Land Administration in Supporting Digital Era: An Experience and Effect to the Land Acquisition

Land Administration in Supporting Digital Era: An Experience and Effect to the Land Acquisition

Ahmad Hamidi Mohamed, Noorfajri Ismail, Kamilah Wati Mohd

Faculty of Syariah and Law, Islamic Science University of Malaysia, Malaysia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.9020326

Received: 14 February 2025; Accepted: 19 February 2025; Published: 20 March 2025

ABSTRACT

Land administration and management is the heart of development. This sector is mainly concerned with public sector services, as in Malaysia, where land transactions are governed and executed by the land office. The advancement of technology should also be adopted in the land administration and management sector. This paper seeks to explain the experience of Malaysian land administration in adopting digital technologies and transformation. Qualitative methods of content analysis and thematic analysis are used in construing the experience and its effect on the land administration. Some of the findings are the evolution of the land administration in digitalizing the sector, the design of the system and the factors for the adoption of digital technology. This paper recommends that policy should focus on comprehensive collaboration between institutions involved in land matters and provide an enabling legal framework.

Keywords: administration, acquisition, digital, land, system.

INTRODUCTION

The National Land Code [Act 828] (NLC) is the main act in land legislation in Malaysia, aimed at uniforming the laws and policies on the land administration for Peninsular Malaysia, including Federal Territories of Kuala Lumpur, Putrajaya and Labuan. This action is based on the authority as enshrined in Article 76(4) of the Federal Constitution of Malaysia. Beforehand, land legislation was enacted by each and every 11 Malay states in Peninsular Malaysia, also known as the Federation of Malaya. After gaining independence from the colony in 1957, the Federation of Malaya initiated the uniformation of several legislations, including land legislation.

Therefore, NLC was enacted on the basis of combining the general practice and legal stands of the state land law, and it was enforced in 1966.  This legislation must be in line with the current needs, especially among the public as the largest stakeholder, and at the same time protect the interests of the Land Administration which guarantees land ownership according to the Torrens system principle [1], [2]. The main principles in the Torrens system are the mirror principle, curtain principle, and assurance principle. These principles are important in securing the ownership and rights of the landowner, and must be carried into the digital framework as well.

The land administration has been the foundation of the indicator for Ease of Doing Business in Malaysia, a report conducted by the World Bank, for several years until discontinued in 2022 for a better indicator arrangement. Since the introduction of the indicator, the Government has put its effort into improving the land administration system. It seeks a better way of giving the best from other best practices from other countries. Most countries invest in shortened timeframes and expedite land transactions through digitalization and simplified land matters transactions. This is important as a catalyst for investment and economic growth from the factor market, land. However, the discontinuation seems not to affect the initiative for land transformation.

As such, the intervention from the government is done continuously by introducing a technological improvement to the system such as an electronic land administration system known as e-Tanah. This system had been piloted initially in Penang, and later a revised version in the Federal Territory of Kuala Lumpur, before being expanded to its counterparts, the Federal Territory of Putrajaya and Labuan, as well as to the State of Perak, Selangor and the latest adoption in Terengganu.

The expansion and enlargement of the e-Tanah system into several states illustrates the successful implementation of the framework although there are challenges down the line. It is observed that the biggest hindrance of the initiative to digital transformation is the cost to be invested, to run side by side with rapid changes needed due to technological advancement. Moreover, the land legislation has also evolved which needs amendments to the legislation and affecting the systems structure.

For further improvement and to cater to the new environments of digital years, the e-Tanah system is proposed to be further developed and enhanced by embedding a fully electronic system into the land administration environment.

This paper evaluates the land administration in Malaysia through qualitative methodology as mentioned in the next section. Further, the findings and discussion will be elaborated in a later section. Lastly, this paper provides some conclusions and observations based on the findings.

RESEARCH METHODOLOGY

This study was conducted using qualitative methods. Based on several literature on legal framework study, the qualitative is the most suitable method as to explore and best answer the research questions and objectives. The qualitative method refers to a doctrinal study involving the analysis of current legislation, especially the National Land Code [Act 828] (NLC). The library research is conducted, and data is collected from the unpublished reports from the respective authority, which is the Department of Director General of Lands and Mines (Jabatan Ketua Pengarah Tanah dan Galian Persekutuan – JKPTG).

Most of the reports are for internal use only and are not publicly available. However, the reports are available for research purposes with formal permission by JKPTG. As such, to withhold the transparency of the study, the unpublish document is reviewed during the interview session and data collection together with the personnel of JKPTG.

