IMPROVING OFF-SITE INFRASTRUCTURE PROVISION
THROUGH THE PLANNING APPROVAL SYSTEM
IN PENINSULAR MALAYSIA
DANI BIN SALLEH
UNIVERSITI TEKNOLOGI MALAYSIA
IMPROVING OFF-SITE INFRASTRUCTURE PROVISION
THROUGH THE PLANNING APPROVAL SYSTEM
IN PENINSULAR MALAYSIA
DANI BIN SALLEH
A thesis submitted in fulfilment of the
requirements for the award of the degree of
Doctor of Philosophy (Urban and Regional Planning)
Faculty of Built Environment
Universiti Teknologi Malaysia
JULY 2009
iii
ACKNOWLEDGEMENTS
I would like to thank my principle supervisor Professor Dr. Ho Chin Siong
for his thoughtful and encouraging supervision and his significant input for his
guidance, comments and suggestions especially helping me on statistical analysis
during the course of this study. I would like to thank other staff members,
particularly those in Department of Urban and Regional Planning, Faculty of Built
Environment, Universiti Teknologi Malaysia (UTM) for their advice and assistance
in my study.
I am also indebted to the Department of Public Services (JPA) and Universiti
Utara Malaysia for granting me financial assistance and study leave in order to
undertake the study at the Universiti Teknologi Malaysia. My deep appreciation goes
to my colleagues at the Department of Development Management, Faculty of Public
Management and Law, Universiti Utara Malaysia (UUM) for taking over my
teaching duties during my absence. Many other people, both in Britain and Malaysia,
have also given their assistance without which the study would not have been
possible. I would particularly like to thank:
- Dato’ Mohd. Khalid (Deputy President of REDHA Malaysia),
- Dato’ Khoo Kim Choon (REDHA Legal Advisor),
- Professor Patsy Healey (University of Newcastle Upon Tiny),
- Professor Jim Claydon (University of New England),
- Professor Dr. Ghani Salleh (USM),
- En. Abu Bakar Johar, Director of Development Planning Department,
Ministry of Housing and Local Government (MoHLG).
- Pn. Maimunah bt. Shariff (Director of Town Planning Department,
Municipal Council of Penang Island, MPPP).
- My post-graduate friends for their helps (Department of Urban and Regional
Planning, Department of Architecture, Department of Quantity Surveying,
from Faculty of Built Environment, UTM).
I am grateful to them for recognising the value of the study into an area on
which little has been published. I would also like to express my gratitude to my
colleague at Department of Development Management, Faculty of Public
Administration and Law, Universiti Utara Malaysia (UUM), who drew my attention
to the research projects referred to in this work and who gave helpful and
encouraging support.
Finally, special thanks go to all my Guru, my parent, my wife and children
(Ezzul Hillman and Nuraini Suhailah) for their patience and support during my
study.
iv
ABSTRACT
The scarcity of financial sources has caused local authorities to no longer
remain as the single providers of off-site local infrastructure. This has forced them to
diversify and identify new methods to accommodate the provision. This has raised
the need for the present practice to be reformed in order to involve the private sector.
This research examines the possibility of applying planning approval system to
secure off-site infrastructure from the private sector. To achieve the objective, the
research used both qualitative and quantitative methods to identify the hindering
factors of the present practice of off-site infrastructure provision. The findings
showed that most off-site infrastructure provisions were delivered by public sector.
The private sector delivery was only evident in large-scale development. The
responsibility to provide off-site infrastructure now falls under the mutual
responsibility of both private and public sectors. In addition, the development plans
has played a significant role in terms of the mechanism in coordinating new
development with adequate provisions of off-site infrastructure. The tendency of
private sector to contribute off-site infrastructure is influenced by the cost of
development. The main issues of private involvement in local infrastructure provision
(off-site) are caused by the inconsistency of the conditions imposed by local
authorities to justify the requirements of off-site infrastructure. The findings propose
the practice of off-site infrastructure provision to be clearly defined and standardised.
The study revealed that planning approval system can be used to provide off-site
infrastructure by private sector through negotiation with approving local authority as
the most acceptable approach. However, it requires further investigations to detail
how the framework of negotiations should be outlined and the structure to be applied.
The implications of the findings have shown that the system should be improved by
integrating the element of negotiations as alternative means in considering planning
approvals and the types of infrastructure delivery should be diversified to include
Build Operate and Transfer (BOT), Public-Private Partnership (PPP), Private Finance
Initiative (PFI) and other methods of private delivery. The basis to seek contributions
from private sector should be properly established and local authority therefore shall
establish an Integrated Planning Approval System which enables them to distribute
costs of providing infrastructure to potential users.
v
ABSTRAK
Sumber kewangan yang terhad telah menyebabkan pihak berkuasa tempatan
tidak lagi berperanan sebagai penyedia utama kemudahan infrastruktur yang berada
di luar kawasan pembangunan swasta dan keadaan ini telah memaksa pihak berkuasa
tempatan mempelbagai dan mengenalpasti beberapa pendekatan baru bagi memenuhi
keperluan tersebut. Perubahan terhadap amalan semasa penyediaan infrastruktur
diperlukan sebagai usaha untuk melibatkan pihak swasta. Selaras dengan itu, kajian
ini mengkaji sama ada sistem kelulusan perancangan boleh digunakan untuk
mendapatkan infrastruktur daripada pihak swasta. Untuk mencapai objektif kajian,
pendekatan kualitatif dan kuantitatif telah digunakan untuk mengenalpasti faktor
yang menghalang penglibatan pihak swasta menyediakan infrastruktur. Hasil kajian
menunjukkan bahawa kebanyakan penyediaan kemudahan infrastruktur disediakan
oleh pihak kerajaan manakala pihak swasta hanya menyediakan infrastruktur untuk
projek berskala besar. Tanggungjawab menyediakan kemudahan infrastruktur
sepatutnya adalah tanggungjawab bersama di antara pihak kerajaan dengan pihak
swasta. Di samping itu, pelan pembangunan memainkan peranan yang penting
sebagai mekanisme untuk mengkoordinasi cadangan pembangunan dengan
penyediaan infrastruktur yang mencukupi. Kecenderungan pihak swasta dalam
penyediaan infrastruktur pada masa ini adalah dipengaruhi oleh faktor kos sesuatu
projek. Isu utama yang menghalang penglibatan swasta adalah ketidakselarasan
garispanduan yang ditetapkan oleh pihak berkuasa tempatan untuk menjustifikasikan
keperluan penyediaan kemudahan infrastruktur ini. Kajian mencadangkan supaya
amalan ini diperkemas dan diselaraskan. Kajian ini juga mendapati sistem kelulusan
perancangan boleh digunakan untuk menyediakan kemudahan infrastruktur daripada
pihak swasta dengan menggunakan pendekatan perundingan dan diterima oleh pihak
swasta. Pendekatan ini perlu diperinci dari segi kesesuaian kerangka perundingan.
Penemuan kajian memberi implikasi bahawa pendekatan perundingan perlu
digunakan sebagai kaedah alternatif di dalam mempertimbangkan kelulusan
perancangan dan kaedah penyediaan infrastruktur perlu dipelbagaikan dengan
menggunakan keadah penyediaan swasta seperti Build Operate and Transfer (BOT),
Public-Private Partnership (PPP), Private Finance Initiative (PFI) dan beberapa
kaedah lain yang sesuai. Di samping itu asas untuk mendapatkan sumbangan
daripada pihak swasta perlu disediakan dan pihak berkuasa tempatan perlu
menyediakan suatu bentuk Sistem Kelulusan Perancangan Bersepadu untuk
membolehkan kos penyediaan sesuatu infrastruktur diagihkan kepada pengguna yang
berpotensi.
vi
TABLE OF CONTENTS
CHAPTER
1
TITLE
PAGE
DECLARATION
ii
ACKNOWLEDGEMENTS
iii
ABSTRACT
iv
ASBTRAK
v
TABLE OF CONTENTS
vi
LIST OF TABLES
xiii
LIST OF FIGURES
xvi
LIST OF ABBREVIATIONS
xix
LIST OF APPENDICES
xxi
INTRODUCTION
1.1
Introduction
1
1.2
An Overview of Urban Development and Local
2
Infrastructure Provision
1.3
Current Issues in Local Infrastructure Provision
3
1.4
The Definition
5
1.5
Problem Statements
9
1.6
Research Questions
13
1.7
Purpose of the Research
14
1.8
Scope of Research
15
1.9
Significance of the Research
16
1.10 Expected Contributions of the Research
18
1.11 Thesis Structure
20
1.12 Conclusion of the Chapter
23
vii
2
LOCAL INFRASTRUCTURE PROVISION AND
PLANNING APPROVAL SYSTEM: A
THEORETICAL FRAMEWORK
2.1
Introduction
24
2.2
Local Infrastructure Provision: The Previous Studies
24
2.3
Public and Private Initiative in Infrastructure Provision
27
2.4
Local Infrastructure Provision: Why Private Sector?
30
2.5
Private Delivery of Local Infrastructure Provision
33
2.5.1 Issuing Municipal Bonds
34
2.5.2 Traditional Public Contracting
35
2.5.3 Service/Management Contracts
35
2.5.4 Lease Contracts
35
2.5.5 Public-Private Partnership (PPP)
36
2.5.6 Private Financial Initiative (PFI)
36
2.5.7 Build Operate and Transfer (BOT) Schemes
37
2.5.8 Concession/Franchise Agreements
38
2.5.9 Joint Ventures
38
2.5.10 Full Privatization
39
2.6
Classification of Infrastructure
39
2.7
Planning Approval System and Off-site Infrastructure
44
Provision
2.7.1 Planning System and Development Plans
44
2.7.2 Development Process and Planning Approval
46
2.7.3 Planning Gains and Planning Approval Process
50
2.7.4 Planning Approval Mechanism to Secure Off-site
57
Infrastructure
2.7.4.1 Planning Contributions
58
2.7.4.2 Development Charges
58
2.7.4.3 Planning Agreements
59
2.7.5 Negotiating Off-site Infrastructure Provision
62
viii
2.8
2.9
3
Comparative System of Local Infrastructure Provision
65
2.8.1 Ireland
65
2.8.2 Australia
66
2.8.3 Germany
68
2.8.4 United States
69
Conclusion of the Chapter
71
PLANNING APPROVAL SYSTEM IN MALAYSIA
3.1
Introduction
73
3.2
Urbanisation and Infrastructure Development
73
3.3
The Framework of Planning System
75
3.3.1 Planning System in Malaysia
75
3.3.2 The Administrative Functions of Local Authority
78
3.3.3 Administrative Framework of Planning System
82
3.3.4 Legislation Framework for Development Control
83
3.3.5 Planning System and Infrastructure Provision
85
3.4
Development Plan and Infrastructure Provision
86
3.5
Development Process and Planning Approval
89
3.6
Conclusion of the Chapter
95
ix
4
LOCAL INFRASTRUCTURE PROVISION IN MALAYSIA
4.1
Introduction
96
4.2
An Overview of Infrastructure Development in Malaysia
96
4.3
Local Infrastructure Provision in Malaysia
100
4.3.1 Local Infrastructure Development
101
4.3.2 Local Expenditures on Infrastructure Development
103
4.4
Source of Funds for Infrastructure Development
107
4.5
Planning Approval System and Infrastructure Provision
109
4.6
Planning Approval and Planning Contribution
111
4.6.1 Development Charge
112
4.6.2 Unilateral Undertaking of Planning Obligation
112
4.6.3 Improvement Service Fund (ISF)
114
4.6.4 Issuing of Municipal Bonds
115
Conclusion of the Chapter
115
4.7
5
RESEARCH METHODOLOGY
5.1
Introduction
117
5.2
Research Process
117
5.3
Conceptual Framework
122
5.4
Research Approach
123
5.5
Methods of Data Collection
125
5.5.1 Fieldwork Survey
126
5.5.2 Questionnaire Design
127
5.5.2.1 Local Authority
128
5.5.2.2 Developer
130
5.5.3 Sampling Design and Procedure
131
5.5.3.1 Local Authority
131
5.5.3.2 Developer
134
x
5.5.4 Pilot Survey
135
5.5.5 In-depth Interview
136
5.5.6 Library Research
138
5.6
Validity and Reliability
139
5.7
Methods of Data Analysis
141
5.8
Documentation of Research Findings
144
5.9
Limitations of the Study
145
5.10 Conclusion of the Chapter
6
146
PRACTICE OF SECURING OFF-SITE LOCAL
INFRASTRUCTURE PROVISION
6.1 Introduction
148
6.2 The Background of Respondents
148
6.2.1 Local Authority
149
6.2.2 Developers
152
6.3 The practice of Local Infrastructure Provision
155
6.3.1 The Present Practice of Off-site Local
155
Infrastructure
6.3.2 The Reasons of Using Private Sector
158
6.3.3 The Type of Off-site Infrastructures Most Needed
160
by Local Authority
6.3.4 The Responsibility of Providing Off-site
162
Infrastructure
6.3.5 The Costs of Off-site Infrastructure
163
6.3.6 Delay in Obtaining the Planning Approval
165
6.3.7 The Influence of Infrastructure Distribution
167
on Project Locations
6.3.8 The Major Drivers of Private Sectors Involvement
in Off-site Infrastructure Provision
170
xi
6.4 The Application of Planning Approval System to Secure
171
Off-site Infrastructure Provision
6.4.1 The Perceptions over the Methods Applied to
171
Secure Off-site Infrastructure
6.4.2 The Effectiveness of Negotiations
172
6.4.3 Developers’ Reaction of Off-site Infrastructure
174
Requirements
6.5 The Problems Relating to Off-site Infrastructure
176
Provision during the Planning Approval Stage
6.5.1 The Constraints of Private Involvement
176
6.5.2 The Appropriate Forms of Off-site Infrastructure
178
Provisions
6.5.3 Weaknesses of the Present Practice of Off-site
180
Infrastructure Provision
6.5.4 The Developers Perceptions on Off-site Local
182
Infrastructure Provision Requirements
6.6 Suggestions to Promote Off-site Infrastructure Provision
185
6.7 Existing Perceptions on the Appropriate Type of Delivery
189
of Off-site Infrastructure Provision
6.8 Conclusion of the Chapter
7
192
PROPOSED IMPROVEMENT OF OFF-SITE LOCAL
INFRASTRUCTURE PROVISION
7.1 Introduction
196
7.2 The discussion of the Key Findings
196
7.2.1 The Present Practice of Local Infrastructure
196
Provision
7.2.2 The Application of Planning Approval System
199
to Secure Infrastructure Provision
7.2.3 The Problems Faced by Local Authorities to
Secure Off-site Infrastructure Provision
200
xii
7.2.4 The Perceptions of the Possible Mechanisms to
203
Secure Off-site Infrastructure
7.2.5 Summary of Findings
206
7.3 The Key Issues of Off-site Local Infrastructure Provision
207
7.4 Towards the Improvement of Local Infrastructure
209
Provision System
7.4.1 The Conceptual Framework of the System
210
7.4.2 The Components of the System
212
7.4.3 Incorporating Planning Approval and Negotiations
214
Process
7.4.4 Incorporating Private Delivery Methods in Local
219
Infrastructure Provision
7.5 Recommendations to Improve the Planning Approval
222
System with Regards to Off-site Infrastructure Provision
7.6 Conclusion of the Chapter
8
227
SUMMARY AND CONCLUSION
8.1 Introduction
227
8.2 Summary of Discussion
227
8.3 Key Issues for Future Research
229
8.4 Conclusion
231
REFERENCES
233-259
APPENDICES A - C
260-316
xiii
LIST OF TABLES
TABLES NO.
TITLE
PAGE
1.1
Revenue of major municipalities in Malaysia, 2003
11
1.2
Local infrastructure expenditure in major local
12
authorities in the State of Johor (2000-2004)
2.1
The range of responsibility for infrastructure funding
43
2.2
Types of gains as reported by local authorities
61
2.3
The distribution of planning applications and planning
62
gain agreements in Wokingham, 1974-1981
2.4
Some infrastructure provided by private options in
67
Australia
3.1
The distribution projection of urban population in
74
Peninsular Malaysia, 1911-2020
4.1
Public financing for infrastructure development
98
in Malaysia, 1991-2000
4.2
Local infrastructure investment required for central
sewerage system in major towns Malaysia
102
xiv
4.3
Local infrastructure investment required for domestic
103
solid waste in Malaysia
4.4
Local infrastructure expenditures in Municipal Council
106
of Penang Island Financial 1992-1995
5.1
The purpose of in-depth interview
137
6.1
Type of local authority
149
6.2
The procedures applied to expedite planning approval which
156
involves off-site infrastructure requirements
6.3
The reasons of using private sector for off-site
159
infrastructure provision
6.4
Development cost involved and the percentage of
164
allocation for off-site infrastructure
6.5
Planning permission processing period by development cost
167
6.6
Factors influence developer’s decision to determine
168
project locations
6.7
The major drivers of private involvement in off-site
170
infrastructure provision
6.8
Methods applied to secure off-site infrastructure
171
6.9
The effective of negotiation methods
173
6.10
Developers’ reactions when off-site infrastructure
175
imposed by local authority
xv
6.11
The constraint of private involvement in local
177
infrastructure provision
6.12
The appropriate form of contribution of off-site
179
infrastructure provisions
6.13
Weaknesses of the present practice of off-site infrastructure
181
provision as observed by developers
6.14
The perceptions of off-site local infrastructure practices
183
6.15
The problems faced by developers related to off-site
184
infrastructure provision
6.16
Suggestions to promote off-site infrastructure provision
188
6.17
Local authority and developers’ perception on
191
the appropriate
xvi
LIST OF FIGURES
FIGURE NO.
TITLE
PAGE
1.1
Thesis structure
22
2.1
The range of infrastructure provision
32
2.2
Types of local infrastructure components
42
2.3
The stages of property development process
48
2.4
The outline of British decision-making procedure in
49
planning permission approval
2.5
The cycle of development gain expenditure
54
2.6
Local infrastructure provision (off-site and on-site)
72
3.1
The overall government development machinery
76
3.2
The concepts of state-level administrative boundaries
79
3.3
The location of major municipalities and population
81
in Peninsular Malaysia
xvii
3.4
Land-use planning framework
83
3.5
Development process in Malaysia
90
3.6
Development approval process in Peninsular Malaysia
92
4.1
Expenditure for infrastructure development in Malaysia,
99
1991-2005
4.2
Municipal Councils of Penang Island development
105
expenditure 1992-2004
5.1
The comparison of process involved in qualitative
119
and quantitative type of research
5.2
The research process
121
5.3
The flow of field work survey and the distribution
133
of respondents
5.4
The relationship between reliability and validity
140
in qualitative research
6.1
Years of experience of respondents (Local Authority)
150
6.2
Involvement with off-site infrastructure provision by
151
type of local authority
6.3
Status of ownership of the developer
152
6.4
The years of establishment of the developers
153
6.5
The average of development cost
154
xviii
6.6
The present methods of off-site infrastructure provision
157
6.7
The distribution of off-site infrastructures mostly needed
161
by local authority
6.8
Responsibility of providing off-site infrastructure
162
Facilities
6.9
Development cost allocated for off-site infrastructure
163
6.10
Planning approval timeframe
166
7.1
The practice of local infrastructure procurement
209
(funding and delivery system) in Malaysia
7.2
Local authority infrastructure provision (off-site and on-site)
214
funding and delivery mechanisms
7.3
Proposed integration of planning approval and negotiation
215
process of local infrastructure
7.4
The negotiations process during planning approval stages
216
7.5
Integrating planning approval and negotiation process
219
7.6
Proposed improvement for local authority infrastructure
224
provision (off-site and on site) funding and delivery
system
xix
LIST OF ABBREVIATIONS
Act 133
: Street, Drainage and Building Act 1974 (Act 133)
B.O.O.T
: Build Operate Own Transfer
B.O.T
: Build Operate Transfer
DBKL
: Dewan Bandaraya Kuala Lumpur (City Hall of Kuala Lumpur)
EIA
: Environmental Impact Assessment
FMP
: Fourth Malaysia Plan
IWK
: Indah Water Konsortiun
LA
: Local Authority
LP
: Local Plan
LPAs
: Local Planning Authorities
MBJB
: Majlis Bandaraya Johor Bahru (City Council of Johor Bahru)
MoHLG
: Ministry of Housing and Local Government
MPPJ
: Majlis Perbandaran Petaling Jaya
MPSJ
: Majlis Perbandaran Subang Jaya
MBSA
: Majlis Bandaraya Shah Alam
MPK
: Majlis Perbandaran Klang
NDP
: National Development Policy
NEP
: New Economic Policy
OPP1
: Outline Perspective Plan 1
OPP2
: Outline Perspective Plan 2
xx
BPA
: Pihak Berkuasa Air
P.F.I
: Private Finance Initiatives
P.P.P
: Public-Private Partnership
PBTPG
: Pihak Berkuasa Tempatan Pasir Gudang
(Local Authority of Pasir Gudang)
REDHA
: Real Estate Developer and Housing Association
SMP
: Second Malaysia Plan
SP
: Structure Plan
SPC
: State Planning Committee
STM
: Syarikat Telekom Malaysia
SYABAS
: Syarikat Air Selangor
TCP
: Town and Country Planning Act 1976 (Act 172)
TNB
: Tenaga Nasional Bhd.
WTO
: World Trade Organisation
IMF
: International Monetary Fund
xxi
LIST OF APPENDICES
APPENDIX
A1
TITLE
Evaluation of alternative local infrastructure
PAGE
260
funding measures
A2
Different type of private sector involvement
264
in local infrastructure delivery
B1
Method of privatisation of major infrastructure
265
in Malaysia (National level of infrastructure)
B2
Infrastructure expenditures in City Council
266
of Johor Bahru 2000-2004
B3
Infrastructure expenditures in Municipal Council
267
of Johor Bahru Tengah (2002-2004)
B4
Infrastructure Expenditures in Municipal Council
268
of Kulai (2000-2004)
B5
List of the completed projects funded by federal
269
government allocation for MBJB, 2003
B6
List of projects under construction funded by federal
government allocation for MBJB (2003)
270
xxii
B7
List of projects under construction funded by federal
271
government allocation for MBJB,2003
B8
List of the completed projects funded by State
271
Government allocation for MBJB, 2003
B9
List of projects under construction funded by internal
272
funds for MBJB, 2003
B10
List of development projects in MPJBT, 2003
273
B11
List of development projects in Majlis Perbandaran
274
Kulai (MPK), 2002-2003
B12
Examples of Planning Agreement by local authority
275
to secure off-site infrastructure from private sector
C1
The distribution of local authority in Malaysia
279
C2
Set A1 - Local Authority Survey
280
C3
Set A2 - In depth Interview for Local Authority Survey
294
C4
Set B1 - Developer Survey
299
C5
Set B2 - In depth Interview for developer
312
CHAPTER 1
INTRODUCTION
1.1
Introduction
Rapid urbanisation creates pressure in the demand for additional
infrastructure at the local level. Sufficient infrastructure facilities are vital for a
sustainable economy and local development. In many countries, infrastructure
provision always concerns the involvement of public sector in providing the
physical facilities, consisting of public facilities, roads and highways, hydroelectric
dams, sewerage systems, water treatment plants, airports and many others.
Adequate provision of infrastructure is a prerequisite for the sustainability
of local development. Local authorities (LA) increasingly find themselves in a
shortage of funds. Due to rising costs of infrastructure, there is a need for a
paradigm shift of provisions from public to private sector. This scenario has forced
local authorities to identify new forms of delivery of local infrastructure from
private developers.
This introductory chapter provides a context for the subsequent ones
reviewing the background of the study in relation to current issues in local
government infrastructure. The chapter discusses problems that constraint the
involvement of private sector in local infrastructure provision with reference to the
planning approval system. The chapter also outlines the purpose, scope,
significance and the structure of the study.
1.2
2
An Overview of Urban Development and Local Infrastructure
Provision
Infrastructure has played an effective role in local development. The main
concerns are often raised on the impact of infrastructure development on local
communities, about the appropriate roles of public and private sectors in
infrastructure financing, ownership and management. Enormous change in local
development in the last two decades has sparked a shift of perceptions, likely
shifting the role of public sector in local infrastructure development. At the same
time central government has considerably reduced the allocation for local
infrastructure provision.
Acceleration of local development coupled with financial limitation, have
forced local authorities to diversify the full range of local infrastructure
alternatives, in particular referring to those infrastructures located outside the
responsibility of private developers (off-site). This scenario has forced local
authorities to be more adaptive in formulating local development policies
preferably in managing local infrastructure provision. According to Helmsing
(2001), local authorities in many developing countries were allowed to include the
private sector in local infrastructure provisions. This actually initiated a new
chapter in local infrastructure development.
In the same scenario, London Mayor Ken Livingstone (London Housing,
2001) called for the involvement of private sector to be involved in local
infrastructure provision. The mayor urged local authorities to acquire some gains
from the private development in return for planning approvals. This would further
strengthen the capacity of the local planning authority (LPA) to negotiate any
possibility for additional infrastructure via planning gain method. This particularly
involved off-site infrastructures required by local development. The rationale of the
practice is that the approved development might generate a degree of development
'impacts' in term of the increased demand for new infrastructure in the surrounding
3
areas. This has to be managed by the respective local authorities by providing the
appropriate infrastructure in order to ease the impacts.
In many countries, the involvement of private sector in local infrastructure
provision offers new alternatives of local infrastructure delivery (Guy and Marvin,
1997; Ennis, 1997; Healey, 1997; Claydon and Smith, 1997). In Britain, planning
approval has been widely used to secure local infrastructure such as social
infrastructure, environmental and community facilities from private developers (see
Ennis, 1997). The factors identified as causes of the scenario are the reduction of
property tax that reduced the income of local authorities and the limitation of
budget as imposed by the central government (Healey et al., 1995).
The British planning approval system was identified as an effective means
for local authorities to secure infrastructure facilities from private developers (see
Healey et al., 1995; Bunnell, 1995) and the system appearing as a normal expected
spin-off from the development process through the state intervention to ensure the
essential non-profit-making facilities are provided as well (Greed, 1996). These
might range from the provision of basic physical infrastructure (such as sewers,
drains and roads) and social facilities (such as schools, community centres, public
conveniences, parks and bus stations).
1.3
Current Issues in Local Infrastructure Provision
Provisions of public infrastructure at local level cover transportation
infrastructure, water and wastewater, health sector and public buildings.
Traditionally, the local government has carried out the responsibility at all stages of
infrastructure development. These included the stage of planning, design,
financing, construction, operation and maintenance (Hallmans and Stenberg, 1999).
4
There is no doubt that growing communities require recreational parks,
local roads, waste water facilities, proper drainage systems, solid waste collection
and disposal, streets, parks and other necessary facilities to be provided adequately.
These facilities are needed for the community to function in a manner that protects
the public health, safety and welfare for local development sustainability. With the
scarcity of financial resources, the scenario has raised the question as to who
should provide the infrastructures located outside the development area (off-site)
and this remains a concern for many local authorities. According to Ennis (1997),
two arguments exist here; one concerning the appropriateness of the private sector's
increased share in the costs of provision; the other, concerned with the party that
should pay for the cost of infrastructures, from which three potential cost-bearers
have been identified: the landowner, the developer and the buyer.
The problems that constraint the involvement of private developers are as
follow:
i. Deficiency of consistent guidelines on off-site infrastructure provision
requirements,
ii. Insufficient funds for off-site infrastructures, and
iii. Delay in obtaining planning approval with those projects involved with
off-site infrastructure
These issues have some cumulative consequences on the responsibility of
all actors in the sector. However the fundamental question is that between local
authority and developer who must shoulder this financial burden, since by common
consent, most on-site infrastructure has to be provided by the land owner or
developer.
5
Today local authorities are urged to be more creative in diversifying
methods to finance local infrastructure particularly using planning approval system
instead of increasing the assessment taxes. As practiced in the British planning
system, some off-site infrastructure is secured by planning approval and the
practice incorporates the element of negotiation between local authority and private
sector. Therefore, this research is aimed to look at the possibility of this practice to
be adopted by the Malaysian planning approval system.
1.4
Definition of Terms
For the purpose of this study, the following definitions will be used
throughout.
a).
The Concept of Infrastructure
In Peninsular Malaysia excluding Federal Territory of Kuala Lumpur, by
referring to Town and Country Planning Act 1976 (Act 172), the legitimate
definition of infrastructure is divided into two broad categories, i.e. public
amenities and public utilities. Public amenity includes open spaces, parks,
recreation grounds and play ground. Whereas public utilities include roads, water
and electricity supplies, street lighting, sewerage, drainage, public works, and other
similar public services and conveniences. This definition is being applied by all
local authorities in the country.
However, in the Federal Territory of Kuala Lumpur, the definition of
infrastructure is defined by Federal Territory (Planning) Act 1982 (Act 267). The
term infrastructure here refers to amenity and utility. Amenity means such quality
or condition of a place or area as contributes to its pleasantness, harmony, and
better enjoyment, and includes open spaces, parks, recreation grounds, and
playground. Utility includes roads, water and electricity supplies, telephone
6
services, street lighting, sewerage, public works, and other similar public services
and conveniences.
According to Stewardson (1995), there are two types of infrastructure,
namely economic and social. Economic infrastructure usually refers to transport,
gas, water, electricity and communication due to the 'hard' engineering-based
delivery networks. However, 'social infrastructure' may include public schools,
public hospitals, police and emergency services and inter-local district roads.
Webb (2004) on the other hand classifies infrastructure into two main
categories: the economic infrastructure (such as telecommunication, transport
networks etc.) and the social infrastructure (such as schools, hospitals, public
housing open space etc.). The distinction between these two types comes from the
level of capital intensity in infrastructure service delivery.
b).
Off-site and on-site Infrastructure
Based on a study conducted by Utah Governor's Office of Planning and
Budget (2004) to develop Infrastructure Cost Assessment Model, there are three
levels of infrastructure:
i.
Regional infrastructure; this includes roads, transit and water supply.
Planned by state governments and financed by state and/or federal
funds.
ii. Sub-regional (off-site) infrastructure; this includes water and waste
water treatment facilities, distribution lines, storm drain facilities,
arterial roads, maintained by the municipality or service district. This
type of infrastructure is financed by local governments through bonds,
impact fees and tax revenues.
7
iii. On-site infrastructure by developers; this includes roads, water lines,
sewer lines, dry utilities (telephone, electric, etc.) and storm drains
financed by the private developer.
In the context of this study, on-site infrastructure would refer to those
needed infrastructures identified as mandatory requirements for the proposed
development. In all cases, these types of infrastructure are secured via planning
requirements and fully provided by developers upon the completion of the project;
whereas off-site infrastructure would refer to those needed infrastructures outside
the development boundaries specified by planning approval due to the justification
of development impacts. In many cases, the term is used alternately as public
utility and public amenity.
c).
Development Control
The practice of development control ensures that land activities carry out
according to specified development plans. It is part of the planning system to
ensure efficient and effective land use in the interest of the public, a set of
frameworks in which local authorities work. As defined by McCarthy et al. (1995),
development control is a system of issuing development approval for the purpose
of land-use development. In the context of this research, development control
features the ability to secure infrastructure facilities both on-site and off-site prior
to local authority granting planning approval, through a proper framework of land
use control regulation, significantly contributing to private provision of local
infrastructure during planning approval system.
d).
8
Development Impacts, Planning obligation and Planning Agreement
The purpose of regulation on land use is mainly to avoid the loss of amenity
to immediate neighbours to cover the impacts of development on the community.
This requires local authorities to identify the impact of proposed development. If
there are such adverse social costs, who should shoulder the correction? Normally
after the impacts are identified, a proper estimation is made. Then the developers
(applicants) shall pay a certain sum to the local authority concerned prior to
acquiring planning approval.
Whereas planning obligations and planning agreements are means to ensure
that an appropriate level of infrastructure is achieved to serve new development.
The provision of infrastructure within the proposed development is usually covered
by conditions attached to planning approval. However, this cannot be applied to
land outside applicant's control unless the impact of the proposed development is
identified.
Planning agreements and planning obligations are offered by developers to
ensure the fulfilment of services and facilities required to serve a proposed
development. Developers also offer a way of striking bargains safeguarding the
public interest. The planning obligations attached to planning approval would help
the local authority to secure contribution from private sector to facilitate a proposed
development. These include the agreements (e.g. unilateral undertakings) between
the applicants and local authorities on an obligation offered by the applicant to the
local authority either in support of a planning application or a planning appeal.
e)
9
Planning Gain
The nature of planning gain lies in the view that by granting planning
approval, the local authority is conferring great increase in land value to land
owners and in turn, benefit from the development gains (Allison and Askew, 1996).
The purpose is to mitigate the impact of proposed new development. The various
presented definitions of planning gain are significantly broad. The term has been
used to encompass almost any outcome deemed desirable by the local authority. In
the context of Town and Country Planning Act 1976 (Act 172) and Federal
Territory Planning Act 1982 (Act 267), such practice was considered under
development contributions. Indeed the idea is to mitigate predicted development
impacts identified during the planning approval stage.
1.5
Problem Statement
The adequate provision of infrastructure is vital for the local development
which becomes a major concern for many local authorities. Choguill (1996)
emphasises that the adequate provision of infrastructure is a precondition to the
sustainability of local development. However, the proliferation of infrastructure
costs limits the ability of local authority to provide adequate off-site infrastructure
(Healey, 2003). At the same time, local authority has periodical infrastructure
maintenance which implicates a considerable allocation of its budget. This remains
an on-going debate in most countries. According to Vickerman (2002), there has
been increasing questioning of the rationale for this as the cost of infrastructure
provision indirectly boosts the productivity of private sector. Therefore, the
question is raised whether or not there exist ways to shift at least some of the
responsibility of infrastructure provision to those who may benefit from it most.
10
In Peninsular Malaysia, the problem of infrastructure provision faced by
many local authorities largely concerns the provision of parking facilities,
recreational parks, wet markets, hawker centres and others related community
facilities. It also implicates a substantial allocation of local authority expenditure
for the maintenance of the existing infrastructure. Referring to Table 1.1, local
authorities collect revenue to cover operation expenses and construction of new
infrastructure for the benefit of tax payers. The revenue comprises of assessment
rates, trading licenses, parking fees, planning fees and grants from the state
government.
Among the local authorities, City Hall of Kuala Lumpur (DBKL) is the
largest in terms of revenue generation of four municipal councils compared to
Petaling Jaya (MPPJ), Subang Jaya (MPSJ), Shah Alam (MPSA) and Klang
(MPK). However, a large portion of the revenue has been allocated for
development and operating expenses including infrastructure development. The
amount allocated for urban infrastructure has been spent for upgrading and
maintenance of existing infrastructure and construction of new ones. This incurs a
deficit of 56% increase in urban infrastructure expenditure to RM1.09 billion.
A similar scenario reoccurred among three local authorities in the State of
Johor. For instance, in the City Council of Johor Bahru, a total of RM42 million
was required for local infrastructure development in 2004 (as compared to RM22
million in 2000). The fund was used mostly for construction and maintenance of
off-site local infrastructure comprising of public utilities, hawkers facilities,
drainage system, flood control, sewerage system and roads (see Table 1.2).
1,444.57
2,758.40
Source: Adapted from Ministry of Housing and Local Government, 2005
1,092.57
-995.34
-897.26
-79.05
-7.58
9.43
-15.80
-5.00
1,815.92
254.83
164.44
159.45
118.26
142.50
103.00
927.42
74.84
41.54
28.77
20.00
-
888.50
179.99
122.90
130.68
122.50
-
918.66
175.70
164.44
151.87
127.69
126.70
98.00
1,763.06
Deficit
Total
Development
Operating
Surplus/
Collection
Expenditure (RM’million)
> Actual collection and spending up to October 2003.
> The figure tabulated above represents collection and spending for 2003.
Total
Dewan Bandaraya KL
Penang
Subang Jaya
Petaling Jaya
Shah Alam
Klang
Ipoh
Municipal Councils
Revenue/
Table 1.1: Revenue of major municipalities in Malaysia, 2003
11
95.036
20.451
4.702
120.18
9
Assessment Rates
Non-Assessment Rates
Contributions in Lieu of Rates
Total
Surplus/(Deficit) Income
Total Expenditures (a+b)
11.980
62.920
21.960
22.151
114.17
4
6.015
2.610
1.793
0.413
17.142
4.520
40.960
3.738
92.023
0.001
1.200
1.500
19.451
3.590
30.590
2.220
0.041
17.889
63.758
1.562
5.076
4.987
20.098
7.379
3.825
0.046
0.500
3.008
0.100
12.719
3.358
8.643
0.408
0.210
19.670
3.983
1.432
25.085
MPK
(0.903)
130.857
27.443
3.659
3.650
2.242
17.892
4.074
103.414
20.475
68.170
3.616
7.080
98.236
25.080
6.638
129.954
MBJB
4.490
72.920
29.350
5.060
2.531
0.342
21.413
4.360
43.570
4.180
32.240
2.76
0.03
56.930
14.590
59.940
77.410
MPJBT
2001
0.134
26.145
10.454
5.051
1.011
0.473
3.919
0.072
15.691
3.548
10.975
0.909
0.187
21.227
3.746
1.306
26.279
MPK
4.768
33894
3.300
0.095
(7.004) (5.163)
145.245 85.176
33.530 38.923
6.3504 7.510
2.300 3.753
2.830 0.500
22.050 23.820
4.130 4.197
111.715 46.254
24.060
72.981
3.263
7.281
99.507 57.848
32.261 15.606
6.473 6.559
138.241 80.013
MBJB MPJBT
2002
(5.916)
33.930
15.091
7.078
1.616
0.000
6.397
0.164
18.839
4.246
13.823
0.592
0.014
23.637
3.713
0.664
28.014
MPK
(7.755)
151.244
40.200
12.700
1.200
3.700
22.600
4.254
111.043
26.201
71.465
1.424
7.699
102.507
34.689
6.293
143.489
MBJB
1.487
79.891
36.820
10.670
2.100
0.400
21.00
4.004
43.071
4.431
33853
0.640
0.144
58.386
16.667
6.324
81.377
MPJBT
2003
1.145
42.435
17.050
9.000
0.400
0.150
7.500
0.263
25.385
4.266
20.118
0.665
0.073
36.959
3.936
2.685
43.580
MPK
(6.296)
154.368
41.750
10.750
1.200
2.200
27.600
4.382
112.618
26.987
71.822
1.497
7.930
105.507
36.272
6.293
148.072
MBJB
(Source: Adapted from MBJB, MPJBT and MPK, 2005)
Indicator: MBJB - City Council of Johor Bahru; MPJBT - Municipal Council of Johor Bahru Tengah ; MPK - Municipal Council of Kulai
Development Expenditures (b)
Public Utilities
Hawkers facilities
Offices/Buildings/Lands
Drainage system,
Flood
control,
Sewerage and Roads
Total
Administrative and operating
Expenditures (a)
Emolument
Services & Supply
Assets
Contributions
&
Fixed
Payments
Miscellaneous
Total
MPJB
T
MBJB
Income
56.011
13.570
5.320
74.901
2000
Table 1.2: Local Infrastructure Expenditure in Major Local Authorities in the State of Johor (2000-2004)
(RM’million)
1.018
83.269
37.500
12.400
2.100
0.200
19.00
3.889
45.769
5.023
35.502
1.202
0.153
59.686
17.657
6.944
84.287
MPJBT
2004
MPK
7.944
37.106
11.950
5.450
0.000
0.000
6.500
0.270
25.156
4.394
19.961
0.320
0.211
38.006
4.059
2.985
45.050
12
12
1.6
13
Research Questions
As deducted from the discussions above, the raising cost of infrastructure
provision has significantly reduced the possibility of local authority to provide offsite infrastructure. Therefore, there is a need for the local authority to identify ways
to accommodate infrastructure requirements by seeking new methods of funding.
However, in Malaysia under the present practice of planning approval system, local
authorities are allowed to impose such planning requirements prior to granting
planning approval.
Thus, the research will aim to answer the question as to how off-site local
infrastructure provision can be secured by local authority using planning approval
system. Accordingly the research is designed to answer the following questions:
i.
How is infrastructure provision practices in Malaysia?
ii. How is planning approval system applied by local authority to secure
infrastructure provision?
iii. What are the problems pertinent to off-site infrastructure provision in
obtaining planning approval from local authority?
iv. What are the perceptions of developers and local authorities on using
planning approval to secure off-site infrastructure provision?
1.7
14
Purpose of the Research
The main purpose of this research is to study the possibility of using
planning approval system to secure off-site infrastructure from private sector. In
achieving the objectives above, it is required to understand the present practice of
planning approval system. Further, to identify factors closely associated with the
constraints of the active involvement of private developers in providing
infrastructure. To achieve this objective, the research was carried out based on the
following sub-objectives:
i.
To study how local authority secures off-site infrastructure.
ii. To examine the current practice of off-site infrastructure provision
through planning approval system.
iii. To identify factors closely associated with constraints of developers'
involvement in off-site local infrastructure provisions.
iv. To identify the possible approaches of how planning approval measures
can be used to secure off-site infrastructure provision.
The findings subsequently will help develop recommendations on off-site
infrastructure provision for local authorities as an alternative means to secure
infrastructure facilities; with the local authority broadening the possible means to
meet the required facilities. As an outcome, the findings of this study help develop
an appropriate model to improve the off-site local infrastructure provision in the
nation.
1.8
15
Scope of Research
The research will start with the review of pertinent theories and concepts of
development planning system and development control as practised in Peninsular
Malaysia with reference to the impact of rapid urbanisation on major local urban
centres as the result of inadequacy of local infrastructure. This approach will give a
wider scope of the concept pertaining to local infrastructure provision. It is done in
order to form the basis for the conceptual framework of the study. It will then
discuss, as a background, the financial constraints and problems faced by local
authority in providing infrastructure facilities which necessitate a proper and viable
system or approach imposed to encourage private sector to participate in providing
infrastructure facilities.
The focus of the research also would be to identify how a new planning
approach such as planning gain can be adopted as an alternative means by local
authority to secure its infrastructure facilities under the present planning approval
system. Therefore the study needs to identify the factors which are being closely
associated with constraints of the active involvement of private sector in local
infrastructure. That requires an evaluation on the perceptions of developers and
local authorities on how this new approach can be adopted by the local authorities
to secure infrastructure facilities.
Finally, the research will analyse the findings that lead to a system (or
approach) to enable private developers to participate proactively in local
infrastructure provision and also recommendations to improve the existing system
of infrastructure provision.
1.9
16
Significance of the Research
The availability of adequate infrastructure is critical to local development.
The lack of infrastructure would affect the well-being of local communities and
consequently harm the momentum of local property sector development in
particular and the efficiency of economy in general. There is a variation between
different planning systems and infrastructure provision that is financed through a
variety of means operating at local level by both private and public sectors. What is
needed here is a means by which infrastructure is provided by private sector using
planning approval system.
Graham and Marvin (2001) stressed that one of the significant reasons why
local infrastructure has been neglected is because of the relationship between
infrastructure provisions in their broader sense and the planning system. Again,
Graham and Marvin (2001) identify several factors for this insight, such as:
i). Issues relating to urban governance and local economic development
take no account of the local infrastructure which is critical to all local
development; and
ii). Some infrastructure network characteristics are hidden in nature. Some
are located underground and the management of these facilities are
undertaken by technical institutions or agencies. Another crucial aspect
of local infrastructure provision is the question of who pays for the cost
of infrastructure provision? There are three potential parties identified
as responsible in absorbing the cost incurred, namely; land owner, enduser and the developer (Keogh, 1985).
17
Based on the previous discussion, the significance of this research is as
follows:
i. Limited research on the effectiveness of planning approval system to
secure infrastructure. What is available at present does not shed much light
on the detailed procedure of the planning approval aspects to promote
infrastructure provision. This leads to the lack of appropriate guidelines,
acting as the framework for off-site local infrastructure provision. Since the
use of negotiation in planning agreements to secure planning gain has been
an on-going debate, there is a need for such research to be carried out in
order to gauge the level of perception from both private and public sectors.
ii. The proliferation of infrastructure costs apparently induce a negative
impact on the local authorities' capacity of planning and implementing
infrastructure provision.
iii. Recent studies in U.K and Europe show that most of the subject
countries practice the approach of planning gain in their system as an
alternative tool enabling local planning authorities (LPAs) to reduce the
financial burden in providing on-site infrastructure.
iv. The findings of the study would be very significant for local authorities
to diversify and broaden the present means to secure off-site local
infrastructure. In addition, it is deemed important for the local planning
authority to be proactive in identifying ways to generate additional financial
sources to accommodate infrastructure requirements to meet the future
demands of the fast growing urban sector.
v. As argued by Helmsing (2001) in the context of local development, local
economy is very much shaped by central government agencies and critically
depends on central government intervention. Some of these interventions
were implicit and discrete rather than based on an explicit policy of local
18
development. Local economic development strategy is a means to achieve
this. Local resource mobilisation becomes crucial to finance these
investments. Therefore local authorities are encouraged to secure their own
local infrastructure in order to provide the required infrastructure.
The material on off-site local infrastructure provision which is readily
available tends to be limited in scope and scattered amongst a variety of sources.
Due to the significant aspect of local infrastructure development as outlined above,
it is considered of value to study how off-site local infrastructure can be secured
using planning approval. Therefore, the significant feature of this research is to
undertake a review of the existing research on planning approval and to relate the
research findings to the current issues on off-site local infrastructure provision.
1.10
Expected Contributions of the Research
The present studies on planning approval do not shed much light on the
details of how the system can be used as a method to secure infrastructure for local
authorities. Much of the 'evidence' derived from literature is anecdotal in form and
often relates to the operations of planning in general rather that the appropriateness
'features' of planning approval to be used as legal mechanisms to secure
contributions (off-site infrastructure) from private sector.
Apart from the objective to propose an improvement to the present practice
of local infrastructure provision system, this research also would contribute
significantly to the following areas:
i.
The research would then provide a basis for local authority and other
public authorities to secure infrastructure from private sector.
ii. The findings of this study further pave the way for future research on
local infrastructure provision.
19
iii. According to Claydon and Smith (1997) such study can contribute to
the enhancement of the present planning approval system pertaining to
off-site local infrastructure provision.
iv. As argued by Guy and Marvin (1997) however, if local authorities don't
take into account these new infrastructure practices, they might lose
significant opportunities providing wider benefits to the local
community. Therefore, the expected findings of the research would
further furnish the present practice, provided that the perceptions of
both private developer and local authority are positive.
v. Many authors look at the fundamental constraint of local infrastructure
provision as involving the private sector. Guy and Marvin (1997) argue
that the current debates about developer contribution in relation to
infrastructure provision look quite confusing to developers. They define
this move as the efforts of the authorities to 'off-load' their
responsibility. This research is intended to study the possibility of using
planning approval system to acquire off-site infrastructure provision
from private sector.
1.11
20
Thesis Structure
This thesis consists of eight chapters. Figure 1.1, illustrates the summary of
the overall structure of the thesis. The thesis starts with the introduction in Chapter
1. The chapter outlines a very general overview of the research which briefly
discusses the research problem, the purpose, scope and also the objective of the
research.
Chapter 2 will discuss the salient background in local infrastructure
provision. A review of literature on relevant theories and concepts on local
infrastructure and the concept of off-site infrastructure provision which is discussed
under development control practice. Apart from this, the chapter also includes the
review of some impacts of urbanisation on the local infrastructure.
As a background to the research, the discussion in Chapters 3 provides an
overview of local infrastructure provision and development control system with
reference to the Malaysian context. The chapter also discusses how planning
approval is practised at local authority level related to infrastructure provision
within the framework of the Malaysian planning system in order to answer one of
the research questions.
Chapter 4 will examine the local infrastructure provision in Malaysia. The
main focus of the chapter is to discuss how planning approval within the
framework of development control applies to secure infrastructure from private
developers. It will then have a closer examination of the local scenario on
infrastructure provision.
Chapter 5 outlines the foundation of the work by discussing the
methodology in performing this research. It starts with defining the scope as well
as the strategy employed in designing the research. It will discuss the conceptual
framework from which the main question of the research is to develop and explain
21
the methods of data collection and analysis. This chapter also enumerates the
processes involved in constructing the research questionnaire for data collection.
Chapter 6 presents the results obtained from the fieldwork interview. It
discusses the perception of developers and local authorities on local infrastructure
provision in Malaysia, which forms the main focus of this study. The analysis looks
at the local authority perception on local infrastructure provision, which includes
the current practice of off-site infrastructure provision and development approval
practice, how local authorities secure their off-site infrastructure provisions, the
feasibility of using planning approval means to secure infrastructure facilities.
Chapter 7 addresses the perceptions of the two key players of the research,
local authority and developer on off-site local infrastructure provision. In the
chapter, the discussion mainly focuses on recommendations to improve the present
system of planning approval to incorporate private options in off-site infrastructure
provisions.
Finally, Chapter 8 will summarise and amalgamate all findings into one
coherent set of results in order to answer the outlined research questions. The
chapter discusses the limitations to this research and ends with recommendations
on areas for future research.
22
1. Introduction
2. Local Infrastructure Provision and Planning
Approval System: A Theoretical Framework
3. Planning Approval
System in Malaysia
4. Local Infrastructure
Provision in Malaysia
5. Research Methodology
6. Practice of Securing off-site Local
Infrastructure Provision
7. Proposed Improvement of off-site Local
Infrastructure Provision
8. Summary and Conclusion
Figure 1.1: Thesis structure
1.12
23
Conclusion of the Chapter
At the beginning of the chapter, an introduction to the background of the
study was given generally with the purpose to provide a thorough review to the
research problem. The relationship with the main identified research components
between infrastructure provision and planning approval system were discussed. In
the second part, a brief overview followed on the current situation of off-site local
infrastructure provisions within the framework of Malaysian development control
system.
