the Constitution of Malaysia provides for equal treatment of all citizens, but the country maintains an official affirmative action policy that gives preferential treatment to ethnic Malays (bumiputera) in many areas, including property ownership. Furthermore, companies should be aware that irregularities are seen in relation to land transfer and, according to a 2007 report by Paul van der Molen, fraud and corruption occur in sales of land and dealing in shares of plantations.

Political Corruption

Transparency International Global Corruption Report 2008 reports that irregularities sometimes occur prior to elections in order to bend public favour towards Barisan Nasional candidates, including outright bribery, land-for-votes and low cost housing offers. According to BBC News 2007, the head of Malaysia's Anti-Corruption Agency, Zulkipli Mat Noo was forced to resign because of allegations of graft. The allegations are related to acquisition of property through corrupt practices.

Another major scandal, which is considered one of the biggest corruption scandals in 2009 in Malaysia by the Transparency International Global Corruption Report 2009, was the Port Klang Free Zone (PKFZ) scandal. It involved a major construction project having its cost inflated from MYR 1.1 billion to MYR 4.7 billion. The project was carried out by a government agency - Port Klang Authority (PKA). The PKA bought the land for MYR 1.1 billion in 2002 from Kuala Dimensi, which had bought the same plot for only MYR 95 million in 1999. The project initially involved building public infrastructure such as warehouses, parking bays and office buildings. Further investigation revealed that the scandal involved politicians, government officials and business people. According to the report, neither criminal charges have been pressed against any individuals nor have any funds been repaid. According to Reuters 2009, the Malaysian government made a statement in November 2009 that it will follow up on the investigation and prosecute offenders.

Frequency

The Word Bank & IFC: Doing Business 2010:
- On average, it takes 144 days and 5 procedures to register property, and the cost amounts to 2.6% of the property value.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the protection of property rights in Malaysia, including financial assets, a score of 5.2 on a 7-point scale (1 being 'very weak' and 7 'very strong').

Transparency International: Global Corruption Barometer 2009:
- 5% of the households surveyed reported to have paid a bribe to land services in 2008.

- 33% of households consider grand or political corruption in land matters to be a 'very serious problem'.

- 28% of respondents consider bribes to land authorities to obtain favourable decisions a 'very serious problem' in Malaysia.

Transparency International Malaysia: Transparency Perception Survey 2007:
- 21% of corporate respondents name the Land Office as the most, the second most or the third most corrupt public institution.