This research depends on the main reference of regulatory impact research of the proposed amendment of the land legislation. The report was prepared by the JKPTG but was not published publicly. The author has the privilege to be in the team and use the observation for the research. Nonetheless, the privileged information has been cross-referred for affirmation with the respective team members.

In addition, interviews also have been done with JKPTG’s personnel who are involved in policymaking, particularly in the Policy and Research Division of JKPTG. Semi-structured interviews and questionnaires are used to interview two subject matter experts in JKPTG, two team members of NLC amendment, and three desk-officer in-charge of specific legislation namely the Land Acquisition Act 1960 [Act 486], the Strata Titles Act 1985 [Act 318] and Small Estate (Distrtibution0 Act 1955 [Act 98]. Meanwhile, the experience and observation of the authors also is translated into this paper as the author involved directly with the research on the amendment of the legislation.

FINDING AND DISCUSSION

The Evolution of the Land Administration System

Land management and administration have been at the centre of the attention of the developer or development-related industry players. The developers see the land administration, especially the transaction at the counter of the land office as a hindrance to the development process. The timeframe may differ from one state to another according to respective subsidiary legislation such as State Land Rules. As well, it may also differ from one transaction to another, and an exact timeframe cannot be determined precisely. In planning and developing the land, several stages and elements need to be fulfilled before the development can be initiated.

The earliest stages of development might be referred to the land acquisition or procurement. In preparing land for development, the main element is to secure land ownership, which involves several transactions at the land office. The process and procedure that needs to be adhered to are very stringent, which covers up to the colour of the ink used in the form for land transaction [3]. For example, the only ink permissible in filling the form for land matters is black or blue-black only.

This requirement has received several commentaries, which seems that the procedure was troublesome for the people. Then, the procedure was given an alternative due to an amendment to the land administration ecosystem which evolved through the computerized land registration system known as the Computerized Land Registration System (Sistem Pendaftaran Tanah Berkomputer – SPTB). This initiative is the result of the study and recommendation made by the Modernization of Administrative and the Management Planning Unit, Prime Minister’s Department (MAMPU) in 1995 to shift the paradigm of land administration. As a result, it increases the performance of the land office counters across the states. For instance, it is reported that all states achieve 93 per cent of transactions of land registration transfers within a day.

Fig. 1 Evolution of Land Administration [4]

Further, land administration has been developed through an electronic system which was legalized by Part 5D of the NLC, Electronic Land Administration System, in 2005. Under this amendment of the law, the development of land transactions for physical development and foreign land or development investment becomes more attractive. The system of electronic land administration is known as e-Tanah. This initiative has been impacting the performance of the land administration in Peninsular Malaysia, as the NLC is only applicable in Peninsular Malaysia.

At the earlier stage of land administration under NLC, land title registrations were made manually and supported by a cadastral system that used maps and card systems [4]. For example, it is reported and informed by the participants that the transfer of land, as an example, can only be settled after years, considering having the forms signed, or the plan needs to be referred to and recorded manually. Thus, there are abundant forms and procedures to fulfil in order to transact a particular land. As the NLC is the main land law, the other land-related laws must also be parallel and consistent with the NLC. Some of the examples of other laws are the Strata Title Act 1985 [Act 318], the Land Acquisition Act 1960 [Act 486] and the Small Estate (Distribution) Act 1955 [Act 98].

In the 1980s, the implementation of the land transaction and other procedures changed. The introduction of computing systems in public services as well as in the global environment creates a new paradigm. It creates the first cadastral digital databases, namely the Cadastral Data Management System (SPDK) and the Land Revenue Collection System (SPHT). However, the system only caters for the printed output of the product needed such as the plan and document of title. Thus, the calculation of land revenue and the cadastral data is recorded in the computer database.

Further, the land administration evolved with the introduction of the Computerized Land Registration System (SPTB) in all Land Offices in Peninsular Malaysia in 1995. This initiative remarks on a new land administration process where the land administration enables the use of the computerized system through its amendment of the NLC. It is provided in the NLC as follows—

“5A  Coming into operation of the Computerized Land Registration System in any land Registry

(1) The Minister may, with the approval of the National Land Council, by notification in the Gazette of the Federation, appoint a date for the coming into operation of the Computerized Land Registration System in any land Registry.”

This transition reduces the space needed for document storage. As such, this initiative creates a better working environment in the land office, and it does away with the handwriting.