A number of successful experiences in others countries were generally
overviewed. The following parts elaborate findings on similar research areas. This
is done by a brief review of the problems encountered by local authorities in
securing off-site local infrastructure provision. The last part of the chapter outlines
the structure of the study in order to show the relationship between chapters, to
ensure that the flow of the argument can be referred systematically.
CHAPTER 2
LOCAL INFRASTRUCTURE PROVISION AND PLANNING
APPROVAL SYSTEM: A THEORETICAL FRAMEWORK
2.1
Introduction
The chapter examines the relationship between local infrastructure and
planning approval. It provides the understanding of how planning approval system
can be used to secure infrastructure facilities from private developers. The chapter
is divided into two parts. The first part discusses the present mechanism of local
infrastructure provision and the background understanding and the process of
planning approval; and the second discusses how planning approval system is used
to secure infrastructure provisions.
2.2
Local Infrastructure Provision: The Previous Studies
One of the primary concerns of local activities is providing adequate
infrastructure to ensure the effective and efficient function of urban areas, more
particularly at local authorities. It is important to acknowledge that the
infrastructures are linked and interrelated. The efficient local economy is realised
by utilising a range of infrastructures like public amenities and public utilities.
Local development is not possible without the adequate provision of urban
facilities. According to (Dilworth, 2001), without such facilities the development
would never have achieved the availability of its infrastructure provision to support
25
the future capital investment. In order to understand the nature of the local
infrastructure, it is necessary to understand the purpose of infrastructure provision.
All components of local infrastructure exist to indicate the role of infrastructure in
the functioning of local development in form of social and economic activities. The
arguments related to these questions lie at the heart of the controversy surrounding
infrastructure provision as secured from the private developer. These facilities
secured through various available methods, are subject to their effectiveness and
adaptability of the methods with current local authority practices.
Infrastructure provision is the fundamental asset to local development.
Without access to this, land has little potential for development. Therefore, most of
the infrastructure is usually provided by governments of various levels and forms.
However, the question is how local authority provides and delivers its
infrastructure? As this chapter aims to provide an overview on to the planning
approval system and how local authorities abroad secure some of the local
infrastructure from private sector.
Based on the study by the Organisation for Economic Cooperation
Development (OECD, 1991), the local authorities are facing a number of
challenges and constraints with regards to local infrastructure provision. This can
be summarised as below;
i.
Improper maintenance of infrastructure - there is a need for the existing
local infrastructure to be replaced or rehabilitated, while providing the
new infrastructure in order to adapt to the emerging industries and
activities.
ii. The need for environmentally-friendly local infrastructure - the urban
environment is deteriorating and this requires urban infrastructure to be
improved for a better quality of life for urban occupants.
26
iii. Increasing of financial burden – the cost required for urban
infrastructure constitutes a significant element of both public and private
investment on infrastructure. This in turn will focus on how the costs
should be financed and who should bear them.
iv. The constraint and limitation of public funding - most local authorities
face serious constraints on public expenditure. Public borrowing severely
limits the ways in which long-term investment in urban infrastructure
can be financed.
v.
The need to promote the private sector in local infrastructure provision the involvement of private capital in financing local infrastructure
provision could relieve the private sector of the need to increase its
burden.
According to Jaarsma and Dijk (2002), many countries in Asia have
invested heavily on local infrastructure over the last fifty years using international
funding agencies. Unfortunately, in many cases, the international funding agencies
(e.g. World Bank and Asian Development Bank) were not willing to assist in the
long term funding arrangements. This scenario has significantly shifted the public
funding responsibility to the private initiative in local infrastructure provision and
particularly through planning approval system (sees Howe, 1998; Sylte, 1996;
Ziethow and Bull, 1999).
Numerous studies show that the planning system does have a significant
impact on local development, particularly on the requirements of private sector in
local infrastructure provisions (See Healey, 1995; Ennis, 2003; Bunnell, 1995;
Rydin, 1985; Booth et al., 1997; Altshuler and Gomez, 1993; Kaplinsky, 1999). By
looking at the way planning system interfers with the overall development process,
the system itself has the tendency to interfer with the process in many ways
significantly. Planning system uses mechanisms such as planning approval to
interfer in the local development process by changing the availability of land for
development. It might also happen during development approval process where
27
local authority acts as local planning authority, imposing such planning
requirements.
Securing infrastructure from private developers through planning approval
system has been practised since the late 1970s. The practice was not a new
approach, according to Allinson and Askew (1996), in the British planning system
local planning authorities have had policies in their adopted statutory development
plans enabling them to assess the need for new infrastructure whether on-site or
off-site as a firm justification imposed on the private developers to contribute to
meeting this need.
According to Claydon (1997) and Ennis (1995), local authorities are
encouraged to use development plans to facilitate the effective mechanism between
local authority and private sector in infrastructure provision. Numerous studies
show that development plan is able to perform a central role in the privatisation of
infrastructure provision. Prior to the granting of planning approval, some planning
permission might be secured through a series of negotiations; and during the
process the applicants (or developers) can present offers to local authorities for
additional approval. These shall be made within the permissible requirements.
2.3
Public and Private Initiative in Infrastructure Provision
The cost of establishing local infrastructure is substantial and has caused
local authorities to seek alternatives in the delivery of infrastructures. In the past,
the public has placed a legal responsibility on municipalities to provide the required
infrastructures and services to their residents (Kaplinsky, 1999). Local
governments are increasingly pressed with lack of funds for necessary
infrastructure. As Altshuler and Gomez (1993) put it:
28
“…In most cities in North America, the reasons for this situation
includes deterioration and overcrowding of existing facilities, a rise in
infrastructure costs due to higher standard of living and a concern for
environment, a decline in central government funding, and opposition
from taxpayers to property tax increases due to reduced income
growth…”
In the past, local authorities would finance infrastructure and new
developments from the general public revenue, expecting broader tax base in
return.
Private infrastructure provision is not a new idea. Traditionally most local
authorities have been responsible for the essential hard-infrastructure networks
such as local roads, drainage, recreation facilities, parks, gardens and open spaces;
in cases, water and sewerage infrastructure and/or neighbourhood-based public
transport systems as well. They have also provided ‘soft’ infrastructure services
such as cultural, civic and library facilities amongst others.
The deregulation of the public expenses in the United States and the
privatisation movement in the United Kingdom, saw a major change in the way
infrastructure is viewed; but this has not been without its disappointment, since the
supporters of private initiatives see the off-loading of some of their responsibilities
for local infrastructure delivery.
There has been increasing objection on the local authority’s responsibility
in providing local infrastructure. Under such circumstances infrastructure provision
should be promoted by stimulating the private capital and shifting responsibility to
the beneficiaries. Therefore, this requires local authorities to seek innovative
methods to finance new infrastructure such as through Joint-ventures (JV) with the
private sector, developer contributions, Public-Private Partnerships (PPP), Private
Finance Initiative (PFI) and identified methods of delivery with the aims of
building high quality public infrastructure.
29
There are several reasons to incorporate the private sector in local
infrastructure provision and the reasons vary among countries. In the United States,
local authorities have been shifting infrastructure costs by levying user fees on the
consumption of infrastructure services to users and beneficiary groups. The charges
can be structured in a variety of ways such as flat monthly rates (as with water and
electricity). Beneficiary charges are based on the positive effects infrastructure
services have on properties and businesses. It was identified that the rising cost of
infrastructure provision urges local authorities to shift some of the existing
responsibilities to provide infrastructure to private developers. As revealed by
Megginson et al. (1994), in a study of privatised infrastructure in Australia, the
efficiency of local infrastructure services increased constantly when exposed to
competitive pressures. The study identified several factors influencing the
involvement of private sector in local infrastructure provisions:
i.
Accelerate local economic development,
ii. Improve quality of service delivery and also enable to bring forward
investment,
iii. Lower the cost of providing local infrastructure provisions,
iv. Access to private sector capital options,
v. Use of private sector skills.
In the past years, there has been a significant increase in the participation of
private sector in infrastructure development in developing countries (Vives, 1996).
However, the approach has not reached its targets and seems to be below
expectations. This failure has sparked much concern on the effectiveness of the
approach. The apparent gap depends largely on how the transition process of the
practice from public funded to private funded is handled and how this new
framework is planned and managed by the relevant authorities.
30
Another reason for private involvement is to improve the efficiency of
public infrastructure delivery. The participation of the private sector in the
provision of infrastructure services has the potential to stimulate supply and
improves the quality of service. Moreover, it releases government funds for more
needed social programs, attracts private investments and reduces public spending
(Vives, 1996).
2.4
Local Infrastructure Provision: Why Private Sector?
The importance of private involvement in local infrastructure provision has
burst research interest to identify the appropriate approach to involve private sector
in local infrastructure development. Despite these concerns, there has been little
research on the relationship of development process and infrastructure process
(McLoughlin, 1985), the assessment of the role of planning approval in large new
settlement projects (Elson, 1990) and the studies on the role of planning approval in
relation to infrastructure provision (Rowan-Robbison and Lyod, 1988). This study
is to review the arguments that justify the rational behind private sector providing
off-site infrastructure by Healey et al. (1995) and to review the arguments used to
justify the rational of negotiating planning contribution from developer in local
infrastructure (Bunnell, 1995).
According to Guy and Marvin (1997), the private sector in the United
Kingdom has been given key role in developing the policy pertaining to
infrastructure development at local level. Since the early 1980s, the utilities sector
has been subjected to restructuring of privatisation and liberalisation of
infrastructure facilities, while private sector has been increasingly involved in the
provision of infrastructure. With reductions in public expenditure, private sector
has to supply infrastructure ahead of development. These shifts have created
considerable changes in the local infrastructure development and development
31
process and the practices of infrastructure provision need to be placed in a broader
context.
In Peninsular Malaysia, the local authorities look up ways to secure off-site
infrastructure from private developers during the stage obtaining the planning
approval. In principle the planning approval system can and does provide the
needed infrastructure. Therefore, the local authority has to be more creative to
explore the new ways to secure the needed off-site local infrastructure provision.
The policies pertaining to infrastructure provision as outlined in development plans
such as structure plans are generally very broad in nature. Whereby during
planning approval, developers are required to ensure that planning applications
comply with development plans and that enabled externalities can be minimised
(Wills, 1995). The plans provide the basis for relevant agencies to detail their
infrastructure development programs and particularly for private developers to
comply the requirements outlined by local authority in the proposed developments.
Accurate estimation of requirements for off-site infrastructure has been a
problem in local infrastructure provision. As suggested by Simpson (1983);
“…when dealing with the provision of off-site infrastructure, the effects
of an increase in demand from one site can be felt at several other
locations where the fund allocated to the particular locations may be
reduced. This may have ramification spreading over a considerable
area…”
To minimise the uncertainty level of cost required to provide off-site
infrastructure, local authorities have to establish an integrated and efficient system
to involve private sector (or developer) in considering planning approval. Whereby,
with these technical assessments, the local authority has to formulate a standard
negotiation procedure on charges or contribution (Healey et al., 1996). Where this
often gives developers incentives and clear path of the cost implication might be
incurred at the early stage of development.
Characteristics
1. Traditional Public
Sector Delivery
Set by local authorities to provide, maintain and expand services in order
to meet the public needs. It governed all operations and maintenance
activities.
2. Traditional Public
Contracting
Infrastructure asset ownership and operational risks remain with local
council.
3. Service /
Management
Contracts
Private operator is hired to carry out specified services for a period of five
to seven years (max 10 years). Local council remains the primary provider
and owner of the infrastructure assets. Responsible for all capital and
service and bears very little risks associated with fluctuations results from
fluctuating demand.
4. Lease Contracts
Remuneration is usually tied (or in part) to the agreed cost of service
delivery and estimated level of demand and have to built-in incentives that
encourage private provide efficient services (extendable up to 30 years).
5. Build Own
Operate and
Transfer
Private sector requires designing, constructing and operating such facilities
for a term of between 20 and 30 years and sells back to Council. The
council retains ownership and becomes the customer and regulator of the
service. All capital, recurrent and capital maintenance expenditures are
assumed and managed by the private sector.
5. Concession /
Franchise
Agreements
Private contractor responsible for the delivery of the infrastructure services
in a specified area, including all operating, maintenance, collection and
management activities and any capital investment required to build,
upgrade or expand the system and for financing those out of the revenues
drawn from system users, with which it interacts directly
6. Joint Ventures
(JV)
It requires a separate corporate entity to be formed by the public and
private interests and result from the partial sale of an infrastructure
ownership entity to the private sector. It is usually independent from the
municipality and shares the operating profits and work. Has the primary
responsibility for performing daily management operations.
7. Municipality
Bond
Municipalities issues bonds to raise capital for their day-to-day activities
and for specific project such as provisions infrastructure. Public will be
paid a certain annual rate of return when the bond matures at some specific
time in future.
8. Full Privatisation
Full privatisation of the local infrastructure. Assets are sold to and remain
to private sector. All risks are borne by the private sector. Public sector
authorities retain regulatory responsibility and ensure reasonable service
delivery charges.
9. Public-Private
Partnership
It involves some form of contract between public and private sector. PPP
is a rather more general arrangement between public and private sectors
(often with legal force) for expected mutual benefit in the provision of
services.
10. Private Finance
Initiative (PFI)
The private sector undertakes design, building, financing, and operation of
public sector assets in return for long-term payments from the government.
It requires a full financial backing from the participating private companies
over the life of the project.
Public
Sector
Private
Sector
Increasing of private sector role
Type of delivery
Increasing of public sector role
32
Figure 2.1: The range of infrastructure provision
(Source: Australia National Office of Local Government, 2002)
33
Most local authorities are looking for new methods of infrastructure funding
to be incorporated with planning approval system to accommodate the increased
demand of local infrastructure. Figure 2.1 illustrates the range of private and public
arrangement of infrastructure provision delivery. As suggested by Healey (1997),
Ennis (1997), Greed (1996) and Claydon (1996), negotiation was among the most
effective ways for private developers to be involved in local infrastructure
development. As verified by Sidney, (1996); Stephen and Murray, (2000); Ronald,
(2000); Carroll and Steane, (2000), there are several options of private financing
and delivery widely practised, including:
- Public Sector Delivery
- Service / Management Contract
- Lease Contracts
- Public-Private Partnership (PPP)
- Private Finance Initiative (PFI - A form of PPP)
- BOOT or BOT (Schemes)
- Concession / Franchise Agreements
- Joint Venture (JV)
- Full Privatization
2.5
Private Delivery of Local Infrastructure Provision
The provision of off-site infrastructure as resulted from new developments
has always been a central issue in the bargaining process between local planning
authority and private developers. Since then, local authorities have long been
exploring for reliable alternative methods to finance infrastructure provision.
Furthermore, initiatives are taken to explore means to enable local authorities to
secure infrastructure from private sector. In British planning system, local
authorities are allowed to impose such financial contribution to private sector as a
34
gain to be paid to local community by granting planning approval (Claydon and
Smith, 1997; Marvin and Guy, 1997).
However, according to McNeill and Dollery (1999), local authorities in
Australia are in favour of private funding for local infrastructure. Some of the
provisions of infrastructure are made during obtaining development approval from
local authorities. Where at this stage, negotiation process takes place between local
authority and private sector to determine the types of infrastructure to be provided
and the suitable methods of delivery of the agreed infrastructure.
This involvement has come under various methods of delivery, including
service/management/lease contracts, joint ventures, build operate and invest
arrangements (e.g. Build Operate and Transfer, BOT), full privatisation of the
infrastructure networks/ services, public-private partnership (PPP), private finance
initiative (PFI), and issuing municipality bond (see also Figure 2.1).
2.5.1 Issuing Municipal Bonds
These are bonds issued by a state, city or local government. The main
purpose is to raise fund to finance the local infrastructure provisions. The public is
encouraged to buy bonds that generate stable annual rates of return. Where the
financial capacity of local authority is stable, it is encouraged by the central
government to gain operating expenses by issuing municipal bonds. As long as
each additional project will bring net additional revenue to the local authority, the
project can be financed by way of issuing bonds to general public.
35
2.5.2 Traditional Public Contracting
The method varies only to the extent that the private sector usually
competitively tenders for a specified task or service on a basis (e.g. design and
construct), usually for an agreed fixed price. Wider project/ system management,
infrastructure asset ownership and operational risks remain with local authority.
2.5.3 Service/Management Contracts
Under this category the local authority essentially hires a private operator to
carry out local services for a period of five to ten years. Local authority is usually
responsible for all capital and service expansion spending. The private operator
usually executes operational and maintenance expenditures and the local authority
is again responsible for the regulation of the infrastructure. The private contractor
does not deal with the end users and all financial interactions are made directly
with the local authority. The services are delivered at an agreed cost and shall meet
performance standards set by local authority. The private operator bears less
ongoing commercial risks associated with fluctuations in the cost of service
delivery or the revenues flowing from demand.
2.5.4 Lease Contracts
Under this method, the private operator’s remuneration is tied to the agreed
cost of service delivery and estimated level of demand. The private operator
usually bears any changes away from these upfront agreements, thereby assuming
‘commercial risk’. Lease contracts can be extended for up to thirty years of period
and have promoted a range of incentives that encourage private sector.
36
The advantages of this method include:
- Reduced operating costs;
- Increased revenue;
- Improved collection from users/ customers;
- Regular maintenance of assets
2.5.5. Public-Private Partnership (PPP)
At the present, local authorities place considerable emphasis on the use of
private options for local infrastructure. As far as large infrastructure projects are
concerned, they are looking into ways to encourage public-private partnership. A
great awareness on the ‘partnership’ between public and private in the promotion
and financing of infrastructure projects exists in many countries (Garwood, 1995).
In certain legal implications, partners may have joint liability on the obligations of
the partnership and the actions of one partner bind the entire partnership. In
response to increasing demand for local infrastructure, local authorities and private
sector have sought new ways of promoting local economy.
2.5.6 Private Finance Initiative (PFI)
Over the years, the private sector has played an important role in financing
infrastructure projects (Asenova and Beck, 2003). In Britain, the preferred model of
Public-Private Partnership (PPP) is the Private Finance Initiative (PFI). The method
initially developed by the British government to provide financial support for
Public-Private Partnerships (PPP). This involves a long-term contractual
partnership in which the private sector takes on the risks of a venture in return for
payments dependent on agreed standards of performance (Birnie, 1999).
37
Under the PFI, the private sector undertakes to design, build, finance, and
operate the physical assets in order to provide a required service as demanded by a
public sector responsible for the delivery of the service (Kirk and Wall, 2001). In
the context of local infrastructure provision, the key distinguishing characteristic as
compared to other forms of contract, lies in the fact that in PFI the emphasis is on
the procurement of services rather than the construction of the infrastructure (Owen
and Merna, 1997). Under this method, the private sector undertakes design,
building, financing, and operation of public sector assets in return for long-term
payments from the government.
The long-term partnership of PFI allows the private sector to introduce its
own management and procurement strategies, leading to cost savings, increased
efficiency and innovation in local infrastructure provision. The approach has now
been adopted by parts of Canada, France, Netherlands, Portugal, Ireland, Norway,
Finland, Australia, Japan, the United States and Singapore.
2.5.7 Build Operate and Transfer (BOT)
Build, Operate and Transfer (BOT) are one of the private deliveries which
incorporate private sector capital investment in infrastructure provision. Usually
these arrangements are instigated for the construction of a new facility (e.g. water
treatment plant, toll road, power generator, etc.) or the complete refurbishment of
an existing facility. The method involves designing, constructing, and operating the
facilities for 20 or 30 years, after which the investment is either handed over or sold
to local authority, depending on the terms of the contract. This extended contract
duration allows the private sector to recover the return of investment and the
significant costs of construction. The local authority retains ownership of the
infrastructure asset and becomes the customer and regulator of the service. Local
authority agrees to purchase a minimum level of output.
38
2.5.8 Concession/Franchise Agreements
This method entails municipalities awarding a private contractor
(concessionaire/ franchisee) full responsibility for the delivery of the infrastructure
services in a specified area, including all operation, maintenance, collection and
management processes. This includes any capital investment required to build,
upgrade or expand the services drawn from users. The method incorporates more
incentives for the private sector to expand its customer-base, increase investment,
and maintain existing assets and, most importantly, reduce loss in the distribution
network (e.g. water, electricity). The local authority remains the regulatory body
and at the end of the concession contract period, the infrastructure will be
transferred back to the authority.
2.5.9 Joint Ventures (JV)
A joint venture (JV) requires a separate corporate entity to be formed by the
public and private interests. It results from the partial sale of an infrastructure to the
private sector and generally applies in combination with other arrangements such
as a JV for the provision of urban services. In this case the public and private
interests share the operating profits and work together to ensure wider
acceptability. The private sector has the primary responsibility for performing daily
management operations. Apart from the sharing of profits and commercial risks,
the JV is distinguished from less intense forms of private involvement at the early
stage. Private sector contributes to feasibility studies prior to binding of contractual
arrangements to invest in the resulting joint entities. Thus JVs are more processoriented and infer earlier involvement of the private sector.
39
2.5.10 Full Privatization
According to Vickerman (1995), based on experience in United Kingdom
expected savings in providing local infrastructure may not be as great as previously
believed. However a PPP and PFI may have offered better results. The problems
faced by private sector in providing and managing the public services without the
involvement of public sector creates doubt on the actual private sector provision.
However, there are two arguments against these views; the competition does take
place in the form of the competitive bidding for the rights and in reducing costs
(e.g. PFI schemes). However the question remains whether the practices allow the
introduction of full competition, rather than competitive bidding, for major
infrastructure. Full privatization of the local infrastructure interprets in assets being
sold to and remaining indefinitely in the hands of the private sector. All risks are
born by the private sector and local authority retains regulatory responsibility in
order to ensure reasonable charges and to control the level of service quality as
signed in the agreements.
2.6
Classification of Infrastructure
The first stage in contextualising the concept of local infrastructure
provision is to produce the classification of infrastructure. A distinction is made
between hard and soft infrastructure. In some countries, the term refers to
infrastructure networks operating at the local level. It ranges from water supply,
and
sewerage,
infrastructures.
effectively.
to
the community
centres,
schools,
and
environmental
Such definitions are useful in order to precede the study
40
The classification enables a clearer understanding of the structure and
function of local infrastructure system. Seeley (1995) as cited by Ennis (2003)
defines public infrastructure as:
‘… almost every support system in modern industrial society, public
or private, infrastructure is to be said to include not only roads and
sewers, but national transportation grids, communications system,
media, housing, education, computer networks and fibre-optic
‘information super-highways….’.
What is emphasised here is the importance of public infrastructure to
support the local development. Defining all the main components of the city as
infrastructure is useful in providing a way to analyse the role of actors in local
development.
Figure 2.2 and Table 2.1 provide such classification of the main
components of local infrastructure, and their availability as required by most local
authorities (Healey et al., 1997).
Briefly, Ennis (2003) defines the types of
infrastructure as follow:
i. Economic infrastructure - their establishment is essential for
urban
economy and are intended solely for profit. These include industrial, retail,
office spaces and other premises. However, in cases, local authorities
generate local economy to acquire these facilities in form of off-site
infrastructures from private developers via negotiations during planning
approval.
ii. Physical infrastructure - the facilities falling under this category are
critical infrastructures in terms of function, some of which can be
considered marketable. Local road infrastructure is typically a public sector
concern with both national and local authorities being responsible for the
construction and maintenance. Then, there are instances where developers
are `willing to contribute`, in cases imposed by local authorities during the
planning approval stage.
41
iii. Health infrastructure - in order to sustain healthy urban communities,
there is a need for adequately provided health infrastructure. Normally, the
provision is the responsibility of the public sector. However, there are local
authority efforts to provide and this scenario brings the possibility of private
developer to provide at a profit. Lists of infrastructure that fall under this
category are hospitals, clinics or polyclinics, rehabilitation centres and other
types of health facilities.
iv. Educational Facilities - education facilities are very urgent, in terms of
necessity. In many countries, educational infrastructure is publicly-owned
and freely available to local residents.
v. Housing - in most local authorities, housing area covers the largest
portion of land available for development. For instance, in the UK private
sector provides housing for locals in the private market and local authorities
building their own housing schemes then letting them out. In some cases,
this infrastructure is secured through negotiation during planning approval
stage.
vii. Community facilities - this is the key facility necessary in community
development. Almost all the infrastructures under this category are public
and non-marketable which are unlikely to be provided by private sector.
The facilities such as community halls, recreation facilities such as public
swimming pools, markets, public library, religious centres and others fall
under this category. These are provided by local authorities and state funds
and grants allocated annually by federal governments.
viii. Environmental - refers to the infrastructure required to increase the
quality of the environment surrounding a development such as open space,
buffer-zones, landscaping provisions and others as required and also
provided by developers.
Economic infrastructure
on-site
Physical infrastructure: This includes highways,
footpaths, water, sewerage, parking, public transport,
incinerator, local roads, road furniture
off-site
Economic infrastructure: Comprises places of
business, skills training
on-site
Health infrastructure: Hospitals, health centres.
Socio infrastructure
Types of local infrastructure
42
Educational Facilities: Schools, universities,
colleges.
Housing: Owner-occupied, private rented, affordable
housing.
off-site
Community facilities: Such as recreational facilities,
art galleries, museums, fire stations.
Environmental: Landscaping, open spaces, street
furniture, ecological.
The differences between Social Infrastructure and Economic Infrastructure
Economic Infrastructure
1. Revenues are often from third parties
subject to market using the facility.
2. Infrastructure provider faces genuine market
risks.
3. Traditionally delivered through a Government
Business Enterprises.
4. Revenue risk are key driver of financial
outcomes.
Social Infrastructure
1. Paid for out consolidated revenue - subject of
government resource allocation decisions;
2. No market risk to provider of infrastructure –
payments streams are usually subject to long term
contract or budget allocations;
3. Traditionally delivered through a general
Government agency;
4. Costs risks are a key driver of financial outcomes.
Figure 2.2: Types of local infrastructure components
(Source: Adopted from Ennis, 2003)
43
Table 2.1: The range of responsibility for infrastructure funding
Level of
government
Economic Infrastructure
Social Infrastructure
Central
- Aviation services (air
navigation etc.)
- Telecommunication
- Postal services
- National roads (shared)
- Local Roads (Shared)
- Railways (shared)
- Tertiary education
- Public Housing (shared)
- Health facilities (shared)
State
- Roads (urban, rural, local)
(Shared)
- Railways (Shared)
- Ports and sea navigation
- Aviation (some regional
airports)
- Electricity supply
- Dams, water and sewerage
system
- Public transport (train, bus)
- Educational institutions (primary,
secondary and technical)(shared)
- Childcare facilities
- Community health services (base
hospitals, small district hospitals, and
nursing homes) (shared)
- Public housing (shared)
- Sport, recreation and cultural facilities
- Libraries
- Public order and safety (courts, police
stations, traffic signals etc.)
Local
- Roads (local) (Shared)
- Sewerage treatment, water
and drainage supply
- Aviation (local airports)
- Electricity supply
- Public transport (bus)
- Childcare centres
- Community centres and nursing homes
- Public housing (shared)
- Recreation facilities, parks and open space.
Source: Adapted from Webb (2004)
44
2.7
Planning Approval System and off-site Infrastructure Provision
Planning approval is a method applied by local planning authority to ensure
development proposal according to development plans (McLoughlin, 1975). During
planning approval stage, the system enables local authority to secure adequate
provision of infrastructure (on-site and off-site) prior to granting of planning
approval by the authority.
In the context of local development, the system is identified as the major
influential to the local development (Bo-sin Tang et al., 2000). In this case,
according to Klosterman (1996), the system has been widely applied as an effective
means to ensure the adequate provision of infrastructure by developers. Therefore,
by regulating land use control, the system enables to contribute a significant
provision of infrastructure.
2.7.1 Planning System and Development Plans
Development plans have been an important tool in considering planning
approval decisions. In the context of off-site infrastructure provision, the granting of
planning approval is made according to the requirements outlined in the plans to
ensure the mentioned proposed infrastructure is provided. In many planning
systems, the plans which consist of structure plan and local plan are treated as
primary guidance to be referred in making planning approval decisions (Ennis,
1997; Healey, 1991; Claydon, 1997; Ratcliffe et al., 1991; Bunnell, 1996). The plan
frequently acts as a basis which requires the applicants to provide the needed
infrastructure. In many planning systems, the plans act as guidance in
implementation of infrastructure.
45
According to Morgan and Nott (1995), plan preparation is subject to legal
process due to the basis where the statutory plan-based making process enables the
local planning authority to establish the policies to guide and control future land use.
However, as added by Grant and Jowell (1983) there is now a tendency by many
local planning authorities to provide a detailed requirement of infrastructure in plan
rather than leaving matters to the discretion of the planning authority.
The purpose of planning approval system is to ensure efficient and effective
land use in the interest of the public. In this regard local planning authorities have
the responsibility to influence developers to carry out development according to the
approved development plans (Burke and Taylor, 1990). It is particularly important
that the relevant infrastructure is of adequate standard to cater for new developments
(Thomas, 1997). It provides the policy framework in form of development plans,
land use regulations and scrutinise the type of infrastructure required for the
proposed development to take place. This is what has been outlined by Greed
(1996) when describing the characteristics of planning system. Planning approval is
plan-led system, therefore development plans are not the only consideration in the
system. To fulfil the responsibility, local authorities are likely to include other
significant relevant features in their planning policy agenda such as social,
economic, political and environmental considerations, design and layout constraints
of development as well as ensuring adequate provision of infrastructure.
The significance of development plans in considering planning approval is
stressed by Thomas (1997), when he claimed that in British planning system,
development plans become the material of consideration when local planning
authority considers planning approval. It consists of policies which describe in detail
the type of infrastructure to be provided in a particular location (Greed, 1996).
46
Normally, the plan gives such following guidelines according to
infrastructure requirements;
i).
to improve the quality of the present infrastructure
ii).
to improve access and circulation to the location of the facilities
provided, and
iii). to identify the strategic and accessible location of new infrastructure
2.7.2 Development Process and Planning Approval
Planning as an activity is widely recognised as a legitimate land use process.
Furthermore, the general understanding of planning approval is more than of
development process. Technically, planning approval is a term used to define the
system of issuing permits for land development. Basically, the stages of
development process are: initiation, approval, building and disposal. At the approval
stage, planning approval is a vital part of the development process (Ratcliffe et al.,
2001) because granting of planning approval increases the value of land and
buildings (Thomas, 1997). Along the process, it may involve negotiation by local
planners to secure public facilities from private sector, particularly in securing offsite infrastructure (see Figure 2.3).
In the previous paragraphs much has been elaborated on the nature of
development process. Similarly in Peninsular Malaysia one of the hurdles of the
developer is the certification of planning approval from local planning authorities
prior to commencement of development. At this stage, the developer is required to
obtain approval from a range of other statutory bodies or the relevant technical
authorities; local planning authority acts as the central approval authority (see
Figure 2.4). The developer will need to conform to the requirements of the building
47
regulations; to conform to any restrictive covenants (e.g. certificates of approval
from various authorities such as fire department, public work department, health
department and etc.) over the way in which the land can be used or developed. In
certain cases, developer is required to provide a range of infrastructure not just
located within the development area, but the developers might impose conditions
requiring the provision of infrastructure outside or adjacent to the site of the
proposed development. In planning terms, outside is referred to as off-site.
48
1. Analysis of Property Investment
Situation
- Review of property portfolio.
- Existing portfolio management.
- Examination of future trends
- Property market analysis
Actors involved
Accountants – Financiers/Bankers –
Economists – Stock market
specialists – The developer as client
6. Letting/selling of units and
management
2. Decision to develop
- Development advice.
- Feasibility studies.
- Site analysis.
- Site finding.
Actors involved
Town Planners – Architects – Market
researchers – Design consultants – Property
agents.
3. Obtaining planning permission
- Agency role in letting disposing of
units.
- Property management.
- Property maintenance.
- Overall financial management,
portfolio revisions.
- Legal issues, rents, rate reviews
with district valuer.
- Representing client in submitting outline
application, followed by negotiation and
planning gain consultation, or inquiry.
- Local planning authority and central
government ‘planner’ determining the
application may also be surveyors.
- Also private surveying practices act as
consultants to local authorities in statutory
plan preparation.
Actors involved
Property agent, Maintenance
engineers- Retail managers –
Arbitrators.
Actors involved
Town Planners - Lawyers - Economists –
Architects Design consultants – Community
Groups.
5. Building design and construction
4. Site development
- Liaison on design with user groups.
- Liaison on planning control.
- Costing, procurement, tendering.
- Property management.
- Involvement in building team in
many specialist roles.
- Investigating land rights, covenants as
constrains on development.
- Monitoring land transfer, site analysis and
setting out.
- Landscaping liaison.
- Design consultation.
- Consumer research.
- Occupancy prediction.
Actors involved
Architects - Planners – Accountants
– Civil engineers.
Actors involved
Civil engineers – Landscape Architects –
Highway engineers - Town Planners Lawyers – Architects.
Figure 2.3: The stages of property development process
(Source: Adapted from Greed, 1993)
49
Applicant/Developer
Submission of Planning
Application to appropriate
local authority
Consulting with
other departments
of local authority
Planning Department
Application registered, checked
against plans and policies outlined
by the approval authority
Planning officer visits proposed
site for development
Referred to county
for ‘county matters’
Advised locally
for comments
Technical comments received
by approval authority
‘Called in by Minister who
institutes Inquiry and make
decision
Decision made accordingly
to comments received
In certain cases planning
approval might be decided
by LPAs without consulting
other technical departments
Refer back
Planning
committee decide
Decision
deferred
Council decide
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Decision released
Application approved / refused /
approved with conditions
Decision issued to
applicant / developer
Applicant may appeals to
‘relevant’ channel which
provided under laws
[Pre-application discussion between applicant and local planning authority (LPA)]*.
Application submitted by applicant to LPA.
Application check, registered and acknowledge by LPA.
Public consultation period with statutory and non-statutory consultees.
Planning officer visit site and starts to compile report on the application for planning
committee on the basis of material considerations.
Results of public consultation received by LPA.
[Before final decision there may be further discussions between applicant and LPA to make
application acceptable]*.
Planning officer finalises his report and either makes a decision himself under delegated
power or remits it to LPA planning committee with a recommendation to grant or refuse
planning permission.
Planning committee decides to refuse or grant planning permission.
Applicant notified of decision, which is recorded in planning register.
[Where applicant is dissatisfied because of refusal or onerous conditions, he may
appeal to Secretary of State].*
*Note: This stage some time not necessarily in the procedure.
Figure 2.4: The outline of British decision-making procedure in
permission approval
(Source: Thomas, 1997)
50
2.7.3 Planning Gains and Planning Approval Process
This part pursues further the significant features of planning system in
planning approval process with particular reference to the question of what means
are available to local authority to secure some portion of benefit from private
development in order to achieve his social and environmental objectives. In many
parts of the planning system, one particular attention is given to the effectiveness of
applying planning gain as a means to achieve such local development plan policies.
According to Keogh (1982) as cited by Allison and Askew (1996), to certain extent
such practice is applicable to many local authorities. Planning gain is used in
negotiating additional gains (infrastructure) from private sector to community when
the private development in a huge area is under progress.
According to Greed (1993), planning gain is a non-statutory term which
covers additional concessions secured by the local authority from the developer
when entering into agreement to provide certain amenities in return for a more
favourable planning approval. It is not a bribe, as it is for the benefit of the
community and has to be directly related to the development in question. Typical
examples might be the provision of infrastructure such as road improvements,
recreation facilities, open spaces, community centres etc. Certain local authorities
acquire much higher contributions than the mentioned ones from developers
ranging from local schools or even sport facilities to construction of new roads.
This is one of the limited means by local authorities to materialise the social
aspects of planning in view of public financial cutbacks.
Conceptually, planning gain is that any extraneous profit above the norm in
private development might be negotiated as planning contribution to be provided in
form of off-site infrastructure provision. In the context of planning system in
Peninsular Malaysia, such practice is not clearly mentioned in the TCP or any other
statutory documents. The concept is an ad-hoc in some local planning authorities
when dealing with off-site infrastructure provision. In British planning system,
51
planning gain is being using to secure infrastructure from private sector (Healey et
al., 1992).
In a study by Ennis (1994) using two case-studies to determine the
perception of local authority and developer towards the practice of planning
obligation, there is a significant reformation in the practice of the planning gain.
The used legislations such as Town and Country Planning Act, 1990 and DoE’s
Circular 16/91 made the change from ad hoc practice to more structured practice.
Negotiating planning gain informally practiced in the 1980s became gradually
established by the statutory plan policies. The major issues identified in the study
are the formalisation and legitimising of the planning obligation practice. The
major concern by most developers was on the size and scope of the said obligation
that might be imposed on developer.
The results show that most countries have been practising the approach of
planning gain in their planning system as an alternative which enables local
planning authorities (LPAs) to reduce the financial burden in providing off-site
infrastructure. This part pursues further, the role of LPAs in the development
process with particular reference to the question of what means are left to the local
authority to get benefits from the private development and with focus on the role of
planning gain as a means of achieving such infrastructure.
The purpose of planning gain is to mitigate the impact of proposed new
development. Various definitions of planning gain have been put forward, most
very broad. In general, the term has been used to encompass any outcome which a
local authority views as desirable.
52
However, the concept of planning gain is best expressed by Circular 22/83
(cited by DoE, 1993):
‘..whenever, in connection with a grant of planning approval, a local
planning authority seeks to impose on a developer a positive
obligation to carry out works not included in the development for
which planning permission is being sought, or to make some
payment or confer some right or benefit, in return for permitting
development to take place…’
To be sure of the concept and definition of the practice, there are several
definitions widely accepted such as:
Jowell (1970); ..defines planning gain as the achievement of a benefit
to the community that was not part of initial application and
that was not of itself normally commercially advantageous to
the developer..’
Marsh (1989) defines planning gain as a benefit to the community,
achieved at no cost to the community… usually secured by
the developer and local planning authority (LPA) signing a
planning agreement before planning consent is granted…’
Crow (1998), spoke of its concern about planning gain as the
arrangements whereby local authorities, in granting planning
approval, achieve planning and other community gains at the
expense of developers…’
At this point, development should not be permitted because of any
extraneous offers from private developers and ensures local authorities’ attempts to
extort unreasonable benefits from developers. To be a valid planning gain, the item
which is decided by planning authority to be acquired as list of ‘gain’ must fulfill
the following characteristics:
i. Relevant to planning
ii. Fair and reasonable in scale and kind
53
iii. Logical
iv. Directly related to the proposed development, and
v. Necessary
In the context of British planning system, the gain can take a variety of
forms which lies in the view that by granting planning approval, the local authority
is actually conferring a great increase in land value. In many cases, planning
authorities are in a stronger position to impose such planning gain, and even
impose additional conditions on the planning approval as applied by developers for
development.
The Circular 16/91 (Planning and Compensation Acts: Planning
Obligations), cites the following as 'reasonable' subjects for planning gain:
i. Specification of use
ii. Dedication of land and building for public use
iii. Improvements of environmental quality
iv. Off-site infrastructure provision
v. Cash payments
One might argue that the practice of planning gain is allowable to local
authorities to extract public benefits (e.g. on-site and off-site infrastructure) at no
cost. As mentioned earlier, in the definition of planning gain, the term contribution
does not require to be commercially disadvantageous to the developer (Verhage
and Needham, 1997). However, it offers a relevant benefit to the local authority
elsewhere as beneficial to the developer (see Figure 2.5).
54
Ad-Hoc Expenditure of development gain
What is the size of the
development gain?
Who receives the
development gain?
Who has power over the use
of development gain?
Negotiations
- Characteristics of site
- Other than financial arrangements
- ‘Regulated expenditures’
Residential development
Figure 2.5: The cycle of development gain expenditure
(Source: Verhage and Needham, 1997).
According to Greed (1993) planning gain should only be limited to land-use
and land development. Anything else is strictly ultra virus. Any planning condition
must be for a genuine reason, for restricting or regulating the development or use of
land, and reasonable (Morgan and Nott, 1988). Jowell (1977) defines planning gain
as the achievement of a benefit to the community that was not part of the initial
application (and was therefore negotiated) and that is not normally commercially
advantageous to the developer. Furthermore, Marsh (1989) defines planning gain as
a benefit to community, achieved at no cost to the community and usually secured
by the developer and local planning authority signing agreement before planning
consent is granted.
55
Generally, planning gain can only be secured by local planning authority
when development occurs. It is relevant to ask exactly how advantageous is the
practice of planning gain to the local residents (Allison, 1996). Besides the
advantages of planning gain to secure infrastructure, Allinson and Askew (1996)
argue that in implementing planning gain, the United Kingdom’s experience of
disadvantages can be applied to consider the value of gains. These experiences can
be learnt for the purpose of adopting this approach in the Malaysian context.
Planning gain may include provision of facilities arising from the need created by
the development.
The nature of planning gain can be described as follows:
i.
Planning gain is only achievable in areas of development pressure,
where there is the potential for profitable, large-scale development.
ii.
The system of negotiation for planning gains is corrosive to the
neutrality of the local planning authority.
iii.
The nature of planning gain agreements is secrecy. The practice of
negotiations normally is held behind closed doors between developers
and planning officers.
iv.
There is a question as to the actual benefit of the gains to the local
community.
v.
Commercial viability during negotiating for planning gains was given
priority as a material consideration.
56
In the United Kingdom, the benefits from planning gain can take a variety
of forms such as additional contribution to infrastructure, amenities, social facilities
and landscaping, in return for a better planning permission. Similarly in Peninsular
Malaysia, for instance the Municipality of Penang in the State of Penang (MPPP),
the planning gain can be divided into two main categories:
i) Monetary gain (e.g. development charges, financial contribution levied
in exchange of public amenities; and
ii) Amenities gain (e.g. infrastructure improvement, environmental
improvement, providing open spaces, recreation parks, parking
facilities, religious facilities (mosque), allocating a piece of land for
building of school etc.).
However, in the first part of the practice, planning gain is not likely what
has been practised in United Kingdom. There is a misconception regarding the
actual meaning of planning gain.
Grimley et al. (1992) as cited by Healey et al. (1995) found that negotiation
process is critically valuable in dealing with issues by large and complex
development applications and particular to sort out who should pay for what in
relation to infrastructure development. For developers, the advantages of agreement
noted in the study include:
i.
Removing an obstacle to planning permission;
ii.
Bringing forward public infrastructure programmes;
iii.
Avoiding delay through an appeal;
iv.
Enabling a trade-off between advantages and disadvantages of project,
so allowing it to proceed;
57
v.
Influencing public opinion on the effectiveness of applying
negotiations approach in securing public infrastructure from private
sector; and
vi.
Enhancing the development itself.
Even though planning gain much benefited local authorities and
communities in particular, the practice receives a number of public arguments. For
example although Marsh (1989) has argued that planning gain has allowed local
authorities to achieve public benefits at ‘no cost’ it’s still argued that the definition
of contribution should include offers from developers which allow a local authority
to achieve a benefit at less cost than incurred otherwise. As opposed to Jowell’s
definition of planning gain, the definition of ‘contribution’ does not require to be
commercially disadvantageous to developers. Rather, contributions offered to the
local authority, might also be beneficial to the developer.
2.7.4 Planning Approval Mechanism to Secure off-site Infrastructure
Planning application will be processed according to a set of guidelines
fulfilled by the applicants prior the granting of planning approval. In the extreme
situation, the local authority is in a strong position to apply whatever means
available under the prescribed legislative to secure planning contribution and this
includes of off-site infrastructure. As supported by Claydon (1997), there are
widely accepted practices which allow local planning authority to accept an
adverse-offer from developer as planning contribution. The offer was in form of
off-site infrastructure which can be secured via negotiation process.
Under this category, there are three mechanisms of how off-site
infrastructure can be secured from private developers through planning approval
process. This includes Planning Contributions, Development Charges and Planning
Agreements.
58
2.7.4.1 Planning contributions
Planning contribution or development contribution primarily relates to the
provision of parks, gardens, open spaces and others facilities by planning
applicants. This requirement was provided under planning control guidelines.
Infrastructure charges or development contributions apply to secure adequate level
of infrastructure before planning approval is granted. It may come in many forms,
such as drainage system, parks and open space, transport infrastructure (local roads)
and infrastructure for local community purposes (i.e. community facilities, cultural
facilities etc.).
The planning contributions are recovered by various methods, in the
following forms:
- Incorporated in the local planning authority's planning control
guidelines.
- By voluntary agreement, usually for the purpose of securing the required
planning approval (e.g. via unilateral undertaking agreement by
developers); or
- Through statutory enabled negotiated agreements.
2.7.4.2 Development Charges
The development charge imposed by local planning authorities on
developers is used to pay for infrastructure required by new development. In order
to fulfil the demands for public utilities and amenities, local authorities have long
been seeking ways for reliable methods of infrastructure funding and financing to
secure the required local infrastructure (Booth, 1999). In a study on comparative
evaluation of development charge practices in Ontario and Israel, Kaplinsky (1999)
found a significant result, under planning approval system. Here development
charges were found to be of the efficient means to oblige private developers to
contribute to the cost of local infrastructure. This was designed to recover the
59
public costs incurred in the provision of infrastructure from the users. Development
charges were levied on the land owners rather than the occupants or users of
specific services. The terms of development charge have a common purpose but
often carry different names such as impact fees, contributions for betterment and
special assessments.
There are three main reasons for imposing development charges, namely;
i). Development charges is a source of income to local authority;
ii). It is economically efficient for the development charges to be levied on
the appropriate users; and
iii). It is equitable to charge those parties who individually benefit directly
from the facilities. For example in Australia, the fee was referred to
developer contributions. Although the terms have a variety of names,
but it was referred to the same purposes which is a process applied by
local authority to obtain contribution from developers prior the
planning approval is granted.
2.7.4.3 Planning Agreements
To make the planning approval system come to force there had to be strong
powers of control (Greed, 1993). The system should be entered into either by
agreement or ‘unilaterally’ (Heap and Ward, 1980) to impose restrictions and
conditions on the development and to require specified facilities to be carried out or
to be paid to the local authority prior granting of planning approval. In the case of
the ability of local planning authority to impose a betterment levy on developers
who benefited from an increase in land value because of a planning approval or
land use zoning, it was necessarily for local planning authority to provide such
powers. For example, when an agricultural land zoned as residential land would
vastly increase in value. However, many would argue that the present proliferation
of planning gain may constitute an unofficial form of betterment levy or land tax to
get the developer to pay for infrastructure.
60
A planning agreement is not a condition attached to planning approval. In
fact, the agreements operate alongside any planning approval. Justification for the
local authority to impose an agreement as a pre-requisite of grant of planning
approval will be contained in appropriate policies as appeared in the approved local
authority’s plans. In the Bristish planning system, such policies may be amplified
by Supplementary Planning Guidance (SPG) which aims to clarify the justification
of the requirement. Bunnell (1995) had found that the practice of local planning
authorities negotiating agreements and contributions as a condition for granting
planning approval has become known as the negotiation of planning gain.
Applicants may also make similar provisions by making “a unilateral
undertaking”. Where given, these normally arise in the context of an appeal. In this
case, the applicant makes a legally binding declaration to carry out works or
provide funds as part of submissions made to justify an application. This is
sometimes the case where negotiations have failed to produce agreement.
According to Healey et al. (1995), the practice of planning gain has been
initiated since early 1960s in return for the grant of planning approval. The
Government proposed to legislate to require developers to contribute community
facilities in connection with new development. In fact the planning agreement
should be used by local authorities to secure private contributions to infrastructure
cost (or planning gain).
The first detailed analysis of how local authorities have used agreements
was provided by Jowell (1977). Approximately one-half of all authorities who
responded to Jowell’s survey reported that they had achieved some kind of
planning gain. The types of ‘gains’ local authorities reportedly achieved and the
percentage breakdown of those gains are shown in Table 2.2.
61
Table 2.2: Types of gains as reported by local authorities
Type of gains
Percentage %
Public right of way on the developer’s land
19.5
Dedication of land to public use
18.4
Provision of community buildings
6.9
Provision of infrastructure
6.9
Gift of site or buildings for residential use
6.9
Rehabilitation of property
6.9
Source: Gene Bunnell, 1995.
By referring to Table 2.3, a consensus appeared to emerge that the practice
of forcing developers to sign agreements containing offers of contribution for offsite infrastructure was increasing. In fact the table also suggests a trend toward
signing more agreements. From 1974 through 1977, with an average of 10
agreements were signed per year. However, from 1978 to 1981 an average of 24
agreements per year was recorded (Bunnell, 1995).
Based on a study by Rowan-Robison and Durman (1993) on the practice of
planning agreement to secure infrastructure from private sector, they found a steady
increase in the use of agreements in the planning approval process. Among other
things, they recommend that local planning authorities should, where appropriate,
give guidance in development plans about the circumstances in which they intend
to seek to impose obligations through agreements. It shows that development plans
are increasingly making provision regarding the funding of collective infrastructure
and that some of development plans are making explicit provision arising from
detailed planning control policies.
62
Table 2.3: The distribution of planning applications and planning
gain agreements in Wokingham, 1974-1981
Year
Full
applications
Planning gain with
Agreements
1974
1975
1976
1977
1978
1979
1980
1981
1320
1548
1454
1307
1747
1890
1832
1218
6
2
13
18
21
20
31
22
Total
12,313
133
Source: Bunnel, G. (1995)
2.7.5 Negotiating off-site Infrastructure Provision
How is planning gain secured? What method is used to secure gain?
