12-05-2025
- Business
- Free Malaysia Today
Proposed URA: Consider the facts and hard truths
From Peter Leong
Razak Mansion is repeatedly held out as a success story of urban renewal and, despite ongoing issues such as maintenance deficits, is perhaps deservedly the poster child for this formative stage of legislation and policy-making.
It is also true that the old Razak Mansion dwellers were successfully re-housed without the help of any Urban Renewal Act (URA), and that similar 'in-situ resettlements' to facilitate urban renewal could likewise be achieved.
The housing and local government ministry's urban renewal guidelines, which drew from the learnings of Razak Mansion and were launched in September 2023, did not take into consideration the existence of a URA.
It was detailed enough in its process flows that we could see how it would work without a URA.
But irrespective of the polemics and political narratives, this is no reason to outright reject the potential merits of having a URA – a potential that can only be achieved through a much more inclusive and rights-based consultation of the draft bill's provisions than what we are seeing now.
Specifically for Kuala Lumpur, which has a different town planning act (Act 267 instead of 172), a form of 'URA' already seems to be embedded therein – at a level of detail not contemplated by the rest of the country's Act 172.
Most notable is the action area provision, the declaration of which affords a window of opportunity for owners to exercise their right to self-initiate redevelopment before state authorities can take over.
But even this cannot be the silver bullet.
The proliferation of strata properties since then also means that in the majority of cases, a (self-)action area is unlikely to materialise, as the owners have to reach 100% consent.
Therefore, for Kuala Lumpur as with the rest of the country, the best prospects for a way forward lie in an all-stakeholder consultation with open and equal access to statistics and sectoral expertise, founded on a clear acknowledgement of the need to balance economic priorities and the right to do business with the rights of ordinary citizens.
The URA draft bill proclaims itself as a 'town planning law' while describing its 80% (or 75%) prescriptions as 'consent thresholds'.
This is totally different from the consent thresholds of the foreign countries against which the local housing and development has (perhaps inappropriately) benchmarked us, which are in land/property law.
For example, Singapore's is in its Strata Titles Act, which we have here too as Act 318.
From the best information available so far, there is no intention to amend Act 318's 100% consent requirement for terminating a strata scheme.
So our URA seems to be really about adding some kind of structure to the 'Razak Mansion' way of doing it, and in the process augmenting the bureaucratic structures (or creating them where they did not exist before) – and setting these up as chains of authority that would eventually be applied towards dealing with the minority non-consenters once the minimum threshold is met.
Others have already written in depth about the evils of the compulsory acquisition of minority holdings and the likelihood of unfair (under-)valuation of minority units, i.e. at existing resale market value without any uplift for plot ratio/GDV enhancement, on the basis that 'they refused to participate in joint venturing with the developer.'
Simply put, no one should be penalised for personal circumstances that make no good sense for them to follow the crowd. On the other hand, it is also true that a hyper-majority should not be made to suffer by the unreasonable individual.
Singapore's consent thresholds (80% generally, and 90% for newer properties), which are under its strata property law, facilitate profitable en bloc sales through competitive bidding, orchestrated by a collective sale committee elected from among the owners themselves.
These are very 'enriching' to the sellers, who typically enjoy a massive value uplift as potential (re)developers seek to outbid each other.
But this only happens for higher-end/private strata properties.
It does not work this way for owners of public housing built by the Housing Development Board (HDB) (Google 'Selective En Bloc Redevelopment Scheme' or 'SERS').
Malaysia's urban renewal needs are much skewed towards this 'HDB-equivalent' segment but are not supported by any unifying/federal framework that enables the redevelopment of a common class of public housing (in the manner that city-state Singapore can).
Seen in this light, it is understandable why our legislative trajectory for urban renewal is not putting its 'consent threshold' into a land/property law, which logically no one else but the owners would have the right to negotiate.
This again points to the potential merits of having a URA – not necessarily focused only on the 'HDB-equivalent' categories, but certainly with all the appropriate processes and safeguards for achieving acceptable outcomes despite our starkly contrasting approach to the problem – such as public private partnership models, which devolve or 'abdicate' too much to private sector initiative or control.
Fundamentally, the entire premise of promoting in-situ resettlement through the 'joint venture participation' of the owners is about reducing developers' capital outlay by taking away 80% of the land acquisition costs, and shedding a significant part of the economic risks to owners.
In the complex economics and intricacies of executing redevelopment projects, this basic truth must feature prominently in finding a morally appropriate balance between the rights of businesses and ordinary citizens.
Peter Leong is a volunteer with Selamatkan Kuala Lumpur and public policy adviser to the Kuala Lumpur Residents Action for Sustainable Development Association.
The views expressed are those of the writer and do not necessarily reflect those of FMT.