Later, in 2005, the land administration once again moved one step ahead by the introduction of a web-based system in Penang. The pilot system, as it is called, is a system based on the web which requires an internet connection. The infrastructure is developed for the connection and the networking, but within the state boundaries. The NLC enables the use of internet-based applications in land administration as provided by the amendment of the NLC known as the Electronic Land Administration System, well-known as e-Tanah as follows—

“5D  Coming into operation of the Electronic Land Administration System in any land Registry

(1) The Minister may, with the approval of the National Land Council, by notification in the Gazette* of the Federation, appoint a date for the coming into operation of the Electronic Land Administration System in any land Registry.”

As the previous system architecture and infrastructure are already in place, the integration and interaction of e-Tanah are implemented. It just not only covers between the Land Revenue Collection System (SPHT) and the Computerized Land Registration System (SPTB), but also involves other systems that have been developed by various agencies involved in land management and administration including the National Geospatial Data Infrastructure (MyGDI), the Cadastral Data Management System (SPDK) in JUPEM and the systems that land offices are currently using in all states in Peninsular Malaysia [4].

The New Design

Moving towards the new electronic era, the system’s design needs to cope with the current technology as an expansion of the pilot project of e-Tanah in Penang into the states of Negeri Sembilan and Melaka. However, the development of the system still has hiccups during the live session. The design of the ecosystem for technology has quickly evolved and needs to cope with the current development. As such, the issue of cost is raised as the system needs to be in line with the current legislation and technology.

Hence, in supporting the digital era, the previous design needs to be strengthened and upgraded, so as to cater for the new needs of the electronic ecosystem. The previous version of e-Tanah seems an incorporation of the electronic mechanism in the manual ecosystem. This referred to the need for the physical transaction still need to be done, such as submitting the forms or instrument of the transaction to the land office after the same transaction has been registered in the system.

Thus, JKPTG conducted a study to improve the system. The study focuses on embracing wholly end-to-end electronic transactions [5]. It is suggested that these transactions require a legislative amendment to enable and allow the transactions to be done through an electronic system. Several electronic concepts such as digital signature and paperless output must be synchronized with the land administration environment and ecosystem.

The latest study conducted by JKPTG is to introduce the fully electronic ecosystem. This will involve several agencies and institutions as the stakeholders of the land transactions, land administration and land management. Several transactions are briefly mentioned in Table 1 below.

Table 1. Several examples of major land transactions in land administration [3], [6], [7]

The Covid Push Factor

The 2 years of the COVID era is an unprecedented event which explores the need for advancement in electronic and digital adoption. The development still needs to be done although the operation of the office, especially physical transactions, is almost difficult during the period. The investment and economic development of in-situ behaviour are in question. In the land administration context, the fundamental needs for the land as the input of the primary source for economic development need to be done remotely during the period. Thus, the land transaction including the acquisition and procurement needs to be through online medium.

For example, there is a case for land auction which has been registered to court and needs to be heard before the judge. As the movement control order (MCO) is in force, there is no seating of the court that can be done and it affects the timeline provided by the law. Thus, the transaction of land auction can be figured out online in order to hear the case before the judge.

Similarly, during the MCO period, it also hinders the inquiry of compulsory land acquisition and the distribution of small estates[1]. The inquiry of compulsory land acquisition is required to be held physically as provided by the Land Acquisition Act 1960 [Act 486]. Alike, the provision in the Small Estate (Distribution) Act 1955 [Act 98] is also the same where the inquiry for the distribution of the small estate should be done physically.

Besides, the MCO and COVID status also affect the performance of the land office [8]. Land transactions cannot be done in full force or at full performance. The land transaction should be done as soon as possible by the land office to secure the rights of the landowner. As such, all land offices agree to the implementation of “one-day registration” for the transfer of land. The implementation is performing well and has increased year-by-year until it was shocked by MCO and COVID.

Fig.2 Performance of Registration of Memorandum of Transfer in Malaysia. (Reproduced from [8] )

Policy Recommendation

Comprehensive Institutionalization

Hence, this transition from a manual ecosystem towards a fully electronic ecosystem should not work in silo. As land matters require each and every stakeholder to respond to the need for a digital environment, they need to put the effort on the same platform of digitalizing the land ecosystems.

The study conducted by JKPTG was initiated from the lack of mechanisms for implementing land administration through the online system and digital ecosystem. The study performs a cost-benefit analysis (CBA) of the cost incurred in proposing new methods and mechanisms of land administration in the digital era [5]. The CBA is conducted to provide a basis for the implementation of an end-to-end system, from application by user until registration by the land office or land administration. The current e-Tanah system needs to be upgraded to encompass the new features of technological development in the digital economy such as fully digitalized titles and plans.