Because the negotiation of agreements is costly and time-consuming, it is
unrealistic to expect that every agreement should be negotiated for every planning
approval. What was the significant feature available in planning system which
allowed local planning systems to acquire benefit from private development? By
referring to United Kingdom based studies during planning approval process,
initially planning approval has to be secured prior commencement of the
development. Local planning authority normally always put negotiations as a
significant tool to gain some community facilities out site boundary of acquired
planning approval (see Healey, 1997; Bunnell, 1995; Claydon, 1997; Greed, 1996).
63
Negotiations, is one of the methods applied by many local authorities in
number of countries to secure off-site infrastructure from private developers. The
negotiation involves local authority and the developer during the planning approval
stage. It involves the bargaining process of the developer contribution during the
process. By entering negotiations, planning authorities enable to covers some cost
of public infrastructure from the private developer by attaching development
contribution conditions to a planning approval (Ennis, 2003; Hendrik, 2003).
The practice of negotiation in connection with the grant of planning
approval is primarily aimed at ensuring that the adverse social and environmental
costs from the development are limited. A planning condition is imposed by local
planning authority as part of the public system for the regulation of development
projects. As practised in British planning system, the agreements are negotiated
based on separate statutory provisions. Therefore the scope and legal consequences
can be very different from those arising from a condition. This was pointed out by
Healey et al. (1996) the use of planning agreements to impose obligations on those
carrying out a development could be seen as a substitute for a betterment levy or
development tax.
The relationship between the applicant (developers) and local planning
authority is probably the most important. This may take the form of pre-application
negotiations over planning conditions and planning agreement before planning
permission be granted. The negotiation of planning agreements to achieve
‘planning gain’ has generated an on-going debate and widely differing perceptions
and interpretations of how local authorities have used agreements.
The British planning system is considered `discretionary’ in nature because
it provides for the interpretation of policy and the input of material considerations
in decision-making. Discretion is also evident at an operational level where officers
gather information and make judgments before offering advice on planning
applications. Within this discretionary space, negotiation commonly occurs,
sometimes in relation to planning gains.
64
Negotiating gains is proposed through the planning approval, a negotiation
process is also being acted out. The stages of the negotiation process may be seen
to run parallel to those of the planning process but there is not automatic linkage.
The successful conduct of both processes, in order to achieve a compatible
outcome, depends on the abilities of the key actors. Those actors need helpful
organizational structures to support them, but also strategies for successful
management of the processes.
Most of the studies comment on the mutual benefits the negotiation of
obligations brings in improving the present quality of local facilities. Durman and
Rowan-Robinson (1991) as quoted by Healey et al. (1995) outlines two main
benefits that can be secured by planning authorities during negotiating of planning
obligations. The first one is to remove obstacle preventing planning permission
being granted in order to ensure infrastructure provided and the second is that to
provide a more robust control over development to provide greater strength than
was possible through a condition for rapid enforcement.
Even though agreements affect relatively few applications, the study found
that the practice seems to have become routine among most local authorities during
the 1990s. The practice has now extended across the planning system in some part
of British’s local authorities in the 1960s and 1970s. Despite of local planning
authorities making extortionate demands from developers for planning gain, the
reality seems to be that such negotiations have a useful role for most parties in
managing the development.
The lack of detailed guidance of authority would result in inconsistency in
negotiating planning gain. It will continue to be uncertain as long as the authority
does not produce a comprehensive guidance to local planning authority to be used
as policy guidance.
65
2.8
Comparative System of Local Infrastructure Provision
2.8.1 Ireland
In Ireland, part of public infrastructure been has provided by private
developers using planning approval. Normally, the negotiation takes place to
identify the types of infrastructure to be considered as planning conditions and the
method of payment. Previously the negotiation was driven by the need to recoup
public investments. However in the recent practice, planning requirement also
applies to provide infrastructure that would otherwise not be provided. The lack of
infrastructure might be a possible impediment to the local development. This has
given a tough responsibility to local authority to apply development process
effectively in ensuring the local infrastructure provided adequately.
The Irish planning system is a plan-led system which using development
plan for its administrative area and each planning application must be considered in
the context of the development plan. The main reasons for this are that the
development plan is often not sufficiently specific to provide more than an answer
to the question whether development should take place in principle, and a
significant degree of discretion is left to the decision on an individual planning
application. Also in some planning approval practices, planning permission may be
granted by default if a planning permission is not made within specified periods.
A planning application can be disapproved if it does not comply with the
development plan. The planning authority can follow a procedure of material
contravention where it decides to facilitate the development (Hendrik, 2003). This
is because the choice to follow this procedure of material contravention is open to
the planning authority it gives it a negotiating tool. This is helped to a degree by the
fact that each planning permission that is granted by a planning authority may also
be challenged by a third party while the applicant may also appeal the decision
granted to a board of appeal. Through the attachment of development contribution
66
conditions, planning authorities can achieve a contribution from the private
developers for the provision of public infrastructure that would facilitate the
development for which permission is requested.
Development conditions have been used by planning authorities to acquire
infrastructure. The reasons to refuse the planning permission may also be based on
the lack of infrastructure facilities in the development proposal. Under the planning
legislation, planning authorities can refuse a development proposal as being
premature if the required infrastructure is not available or where the capacity of the
available infrastructure that has been reserved for other development is not enough
to support the private development which much benefited the private sector. The
use of conditions and refusal reasons enable to promote the use of negotiation and
the practice also initiate developers the facts that some of responsibility to provide
infrastructure should be bearded by them as part of their corporate responsibility.
2.8.2 Australia
According to Cardew (2003) the involvement of private sector in local
infrastructure is well established. The private sector has been involved with local
infrastructure delivery over a decade and bears most of the inherent risks in infrastructure
provisions. They responsible for the provision of the local infrastructure such as
recreation facilities, local roads, drainage, parks, gardens and sewerage infrastructure or
in some state local authority also provide neighbourhood-based public transport systems.
Most of local authority in Australia revealed that private sector financing of local
government infrastructure is limited (see Table 2.4).
67
Table 2.4: Some infrastructure provided by private options in
Australia
Type of delivery
Type of infrastructure
Lease Contracts
Fifty eight different councils - recreation facilities AND
cultural, civic and/or library facilities
BOOT, BOO or BOT
schemes
- Willoughby City Council; parks, gardens and open
space
- Central Goldfields Shire Council; recreation facilities
- Frankston City Council; recreation facilities
- Warringah City Council; bus shelters
- Burwood City Council; public car park
- Noosa Shire Council; water and/ or sewerage
Concession/
franchise agreements
- City of Booroondara; recreation facilities AND
cultural, civic and/or library facilities
- Kempsey Shire Council; recreation facilities
Full privatisation
- City of Port Lincoln; recreation facilities
- Armidale Dumaresq Shire Council; gas utilities
Source: Australia National Office of Local Government (2003).
The argument made by many private infrastructure providers, is that the
inability of many local authorities to identify the potential of infrastructure projects
as local investment opportunities causes local authority go for private sector
engagement in providing such facilities. These factors inhibit private investment in
local infrastructure. Thus it is acknowledged, by both the private and public
sectors, that local authority inability is the main constraint to private sector
infrastructure financing.
68
2.8.3 Germany
In Germany, the lack of funding of many local authorities increasingly
pressured them to provide adequate and appropriate infrastructure (Ache, 2003). It
had a significant impact on the local infrastructures. The main challenge for many
local authorities was the lack of funds to finance the required local infrastructure. It
worked as engines of local economy, adequate provision of local infrastructure
would maintain the performance and remain the local authority competitiveness in
local development.
However, the country has rigid planning system regarding infrastructure
requirements. The system operating with a number of regulations which covers
ways to provide infrastructure in the planning and development process and how to
fund the occurring costs.
As a rule, new development cannot take place without
securing provision of infrastructures to serve the land development which also
covers outside (or off-site) and on-site developments.
The provision of infrastructure is solely on the basis of a secured
Bebauungsplan, a statutory local plan. The strategy benefits from the practice of
planning gain. The local authority is shared at a certain portion with developer to
pay for the costs of providing infrastructures. The ‘cost’ for the developer includes
providing socio-infrastructure and economic infrastructure. According to Ache
(2003) developers had provided public drive ways, social infrastructure, public
green space and planning costs.
69
The procedure applied is divided in three main stages:
Stage 1: All parties involved agreed in principle on a shared cost
basis and this should be done before detail planning work is
started.
Stage 2: Either the agreement for the actual development is accepted
by all parties involved.
Stage 3: Finally, the actual agreement for the development is agreed.
2.8.4 United States
Under the American planning system, the developers are required to
provide on-site infrastructure. However, in the 1970s and 1980s, major cities in U.S
increasingly laid down requirements for private-sector provision for off-site
infrastructure because of rapid growth in many areas combined with increase in
construction costs and interest rates and reductions in federal and state aid
increased the cost to local governments of providing new expenditure. Coupled
with the fiscal decline of many cities, tax and expenditure limitations, and voter
rejection of bond issues, the cost increases have forced many cities to reconsider
the way they pay for capital facilities (Snyder and Stegman, 1987).
As describe by Nelson et al. (2004), the approach that has been practised is
likely as considered as impact fees and is imposed on new development as a means
to raise revenue to pay for expanded public facilities necessitated by new
development. The fee applied to bridge the gap to build or expand public facilities to
accommodate new development. The system would certainly produce some
improvements over British planning gain/obligation practice. The system actually
produces some improvements over British planning gain practice and is applied
consistently and being based on a planned program of infrastructure investment.
70
By comparing the different planning systems, the Ireland and Germany
planning system much relevant to what has being practised in Malaysia planning
systems in securing off-site infrastructure provision. Part of infrastructure provision
been placed under the duty of private sector. The planning approval system is
applied to secure infrastructure from private sector and uses the system to reduce the
public burden on infrastructure development particularly off-site infrastructure.
In securing infrastructure provision, the Irish planning system operates
almost similar to Malaysia planning system. They are exercising a development plan
system consisting of development plan and development control. During planning
approval stage the local authority might use development plan as guidance to
consider planning applications. If there is a requirement for infrastructure stated in
the plans, infrastructure requirement will be attached to the planning approval. This
is also what has been applied in Irish and Germany planning approval system.
Local authorities in Ireland had placed a significant consideration to involve
private partnership in securing the provision of infrastructure and the system is wellstructured and established. It appeared as discretionary rather than regulatory this is
because the development plans is not legally binding due to the type of land
development process. In securing of local infrastructure provision, the development
approval is negotiable practice because of the degree of discretion that is open to the
planning authority in the planning approval process.
71
2.9
Conclusion of the Chapter
It can be concluded at this stage that planning system is an essential tool
since it enable local authority to acquire adequate provision of infrastructure at the
local level. With efficient implementation of planning approval, local planning
authorities might secure some benefits or gain from developers at the stage of
planning approval. The literature proved that, local infrastructure can be secured
from private sector, however local planning authorities have to rely upon the
existing procedural aspects of negotiation when dealing with private proposals to
achieve the required outcomes. In the recent practices, negotiation is the key factor
in securing local infrastructure provision and in particular in the provision of off-site
local infrastructure provisions instead of other method allowable under planning
system. This has effectively been concerned with the issues that relate to planning
gain, how to get back from the developer, and return to the community, some
element of the profit that has been made as a result of development to fund the
necessary social and infrastructural provision.
It can therefore be summarised that the private sector can and has also
become more directly involved in the provision of local infrastructure. Such
involvement revolves around the rights and obligations in the contractual
arrangements between private operators and Councils and can take the form of
service/ management contracts, lease contracts, build operate and invest
arrangements (e.g. BOOT, BOO or BOT schemes), concession or franchise
agreements, joint ventures or full privatisation.
This chapter has provided a framework on how this approach can be adopted
into planning approval system in Peninsular Malaysia. However, a comprehensive
study is needed to evaluate the level of readiness and acceptance of the private
sector as the key player before such approach can be adopted. Figure 2.6, illustrates
a number of options of private financing and delivery are available at the local level
to secure off-site infrastructure within the framework of planning approval.
Public Sector
Delivery
Public financing
1. Development
Charge
2. Developer
Contribution
Issuing Municipality
Bonds
Indirect Private
financing
3. Development
Impact Fees
4. Processing
fees
Planning Approval Process
(Development Control System)
User Charges
(Utility Charges / Direct User Charges
General revenue
(General Rates / Special Rates /
Differential Rates / Separate Rates
Internal Funding
funding and delivery mechanisms
Figure 2.6: Local infrastructure provision (off-site and on-site)
Private Financial Initiative (PFI)
(PFI is a form of PPP)
Public-Private Partnership (PPP)
Joint Ventures
Concession /Franchise Agreements
BOOT, BOO or BOT Schemes
Full Privatisation
Lease Contracts
Service / Management Contracts
Traditional Public Contracting
Direct Private
financing
Private financing / delivery
External Funding
Local Authority
7. Loans
6. Parking lot fees,
plans fees, interest
receivable and others
miscellaneous items.
5. User-charge/
Government
grants
4. Improvement
Services Fund (ISF)
e.g. The fund
allowable to be used
for building or
maintenance of
existing local
infrastructure.
3. Rentals
2. License fees
1. Real property tax
or assessment
72
CHAPTER 3
PLANNING APPROVAL SYSTEM IN MALAYSIA
3.1
Introduction
Pursuing private involvement in local infrastructure development is not
simple. It requires effective integration of all relevant regulating authorities
promoting greater participation of private sector. The discussion in Chapter 2 has
provided an overview on the theoretical framework required for the study. This
chapter than provides an overview of the planning and development approval
system as practised in Malaysia.
The discussion will focus on the planning approval system in securing offsite infrastructure from the private sector as outlined in Town and Country
Planning Act 1976 (Act 172) and Federal Territory (Planning) Act 1976 (Act 267).
3.2
Urbanisation and Infrastructure Development
Rapid urbanisation would create additional demand for infrastructure. In the
last three decades, Malaysia has been experiencing a progressive rate of
urbanization (see Table 3.1). The total urban population of Malaysia in 1991 was
reported to be at 7.68 million (54.3%), i.e., more than half of the nation’s total. It is
anticipated that by the year 2020, the urban population would grow to 20 million
(or 80.0%) of the total population. By referring to Table 3.2, urban population
experienced a rapid increase from 1980 to 2000.
74
This requires the relevant authority to provide adequate infrastructure in
order to meet the demand of future development and several strategies have been
adopted to maintain and ensure the achievement of an equitable urban growth. At
the local level these include the strategies to provide urban infrastructure through
the implementation of privatisation projects.
Table 3.1: The distribution projection of urban population in
Peninsular Malaysia, 1911-2020
Year
Total
Population
Urban
Population
Rural
Population
Urban
%
Rural
%
1911
1921
1931
1947
1957
1970
1980
1991
2000
2010*
2020*
2,339,000
2,906,691
3,787,758
4,908,086
6,267,955
8,819,928
11,426,613
14,127,556
16,884,000
20,582,000
25,088,000
250,273
406,936
570,513
929,928
1,666,969
2,662,787
4,182,759
7,676,486
10,838,000
14,406,700
20,070,400
2,088,727
2,399,755
3,217,245
3,978,158
4,600,986
6,157,141
7,243,854
6,541,070
6,046,000
6,174,300
5,017,600
10.7
14.0
15.1
18.9
26.6
30.2
36.6
54.3
64.2
70.0
80.0
89.3
86.0
84.9
81.1
73.4
69.8
63.4
45.7
35.8
30.0
20.0
Source: Federal Town and Country Planning Department, Malaysia (2003)
Note: *Projected figures
In Malaysia, infrastructure provisions normally concerned the involvement
of public sector in providing facilities such as roads, hydroelectric dams, water
treatment plants, and airports. This practice therefore contributes financial burden
to the local authorities. In order to reduce the burden, the present practice should be
reformed accordingly by promoting the private sector in such local infrastructure
provision.
75
It has been seen that adequate infrastructure facilities are vital for local
development and it is clearly a necessary precondition to sustain economic
development. However, the increasing cost of providing infrastructure has had a
significant impact on the capacity of the local authorities to provide infrastructure
as they did in the past (Healey, 1995; Choguill, 1996; 1997; Ennis).
As provided under the present planning legislative, local authority is to
impose either the requirements of financial contribution, adequate public amenities
and appropriate infrastructure facilities to private developers’ upon the granting of
planning approval. In cases, developers are also required to provide off-site
requirements such as road improvement, new roads and other facilities.
3.3
The Framework of Planning System
3.3.1 Planning System in Malaysia
Britain has a town and country planning system which has provided a
model for many other countries. The system comprises the production of policy
frameworks in the form of development plans, the regulation of land use and
development activities through granting or withholding of planning permission
(Underwood, 1981). This Act is modelled after the British system to regulate
development in public interest. It has a positive role in the achievement of urban
development with adequate infrastructure. This requires an efficient development
control system which provides the basis for a sustainable urban development.
In Peninsular Malaysia, the town planning system has been practised
legitimately since 1976 under the Town and Country Planning Act 1976 (Act 172).
The system was established with a hierarchy from the national to the lowest level.
Figure 3.1, outlines the overall government machinery at various levels and
components of national development system. The Local Government Act 1976
(Act 171) itself does not include planning power under the purview of the local
76
authorities. However, under Sec. 59 (1) of the Town and Country Planning Act
1976 read together with Local Government Act 1976, planning is defined as a
function of the local authority.
The King
(YDP Agong)
Council of Rulers
National
Development Council
The Cabinet
National Economic
Council
Prime Minister’s
Department
National Security
Council
National Development Planning
Committee
Federal and
State Relation
Committee
Ministries
National Finance
Council
National
Land Council
National Council
for Local
Government
Ruler of the State
State Executive
Council
Secretary of the
State
Federal Secretary (For
Sabah and Sarawak)
State
Development
Council
State
Economic
Planning
Committee
Figure 3.1: The overall government development machinery
(Source: Adopted from JPBD, 1994)
State
Planning
Committee
77
The function of the local planning authorities (LPAs) is further said to
include power to regulate, control, and plan the development and use of all lands
and buildings within its area. In fact, under Sec. 5 (1) of TCP Act 1976 provides
that ‘every local authority shall be responsible for the planning of the area under its
jurisdiction’. With these provisions, most local authorities have been conferred
with a primary physical planning responsibility at local level and retaining their
established role in land use planning.
In relation to infrastructure development, the process provides a legitimate
procedure to local authority to work with. The necessity to accommodate the need
of infrastructure within the development planning process is fully recognised and
accepted as a useful role of planning. The introduction of the Town and Country
Planning Act 1976 (Act 172) and Federal Territory (Planning) Act 1982 (Act 267),
would seek to confirm the commitment of the federal government planning in such
areas as infrastructure for social change. The Acts provide statutory powers and
duties for the planning authorities in the process of planning approval.
In relation to the provision of infrastructure, the acts provide several
requirements to acquire infrastructure during planning approval stage. These
include:
i. The requirement to obtain planning approval from the local planning
authority before carrying out any development, and
ii. The leverage of development charges.
However, doubts are raised on the capability of the present planning
approval system to ensure a significant strategy to such change. It is argued that the
provision of adequate urban facilities is central to social and economic sectors in
land use planning; as it has been pointed out that the planning approval system is
deemed to be necessary to provide the linkages between strategies policy
formulation and implementation.
78
3.3.2 The Administrative Functions of Local Authority
Development administration in Malaysia is divided into three levels of
government, namely Federal, State and Local Governments. The Local
Government Act 1976 (Act 171) provides a consolidated framework for local
authorities and empowers the authority to undertake a wide range of functions as
stipulated in Town and Country
Planning Act, 1976 (Act 172) and Federal
Territory (Planning) Act 1982 (Act 267). The Acts state that the local authority
shall be the Local Planning Authority (LPAs) for the area and conferring the
responsibility for physical planning within its area of jurisdiction (Yaakup et al.,
2003) and enable the LPAs for organizing, controlling and planning the
development and use of land and buildings in their area (see Figure 3.2).
The acts provide a framework for integrated planning of urban development
and effective management of the urban planning process in the country. With
regards to local infrastructure development, policy has therefore given a great
focused on promoting dynamic private sector participation by creating a closer cooperation between the public and private sectors in providing major public
infrastructure through privatisation.
Generally, local authorities are empowered by laws for local planning and
to perform urban planning management. There are four main legislations used in
administration of local authorities in Malaysia, namely;
i).
Town and Country Planning Act 1976 (Act 172);
ii). Federal Territory (Planning) Act 1982 (Act 267);
iii). Street Drainage and Building Act 1974; and
79
iv). National Land Code 1969; The Environmental Quality Act 1974;
Local Government Act 1976 (Act 171) and Land Conservation Act,
1960.
State boundary
District boundary
Sub-district boundary
Local authority boundary
Figure 3.2: The concepts of state-level administrative boundaries
Source: Adapted from Morrison, W.J. (1994)
80
In performing its function as urban services provider, the local authority is
also empowered by law to impose the financial contribution and infrastructure
provision before granting planning approval. The development plans enable the
needed infrastructure available prior the settlement of the development.
However, the situation is somewhat complicated for the individual local
authority to fund the provision of off-site infrastructure when it does not have the
financial capacity. In some states, those lands not incorporated within the
jurisdiction of local authority, in spite of the local authority’s boundaries
containing them, overlap the sub-district boundaries. For such areas, most of the
required infrastructure facilities will be provided by Federal government’s grant
under the Ministry of Rural Development. However, the responsibility of planning
process still falls under the respective local authority.
MBI
MPPP
MPSP
MPSP-K
MPKB
MPK-P
MPS
DBKL
MPPJ
MBSA
MPSJ
MPAJ
MBM
MPJBT
MDP
MPK-J
MPKB
MPK
MPKT
(
PBTPG
MBJB
MDKT
Total respondent
4. City Council of Kota Setar (MBKS)
5. Municipal Council of Sungai Petani (MPSP-K)
6. Municipal Council of Kota Baharu (MPKB)
7. City Council of Melaka (MBM)
8. Municipal Council of Seremban (MPS)
9. Municipal Council of Kuantan (MPK)
10. Municipal Council of Kangar (MPK-P)
11. Municipal Council of Seberang Perai (MPSP)
12. Municipal Council of Pulau Pinang (MPPP)
13. City Council of Shah Alam (MBSA)
14. Municipal Council of Ampang Jaya (MPAJ)
15. Municipal Council of Petaling Jaya (MPPJ)
16. Municipal Council of Subang Jaya (MPSJ)
17. City Council of Johor Bahru (MBJB)
18. Municipal Council of Johor Bahru Tengah (MPJBT)
19. Local Authority of Pasir Gudang (PBTPG)
20. Municipal Council of Kulai (MPK-J)
21. District Council of Pontian (MDP)
22. District Council of Kota Tinggi (MDKT)
2. Municipal Council of Kuala Terengganu (MPKT)
3. City Council of Ipoh (MBI)
1. City Hall of Kuala Lumpur (DBKL)
Local Authority
164,444
116,977
234,581
113,752
193,237
202,445
81,882
542,010
506,295
158,439
290,452
350,995
79,002
441,703
19,556
8,161
29,929
30,181
24,327
228,119
468,841
1,145,342
1990
n = 22
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
nLA = 22
n = 16
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
nD = 16
No. of Respondent (n)
Indicator : nLA = Local Authority
nD = Developer
186,433
174,962
251,801
151,082
290,709
288,727
100,162
655,711
575,498
314,440
478,613
42,619
447,183
642,944
94,451
90,742
48,546
40,675
38,863
255,518
536,832
1,305.792
2000
Total Population
Figure 3.3: The location of major municipalities and
population in Peninsular Malaysia
Note: The statistics included all categories of local councils
city hall/city council, municipal council and district
council)
Johor
Selangor
Kelantan
Melaka
Negeri Sembilan
Pahang
Perlis
Pulau Pinang
Kedah
Federal Territory
of Kuala Lumpur
Terengganu
Perak
States
81
82
3.3.3 Administrative Framework of Planning System
One of the most significant features of the British planning system which
has been adopted in Malaysia is the framework of control over the use and
development of land. Anyone making a significant change in the land or property is
required to seek planning permission from the local planning authority. Whilst
local planning authorities are required to produce a strategic policy framework for
the area they administer (structure plan) and may produce more detailed
frameworks of policies and proposals for specific localities (local plans) in order to
guide development (see Figure 3.4).
The system is actually influenced by one designed to guide the urban land
use. The system has been formulated in order to regulate the balanced development
in the public interest. Therefore, it has a positive role to play towards the
achievement of an orderly urban development pattern by guiding appropriate
development and adequate provision of infrastructure. In order to achieve this, the
framework of urban planning and development control should be effective and
efficient in concept and operation.
83
National Plans
Provide a framework for
Regional Strategies Formulating general policies and proposal for
socio-economic and physical development
Provide general
guidance for
Provide a
framework for
Provide general
guidance for
Development Plans District-wide and, where
Appropriate detailed proposals for the
development and use of land
Provide a
framework for
Control of Development Coordination of private infrastructure
investment
Co-ordinate development
and use of land through
Investment into Physical
Infrastructure Public and Private
Sector
Figure 3.4: Land-use planning framework
(Source: Adopted from Bruton, M.J., 2006)
3.3.4 Legislative Framework for Development Control
The primary legislation which provides the basis for development control,
the part of the system under consideration here is largely the Town and Country
Planning Act 1976 (Act 172, amended 2000), adopting certain parts of the Acts to
incorporate the change in order to further strengthen the scope of development
control as result from rapid development incurred.
84
A country like Malaysia requires a comprehensive legitimate structure of
urban planning system for controlling the development process. It not only applied
for development planning purposes, moreover it was a necessary instrument for
local authorities to safeguard the development according to the standards outlined.
The related legislatives in urban planning have been formulated to regulate the
balanced development in the public interest. Therefore, they have a positive role to
play towards the achievement of an orderly urban development pattern by guiding
appropriate urban development strategy.
Planning legislations provide the main statutory powers for development
control exercise; which provided in the form of structure plan and local plans. The
enabling legislation used for development control can be summarised in the
following manner:
i. Town and Country Planning Act 1976: This Act confers upon the local
authority three main forms of statutory power:
a) Power to prepare Structure Plans and Local Plans
b) Power to control all development of land
c) Power to levy development charges for permission granted under
various circumstances.
ii. Street Drainage and Building Act 1974: This Act empowers local
authorities to control building construction and management of
sewerage and drainage works.
85
iii. National Land Code 1965: This is the main legislation governing all
land matters in Peninsular Malaysia. There are provisions which
require plans for subdivision of land to conform to certain
requirements and approved by an authority with power on town
planning.
iv. The Environmental Quality Act 1974: This Act requires developers to
submit EIA reports for any housing project exceeding 50 hectares.
v. Land Conservation Act, 1960: This act is administered by the land
office and meant to control development of hilly land with more 10
than percent slope.
vi. Uniform Building by Laws 1984.
3.3.5 Planning System and Infrastructure Provision
The planning system in Peninsular Malaysia has been formulated in order to
ensure a balanced development in the public interest. In this respect, the planning
system has been seen as a potential instrument for creation of urban growth in
addition to its traditional function of enhancing environmental quality. Planning
system makes an important contribution towards optimising land use. Numerous
factors impact the urban development and the relationship between these factors
needs to be understood. To meet the future trend of land-use demand, flexibility
and forward planning must be incorporated into existing development plans.
The system provides a framework for future development and requirements.
To support the significant planning system in land use, Chung (1986) had stressed
that the extended role of town planning in the context of settlement planning can be
based on the five specific areas of specialisation, namely;
86
i.
Development planning
ii.
Socio-economic planning
iii. Civic design
iv. Infrastructure development
v.
Advocacy planning
With respect to infrastructure development, planning itself is not confined
to allocating land for various types of development. It is also concerned with the
form of development and redevelopment. The physical development and
redevelopment involving investment decisions across many related fields of
policies, these include the aspects of planning of infrastructure facilities.
3.4
Development Plan and Infrastructure Provision
At the local level, the policies stipulated in the national plans are very
spatial in nature and needs to be interpreted in line with local development
requirements. Practically, the plans serve to complement upstream efforts by
providing necessary physical development strategies for executing socio-economic
development policies in definite spatial terms. Under the provision of Town and
Country Planning Act, 1976 (Act 172) and amended Act (A933), the Act confers
upon the local authority three main forms of statutory power to prepare Structure
and Local Plans, control all development of land, and levy development charges for
permission granted under various circumstances. To get a better understanding of
how development plans under the planning system works, it may be necessary to
further examine these two categories of plans under this system.
The Town and Country Planning Act, 1976 (Act 172) introduces for the
first time a comprehensive system of town and country planning in the states of
Peninsular Malaysia. It reflects the growing importance of proper and
comprehensive planning in the country. The two main features of the Act are the
requirements of the preparation of development plans consisting of Structure Plan
87
(SP) and Local Plan (LP) by the LPAs as adopted in TCP. The preparation process
of the plans must be according to the specified procedures (see Sec. 8 and Sec. 12
of Town and Country Planning Act, 1976 [Act 172], A2003) and the requirement
to land owner to get prior permission (planning approval) from the LPAs before
carrying out any development.
SP basically acts as a general guidance document for development control
measures, whereas LP provides detailed guidance for development control.
However, until the LP providing a universal coverage of the planning area have
been prepared and adopted, the SP will provide the basis for development control
of those areas not covered by a LP.
Pertaining to infrastructure development, the local plan will refine the broad
guidance on infrastructure requirement in the prescribed zones or areas according
to what had been outlined in the structure plan. The guidelines are eventually used
in considering planning approval application. By allocating land to specific
purposes (infrastructure type of land uses), such development plans further
contribute to the effectiveness in the provision of infrastructure at the local level.
The main arguments remain on its contents detailing the quantity of infrastructure
provided and the degree of discretion (negotiations) allowed in during determining
the type of infrastructure requirements. Therefore by defining areas to which
particular development control policies will apply; and by explaining those policies
in terms of planning standards and other criteria, the developers should be provided
with detailed guidelines (e.g. developers).
The involvement of private sector (developers) in local infrastructure
development should be implemented via appropriate legitimate procedures. The
previous studies show that the neglected aspects in the process would lead into
dispute among the two parties (see Healey, 1995; Claydon, 1997; Lee et al., 1999).
To resolve this matter, at the stage of LP preparation the local authority defines a
clear definition of the scopes and functions of LPA in planning and monitoring
88
local development in particular with the degree of involvement of private sector in
local infrastructure provisions.
As discussed in the earlier parts of the chapter, Local Plan (LP) can be a
significant instrument in local infrastructure provision. The plan in its capacity as a
statutory plan would stimulate the involvement of private sector in local
infrastructure development (see Figure 3.7). Section 12 (3) of the Town and
Country Planning Act (Act 172) defines a local plan as a map accompanied by
written statement which shall:
‘… formulate in such detail as local planning authority thinks
appropriate, its proposal for the development and use of land in the
area of the local plan, including such measures as the local planning
authority thinks fit for the improvement of the physical environment,
the improvement of communications and the management of
traffic…’
By taking into consideration the pursuing framework for local infrastructure
provision, local plan is used as statutory plan by local planning authority in
determining the scope of infrastructure requirement. These features include:
i. The plan details the allocation of land uses and also the demand for
infrastructure requirements (on-site and off-site).
ii. The plan bring planning issues regarding to infrastructure (on-site and
off-site).
It can be deduced that LP is proactive in nature where it functions not only
to guide and promote local development but also enable local authority to improve
any appropriate infrastructure requirements. The policies defined and attached to
the plan provide a legitimate basis for local planning authority in considering the
requirement of infrastructure provision (off-site or on-site).
89
3.5
Development Process and Planning Approval
Property development in Malaysia was highly regulated by various laws,
guidelines and statutory development plans which incurred at different stages of
development. Chan (1997) stated that the developer has to consider various policies,
guidelines and procedures especially those pertaining to off-site infrastructure
requirements. These guidelines mostly are issued at local, state and federal levels. In
addition to the previously mentioned guidelines, there are numerous government
departments that impose regulatory measures in property development (see Figure
3.5).
Along the process, planning application has gone through various
departmental requirements, ranging from Department of Environment (DoE),
Sewerage, Landscape and several other departments (Mohd. Anuar, 1994). The
various stages of approval that need to be secured by developer prior final approval
were issued by local planning authority. In relation to infrastructure provision
requirements, it becomes quite normal for LPA to initiate negotiations of off-site
infrastructure provision once there is development impacts identified.
The whole process of development approval has been summarised in Figure
3.6. The flow chart of the process only illustrates the broad process of development
approval. However, the details of the stages of development may vary from state to
state. For the purpose of the study, the researcher refers to the development process
flow-chart as used by Real Estate and Housing Association (REDHA).
90
Feasibility Study
Application for
Foreign Investment
Committee (FIC)
Approval
Acquisition of property
Preliminary
Appointment of Consultants (For of Layout Plan)
Plan
Preparation
Town Planners/Architects
Engineers
Land Surveyors
Preparation of Site Plan and Layout Plans Drainage and Sewerage design and Section plans
Applications
Application for Conversion and Sub-division Approval
Land office
Department of Mineral (PTG)
Executive Council (EXCO)
Conversion and Sub-division Approval
Architect
Engineers
M&E
- State Planning
- Department of Irrigation
and Drainage (DID)
- Health Department
- Waterworks
- Telecom (STM)
- TNB
- SEDC
- Land and District Office
- Parks and Recreation
Department
- DoE, PWD
- Department of Civil
Aviation
- Sewerage Department
(IWK)
Land Surveyors
Obtain Survey Nos
Architect Building plan design
Obtain Q.T
Application of Developers Licence
Application for Advertising Permit
Submission of Building Plans to Local Authority
Issuing of Q.T
Architect
Civil
Fire
Sanitation
Plans Approval
Project Planning
Contract Administration
Finance and Control
- Project schedule
- Progress charting
- Inspection
- Cost Control &
project budgeting
- Tender & documentation
- Tender selection
- Signing of Contract
- Supervision
- Classification of Payments
- End-Finance
- Progress Payments
Issuing of C.F or CCC
Sale Administration
- Pricing
- Advertisement
- Sales Agreement
Delivery of vacant possession
Figure 3.5: Development Process in Malaysia
Source: Adopted from Tan, 1996
91
In the context of the Malaysian planning system, development control in
general is being practised implicitly and explicitly throughout the process under the
Town and Country Planning Act 1976 (Act 172). The development control in the
country had in fact been initiated before any institutionalised planning was
established. According to Goh (1991) at least in Peninsular Malaysia before the
formal planning institution was set up, there were two fire incidences in
Georgetown (Penang, 1813) and in Kuala Lumpur (1881). Consequently, these
prompted conscious reactionary development control measures in the form of bylaws in Peninsular Malaysia. These by-laws were empowered under the town’s
Sanitary Board (then Local Authority) the towns were divided into land use zones
and prohibited the use of timber construction material in certain areas.
According to Mohd Annuar (1994), there are three types of development
control systems, namely:
i)
A system originated and practised in British planning system, socalled discretionary system of control;
ii)
The heavily regulated development control system (often regarded as
rigid-based system) as practised in United State ; and
iii)
The mixed-system called hybrid which is a mix of both system.
92
Comments/Certification
JPN / JPBD / JPS / JPP / PBAN
TNB / STM / PBPT / JKR
Evaluation Department
Geosciences and Mineral Department
Department of Civil Aviation (DCA)
and other if relevant (all in 30 days)
Certification
JPBD - 21 days / PBT - 30 days
Comments/Certification
JPN / JPBD / JPS / JPP / PBAN
TNB / STM / PBPT / JKR
Evaluation Department
Geosciences and Mineral Department
Department of Civil Aviation (DCA)
and other if relevant (all in 30 days)
Comments/Certification
JPBD
JPP
JAS
JKR
- 24 days
- 30 days
- 90 days
- 30 days
- 30 days
- 30 days
- 90 days
- 30 days
JPBD
JPP
JKR
JPS
- 30 days
- 30 days
- 90 days
- 30 days
Approach 1
1. Application for
Development Policy
Approval / Change of Use
and Sub-division
(1B). Final Approval for Change of
Use and Sub-Division (9-10 weeks)
Approval for Change of Use and SubDivision (22 weeks)
Approach 2
(2). Planning Approval Sec. 21 (1)
TCP 1976 Act 172 (12 weeks)
2. Application for
Planning Approval (PA)
JPS - 30 days
TNB - 30 days
STM - 30 days
PBAN - 30 days
Comments/Certification
JPBD
JPP
JKR
JPS
(1). PTD/PTG
Approval for Change
of Use / Approval for
Development Policy
form MMKN (17
weeks)
TNB
STM
PBAN
PBT
- 30 days
- 30 days
- 30 days
- 30 days
(4). Approval for
Building Plan (Sec.
70 Act 133)
PBT (12 weeks)
(PBT)
(3). Housing Developer
Licence (4 weeks)
(KPKT)
(5). Application for
Sales and advertisement
permit (4 weeks)
3. Application for
Developer Licence
4. Application for
Building Plan
5. Application for Sales
and Advertisement
Permit
Comments/Certification
TNB - 30 days
STM - 30 days
PBT - 30 days
PBAN - 30 days
(6). Application for Certificate of
Occupancy (C.F or C.C.C)
6. Application for
Certificate of Occupancy
(C.F or C.C.C)
Indicators
JPBD
JPS
JPP
TNB
JAS
STM
JKR
KPKT
KTN
- Federal Department of Town and Country Planning
- Department of Irrigation and Drainage
- Department of Sewerage Services
- National Electricity Company
- Department of Environmental
- National Telecommunications Company
- Public Works Department
- Ministry of Housing and Local Government
- National Land Code
JKR
PBAN
LLM
JPA
Act 172
Act 133
Act 118
MMKN
- Public Works Department
- State Water Authority
- Malaysian Highway Board
- Department of Civil Aviation
- Town and Country Planning 1976
- Street, Drainage and Building 1974
- Housing Developer (Controlling and Licence) 1966
- State Executive Council
Figure 3.6: Development approval process in Peninsular Malaysia
(Exclude Federal Territory of Kuala Lumpur and Putrajaya, 2004)
(Source: Adopted from Ministry of Housing and Local Government)
93
At the present, most local planning authorities face problems related to
housing shortage, traffic congestion and inadequate local infrastructure. Apart from
the above, there is also the problem of inadequate sources to maintain and upgrade
urban services to sustain the fast growing local population (Osman, 1990).
Therefore, local authorities have to adopt an innovative system. In this respect the
planning system is seen to be a potential instrument in promoting local
infrastructure development.
In the context of planning system in the country, the development plans
have the basic guidelines to guide local authority in its decision-making process.
During the preparation of the plans, they had identified the relevant issues which
should be addressed in formulating development plans and these issues include
those pertaining to local facilities (infrastructure) required by the local plan area.
The development plans also consists of sectoral policies and development
control guidelines which include standards of open space provision, recreational,
educational facilities and particularly for the provision of community facilities
requirements. The development plans are constantly being applied as a main source
of reference for development control and planning approval process. It treated as a
basis for local authority to impose development charges or any other relevant
planning requirements.
To facilitate the preparation of detailed planning layouts, local authority has
introduced a series of planning and infrastructure standards to be referred. These
standards are meant for the provision of amenities such as schools, small mosques,
community halls and other facilities required by the local community. The same
guidelines also apply to other infrastructures such as sewerage treatment plants,
electricity sub-stations, telecom exchange and fire station as recommended by the
relevant authorities.
94
As practised by most local planning authorities, local infrastructure
provision guidelines were reviewed and upgraded periodically in order to comply
with new policies (federal or state government policies) as adopted by the
authority. As provided under the Sec. 32 (1) of TCP Act 1976, development charge
may only be imposed if there is a local plan affects a change in use, density, or
floor area and it would enhance the value of the land. The charge can only be
imposed upon the consideration of planning approval if there is an approved local
plan. However, even the availability of structure plan being insufficient for the
purposes of levying development charges. The charge may only be levied upon
carrying out the development benefiting from the provision of the local plan as
payable upon the grant of planning approval.
Osman (1990) stated that the rules governing the development charges in
City Hall of Kuala Lumpur (DBKL) were provided in the Planning (Development)
Rules 1970. It outlined four types of development which require the payment of
development charges with specified rates. The four categories of development
referred are as follow:
i.
Development involving an increase in residential density where the
charge is equivalent to 30% of the increased value of the land resulted
from granting of planning approval.
ii.
Development involving change of land use zoning where the charge is
equivalent to 30% of the increased value of the land due to granting of
planning approval.
iii. Development with shortage of car parking spaces (e.g. the charge is
RM15, 000.00 for every parking lot that is not provided.
iv. Excess of floor area over and above the permissible plot ratio which
involving commercial development.
95
3.6
Conclusion of the Chapter
Local development involves a considerable number of policies and
implementation decisions which have to consider the cost and benefit of every
urban dweller. The public sector as represented by local authority and the private
sector represented by the developer become the prime concerns in local
development. Therefore the development system should be formulated towards
close cooperation between the two. Given the wide range of development activities,
local authorities have to allocate a huge amount of allocation for infrastructure
provision in order to facilitate the incoming development particularly from private
sectors. The discussions of the chapter had provided an overview on the planning
approval system as practised in the country by focusing on the off-site
infrastructure provision at local level by mainly discussing the background of
Malaysian planning system as outlined in Act 172, Town and Country Planning
Act 1976.
CHAPTER 4
LOCAL INFRASTRUCTURE PROVISION
IN MALAYSIA
4.1
Introduction
This chapter provides an overview of local infrastructure provision in
Malaysia. An attempt is made to study the present practice of how infrastructure
provision secured by local authority within the framework of planning system.
4.2
An Overview of Infrastructure Development in Malaysia
The main objective of social and economic development of any community
is to improve the quality of life of its people. At the local level, overriding goal of
the long term development plan is also to achieve a balanced social and economic
growth through sustainable development and promotion of quality of life of the
community. One way to achieve the goal is by upgrading the existing local
infrastructure facilities.
In Malaysia off-site infrastructure provision was almost entirely the public
sector’s responsibility. The involvement of the private sector started as early as
1980s, when government has stressed that the involvement of private sector as the
primary engine of economic growth through the introduction of privatisation
concept. The concept was a comprehensive policy which contains liberalisation
97
and deregulation strategies. The strategy resulted in down-sizing the public sector
while widening the involvement of private sector.
The macroeconomic problem faced in the early 1980s had initiated the
privatisation policy. Many of these problems were attributed to the government’s
increasing involvement in the economy, largely in pursuit of the objectives of the
New Economic Policy. The shift in strategy from public-sector-led growth to
private-sector-financed development began in 1983 and the private sector serves as
the main engine of growth (Yaacob and Naidu, 2000).
The shift is clearly evident in the financing of infrastructure development.
Until the Fourth Malaysia Plan (1981-85) investment in infrastructure in Malaysia
was funded by the public sector. The growth in public financing for infrastructure
development was increase drastically during 1991-2000. During the period, public
sector invested RM38 billion and expected to invest about RM27 billion in the
Eighth Malaysia Plan (2001-2005) on infrastructure (see Figure 4.1). Table 4.1
illustrates approximately of RM65 billion (5MP-8MP) had been invested in
various infrastructure projects, ranging of roads, ports, airports, telecommunication
facilities, water supply, sewerage and railway lines. Most of the infrastructure
delivered by BOOT, BOT and only few of them had been delivered by sale of
equity and management contracts.
In order to increase the effectiveness of infrastructure provision, several
major infrastructures have been privatised by the federal, state or local authorities.
The privatisation of infrastructure provision has changed over the past decade and
has resulted in an important change in the role of the public and private sectors in
infrastructure development.
98
Table 4.1: Public financing for infrastructure development
in Malaysia, 1991-2000
Malaysia Plan’s
Expenditure
Sectors
6MP
A. Public Sector Transport
Roads*
Rail
Ports
Airports
Urban transport
Utilities
Water Supply
Sewerage
Communications
Telecommunications and postal
services
Meteorological services
Total
7MP
8MP
11,594.7 20,484.2 21,222.1
7,572.6 12,269.5 14,002.6
705.6
1,735.4
404.0
410.9 5,450.3 4,081.0
1,780.6 1,089.2 1,500.0
95.2 1,271.2
932.9
2,796.7 3,048.0 5,549.9
2,671.9 2,382.7 3,966.3
124.8
665.3 1,583.6
228.0
71.0
39.6
146.7
39.6
4.1
81.3
31.1
35.5
14,462.4 23,571.8
27,000.0
* Excludes local roads in regional development areas, some local authorities and agriculture
roads, which have been allocated RM700 millions.
Source: Malaysia (2001).
Type of infrastructure
12,269.50
7,572.60
11,594.70
1,735.40
404
705.6
Rail
1,780.60
1,089.20
1,500.00
Airports
Urban
95.2
1,271.20
932.9
transport
2,796.70
3,048.00
5,549.90
Utilities
15000
Expenditure ('000)
410.9
5,450.30
4,081.00
Ports
10000
Water
2,671.90
2,382.70
3,966.30
Supply
124.8
665.3
1,583.60
Sewerage
20000
71
39.6
228
Communication
39.6
4.1
postal
146.7
ications and
Telecommun
25000
31.1
35.5
81.3
ical services
Meteorolog
(Source: Eight Malaysia Plan (2001-2005).
30000
23,571.80
27,000.00
Total
14,462.40
Figure 4.1: Expenditure for infrastructure development in Malaysia, 1991-2005
14,002.60
21,222.10
20,484.20
6MP
Roads*
Transport
5000
7MP
0
8MP
A. Public Sector
Transport
Roads*
Rail
Ports
Airports
Urban transport
Utilities
Water Supply
Sewerage
Communications
Telecommunications and
postal services
Meteorological services
Total
99
100
4.3
Local Infrastructure Provision in Malaysia
As stated in the Local Government Act 1976 (Act 171) most of the local
infrastructure facilities such as road maintenance, sewerage treatment plants,
drainage system maintenance, upgrading traffic system, maintenance of street
lighting system and maintenance of traffic-light system are undertaken by local
authorities. The practice led the local authority to increasingly face shortages of
fund to provide the necessary infrastructure. This scenario has also encouraged
local authorities to look other ways by shifting to private sector to secure adequate
provision.
In the previous chapters, the discussion focused on some important features
of the country planning system which affects the way of infrastructure provision.
Local planning authority is required by the Act to ensure the proposed development
is complying accordingly with the contents of the development plans. One of the
requirements is to provide infrastructure. The Act may impose such requirements
upon the planning approval is granted. Therefore, local planning authority should
be more realistic in formulating policies related to infrastructure requirements by
taking into consideration of the affordability of private sector. The main focus
should be given on how to promote private sector to participate in local
development, particularly off-site local infrastructure provision.
Basically, the involvement of private sector will naturally be increased
when there is availability of infrastructure to support their future development. In
order to sustain the participation of private sector, a long-term private interest
should be given more attention by local planning authority.
101
4.3.1 Local Infrastructure Development
At the local level, the improvement and provision of infrastructure is under
the responsibility of various ministries or departments including the local authority
itself (Mohammad Nong, 1990). The local authority in response to this has taken
steps to upgrade its infrastructure facilities, including roads, water, domestic solid
waste incinerator facilities and electricity supply, telecommunication facilities and
others.
There is a strong relationship between land use planning and the
construction of major physical infrastructure. The location, capacity and efficiency
of a municipality’s infrastructure can greatly impact the growth and development
pattern. Major improvements have been made in many local authorities in the past.
However, additional infrastructure development is required to cope with the rapid
increase of local development and also to serve the new growth centres (MPPP,
1987). For instance, the rapid increase of urbanisation process in major urban
centres in the country has resulted in the increased demand for local infrastructure.
This requires the local administration to evolve more efficient delivery of
infrastructure provision. For instance in the year 2000, the local domestic waste
water sewerage generated 800 million m3 of domestic waste (see Table 4.2). This
figure has increased drastically compared to the volume of waste water generated
in the previous years (376 million m3 in 1980, 457 million m3 in 1985, 550 million
m3 in 1990 and 664 million m3 in 1995). A total of RM9.8 billions of investment
required to build the solid waste disposal sites in order to cater for the huge
increase in urban water waste.
102
Table 4.2: Local infrastructure investment required for central
sewerage system in major towns in Malaysia
Investment Needed ($ million)
States
1980
1985
556.836
155.503
241.028
104.381
179.514
200.863
427.805
562.202
12.949
487.233
225.181
978.326
676.556
311.740
483.200
209.260
359.880
402.680
446.275
112.707
25.960
976.780
451.430
156.130
815.250
227.668
352.883
152.822
262.822
294.078
449.611
823.106
18.958
664.611
329.682
1,297.343
982.376
274.340
425.224
184.150
304.815
354.365
567.750
988.543
22.845
810.847
397.267
1,590.973
1,183.763
330.580
512.395
221.901
381.624
427.009
909.459
1,195.170
27.528
1,035.796
478.706
2,079.797
P. Malaysia
Sabah
Sarawak
4,131.821
210.600
238.200
14,612.98
422.200
477.530
5,688.834
308.334
348.743
6,903.495
371.543
420.235
8,783.728
447.709
506.383
Malaysia
4,580.621
5,512.328
6,345.911
7,695.273
9,737.820
Johor
Kedah
Kelantan
Melaka
N. Sembilan
Pahang
P. Pinang
Perak
Perlis
Selangor
Terengganu
Kuala Lumpur
1990
1995
2000
Note: 1. Wastewater generation rate is 0.225 m3/per person/day
2. Investment is estimated at RM5,000.00 per household
3. Per household population is estimated at 5 persons.
Source: Compiled from Ministry of Housing and Local Government (2003).
However, the increase in the urban population has also generated significant
amount of waste. Referring to Table 4.3, there was 989 million tons of domestic
solid waste generated in the urban areas in Malaysia in 1980. This figure increased
to 1.4 billion tons in 1990 as compared to more than 2 million tons of solid waste.
In terms of investment, the government requires more than RM400 million to build
solid waste disposal sites in order to cater for this huge increase in solid waste.
Such large expenditure within limited resources requires local authorities
implementing the development in particular infrastructure projects strategically in
order to stimulate the strategic urban sector development and avoiding allocations
103
to the less needed projects. The emphasis is to ensure that the urbanisation process
is planned and implemented at the local level would enhance local economic
development.
Table 4.3: Local infrastructure investment required for domestic
solid waste in Malaysia
States
Investment Needed ($ millions)
Johor
Kedah
Kelantan
Melaka
N. Sembilan
Pahang
P. Pinang
Perak
Perlis
Selangor
Terengganu
Kuala Lumpur
1980
4.81
1.34
2.08
0.90
1.55
1.74
3.70
4.86
0.11
4.21
1.95
8.45
1985
8.77
2.45
3.80
1.64
2.83
3.16
6.74
8.85
0.20
7.67
3.55
15.41
1990
17.61
4.92
7.62
3.30
5.68
6.35
13.53
17.78
0.41
15.41
7.12
30.94
1995
31.70
8.85
13.72
5.94
10.22
11.43
24.35
32.00
0.74
27.73
12.82
55.69
2000
50.51
14.10
21.86
9.47
16.28
18.22
38.80
50.99
1.17
44.16
20.42
88.73
P. Malaysia
Sabah
Sarawak
35.70
1.82
2.06
65.06
3.32
3.75
130.66
6.66
7.53
235.20
11.99
13.56
374.75
19.10
21.60
Malaysia
39.58
72.13
144.86
260.74
415.45
Source: Compiled from Ministry of Housing and Local
Government (2003)
4.3.2 Local Expenditures on Infrastructure Development
In order to have a close understanding on how local authority funds
infrastructure, Municipal Council of Penang (MPPP) in the State of Penang has
been chosen. The local authority was located on the northern part of Peninsular
Malaysia, experiencing high demand for infrastructure to accommodate the rapid
increase in urban sectors. The situation has put more financial pressure on MPPP to
104
manage the needs. The task is perhaps even more difficult since the local authority
also experienced a deficit in 2001 (see Figure 4.2). A projected deficit amounted to
RM79 million for the year 2003, compared to a deficit of RM17.6 million in 2002,
which recorded an increase by 3.5 times. However, the deficit alone could be a
reflection of MPPP spending to fulfil the needs of urban infrastructure as result of
rapid growth in urban population.
In the Figure 4.2, the development expenditure has drastically increased
from RM57 million in 2002 to RM75 millions in 2003. However, MPPP
experiences the highest deficit in 2004 (RM67.8 millions). In fact, this is due to the
expenditure made by the local authority to construct adequate facilities in urban
infrastructure. This includes the purchase of land for the construction of public
amenities, buildings for business premises to accommodate the increase in demand
for urban economics and construction of new infrastructure. In this situation it
would be difficult for the local authority to reduce its expenditure since there is a
need to fulfil the community needs and subsequently to stimulate local investment.
The Table 4.4 also illustrates the details of the expenditure incurred from
infrastructure development in the local authority from the year 1992 to 1995.
Although the data is only available from 1992 to 1995, however it would provide
adequate evidence that the local authority is experiencing an increase in allocation,
to fund the demand of infrastructure provision. Analysing the trends of urbanisation
and demands for various types of local infrastructure has generated several key
financial issues. It is apparent that the investment needed to cater for the increased
demand for urban infrastructure is tremendous. The total expenditure for major
infrastructure projects had increased from RM15 million (1992) to RM27.3 million
in 1995.
N.A
9.96
Surplus / Deficit (RM'million)
N.A
82.1
Years
17.6
-67
18.7
38.7
89.5
-23.9
63.4
-17.6
57.2
103.8 127.4
N.A -Data not available
40.3 121.1
71
167
128.9 136.2 146.9 143.3
2000
2002
1999
2001
1998
Source: Municipal Council of Penang Island, MPPP, 2005
Figure 4.2: Municipal Councils of Penang Island development expenditure 1992-2004
17.23
-37.8
N.A
N.A
39.13 38.87 52.38 79.31
Development (RM’million)
2.5
N.A
N.A
42.49 42.89
32.4
N.A
31.13
N.A
Operating (RM’million)
1997
84.4
1996
80.22 87.47 97.28
1993
Income (RM ‘million)
1992
1995
-100
-50
0
50
100
150
1994
Expenditures (RM'million)
200
2004
-79
74.8
181
-67.9
55.1
184.4
175.8 171.6
2003
142
105
Total
Maintenance of Sewerage
Pipe-Lines System
Villages Development Schemes
100.0
9.0
0.8
3.6
16.3
1.8
2.8
43.3
22.0
0.9
1.4
%
18,735,906.63
1,566,617.00
52,069.00
104,743.00
3,339,063.00
247,444.00
846,549.31
8,382,517.00
3,542,472.00
251,562.51
402,869.81
1993
100.0
8.4
0.4
0.6
17.8
1.3
4.5
44.7
18.9
1.3
2.1
%
23,236,727.42
2,912,671.00
133,811.04
358,494.00
3,660,000.00
330,000.00
100.0
27,275,900.45
2,704,789.00
250,000.00
0.7
12.5
600,000.00
3,660,000.00
340,000.00
1.5
15.8
1.4
1,921,421.70
4.9
1,137,786.60
1995
11,690,556.00
4,721,820.00
1,179,299.24
208,014.51
%
41.9
19.5
1.1
0.7
1994
9,750,876.00
4,526,449.00
266,194.48
160,445.30
Expenditures RM
Source: Finance Department, Municipal Council of Penang Island (MPPP), 1997
15,133,286.94
1,365,177.00
116,004.00
543,340.00
2,464,285.00
274,678.00
427,965.78
Drainage System Maintenance
Street lighting
Upgrading Traffics system
Street Lighting System Maintenance
Traffic-Light System Maintenance
6,554,383.00
3,325,373.00
136,139.68
200,619.48
1992
Roads
Roads Maintenance
Road-surface Maintenance
Road-Side Maintenance
Road Furniture Maintenance
Type of Services
Table 4.4: Local infrastructure expenditures in Municipal Council of Penang Island Financial 1992-1995
100.0
9.9
1.0
2.2
13.4
1.2
7.0
42.9
17.3
4.3
0.8
%
143
106
107
4.4
Source of Funds for Infrastructure Development
The financial sources for local authority include the collection of tax on
such items as assessment rates on houses and buildings and non-tax incomes
including the issue and renewal of trading licenses, rental of stalls, parking fees
and fines. This financial source depends on how well the LA collects revenue and
increase income and how efficiently controls the expenditure. Local expenditure
can be divided into two broad categories: i) Administrative and operating
expenditure; ii) Development expenditure.
Administrative and operating expenditure includes salary of local authority
staff, acquisition of services and supplies, upkeep of roads and traffic systems,
town cleaning and health programs, among others. Whereas, the development
expenditure involves the construction of new roads and infrastructure, parking
facilities, recreational parks, wet markets, hawker centres and others. The pattern
of development expenditure may jump drastically as special needs arise, say, in
preparation for hosting of major sport events or to build new infrastructure to
replace old ones.
In some local authorities, part of development allocation was funded by
federal government to finance certain projects or special programs. Ministry of
Housing and Local Government (MoHLG) allocated annually for local
development. Since, the local authority is a non-profit organisation it is urged to
manage its finances to improve the quality of services to the residents. At the
ministerial level, as provided in Section 41 of the Local Government Act 1976
(Act 171), local authorities in the country may apply development grant or loan
which are not more than five times the annual value as contained in its current
valuation list (Mohammad Nong, 1990).
108
However, due to the rapid urbanisation process, the ministry has initiated
several funds aims to mobilise resources in assisting the local authority meets the
required infrastructure facilities. The new financial funds are;
i.
Equalisation grants for the purpose of the overall maintenance of
their areas.
ii.
Maintenance of public buildings such as local roads, drainage
system. The grant provided for local authorities for maintenance.
iii.
Grant for the improvement of infrastructure and facilities in the
traditional villages and new villages. The grant allocated by Federal
Government for the purpose.
iv.
Grant for the purpose to cleaning and beautification programme for
local authorities.
The revenue collected by local authorities is categorized into internal and
external sources. Internal sources are raised from taxes and business licence fees or
charged on public services as provided in Local Government Act, 1976 (Act 171).
Whereas, the external sources of funds are either from government grants or
borrowings from the State or Federal Government or commercial financial
institutions.
Specifically, revenue collected by local authorities could be classified into
six major groups which are:
i).
Real property tax or assessment - is a tax levied on all holdings
within the local authority area. The property tax is the main income
for most local authorities.
109
ii).
Licence fees - the licence fee is used as a means of regulating the
business activities within a local authority.
iii).
Rentals - rentals of the local authority’s properties.
iv).
Government grants - the grants received from the central
government in the form of road grants and annual grants.
v).
Parking lots fees, plan fees, interest receivable and miscellaneous
items.
vi).
Loans.
vii).
Improvement Services Fund (ISF) - Revenue collected as provided
under Street, Drainage and Building Act 1974 (Act 133), Part VI:
Section 132. The provision has to be used together with the relevant
provisions under Town and Country Planning Act 1976 (Act 172).
4.5
Planning Approval System and Infrastructure Provision
The planning system provides the basis for relevant agencies to provide
infrastructure. Development plans comprises the policies which are required for the
provision of relevant on-site facilities. The policy also describes the type of
facilities with potential to be provided in the particular location. The policy outlines
the requirements of on-site infrastructure, such as:
i)
To improve the quality of the present infrastructure facilities,
ii)
To improve access to and circulation to the location of the facilities
provided, and
110
iii)
To identify the strategic and accessible location of new
development. The large development projects normally involve a
series of negotiations between approval authorities and private
parties (developers) to determine the provision of infrastructure
(off-site or on-site) prior granting of planning permission.
There are numerous ways in which public policy can affect development
process. As suggested by Healey et al. (1995), under the current practice
developers are required to allocate for infrastructure provision. This was revealed
by Asiah (1999) that the developers have to allocate a large portion of their land
areas for community facilities (on-site infrastructure) and in some cases they have
to improve the existing off-site infrastructure. These also included improving or
constructing the new local roads, drainage system and other community facilities.
The provision of off-site infrastructure would increase the development
cost. As practised by many local authorities, facilities such as open space, sites for
school, playground, community centre and other as required by local authority.
Developers have to provide the facilities according to the standards and
requirements and hand over to the relevant authorities upon the completion of these
facilities.
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4.6
Planning Approval and Planning Contribution
Like their counterparts in other developed countries, the local authorities in
Peninsular Malaysia have explored several alternative methods of funding of local
infrastructure. The rapid growth in local development continues to expose
additional pressures on local infrastructure funding. There are several methods of
funding being practised:
i. Development Charge
Development charges are the most acceptable and effective source of funding
based on the ground that the new growth should not create a financial burden
on existing residents of the community. The charge is imposed by local
planning authority on new development within a municipality and developers
are required to bear the cost of providing the infrastructure. The purpose is to
finance the subsequent demand of local infrastructure which would arise as a
consequence of new development. Most local authorities collect development
charge upon granting planning approval. However, this method is only
applicable for on-site provision of infrastructure and not permitted for off-site
infrastructure.
ii. Unilateral Undertaking of Planning Obligation
In the context of Malaysian planning system, the practice of planning
obligation requires the developer to contribute for some community facilities
before granting of planning approval. The practice is a legal agreement
between developer and the planning authority. The obligations that are
attached to planning approval enable the local authority to secure
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contributions to services, infrastructure and amenities in order to support and
facilitate the proposed development.
However, with regards to off-site infrastructure provision, the practice of
planning obligation is only applicable within the following purposes:
i. The planning approval which is being applied must be acceptable in
planning terms.
ii. It is directly related to the proposed development and relevant to
planning.
Only few planning applications need planning obligation before approval is
granted. The obligations imposed have to represent a benefit for the land and/or the
locality. If the planning application is imposed with planning obligation, the scope
of the obligation only covers the following;
i. Require specific operations or activities to be carried out in relation to the
land.
ii. Restrict the development or use of land.
iii. Require land to be used in a certain way.
iv. Require payment of a sum or sums of money - e.g. towards future
maintenance costs.
In most cases planning obligation is only applicable for large scale
developments, where the contribution is sought to improve the impact of the
proposed development. In practice, unilateral undertaking is an obligation offered
113
by the applicant to the planning authority either in support of a planning application
or a planning appeal. The terms of the agreement are produced entirety by the
applicant's solicitor without the involvement of local authority. The planning
authority will verify if the undertaking is needed, acceptable and legal, and will
either accept this undertaking or reject it with reasons as appropriate (see Appendix
B12).
Planning legislation includes the essential principle that development should
pay for the social and physical infrastructure to support and facilitate a
development. It would not be fair to expect a developer to contribute towards
existing service deficiencies of schools or libraries for example. However, it would
be fair to expect them to contribute to reduce the impact of their own development
on the local level, such as improvement of the existing infrastructure as impact of
the proposed development.
The following parameters are applied in the negotiation of off-site
infrastructure provision;
i.
Reasonably related in scale and nature of development.
ii.
Urgently needed as result of the development.
iii.
Reasonable in all other respects or there is no interpretation that
LPA indirectly off-loading their responsibility in providing the said
infrastructure to the applicants or private sector.
iv.
v.
Relevant to planning purposes.
The imposed or negotiated infrastructure is directly related to the
proposed development.
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iii.
Improvement Service Fund (ISF)
As provided by Street, Drainage and Building Act 974 (Act 133), local
authority is to raise fund for local infrastructure provisions. The Improvement
Service Fund (or ISF) is another method of funding which is adopted and practised
by many local planning authorities for the purpose of improvement, maintenance
or construction of new infrastructure. The fund is collected during planning
approval stage.
As provided in Section 32 of Street, Drainage and Building Act 974 (Act
133) [Am. Act A867], the Acts says;
i). There shall be established for the purpose of this Act in each
local authority a fund to be known as the “Service Improvement
Fund” into which shall be paid all money that may from time to
time be paid to a local authority for the purpose of carrying out the
provisions of this Act, all money recoverable by the local authority
from any person under this Act or any by-laws made there-under
and any contributions from any person towards the beautification,
construction or laying out of any street, drain, culvert, gutter or
water-course.
ii). The Improvement Service Fund shall be administered by the
local authority at its absolute discretion.
iii). Without prejudice to the generality of subsection (2) the local
authority may pay out from the Improvement Service Fund any
expenses which may be incurred in carrying out the provisions of
this Act.
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iv.
Issuing of Municipal Bonds
Local Government Act, 1976 (Act 171) allows local authorities to initiate
the issuance of bonds in order to raise the needed capital for the provision of local
infrastructure. In fact the local authorities should be proactive towards other
methods or mechanisms to raise the appropriate funds as necessary to the local
communities as a whole. This means that so long as each additional project will
bring additional net revenue to the local authority, that project can be financed by
issuing bonds to general public. The bond issue is a form of domestic loan from the
public because it promises the general public who pay the bonds a certain annual
rate of return for lending their money which will be repaid when the bond matures
at some specific time in future. In Malaysia, the first Municipal Bonds had been
launched by the Pasir Gudang Local Authority in the state of Johor in 2005, where
the issuance amounted to RM80 million maturing in 2011. The bond is using the
Islamic concept (Mudharabah) was arranged by AmInvestment Bank Bhd., one of
Malaysia’s leading merchant banks. The public were encouraged to buy these
bonds because the bonds generate a good and stable annual rate of return.
4.7
Conclusion of the Chapter
The rapid urbanisation at local level has put pressure on the demand for
adequate provision of infrastructure; in return demanding a huge allocation to
finance its provision. Adequate provisions of infrastructure are essential and must
keep pace with local economic development. To increase the effectiveness, local
infrastructure provision must be privatised and the involvement of private sector
should be promoted.
Involvement of private sector in local infrastructure provision is to improve
the efficiency of infrastructure delivery and would increase the standard of living of
the local community. If there is no immediate reform on the present local
infrastructure provision, it would further deteriorate the local infrastructure
116
condition. As revealed in the chapter, the approach should be carried out without
reducing the interest of private sector. Most importantly, local authority should be
more realistic in reviewing and formulating the related policies of local
infrastructure provision by taking into consideration the interests of developers.
Within the buoyancy of the current economic scenario, basically, the
involvement of private sector is increased when there is availability of
infrastructure to support the proposed development. However, in order to sustain
the active-involvement of private sector, a long-term private interest rather than
short-term public interest should be given more serious consideration by LPAs.
Therefore to reduce the financial burden, an effective approach of planning
approval system will be the alternative solution.
CHAPTER 5
RESEARCH METHODOLOGY
5.1
Introduction
The main purpose of this chapter is to discuss the method applied and to
provide a better understanding of the direction of the research. It is important
because the validity of the findings depend on how the data are collected and
analysed. The chapter highlights the assumptions used in arriving at the findings
and their limitations.
The chapter starts with a description of the process that provides the outline
of the work. It proceeds to discuss the conceptual framework of the research and
the process of selecting respondents. Consequently, it describes and outlines the
appropriate analytical approaches to be applied to draw certain conclusions for the
research.
5.2
Research Process
Conducting research requires following a sequence. However, the steps
vary with the type of social research, but there are essentially seven major steps.
The variations involve a quantitative or qualitative nature throughout the research
and the related data. By understanding both approaches, the researcher knows
about a range of studies and can use both in complementary ways.
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The key features of qualitative method are best understood as data
enhancers. When data are enhanced, it is possible to see key aspects of cases more
clearly (Ragin, 1994). Each method has its strengths and is suitable for a particular
context. The method adopted for data gathering depends upon the nature of the
inquiry and the type of information required.
Quantitative approach involving the process of conducting a quantitative
study begins with selection of a research topic after thorough review of issues
intended to be researched. Neuman (2006) stated that both methods require a
thorough review of the research literature to be done and developing the research
questions from the related theories.
Denzin and Lincoln (1998) are quoted by Neuman (2006) as claiming that
the qualitative method has a slightly different approach. Qualitative method
ponders the theoretical framework in an inquisitive way and using open-ended
questionnaires is an appropriate method. The next stage is to design a study, collect
data, analyse and interpreting the data prior documentation of the research findings.
On the other hand, the qualitative study tends to develop new concepts and
emphasise more on theoretical interpretations. The comparison of the main features
between the two types of research techniques is summarised in Figure 5.1.
A significant distinction of the terms qualitative and quantitative is often
associated with direct methodological implications (Clarke and Dawson, 1999).
Quantitative methods generate data that can be presented numerically and are
subject to various types of statistical analysis, whereas qualitative techniques
produce data that are not readily open to statistical interpretation. A major
distinction between the two approaches is that one deals in numbers while the other
is concerned with words. Bryman (2000) simply concluded that the quantitative
research is typically taken to be exemplified by the social survey or an
experimental investigation. Meanwhile, qualitative research tends to deal with
unstructured or in-depth interview and participant observation method in data
gathering.
119
This was supported by Philip (1998). The combination of qualitative and
quantitative methods in a single research has its advantages. It reduces the
erroneous findings. The qualitative may require establishing research questions,
which will subsequently be addressed by means of quantitative methods; or a
qualitative study may suggest questions suitable for further investigation by means
of in-depth qualitative methods. The combination of methods may allow a broader
range of issues to be addressed during the course of a research than would be
possible if exclusive use of either qualitative or quantitative methods had been
made.
Quantitative
Qualitative
1. Selection of
research topic
1. Acknowledge
Social Self
2. Focus
Question
2. Adopt
Perspective
3. Design Study
3. Design Study
4. Collect Data
THEORY
4. Collect Data
5. Analyse Data
5. Analyse Data
6. Interpret Data
6. Interpret Data
7. Inform Others
7. Inform Others
Figure 5.1: The comparison of process involved in qualitative
and quantitative type of research
(Source: Adopted from Neuman, 2006)
120
Figure 5.2 details the whole process involved in the research. In the first
phase, it describes the identification of appropriate research focus area and
refinement of general ideas into a precise question to be studied which then results
in the formulation of the research problem. Scientific research starts with the
formulation of research problems from causal observation and background
knowledge (inductive reasoning) and moves onto reasoning out consequences or
implications of research problems (deductive reasoning). Inductive reasoning
means that the researcher observes particular facts (e.g. the demand for local
infrastructure increase drastically when urbanisation process takes place very fast).
The next stage is to integrate the research problems with the theories
towards facilitating the process to refine the subsequent steps in developing the
research process. The formulation of the conceptual framework for the study was
addressed by Berger (1988) as a deductive process. It acts as the basis in defining
concepts and variables of the research problems based on the relevant theories.
121
Problem
definition
Identification of research
topic
Refinement of general
ideas
To precise research
questions
Generation
of Research
Question
Formulation of research
problem
Defining the concepts and
identified variables relating
to the research question base
on the theories
At this stage research questions
must be related to the identified
existing theories or knowledge.
It is important to facilitate the
subsequent steps in the research
process.
Generation of the Research
Questions base on the
relationships of the concepts
and variables
Data
Collection
Design procedure and
observation for gathering
research data
Type of data and methods of
data collection are identified
Data
analysis
Analysis of data and data
interpretation
Data collected will be analysed
appropriately either using
qualitative analysis or quantitative
analysis
Presentation
of research
findings
The main stages
involved
Documentation of the
research findings
The action of the research activities
Figure 5.2: The research process
Explanation of stages
122
Data analysis and interpretation involve the analysis of the gathered
information by comparing research findings with the research predictions. Then,
the inductive process would support or reject the theory based on the research
findings. The final stage is the documentation of the research findings in a written
form. Therefore, the above research process can be grouped into five main stages,
namely; i) Problem definition; ii) Generation of Research Questions; iii) Data
collection; iv) Data analysis; and v) Presentation of research findings.
5.3
Conceptual Framework
Most studies have shown that adequate provision of infrastructure is a
necessary precondition to sustain economic development. This requires the local
authority to diversify and to find other alternatives to secure infrastructure. In
Malaysia, local authorities are permitted to impose such requirements prior to
planning approval.
There has been an increase in research interest pertaining to the application
of planning approval system to acquire infrastructure from private sector. For
instance, Elson (1990) looks at the assessments of the role of planning gain in large
new settlement projects. The study by Rowan-Robison and Lyod (1988) is on the
use of planning approval system to acquire the local infrastructure. The study looks
at the role of planning agreements in relation to infrastructure provision and shows
that a possibility for the local planning authority to apply planning approval to
secure local infrastructure from private developers. Similar findings have been
observed in various studies; the use of negotiation and the planner’s role (Ennis,
1997); negotiating planning gain to acquire infrastructure through the development
control system (Claydon, 1997); infrastructure provision and development process
(Healey, 1997).
123
In another study by Bunnell (1995) on the negotiation of agreements in
Cambridgeshire, the findings obtained revealed that developers were willing to
offer contribution (infrastructure facilities) for which planning agreements were
signed. If there is a significant reward obtained from the agreement, the agreements
are more likely to be negotiated during planning approval for those developments
located in rural areas or the fringes of cities than in major urban centres and
densely developed zones.
Until today, there exists very little empirical study on the infrastructure
provision under planning approval system at the local level. In particular very little
research has focussed on the possibility of local authority using planning approval
system to secure off-site infrastructure. It is therefore important to have in-depth
survey to identify the constraints and problems faced by local planning authorities
and developers which enable local planning authorities impose such infrastructure
to developer prior granting planning approval.
5.4 Research Approach
In conducting the research, several studies were reviewed to understand the
possible approaches to involve developers in off-site infrastructure provision. Most
of the studies have been general without looking at the infrastructures provision
located outside (off-site) of proposed development areas which are required as a
result from the impact of the development.
Other studies have shown that very little is known about the perceptions of
private sector (developers) on provision of off-site infrastructure during planning
approval application (see Healey, 1997; Claydon, 1997; Guy and Marvin, 1997 and
Ennis, 1997). These studies conclude that the active involvement of private sector
was very important indeed for the local authorities to gain some benefits from the
approved development in terms of off-site infrastructure.
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The method of data collection for this research is based on a study by
Healey et al. (1995) on negotiating infrastructure and community impacts and
Bunnell (1995), of his study on the application of planning agreements during
planning approval stage to secure such infrastructure from private sector.
Therefore, the research involves a general review of approaches to use
‘planning gain` during planning approval procedure to secure infrastructure from
developers. The research involves two main stages; to review the relevant
information from the relevant departments and structure interview with planning
officers, developers and also council members.
To proceed with, this research will first review the present situation of
planning approval and infrastructure provision at local authority in order to obtain
the actual situation of the development approval and infrastructure provision
practice. It is important to carry out a fieldwork survey which is involve two
difference samples of (local authority and developers) to understand the current
practices in local infrastructure provision.
The second stage is to design procedure and observation phases which
involve the identification of specific procedures to be used in the data gathering. At
this stage, the types of data and the methods of data collection are identified. This
must be done in order to form the basis for the conceptual framework of the study.
It will then discuss the financial constraints and problems faced by local authority
in providing infrastructure facilities.
The third stage is to identify the perceptions of developers and local
authority with reference to planning approval system in order to understand the
constraints and problems in local infrastructure provision. Finally, the study
analyses the findings that will lead to proposing an improvement of the present
system in local infrastructure provision.
125
Therefore, in order to obtain the perception of both respondents, they (local
authority) were asked on the nature of the planning approval used to secure off-site
infrastructure, the problems faced by local authority, the suggestions or opinions on
the possible approaches to involve private sector. This is the key question which
could be answered by exploring the local authority perceptions on planning
approval. It should be stressed here that this research will be interpretative,
revealing the perceptions of local authority and developers towards controls
imposed by the local planning authority.
Therefore, the most appropriate approach to conduct the research is the
qualitative method however at the initial stage the study begins with the
quantitative approach. Thus quantitative provides the entire picture with the
perceptions of the respondents (local authority and developer). The use of
qualitative method is far more essential as its emphasis is on understanding the
respondents and revealing their perceptions.
5.5
Methods of Data Collection
The main purpose of selecting a research technique is to identify the most
appropriate method for data gathering that will help provide answers to the research
questions formulated during the conceptualisation stage. In this case, it is rare to
find a research based only on one method of data collection. This was stated by
Clarke and Dawson (1999). There are four main techniques by which the data can
be collected which are questionnaire, interviews and observation and documentary
sources. This study mainly generates data from two types of sources which are
primary and secondary sources. For the primary data it was collected and obtained
from a field survey, while secondary data mainly come from books, reports,
seminar papers, journals, periodicals and government publications.
126
The interview is an alternative of collecting data for qualitative type of the
research. Obviously in field survey, the respondent was asked to read and record all
the questions in the questionnaire and answer the questions accordingly. The field
survey was conducted during the months of February to September 2005. Two
types of surveys were conducted, namely local planning authority survey and
developer survey. For the local authority survey it involves four levels of local
authorities in our local government system in the country namely city hall, city
council, municipal council and district councils. It is an important consideration to
have the researcher and respondents (local authority and developer) match on
several attributes, particularly professional discipline. This scenario was
appropriate as stressed by Neuman (2006) and Silverman (2005) by having similar
characteristics
of
respondents
and
interviewers
would
reduce
gap
of
communication of two or more parties during the interviewer session.
5.5.1 Fieldwork Survey
The local authority survey was aimed to elicit data and information on the
present practice of local authority securing off-site infrastructure, planning
approval mechanism, the problems of getting planning approval related to off-site
infrastructure negotiations during planning approval, the perceptions of local
authority and developer towards off-site local infrastructure provision. The field
survey was conducted using a set of questionnaire and were asked in order to gain
information from the respondents (local authorities, including city hall, city
council, municipality and some districts council which had experiences dealing
with off-site infrastructure) to provide a general background of the issues of
concern.
For the developer, the survey is aimed at eliciting the information on the
problems pertaining to off-site infrastructure provision faced during the planning
approval stage. The questionnaire for developer field survey is designed similar in
127
most forms with the questionnaire used for local authority survey to obtain the
following information;
i. The problems related to off-site infrastructure provisions faced by
developers in obtaining planning approval.
ii. The developers’ opinions on the possibility of local authority to secure
off-site infrastructure provision.
5.5.2 Questionnaire Design
Survey design reserved a significant effort in conducting this research. The
selection of the appropriate instrument to be used is guided by the research
problem, research questions and survey objective. Hague (1993) recognise three
different kinds of interview which in turn require different kinds of questionnaire in
designing the research questionnaires;
i. Structured - the questionnaires set out precisely the wording of the
questions and the order in which they will be asked. Most of the
questions have predefined answers with little latitude for a respondent to
stray beyond, hence the basis of large quantitative surveys.
ii. Semi structured - this type of interview uses questionnaires with a
mixture of questions with predefined answers as well as those where the
respondent is to speak freely on the topic. In each session of interview the
questions are asked in the same way and are more flexible tool than its
highly structured counterpart and there is likely to be more probing to
fine out the reasons for certain answers.
128
iii. Unstructured - In this type of in-depth interview, the researcher uses a
checklist of questions rather than a formal questionnaire on which the
answers are written down. The part of the interview and different
channels of questioning will be selected during the interview itself.
For the purpose of the research, the most appropriate method was to have a
series of interviews conducted through a semi-structured interview. This kind of
interview is much less rigid than structured interviews. The goal is to explore the
studied area more openly and allow researcher to express their opinions and ideas
in their own works (see Esterberg, 2002; Hague, 1993; Denzin and Lincoln, 1998).
Appropriately this research applies survey method using questionnaires in
the fieldwork. It was one of the most frequently methods used to collect data in
research. This method is the major instrument to collect primary data. It is capable
of producing large quantities of highly structured and standardised data. The
quality of the data gained from the survey largely depends upon the design of the
questionnaires and the type of questions will be determined by the aims and the
objectives of the study (Hague, 1993). Accordingly, the questionnaire was designed
in such a way to ensure it would retrieve all the appropriate data or information
from the fieldwork survey.
5.5.2.1 Local Authority
For the Section A, the questionnaire has been designed to know the
background information of the respondent. In Section B, the respondent was asked
whether any initiative made to secure off-site infrastructure from applicant during
planning approval stage and suggestions from the respondents on how planning
approval can be applied to secure off-site infrastructure from private developers are
also being asked in the questionnaire.
129
Section C was designed likely to know how the present off-site
infrastructure provision is secured by local authority. Section D was designed to
obtain information on the problems faced by respondents related to off-site
infrastructure provision in obtaining planning approval. In the Section E, the main
purpose is to identify the perceptions of local authority on off-site local
infrastructure provision.
In Section F, the questions are outlined to obtain the suggestions from both
respondents on how off-site local infrastructure provision can be secured by local
authority. Likert scaling is adopted as it appears to be a reasonable ordinal scale.
According to Neuman (2006), the technique developed by Rensis Likert in 1930s
is simple to construct and is likely to be more reliable to provide an ordinal-level
measurement of a person’s attitude. It requires a minimum of two categories, such
as “agree” or “disagree”. For this study, the scale of five categories was applied,
ranging from “Inappropriate” (1), “Less appropriate” (2), “Slightly appropriate”
(3), “Appropriate” (4) and “Very Appropriate” (5). By referring to the Appendix
C2, a brief explanation of each type of delivery was attached to the both set of
questionnaire (local authority and developer).
Again, open-ended questions are necessary and the interviews have to be
well briefed to ensure that they can probe in depth and offer explanation should
respondents face difficulties in providing answers. Open question is one where the
respondent is left free to give any answer and this is either down verbatim or the
interviewer is armed with a list of anticipated pre-defined answers. Designing for
an effective questionnaires take the respondents through the interview in such a
way that easy to give precisely.
130
5.5.2.2 Developer
The questionnaire used for developer is designed in similar way as the one
designed for local authority which is based on the research questions. The
questionnaire consists of four sections. In certain parts of the questionnaire, the
additional information was provided as appendix to guide and clarify respondents to
answer the question so that a level of consistency could be reached in the survey.
To achieve the objectives, a semi-structured questionnaire is designed and
has covered several main sections. Section A seeks to gather information on the
background of the respondents. Categorisation of the developers’ organisation is
made because most previous studies show that it has a strong influence of developer
to involve with off-site infrastructure based on the size of development cost and the
total size of development area (Short et al., 1983; Rydin, 1983). In this section to
obtain such data, open-ended type questions are used because this approach allows
respondents to answer in their own words, rather than being restricted to choosing
from a list of pre-coded choices (Clarke and Dawson, 1999).
Section C seeks the developers’ opinion on the possible approach available
for local authority to secure off-site infrastructure provision.
Section D is
designed to elicit information on the perceptions of respondents on off-site local
infrastructure provision and suggestions from respondents on how off-site
infrastructure can be secured by local authority and the roles that might be played
by the private sector. The details of the questionnaire used for the developer field
survey are shown in Appendix C4.
131
5.5.3 Sampling Design and Procedure
Population is defined by Rossi et al. (1983) as a set of elements; an element
is defined as the basic unit that comprises the population. In other words population
refers to all the people who possess the characteristics of interest and in this case
the population was the local authority. As stated earlier, most respondents have
experienced dealing with off-site infrastructure during planning approval stage. As
stated by Neuman (2006), purposive sampling applied when researcher wants to
identify particular type of respondents for in-depth investigation. The technique
enables to gain a deeper understanding of respondents.
5.5.3.1 Local Authority
For this research the population of local authorities was 145 (N=145) and
for a practical reason this figure is impossible to carry out fieldwork survey
involving almost every element in the population. Therefore, 22 local authorities
(n=22) had been selected using purposive sampling of non-probability sampling
(see Figure 5.3).
The determination of respondents is guided by the following criteria;
i.
The local authority should have a number of years of experience dealing
with off-site infrastructure requirements during planning approval stage.
ii.
Local authorities have such practices of promoting private initiative in
off-site infrastructure provision from private sector.
Besides the above criteria, the selection criteria made based on those local
authorities who yield a substantial number of projects with planning approval were
subject to off-site infrastructure provision. Finally, it was important to select
different types or levels of local authorities, so as to make possible the observation
132
and comparison of local authority’s perceptions on the use of planning approval in
local infrastructure.
This part will describe the reason why only few local authorities and
developers were used as the respondents. After reviewing the previous discussion,
the main criteria set for determining the respondents is the experience with off-site
infrastructure provision at the planning approval stage. It is necessary only for
those dealing with off-site local infrastructure to be short listed as the respondents.
In addition the following sub-criteria are also applied:
i.
The local authority is seeking for effective and efficient approaches
pertaining to local infrastructure provision to enhance the involvement
of private sector in local infrastructure provision.
ii. Availability of data related to this research objectives. The consideration
of data availability and accessibility were very significant factors in
choosing the respondent.
iii. The researcher is a former planning officer at the Municipality of Penang
Island (MPPP) in the State of Penang. This factor helps much to access
most local authorities in the studied areas.
iv. At present many local authorities are strongly looking for effective and
efficient approaches securing infrastructure provision from private sector
due to scarcity of funds allocated for infrastructure development.
Therefore these local authorities have to identify other ways of providing
infrastructure.
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List of respondents identified from Ministry of Housing
and Local Government (MoHLG)
Stage 1
Set A (Local Authorities)
n=22
Stage 2
Set B* (Developers)
n=24
Majlis Perbandaran Kuala Terengganu (MPKT)
None
Majlis Perbandaran Kota Bahru (MPKB)
1 developer (MPKB)
Majlis Perbandaran Kuantan (MPK)
2 developers (MPK)
Majlis Bandaraya Alor setar (MBSA)
Majlis Perpandaran Sungai Petani (MPSPK)
1 developer (MBAS)
2 developers (MPSP)
Majlis Perbandaran Kangar (MPKangar)
1 developer (MPK)
Majlis Perbandaran Pulau Pinang (MPPP)
Majlis Perpandaran Seberang Perai (MPSP)
1 developer (MPPP)
1 developer (MPSP)
Majlis Bandaraya Ipoh (MBI)
1 developer (MBI)
Majlis Bandaraya Shah Alam (MBSA)
Msjlis Perbandaran Ampang Jaya (MPAJ)
Majlis Perpandaran Petaling Jaya (MPPJ)
Majlis Perpandaran Subang Jaya (MPSJ)
1 developer (MBSA)
1 developer (MPAJ)
1 developer (MPSJ)
Dewan Bandaraya Kuala Lumpur (DBKL)
1 developer (DBKL)
Majlis Perbandaran Seremban (MPS)
1 developer (MPS)
Majlis Bandaraya Melaka Bersejarah (MBM)
1 developer (MPS)
Majlis Bandaraya Johor Bahru (MBJB)
Majlis Perb. Johor Bahru Tengah (MPJBT)
Pihakberkuasa Tempatan Pasir Gudang (PBTPG)
Majlis Daerah Kota Tinggi (MDKT)
Majlis Daerah Pontian (MDP)
Majlis Perbandaran Kulai (MP Kulai)
7 developer (MBJB)
5 developer (MPJBT)
1 developer (MPJBT)
1 developer (MDKT
1 developer (MPP)
*The respondents for the developer survey were identified from the respective local
authority which had experience in dealing with off-site infrastructure provision.
Figure 5.3: The flow of field work survey and the distribution
of respondents
134
v.
These local authorities experience high-development pressure due to
rapid urbanisation process. Based on the statistical evidence provided by
the State Town Planning Department, many of these local authorities are
experiencing problems in considering planning approval application
which subject to the provision of off-site infrastructure.
Based on these criteria, about 22 local planning authorities (n=22) had been
selected.
5.5.3.2 Developer
Initially before the commencement of field survey for the developers’
group, a considerable list of developers who have experience in dealing with offsite infrastructure had been obtained from the first stage of interview with the local
planning authorities. The research had shortlisted 24 developers representing nearly
every state in the country. However, only 16 developers responded to this research.
The reason was that the local authority received less applications of planning
approval subject to off-site infrastructure provision (see Figure 5.3).
The field survey is conducted personally by the researcher which takes
roughly two months to complete the developer’s field survey. Initially prior field
works conducted, a list of respondents used to make appointment before the actual
date for interview confirmed by the respondents. Overall, the field work (interview)
is successfully carried out in the sense that all the questions in the questionnaires
are answered. In terms of validity of the study, most interview sessions is
represented by local planning officers and property managers who had experience
in off-site infrastructure provision.
135
5.5.4 Pilot Survey
In many social researches, it requires proper planning to start a research
work. As suggested by many authors (Babbie, 1998; Neuman, 2006; Crano and
Brewer, 1986, Denzin and Lincoln, 1998), prior collecting data from fieldworks,
there is a need to develop a well organised research plan solely for recording the
data. The main reason to conduct a pilot survey is to improve the scope covered by
the contents of the questionnaire designed and to ensure the relevance of the
information obtained from the field survey. The feedback and comments received
at this stage from the pilot study are useful to ensure more comprehensive and clear
questionnaires. This will make the task of data collection in the field easier and
more efficient.
For both respondents (local authority and developer), five respondents for
each category are selected and the first draft of the questionnaires is posted out to
local authorities and developers who have experience on off-site local
infrastructure provision. As detailed in the previous chapters, the feedback received
from both sets of respondents was considerably adequate. The researcher felt that
the comments were very useful and significantly considered finalising the final
drafts of both sets of questionnaires. Since the main objective of the research is to
identify actual scenario of the off-site local infrastructure provision, therefore any
considerable inputs derived from main actors would be considered.
The respondents of each set of questionnaire is represented by experienced
planning officer as well as respondents from private property developer who often
deal with off-site infrastructure requirements with local authority during planning
approval application stage.
136
Based on all the above comments, the questionnaire is revised and amended
accordingly to ensure its objectives could be achieved. A final version of the survey
questionnaire is sent by post as early September 2004 to all respondents. The list of
the Set A survey (Local Authority Survey) is provided by Ministry of Housing and
Local Government (MoHLG) and list of developers for Set B (Developer’s Survey)
as mentioned in the previous parts of this chapter is suggested by the local authority
of the respective states.
5.5.5 In-depth Interview
The interview tries to provide a more thorough picture of the problem and
constraints faced by local authorities and developers when dealing with off-site
infrastructure provision. According to Esterberg (2002) in-depth interview is a data
collection technique relied on extensive qualitative research and this was supported
by Neuman (2006) by as saying that a qualitative research as ‘a conversation with
purpose’. However, the technique varies on type of interview. For the purpose of
this study, the in-depth interview is intended to seek the insights by going into
more detail pertaining to the present practice of planning approval system, the
problem and issues pertaining to off-site infrastructure provision. Specifically, the
purpose of the in-depth interview has been described in Table 5.1.
137
Table 5.1: The purpose of in-depth interview
Set A: Local Authority
- To know how planning approval system is used
to secure off-site local infrastructure.
- To examine the current practice of off-site
infrastructure provision pertaining to planning
approval system.
- To identify factors constraints the active
involvement of developers in off-site local
infrastructure provisions.
Set B: Developer
- To identify the problems
related to off-site infrastructure
provisions.
- To explore the perceptions of
developers on the practice of
off-site local infrastructure
provision.
- To explore the perceptions of local authority on
the practice of off-site local infrastructure
provision.
- To study the local authority’ perceptions in order
to identify the possible approaches of how
planning approval measures can be used to secure
off-site infrastructure provision.
As mentioned earlier, the in-depth interview is carried out after analysing
data from the questionnaire and it should be noted that the interviews had to be
completed during the permitted period. The interviews enabled the researcher to
focus on the major issues revealed from the questionnaires. The interviews were
successfully done. The method used for the interview initially using tape recorder
since it could be very helpful and to make the interview session running smoothly
without any interruption in recording the information taped from the respondents.
However, most of them refused to be taped because of personal opinions.
As explained earlier, the research employed a combination of quantitative
and qualitative methods, involving a survey and in-depth interview. A field survey
is done both in local authorities and private developers. The survey mainly
intended to analyse both respondent’s backgrounds, their perceptions, the
138
constraints faced in obtaining the planning approval and also to explore the local
authority’s strategy to promote and further to involve private developers in local
infrastructure provision in particular the planning approval. After analysing the
data from the field survey, then the in-depth interviews were held together with
selected local planning authorities and developers which the list of then was
identified during local authorities’ field survey from respective states.
In local authority survey, the local authorities to deal with were identified
during the field survey. This was based on the higher experience of the LA with
planning applications containing off-site infrastructure. However, the list of
developers is obtained based on the feedback received from local authorities in the
particular states. The respective local authority had been asked to name few
planning applications which dealt with off-site infrastructure provisions.
Next, using this information, at least one developer was chosen as the most
suitable for in-depth interview. The in-depth interview carried out for both set of
respondents (local authority and developer) provided a detailed insight of the study
by looking into the developers’ perceptions, strategies and suggestions over the
practice of off-site local infrastructure provision within the framework of planning
approval system. For both sets of respondents, the interviews are structured in a set
of questions as shown in the interview agenda in Appendix C2 until Appendix C5.
5.5.6 Library Research
Although most data are gathered from the field survey and in-depth
interview, there are some secondary data that are available from the local planning
authority, Federal Department of Town and Country Planning, Ministry of Housing
and Local Government, Statistical Department and several state authorities. Some
data are also obtained from the respective local authorities.
139
The data obtained from the secondary sources are in the form of
government publications, departmental annual reports, books and journals, seminar
papers and technical reports. Most of the library research was conducted in some
local universities in Malaysia such as the main library of Universiti Sains Malaysia
(USM) and Universiti Teknologi Mara (UiTM). Most library search had been done
mainly at the Universiti Teknologi Malaysia (UTM) library (including inter-library
loan from National University of Singapore, NUS).
A considerable amount of data and information came from the Library of
Ministry of Housing and Local Government and few resource centres of local
authority of which some of the data proved to be very valuable and up to date. One
of the particular difficulties dealing with these materials is that most of them were
collected for specific purposes and therefore may not directly be relevant to the
research.
5.6
Validity and Reliability
The meaning of reliability as defined by Neuman (2006) is dependability or
consistency. The opposite of reliability is a measurement process that yields erratic,
unstable, or inconsistent results. Reliability is necessary for validity and easier to
achieve than validity. Further, Kerlinger (1986) defines reliability as consistency
and dependability which leads to determination the level of accuracy of the
research findings. Therefore, this study suggests that reliability can be achieved in
three different approaches:
i). The questions is designed based on the same set of objectives.
ii). Designing the appropriate measures which relates to the accuracy
which is fundamental to the research.
140
iii). Identifying the element of error of measurement. If there is an error of
measurement in measuring instrument the instrument is said to be
unreliable.
The Figure 5.4 illustrates the relationship between the concept of reliability
and validity adopted by this research using the analogy of a target with usually
complementary (but in some special situations conflicting) concepts. As validity
increases, reliability is more difficult to attain. This occurs when the construct is
highly abstract with no easily observable definition.
Low reliability
and low validity
High reliability
and low validity
High reliability
and high validity
Figure 5.4 The relationship between reliability and validity
in qualitative research
(Source: Adapted from Babbie, 1998)
Since this study applies qualitative approach, it tends to take view that
reliability is achieved when as the actual situation is figured by the data obtained
from the fieldworks survey. Furthermore, the in-depth nature of qualitative research
is closer than in structured surveys (Bryman, 2000; Crano and Brewer, 1986).
Thus, the field survey and followed by in-depth interview as applied in the research
enable to give the insights and detailed information. For this reason, a degree of
validity is managed to be achieved. However as pointed out by Denzin and Lincoln
(1998), there is a tendency that an interviewer may influence the interview session.
Therefore, a systematic precaution measures should be outlined in order to avoid
141
the element of bias. To mitigate the element of bias the interviewer should be
aware of his role in the interview session at the time of conducting the interview.
How can reliability be achieved? The validity of the measurements should
be predetermined at the earlier stage of the research process. In qualitative type of
research, there are several techniques that might be applied to validate the research
findings. As discussed in previous parts of the chapter, in-depth interview allowing
the study to reveal the actual situation based on the reality. Thus, by applying this
technique (in-depth interview), the validity of the research analysis is more towards
interpretation rather than its representativeness of a wider sample or population.
According to Silverman (2005) the required level of reliability and validity
in qualitative research needs to be predetermined at the earlier stage of the study.
Normally in this type of research, the high degree of acceptance of reliability is a
precondition in accepting the validity of certain observation. Therefore in this
research, reliability is a significant prerequisite for validity data (of the respondent
perceptions). The level of reliability of the data collected from field survey had
been validated by conducting an in-depth interview for the both set of respondents
consequently.
5.7 Methods of Data Analysis
In analysing the data obtained from the field survey, the research identified
several appropriate statistical techniques to be applied to generate the required
results. Accordingly, descriptive statistical techniques such as frequency, crosstabulations were used to describe the characteristics of the respondent, i.e.
regarding the background of respondents, based on the sample data collected from
both surveys. The results from the statistical analysis were used as evidence to
show any differences between local authority and developer. However the detailed
information will be dealt with in the qualitative analysis. For this reason, an in-
142
depth study using qualitative techniques would be very useful. This means that this
research employs a combination of quantitative and qualitative methods, with the
quantitative method as the leading methodology.
As elaborated previously, the research consists of a combination of
quantitative and qualitative methods of analysis. The quantitative analysis
provides the general picture regarding the issues as well as revealing the variations
that exist between the case study areas. It is then followed by qualitative analysis
that provides further explanations on the issues and the developers’ behaviour.
Thus, it is clear that the quantitative analysis provides the basis for the qualitative
study. In other words, the findings from the quantitative study suggest major
issues or questions, which are applied for further investigation by means of indepth qualitative methods. At this stage in-depth interview for validation of the
proposed improvement model which developed the later stage of the study.
Quantitative analysis will then be used as a foundation for the qualitative
analysis. On the other hand, it involves the work of transcribing and putting things
together in order to make sense of the interview materials. The discussions from
the interview need to be compiled and concluded and this should be done in a very
precise manner so as to exclude any misinterpretation of the information. Hence,
the quantitative tools are in use only as a valid way to achieve descriptive
generalisation as well as to reveal whether or not the variables that relate to the
developers’ perceptions, problems and strategies are significantly different
between the two areas.
In this research, the qualitative analysis starts by looking at the major
problems faced by both sets of respondents and then moves on to analyse the
common problems confronting the developers regards to planning approval which
subject to the requirements of off-site infrastructure provision. Eventually, the
study concentrates on the ways they adopted to overcome problems as well as
looking for its justification.
143
The next stage of the research is the analysis of the data. Two types of data
had to be analysed from the questionnaires and the interviews. In terms of
analysis, data from the questionnaires were analysed by using Statistical Package
for Social Science (SPSS) as it could provide some basic generalization of the
research.
Subsequently, the data obtained from in-depth interviews are analysed by
quoting all the relevant respondents’ transcriptions. The data provides an evidence
to support the relevant theoretical arguments to increase the plausibility in
answering the research questions. The analysis is almost entirely descriptive to
retain its actual intent or meaning of the respondent perceptions.
The exploration of the data on the sample was useful in describing the
present situation. The quantitative technique is employed in addressing the main
concern of the research seeking insights rather than statistical analysis. In other
words, the analysis only concentrates on the background features, providing the
general view, before focusing on the major issues of concern. This can be obtained
through the questionnaire survey.