The study finds that the cost of implementing the new mechanisms in the digital ecosystem requires huge investment. Nevertheless, the investment breakeven seems to be in the 8^th year of implementation. As such, the conventional approach of using the development expenditure (DE) in the government budgeting system cannot afford the pragmatic development of land legislation, as well as technology. It is because the DE is based on a yearly basis, which also can be accumulated within 5 years plan of expenditure. The implication of the cost incurred in developing and transforming the system may not be measured directly by the government through the DE approach.

Therefore, the one-sided investment in public services, such as the DE approach, is not the solution for the advancement of system development. The system development must not be hindered by the cost of developing the project. Thus, the government approach in Private Funding Initiatives (PFI) which involves the private sector and public sector works for the development of land administration digital ecosystem.

Legislation Amendments

The legal framework of land administration and management should be revised. Current legal frameworks are still in the manual environment. Although the amendments of the legal framework, especially the NLC, recorded an amendment of 20 times since 1965, the legal framework is still providing the enabling provisions subjected to the current practices. Hence, this study finds that the specific legal framework mentioned on the computerized system, or electronic system as under Part 5D of the NLC or Section 292 of the NLC respectively needs to be revised.

Moreover, the overall structure of the land administration in Malaysia is unique which empowers every state with the power on land matters as mentioned in the Ninth Schedule of the Federal Constitution [9]. Besides, there are a lot of agencies involved and there are a lot of digital platforms for integration. To name some, the Department of Survey and Mapping of Malaysia (Jabatan Ukur dan Pemetaan Malaysia – JUPEM), which is involved in preparing and approving the plan of land, and local authority, which is involved in approving the plan for the development of land, are the institutions directly related to land administration.

Additionally, the Inboard Land Revenue of Malaysia (Lembaga Hasil Dalam Negeri – LHDN) is involved in the real property tax, and the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia – SSM) is involved in the registration of a company, are among the industry player indirectly related to land administration. These institutions and digital platforms need to be integrated in such a way, that they are eligible to be penetrated by digital services for the benefit of the public and economies.

Among other strategies that can be considered is the digitalization of the national identity as has been done by Danish Land Registry Court, Denmark which enables easy access to the system using individual digital identity [10]. In addition, this study would like to suggest that the platforms between the agencies in the government should be one platform or at least similar to each other as compared to current different platforms, which can expedite integration and interoperability.

Fig.3 Initial proposal for land legislation framework in Malaysia [11]

In addition, current developments also require an advanced approach to technology as well as digital. For example, the underground land development is emerging in Malaysia [12], [13], [14], [15]. The legal framework should support the implementation of the underground development. The framework should cover the acquisition and procurement of land until the issuance of underground titles known as stratum under section 92A of the NLC.

The definition and interpretation of enjoyment of right on the land also should be secured by the plan with accurate boundaries, which need to collaborate with technology and digitalization. The title of land should consist of accurate information about the land, with the help of the systems. Thus, every area or volume of the land will be secured by the law and need to be compensated accordingly if there is encroachment or compulsory land acquisition.

All these items and elements must be considered in the legal framework of digital land administration, especially in the computerized land titles [16]. The most important element is the security of ownership and indefeasibility of title need to be strengthened. Likewise, the accessibility of the system must be stable and readily accessible by the user at all times. Therefore, it can cater for social issues, as well as economic development issues, of development and to balance between public and private needs.

CONCLUSION

To conclude, the Malaysian land administration is on the right path towards the digitalization of the system. MyDigital ID initiative by the Malaysian government is similar to the one implemented in Denmark and can boost the digital ecosystem for the transformation of land administration[2]. Meanwhile, the initiative taken by each and every agency and institution in the digitalization of their process and transactions is a good sign for a successful adaptation in the digital era. Systems like e-Filing by Malaysia’s Court and STAMPS by LHDN are examples of an electronic environment that supports the current e-Tanah system. However, there are still challenges in the digitalization process such as the infrastructure and the marginal community as to access to the digital environment.

Hence, the digital and technological environment must be well included in the legal framework for land administration. As there are a lot of institutions as the stakeholders in land administration, this paper recommends that policy should focus on comprehensive collaboration between institutions involved in land matters and provide an enabling legal framework. The legal framework and infrastructure should be in a common or similar platform. It will promote better collaboration and integration of inter-agencies to ensure the success of the digital land transformation.

ACKNOWLEDGEMENT

I would like to extend my gratitude to the supervisors who guided me through the process, the participants and the subject matter experts in the land administration for the input and data provided.

REFERENCES

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FOOTNOTE

[1] Collected from several discussion and interview sessions and input from unpublished reports by JKPTG in 2022.

[2] https://www.digital-id.my/about access on 23 February 2025 and input from JKPTG’s personnel involved in the benchmarking visit to Denmark.