144
5.8
Documentation of Research Findings
As the research employs a combination of quantitative and qualitative
methods, the presentation of the research should encompass both ways,
interpretation of tables, charts that involve numbers and making use of quotations
to support the analysis. The research findings is presented in the way of the method
used either it was a quantitative or qualitative.
As mentioned before, the background of the research mainly applied the
quantitative method, thus, firstly the results presentation from quantitative analysis
was illustrated, elaborated and interpreted using tables, charts and illustrations. For
clarification purposes, the issues pertaining to the practices of the planning
approval are to be distinguished as experienced by the both respondents. This
information required to be revealed in order to compare the common problems
faced by both respondents.
As the research tries to obtain perceptions from both of respondents on the
perceptions of planning approval practices, constraints faced by developers during
obtaining planning approval from planning authority was discussed in details. The
discussion also made on the perceptions regarding the process involves in the
provision of off-site local infrastructure provision. Consequently, the qualitative
data gathered from field interviews were then transcribed, as the quotation needed
to clarify the assertions made earlier of the research.
In presenting the developers’ opinion to enhance certain issues as to give
justifications, the researcher transcribed the relevant parts of the interview
manually before it was presented in the form of quotation. The idea is that it can be
used as supportive evidence which either reflects the general opinion of the
developers or which highlights certain issues that may be raised.
145
From the above discussions, it is clear that the research involves two stages.
The first level provides the full description towards the issues and the scenario of
planning approval system as practiced at local planning authority then in the second
stage the study proceeds with detailed in-depth interview from the both respondent
on the planning approval. The overall, the analysis could provide the answer to the
research questions that had been outlined in Chapter 1.
5.9
Limitations of the Study
This part describes the limitations to the research. This research is confined
to the practice of planning approval and off-site local infrastructure provision
which takes place at local development. The arguments used to support the
discussion solely derived from the analysis is based on the data collected only from
the field survey.
In arriving to the conclusion, the research was ‘framed’ or
‘influenced’ with several limitations. The limitation of the research had been
encountered at the stage of designing the questionnaire, identification of sample,
the stages of data collection and during analysing qualitative data.
During designing the questionnaire, the cooperation received from
developer was encouraging. The input from both respondents was very useful and
had been incorporated in the final draft of the questionnaires. There are also
problems in terms of co-operation from the respondents. As mentioned earlier,
obtaining the co-operation from respondent was not an easy task. The situation has
really affected the outcome of the research.
There were problems in identifying the appropriate developer. This is
because the list of developers as identified from the respective local authorities
fulfilled the criteria of respondent’s selection, however there are few cases where
the appropriately identified respondents (developers) were not available at the
moment of interview. Due to time consumption, the researcher had to work within
a limited timeframe allocated for fieldwork just for six months. Therefore, the task
146
has to be delegated to another person from the company to proceed with the
interview. This actually created a less reliable feedback or responses.
Another problem encountered during analysing the qualitative data which
was not only time consuming but also involved difficulties in cross-checking facts
and data. The analysis involved the process to transcribe the data obtains from the
interview as it forms the evidence for an argument as well as supports the analysis.
It was done manually through the field notes.
To ensure that the findings of the research are accepted methodologically,
there are a number of assumptions applied in the analysis. The first assumption is
that the selection of respondents should be fulfilled the criteria outlined, however
the real situations may affect the ability to of the respondents to represent the
whole. Nevertheless, this scenario does not affect the reliability of the results of the
survey.
5.10
Conclusion of the Chapter
It has been established that this research is qualitative using an in-depth
field interview analysis to establish an appropriate ground for this research to be
carried out. This chapter had been described as the research strategy and methods
of data collection and analysis. The research questions not only imply the
objectives and the scope of the research but it would guide how the data will be
collected and analysed.
Two types of survey were carried out in this research to gather data and
information of perceptions of local authority and developer on application of
planning approval to secure off-site infrastructure provision from private sector.
The local authority survey mainly was aimed at examining the extent of present
planning approval being accepted by private sector. However, the developers’
147
survey, on the other hand, was aimed at examining the reactions of private sector
on the practices of planning approval which are imposed by local authority. Both
sets of questionnaire had been reviewed after pilot survey had been carrying out.
The rationale of why the qualitative method had been applied is explained
and also the type and sources of data have been identified. The techniques of data
collection have been chosen according to their suitability to the data obtained from
the survey. Basic purposive-sampling techniques and field surveys have been
followed in order to avoid sampling bias and to secure the highest possible
response rate in the surveys. The data from other available secondary sources were
also collected to complement the data from the surveys. The data were analysed
using the appropriate descriptive statistics. The descriptive statistics were mainly
used to summarise the data.
In conducting the research, a number of problems were encountered and
certain weaknesses were found in the research methodology and respondent cooperation. It has to be mentioned that gaining respondent co-operation in the study
was not an easy task affecting the outcome of the study. These problems and
weaknesses certainly have an effect on the results and findings of the research.
The chapter concludes with the limitations of the study by explaining the
assumptions and the validity of the techniques used in the analysis of data.
CHAPTER 6
PRACTICE OF SECURING OFF-SITE LOCAL
INFRASTRUCTURE PROVISION
6.1
Introduction
This chapter analyses the perception of developers and local authorities on
the practice of securing off-site infrastructure based on the data gathered from the
survey and the in-depth interviews. The input of the chapter was obtained from
local authorities and developers. The analysis was guided by the literature as
discussed in the previous chapters. The results from this chapter will further be
analysed in order to propose the improvement of the present practice in off-site
local infrastructure provision.
6.2
The Background of Respondents
The research has selected two groups of respondents, from 22 local
authorities (n=22) and 16 developers (n=16). Those representing the developers
have undergone major property related development which involving the off-site
infrastructure requirements in the past. Most respondents are experienced of offsite infrastructure.
149
6.2.1 Local Authority
The sample survey covers 22 local authorities (n=22), comprising
municipal councils, city councils (and city halls) and district councils. The list of
respondents used for this study had been obtained from Ministry of Housing and
Local Government (MoHLG). Table 6.1, shows the detail the respondents by type
of local authority.
Initially, the response rate was only 13% of local authorities returning the
questionnaires. Due to the lack of cooperation from the respondents at the early
stage of survey, the researcher sought to administer directly by approaching the
respondents through appointment.
However, such approach was very time
consuming.
Table 6.1: Type of local authority
Type of local authority
Frequency
Percentage %
City Hall
1
4.5
City Council
5
22.7
Municipal council
13
59.1
District council
3
13.6
Total
22
100.0
Source: Field survey 2005 (n=22)
Figure 6.1 illustrates the experience of the respondents by years. As
stressed in the previous chapter, since the study applies the qualitative approach,
the aspect of reliability is given significant consideration in collecting the data.
The reliability of the data or answers obtained from the survey that had been
carried out through interview was significantly influenced by the level of
experience of the respondents. From the survey, most of the respondents have the
experience of 4-6 years (45%) as planning officers with local authority, 32% with
150
experience of 7-9 years and only 4.5% have 19-21 years of experience. Based on
this figure, the level of reliability that can be concluded will be high and the
Year of experience
answer obtained from the respondents is considered reliable.
19-21
13-15
7-9
1-3
0
10
20
30
40
50
1-3
4-6
7-9
10-12
13-15
16-18
19-21
Frequency
0
45.5
31.8
13.7
4.5
0
4.5
Percentage
0
10
7
3
1
0
1
Percentage
Figure 6.1: Years of experience of respondents
(Local authority)
Source: Field survey 2005 (n=22)
The findings show that most of the local authorities are experienced with
the involvement of off-site infrastructure provision. Figure 6.2, illustrates 59.2% of
municipal councils as involved in providing infrastructure, 22.7% city councils and
city halls (4.5%). What can be concluded is that the selected local authorities have
fulfilled the outlined requirements.
Most of the respondents representing local authority selected from the
states of Selangor, Pinang, Johor and Federal Territory of Kuala Lumpur have
experienced rapid growth in population. The population for the period of 19902000 can be used as an indicator to show the level of urbanisation from each of
these local authorities. Within these periods, few local authorities such as City
151
Hall of Kuala Lumpur (DBKL), Municipal Council of Seremban (MPS),
Municipal Council of Kuantan (MPK), Municipal Council of Pulau Pinang
(MPPP), Municipal Council of Ampang Jaya (MPAJ) and Municipal Council of
Subang Jaya (MPSJ) experienced a rapid growth in urban population.
Percentage of involvement
80
60
40
20
0
Percentage
City Hall
City Council
Municipal
Council
District
Council
4.5
22.7
59.2
13.6
Type of local authority
Figure 6.2: Involvement with off-site infrastructure provision by
type of local authority
Source: Fieldworks survey 2005 (n=22)
DBKL is the capital region where one of the respondents in the research
applied a different legislation (Federal Territory [Planning] Act 1982 [Act 267]) to
guide the planning system. However, the authority is practising almost similar
planning approval systems. Based on the survey findings, DBKL was among the
local authorities involved with a significant number of development approvals with
the condition of off-site infrastructure provision requirements.
152
6.2.2 Developers
The research aims to look at the possibility of using private options in
providing off-site infrastructure, therefore 16 private developers have been
identified to be the respondents for the research. Initially, 44 developers had been
shortlisted, however after entirely scanning the nature of the activity of the
developer firms, only 25 fulfilled the criteria outlined for the research. In total
only 16 developers were willing to be called for the interview.
The respondents came from various backgrounds based on the type of
ownership. Hence the interviewed developers have the same related backgrounds
ranging from the status of ownership, the duration of involvement in property
development, the average development cost per project and also their involvement
in off-site infrastructure provisions. Figure 6.3 show the distribution of developers
representing different levels of ownership from public listed companies (Bhd.)
(43.8%), private limited (Sdn. Bhd.) (31.1%), and government linked (GLC)
(18.8%) to Joint ventures (6.3%).
Public Listed
Company
(Bhd)
43.8%
Private
Limited (Sdn.)
31.3%
Semi-government
18.8%
Joint-Venture
Company
6.3%
Figure 6.3: Status of ownership of the developer
Source: Fieldworks survey 2005 (n=16)
153
In relation to this, it is noted that most developers involved with off-site
infrastructure are from the large firms. The findings show that the majority of
developers have been involved in off-site infrastructure provision for 7-9 years
(24.9%), 10-12 years (24.9%), 13-15 years (24.9%) and only 6.3% having more
than 19 years of experience. The respondents have a strong background in terms
of years of experience (See Figure 6.4).
Years of experience
19 - 21
13 - 15
7-9
1-3
0.0
5.0
Year
1-3
Percentage %
0.0
4-6
12.7
10.0
7-9
24.9
15.0
20.0
25.0
30.0
10 - 12
13 - 15
16 - 18
19 - 21
24.9
24.9
6.3
6.3
Figure 6.4: The years of establishment of the developers
Source: Fieldworks survey 2005 (n=16)
154
According to Claydon and Smith (1997), the tendency of developer to
contribute to off-site infrastructure is mostly influenced by the size of the project;
where the bigger the development, the higher the probability for the developer’s
contribution is. Allison and Askew (1996) also revealed a similar scenario where
many local authorities have come to depend upon the private funding for the
provision of public utilities. This occurs because local authorities have to rely on
their power of negotiation with private developers to secure the required facilities.
Figure 6.5 illustrates the size of development and percentage of
involvement with off-site infrastructure. 25.0% are developers with average
development cost of RM15-30 millions, 25.0% with average of
RM31-45
millions, 18.8% with cost of 91-105 millions and only 25.0% were involved with
more than RM120 millions.
Average of development cost ($ million)
More than RM 120
RM106-RM120
RM91-RM105
RM31 - RM45
RM15 - RM30
0.0
5.0
Avg. Cost
(RM’000)
15 - 30
Percentage
25.0
10.0
15.0
20.0
25.0
31 - 45
91 -105
106 -102
More than 120
25.0
18.8
6.3
25.0
Figure 6.5: The average of development cost
Source: Fieldworks survey 2005 (n=16)
30.0
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The findings had been supported by one of the developers during in-depth
interviews as saying:
‘…based on our observation, the practice of off-site infrastructure is
only realised in large scale developments ...’
This statement was further supported by another developer:
‘…the tendency for developers to contribute to off-site infrastructure
is relatively high compared to the size of the projects applied for
planning approval in large scale developments. The quantity of
contribution is proportionate to the size of the project ...’
6.3
The Practice of Local Infrastructure Provision
6.3.1 The Present Practice of off-site Local Infrastructure
Planning approval process involves a comprehensive overview of planning
matters prior to obtaining approval from local authority. Table 6.2 outlines the
procedures applied by local authority to expedite planning approval which involves
off-site infrastructure requirements. From the table, there are three methods
frequently applied by local authorities. The most effective method is One-StopCentre to monitor planning application (77.3%). The centre would facilitate all the
disputes arising between local authorities, technical departments and applicants
(developers). The disputes would occur in case there is disagreement on the part of
the developer in order to fulfil certain requirements as imposed by local planning
authority (e.g. off-site infrastructure), technical departments requesting to list the
infrastructure needed to be imposed on applicants (18.2%) and only one local
authority initiated such internal committee to expedite the planning application
which involved withy off-site infrastructure (4.5%).
156
In the British Planning System, planning approval process is essentially
coordinating and allocating of activities (Ennis, 1997). Planning approval
mechanism can always be found in the planning system and has been identified as
an effective method in securing off-site infrastructure provision. What can be
concluded is that the practice of planning approval was proven as one of the
acceptable methods for local authorities to be applied to acquire off-site
infrastructure. However, planning requirements imposed via planning conditions
might be applied if there’s a must for developers to provide. This could happen if
the approved projects could deteriorate the adjacent areas. Therefore, there is a
need for developer to compensate or to provide any form of mitigation measures to
avoid any predetermined negative consequences of the development.
Table 6.2: The procedures applied to expedite planning approval which
involves off-site infrastructure requirements
Procedures applied
Frequency
Per cent
%
Each technical departments requested to list
the infrastructure required by each individual
departments
4
18.2
Having one-stop centre to monitor the
requirements of planning approval process
17
77.3
The developer setup SPEAD (SurveyorPlanner-Engineer-Architect-Developer) to
expedite the planning application.
1
4.5
Total
22
100.0
Source: Field Survey, 2005 (n=22)
157
In this part the analysis will look at the present practice applied by local
authorities to acquire off-site infrastructure from private developers. Figure 6.6,
revealed several methods of infrastructure delivery at the local level. Complete
public sector delivery has 100.0% from the surveyed council. The recent
outsourcing approach of local infrastructure provision had been manifested in jointventure (100.0%), lease contract (72.7%), service management contract (81.8%)
and full privatization (77.3%). However, other methods of private option such as
concession/franchise agreement and public-private partnership (PPP) were not
successfully implemented.
77.3
Planning Contribution
63.6
Planning Requirements
77.3
Full Privatization
100.0
Joint Venture (JV)
Concession/ Franchise Agreements
0.0
13.6
BOOT, BOO or BOT Schemes
Public-Private Partnership (PPP)
0.0
72.7
Lease Contracts
81.8
Service/ Management Contracts
100.0
Complete Public Sector Delivery
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Figure 6.6: The present methods of off-site infrastructure provision
Source: Fieldworks survey 2005 (n=22)
158
In fact, the breakdown in Figure 6.6 also suggests that apart from private
options in off-site infrastructure, there are several other methods applied to acquire
from private developers, such as the use of planning contributions (77.3%) and
planning requirements (63.6%) during planning approval process. The use of these
methods to secure off-site infrastructure is very limited. It was found that local
authorities widely use private sector financing. However, this situation is applicable
to all types of infrastructure delivery as well as to the less effective ones, such as
concession/franchise agreements and public-private partnership (PPP). These are
few local authorities which utilise an intensive private sector delivery of off-site
infrastructures, i.e. Built-Operate-Transfer (BOT, 13.6%).
Therefore it can be concluded that in addition to public sector delivery the
provision of off-site infrastructure widely shifted from public sector to private
sector. The finding has supported by Allison and Askew (1996), a local authority
might seek contribution from private developer through negotiation while
considering planning approval. In return, the developer might give something to
local authority in the form of contributions. The contents of the contribution would
be as what has been agreed upon the approval. The process of securing benefits
(e.g. off-site infrastructure) normally is enshrined between developers and local
authority.
6.3.2 The Reasons for Using Private Investment
For this purpose, local authorities were asked to indicate the reasons for
using private sector delivery method for off-site infrastructure provision. Private
sector does offer improved service delivery when it is exposed to a competitive
market. From the Table 6.3, the findings indicate that the main reason why local
authority move to use private options in delivering off-site infrastructure was to
fund the increase in demand of local infrastructure provision. This was agreed by
all interviewed local authorities (100.0%). Other reasons were to improve the
159
efficiency and the quality of services (36.4%) and to increase efficiency of the
services provided (13.6%).
The study by Megginson et al. (1994) reveals similar findings on private
involvement in local infrastructure. The result indicates that efficiency consistently
increases when the infrastructure provision is shifted to private market.
Table 6.3: The reasons of using private sector for off-site
infrastructure provision
Involved with off-site
infrastructure
Yes
No
The reasons
To raise necessary resources (e.g.
financing)
Total
22
(100.0)
-
22
(100.0)
Ability to identify and manage risks
1
(4.5)
21
(95.5)
22
(100.0)
To provide contemporary
management skills and optimize
performance
2
(9.1)
20
(90.9)
22
(100.0)
To improve the efficiency and
quality of services
8
(36.4)
14
(63.6)
22
(100.0)
Efficiency improved when exposed
to competition
3
(13.6)
19
(86.4)
22
(100.0)
Source: Field Survey, 2005 (n=22)
160
6.3.3 The Type of off-site Infrastructures Most Needed by Local Authority
Depending on local authority funding guidelines, any specific infrastructure
may have social and private benefit components. The particular types of
infrastructure have governed the traditional responsibility of local authorities in
local infrastructure provision. Responsibility in this context does not refer
exclusively to local infrastructure delivery. However, with increased number of
private developments, there is need for developers to be involved in local
development by participating in infrastructure provisions, particularly in off-site
infrastructure.
The study shows a few types of off-site infrastructures to be mostly needed
by local authorities as provided by private developers. This is indicated by Figure
6.7, to include drainage/monsoon drain (100.0%), parking facilities (100.0%),
recreation facilities (87.5%), and improvement of existing local infrastructure
(81.2%), public utilities (62.5%) and public amenities (62.5%).
Lists of infrastructure
0
Construction
of new local
roads
20
Drainage
40
Parking
facilities
60
81.2
18.8
81.2
18.8
No
Yes
0.0
100.0
87.5
12.5
Recreation
facilities
0.0
100.0
37.5
62.5
Incinerator
plants
81.2
18.8
Betterment of
existing local
infrastructure
80
62.5
37.5
Other public
utilities
2 (87.5%)
3 (81.2%)
Source: Field Survey for Developers, 2005 (n=16)
provided by a developer
62.5
37.5
Other public
amenities
120
25.0
75.0
Maint. of existing
off-site
infrastructure
1 (100.0%)
1 (100.0%)
100
Figure 6.7: The distribution of off-site infrastructures mostly needed by local authority
Percentage
Construction of new local roads
Local road maintenance
Drainage
Recreation facilities
Parking facilities
Incinerator plants
Local road
maintenances
4 (62.5%)
Other public utilities
(e.g. Monsoon drain)
Betterment of existing local
infrastructures
4 (62.5%)
Other public amenities
(e.g. Market, etc.)
Maintenance of existing
off-site infrastructure
161
161
162
6.3.4 The Responsibility of Providing off-site Infrastructure
While acknowledging the significance of adequate infrastructure for local
development, the involvement of private sector would reduce the financial
responsibility of local authority in providing the needed infrastructure. In the
previous assumption, the delivery of on-site infrastructure realised by private sector
while public sector to provide off-site infrastructure. However, the practice
remedially has been changed (Ennis, 1997).
100
80
60
40
20
0
Local authority
Percentage
Local authority and developers
12.5
87.5
Figure 6.8: Responsibility of providing off-site infrastructure
facilities
Source: Field Survey 2005 (n=16)
The Figure 6.8 shows most of the respondents (developers) to have agreed
that the responsibility to provide the required off-site infrastructure should be
provided by private and public sectors (87.5%), while only 12.5% reserve it under
the local authority. The finding was supported by Sagalyn (1997) by saying that
United State local development obtains significant contribution from private
developers under several approaches initiated by local authority. These include the
exactions, incentive zoning and public-private joint development due to the rising
costs of infrastructure.
163
6.3.5 The costs of off-site infrastructure
In the past, developers have always been required to provide on-site
infrastructure. However, with the rising costs of infrastructure provision and the
perception that local economies would function efficiently when lower taxation is
imposed (Healey et al., 1997) a significant impact has taken place on the capacity
of local authority to provide the necessary infrastructure. A similar pattern can be
seen in local authorities in the country. Figure 6.9 illustrates 68.8% of the
developers interviewed claimed that they had allocated 10-15% from the estimated
gross development cost to build infrastructure, 24.9% allocates 15-20% and only
Percentage of development
cost
less than 6.3% allocate 10% from the total development cost.
15-20 percent
10-15 percent
Less 10 percent
0
Percentage %
20
40
60
Less 10 %
10-15 %
15-20 %
6.3
68.8
25.0
80
Figure 6.9: Development cost allocated for off-site infrastructure
Source: Field Survey 2005 (n=16)
164
As shown in Table 6.4, most developers perceived that more than 69.3%
had been allocated 10-15% of development cost and 68.8% had been allocated 1015% from development cost. Whereas most developers perceived 15-20% had been
spent on infrastructure with estimated development cost of RM120 millions and
above. Thus the cost of providing infrastructure is relatively much higher as the
development cost increases. This may be related to the type of infrastructure (see
Figure 6.8) required to be complied with. Most of the infrastructure imposed by
local authorities ranging from public amenities, public utilities, betterment of
existing local infrastructure, parking facilities, recreation facilities and drainage
system.
Table 6.4: Development cost involved and the percentage of
allocation for off-site infrastructure
Development cost
Total
Allocated for off-site
infrastructure
(RM’million)
Less 10 %
10-15 %
15-20 %
RM15-RM30
6.3
12.6
6.3
25.2
RM31-RM45
-
25.2
-
25.2
RM91-RM105
-
18.9
-
18.9
RM106-RM120
-
6.3
-
6.3
>RM120 and above
-
6.3
18.9
25.2
6.3
69.3
25.2
100.0
Total
Source: Field Survey 2005 (n=16).
165
6.3.6 Delay in Obtaining Planning Approval
The delay during planning approval was among the most critical problems in
planning system. Several studies revealed the same opinion (see Healey, 1995;
Wood, 1985; Bunnell, 1995). However delay still remains the concern of local
planning authorities particularly those involved with off-site infrastructure. As far as
the developers are concerned, most of them bear the difficulties on the effectiveness
of the authority to adopt the appropriate approaches to eliminate the problem. The
main concern is to determine the appropriate methods or approaches which enable to
obtain the faster approval. For many developers the procedure applied to carry out
planning approval had cause in delaying planning approval.
There had been a growing concern over the role and function of planning
approval. It had play a significant role in planning control as its ability to ensure the
infill development were carried out accordingly to development plans. The critics
complain on the nature of the decision taken and the delay causes by the practices.
Based on Figure 6.10, most planning approvals issued within the timeframe of 1-2
years (81.2%) and only 6.3% were granted in less than 1 year. However, the cases
were quite rare. From the findings, it can be concluded that most of the developers
assume the duration of 1-2 years to obtain planning approval to be acceptable.
Furthermore, these are also the cases where planning application only receives the
approval in more than 2-3 years (12.5%).
166
100
Percentage
80
60
40
20
0
Percentage %
Less than 1
1-2 years
2-3 years
6.3
81.2
12.5
Figure 6.10: Planning approval timeframe
Source: Field Survey 2005 (n=16)
Time consumption in obtaining planning approval has long been recognised
amongst the major obstacles in property development in the country (Ghani Salleh,
1990). Several attempts have been made to reduce the level of constraint. However,
the problems still persist in planning approval stages. As far as developers are
concerned, most local authorities look at the problem as their main responsibility to
expedite the planning approval process.
Table 6.5 illustrates the average period consumed by developers to obtain
planning approval as more than one year (93.7%). The findings show no significant
evidence of the timeframe taken for planning approval to be affected by the cost of
project. The timeframe by the average cost incurred, shows that 25.2% fall under the
categories of RM120 million (more than 1 year) and 25.2% is RM31 million –
RM45 million (more than 1 year). There is 18.3% that fall under the categories of
RM15 million – RM30 million (more than 1 year) and only 6.3% is RM91 million –
RM105 million received planning approval less than one year.
167
Table 6.5: Planning permission processing period by development cost
Timeframe for approval
Development cost
Total
RM15 million - RM30 million
RM31 million - RM45 million
RM91 million - RM105 million
RM106 million - RM120 million
More than RM120 million and above
Total
< 1 year
> 1 year
6.3
18.3
25.1
0
25.2
25.2
0
18.3
18.3
0
6.3
6.3
0
25.2
25.2
6.3
93.7
100.0
Source: Field Survey 2005 (n=16)
6.3.7 The Influence of Infrastructure Distribution on Project Locations
In dealing with planning approval, one factor that cannot be denied is the
influence of planning control on the distribution of investment decisions (Claydon
and Smith, 1997). The key issue are the problems faced by developer in coordinating the proposed development with the present location of infrastructure
provision and how these problems affect developers’ strategies (Healey et al.,
1996). Another question is how local authorities ensure that development have
adequate infrastructure provision.
In this study, the respondents (developers) have been questioned on the
factors considered in selecting the project location. The developers were required to
list the factors that influence their decisions in site selection. By referring to the
Table 6.6, it can be seen that most developers considered having good access to
existing off-site infrastructure is the main factor to determine the selection of
168
project location (81.2%). Developer would rather choose the location which is
readily available with adequate infrastructure. As shown in the same table, only
6.3% developers consider areas with less possibility to be imposed with off-site
infrastructure requirements for future project location. The developers treated the
flexibility in negotiating off-site infrastructure requirements to be less important
(12.5%) even if it was given assurance by local authorities.
Table 6.6: Factors influence developer’s decision to determine
project locations
Factors influence developer’s decision
Frequency
Percent %
Areas with less possibility to be imposed
with off-site infrastructure requirements.
1
6.3
Have a good access to existing off-site
infrastructures.
13
81.2
In local planning authorities which are
proactive in negotiating the planning
requirement pertaining to off-site
infrastructure provision.
2
12.5
Total
16
100.0
Source: Field Survey 2005 (n=16)
169
This implies that the availability of adequate off-site infrastructure is an
important criterion in determination of projects location. Developers may have
their justifications but the availability and accessibility to the off-site infrastructure
mainly influences developers to determine the project location. What can be
concluded is that most developers consider sites that are readily provided with
infrastructure as the main factor determining location for development. Since it
could reduce the cost to provide the necessary off-site infrastructure as it will be
imposed by local planning authority upon granting the planning approval.
6.3.8 The Major Drivers of Private Sectors Involvement in off-site
Infrastructure Provision
The findings of the survey identify several factors of the involvement of
private sector in local infrastructure provision. Table 6.7 reveals the prompt
responses of the factors driving the private sector participating in local
infrastructure. These include, such as to fulfil the planning approval requirements
(100.0%), as a marketing strategy (95.5%), as part of corporate social responsibility
(87.5%), as capital investment and corporate image (81.2%) and to enhance land
and capital (72.3%).
What can be summarised from the above analysis is that the private
financing is generally perceived as an efficient means by most respondents (local
authority). The study also revealed that most respondents (developers) agreed that
the involvement of private sector in local infrastructure is significant to local
development. However, such practices directly incurred additional cost to the
developer in order to meet the needs of local infrastructure provision as outlined by
local authority.
170
Table 6.7: The major indicators of private involvement in off-site
infrastructure provision
Drivers of involvement
Yes %
No %
Total
To fulfil the planning approval requirements as
imposed by local authority
100.0
0.0
100.0
Used as a marketing strategy
95.5
4.5
100.0
With proper planning of off-site infrastructure
provision the project’s profit still can be gained
95.5
4.5
100.0
Appear as part of corporate social responsibility
87.5
12.5
100.0
As long term investment of capital and corporate
image
81.2
18.8
100.0
Enhance land and capital value
72.3
27.3
100.0
Source: Field Survey, 2005 (n=16)
However, the main obstacle remains on how the financing may be
efficiently tapped out from the private sector (developers). These findings are
further supported by Bunnell (1995) in his study on the application of planning
approval mechanism to secure off-site infrastructure. He then suggested that in
order to promote private financing, the most significant part is to clarify the
possible method of how private sector can finance the infrastructure. The methods
should be appropriately applied and consistent with the established development
plans because it would affect the pattern of local development.
171
6.4
The Application of Planning Approval System to Secure off-site
Infrastructure Provision
6.4.1 The perceptions Over the Methods Applied to Secure off-site
Infrastructure
As shown in Table 6.8, the most successful method to secure off-site
infrastructure as perceived by respondents is through negotiations (81.8%).
However, 18.2% agreed that off-site infrastructure can be secured through planning
requirements using ISF (Improvement Services Fund) as provided under Section
132 of the Street, Drainage and Building Act 1974 (Act 133).
Table 6.8: Methods applied to secure off-site infrastructure
Type of methods
Frequency
Per cent %
Planning requirements (ISF)
4
18.2
Negotiation
18
81.8
Total
22
100.0
Source: Local Authority’s field survey, 2005 (n=22)
To support the above findings, an in-depth interview was made. The
following revealed the perceptions of developers over the appropriate methods for
local authority to acquired off-site infrastructure from private sector;
Developer 1;
‘… many developers dealing with large scale development are willing
to provide off-site infrastructure. However, the approach must take the
benefit of developers who pay the costs…’
172
Developer 2;
‘…based on previous experiences, off-site not just increases our
development cost, but with proper planning it would increase the
appearance of our development. Therefore, local authorities have to
come-up with proper guideline or explanation regarding to off-site…’
Developer 3;
‘…produce a proper guideline on off-site infrastructure requirements
and involved private developer as local partner in local
development…’
Developer 4;
‘…the state planning committee has to play a vital role to realise this
effort…’
Developer 5;
‘…those local authorities involved with off-site infrastructure
requirements should be 'treated' case-by-case. The key features in
dealing with off-site requirement must be through negotiation…’
6.4.2 The Effectiveness of Negotiations
In the previous parts, negotiation had been identified as the most successful
method to secure off-site infrastructure from private sector. However, the question
could be raised is that how effective the method might be? Table 6.9, illustrates that
most respondents (local authority) agreed that negotiations was a very effective
method to secure off-site infrastructure from the private sector.
173
There are two significant perceptions upon this matter. They found that the
method is quite effective since the approach had been backed up by the legal
provision (68.2%) and the approach was claimed to be very effective but it is only
applicable for large scale of development (27.3%). But for some respondents they
also agreed with the method, however, they perceived that the method is only
limited too few types of off-site infrastructure (4.5%).
Table 6.9: The effective of negotiation methods
The nature of effectiveness
Frequency
Per cent %
Quite effective since the approach is back-up
by legal provision (Act 172).
15
68.2
Very effective but is only limited to a few
types of off-site infrastructure.
1
4.5
Very effective, however it is only applicable
for large scale development.
6
27.3
Total
22
100.0
Source: Field Survey, 2005 (n=22)
The findings are similar to Sagalyn’s (1997) study on the practice of
negotiation to capture public amenities from private developers in United State
cities. The latter claims that with strong property market, these local authorities
successfully negotiated a demand to fund their public amenities from private
developers. He then stresses the power of the public sector (local authorities) in
negotiating a deal on a particular private development requiring public amenities
during the planning approval stage.
174
Based on the above, and referring to British planning system, negotiation is
one of the most efficient and acceptable approaches applied by local authorities to
secure off-site infrastructure, from developers through planning agreement during
the planning approval stage (Ennis, 2003). If there is a need for off-site
infrastructure to be provided prior granting of planning approval, the local authority
would then enter into negotiations with developers to secure the appropriate
infrastructure considered necessary for the development to proceed. The fact is
that, there is no structured guideline available to be used as a basis for such
practices. Since negotiation was promoted and implemented in many countries,
therefore there is a need for local authority to work seriously to initiate a structured
guideline of negotiation procedure.
6.4.3 Developers’ Reaction of off-site Infrastructure Requirements
The requirement of infrastructure during the planning approval stage is a
product of planning gain. Planning gain is a concept which emerged to retrieve
community benefits from the increase of land value after planning approval is
granted. However the practice indirectly would increase the development cost as
many developers have claimed. The above scenario is quite similar with the finding
of the study. In Table 6.10, an approximately 81.8% local authorities interviewed
realised that most developers are not favourable over the practice. However, they
have no choice since it has been legitimately practised. Although such practice is
not favourable to many developers, there are few developers who can really bear
the responsibility of private sector involvement in local infrastructure development.
This can be revealed by 9.1% of respondents found that some developers do
understand the role that have to be played by private sector in local infrastructure
development.
175
Table 6.10: Developers’ reactions when off-site infrastructure
imposed by local authority
Frequency
Per cent
%
Appeal to council to exemption from fulfilling the
requirements imposed
2
9.1
Most developers are very unhappy. However, they
have no choice.
18
81.8
Some developers understand the benefits to the
community.
2
9.1
Total
22
100.0
Developers’ reactions
Source: Field Survey, 2005 (n=22)
The study also revealed significant findings when local authorities were
asked on developers’ reactions with regards to their planning application involved
with the requirement of off-site infrastructure provisions. Approximately 9.1% of
the 22 interviewed local authorities had experienced developers who appealed to
local planning authority in order to obtain exemption from providing the
requirements of off-site infrastructure.
There were developers have been wary of such practice because of the
difficulty in measuring the impact of new development and accepting a reasonable
level of compensatory gain in form of off-site infrastructure provision. However
the practice to require developer to provide off-site infrastructure was widely
accepted as planning gain. As asserted by Fordham (1989), the practice of planning
gain is well established and recognised as reality in development control process in
planning system particularly to secure off-site infrastructure provision from private
sector.
176
6.5
Problems Relating to off-site Infrastructure Provision During
the Planning Approval Stage
6.5.1 The Constraints of Private Involvement
The main problem faced by local authorities in local infrastructure provision
is the lack of private sector involvement. The findings state that most developers
believe the main constraints are due to unavailability of off-site infrastructure
provision requirements guidelines (62.5%). Improper procedure applied to impose
off-site infrastructure requirement is also a major concern. Many developers
believe that such constraints can be avoided if the procedure defined clearly by
interpreting and incorporating with the local contexts. Moreover, several
developers claimed that the main problem caused by the groundless of procedures
used to justify the requirements is not consistent from one project to another project
and some cases from one local authority to another (6.2%).
By considering cost as the main determinant for the viability of the
development, the developers may have the perception that planning control affects
the development cost. Where, developers have to incur additional cost to provide
other infrastructures prior granting the planning approval. The study also claimed
that another reason constraining the involvement of private sector results from the
nature of the infrastructure. They claimed that the cost of providing off-site
infrastructure is comparatively high. This can be true since 18.8% of developers
positively responded to the statements that providing off-site infrastructure was
costly (see Table 6.11).
177
The findings are supported by many authors. As observed by Crow (1998),
the practice of planning gain is not a favourable one because such practice violates
the fundamental principle that planning permission cannot be bought or sold. What
had been pointed out regards to the abused of power by local planning authority
and Crow (1998) made another significant argument over the practice:
‘…the important point that must be made is between the products of
planning gain. Which are the nature and the purpose of the gain,
sought or offered, and the process in which generally takes the form of
negotiation leading to the agreement…’
Table 6.11: The constraint of private involvement in local
infrastructure provision
Factors
Frequency
Percent %
Providing off-site infrastructure was costly.
3
18.8
Insufficient of guidelines pertaining to off-site
infrastructure requirements.
10
62.5
Less incentive given by LA to developers who are
willing to contribute off-site infrastructure.
2
12.5
The rational used to justify the requirements of
off-site not consistent and unclear.
1
6.2
Total
16
100.0
Source: Field Survey 2005 (Developers, n=16)
178
6.5.2 The Appropriate Forms of off-site Infrastructure Provisions
Developers are expected to provide infrastructure to serve the development
or to contribute to provision in proportion to the scale of development. From Table
6.12, there are several types of planning contributions as recommended by both
respondents, which are:
- Financial contribution for existing off-site infrastructure improvement.
- Donating land for off-site infrastructure facilities.
- Existing road improvements (or provision).
- Joint-funding to expand infrastructure.
- Dedication of land for public use
- Provide urgently infrastructure at the other sites
- Constructing infrastructure improvements
- Cash payment of constructing facilities
- Provision of drainage system
However, the main problem that constrained the private involvement has
resulted from the improper practised of local planning authority as such unclear
definition and insufficient information of the practice which suppose to be provided
by local planning authority.
179
Table 6.12: The appropriate form of contribution of off-site
infrastructure provisions
Local
Authority
(n=22)
22
(100.0)
Developer
Donating land or easements at no cost for off-site
infrastructure facilities.
22
(100.0)
16
(100.0)
Existing road improvements (or provision).
22
(100.0)
16
(100.0)
Joint-funding to expand infrastructure capacity to serve
subsequent development in surrounding areas.
22
(100.0)
15
(93.8)
Dedication of land for public use.
21
(95.4)
14
(87.5)
Provide urgently infrastructure at the other sites.
18
(95.5)
12
(75.0)
Constructing infrastructure improvements to meet the
needs of the proposed development.
22
(100.0)
12
(75.0)
Cash payment towards capital cost of constructing
facilities or improvement (including commuted payment
for construction of off-site parking space).
20
(90.9)
14
(87.5)
Provision of drainage system.
20
(90.9)
11
(68.8)
Other public building/facilities (e.g. community centre,
public library etc.)
17
(77.2)
10
(62.6)
Leasing of completed off-site infrastructure to local
authority, or some other entity.
13
(59.1)
9
(56.3)
Allowing public access and use of privately owned land
and facilities.
5
(22.7)
10
(62.5)
Selling land to a public authority at less than market cost
for the purpose of off-site infrastructure facilities.
2
(9.1)
9
(56.3)
Paying fees to public authority towards the cost of
operating and maintaining public land or facilities.
4
(18.2)
3
(18.8)
Provision of community buildings or facilities.
11
(50.0)
2
(12.5)
Form of contributions
Financial contribution for existing off-site infrastructure
improvement.
Source: Field Survey, 2005
(n=16)
16
(100.0)
180
6.5.3 Weaknesses of the Present Practice of off-Site Infrastructure
Provision
Many interviewed developers expressed concerns over the difficulty to
promote private sector (developers) involvement in local infrastructure
development due to unregulated-procedure. Developers also have the perception
that the process of getting planning approval becomes complicated when it
involves the requirement of off-site infrastructure provision.
This is particularly evident in Table 6.13, where most developers
experience the difficulty in dealing with off-site infrastructure provision due to
improper structure of the present practice. The findings show that the main factors
are because of no clear guidelines of the negotiation practice (37.5%) and the adhoc procedure applied whenever off-site infrastructure imposed (37.5%). Thus,
combining what the developers felt, there are many weaknesses during planning
approval when the proposed development is involved with off-site infrastructure
requirement. The process is perceived to be time consuming by developers due to
improper practice of negotiations.
In addition to the above factors, about 25.0% of respondents agreed that
there is lack of clear guidelines on the practice of off-site infrastructure
requirements and most widely applied negotiations are inconsistent. Again Claydon
and Smith (1997) observed that such practice is decretive in nature. The discretion
in negotiating planning gain for off-site infrastructure is greater because it places
decision-making beyond the carefully defined confines of the development control
process.
181
In British planning system, among other factors, planning gain is to be
sought only when meeting the following circumstances:
i. When necessary;
ii. It must be relevant to planning;
iii. It must be directly related to the proposed development;
iv. Fairly and reasonably related in scale; and
v. Reasonable in all other aspects.
Table 6.13: Weaknesses of the present practice of off-site infrastructure
provision as observed by developers
Frequency
Percent%
Have no clear guideline of negotiation practice.
6
37.5
No proper guidelines on the requirements of offsite infrastructure. Most LA applied ad-hoc
procedures which some time create disputes
among developers and local planning authority.
6
37.5
There is lack of clear guidelines on the practice
of off-site infrastructure. However most
negotiation methods widely applied was
inconsistent.
4
25.0
Total
16
100.0
List of weaknesses
Source: Field Survey 2005 (n=16)
182
The important fact to be stressed here is that based on the above findings, in
the effort of local authority strengthening the practice of off-site infrastructure
provision similar approaches that have been practised in British planning system
can be considered. In the practice, development is permitted if the infrastructures
required by local planning authority are adequately provided or where there is a
firm undertaking or agreement to provide appropriate provision (Ache, P., 2003
and Hendrik, 2003). That institutional framework outlines the legal grounds for
local authority to negotiate with developers to secure the provision of off-site
infrastructure necessary for development to proceed (Ennis, 2003).
6.5.4 The Developers Perceptions on off-site Local Infrastructure
Provision Requirements
The availability of infrastructure is vital in the function of urban
community. The lack of such would affect the well-being of residents. In order to
fulfil the purpose, this has to be easily available (Ennis, 2003). However, such
practice has emerged by many developers or land owners with the concern that the
cost of infrastructure provision would affect the profitability of development. Most
of respondents agreed that the requirements to provide off-site infrastructure would
increase the development cost (see Table 6.14).
This is supported by two in-depth interviews to conclude the above findings,
which:
Developer 1 stated that:
‘…development cost would increase, therefore it will consequently
reduce the profit margin. Property prices become less competitive
because there is a slight increase in development cost…’
183
Then the developer 2 said that;
‘…the selling price of the development (project) which is required to
provide off-site infrastructure would be increased accordingly.
Subsequently, the selling price will be affected. Actually the
marketing strategies become very tough if the initial selling price
remain unchanged as there is additional requirements from approval
authority in development cost …’
Table 6.14: The perceptions of off-site local infrastructure practices
Local
Authority
(n=22)
Developer
(n=16)
Development control process incurs additional
development costs.
68.2 %
31.8 %
Developers are required to provide off-site
infrastructure as a return from additional
approval granted to developers.
81.8 %
56.3 %
The gradual improvement of off-site
infrastructure would expose competitive
market of the adjacent properties.
81.8 %
100.0 %
Indirectly planning gain has being practiced
widely in securing off-site infrastructure in
most local authorities in Malaysia and however
the practice was improperly practiced.
90.9 %
100.0 %
Developers would provide on-site physical
infrastructure and the public authority will
provide off-site physical and other forms of
infrastructure.
9.1 %
90.9 %
Perceptions
Source: Fieldworks survey 2005
184
Table 6.15: The problems faced by developers related to off-site
infrastructure provision
List of problems
Related
Yes
No
Total
Some local authorities are inconsistent in
considering planning permission for those
projects involved with off-site infrastructure
requirements.
11
(68.8)
5
(31.2)
16
(100.0)
High percentage of fund/land has to be
allocated for public amenities.
14
(87.5)
2
(12.5)
16
(100.0)
Requirement to provide off-site infrastructure
normally reflects the increase in development
cost.
16
(100.0)
0
(0.0)
16
(100.0)
Less commitment from developers due to the
perceptions that traditionally infrastructure has
long being provided by local authority.
4
(25.0)
12
(75.0)
16
(100.0)
Developers find that the guidelines used by
local authority to impose off-site infrastructure
was not clear.
15
(93.8)
1
(6.2)
16
(100.0)
Source: Field Survey, 2005 (n=16)
From the study, there are several factors identified as commonly confronted
by developers when their planning application is involved with the requirement to
provide of off-site infrastructure. However, the extent of the problems may vary
amongst local authority and the merit of each development. The appropriate
approaches should be taken by developers and local authorities to solve the
problems. Together with the limitation and the scarcity of financial capability the
185
current practice should be remedially shifted to private sectors (e.g. developers).
Table 6.15 illustrates the main problems faced by developers.
6.6
Suggestions to Promote off-site Infrastructure Provision
From the Table 6.16, the study has identified several approaches to promote
the provision of off-site infrastructure. This can be summarised as follows:
i. Introduce an attractive incentive.
ii. Standardised the negotiation framework since its enables the both parties
achieves a ‘win-win’ situation.
iii. The infrastructure should be financed using a special fund generated by
local authority.
iv. Local authority needs to set up a special mechanism to expedite the
planning approval of those projects involved with off-site infrastructure
requirements.
v. Negotiation for off-site infrastructure by developers should be initiated
properly and transparently by a local authority.
Based on these findings, it was also revealed that off-site infrastructure can
also be secured through planning requirements such as using ISF (Improvement
Services Fund) as provided under Section 132 of the Street, Drainage and Building
Act 1974 (Act 133). Local authorities seek contribution from private developers
through negotiation while considering planning approval. In return to the approved
planning permission, the developer might offer something to local authority in the
form of ‘contributions’. The contents of the contribution would be as what has been
186
‘agreed’ upon the approval.
The process of securing benefits (e.g. off-site
infrastructure) normally is enshrined between developers and local authority.
The findings also show that more developers adopted negotiations as an
effective approach to obtain fast-approval when dealing with off-site infrastructure.
Negotiation had been identified as the most successful and agreeable method to
secure off-site infrastructure from private sector. The practice to capture public
facilities in a strong property market was successfully negotiated from private
developers during planning approval stage.
There are several perceptions upon this matter. The in-depth interview with
few outstanding developers revealed the following opinions.
Developer 1;
‘...introduce an attractive infrastructure contribution scheme out-site of
proposed development location. This might be applicable for proposed
development located in the area where already adequate numbers of
infrastructure have…’
Developer 2;
‘…local authority should initiate private developers to sign planning
agreements on the purpose to require private developers to provide offsite infrastructure facilities in return of additional planning approval (e.g.
Unilateral Undertaking)….’
Developer 3;
‘… local authority should have Infrastructure Priority Lists (IPL) used as
check-list when they enter the negotiation of infrastructure requirements
with private developer….’
187
Developer 4;
‘… developer should be encouraged to provide other infrastructure
which needed in the surrounding development area. Subsequently the
local planning authority should reasonably ‘entertain’ developers by
facilitating the proposed development as far as it’s allowed under
prescribed legislations…’
Developer 5;
‘… some new developments could generate the ‘development impact’;
therefore there is a need for local authority to impose extra charges (e.g.
Development Impact Charge) for the use of infrastructure to reflect the
use of resources…’
Developer 6;
‘…. developers should be allowed for maximum development in order to
cope with the increased cost of development if the developer is willing to
provide off-site infrastructure. However, the exercise must comply with
other requirements…’
188
Table 6.16: Suggestions to promote off-site infrastructure provision
Suggestions
Introduce an attractive incentive (e.g. ‘Fast-Track’ approval at
planning stage).
Developer
Local
Authority
(n=22)
(n=16)
100.0
100.0
Standardised the negotiation framework since its enables the
both parties achieves a ‘win-win’ situation. Therefore, local
authority should introduce a transparent method of
developer’s contribution (e.g. planning agreements).
100.0
100.0
Off-site infrastructure should be financed directly out of
general tax revenues.
13.6
68.8
Off-site infrastructure should be financed using a special fund
generated by local authority (e.g. ISF provided , Act 133).
100.0
100.0
Off-site infrastructure should be financed by project owner
(e.g. developers).
31.8
-
Off-site infrastructure should be financed by both parties;
developer and local authority.
100.0
56.3
The user of infrastructure might be charged and the revenues
collected charges should be deposited into the so called
‘infrastructure fund’ then to be spend accordingly.
100.0
56.3
90.9
100.0
The cost incurred in providing off-site infrastructure should be
shared with other utility bodies and should not be a burden to
developers only.
95.5
100.0
The ‘size’ of infrastructure should be quantified from the
‘development impact’.
86.4
50.0
Negotiation for off-site infrastructure by developers should be
initiated properly and transparently by a local authority.
100.0
93.8
There is a need for private sector to participate in off-site
infrastructure provision to reduce the cost on public sector.
100.0
Local authority needs to set up a special mechanism to
expedite the planning approval of those projects involved with
off-site infrastructure requirements.
Source: Field Survey, 2005.
25.0
189
6.7
Existing Perceptions on the Appropriate Type of Delivery of off-site
Infrastructure Provision
The local authority may adopt any type of infrastructure delivery, however
with the appropriate utilisation of type of infrastructure delivery it could reduce the
cost of providing infrastructure. The limitations of funding forced local authority to
identify appropriate type of delivery in infrastructure provision. By referring to
Table 6.17, four methods of private involvement might be appropriate of delivery
for local authority to acquire off-site infrastructure from private sector. These
include service/management contract, least contract, Public-Private Partnership
(PPP), Joint-Venture (J.V) and privatisation. However, most respondents (local
authority and private sector) strongly agreed that such infrastructure can efficiently
be secured via Planning Approval System.
Service or Management Contract –the private sector will be awarded the
contract to maintain the local infrastructure instead of which is currently conducted
by local authorities. This type of delivery is suitable for local road maintenance,
drainage, landscaping, recreational facilities, parking facilities, incinerator plant,
maintenance of public utilities and public amenities.
Lease contracts are frequently used for the provision of standalone
recreation and cultural facilities and maintenance of pubic amenities. These are
usually short to medium term arrangements with the private operator accepting
components of commercial risk and with council retaining capital expenditure
responsibilities. However, for Joint-Venture (JV), under this method there are few
appropriate infrastructures to be delivered, these include recreational facilities and
provision and maintenance of public amenities. The local authority can go on JV
basis with the private sector to build and operate the local infrastructure and
services facilities.
Based on the findings, partnership concept which comprises of PublicPrivate Partnership (PPP) and Private Finance Initiative (PFI) has a potential
190
alternative for the both parties (government and private) to be used in local
infrastructure provisions. Through this method enables the government to secure
service rather than the ownership of the asset and enables the public to obtain a
good service and proper maintenance of the services.
However, the more intensive methods of private sector financing such as
Build-Operate-Transfer (BOT) schemes are very rarely applied in this country.
Table 6.17 revealed that the method is normally suitable for provision of highly
technical infrastructure such as incinerator plants, amenities and public utilities.
Based on the literature in previous chapters, local authority could benefit from the
involvement of private sector in (e.g. Service / Management Contracts, PublicPrivate Partnership (PPP), Private Financial Initiative (PFI), BOT Schemes, Joint
Ventures and Full Privatisation). Such practice is capable to provide higher
responsiveness of private sector and improves the quality of services and also helps
to ensure that essential infrastructure development continues even government
continuously tightening the relevant measures.
Sewerage etc.)
Maintenance of existing off-site
infrastructure
Other public amenities (e.g. Market etc.)
Other public utilities (e.g.
Betterment of existing local infrastructures
Parks, gardens or open space
Incinerator plants
Parking facilities
Recreation facilities
Landscaping
Drainage
Local road maintenance
Construction of new local roads
Type of off-site
infrastructure
delivered
Type of delivery
-
LA
-
10
62.5
11
68.5
13
81.8
11
50.0
13
59.1
18
81.8
-
12
75.0
11
50.0
-
-
-
-
10
45.5
15
68.2
-
-
13
81.3
-
2
12.5
13
81.3
-
-
12
75.0
-
-
-
-
-
-
D
10
45.5
-
-
-
14
87.5
-
-
-
-
-
LA
-
-
-
-
D
Lease
Contracts
17
13
77.3 81.3
13
11
59.1 68.8
9
15
40.9 93.8
15
11
20
68.2 68.8 90.9
22
16
100.0 100.0
12
10
54.5 62.5
15
12
18
68.2 75.0 81.8
-
D
Service/
Management
Contract
LA
Public-Private
Partnership
(PPP)
-
8
36.4
12
54.5
-
-
13
59.1
-
-
-
-
-
-
LA
-
3
18.8
11
68.8
-
-
9
56.3
-
-
-
-
-
-
D
BOOT, BOO
or BOT
(Schemes)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
D
Concession/
Franchise
Agreements
LA
-
14
63.6
-
-
-
-
-
12
54.5
-
-
-
-
LA
-
12
75.0
-
-
-
-
-
11
68.8
-
-
-
-
D
Joint Venture
(JV)
Developer (D) n = 16
Source: Field Survey, 2005
Note: Local Authority (LA) n = 22
D
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
16
100.0
Public Sector
Delivery
LA
21
95.5
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
22
100.0
-
19
86.4
22
100.0
-
-
8
36.4
12
54.5
15
68.2
-
-
-
-
LA
-
-
13
81.3
-
-
11
68.8
11
68.8
12
75.0
-
-
-
-
D
Full
Privatization
16
72.7
16
72.7
22
63.6
-
-
16
72.7
-
-
-
-
-
-
10
62.5
10
62.5
8
50.0
10
62.5
3
18.8
-
-
-
-
-
-
D
Private Finance
Initiative
(PFI)
LA
Table 6.17: Local authority and developers’ perception on the appropriate type of delivery
of off-site infrastructures
191
-
22
100.0
22
100.0
21
95.5
22
100.0
-
-
16
100.0
16
100.0
15
93.8
1
6.3
-
16
100.0
16
100.0
16
100.0
16
100.0
22
100.0
22
100.0
22
100.0
22
100.0
D
16
100.0
Planning
Approval
System
LA
21
95.5
191
192
6.8
Conclusion of the Chapter
The data gathered from the fieldwork is used to answer the research
questions. The chapter also generates grounds of suggestion for the improvement of
the current practice of planning approval through incorporating the element of
negotiation.
The chapter also discusses the possibility to use planning approval to secure
off-site infrastructure, a problem faced by the respondents at the planning stage.
For the field survey interview, the collected data is analysed using descriptive
analysis through the software program Statistical Package for Social Sciences
(SPSS).
The chapter reveals the problems pertinent to off-site infrastructure
provision through obtaining planning approval. It goes on to study the perceptions
of local authorities and developers on the possibility of using planning approval to
secure off-site infrastructure from the private sector. For many years local
authorities have secured on-site infrastructure to serve new developments using
planning approval, however not much effort has been made to identify the
possibility to use planning approval to secure off-site infrastructure from private
sector (developers). The limitation of funding available for local authorities to
provide such infrastructures has left the authorities with few options, other than
private sector.
The main findings of the study indicate negotiation to be the most effective
method to acquire infrastructure from private sector at planning approval stage. The
findings reveal that when the necessary infrastructure could not be provided by a
planning condition, it would be more effective to secure it by negotiation. If
infrastructure is secured in pace with the development, agreement alone may
suffice. More commonly, conditions are required to be imposed. Development need
not be a remedy to all deficiencies but nor should a developer expect the local
193
planning authority to grant planning approval that complicates matters. The
practice depends on the institutional framework of planning approval as extensively
framed by legislations. As agreed by many respondents, the development plan
system plays a significant role in coordinating new development with off-site and
on-site infrastructure provision.
Most developers agreed that the practice of negotiation for planning
contribution should be allowed, even if against the fundamental principles of
planning. However, the basis for seeking contributions to facilitate off-site
infrastructure provision from new development must be clearly established by local
authorities.
Yet, the involvement of private developer in local development must be
given prime consideration. Too much demand from private sector is not healthy for
local development. It would create insecurity for investment. Developers are driven
by the demands of the local property market. As a business entity, the developer
will only enter the market if the project is feasible or there is a potential gain.
Generally, the respondents who represent developers have the same opinions in
terms of development with some differences in guidelines or procedures dictated
by local authorities at the planning approval stage.
CHAPTER 7
PROPOSED IMPROVEMENT OF OFF-SITE LOCAL
INFRASTRUCTURE PROVISION
7.1
Introduction
In this chapter, the discussion aims to develop an improvement on the
present practice of local infrastructure provision. The chapter elaborates the
practices of local infrastructure provision based on the research findings in the
previous chapters. The discussion will accordingly answer the outlined research
objectives.
7.2
Discussion on the Key Findings
7.2.1 The Present Practice of Local Infrastructure Provision
The rapid increase of population demands for adequate infrastructure. In
order to fulfil the requirements, the involvement of private sector (developers) must
be given prime consideration. However, too many conditions being imposed on the
private will discourage the private sector investments. It creates insecurity for
private sector to invest in local development. This could happen because with the
nature of private investments, they only enter the market if they’re feasible and not
involving much procedural problems. Therefore, the procedural aspects in
195
obtaining development approval should be given prior consideration by the local
authority, particularly at the stage of considering planning approval applications
from private sector. The authority must facilitate the need of private sector without
giving less priority to the local residents in terms of quality local facilities.
The findings reveal several methods of infrastructure delivery applied at the
local level. The tendency of developer to contribute off-site infrastructure is mostly
influenced by the development cost. This occurs because local authority may use
power of negotiation in dealing with private sector to secure the required facilities.
The findings show that most off-site infrastructure provisions had been delivered
through complete public sector delivery and only realised in large-scale
development. Notably, most projects imposed with off-site infrastructure provision
are those with large scale development and the contribution is proportionate to the
size of the project.
In fact, there are several other forms of private provision such as the use of
planning contribution and planning requirement. The use of these two is very
limited and it was found that local authority widely used private sector financing.
However, this situation is applicable to all types of infrastructure delivery as well
as to the less effective methods, such as concession/franchise agreements, Publicprivate Partnership (PPP) and Private Finance Initiatives (PFI). Another method
applied by private sector is Built-Operate-Transfer (e.g. BOT, BOOT or BOO).
The findings show that the shift from public to private delivery of off-site
infrastructure is mainly due to the ability to raise the necessary financial resources
to facilitate the increase of local infrastructure provision.
The study also found that the availability of adequate off-site infrastructure
is an important criterion in the determination of project location. It can be
concluded that the sites which are readily provided with infrastructure are more
preferable to developers in determining the location for development. The findings
are supported by Claydon (1996) where many developers had considered areas
196
with less possibility to be imposed with off-site infrastructure as priority and even
treated as priority in negotiating the infrastructure provisions with local authority.
Based on the analysis in the previous chapter, the present drivers of the
provision of off-site infrastructure can be summarised and ranked as follows;
i. To fulfil the planning approval requirements as imposed by local
authority.
ii. Used as a marketing strategy.
iii. To increase the profit margin of the development by proper planning of
off-site infrastructure provision.
iv. To fulfil as part of corporate social responsibility.
v. As long term investment of capital and corporate image, and
vi. To enhance land and capital value.
197
7.2.2 The Application of Planning Approval System to Secure
Infrastructure Provision
The mechanism applied to secure infrastructure from developers is the
reflection of the institutional framework in which it operates. Planning approval
process is a legitimate process involving a comprehensive review of planning
system requirements during the planning approval stage. Therefore, town planners
and developers shall be equipped with the related skills and knowledge, such as
negotiating private contributions (advocacy planning), obtain planning approval
with complicated planning conditions and be more creative in offering planning
contributions which contributes to positive impact to the local development.
There are three methods frequently applied by local authorities to expedite
planning approval with regards to off-site infrastructure requirements. The study
found that one of the most efficient methods to monitor the planning application is
by setting up a One-Stop-Centre. It enables to facilitate all the disputes arising
between local authorities, technical departments and developers. The findings also
indicate that the firm whose town planner is well versed in planning is in
advantage to deal with planning matters and this helps the firm to expedite
timeframe obtaining planning approval.
Another significant finding is the key success in local infrastructure
provision through planning negotiations. Since the private sector holds the financial
capacity to bring local development and the local authority holds the institutional
framework in term of planning approval, therefore the local authority have much
opportunities to secure the appropriate infrastructure (off-site) from the private
sector.
198
7.2.3 The Problems Faced by Local Authorities and Developers to Secure
off-site Infrastructure Provision
Based on the findings, the main problems faced by local authorities are the
scope of definition for “off-site infrastructure” and the concern of developers over
the additional cost incurred and borne by developers. Most interviewed local
authorities expressed their concerns over the difficulty to promote private sector in
local infrastructure development due to unregulated-procedure which is involved
with off-site infrastructure provision. The problem resulted from the improper
practice by planning authority. The main factor contributing to these are unclear
guidelines of the negotiation practice and the ad-hoc procedure applied.
By considering cost as the main determinant for the viability of development,
developers have the perception that the ‘contents’ of planning approval directly
contribute to the development cost. The cost of providing off-site infrastructure is
comparatively high. Planning approval might indirectly influence the distribution
of private investment at the local level. The key issues are the problems faced by
the developers in co-ordinating and financing infrastructure provision and how
these problems affect the developers’ strategies with respect to the project location.
Another question is that how local authorities are able to ensure the adequate
infrastructure provision prior to granting the planning approval.
The delay at planning approval stage is among the most critical parts in
planning system and this particularly remains the concern of planning authorities
particularly those involved with off-site infrastructure requirements. As far as the
developers are concerned, the authority has to adopt the appropriate measures to
eliminate the problem. The main concern of developer is to obtain rapid approval. In
obtaining approval, time has long been recognised as among the major obstacles in
property development in the country.
However, the problems still persists. As far as developers are concerned,
most local authorities look at the problem as their main responsibility to expedite the
199
planning approval process. The study identified several issues and problems
pertaining to off-site infrastructure provision, such as:
i.
In most cases off-site infrastructure requires a lot of amendments in the
planning application. This occurs if in the present practice there is no
pre-discussion initiated at the early stage of the development, either by
local authority or private sector.
ii.
Most local planning authorities practice inappropriate procedures on
off-site infrastructure provision which often creates disputes among
applicants (e.g. developers).
iii. Without a clear and structured procedure, such practices would prolong
the period of obtaining the planning approval and subsequently increase
the development cost.
iv. Due to unavailability of a structured procedure, the development cost
has to be increased simultaneously because the developer is only
informed of the requirements once the planning application is
considered by local planning authority. However, in some countries
(e.g. UK) the planning system itself initiates pre-discussion upon
submission of plans.
v.
Strict planning application procedure imposed by local planning
authorities with regards to off-site infrastructure requirements. In most
cases such requirements are imposed to mitigate the expected
environmental consequences (e.g. traffic congestions, inadequate of
drainage, public utilities and public amenities).
vi. Poor co-ordination between relevant technical departments.
200
vii. Less commitment from developers due to the perception that
traditionally local authority has to provide such requirements.
viii. Great bureaucracy in the process.
ix. Inability to fulfil requirements due to cost implications.
x.
The guidelines used are not clear and inconsistent between local
planning authorities.
xi. Lack of information on off-site infrastructure practice.
xii. Inconsistency of the said practice among local authorities.
This part summarises the problems pertinent to off-site infrastructure
provision faced by local authority and developers at planning approval stage.
However, the extent of the problems may vary amongst local authorities and the
merit of each development. These problems have to be addressed because the
authority is no longer capable to provide infrastructure in order to sustain the local
economy. Due to the scarcity of local financial capacity the current practice should
remedially shift to the private sector.
201
7.2.4 The Perceptions of the Possible Mechanisms to Secure off-site
Infrastructure
The findings revealed that the responsibility to provide off-site
infrastructure fall under the mutual responsibility of both the private and public
sector. Local authority receives contribution from private developers under several
current mechanisms. These include the development charge, service charge,
Improvement Service Fund (ISF under Act 133), public-private joint development.
Although such practice is not favoured by many developers, however, they have no
choice since the practice is a legitimate process. Nevertheless, there are few
developers who really bear the responsibility of private sector involvement in local
infrastructure development.
Another point of view is that there are developers agree that the practice by
which contribution is obtained from developers should not be allowed. The practice
is alleged as against the fundamental principles of planning where the planning
approval cannot be bought and sold. The practice requires developers to bear all the
cost to provide off-site infrastructure. Planning approval system is applied to secure
appropriate level of infrastructure (off-site and on-site) to serve new development.
The system is considered as one of the means available to secure adequate level of
required infrastructure, either in the form of built facilities or financial
contributions. Therefore, the basis for seeking contributions to facilitate off-site
infrastructure provision from new development must be clearly established by local
authorities.
The study revealed that private developers are keen to accept the
negotiation approach as the most appropriate and effective way that benefits offsite local infrastructure from private developments. The findings were supported by
Sagalyn (1997 and Healey (1996), where negotiations had been considered as an
effective method to secure off-site infrastructure. Local authorities seek
contribution from private developers through negotiation while considering
202
planning approval. It is further known that off-site infrastructure can be secured
through planning requirements such as through ISF (Improvement Services Fund)
as provided under Section 132 of the Street, Drainage and Building Act 1974 (Act
133).
The findings show that more developers had adopted negotiations as an
effective approach to obtain fast-approval when dealing with off-site infrastructure.
However, in the actual practice of negotiation, there is a bargaining position on
both sides such as enhancing the values by deregulating from approval authority
against infrastructure provision of the private sector in return. From the findings, in
the return to the planning approval, the developer provides something to local
authority in the form of ‘contributions’. The contents of the contribution would be
as what has been ‘agreed’ as the approval.
This can be revealed by two perceptions from the interviews on developers
upon this matter:
Developer 1
‘…private developers and local planning authorities (LPAs) are very
keen on off-site provision through the concept of ‘planning obligation’
and not ‘planning gain’ which is claimed by many developers as the
abuse of public rights…’
Developer 2
‘… negotiation of planning contributions is about the ‘willingness’
and ‘not forcing’ developers to provide (to contribute) off-site
infrastructure to local authorities in exchange of additional
development approval…’
203
The study also identifies a few types off-site infrastructure which are
urgently needed by most local authorities which should be provided by private
developers. These include the drainage system (monsoon drain), parking, recreation
facilities, and betterment of existing local infrastructure, public utilities and public
amenities.
As discussed previously, planning approval ensures developers to provide
adequate infrastructure as prescribed in the development plans. There are several
types of off-site infrastructure that can be sought during planning approval, they are
as follows:
i. Paying for the provision of other infrastructure or public services;
ii. Provide the appropriate infrastructure to mitigate the identified
development impacts;
v. To pay the compensation of the identified development impacts; and
vi. Recovery in increase in the value of land on the grant of planning
approval or betterment.
However, the requirements are only permitted for a few types of
infrastructure and fulfil the following characteristics:
i. Critical infrastructure.
ii. Relevant to planning.
iii. Directly related to the proposed development.
iv. Reasonably related in scale and quantity; and
v. Reasonable in all other aspects (e.g. environmental mitigations).
Developers strongly believe that the constraints can be avoided if the
procedure is defined clearly. Moreover, several developers also claimed that the
main problem is caused by the rationale to justify the requirements of off-site
infrastructure, inconsistent between local authorities.
204
The following summarises several findings about the suggestions to
expedite planning approval which involves with off-site infrastructure.
i. Technical departments require a list of infrastructure by each individual
department.
ii. Having one-stop centre to monitor the requirements of planning approval
process
iii. Setup up SPEAD committee consisting of Surveyor, Planner, Engineer,
Architect and Developer to expedite the planning application.
7.2.5 Summary of Findings
Planning approval is essentially a process in co-ordinating and allocating of
activities. The mechanism that had been identified was an acceptable method to
acquire off-site infrastructure provision from private sector. However, the
negotiation would be the most appropriate method to deal with the affected
developers since the method is widely accepted by the developers.
Furthermore, development plans have played a significant mechanism in
coordinating new development with adequate provision of infrastructure (off-site
and on-site). Planning approval is only given if the conditions imposed by local
authority are fulfilled since the approval shall be made according to such gazetted
development plans. The new development requires bearing the cost of extra
services and community facilities where appropriate. In order to strengthen off-site
infrastructure provision, the institutional framework should outline the legal ground
for local authority to negotiate with developers to secure the infrastructure
necessary for development to go ahead.
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7.3
The Key Issues of off-site Local Infrastructure Provision
The analysis in Chapter 6 revealed some of the key issues pertaining to off-site
infrastructure. These are summarised as follows:
i.
Currently, the local authorities in Peninsular Malaysia are extensively
outsourcing the financial requirement for infrastructure provision from
public funds. However, the financing from private sector is limited to
Joint-Venture, Municipality Bond and BOT. At present the involvement
of private sectors only concentrated in infrastructure delivery, such as
Service/management contracts and Lease Contract.
ii. The results indicate that large local authorities are more likely than small
local authorities to have private sector involvement. Once again, this is
due to the lack of incentive and inability of the local authorities to manage
the risk sharing arrangements across the local authorities. However,
qualitative findings indicate that those local authorities located in remote
areas receive less involvement of private sector in local infrastructure.
Therefore, if there is no immediate reform in local infrastructure provision
mechanism the private involvement will remains concentrated in major
urban areas. This however would further deterioration the quality and
quantity of infrastructure in less developed areas.
iii. Various factors have driven the push for private sector involvement in the
provision of local infrastructure. These include lowering the cost and
improving the quality of infrastructure service delivery, bringing forward
investment and other objectives such as: economic development, access to
private sector capital ‘options’, use of private sector skills, minimising
council risk and broadening the scope of services.
206
vii. In the vast majority of local authority experiences with the private sector,
the private sector has performed better than or equal to expectations.
Moreover, these perceptions are the results of a long term private sector
contact, and not just a once off transaction.
Another significant finding is that the local authority needs a list of long
term public utilities and amenities projection within its jurisdiction. The lists of
infrastructure will be useful for the local authority to negotiate any infrastructure
from developer once planning application is considered. This is useful to developer
to review his proposed development or to minimise the costs of provision.
Normally, all interested parties have experienced conflict in their differing
assessments of the cost of providing infrastructure.
Nonetheless, there was concern over local authorities who were attempting
to extract unreasonable contribution from developers. There are complaints from
developers saying that local authority simply reviews their planning application and
requires developers to provide or pay for the facilities. The dispute raises debate
between local authorities and developers on the difficulties in formulating the
charging mechanisms. This happened because the guidelines had been formulated
without consulting the private sector (Hodge and Cameron, 1989). Involving
private sector would encourage it to view the concerns over the content of the
guidelines. In fact the approach indirectly strengthens the involvement of private
sector in the local development.
This
research,
ultimately
culminating
in
an
improvement
of
recommendation for local authority, look towards establishing a new balance
approach to the provision of local infrastructure, ensuring efficient and effective
service provision and contributing to economic growth. Development at local level
should ensure a balance of public and private sector approaches, complemented by
transparent and effective local policy.
207
7.4
Towards the Improvement of Local Infrastructure Provision System
Development of local infrastructure which covers several types of
infrastructure such as local road, sewerage, drainage system and waste management
was focused on capacity expansion through integrated and coordinated planning to
ensure the availability of the facilities to meet the demand. Infrastructure provisions
require a supply-driven approach to adopt and encourage the participation of the
private sector. The instability of local authority would affect the implementation of
major infrastructure projects by the private sector. As a result, the government have
to provide financial assistance for the completion of these projects in order to
ensure other sectors in the economy is not affected.
As revealed in the Ninth Malaysian Plan (9MP, 2006-2010), the strategies
are emphasised to enhance efficiency of the existing facilities. The provision of
local infrastructure is made to increase coverage and improve the quality of local
community. In order to strengthen their revenue collection, local authorities have
been encouraged to diversify methods of collection and adopt new methods of
private financing such as Public-Private Partnership (PPP) and Private Finance
Initiative (PFI). In addition, local authorities are encouraged to incorporate
innovative methods to increase revenue to reduce dependency on public funding
options and moving towards self-financing in the long run. Therefore, the attempt
is to outline the framework of planning approval process by incorporating the
various potential components from the research to the proposed improvement of
the present local infrastructure provision system.
208
7.4.1 The Conceptual Framework of the System
From the previous chapters, the main problem of local infrastructure is
always associated with inadequacy of funds. Given this fact, any mechanism to be
put forward should be able to consider all significant attributes towards efficient
local infrastructure provision. By referring to Figure 7.1, there are two main
features of the system that has been identified and should be incorporated in the
planning approval system, these are:
i. Adopting the present related legislative framework of planning system
(planning approval system) to recoup the direct costs from beneficiaries
(e.g. private property developers) rather than through general taxation;
ii. Maximising cost recovery from beneficiaries within the budget and
expectation of the respondents.
As discussed in the previous chapters, during the planning approval stage the
local authority may initiate some adverse-offers from developers – local authority
negotiation or negotiate for additional planning approval from developers to
facilitate local infrastructure provision. Normally during the negotiation, local
authority will be offered by developers’ preferable items to be considered as
developer contributions from the negotiation. Under the present practice, local
authorities are not allowed to impose excessive requirement since it is not stated in
related acts.
209
Maintenance grant
Grant based on economic
development
Loan
Repayment
Loan
Grant
Issuing Municipal Bonds
Revenue growth grant
Joint-Venture
Infrastructure
Existing Infrastructure
projects
projects
infrastructure
(new)
(new)
B.O.T Service or Management
Contract
Note:
1. By assuming that infrastructure project constructed by local authority
2. Local authority can secure infrastructure through negotiation upon the approval
of planning permission (subject to the size of the proposal developments).
Indicators: The Key Flow of income to local authority
Flow of expenditures from local authority
Flow of income/financial sources from
state/federal government to local authority
Figure 7.1: The practice of local infrastructure procurement (funding
and delivery system) in Malaysia
Direct Federal allocation for project construction
Authority Local equity
(Construction expenditures)
Maintenance
(See also figure 4b – 4c)
Direct involvement of
private sector.
(Refers note 2
and figure 4a).
Infrastructure
projects
(new)
Direct state budget for infrastructure construction
Loan
Repayment
Loan
Grant
State Government
Local Authority
(As executing agency)
Infrastructure secured
by development
control method.
7. Loans
6. Parking lot fees, plans fees,
interest receivable and
other miscellaneous items.
State road grant
Federal Government
Revenue collected by
local authority
5. Services charges/
Government grants
Loan
Repayment
Loan
4. Improvement Services Fund (ISF)
e.g. The fund allowable to be used for
building or maintenance of existing
local infrastructure.
3. Rentals
2. Licences fees
1. Real property tax or assessment
Sourcing funding from
external/internal fund borrowers
(e.g. Asian Development Bank,
Local banks etc.)
210
The system is outlined in such a way to avoid local authority facing direct
financial implications and the risks of investment as shared by many parties if the
fund is sourced from external institutions. However, before the system could be
effectively adopted by local authorities, a few changes are needed to meet the local
conditions. The system suggests the funding should come from the external
financial institutions such as Asian Development Bank. To avoid the problem it is
suggested that the funding should be sourced from multi-sources.
The system also incorporates the use of municipality bonds as one option to
finance the infrastructure provisions. The public are encouraged to buy these bonds
since the bonds generate a stable annual rate of return. As long as each additional
project brings net revenue to the local authority then the project can be financed by
issuing bonds to public. It is a form of loan from the public and promises a return
for lending their money when the bond matures.
7.4.2 The Components of the System
Based on the previous analysis, the planning approval can be applied by
local authority to secure off-site infrastructure from private sector. The following
findings provide the ways how planning approval system might be applied to
secure infrastructure from developers (private sector);
i. Securing infrastructure via negotiations: From the study most
respondents strongly agreed that infrastructure can be secured via
planning negotiations from private sector at planning approval stage.
They added that through such approach the developers may reduce the
financial burden if such requirement is imposed during hard times.
Healey et al. (1996) also observed that many developers preferred to
negotiate in fulfilling the required infrastructure instead of local
211
authority imposing immediate requirements without considering the
developers ability.
ii. Promoting and regulating a proper planning approval system which
involves off-site infrastructure: Currently most local authorities apply
ad-hoc procedures and respondents agreed that local authorities should
provide proper guidelines enabling them to apply the planning approval
to secure infrastructure. The rationale is to detail restrictively both good
and bad practices, and clarifying the actual concepts of planning
approval to secure infrastructure.
iii. The practice of negotiating off-site infrastructure retains high level of
public confidence. Therefore, negotiating process should be based on
the fundamental principle that the ‘planning approval may not be bought
or sold’.
iv. Planning approval ensures an adequate level of infrastructure from the
new development. Planning system also delivers appropriate facilities,
either in the form of built facilities or financial contributions. The basis
for seeking contributions from new development must be clearly
established and legitimately grounded. However, such practices should
be pre-discussed among all players before it came into effects.
v. Detailed guidance of planning approval which involves off-site
infrastructure requirements enables to spell out at all stages involved.
In assessing how infrastructure should be provided from different types
and scales of development, the guideline may provide a useful guidance
to the developer to identifying the requirements of off-site infrastructure
at the earlier stage of development. The new development referred to
LPA is required to evaluate the level of reasonableness before it can be
imposed with off-site requirements. This requires LPA to establish an
institutional framework to guide the negotiations between local
212
authorities, developers and others infrastructure providers in order to
fulfil the requirements.
7.4.3 Incorporating Planning Approval and Negotiations Process
The outcome of the study revealed that the developers have reacted
positively on the need to provide infrastructural facility to remedy the impact of the
proposed development prior to planning application approval. Based on this study
there is a need for the local authority to restructure the present procedure by
incorporating the private sector as local development partner. This approach can be
implemented by promoting negotiations as a part of approval approach in planning
approval process.
The practice should also incorporate as many private financing options such
as Built Operate Transfer (BOT), Public Private Partnership (PPP), Private Finance
Initiatives (PFI) or issuing Municipal Bonds to raise the capital needed to finance
the provisions of the local infrastructure. Such practices will enable local
authorities to reduce dependency on public funds. Basically, local authorities are
able to finance their projects by way of bonds, so long as the projects generate
positive marginal revenue to the local authority. Figure 7.2 outlines the system
which formulated in such a way in order to integrate planning approval to have
direct to private infrastructure delivery options.
By referring to Figure 7.3, during the consideration of planning approval, it
is actually undertaken by a team of planning officers in the local planning
authorities. In the proposed system, they act to advise planning committees on the
matters of off-site infrastructure requirements. The narrated process is based on the
research findings. The application, as advised by their planning consultants, is
decided by negotiating with the planning authority in advance of the submission of
an application. This demands extensive involvement from within the local planning
authority and several other technical departments. Normally the process reaches the
213
final decision by finalising the type of infrastructure required and the method of
delivery. The whole process is relatively straightforward and subject to
amendments on details as decided by the authority.
The process also illustrates the representatives of other service providers
such Syarikat Telekom Malaysia (STM), Tenaga Nasional Bhd. (TNB), private
water suppliers such as Syarikat Air Selangor (SYABAS), Pihak Berkuasa Air
(BPA), Indah Water Konsortiun (IWK) and many other public or private
infrastructure providers. These are coordinated within the local authority areas in
planning approval system. The Figure actually illustrates the passage of planning
applications through negotiating process.
Normally, the developer is offered to enter for negotiation if the planning
application is subject to the provision of off-site infrastructure and however, for
those planning applications not affected by off-site provisions, the application will
be treated through ordinary process. Referring to Figure 7.3 and Figure 7.4, based
on the suggestions received from both respondents, there is a possibility to
incorporate the negotiation components in the planning approval system. This
enables the local authority and developer to determine, identify and negotiate in
order to fulfil both requirements. Such practices enable both parties to achieve a
negotiated level of gain where local authority obtains off-site infrastructure then the
developer may be granted with additional bonuses such as increases in number of
story or waive of some financial contributions.
Full Privatization
Joint Ventures
Concession / Franchise Agreements
BOOT, BOO or BOT Schemes
Private Financial Initiative (PFI)
Public-Private Partnership (PPP)
Lease Contracts
Service / Management Contracts
State Government
Federal Government
Via Negotiations
Process
(list of ‘adverse-offers’
User Charges
(Utility Charges /
Direct User Charges
Mandatory Planning
Requirements
Taxes
(General Rates / Special
Rates / Differential Rates /
Separate Rates
Joint Ventures
Full Privatization
Private Financial Initiative (PFI)
Concession / Franchise Agreements
BOOT, BOO or BOT Schemes
Public-Private Partnership (PPP)
Lease Contracts
Service / Management Contracts
List of adverse-offers by private developers
Development
Contributions /
Infrastructure Charges
Development
Approval Process
(Development
Control System)
Internal Funding
Figure 7.2: Local authority infrastructure provision (off-site and on-site)
funding and delivery mechanisms
Taping funding from external/internal fund
borrowers (e.g. Asian Development Bank ,
ADB; Local banks etc.)
Issuing
Municipality
Bonds
Loan
Traditional Public Contracting
Direct Public
Funding
Grant
Grant
Indirect Private
Financing
Loan
Loan
Direct Private
Financing
Loan
Repayment
Loan
Repayment
Loan
Repayment
External Funding
Local Authority Infrastructure Provision Delivery
and Funding Mechanisms
214
214
215
Local
Authority
Applicant/s
(submission through
qualified town planner)
(Planning
Department)
Technical
Committee
Departments
Planning applications will be reviewed by
numbers of technical departments
Town and country Public Works
Planning
Department
Department
Mineral and Land
Malaysia
National Drainage and
Telecommunication Electricity
Irrigation
Department
Company
Company Department
Normal procedure of
planning approval
Planning
Department
(Receive technical
comments)
Environmental
Department
Checking by Planning
Department
Health
Department
Technical
Department
Committee Meeting
(Planning guidelines
checklists)
(Review panel)
or
Correction & Amendments
Tendency of
infrastructure
provision by
public sector
Preferred to enter negotiation for
infrastructure provision
Pre-negotiation of the terms to be offered
or required by local authority/developer
Agreed with the terms
of negotiation
Not agreed
Tendency of
infrastructure
provision by
privates sector
- Metropolitan open space
- Community Services
- Community Hall
- Pre-School
- Neighbourhood Centres
- Public Library
- Open Space
- Recreations and Cultural
Facilities
- Public Transport
- Local Roads
- Local Parks
- Water Treatment Plants
- Local Parks
- Water supply
- Sewerage treatment plants
Range of infrastructure categories might be
offered/required during negotiations
(based on study’s findings)
Negotiating the detail of
infrastructure will be offered
and the mode of delivery
The offered items will be bind in
form of planning agreements
(e.g. unilateral agreement)
Disapproved
Applicant/s
Planning Approval
issued to the
applicant
Approved
Full Council
Meeting
K.I.V
Figure 7.3: Proposed integration of planning approval and
negotiation process of local infrastructure
(Source: Formulated from research finding)
216
Stages
Pre-application
Consultation
Recommendation
/decision
Revised application
Recommendation
/decision
Activities involved
Extensive meeting / discussion among
technical departments, planner, architect
and local authority.
Limited importance because of extent
of pre-application negotiations
Defer subject to more detailed negotiations,
but acceptance in principle
Further negotiations between developer
and local authority
Approval
Figure 7.4: The negotiations process during planning approval stages
(Source: Compiled based on research findings)
For many planning applications, negotiation occurs at the point of initial
contact between the applicant and planning authority (see Figure 7.4 and Figure 7.5).
The scope of negotiation takes place at this pre-submission varying considerably
according to the character of the proposal. Following formal submission of the
planning approval applications, a series of parallel processes occur which may involve
negotiations with several other parties which are involved in the project. These might
include the applicants (developers), owners of the adjacent lots, consultants,
representatives of public or the interest group of the project and the planning
department.
217
By the pre-application, the applicant will be given a proper explanation
regarding how planning approval will likely proceeded if the proposed development is
subject to off-site infrastructure requirements. The local authority will notify
applicants of the infrastructure requirements. The suggestions to improve the planning
approval system which involves negotiation procedures to acquire off-site local
infrastructure provision from private sector is summarised in Figure 7.6.
7.4.4 Incorporating Private Delivery Methods in Local Infrastructure Provision
The provision of local infrastructure can be more efficient using the private
delivery methods. The advantages of these methods are the ability to share
investments, risks, rewards and responsibilities between the public and the private
sectors. Some projects that had been implemented using the traditional method of
delivery have not been successful due to the unstructured allocation of risk between
the private sector and the public sector. However, with proper structure of
implementation of privatisation (e.g. Public-Private Partnership or Private Finance
Initiative) the government is able to lead the approach which benefiting the both
parties and particularly public who the user.
Take for instance the countries of Australia, Ireland, Netherlands and Canada
which have successfully implemented the infrastructure provision using private
involvement such as Public-Private Partnership (PPP). Meanwhile in the British local
authorities, the provision of local infrastructure provision (off-site and on-site) was
intensively obtained from private sector. By looking at the experience from various
countries, Malaysia’s local authorities are urged to be more selective in local
infrastructure provision due to the fact that not all projects appropriately can be
implemented through such partnerships. In Malaysia, the private involvement is being
touted as an alternative approach for local authority to secure infrastructure for the
218
next generation of public facilities likes local road maintenance, urban services
provision and maintenance.
In Malaysia, budget constraint is serious. The government has stated the
intention to reduce its budget deficit and that inevitably results in the shelving of some
infrastructure projects. The scenario has forced local authorities to look at how to
involve private sector in local infrastructure provision. Based on the findings, most
respondents (local authorities and private developers) agreed that in order to reduce the
cost incurred to provide infrastructure, the concept called Public-Private Partnership
(PPP) and Private Finance Initiatives (PFI) have been identified as an appropriate
method to be applied for private involvement. However, based on the findings the
methods are still less considered by local authorities. This is due to the fact that the
method is still new to many local authorities. Therefore it requires a lot of skills to
manage such method. Incentives should be awarded to those local authorities willing
to apply any innovative private method of delivery to secure infrastructure from the
private sector.
However, the delivery of public infrastructure and community facilities can be
more effective if implemented through these methods. As an outline, the concept is a
refined approach of privatisation where partnerships are characterised by sharing of
investments, risks, rewards and responsibilities between the public and the private
sectors. The method is able to substantially reduce capital expenditure and convert the
costs into affordable operating expenditure that spread over the lifespan of the project.
- Applicant/agent
- Planning officer
Parties
involved
- Administrators
- Planning officer
- Agents
- Legal /
organizational
processes
- Consultants
- Planning officer
- Agent
- Public/groups
- Organisational
relationships
(e.g. policy/design)
- Nature of application
- Extent of consultations
- Organisational culture
- Information giving
- Amendments
- Bargaining
(e.g. agreements)
Consultations
-Planning officer
- Politicians
- Hierarchy/position
- Power/influence
- Precedent
- Value
- Politics
- Approval/refusal
- Modification to
reasons/conditions
Recommendation /
decision
Figure 7.5: Integrating planning approval and negotiation process
- Size, location and
type of application
- Attitude of parties
- Power/influence of
individuals
- Information
(e.g. parking)
- Modifications
(e.g. description)
- Information
exchange
- Bargaining the
adjustment of proposal
Major
influences
Components /
nature of
negotiations
Submission
Pre-application
stage
Planning approval process
- Planning Application
- Planning officer
- Nature of
decision
- Attitudes
- Nature of
application
- Conditions
- Details
- Resubmission
(start again)
- Pre-appeal exchange
of information
Approval stage
219
219
220
PPP and PFI were a refinement of Build-Operate-Transfer (B.O.T)
mechanism that see the local authority procuring a service rather that an asset by
contracting private sector to design, build, finance, operate and maintain the assets
required to deliver the service to its public sector client. Some privatisation projects
have not been successful because the risk allocation was not structured properly.
Under PPP or PFI, the local authority enables to restructure his financial capacity to
ensure his responsibility to provide the urgent infrastructure can beneficit to the
local development.
There is potential for this method to be introduced at the local level,
especially in the provision of public amenities and public utilities. The government
could set up a task force to study the viability of implementing such method.
Meanwhile, Malaysia can develop its own model based on existing ones and
incorporate these with the present planning approval. However, the local authority
should be selective when implementing projects using this method as not all
projects are viable through such partnerships.
7.5
Recommendations to Improve the Planning Approval System with
Regards to off-site Infrastructure Provision
The study proposes that the future trend of planning approval system should
emphasise more on de-regulation, monitoring and promotional aspects rather than
controlling local development. The approach of providing local infrastructure
should be based on the following features:
i.
Giving incentives to those projects providing local facilities such offsite infrastructure.
221
ii.
Periodically examining and revising the land use zoning, plot ratio,
density control and any other development control guidelines related to
off-site local infrastructure requirements in order to cope with the
present demand and infill development.
iii. Setting up an effective and efficient mechanism to monitor the process
of granting planning approvals by fulfilling any changes of policies.
The provision of local infrastructure should be viewed in terms of fulfilling
the demands of the local population and supporting the growth of the local
development by providing adequate provisions of infrastructure. The provision of
local infrastructure and utility should be coordinated in the context of the hierarchy
and function of local development. Moreover, these facilities need to have an
efficient level of management and maintenance service.
For an efficient urban service, the main strategy is to widen its coverage and
improve the quality of service by ensuring the sustainability and cost-efficiency of
maintenance. This could improve the living quality of population as well as
increase the attractiveness of the urban area. For efficient and cost-effective
provision of off-site infrastructure the present practices shall incorporate such
innovative approach requiring private developer to off-site infrastructure.
In order to further enhance the efforts to promote private involvement
through planning approval, local authority should extensively identify more
innovative sub-mechanisms in the present system. For this purpose, this research
outlined the following mechanisms to be adopted at in the system:
i. In the provisions of off-site infrastructure, the selection of proper sites
for the facilities must conform to the existing development plans (e.g.
Structure Plans or Local Plans). Therefore, the coordination amongst the
various approval authorities becomes pertinent.
222
ii. In preparing provisional plans, local authority must promote such
approach of partnership with private developer and other private service
providers (e.g. PPP, PFI or BOT). The move may reduce the financial
burden of local authorities in fulfilling its tax payer’s needs.
iii. As revealed in the findings and the previous studies, there is a need to
promote the concepts of integrated-sharing of off-site infrastructure
amongst neighbouring developments.
iv. In promoting the provision of off-site infrastructure, the authority
should ensure that developers (applicants) provide appropriate, efficient
and cost-effective infrastructure (normally during approving building
plans).
v. Introducing an attractive package of incentive to the private sector to
encourage their involvement in providing and managing of off-site
infrastructure.
vi. The local authority may adopt privatisation scheme because experiences
have shown that privatisation schemes have not only been able to
reduce local authorities’ allocation on infrastructure but also to generate
good revenues. Therefore, the privatisation scheme should be made as a
part of the proposed financial package model. The limitations of
borrowing also encouraged local authority to innovative ways of
financing, such as the requirement for contributions from developers.
Pricing policy should be designed to enhance efficiency by covering the
costs of capital and operation and by internalising the environmental
costs of urban infrastructure. It should substantially contribute to
financing of local infrastructure investments, maintenance, operation
and renewal.
223
The local authority should be clear about the rational used to justify the offsite infrastructure requirements. The findings show that most developers are willing
to accept off-site infrastructure provision should be provided mutually by both
parties. Such factors of social, economic and environmental impact should be
evaluated to determine the level of impact proposed development and this will used
to justify the appropriate forms of contributions should be imposed.
Private delivery
agent
Infrastructure
facility/service
Borrowing
Grant
Local authority
Delivery agent
Financing source
Infrastructure
facility/service
Local
Authority
Taxes
Public
Indirect users/
wider community
Public
Indirect private financing
Private
Subsidy
Taxes
Indirect users/
wider community
Direct Private financing
Private:
Local government debentures infrastructure
/ Issuing Municipality Bonds
User
charges
Direct user
Federal Government
State Government
Loan Repayment
Full Privatization
Joint Ventures
Concession /
Franchise Agreements
BOOT, BOO or
BOT
Private Financial
Initiative (PFI)
Public-Private
Partnership (PPP)
Lease Contracts
Service /
Management
Traditional Public
Contracting
Outsourcing of funding from external/internal fund sources (e.g.
Asian Development Bank, ADB; Local banks etc.)
Loan
2. Local authority can secure infrastructure
through negotiation upon the approval
of planning permission (subject to the
size of the proposal developments).
Local government debentures
Infrastructure/revenue bonds
User charges
Direct user
Issuing
Municipality
Bonds
1. By assuming that infrastructure
project constructed by local authority
Explanations
Grant
Grant
Direct Private
financing
Loan
Direct Public financing
Submission of Planning
Applications
Normal procedure of
considering planning
applications
(e.g. unilateral agreement)
The offered items will be bind
in form of planning agreements
Service / Management Contracts
Lease Contracts
Public-Private Partnership (PPP)
Private Financial Initiative (PFI)
Joint Ventures
Full Privatization
BOOT, BOO or BOT Schemes
Concession / Franchise Agreements
Method of delivery (See Note 3 and 4 for details and guidance)
List of adverse-offers by private developers (see Note 2, 3 and 6)
Negotiating the detail
infrastructure to be
offered by developer
Not agreed
Pre-negotiation of the terms to be offered
or required by local authority/developer
(See Note 2, 3, 4, 5 and 6 for details)
Agreed with the terms
of negotiation
(Planning
Department)
Local Authority
Technical Committee
Departments
1. Real property tax or assessment
Disapproved
Applicant/s
Planning Approval
issued to the applicant
Approved
Full Council
Meeting
K.I.V
Note 6 : Range of infrastructure categories might be offered/required
during negotiations (based on study’s findings).
Tendency of
infrastructure
provision by
privates sector
Tendency of
infrastructure
provision by
public sector
- Monson drain
- Metropolitan open space
- Community Services
- Community Hall
- Pre-School
- Neighbourhood Centres
- Public Library
- Open Space
- Recreations and Cultural
Facilities
- Public Transport
- Local Roads
- Local Parks
- Water Treatment Plants
- Local Parks
- Water supply
- Sewerage treatment plants
- Other facilities identified by
Local Authority.
Correction & Amendments
(Review panel)
(Planning guidelines
checklists)
Health
Department
Technical Department
Committee Meeting
Environmental
Department
7. Loans
6. Parking lot fees, plans fees, interest
receivable and others miscellaneous
items.
5. Services users/ Government grants
4. Improvement Services Fund (ISF)
e.g. the fund allowable to be used
for building or maintenance of
existing local infrastructure.
3. Rentals
2. License fees
Checking by Planning
Department
Mineral and Land
Malaysia
National Drainage and
Telecommunication Electricity
Irrigation
Department
Company
Company Department
Preferred to enter negotiation for
infrastructure provision
or
Town and country Public Works
Planning
Department
Department
(Receive technical
comments)
Mandatory Planning
Requirements
(General Rates / Special Rates /
Differential Rates / Separate Rates)
Revenue collected by local
authority
Planning applications will be reviewed by technical departments
(Submission through qualified town
planner)
Planning
Department
Development Contributions /
Infrastructure Charges
(Utility Charges / Direct User
Charges)
User Charges
Pre-discussion or negotiations of off-site infrastructure
requirements (See Note 1 for details)
Via Negotiations Process
(Development Control
System)
Planning Approval
Process
iv. Reasonably related in scale and quantity; and
v. Reasonable in all other aspects (e.g. environmental impacts)
224
10. Constructs infrastructure then dedicate for
public use.
LA
95
100
100
100
100
100
100
100
100
100
100
100
D
100
100
100
100
100
100
100
100
100
100
100
100
50
59
82
77
59
41
68
100
55
68
LA
D
63
69
82
82
69
94
69
100
63
75
50
82
91
LA
75
823
88
D
46
68
46
LA
13
81
75
D
36
55
59
LA
19
69
56
D
Usually one of
contracts for small
components of the
overall infrastructure
network, with council
bearing virtually all
risks. These are
common arrangements
and include
maintenance contracts,
design and construct
contracts, etc.
Service/ Management
Contracts
Usually a long term
contract for a particular
infrastructure facility where
the private sector finances
builds and operates the
facility with the assurance
that Council will buy a
minimum level of output.
These are uncommon but
may include toll roads,
wastewater treatment
plants, health facilities, etc.
Build Own Operate
Transfer (BOOT) or BOO
or BOT Schemes
D
64
55
LA
75
69
D
86
100
36
55
68
LA
81
69
69
75
75
75
65
75
LA
65
65
55
65
15
D
100
100
96
100
100
100
100
100
LA
96
100
100
94
6.3
100
100
100
100
D
100
Usually a long-term
contract for all components
of an infrastructure network
within a given area, with
the private sector assuming
all commercial risk and
service expansion
responsibilities. These
agreements may cover
water and electricity
infrastructure networks,
etc. but are uncommon at
the local level.
Concession / Franchise
Agreements
The permanent sale
of an infrastructure
asset/ network to the
private sector,
usually accompanied
with public sector
price and quality
regulation. The most
typical infrastructure
privatization (i.e.
telecommunications
infrastructure).
Full
Privatization
The infrastructure
secured from private
sector through
planning approval
system
as practised under
development control
system (Part 4 :
Development Control,
Town and Country
Planning Act 1976
[Act 172).
Planning
Approval
Note: Local Authority (LA) n = 22 Developer (D) n = 16
LA
Figure 7.6: Proposed improvement for local authority
infrastructure provision (off-site and on site)
funding and delivery system / process
Usually a short to medium
term arrangement for a
particular infrastructure
facility, with the private
operator accepting most
commercial risks but with
Council retaining capital
expenditure responsibilities.
An example is the
outsourcing of leisure
facilities to private
Management / operation.
Lease
Contracts
Note 5: The summary of characteristics of delivery methods of local infrastructure provision.
How to use Note 4 – There are 2 ways. If LA seeking for the appropriate method to procure recreation facilities.
First, refers to list type of delivery_ public delivery-Planning Approval.
Then based on the list the most recommended type of delivery were Public Delivery,
Planning Approval System and Lease Contract.
Source: Compiled from research findings.
Construction of new local roads
Local road maintenance
Drainage
Landscaping
Recreation facilities
Parking facilities
Incinerator plants
Parks, gardens or open space
Betterment of existing local infrastructures
Other public utilities (e.g. Sewerage etc.)
Other public amenities (e.g. Market etc.)
Maintenance of existing off-site infrastructure
Type of off-site infrastructure
delivered
Type of delivery (Percentage %)
D
13. Other public building/facilities (e.g.
community centre, public library etc.
14. Cash payment towards capital cost of
constructing facilities or improvement. .
(Including commuted payment for construction
of off-site parking space).
7. Provide urgently infrastructure at the other
sites.
8. Dedication of land for public use.
9. Commuted payments for car parking.
11. Provision of community buildings or facilities.
12. Provision of drainage system.
6. Existing road improvements (or provision).
Note 4: The recommended and priority of type of off-site infrastructures and the methods of infrastructure provision delivery
1. Financial contribution for existing off-site infrastructure
improvement.
2. Donating land or easements at no cost for off-site
infrastructure facilities.
3. Constructing infrastructure improvements to meet the
needs of the proposed development.
4. Leasing completed off-site infrastructure to local
authority, or some other entity.
5. Joint-funding to expand infrastructure capacity to
serve subsequent development in surrounding areas.
Note 3: Some of the types of off-site infrastructure that can be acquired from new development;
i. The infrastructure critically required.
ii. Relevant to planning.
iii. Directly related to the proposed development.
Note 2: The off-site infrastructure only can be imposed if fulfilled the following circumstances;
Public Sector
Delivery
Private financing
Service/
Management
Contract
Loan
At this stage all the planning applications which the size and the contents of the proposed development fulfilled the minimum requirement set by local authority on the offsite local infrastructure provision have to consult the appropriate local authority to negotiate the quantity or the types of infrastructure should be provided. However, this
ONLY applicable if the proposed development subject to the off-site local infrastructure provision and those planning permission which are not subject to these
requirements they will proceed to normal procedures. However, the details of the criteria for the requirements will be determined and outlined by the appropriate local
authority.
Lease Contracts
Internal Funding
Through PublicPrivate Partnership
(PPP)
Loan
Repayment
Note 1: Pre-discussion or negotiations of off-site infrastructure provisions
BOOT, BOO or
BOT (Schemes)
Loan
Repayment
Explanation Notes
Concession/
Franchise
Agreements
Public Sector
Delivery
Equity
Joint Venture (JV)
Indirect
Private
financing
Borrowing
Full Privatization
External Funding
Grant
Private Financial
Initiative (PFI)
Local Authority Infrastructure Provision Delivery and Funding Mechanisms
Borrowing
Planning Approval
System
225
7.6
Conclusion of the Chapter
Inadequacy of infrastructure is a common problem threatening local
development. Traditionally, local authority has been responsible for the essential
off-site infrastructure facilities such as local roads, drainage system (e.g. monsoon
drain), recreation facilities, parks, gardens, open spaces, sewerage infrastructure
and many other neighbourhood-related facilities. However, the cost of providing
the infrastructure is substantial and is set to increase markedly for the years to
come. The research suggests that the cost to provide the local infrastructure is
expected to increase drastically parallel to the urban population growth. Such
pressure has caused local authorities to look for other options of funding
mechanism for their infrastructure; recognising that the appropriate and effective
delivery methods would be crucial for local authority to provide such
infrastructure.
The benefits from off-site local infrastructure provision can be very
individual and vital for local development. In providing such infrastructure, local
authorities therefore are supposed to outline an efficient planning approval system
enabling them to distribute costs of providing infrastructure to potential users.
However, the present mechanism in providing off-site infrastructure provision is
poorly practised.
Since the number and the locations of required off-site infrastructure
provisions have been allocated in development plans, the lack of funds have forced
the local authorities to give priority to the needy areas in order to stimulate private
capital investments. Accurate estimation of demand for off-site infrastructure and
the cost incurred in providing such facilities has been very problematic in local
infrastructure provision.
226
To minimise the uncertainty of cost required to provide off-site
infrastructure, local authorities have to develop a mechanism to forecast accurately
the size of requirements by new development based on information available.
Alongside these technical assessments the local authorities have to formalise the
negotiation practices in planning approval stage. A standardised form of
negotiation practice by giving developers incentives and clear path of the cost
implication should be devised at the early stage of development.
The research has identified several problems faced by local authorities
involving the provision of off-site infrastructure:
i.
The rising cost of infrastructure provision to reduce the ability of the
local authority to provide off-site infrastructure compared to the past.
ii. Unavailability of a structured mechanism to justify the need for the
provision of off-site infrastructure during considering planning
approval.
v. The constraints faced by many potential private sectors (e.g. private
developer) to obtain planning permission from local planning authority.
CHAPTER 8
SUMMARY AND CONCLUSION
8.1
Introduction
This chapter summarises the findings of the previous ones from which
conclusions are drawn and recommendations for the improvement of the
infrastructure provision of the present planning approval system. The chapter also
provides possible areas for further research to identify the options or methods of
local infrastructure provision.
8.2
Summary of Discussions
The study revealed that without any effort to reform the present practice of
local infrastructure provision, the current situation would further constraint the
ability of local authority to provide infrastructure. The provision of off-site
infrastructure always incurred a substantial financial allocation. This is due to the
fact that the provision is not only costly; it entails several financial implications to
the capacity of local authority to fulfil such need. To overcome the problems, the
findings strongly recommend that the local authority has to reform the present
system of planning approval. The system should be adopted with an integrated
planning approval be based on the costs-sharing concept among the users via
228
improving the procedures of planning approval system. The approach also stresses
on the need to rely on private involvement as the main source of finance.
This study has reviewed the different options of public and private funding
available to the provision of off-site infrastructure. It then explored the role of
external organisations that might assist the progressive improvement of local
infrastructure. The findings further provided evidence to indicate that at a larger
local authority, off-site infrastructure provision is largely considered as part of the
developers’ responsibility to mitigate the development impacts, one of the main
concerns over the development. The design and layout of the infrastructure should
be tailored within the capacity of the developers.
The mechanisms applied to secure contributions from private sector are the
reflections of the institutional framework. The study has identified that although
both developer and local authority have a good understanding of the fundamental
concept of off-site infrastructure, there are still considerable areas of uncertainty
surrounding the precise definition and measurement of the key elements pertaining
to off-site local infrastructure. The situation occurs because at the present such
practice does not have a proper guideline. The practice was segmented amongst
local authorities.
The findings of the research also revealed that the previous research has only
tended to examine the nature of the practice of the infrastructure delivery within the
frameworks of national economy and very little focus has been given to
comprehensive examination on how private developers can be involved in off-site
local infrastructure provision.
The main concern over the discussion revolves around the relationship
between private developers and local planning authorities over the issue of scarcity
of local funds. The study therefore provides the parameters to secure infrastructure
contributions. It has argued that in order to achieve a comprehensive understanding
of the issues it is necessary to overview on the broader picture, what is required in
229
terms of the types of infrastructure. This can be realised by introducing an
Infrastructure Priority List (IPL) which can be used to determine the types and
methods of delivery for the urgently required infrastructure. This IPL is a very
useful mechanism since it provides a list of currently needed infrastructure either
on-site or off-site. The list will be used by the local authority to propose any
infrastructure to developer in negotiating planning approval.
Other significant findings include the negotiation process that plays a
significant role in acquiring off-site local infrastructure. The nature of the process
and the effectiveness of the method also vary under different circumstances. This
requires further investigation to define how the framework of negotiations should
be outlined and the structure of how the method can be applied in various local
authorities regardless of geographical features.
8.3
Key Issues for Future Research
The findings have raised several key questions on the possibilities of private
involvement in local infrastructure development. There are several issues that have
been identified for further research, such as:
i.
Research has to be conducted to identify the main barriers to the private
involvement in local infrastructure. The research also has to look at
other opportunities such as privatisation of local infrastructure.
ii. Local economic development is about creating consensus on the
direction of local development, convergence in activities of the various
local actors and about undertaking partnerships between local authority
and private sector. Therefore, there is a need to identify the
opportunities for local authorities to achieve such cooperation from
private sectors in off-site infrastructure provision.
230
iii. Another opportunity available for local authority to gain contribution
from private developers can be formulated from a framed joint-venture
between local development actors with local authority. A model that
has been practised in Australia’s local authorities can be considered as
the framework to start with. The approaches should be tailored to the
local administrative framework. Therefore, this study strongly
recommends that a thorough study be conducted to explore the
suitability of this model adapted into local infrastructure provision.
iv. Both private developers and local authorities emphasise negotiation as
a reliable means to secure off-site infrastructure from private
developers. This research looks into how the negotiation should
proceed and implement. Therefore, it is suggested a future research to
delve on the negotiation process, including the bargaining process
available at the local authority and benefits that can be gained by the
developers.
The findings of this study also shed light on the realisation of the
relationship between local infrastructure provision and local authority growth. This
research has identified that despite good understanding of the planning system
which becomes the legitimate framework for local infrastructure provision and the
arguments for and against the use of private involvement, there are still
considerable areas of uncertainty surrounding the precise definition and
measurement of key elements in local infrastructure.
231
8.4
Conclusion
Planning approval is essentially a process of coordination and allocation of
activities. The mechanism that had been identified was an acceptable method to
acquire off-site infrastructure provision from private sector. In the process,
development plans have played a significant mechanism in coordinating new
development with adequate provision of infrastructure (off-site and on-site).
Planning approval is only permitted if the conditions imposed by local authority are
fulfilled since the approval shall be made according to such gazetted development
plans.
The findings reveal that the responsibility to provide off-site infrastructure
fall under the mutual responsibility of both private and public sectors. Although it
is not favoured by many developers, they are forced to comply since the practice is
legal. Nevertheless, there are few developers which indeed bear such responsibility
of some local infrastructure development.
The tendency of developers to contribute off-site infrastructure is mostly
influenced by the development cost. The findings show that most off-site
infrastructure provision had been delivered through complete public and private
deliveries and most projects coupled with off-site provisions are the large scale
developments and the value of contribution is proportionate with the size of the
projects.
However, there are developers which had objected to the method of
contribution. The practice is alleged as contravening the fundamental principles of
planning where approval cannot be bought and sold. Several developers had
claimed that the main problem to be attributed to the rationale justify such
requirement on off-site infrastructure as the issues of non-consistence being
imposed on developers is the different local authorities. Therefore, the basis for
seeking contributions to facilitate off-site infrastructure provision from new
development must be clearly established by local authorities.
232
From the study it is revealed that developers are keen to accept the
negotiation approach as the most appropriate in the process of securing off-site
local infrastructure from private developers. The findings have reaffirmed of the
potential shifting from the public to the private sector through negotiation within
the framework of planning approval process. The main reason why local authorities
use private options is to fund the infrastructure provisions. In return to the approved
planning permission, the developers extend to local authority in the form of
‘contributions’. The contents of the contribution would be as what has been
‘agreed’ as the approval.
The main purpose of this research has been to study the possibility of using
planning approval system to secure off-site infrastructure from private sector. The
findings of the research conclude that the planning approval system could be used
by local authority to secure off-site infrastructure from private sector. However, it
requires further works to detail on the framework of negotiations and how the
method can be applied in the various local authorities.
233
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• Debt underwritten by
Government can use very low
interest rates – cheap form of
capital.
• Cannot access very low interest
rates.
• Most efficient where costs of
managing risks do not exceed
benefits of getting access to private
capital.
Private Debt
• Not efficient in setting price
signals for best value infrastructure
provision.
• Could redirect public funds from
pure public goods towards goods
for which there are alternative
funding measures.
Efficiency
State Debt
Debt Finance
Consolidated
State Revenue
Funding
Measure
• Potentially able to raise very large
funds subject to fiscal management
imperatives of the State (AAA rating).
• Effectiveness dependant on
controlling risks – including interest
costs / peak levels of debt.
• Feasibility subject to securing and
hypothecating a low risk revenue
stream to fund debt.
• May require a Special Purpose
Vehicle
(SPV).
• Able to access large funds – but at
higher cost.
• Especially where a project (or area
to be serviced stands alone) and relies
less on a complex web of interrelated
decisions that confound aspects of risk
management.
• Appropriate where governance
structures for private-public
partnerships are set up to assist in
managing risks - and where these
costs are acceptable.
Equity
• Shares costs over time among
current and future generation
beneficiaries.
• Shares costs over time among
contemporary and future generation
beneficiaries.
• Assumes the funding of a wholly
public good – not a shared private
benefit.
• Poor linkage between payment and
infrastructure provision.
• Uses current public wealth to pay for
long term community benefits.
• Increased use of this source would
require priority reallocation and
further taxation.
Evaluation Criteria
• Unlikely to offer sufficient revenue
when required.
• Simple to administer and implement
as part of a funding package.
Effectiveness
• Appropriate to fund public goods
(subject to fiscal parameters) which
represent a long term investment in
the city’s future.
• Appropriate where supported by a
secure revenue stream from a
funding source.
• Appropriate to finance debt offbudget on the balance sheet of a
SPV where Government interest
rates can be accessed (and fiscal
parameters are met).
• Appropriate where risks are able
to be managed by the private sector
– otherwise requires significant
Government underwriting and
contractual controls.
• Most appropriate where cceptable
and reliable sources of revenue can
be securely tied to a project (eg:
tolls).
• Useful to access alternative
capital in an environment of fiscal
constraint or where public capital
has other high priorities.
• Well suited to funding network
infrastructure components.
• Broadly understood and
supported mechanism – until
political trade-offs with core public
services are exposed or extra
taxation foreshadowed.
Appropriateness
(Source: Adapted from Funding Local Infrastructure, Department of Infrastructure,
Planning and Natural Resources, Australia)
Appendix A1: Evaluation of Alternative Local Infrastructure Funding Measures
• Not a funding source – likely to
require Government underwriting.
• Operates subject to securing a
private or public revenue stream
(eg: tolls or levies).
• Valuable where access to public
capital is constrained.
• Not a funding source – a financial
management tool to smooth out
peaks and troughs in costs and
revenue – and ensure that costs are
spread out over a longer time.
• Operates subject to securing a
private or public revenue stream
(eg: tolls or levies).
• Preferred mechanism for the
immediate funding of public goods.
• Unlikely to be sufficient funds for
needs which have alternative
funding sources.
• As a default – this mechanism is
the last resort to fund underwriting
of other measures.
Comment on Role
260
26
• Not efficient in setting price
signals
• High cost scheme due to
complexity.
• Uncertain revenue stream due to
land value fluctuation.
• But potentially large revenue
pool.
• Not efficient as a funding
mechanism in its own right due to
high revenue risk.
• Funds local infrastructure and
services on the basis of land value
as a proxy for demand.
Betterment Tax
Direct Land
Value
Capture
Local Rates
Efficiency
Hypothecated
City-wide
‘Environmental’
Levy
Funding
Measure
• Very effective and established local
revenue raising mechanism.
• Not relevant to regional
infrastructure.
• Impost set via balance sheet
overseen
by elected council.
• Effective at delivering a place
outcome where strategic land assets
are acquired (e.g.: Rouse Hill regional
centre).
• High risk - amount of revenue able
to be generated is very difficult to
predict.
• Proven difficult to implement due to
complexity in setting valuation and
measuring uplift.
Equity
• Plays a supporting role to ensure that
existing local residents contribute to
items that they share a benefit in.
• Difficult to allocate a high
proportion of rate income to new
development due to existing resident
rate base being the funding source.
• May raise anti-competitive concerns
where the State may be seen to be
acting to maximise land value uplift
rather than deliver broader outcomes.
• Assume the proportion of uplift
targeted is comparable to the benefit
conferred by the Government
planning and investment decision.
• May target asset rich –. cash poor –
requiring measures to collect revenue
on sale rather than as an annual rate.
• Indirect linkage between payment
and infrastructure provision.
• Payment unlikely to be equitable
where beneficiaries are remote and
where levels of payment are not
sensitive to benefit received or
capacity to pay (eg: flat fee across
city).
Evaluation Criteria
. • Potentially very effective at raising
funds for specific programs of work.
• Unlikely to be sustained for long
term or diffuse infrastructure
provision where political will may
wane.
Effectiveness
• Local rates perform a limited and
strict role in funding a council
balance sheet deficit.
• Rates do reflect land value uplift
but do not extend beyond their role
described above – nor beyond the
prevailing rate cap.
• Rates are useful to fund recurrent
local government expenditure.
• Most appropriate as a component
in a suite of measures – especially
where the State needs to guarantee
an outcome on a strategic site (eg:
Rouse Hill regional centre).
• Appropriate to target unearned
uplift.
• Contributes to broadening
funding base by directly targeting
the raw land owner.
• Community/political backlash to
1970s scheme due to lack of nexus.
• May act to pass infrastructure
costs backwards and suppress raw
land value.
• Useful in establishing a new /
independent source of targeted
funds to achieve a specific result.
• Used for specific projects with
clear milestones.
• Especially valuable to fund
regional benefits without upsetting
other funding regimes.
• Desirable to have community and
political buy-in and acceptance of
result (eg: ocean outfalls levy).
Appropriateness
• Application limited by rate
capping.
• Funds capital and recurrent local
expenditure.
• Limited to funding council
balance sheet.
• Less applicable to greenfield
development.
• Most value as a supporting
measure to lock in place outcomes
as well as incidentally earn a return
on investment.
• Would work as a funding
mechanism only where crafted to
achieve revenue from high land
value uplift infrastructure.
• Anti-competition issues are
raised.
• Valuable to target land owner
beneficiaries of unearned land
value uplift.
• Politically difficult to implement
– history of 1970s betterment tax
regime.
• Hypothecated taxes to fund
infrastructure bonds are a common
feature of US system – typically the
community vote to support these
taxes.
• May have role to fund catch-up
and network connections or a
specific program with measurable
results.
• Requires intense political will –
likely to be only sustained for brief
and visible programs.
Comment on Role
261
26
Developer
Agreements
Developer
Contributions
Section 94
Contributions
Funding
Measure
• More efficient for Government
than contributions via a fund – as
land an infrastructure costs can be
internalised by the developer.
• Agreement optimises provision of
land and infrastructure by having
the party most suited to manage the
risks provide the land/works.
• Price signal felt directly by the
land or infrastructure provider.
• Enables private innovation on
delivery of needed works according
to agreed specification.
• Efficient means of setting the
price and level of provision of local
infrastructure according to the
demands of new development.
• Most efficient where costs are
internalised to development as
works in kind or land dedications.
• Least efficient where goods are
provided indirectly via a fund.
• High administrative costs can
hinder the process where income
streams are low or erratic.
Efficiency
• Agreements are a valuable means of
linking the execution of interrelated
actions towards a common outcome
for a development area.
• The efficiencies discussed can only
be achieved where an agreement binds
all parties to their agreed
responsibilities –
especially where agencies are
expected to make long term funding
commitments.
• Agreements are not effective where
there is lingering uncertainty - it
frequently proves difficult to finalise
agreements and there are many cases
of agreement negotiations spreading
over many years.
• Agreements are most effective
where there is an underlying
understanding of what is appropriate
to be provided for the subject area.
• As developer agreements may be
complex – their formulation places a
burden on the council and agencies
involved especially in terms of
requiring skilled personnel
involvement.
Equity
• Most equitable where development
agreements are genuine ‘agreements’
(not coerced) to progress the delivery
of facilities the need for which is
reasonably generated by development.
• Most equitable where an agreement
also ties down arrangements for the
broader community to contribute to
any public good being produced by
the development.
• Equitable where a contributions plan
establishes reasonable nexus and
accurately apportions costs between
new and existing development
(relying on other sources to fund
existing beneficiaries).
Evaluation Criteria
• Least effective where fund accrues at
a slow or irregular rate ill matched
with expenditure needs.
• Least effective where fund is
exposed to land value escalation risks
regarding land acquisition.
Effectiveness
• Most appropriate in major
developments involving one/few
owners and few agencies – where
costs in negotiation are better
balanced with the efficiencies
gained from using this process.
• Agreements need to clearly
describe how they fit with
surrounding funding arrangements
– (eg: does any aspect of a
contributions plan continue to
apply say for community facilities).
• Appropriate to deliver local
infrastructure in high growth areas
where new developments are the
greatest beneficiaries and where
contributions income is most
predictable.
• Well suited to apply to situations
where there are multiple owners –
with whom the negotiation of a
consistent agreement would be very
difficult.
• Not well suited to apply to
regional infrastructure especially
due to difficulty of local
government coordinating State
infrastructure investment.
Appropriateness
• A more efficient means of
internalizing development costs.
• Most appropriate where the
resources and administration to
negotiate an agreement are repaid
by the efficiencies – especially
where there are one or few owners
and large scale works / land
dedication required.
• There is a continuum between
strict application of a contributions
plan and the receipt of
contributions as works in kind and
the negotiation of a broad scope
development agreement that
although benchmarked against the
contributions plan may adopt a
different approach to achieve the
desired outcomes.
• Section 94 contributions delivers
local infrastructure outcomes where
contributions plans are well
prepared and managed – especially
where there is high growth (usually
greenfields) and income is well
matched to expenditure.
• Works well when land value
escalation risks are managed –
especially where acquisition costs
are internalised by developers
through land dedication.
• Works where there are multiple
separate owners in development
areas who are unable to cooperate
to internalise the costs of delivery
of needed land / works.
Comment on Role
262
26
Tolls/Fares
Parking Levies
Road Pricing –
Concession
Extensions
User Charging
Benefit
Assessments /
Impact Fees on
new development
(hypothecated
value capture
funding works
delivering a land
value benefit)
Flat Percentage
Levies
(on development)
Funding
Measure
• If charges are set to represent the
underlying value of the goods then
they offer an efficient means of
ensuring that needed goods are
provided at the right price.
• Question whether charges fund
recurrent costs or capital costs of
infrastructure, facilities or services
provided – where capital costs are
funded there is the argument that
broader beneficiaries in addition to
the current user should also pay.
• Difficult to implement charging
policy at a local scale (other than
parking which has limited scope for
funding unrelated items).
• Most effective as a complementary
funding tool addressing recurrent
expenditure in areas relating to the
item charged.
• Set at around 1% of the value of new
development – it would not be
sufficient to fund the infrastructure
and land needs of major Greenfield
development.
• However for slow growth areas a
steady trickle of funds from this ource
could fund modest local infrastructure
needs.
• Disconnected from price signals not efficient in ensuring that the
right assets are delivered for the
right price.
• However efficient in terms of ease
of collection and admin costs
especially where income streams
are slow and low.
Equity
• Very equitable in so far as it charges
users the costs of the demands or
impacts placed on the network or
community.
• Equity issues arise where user
charging extends to fund long term
capital improvements that benefit a
broader range of beneficiaries other
than actual current users.• However
where charging is used to fund the
mitigation of an impact arising
from ‘use’ then full cost recovery may
be warranted.
• Flat percentage levies provide a very
loose nexus between contributions
from dispersed new development and
local infrastructure / facility provision
• However , it is arguable whether
Section 94 contributions plans offer
clear nexus in slow growth areas
where funds are not necessarily spent
in a manner that recognises a spatial
or temporal nexus.
• Danger of the flat levy being seen as
a development tax – if poorly targeted
without a plan for expenditure.
• Targets anticipated benefits from
land use changes and infrastructure
prevision.
Evaluation Criteria
• Highly effective if community and
political acceptance achieved.
Effectiveness
• US model more efficient than
citywide levies due to targeted
benefit areas paying into an
hypothecated fund (or paying an
infrastructure bond) to provide
infrastructure.
Efficiency
• Appropriate as a distinct element
of the funding mix – especially to
support the recurrent costs
associated with the use of the item
being charged.
• Where the item is a broad public
good even user charging may not
be appropriate.
• Especially appropriate where
there are dispersed but identifiable
beneficiaries likely to achieve a
windfall gain from land use change
/ infrastructure.
• Well suited to be locked in to
funding a securitised cost and
revenue stream – eg: an
infrastructure bond.
• Most appropriate in areas where
there is slow and dispersed growth
with slow accumulation of
contributions – in these situations
reducing administration costs via a
simpler mechanism would offer
better outcomes in delivering
community facilities.
Appropriateness
• Appropriate as a distinct element
of the funding mix – especially to
support the recurrent costs and
externalities associated with the use
of the item being charged.
• Unlikely to be a dominant part of
the development infrastructure
funding mix but will play an
important role funding recurrent
costs and costs most attributable to
the user.
• Users are a subset of broader
beneficiaries
• Potentially applicable to slow or
lowgrowth established urban areas
or dispersed growth in regional /
rural areas – especially where the
administration costs of running a
typical Section 94 contributions
plan may substantially erode a
fund.
• Most appropriate to fund
infrastructure or facilities with a
similarly dispersed degree of
benefit - eg: community centres.
• US approach to development
contributions.
• Key advantage in US is that it is
able to be secured to fund the
payment of infrastructure bonds.
Comment on Role
263
26
Sectors Where Most
Appropriate
Recurrent Expenditure
Responsibility
Commercial Risk
i. Construction
ii. Operation Risks (Cost)
iii. Market Risks
(Revenue)
Non-commercial Risks
Capital Investment
Responsibility
(inc. initial, upgrade &
service expansion investment)
Public
Public
Private
Not applicable
Public
Public
Public
Public
Public
Public
Public
Public
Public
Agreed contract
fee
Not applicable
Basis for Private Operator
Payment
(All are performance based)
Public
Once off
Not applicable
Contract Duration
Revenue Collection
Responsibility
(inc. invoicing & collection)
Public
Public
Infrastructure Ownership
Traditional
Public
Contracting
Complete
Public Sector
Delivery
Characteristics
Public
Where limited capacity
expansion required
Low
willingness pay
Private
Private
Private
Private
Public (private operator
funds capital maintenance
expenditure)
Public (some private)
Unit cost plus margin
(linked to estimated
demand at contract
inception).
Up to 30 years
Public
Lease Contracts
Public
Private
Public
Public
Private
Public
Public
Agreed contract
fee
5 to 10 years
Public
Service/
Management
Contracts
Where new facilities are
required (e.g. toll roads)
Private
Private
Shared (guaranteed
minimum custom)
Public
Private
Private operator (Public
sector funds service
expansion expenditure)
Public
Public sector guarantees
to purchase a minimum
level of output (based
on unit cost of delivery)
20 to 30 years
Public
BOOT, BOO or BOT
Schemes
Networked based
infrastructure
(e.g. water)
Public
Private
Private
Private
Private
Private
Private
Similar to lease or
BOOT contract
20 to 30 years
Public
Concession/
Franchise
Agreements
Where private
capitals is required
immediately
Joint
Private
Public & Private
Public and Private
Public and Private
Public and Private
Joint
Market driven
(with regulation)
Permanent
Joint
Joint Ventures
Appendix A2: Different Type of Private Sector Involvement in Local Infrastructure Delivery
Where competitive
structure can be
unbundled
Private
Private
Private
Private
Private
Private
Private
Market driven
(with regulation)
Permanent
Private
Full Privatization
264
26
265
Appendix B1: Method of privatisation of major infrastructure in Malaysia
(National level of infrastructure)
Sector and projects
Method of privatisation
Type of contract
Ports
Klang Port
Kelang Container Terminal
Kelang Port Management
Klang Multi Terminal
Johor Port
Bintulu
Penang Port
Lumut Maritime Terminal
Pelabuhan Tanjung Pelepas
Kuantan Port
Sale of equity (1986)
Sale of equity (1992)
Sale of equity and BOT(1986)
Sale of equity (1995)
Corporatization (1993)
Corporatization (1994)
BOOT (1993)
BOOT (1995)
Sale of equity
Lease (21+30 years)
Lease (21+30 years)
Lease (30 years) and concession (33
years)
Lease (30+30 years)
Lease
Lease
Concession
Concession
Lease
Roads
North Klang Straits Bypass
Jln. Kuching/Kepong Interchange
KL Interchange
North-South Expressway
Second Link to Singapore
Penang Bridge
Butterworth-Kulim Expressway
Seremban-Port Dickson Highway
North-South Expressway Central Link
KL-Karat Highway
New North Klang Straits Bypass
Cheras-Kajang Highway
Elevated Highway over Sg.Klang and Sg.
Ampang
Damansara-Puchong – Putra Jaya Highway
New Pantai Highway
Sungai Besi Road
BOT(1984)
BOT(1985)
BOT(1987)
BOT(1988)
BOT(1993)
Management contract (1993)
BOT(1994)
BOT(1994)
BOT(1994)
BOT(1994)
BOT(1995)
BOT(1995)
BOT(1996)
BOT(1996)
BOT(1996)
BOT(1996)
Water Supply
Labuan Water Supply
Ipoh Water Supply
Larut Matang Water Supply
Semenyih Dam
Tube Well Maintenance, Labuan
Johor Water Authority
Pulau Pinang Water Authority
BOT(1987)
BOT(1989)
BOT(1989)
Management contract (1987)
Management contract (1988)
Corporatization (1994)
Corporatization (1987)
Power
Tenaga National Berhad (TNB)
Independent Power Producer (IPP)
YTL-Paka and Pasir Gudang
SEV-Lumut
GSP-Sepang
PDP-Port Dickson
PSP-Powertek, Melaka
Sale of equity (1992)
BOT(1995)b
BOT(1996-1997)b
BOT(1994-1996)b
BOT(1995)b
BOT(1995)b
(1990)
Telecommunications
Telekom Malaysia Berhad
10 Private telecommunications operators
Corporatization (1992)
Corporatization (1992)
Others
KTM Berhad (Malayan Railway)
Malaysian Airports Berhad
National Sewerage System (IWK)
Light Rail Transit System I (phase 1)
Light Rail Transit System I (phase 2)
Light Rail Transit System II
BOT(1992)
BOT(1993)
BOT(1994)
BOT(1994)
Concession (25 years)
Concession (16 years)
Concession (30 years)
Concession (30 years)
Concession (30 years)
Management contract (25 years)
Concession (32 years)
Concession (30 years)
Concession (25 years)
Concession (27 years)
Concession (25 years)
Concession (30 years)
Concession (33 years)
Concession (33 years)
Concession (30 years)
Concession (30 years)
Concession
Concession
Concession
Management contract
Management contract
Lease
Lease
License (21 years)
Power purchase agreement (21 years)
Power purchase agreement (21 years)
Power purchase agreement (21 years)
Power purchase agreement (21 years)
Power purchase agreement (21 years)
License (21 years)
Lease
Lease
Concession (28 years)
Concession (60+60 years)
Concession (60+60 years)
Concession (60+60 years)
Note: i. BOT is Build-Operate-Transfer; BOOT is Build-Operate-Own-Transfer.
ii. a. Transaction was pending in 1996. b. Date of commissioning.
Source: Yahya Yaakob, Naidu, G. (2001).
3.66
3.65
2.242
17.89
22.2
Total infrastructure expenditures
2002
Years
33.53
6.35
2.3
2.83
22.05
2003
40.2
12.7
1.2
3.7
22.6
41.8
10.8
1.2
2.2
27.6
2004
(Source: Adapted from City Council of Johor Bahru, 2005)
Appendix B2: Infrastructure Expenditures in City Council of Johor Bahru 2000-2004
27.44
2001
2000
0.001
1.2
1.5
19.5
0
5
10
15
20
25
Public Utilities
Hawkers facilities
Offices/Buildings/Lands
Drainage system, Flood control,
Sewerage and Roads
Expenditures (RM'million)
30
26
266
10.7
2.1
0.4
21.0
3.7
0.5
23.8
Public Utilities
Hawkers facilities
Offices/Buildings/Lands
Drainage system, Flood control,
Total infrastructure expenditures
37.5
3.8
19.0
0.2
2.1
12.4
2004
Source: Adapted from Municipal Council of Johor Bahru Tengah (MPJBT), 2005
Appendix B3: Infrastructure Expenditures in Municipal Council of Johor Bahru Tengah
(2002-2004)
Years
2.7
36.8
3.3
38.9
Electricity/Water
Sewerage and Roads
2003
7.5
0
5
10
15
20
25
30
35
40
2002
Expenditures (RM'million)
45
26
267
5.05
1.01
0.47
3.92
10.45
3.83
0.05
0.50
3.01
7.38
Public Utilities
Hawkers facilities
Offices/Buildings/Lands
Drainage system, Flood
control, Sewerage and Roads
Total infrastructure expenditures
Years
15.09
6.40
0.00
1.62
7.08
2002
11.95
6.50
N.A
N.A
5.45
2004
N.A - Data not available
17.05
7.50
0.15
0.40
9.00
2003
Source: Adapted from Municipal Council of Kulai (2005)
Appendix B4: Infrastructure Expenditures in Municipal Council of Kulai (2000-2004)
2001
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2000
Expenditures (RM 'million)
18.00
26
268
Construction of Children
Playground
Construction and upgrading of
Children Playground
Construction of Children
Playground
Construction of Orchid Farm
2.
3.
4.
5.
MBJB
MBJB
2,798,737.06
159,250.00
176,000.00
168,910.00
350,000.00
15,000.00
Allocation
(RM’000)
2,798,737.06
150,250.00
152,680.00
152,310.00
317,000.00
Development
Cost (RM’000)
2003
2003
2003
2003
2002
Year
approved
MBJB - Majlis Bandaraya Johor Bahru
Source: Adapted from City Council of Johor Bahru, 2005
Jalan Tasek Utara, Johor Bahru
Jalan Pinang 4, TamanDaya ,
Johor Bahru
JLN
JLN
Jalan Meranti 15, Taman Rinting
Jalan Perkasa 1/1 Taman Tampoi
Utama, Johor Bahru
KPKT
MBJB
Source of
funds
Kg. Ungku Mohsin, Johor Bahru
Location
KPKT - Ministry of Housing and Local Government
JLN - National Department of Landscape
Construction of Community Hall
1.
Indicators:
Name of projects
No
18.2.2003
3.3.2003
3.3.2003
3.3.2003
16.4.2003
Expectation date
of completion
Appendix B5: List of the completed projects funded by federal government allocation for MBJB,2003
26
269
Maintenance of drainage
system at Sg. Chat
Construction of Hawkers
Complex
Construction of Multi-purpose
Community Hall
Construction of Community
Hall
Construction of Multi-purpose
Community Hall
7.
Indicators:
11.
10.
9.
8.
6
5.
4.
Source of
funds
KPKT
MT
MBJB
KPKT
MBJB
KPKT
MBJB
KPKT
MBJB
KPKT
MBJB
KPKT
MBJB
KPKT
MBJB
KPKT
MBJB
KPKT,
MBJB
KPKT
MBJB
500,000.00
700,000.00
500,000.00
1,000,000.00
500,0000.00
450,000.00
800,000.00
500,000.00
300,000.00
250,000.00
Allocation
(RM’000)
178,818.00
1,500,000.00
289,763.90
400,000.00
100,000.00
250,000.00
50,000.00
1,025,547.00
1,161,629.20
754,384.91
935,000.00
1,454,444.00
184,159.42
860,767.00
1,025,047.00
335,640.00
432,613.50
Development
Cost (RM’000)
317,000.00
4,394,763.90
2003
2003
2003
2003
2003
2003
2003
2003
2003
Year
approved
2003
2003
MBJB - Majlis Bandaraya Johor Bahru
MT
- Ministry of Tourism
Source: Adapted from City Council of Johor Bahru, 2005
PTD 39809, Taman Cempaka,
Johor Bahru
PTD 101028, Jalan Permas 9/3,
Bandar Baru Permas Jaya
PTD 32095, Jalan Anggerik 5/1,
Taman Anggerik Johor Bahru
PTD 1664, Jalan Senduduk,
Taman Pandan, Johor Bahru
Kg Mohd Amin, Johor Bahru
Jalan Banjaran 5, Kempas
Kg Melayu Majidee
Kawasan Kempas 9, Kempas
Baru
Kampung Plentong Baru
Jalan Stulang Darat
Jalan Meldrum (fasa2)
Location
KPKT - Ministry of Housing and Local Government
JLN - National Department of Landscape
Construction of Pedestrian
Construction for Tourism and
Handcraft Centre
Construction of new roads and
drainage system
Upgrading of existing roads and
drainage system
Upgrading of existing roads and
drainage system
Construction of new roads
1.
2.
3.
Name of projects
No
10.4.2003
10.8.2003
25.4.2003
31.7.2003
31.10.2003
6.10.2003
6.8.2003
6.9.2003
5.10.2003
Expectation date
of completion
19.7.2003
12.1.2004
Appendix B6: List of projects under construction funded by federal government allocation
for MBJB (2003)
27
270
1,968,960.00
3,000,000.00
35,536.46
4,000,000.00
2,639,695.50
Allocation
(RM’000)
3,589,379,89
6,639,695.50
3,035,536.43
Development
Cost (RM’000)
3,589,379.89
MBJB - Majlis Bandaraya Johor Bahru
MT
- Ministry of Tourism
2003
2003
2003
Year
approved
2003
22.10.2003
21.8.2004
7.8.2003
Expectation date
of completion
21.8.2003
Source of
funds
MT
MBJB
Allocation
(RM’000)
500,000.00
1,549,646.00
Development
Cost (RM’000)
2,049,646.00
MT
- Ministry of Tourism
Source: Adapted from City Council of Johor Bahru, 2005
Jalan Meldrum, Johor Bahru
(infrastructure)
MBJB - Majlis Bandaraya Johor Bahru
Proposed Construction for
Tourism and Handcraft Centre
1.
Location
Year
approved
2001
Expectation date
of completion
14.3.2003
Appendix B8: List of the completed projects funded by State Government allocation for MBJB, 2003
Name of projects
Indicators:
JKR
JLN
MBJB
JLN
MBJB
Source of
funds
MBJB
Source: Adapted from City Council of Johor Bahru, 2005
Median Jalan Tebrau from
Persimpangan Jalan Tengku
Azizah until the junction of Jalan
Kebun, Johor Bahru
Bulatan Sawmill to Jalan Dato’
Onn, Johor Bahru
Jalan Wong Ah Fook and Sg.
Segget, Johor Bahru
Jalan Kolam Air, Johor Bahru
Location
KPKT - Ministry of Housing and Local Government
JLN - National Department of Landscape
No
Indicators:
4.
3.
Development along Jalan
Wong Ah Fook and the
Cleansing of Sg. Segget
Beautifications of Landscape at
Median
Construction of National Public
Park
Construction of Taman Poket
1.
2.
Name of projects
No
Appendix B7: List of projects under construction funded by federal government allocation for MBJB,2003
27
271
Upgrading sewerage pipe
Construction of concrete
drainage
Maintenance of drainage
system
Maintenance for drainage
system to avoid flood problems
Installation of traffic light and
upgrading road junctions
Modifications of the design of
Geometrical Junction
Modifications of the design of
Geometrical Junction
Installation of traffic light and
upgrading road junctions
5.
6
13.
12.
11.
10.
9.
8.
7.
4.
Construction of bus stop
Construction of Pedestrian
Improvement and upgrading
the road surface
Improvement and upgrading
the road surface
Road maintenance and
widening
1.
2.
3.
Name of projects
No
MBJB
MBJB
MBJB
MBJB
MBJB
MBJB
MBJB
105,389.15
192,581.00
116,901.44
197,359.70
493,164.51
230,431.00
131,499.00
4,167,678.12
4,893,460.00
MBJB
MBJB
151,931.00
582,710.00
Allocation
(RM’000)
2,561,428.00
447,880.00
MBJB
MBJB
Source of
funds
MBJB
MBJB
105,389.15
192,581.00
116,901.44
197,359.70
493,164.51
64,472.08
116,001.00
3,241,993.45
3,841,556.47
-
382,861.76
Development
Cost (RM’000)
1,051,667.90
275,825.99
Indicators:
MBJB - Majlis Bandaraya Johor Bahru
Source: Adapted from City Council of Johor Bahru, 2005
Jalan Suria Utama/ Jalan Murni 8,
Taman Suria, Johor Bahru
Jln Tebrau/Jln Kuning/Jalan
Harimau Johor Bahru
Jalan Tebrau/ Jalan Bakar Batu,
Johor Bahru
Jln Masai/ Jalan Ara (Taman
Rinting/Jln Suria 1 (Bandar Seri
Alam) Masai Johor.
Infront of Sultanah Aminah
General Hospital, Johor Bahru.
Jalan Istimewa, Johor Bahru
Jalan Darapper, Jalan Taat, Jalan
Dato’ Hj Abdullah, Jalan Dato’
Mohamed Johor Bahru.
Sg. Sengkuang from Jambatan
Jalan Sutera until Pembentung
Jalan Pasir Pelangi, Kg Bakar
Batu, Johor Bahru.
Sg. Bala, Taman Sri Amar, Fasa
2, Majidee, Johor Bahru
Taman Rinting, Johor Bahru
Jalan Tan Hiok Nee, Pusat Bandar
Jalan Serampang, Taman Pelangi,
Johor Bahru
Jalan Sri Setia, Johor Bahru
Location
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
Year
approved
2002
2003
4.4.2003
27.6.2003
28.3.2003
28.3.2003
30.3.2003
8.6.2003
18.5.2003
3.4.2003
10.3.2003
21.10.2003
10.4.2003
Expectation date
of completion
3.4.2003
23.4.200
Appendix B9: List of projects under construction funded by internal funds for MBJB, 2003
27
272
Upgrading of football field and construction of Astaka
Additional works at Food stalls
Construction of stalls
Construction of 10 units of stalls
Construction of tennis court
Construction of stall
List of projects funded by Ministry of Housing and Local Government grants
Construction of 5 units of shop lots
Construction of community hall and 4 badminton courts
Construction of stall
Construction of stall football field
Construction of basketball court
Construction of sewerage pipes, drainage and maintenance of
existing roads
Replacement of drainage from house No 185A hingga 138
Installation of 60 units of street lighting unit
Installation of decorative street-lighting
1.
2.
3.
4.
5.
6.
B
1.
2.
3.
4.
5.
6.
7.
8.
9.
List of public facilities projects
A
Location
500,000.00
90,000.00
200,000.00
649,000.00
1,633,450.00
526, 200.00
159,861.00
94,992.00
500,000.00
596,552.00
348,958.00
117,586.00
296,300.00
308,450.00
374,380.00
Allocation (RM)
Source: Adapted from Majlis Perbandaran Johor Bahru Tengah (MPJBT), 2005
Jln Ulu Choh, Kg Baru, Gelang Patah
Kg Baru Ulu Choh
Taman Johor Jaya
Jln Lawang, Skudai
Taman Pelangi Indah
Taman Sri Pulai
Taman Desa Skudai
Jalan kebudayaan,Taman Universiti
Kg Poh Chi Leng
Jalan Dedap 1, Taman Johor Jaya.
Jalan Hang Tuah, Taman Skudai Baru
Jalan Hang Tuah Taman Skudai Baru
Jln Bunga Seroja, Kg Baru Plentong
Behind of Multi-purposecommunity hall, Taman
Universiti
At PTD 47477, Jln Penyiaran 2, Tmn Universiti
Name of projects
No
Appendix B10: List of development projects in MPJBT, 2003
27
273
274
Appendix B11: List of development projects in Majlis Perbandaran Kulai
(MPK), 2002-2003
No
Name of projects
Location
1.
MDK T/1/2002: Construction of Public
Market Saleng, Senai Johor
MDK.T/2/2002: Construction of Public
Market Saleng, Senai Johor
MDK.T/3/2002: Upgrading the road of Jalan
Kampung Melayu, Kulai
MDK.T/4/2002: Installation of streetlighting at Tol Kulai until junctions of Jalan
Persekutuan
MDK.T/5/2002: Construction of Monsoon
drain at Kelapa Sawit Fasa 2
MDK. T/8/2002: Upgrading government
department’s roads and roads at Kampung
Baru Kulai
MDK.T/4/2003: Upgrading the main roads of
Taman Sri Kulai Baru via Taman Sri heading
to Taman Putri and Gunung Pulai, Kulai
MDK.T/5/2003: Construction and upgrading
of concrete drain a Parit Konkrit from
Ch.365m until Ch. 495m at Bt 21, Kulai,
Daerah Johor Bahru
MDK.T/6/2003: Upgrading the main existing
sewerage plant at Jalan Air Hitam Bt 20,
Mukim Senai/Kulai Johor
Saleng
2.
3.
4.
5.
6
7.
8.
9.
Source of
funds
MPK
Allocation
(RM’000)
274,700.00
Year
approved
5.8.2002
Kulai
MPK
399,241.50
24.10.2002
Kulai
KPKT
442,309.00
26.9.2002
Kulai
KPKT
485,800.00
7.11.2002
Kelapa
Sawit
Kulai
MPK
747,839.50
15.8.2003
MPK
1,255,2217.50
19.6.2003
Kulai
MPK
900,899.00
10.11.2003
Kulai
MPK
789,635.50
4.4.2004
Kulai
MPK
900,899.00
7.3.2004
Source: Adapted from Majlis Perbandaran Kulai (MPK), 2005
Indicators:
KPKT - Ministry of Housing and Local Government
MPK - Majlis Perbandaran Kulai
275
Appendix 4.12: Examples of Planning Agreement by Local Planning Authority
to Securing Infrastructure Provision
THE UNILATERAL UNDERTAKING is given
this _____________________ day of ___________________________ 200
BY
1. _________________________________________ (“the Applicant”)
TO
2. MAJLIS PERBANDARAN PULAU PINANG (“ The Council”)
WHEREREAS:
1.
The Council is the Local Authority for the purpose of the Local Government Act 1976
and the Street, Drainage and Building Act 1974 and the Local Planning Authority for the
purposes of the Town and Country Planning Act 1976 in respect of the land described in the
First Schedule (“the Land”).
2.
The registered proprietor of the Land is ___________________________________
3.
The
Applicant
has
simultaneoustly
submitted
an
application
dated
___________________
(“the Planning Application”) bearing Reference ________________ to the Council for
permission to develop the Land in manner for the uses set out in the Planning Application and
in the plans specifications and particulars deposited with the Council and forming part of the
Planning Application more particular set out in the Second Schedule (“the Development”).
4.
The
Applicant
has
resolved
vide
their
______________ to furnish this Undertaking voluntarily.
resolution
________________
on
276
NOW THIS DEED WITNESSETH as follows:
1.
The Application is gratuitously voluntarily
Undertaking
to
the
Council
to
and willingly giving this irrevocable
make
a
contribution
of
RM
________________________pursuant to Section 132 (1) of the Street, Drainage & Building
Act 1974 towards the cost of beautification or construction or improvement or upgrading of any
street, road side drain, culvert, footways within the area of the Council as a result of an increase
in the density and/or an increase in the plot ratio of the proposed residential development above
the permissible residential density and/or an increase in the plot ratio of the proposed nonresidential development above the permissible plot ratio notwithstanding and conditions or
charges that may be imposed by the Council in Planning Application.
2.
3.
This Unilateral Undertaking:
i).
is given by the Applicant to the Council;
ii).
shall be enforceable by the Council;
iii).
is executed by the Applicant as a deed.
The Applicant shall indemnify and keep indemnified the Council against all actions,
proceedings, liabilities, claims, costs, expenses and demands in relation to or arising out of the
payment of the contribution to the Council.
4.
The Applicant hereby agrees declares and undertakes that the contribution made under
this Unilateral Undertaking shall remain enforceable agains the Applicant and the Applicant
further agrees declares and undertakes that the Applicant shall be estopped from denying the
validity of this Unilateral Undertaking and the payment of the contribution and shall not be
entitle to restitution of the contribution.
5.
The Applicant agrees that the contribution shall be administered by the Council at its
absolute discretion pursuant to the provision of the Local Government Act 1976 and the Street,
Drainage & Building Act 1974.
277
FIRST SCHEDULE
SECOND SCHEDULE
IN WITNESS WHEREOF the Applicant has caused its Common seal to be affixed to
this Deed the day and year first before written.
The Common Seal of
)
)
________________________
)
)
was hereto affixed
)
)
in the presence of :-
__________________________
Director
)
_________________________
Secretary
278
BOARD RESOLUTION
Whereas the company is desirous of obtaining planning permission to develop the Land known
as ______________________________________ and for the uses set out in the Planning
Application and in the plans specifications and particulars deposited with the Council, it is
hereby resolved that;
1.
The company do give an irrevocable undertaking to the Council to make a contribution
of RM___________ pursuant to section 132 (1) of the Street, Drainage & Building Act
1974 towards the cost of beautification or construction or laying out or improvements
or upgrading of any street, road side drain, culvert, footway within the area of the
Council as a result of an increase in the density of the proposed residential development
above the permissible residential density and/or an increase in the plot ratio
notwthstanding any conditions or charges that may be imposed by the Council in the
Planning Aplication and that the Company shall undertake not to challenge the validity
of this irrevocable Undertaking, the contributions made thereof and how the
contribution is administered.
2.
The Company indemnify and keep indemnified the Council against all actions,
proceedings, liabilities, claims, costs, expenses and demands in relation to or arising out
of the payment of the contribution to the Council under the irrevocable Undertaking.
3.
That (name of director) be appointed to execute the irrevocable Undertaking on behalf
of the Company’s Comman seal be affixed to the irrevocable Undertaking.
Dated this _____________________ day of __________________________ 200
___________________________
__________________________
Director
Secretary
279
Appendix C1: The distribution of local authority in Malaysia
State
City Hall
City
Council
Municipal
Council
District
Council
Kedah
Johor
Kelantan
Melaka
Negeri Sembilan
Pahang
Perak
Perlis
Pulau Pinang
Federal Territory of
Kuala Lumpur
Selangor
Terengganu
1
1
1
1
1
-
3
6
1
1
3
2
3
1
2
-
8
9
11
1
5
9
11
-
-
1
-
7
2
4
5
Sabah*
Sarawak*
1
1
1
2
3
19
21
Total (N=145)
3
6
36
100
* These states are not included in the field survey
(Source: Field survey, 2005)
280
Appendix C2: Set A1 - Local Authority Survey
Respondent Code
Department of Urban and Regional Planning
Last edited: 24.01.06
Faculty of Built Environment
Universiti Teknologi Malaysia.
81310, Skudai
Johor Bahru. Johor.
Phone No. 019 4446887 Fax No. 604 9284379
West Malaysia.
Local Infrastructure Provision and Development
Control System in Malaysia
Set A1: Local Authority Survey
INSTRUCTION FOR RESPONDENTS
Thank you for being one of the research respondents. This research is conducted in fulfilment of the
requirements for the award of the degree of Doctor of Philosophy. All of the information given will be
treated confidentially. To complete this questionnaire, please read all the instructions then answer the
questions.
The main objective of the study is to identify the perceptions of developers and local authorities on off-site
local infrastructure provision with reference to planning approval system in Malaysia. Off-site infrastructure
will be referred to the infrastructure facilities needed outside proposed development areas. For the purpose
of the study, it will refer to two types of infrastructure; i). Economic infrastructure usually refers to public
utilities such as highways, drainage system and etc. due to their 'hard' engineering-based delivery networks,
and ii). Social infrastructure refers to public amenities which include public facilities such as schools, public
hospitals, police and etc. Therefore, this survey is designed to collect the appropriate data to answer the
following research questions.
i.
ii.
iii.
iv.
How does local authority secure its off-site infrastructure?
How does planning approval system is used to secure off-site infrastructure?
What are the problems related to off-site infrastructure provisions in obtaining planning approval?
What are the opinion of developers and local authorities on the possible approach in securing
off-site infrastructure provision?.
Notes : Questions in Section B refers to information provided in Appendix 1 and 2 (the overleaf attached).
Researcher’s Remarks
Date of Interview : __________________ Date of questionnaire received : ___________________
281
Section A : RESPONDENT PROFILE
A1 Name of local authority : ____________________________________________________________________
A2 Type of local authority (Please ticks)
City Hall
Municipal council
City Council
District council
A3 Name of representative : ____________________________________________________________________
A4 Year of experience : _________________________________________________________________________
A5 Current position held : _____________________________________________________________________
Section B : HOW PLANNING APPROVAL SYSTEM IS USED TO SECURE OFF-SITE LOCAL
INFRASTRUCTURE?
B1 Has this local authority ‘initiated’ any method to secure off-site infrastructure provision during
planning approval process?.
Yes
No
(If ‘YES’ please answer the following questions)
i. State the name of the method (guidelines / approaches) : __________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
ii. How effective is the method? _______________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
iii. What are the reactions of developers: ________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
282
B2 During planning approval stage (if any), please describe any specific procedure applied to secure off-site
infrastructure?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
B3 Would you suggest how planning approval system can be applied to secure adequate off-site local
infrastructure?.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Section C : HOW LOCAL AUTHORITY SECURE ITS OFF-SITE INFRASTRUCTURE PROVISION?
C1 Does your local authority get involved in the provision of off-site infrastructure?
Yes
No
C2 Why private sector is used for off-site infrastructure provision?
1. To assess market needs
2. To raise necessary resources (e.g. financing)
3. Ability to identify and manage risks
4. To provide contemporary management skills and optimize performance
5. To improve the efficiency and quality of services
6. Efficiency improved when exposed to competition
7. Others (please specify) :_________________________________________________________
1
0123
0123
0123
0123
0123
0123
0123
6. BOOT, BOO or BOT Schemes
7. Concession/ Franchise Agreements
8. Joint Venture (JV)
9. Full Privatization
10. Planning Requirements
11. Planning Contribution
12. Others (Please specify ):
2
0123
5. Public-Private Partnership (PPP)
Please circle in relevant cells of the
following table. Where 0 = Not applicable;
1 = Not Successful;
2 = Successful;
3 = Very successful.
1 - Construction of new local roads
2 - Local road maintenance
3 - Drainage
4 - Landscaping
5 - Recreation facilities
Type of off-site infrastructure
0123
0123
4. Lease Contracts
b.
0123
3. Service/ Management Contracts
0123
0123
2. Traditional Public Contracting
a.
0123
Level of success 1
1. Complete Public Sector Delivery
Type of delivery
6 - Parking facilities
7 - Incinerator plants
8 - Parks, gardens or open space
9 - Betterment of existing local
infrastructures
10 - Other public utilities (e.g. Sewerage, monsoon
drain, etc.)
11 - Other public amenities (e.g. market etc.)
12 - Maintenance of existing off-site infrastructure
Please list type of off-site infrastructure delivered2
C3 For each type of the delivery methods listed below, would you please list the appropriate type of off-site infrastructure
that can be delivered using this method?
283
283
)
)
7. Full Privatization
(Level of success =
9. Planning Contribution
(Level of success =
)
8. Planning Requirements
(Level of success =
)
)
6. Joint Venture (JV)
(Level of success =
5. Concession/Franchise Agreement
(Level of success =
)
4. BOOT, BOO or BOT Schemes
(Level of success =
)
3. Public-Private Partnership (PPP)
(Level of success =
)
2. Lease Contracts
(Level of success =
1. Service/ Management Contracts
(Level of success =
)
Type of delivery
Not Successful
Successful/Very successful
C4 From question B3, if you answered ‘1=Not Successful or 2/3= Successful/Very successful’ please describe the factors that contribute
to the varying performance of the private infrastructure delivery
284
284
285
Section D: THE PROBLEMS RELATED TO OFF-SITE INFRASTRUCTURE PROVISION IN
OBTAINING PLANNING APPROVAL
D1 What are the problems related to off-site local infrastructure provision often faced by developers
during planning approval stage.
You may tick [ / ] more than one box.
1. Local authority is inconsistently considering planning permission for those projects involved with
off-site infrastructure requirements.
2. High percentage of fund/land has to be allocated for public amenities.
3. Requirement to provide off-site infrastructure normally reflects the increase in development cost.
4. Less commitment from developers due to the perception that traditionally local authority have to
provide those infrastructure.
5. Developers finds that the guidelines used by local authority to impose off-site infrastructure
was not clear and against the present planning regulations.
6. Developers refuse and always use other channels (e.g. political channel) to avoid them
from fulfilling the requirements.
D2 What are the problems encountered by your local authority to secure off-site infrastructure provision?
The problems
i.
ii.
iii.
iv.
Suggestion to overcome the problems
286
Section E : THE PERCEPTIONS OF LOCAL AUTHORITY ON OFF-SITE LOCAL
INFRASTRUCTURE PROVISION
E1 What are the major drivers of private sectors involvement in off-site infrastructure provision?
1.
Meeting initial requirements of local authority
2. Lowering local authority allocation on infrastructure
3. Improving quality of service delivery
4. Bring forward investment
5. Enable to reduce infrastructure cost
6. Local authority lacks of technical expertise to manage such project
7. Encourages economic development
8. Lowers local authority’s capital requirements
9. Access to private sector capital ‘ options’
10. Use of private sector’s expertise
11. Broaden scope of services
12.
Others (please specify) :
E2 What are the Local Authority’s perceptions on off-site infrastructure provision
1. Development control process incurs additional development cost.
2. Developers are required to provide off-site infrastructure as a return from additional approval
granted to developers.
3. The gradual improvement in off-site infrastructure provision is to exposed competitive market.
4. Indirectly planning gain has being practiced widely in securing off-site infrastructure in most
local authorities in Malaysia and however the practice was improperly practiced.
5. The principal rationale of why off-site infrastructure provision has to be provided by local
authority because of its ‘public good characteristics’.
6. Both private developers and local planning authorities (LPAs) are very keen in off-site provision
through the concept of ‘planning obligation’ and not ‘planning gain’ which is claimed by private
sector as the abuse of public rights.
7. Planning gain is about the ‘willingness’ of private developers to provide (to contribute) off-site
infrastructure to local authorities in exchange of extra or maximum development approval.
8. Developers will provide on-site physical infrastructure and the public authority will provide
off-site physical and other forms of infrastructure.
287
E3 What are the suggestions/opinions to secure off-site infrastructure?
1.
(Act 133), is an efficient method to involve private sectors (property developers) in local
infrastructure development.
2.
There is a possibility that local authority use planning gain to secure its off-site infrastructure
provision.
3.
Most developers are willing to fulfill the requirements of off-site infrastructure within the
catchments of proposed development.
4.
Developers are keen to provide other infrastructure in the surrounding development area as it can
make the development attractive to purchasers.
5.
Developers should be allowed for maximum development in order to cope with the increased cost
of development if the developer is willing to provide off-site infrastructure. However, the exercise
must comply with other requirements.
6.
A maximum development should be granted to those developments that are willing to provide
off-site infrastructure.
7.
Most property developers are willing to negotiate the requirements of off-site infrastructure as
imposed by local planning authorities in order for them to get additional or maximum planning
approval.
8.
Some new developments will generate the ‘development impact’, therefore there is a need for local
authority to impose extra charges (e.g. Development Impact Charge) for the use of infrastructure to
reflect the use of resources.
9.
The offer of off-site infrastructure by developer is likely to have a significant effect in loosing up
planning permission from reluctant local planning authorities.
288
E4 What is your opinion on the appropriate type of delivery for the following off-site infrastructures.
You may tick [ / ] more than one box.
Construction of new local roads
Local road maintenance
Drainage
Landscaping
Recreation facilities
Parking facilities
Incinerator plants
Parks, gardens or open space
Betterment of existing local infrastructures
Other public utilities (e.g. Sewerage etc.)
Other public amenities (e.g. market, bus etc.)
Maintenance of existing off-site infrastructure
Others (Please specify) : _____________________
Section F : THE SUGGESTIONS ON HOW OFF-SITE LOCAL INFRASTRUCTURE PROVISION CAN BE
SECURED BY LOCAL AUTHORITY?
F1 In what form of contribution do you think the developers could provide off-site infrastructure.
Where 1 = Not appropriate, 2 = Lease appropriate, 3 = Slightly appropriate, 4 = Appropriate, and 5 = very
appropriate.
1. Financial contribution for existing off-site infrastructure improvement.
12345
2. Donating land or easements at no cost for off-site infrastructure facilities.
12345
3. Constructing infrastructure improvements to meet the needs of the proposed development.
12345
4. Leasing completed off-site infrastructure to local authority, or some other entity.
12345
5. Allowing public access and use of privately owned land and facilities.
12345
6. Selling land to a public authority at less than market cost for the purpose of off-site
infrastructure facilities.
12345
7. Maintenance of public use facilities, either permanently or for some specified period.
12345
8. Paying fees to public authority towards the cost of operating and maintaining public land or
12345
Planning Approval
Private Finance
Initiative (PFI)
Full Privatization
Joint Venture (JV)
Concession/ Franchise
Agreements
BOOT, BOO or BOT
(Schemes)
Through Public-Private
Partnership (PPP)
Lease Contracts
Type of off-site infrastructure delivered
Service/ Management
Contract
Type of delivery
289
facilities.
9. Existing road improvements (or provision).
12345
10. Provide urgently infrastructure at the other sites.
12345
11. Dedication of land for public use.
12345
12. Commuted payments for car parking.
12345
13. Provision of community buildings or facilities.
12345
14. Provision of drainage system.
12345
15. Other public building/facilities (e.g. community centre, public library etc.)
12345
16. Cash payment towards capital cost of constructing facilities or improvement.
(Including commuted payment for construction of off-site parking space).
12345
17. Constructs infrastructure then dedicate for public use.
12345
18. Joint-funding to expand infrastructure capacity to serve subsequent development in
surrounding areas.
12345
19. Others (Please specify) : ______________________________________________________
12345
F2 Please tick [ / ] the level of appropriateness on how to encourage or promote private developer in offsite infrastructure provision.
Where 1 = Not appropriate, 2 = Lease appropriate, 3 = Slightly appropriate, 4 = Appropriate, and 5 = very appropriate.
1. Local authority should have Infrastructure Priority Lists (IPL) used as check-list when come
to the negotiation of infrastructure requirements between a local authority and a private
developer.
12345
2. Introduce an attractive incentive. (e.g. ‘Fast-Track’ approval at planning stage).
12345
3. Introduce a proper and transparent method of developer’s contribution negotiation
(planning agreements).
12345
4. Introduce an attractive infrastructure contribution scheme out-site of proposed development
location. This might be applicable for proposed development located in the area where
already have adequate number of infrastructure.
12345
5. Negotiation would be the best approach applied in order to achieve a ‘win-win’ situation
between a private developer and a local authority.
12345
6. Public-Private Partnership (PPP) concept can be adopted as one alternative to secure
off-site local infrastructure provision by local authority.
12345
7. Off-site infrastructure should be financed directly out of general tax revenues.
12345
8. Off-site infrastructure should be financed using a special fund generated by local
authority (e.g. ISF provided under Act 133).
12345
9. Off-site infrastructure should be financed by project owner (e.g. developers).
12345
10. Off-site infrastructure should be financed by both parties; developer and local authority.
12345
290
11. The direct user of infrastructure might be charged and therefore revenues from such charges
should be deposited into the so called ‘infrastructure fund’ and not into council general fund
12345
12. LPAs should initiate private developers to sign planning agreements on the purpose to require
private developers to provide off-site infrastructure facilities in return of additional planning
approval? (e.g. Unilateral Undertaking).
12345
13. Local authority needs to set up a special mechanism to expedite the planning approval of
those projects involved with off-site infrastructure requirements.
12345
14. The cost incurred in providing off-site infrastructure should be shared with other utility bodies
and should not be a burden to developers only.
12345
15. To overcome the possibility of excessive cost of development, a lower standard of materials
could be permitted for the purpose of off-site infrastructure provision.
12345
16. The local off-site infrastructure can be secured from development approval stage by
quantifying the ‘development impact’ as a result from the proposed development.
12345
17. The negotiation of contribution for off-site infrastructure by developers should be initiated
properly and transparently by a local authority.
12345
18. There is a need for private sector to participate in off-site infrastructure provision to reduce the
cost on public sector.
12345
F3 What suggestions would you put forward to ensure the success of private developers involvement in
off-site infrastructure provision in your local authority?.
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
F4 Would you suggest the most effective methods to ‘justify’ the need of private sector (developers) to
provide off-site local infrastructure?
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
291
F5 Base on the previous sections, would you please name ONE of developers which is in favour to off-site
local infrastructure provision approach. Please note that the recommended developer will be
approached by the researcher for the Developers Survey.
Name of Project
Name of Developers
(Address)
Type of Contribution
(e.g. Local road/market etc.)
Contact Person
(Phone/Fax)
Public
Once off
Agreed
contract fee
Public
Public
Public
Private
Not applicable
Public
Public
Public
Not applicable
Not applicable
Public
Public
Public
Public
Public
Public
Public
Infrastructure Ownership
Contract Duration
Basis for Private Operator
Payment
(All are performance based)
Revenue Collection
Responsibility
(inc. invoicing & collection)
Capital Investment
Responsibility
(inc. initial, upgrade & service
expansion investment)
Recurrent Expenditure
Responsibility
Commercial Risk
i. Construction
ii. Operation Risks (Cost)
iii. Market Risks (Revenue)
Example
Non-commercial Risks
Sectors Where Most
Appropriate
Traditional
Public
Contracting
Complete
Public Sector
Delivery
Characteristics
These are
uncommon but may
include toll roads,
wastewater
treatment plants,
health facilities, etc.
Public
Where limited
capacity expansion
is required
An example is the
outsourcing
of leisure facilities
to private
management/
operation.
These are
common
arrangements
and include
maintenance
contracts,
design and
construct
contracts, etc.
Private operator
(Public
sector funds service
expansion
expenditure)
Private
20 to 30 years
Public sector
guarantees to
purchase a minimum
level of output
(based on unit cost
of delivery)
Public
Public
BOOT, BOO or
BOT
Schemes
Public
Low
willingness to
pay
Private
Private
Private
Private
Public (private
operator funds
capital maintenance
expenditure)
Public (some
private)
Up to 30 years
Unit cost plus
margin (linked to
estimated demand at
contract inception).
Public
Lease Contracts
Private
Private
Shared (guaranteed
minimum custom)
Public
Where new facilities
are required (e.g.
toll roads)
Private
Public
Public
Private
Public
Public
5 to 10 years
Agreed
contract fee
Public
Service/
Management
Contracts
These agreements
may cover water and
electricity
infrastructure
networks, etc. but
are uncommon at
the local level..
Public
Network based
infrastructure
(e.g. water)
Private
Private
Private
Private
Private
Private
20 to 30 years
Similar to lease or
BOOT contract
Public
Concession/
Franchise
Agreements
Appendix 1: Characteristics of Local Infrastructure Delivery
Joint
Where private
capital is required
immediately
Private
Public & Private
Public and Private
Public and Private
Public and Private
Joint
Permanent
Market driven
(with regulation)
Joint
Joint Ventures/
Private
Where
competitive
structure can be
unbundled
The most typical
infrastructure
privatization. (i.e.
telecommunicatio
ns infrastructure).
Private
Private
Private
Private
Private
Private
Permanent
Market driven
(with regulation)
Private
Full
Privatization
Public
Where new
facilities/
infrastructure are
required.
Private
Public
Public
Public
Private
Public
Permanent
Not applicable
Public
Planning gain
contribution
292
292
Usually a short to medium
term arrangement for a
particular infrastructure
facility, with the private
operator accepting most
commercial risks but with
Council retaining capital
expenditure responsibilities.
An example is the
outsourcing
of leisure facilities to private
management/ operation.
Usually one of contracts
for small components of
the overall infrastructure
network, with Council
bearing virtually all
risks. These are common
arrangements and
include
maintenance contracts,
design and construct
contracts, etc.
Summary Description
Non-commercial Risk Bearer
(policy, regulatory changes, etc.)
Private operator
Council
Council
Council
Shared (guaranteed
minimum custom by
Council)
Council
Private operator
1. Construction
(Cost overruns)
2. Operation Risks
(Cost Variations)
3. Market Risks
(Revenue Variations)
Council
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Public
Public
Public
Private
Public
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
6. Recurrent Expenditure
Responsibility
Commercial Risk Bearer
Private
Private operator
Private operator
Private operator
(Council funds service
expansion expenditure)
Private operator
Council (Private operator
funds capital maintenance
expenditure)
Council
5. Capital Investment
Responsibility (inc. initial,
upgrade & service
expansion investment)
Public
Private operator
Private operator
Council
Predominantly Council
(some private operator)
Council
4. Revenue Collection
Responsibility (inc.
invoicing & collection)
Public
Permanent
Not applicable
The infrastructure
secured from private
sector through
planning gain
approach as practiced
under development
control system (e.g.
under Section 106 of
the 1990 Town and
Country Planning Act
of U.K. planning
system).
The permanent sale of an
infrastructure asset/ network to the
private sector, usually accompanied
with public sector price and quality
regulation. The most typical
infrastructure privatization.
(i.e. telecommunications
infrastructure).
Usually a long-term
contract for all components
of an infrastructure
network within a given
area, with the private
sector assuming all
commercial risk and
service expansion
responsibilities. These
agreements may cover
water and electricity
infrastructure networks,
etc. but are uncommon at
the local level..
Private operator
Permanent
Market driven
(with appropriate regulation)
Planning gain
contribution
Full Privatization
Concession/ Franchise
Agreements
Council
20 to 30 years
Similar to lease or BOOT
scheme arrangements
Council
20 to 30 years
Council guarantees to
purchase a minimum level
of output (based on unit
cost)
Council
Build Own Operate
Transfer (BOOT) or
BOO or BOT Schemes
Usually a long term
contract for a particular
infrastructure facility
where the private sector
finances, builds and
operates the facility with
the assurance that Council
will buy a minimum level
of output. These are
uncommon but may
include toll roads,
wastewater treatment
plants, health facilities, etc.
Council (mostly
inapplicable)
Council
Council
3 to 30 years
Unit cost plus margin
Council
1 to 10 years
Agreed contract fee
Major Characteristics
1. Infrastructure Ownership
2. Contract Duration
3. Basis for Private Operator
Payment
Lease Contracts
Service/ Management
Contracts
Type of Private Sector
Involvement
Appendix 2: The Characteristics of Basic Types of Private Sector Involvement in Local Infrastructure Delivery
293
293
294
294
Appendix C3: Set A2 - In depth Interview for Local Authority Survey
Respondent Code
Department of Urban and Regional Planning
Phone No. 019 4446887 Fax No. 604 9284379
Faculty of Built Environment
Universiti Teknologi Malaysia.
81310, Skudai
Johor Bahru. Johor.
West Malaysia.
Local Infrastructure Provision and Planning Approval
System in Malaysia
Set A2: In depth Interview for Local Authority Survey
Name of Local
Authority
: _____________________________________________
_____________________________________________
Date of interview: _____________________________________________
Researcher’s Remarks
The researcher can be contacted at 019-4446887 or dani@uum.edu.my
©Dani Salleh UTM (Postgraduate research student)
295
The Background of Study
It has been seen that most studies have shown that adequately provided infrastructure
facilities are very important for urban development and it is clearly a necessary
precondition for sustained economic development. The rising cost of infrastructure
provision combined with the reduction allocation of public expenditure imposed by
central government has had a significant impact on the capacity of the local authority to
provide infrastructure as it did in the past. Therefore, it is important for the local authority
to be proactive in identifying ways to generate additional financial sources to
accommodate infrastructure requirement within the current practice. This requires the
local authority to improve their sources of revenue and to find other alternative approach
on how infrastructure facilities can be secured. Under the present practice of planning
approval system in Peninsular of Malaysia, local authorities are allowed to impose such
requirements.
Therefore, the main objective of the study is to examine the possibility of using
planning approval system to secure off-site infrastructure from private developer. For the
purpose of this study the terms off-site infrastructure referred those infrastructure needed
outside proposed development areas, which refers to two types of infrastructure; i).
Economic infrastructure usually refers to public utilities such as highways, drainage
system and etc. due to their 'hard' engineering-based delivery networks, and ii). Social
infrastructure refers to public amenities which include public facilities such as schools,
public hospitals, police and etc. Therefore, the purpose of this interview is to seek the
perceptions from the respondent in order to understand the problems faced by developers
regarding to provision off-site infrastructure.
296
Section A : THE APPLICATION OF PLANNING APROVAL SYSTEM IN SECURING OFF-SITE
LOCAL INFRASTRUCTURE
A1 How local authorities secure off-site infrastructure provision?
__________________________________________________________________________________
__________________________________________________________________________________
Then, how effective is the method?
__________________________________________________________________________________
__________________________________________________________________________________
A2 What is your opinion about the application of planning approval system to secure off-site
infrastructure from developers?
_________________________________________________________________________________
_________________________________________________________________________________
A3 In your opinion, what are the most appropriate methods of delivery of the following types of offsite infrastructure?
Type of off-site infrastructure
Methods of delivery
1. Construction of new local roads
2. Local road maintenance
3. Drainage (e.g. Sewerage, monsoon drain, etc.)
4. Landscaping
5. Recreation facilities
6. Parking facilities
7. Incinerator plants
8. Parks, gardens or open space
9. Betterment of existing local Infrastructures
10. Other public utilities
11. Other public amenities (e.g. market etc.)
12. Maintenance of existing off-site infrastructure
Methods of delivery
1. Complete Public Sector Delivery
2. Traditional Public Contracting
3. Service/ Management Contracts
4. Lease Contracts
5. Public-Private Partnership (PPP)
6. BOOT, BOO or BOT Schemes
7. Concession/ Franchise Agreements
8. Joint Venture (JV)
9. Full Privatization
10. Planning Requirements
11. Planning Contribution
297
Section B: THE PROBLEMS RELATED TO OFF-SITE INFRASTRUCTURE PROVISION
IN OBTAINING PLANNING APPROVAL
B1 What are the problems which related to off-site local infrastructure provision often
faced by developers during planning approval stage?
_________________________________________________________________________________
_________________________________________________________________________________
B2 What are the problems encountered by your local authority when the planning permission subject to the
fulfilment of off-site infrastructure?
_________________________________________________________________________________
_________________________________________________________________________________
Section C : THE PERCEPTIONS OF LOCAL AUTHORITY ON OFF-SITE LOCAL
INFRASTRUCTURE PROVISION
C1 What is your perceptions of the following ‘statements’ regarding the practice of offsite infrastructure provision?
i. Developers are required to provide off-site infrastructure as a return from additional approval
granted to developers.
__________________________________________________________________________________
__________________________________________________________________________________
ii. Both private developers and local planning authorities (LPAs) are very keen in off-site provision
through the concept of ‘planning obligation’ and not ‘planning gain’ which is claimed by private
sector as the abuse of public rights.
__________________________________________________________________________________
__________________________________________________________________________________
iii. Planning gain is about the ‘willingness’ of private developers to provide (to contribute) off-site
infrastructure to local authorities in exchange of extra or maximum development approval.
__________________________________________________________________________________
__________________________________________________________________________________
iv. Developers will provide on-site physical infrastructure and the public authority will provide offsite physical and other forms of infrastructure.
__________________________________________________________________________________
__________________________________________________________________________________
298
Section D: SUGGESTIONS ON HOW OFF-SITE LOCAL INFRASTRUCTURE PROVISION CAN
BE SECURED BY LOCAL AUTHORITY
D1 In your opinion, how to promote the involvement of private developer in off-site infrastructure
provision in your local authority?
__________________________________________________________________________________
__________________________________________________________________________________
D2 Would you suggest the most effective methods to ‘justify’ the need to provide off-site local
infrastructure?
__________________________________________________________________________________
__________________________________________________________________________________
299
Appendix C4: Set B1 - Developer Survey
Respondent Code
Department of Urban and Regional Planning
Last edited: 16.01.06
Faculty of Built Environment
Universiti Teknologi Malaysia.
81310, Skudai
Johor Bahru. Johor.
Phone No. 019 4446887 Fax No. 604 9284379
West Malaysia.
Local Infrastructure Provision and Planning
Approval System in Malaysia
Set B1: Developer Survey
INSTRUCTION FOR RESPONDENTS
Thank you for being one of the research respondents. This research is conducted in fulfilment of the
requirements for the award of the degree of Doctor of Philosophy. All of the information given will be
treated confidentially. To complete this questionnaire, please read all the instructions then answer the
questions.
The main objective of the study is to identify the perceptions of developers and local authorities on offsite local infrastructure provision with reference to planning approval system in Malaysia. Off-site
infrastructure will be referred to the infrastructure facilities needed outside proposed development areas.
For the purpose of the study, it will refer to two types of infrastructure; i). Economic infrastructure
usually refers to public utilities such as highways, drainage system and etc. due to their 'hard'
engineering-based delivery networks, and ii). Social infrastructure refers to public amenities which
include public facilities such as schools, public hospitals, police and etc. Therefore, this survey is
designed to collect the appropriate data to answer the following research questions.
i.
What are the problems related to off-site infrastructure provisions faced by developers in
obtaining planning approval?
ii. What are the opinions of developers on the possible approach in securing off-site infrastructure
provision?
Notes : Questions in Section B refers to information provided in Appendix 1 and 2 (the overleaf
attached).
Researcher’s Remarks
Date of Interview : __________________ Date questionnaire received : ___________________
300
Section A : THE PROFILE OF DEVELOPER
A1 Developer Particulars (Please specify)
a). Name of Firm :
___________________________________________________________________________
b). Date of establishment :
_____________________________________________________________________
c). Is there any particular section/department/division in charge of planning
matters in your firm whenever dealing with Local Planning Authority.
Yes
No
A2 Name of representative: _______________________________________________________________
A3 Year of experience: ___________________________________________________________________
A4 Current position held: _______________________________________________________________
A5 Status of ownership of the firm
involved
A6 Please state the average of development cost
Sole Proprietorship (Sdn.)
Less RM15 million
Partnership
RM15 million – RM30 million
Public Listed Company (Bhd)
RM30 million – RM45 million
Family company
RM60 million – RM75 million
Semi-government
RM75 million – RM90 million
GLC (Government Link Company)
RM90 million – RM105 million
Joint-Venture Company
RM105 million – RM120 million
Other (Please specify): __________________
More than RM120 million and above
A7 Please state the type of development your firm has been involved (for the period of the last 10 years)
Type of development
Residential
Commercial
Hotel
Industrial estate
Mixed development
Resort
Other (please state):
Number
of project
Estimated
development cost
Involved with off-site
infrastructure provision
Cost of off-site
infrastructure
301
Section B : WHAT ARE THE PROBLEMS RELATED TO OFF-SITE INFRASTRUCTURE PROVISION FACED
BY DEVELOPERS IN OBTAINING PLANNING APPROVAL?
B1 Does your firm involve with off-site
infrastructure provision requirements?.
B2 Based on your previous experience in obtaining
planning permission, how long will it take to get
the approval?.
No
Less than 1 years
3-5 years
Yes
1-2 years
More than 5 years
3-5 years
B3 What are the common problems related to off-site infrastructure provision faced by developers
during
planning approval stage?
Please indicate the degree of seriousness by circling the appropriate number. Where 1 = Strongly not agree, 2 = Not
agree, 3 = Agree, and 4 = Strongly agree
1. Some developers face problem in obtaining the latest information on planning requirements,
especially the requirement of on-site and off-site infrastructure provision.
1234
2. Many amendments have to be made.
1234
3. Not much information pertaining to planning standards or requirement.
1234
4. New planning requirements regards to off-site infrastructure provision are only informed
after planning applications was submitted to LPAs.
1234
5. Delay in obtaining Planning Permission.
1234
6. Strict planning application procedure imposed by LPAs.
1234
7. Poor co-ordination between relevant technical departments.
1234
8. Inability to fulfill the related requirements as imposed by different approval authorities.
1234
9. Obtaining planning approval is considered a time consuming process.
1234
10. Planning approval process involves so much bureaucracy because many agencies have to be
referred.
1234
11. Local authority is inconsistently considering planning permission for those projects involved
with off-site infrastructure requirements.
1234
10. High percentage of fund/land has to be allocated for public amenities.
1234
12. The requirement to provide off-site infrastructure reflects the increase in development cost.
1234
13. Less commitment from developers due to the perception that traditionally local authority has
to provide those infrastructures.
1234
14. Developers find that the guidelines used by local authority to impose off-site infrastructure
are not clear and against the present planning regulations.
1234
15. Developers refuse and always use other channels (e.g. political channel) to avoid them from
fulfilling the requirements.
1234
302
B4 What are the factors that may influence a developer’s decision in determining proposed project
locations?
Please ticks [ / ] the following factors accordingly.
Most developers prefer to invest in areas with less possibility to be imposed with off-site
infrastructure requirements.
Have a good access to existing infrastructures
In Local Planning Authorities which are proactive in negotiating the planning requirement
pertaining to
off-site infrastructure provision
Others (please specify) :
_______________________________________________________________
Section C : WHAT ARE THE OPINIONS OF DEVELOPERS ON THE POSSIBLE APPROACH IN
SECURING
OFF-SITE INFRASTRUCTURE PROVISION?
C1 What do you think on the present practice of off-site infrastructure provision?.
Reasonable.
Not reasonable.
Too lavish or high standard.
Local planning authority has no right to impose such practice.
The practice is only appropriate for large scale development.
Any other comments : _______________________________________________________
C2 In percentage, how much development cost is allocated
for off-site infrastructure if a project involves such
requirement.
C3 In your opinion, who should bear the cost of
providing off-site infrastructure facilities?
Less 10 percent
The developer
10-15 percent
The land owner
15-20 percent
The buyer
20-25 percent
The developers and the buyer
25-30 percent
Local authority
30-35 percent
Local authority and developer
35-40 percent
Others (please specify) : _________
More 40 percent
303
C4 What is your opinion on the ideas / practices that require developers to provide off-site local
infrastructure?
Where 1 = Strongly not agree, 2 = Not agree, 3 = Agree, and 4 = Strongly agree
1. The local authority is inconsistently considering planning permission especially those
projects involved with off-site infrastructure requirements.
1234
2. The gradual improvement in off-site infrastructure provision is due to competitive market
exposure.
1234
3. Indirectly planning gain has been practised widely in securing off-site infrastructure in most
local authorities in Malaysia but however the practice is improperly practiced.
1234
4. The principal rationale of why off-site infrastructure provision has to be provided by local
authority because of its ‘public good characteristics’.
1234
5. Both private developers and local planning authorities (LPAs) are very keen in off-site
infrastructure provision through the concept of ‘planning requirements’ which is justified by
its development impacts and not through the ‘planning gain’ which is claimed by private
sector as the abuse of public rights.
1234
6. Planning gain is about the ‘willingness’ of private developers to provide (to contribute) offsite infrastructure to local authorities in the exchange of extra or maximum development
approval.
1234
7. Apparently the practice will result in additional development cost. This has to be absorbed in
selling price which will burden property buyers.
1234
C5 What would you suggest on how a local authority can secure its off-site infrastructure?
Where 1 = Strongly not agree, 2 = Not agree, 3 = Agree, and 4 = Strongly agree
1. It can be secured via planning approval process.
1234
2. Developers are required to provide off-site infrastructure as a return from additional approval
granted to developers.
1234
3. High percentage of land has to be allocated for public amenities.
1234
4. The increase in cost of providing off-site infrastructure requirements reflects the total
development cost.
1234
5. Most developers are willing to fulfill the requirements of off-site infrastructure within the
catchments of proposed development.
1234
6. A developer should be encouraged to provide other urgently needed infrastructure in the
surrounding development area as it can make the development attractive to purchasers. Then
at the same time local planning authority should reasonably ‘entertain’ developers by
facilitating the proposed development as far as it’s allowed under prescribed legislations.
1234
7. A developer should be allowed for maximum development in order to cope with the
increased cost of development if the developer was willing to provide off-site infrastructure.
However, the exercise must comply with other requirements.
1234
8. A maximum development should be granted to those developments that are willing to
provide off-site infrastructure.
1234
9. A developer should be allowed to negotiate the requirements of off-site infrastructure as
imposed by a local planning authority in order for them to get additional or maximum
planning approval.
1234
10. Some new development will generate the ‘development impact, therefore there is a need for
local authority to impose extra charges (e.g. Development Impact Charge) for the use of
infrastructure to reflect the use of resources.
1234
304
11. The offers of off-site infrastructure by developers are likely to have significant effects in
loosing up planning permission from reluctant local planning authorities.
1234
12. Based on the previous scenario, there is a possibility of local authority to use planning gain
to secure its needed off-site infrastructure provision.
1234
13. Improvement Services Fund (ISF) provided under Building, Street and Drainage Acts 1974
(Act 133), is an efficient method to get the private sector (property developers) involved in
local infrastructure development.
1234
C6 What are actually the measures taken when the planning application involves with off-site
infrastructure?
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
C7 What are the types of off-site infrastructures mostly needed by a local authority to be provided by a
developer?
1 = Construction of new local roads
2 = Local road maintenance
3 = Drainage
4 = Recreation facilities
5 = Parking facilities
6 = Incinerator plants
7 = Betterment of existing local infrastructures
8 = Other public utilities (e.g. Sewerage, monsoon drain, etc.)
9 = Other public amenities (e.g. market, bus stop, etc).
10 = Maintenance of existing off-site infrastructure
11 = Others (Please specify) : _________________________
C8 In your opinion, what is the most appropriate approach for local authority to secure off-site
infrastructure
provision from private sector?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
305
C9 Would you list the factors that constraint the active-involvement of private sectors in off-site local
infrastructure provision?
i.
_________________________________________________________________________________
ii.
_________________________________________________________________________________
iii. __________________________________________________________________________________
iv. _________________________________________________________________________________
C10 To what extend a property development is affected if developers are required to provide off- site
infrastructure?.
(e.g. tendency of developers to remove their proposed investments to another local authorities nearby).
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
C11 What are the major difficulties faced by a firm when off-site infrastructure is imposed by a local
authority?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
306
Section D: WHAT ARE THE DEVELOPERS PERCEPTIONS ON THE POSSIBILE APPROACHES IN
SECURING OFF-SITE INFRASTRUCTURE PROVISION
D1 What do you think are the most appropriate forms off-site infrastructure contribution?
Where 1 = Not appropriate, 2 = Lease appropriate, 3 = Slightly appropriate, 4 = Appropriate, and 5 = very
appropriate.
1. Financial contribution for existing off-site infrastructure improvements.
12345
2. Donating land or easements at no cost for off-site infrastructure facilities.
12345
3. Constructing infrastructure improvements to meet the needs of the proposed development.
12345
4. Leasing completed off-site infrastructure to a local authority, or some other entities.
12345
5. Allowing public access and use of privately owned land and facilities.
12345
6. Selling land to a public authority at less than market cost for the purpose of off-site
infrastructure facilities.
12345
7. Maintenance of public use facilities, either permanently or for some specified period.
12345
8. Paying fees to public authority towards the cost of operating and maintaining public land or
facilities.
12345
9. Existing road improvements (or provision).
12345
10. Provide infrastructure at the other sites.
12345
11. Provide public access.
12345
12. Public right of way on the developer’s land.
12345
13. Dedication of land for public use.
12345
14. Commuted payments for car parking.
12345
15. Provision of community buildings or facilities.
12345
16. Provision of drainage system.
12345
17. Other public building/facilities (e.g. community centre, public library etc.)
12345
18. Cash payment towards capital cost of constructing facilities or improvement.
(Including commuted payment for construction of off-site parking space).
12345
19. Construct facility or improvement to specifications approved by public authority and then
dedicate the completed facilities or improvement for public use.
12345
20. Joint-funding to expand infrastructure capacity to serve subsequent development in
surrounding areas.
12345
21. Others (Please specify) : ______________________________________________________
12345
307
D2 Please tick [ / ] the level of appropriateness on how to encourage or promote private developer in
off-site infrastructure provision.
Where 1 = Not appropriate, 2 = Lease appropriate, 3 = Slightly appropriate, 4 = Appropriate, and 5 = very
appropriate.
1. Local authority should have Infrastructure Priority Lists (IPL) used as check-list when come
to the negotiation of infrastructure requirements between a local authority and a private
developer.
12345
2. Introduce an attractive incentive. ( e.g. ‘Fast-Track’ approval at planning stage).
12345
3. Introduce a proper and transparent method of developer’s contribution negotiation
(planning agreements).
12345
4. Introduce an attractive infrastructure contribution scheme out-site of proposed development
location. This might be applicable for proposed development located in the area already has
adequate infrastructure.
12345
5. Negotiation would be the best approach applied in order to achieve a ‘win-win’ situation
between a private developer and a local authority.
12345
6. Public-Private Partnership (PPP) concept can be adopted as one alternative to secure
off-site local infrastructure provision by local authority.
12345
7. Off-site infrastructure should be financed directly out of general tax revenues.
12345
8. Off-site infrastructure should be financed using a special fund generated by local
authority (e.g. ISF provided under Act 133).
12345
9. Off-site infrastructure should be financed by project owner (e.g. developers).
12345
10. Off-site infrastructure should be financed by both parties; developer and local authority.
12345
11. The direct user of infrastructure might be charged and therefore revenues from such charges
should be deposited into the so called ‘infrastructure fund’ and not into council general fund
12345
12. LPAs should initiate private developers to sign planning agreements on the purpose to require
private developers to provide off-site infrastructure facilities in return of additional planning
approval? (e.g. Unilateral Undertaking).
12345
13. Local authority needs to set up a special mechanism to expedite the planning approval of
those projects involved with off-site infrastructure requirements.
12345
14. The cost incurred in providing off-site infrastructure should be shared with other utility bodies
and should not be a burden to developers only.
12345
15. To overcome the possibility of excessive cost of development, a lower standard of materials
could be permitted for the purpose of off-site infrastructure provision.
12345
16. The local off-site infrastructure can be secured from development approval stage by
quantifying the ‘development impact’ as a result from the proposed development.
12345
17. The negotiation of contribution for off-site infrastructure by developers should be initiated
properly and transparently by a local authority.
12345
18. There is a need for private sector to participate in off-site infrastructure provision to reduce the
cost on public sector.
12345
308
D3 What is your perception on the requirement of infrastructure provision under the concept of
planning gain that might be imposed by local planning authority?.
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
D4 Would you please suggest the most appropriate methods of private delivery of off-site infrastructure that
could be used in the future.
Please circle in the relevant cells of the following table where 1= Not appropriate, 2 = Lease appropriate, 3 = Slightly
appropriate, 4 = Appropriate, and 5 = very appropriate.
Betterment of existing local
infrastructures
Other public utilities (e.g.
Sewerage, monsoon drain, etc.)
Other public amenities
(e.g. market, bus stop, etc.)
Maintenance of existing
off-site infrastructure
Others (Please specify) : _________
Planning Contribution
(e.g. through Planning
gain)
Private Finance
Initiative (PFI)
Parks, gardens or open space
Full Privatization
Incinerator plants
Joint Venture (JV)
Parking facilities
Concession/ Franchise
agreements
Recreation facilities
BOOT, BOO or BOT
(Schemes)
Landscaping
Public-Private
Partnership (PPP)
Drainage
Lease Contracts
Local road maintenance
Service/ Management
Contract
Construction of new local roads
Traditional Public
Contracting
Type of infrastructure
Complete Public Sector
Delivery
Methods of delivery
309
D5 What would you suggest to ensure the success of the private sector involvement in off-site infrastructure
provision in local authority?.
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
D6 Would you describe any WEAKNESSES of the present practice of off-site infrastructure provision
and your SUGGESTIONS to ensure the success of private provision of off-site local infrastructure?.
a). WEAKNESSES : _____________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
b). SUGGESTIONS : ____________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Public
Once off
Agreed
contract fee
Public
Public
Public
Private
Not applicable
Public
Public
Public
Not applicable
Not applicable
Public
Public
Public
Public
Public
Public
Public
Infrastructure Ownership
Contract Duration
Basis for Private Operator
Payment
(All are performance based)
Revenue Collection
Responsibility
(inc. invoicing & collection)
Capital Investment
Responsibility
(inc. initial, upgrade & service
expansion investment)
Recurrent Expenditure
Responsibility
Commercial Risk
i. Construction
ii. Operation Risks (Cost)
iii. Market Risks (Revenue)
Example
Non-commercial Risks
Sectors Where Most
Appropriate
Traditional
Public
Contracting
Complete
Public Sector
Delivery
Characteristics
Public
Where limited
capacity expansion is
required
An example is the
outsourcing
of leisure facilities to
private
management/
operation.
These are
common
arrangements
and include
maintenance
contracts,
design and
construct
contracts, etc.
Private
Private
Private
Private
Public (private
operator funds capital
maintenance
expenditure)
Public (some private)
Up to 30 years
Unit cost plus margin
(linked to estimated
demand at contract
inception).
Public
Lease Contracts
Public
Low
willingness to
pay
Private
Public
Public
Private
Public
Public
5 to 10 years
Agreed
contract fee
Public
Service/
Management
Contracts
Private
Private
Shared
(guaranteed
minimum custom)
Public
Where new
facilities are
required (e.g. toll
roads)
These are
uncommon but
may include toll
roads, wastewater
treatment plants,
health facilities,
etc.
Private operator
(Public
sector funds
service expansion
expenditure)
Private
Public
20 to 30 years
Public sector
guarantees to
purchase a
minimum level of
output (based on
unit cost of
delivery)
Public
BOOT, BOO or
BOT
Schemes
These agreements
may cover water
and electricity
infrastructure
networks, etc. but
are uncommon at
the local level..
Public
Network based
infrastructure
(e.g. water)
Private
Private
Private
Private
Private
Private
20 to 30 years
Similar to lease or
BOOT contract
Public
Concession/
Franchise
Agreements
Appendix 1: Characteristics of Local Infrastructure Delivery
Joint
Where private
capital is required
immediately
Private
Public & Private
Public and Private
Public and Private
Public and Private
Joint
Permanent
Market driven (with
regulation)
Joint
Joint Ventures/
Private
Where
competitive
structure can be
unbundled
The most
typical
infrastructure
privatization.
(i.e.
telecommunicat
ions
infrastructure).
Private
Private
Private
Private
Private
Private
Permanent
Market driven
(with
regulation)
Private
Full
Privatization
Public
Where new
facilities/
infrastructure
are required.
Private
Public
Public
Public
Private
Public
Permanent
Not applicable
Public
Planning gain
contribution
310
310
1. Construction
(Cost overruns)
2. Operation Risks
(Cost Variations)
3. Market Risks
(Revenue Variations)
Non-commercial Risk Bearer
(policy, regulatory changes, etc.)
Commercial Risk Bearer
6. Recurrent Expenditure
Responsibility
5. Capital Investment
Responsibility (inc. initial,
upgrade & service
expansion investment)
4. Revenue Collection
Responsibility (inc.
invoicing & collection)
Council
Private operator
Private operator
Council
Council
Council
Council
Private operator
Council (mostly inapplicable)
Private operator
Council
Predominantly Council (some
private operator)
Council
Council (Private operator funds
capital maintenance
expenditure)
Council
3 to 30 years
Unit cost plus margin
Council
1 to 10 years
Agreed contract fee
Usually a short to medium
term arrangement for a
particular infrastructure facility,
with the private operator
accepting most
commercial risks but with
Council retaining capital
expenditure responsibilities.
An example is the outsourcing
of leisure facilities to private
management/ operation.
Usually one of contracts for
small components of the
overall infrastructure network,
with Council bearing virtually
all risks. These are common
arrangements and include
maintenance contracts, design
and construct contracts, etc.
Summary Description
Major Characteristics
1. Infrastructure Ownership
2. Contract Duration
3. Basis for Private Operator
Payment
Lease Contracts
Service/ Management
Contracts
Type of Private Sector
Involvement
Shared (guaranteed minimum
custom by Council
Council
Private operator
Private operator
Private operator
Private operator
(Council funds service
expansion expenditure)
Council
20 to 30 years
Council guarantees to purchase
a minimum level of output
(based on unit cost)
Council
Build Own Operate Transfer
(BOOT) or BOO or BOT
Schemes
Usually a long term contract for
a particular infrastructure
facility where the private sector
finances, builds and operates
the facility with the assurance
that Council will buy a
minimum level of output.
These are uncommon but may
include toll roads, wastewater
treatment plants, health
facilities, etc.
Council
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Private operator
Permanent
Market driven
(with appropriate
regulation)
Public
Public
Public
Private
Public
Private
Public
Public
Permanent
Not applicable
The infrastructure
secured from private
sector through
planning gain
approach as
practiced under
development control
system (e.g. under
Section 106 of the
1990 Town and
Country Planning
Act of U.K.
planning system).
The permanent sale of an
infrastructure asset/
network to the private
sector, usually
accompanied with public
sector price and quality
regulation. The most
typical infrastructure
privatization.
(i.e. telecommunications
infrastructure).
Usually a long-term
contract for all components
of an infrastructure
network within a given
area, with the private
sector assuming all
commercial risk and
service expansion
responsibilities. These
agreements may cover
water and electricity
infrastructure networks,
etc. but are uncommon at
the local level..
Council
20 to 30 years
Similar to lease or BOOT
scheme arrangements
Planning gain
contribution
Full Privatization
Concession/ Franchise
Agreements
Appendix 2: The Characteristics of Basic Types of Private Sector Involvement in Local Infrastructure Delivery
311
311
312
Appendix C5: Set B2- In depth Interview for developer
Respondent Code
Department of Urban and Regional Planning
Phone No. 019 4446887 Fax No. 604 9284379
Faculty of Built Environment
Universiti Teknologi Malaysia.
81310, Skudai
Johor Bahru. Johor.
West Malaysia.
Local Infrastructure Provision and Planning
Approval System in Malaysia
Set B2 – In depth Interview for developer
Name of the firm: _____________________________________________
_____________________________________________
Date of interview: _____________________________________________
Researcher’s Remarks
Date of Interview : __________________ Date questionnaire received : ___________________
313
The Background of Study
It has been seen that most studies have shown that adequately provided infrastructure facilities
are very important for urban development and it is clearly a necessary precondition for
sustained economic development. The rising cost of infrastructure provision combined with
the reduction allocation of public expenditure imposed by central government has had a
significant impact on the capacity of the local authority to provide infrastructure as it did in the
past. Therefore, it is important for the local authority to be proactive in identifying ways to
generate additional financial sources to accommodate infrastructure requirement within the
current practice. This requires the local authority to improve their sources of revenue and to
find other alternative approach on how infrastructure facilities can be secured. Under the
present practice of planning approval system in Peninsular of Malaysia, local authorities are
allowed to impose such requirements.
Therefore, the main objective of the study is to examine the possibility of using planning
approval system to secure off-site infrastructure from private developer. For the purpose of this
study the terms off-site infrastructure referred those infrastructure needed outside proposed
development areas, which refers to two types of infrastructure; i). Economic infrastructure
usually refers to public utilities such as highways, drainage system and etc. due to their 'hard'
engineering-based delivery networks, and ii). Social infrastructure refers to public amenities
which include public facilities such as schools, public hospitals, police and etc. Therefore, the
purpose of this interview is to seek the perceptions from the respondent in order to understand
the problems faced by developers regarding to provision off-site infrastructure.
314
Section A : PROBLEMS RELATED TO OFF-SITE INFRASTRUCTURE PROVISION FACED
BY DEVELOPERS IN OBTAINING PLANNING APPROVAL
A1 What are the common problems which related to off-site infrastructure provision faced by
developers during planning approval stage?
______________________________________________________________________________
______________________________________________________________________________
A2 If your development involved with off-site infrastructure, how you going to manage
the project?
______________________________________________________________________________
______________________________________________________________________________
A3 Is there any influences on the developer’s decision in determining proposed project locations if
one local authority practicing that planning approval only granted if the planning permission
fulfill the requirements of off-site infrastructure provision?
______________________________________________________________________________
______________________________________________________________________________
A4 How does off-site infrastructure requirements affect your development?
______________________________________________________________________________
______________________________________________________________________________
Section B : DEVELOPERS’ OPINIONS ON THE POSSIBLE APPROACH OF USING PLANNING
APROVAL SYSTEM IN SECURING OFF-SITE INFRASTRUCTURE PROVISION
B1 Can you describes how present practice of off-site infrastructure provision?
______________________________________________________________________________
______________________________________________________________________________
315
B2 What is your opinion on the ideas / practices that require developers to provide off-site local
infrastructure?
______________________________________________________________________________
______________________________________________________________________________
B3 To what extend property development is affected if developers are required to provide off-site
infrastructure?
______________________________________________________________________________
______________________________________________________________________________
B4 What are actually the measures taken when the planning application subject with the off-site
infrastructure provision?
_______________________________________________________________________________
______________________________________________________________________________
B5 Would you suggest how a local authority can secure its off-site infrastructure using planning
approval system?
______________________________________________________________________________
______________________________________________________________________________
B6 Do you agree that, the present practice of planning approval has being applying the
requirements of off-site infrastructure? However, the practice was inconsistent among local
planning authorities. Therefore, do you have any suggestions how to standardise the practices?
______________________________________________________________________________
______________________________________________________________________________
B7 Can you elaborate further the main factors that discouraging the involvement of private
developer in off-site local infrastructure provision?
______________________________________________________________________________
______________________________________________________________________________
B8 Can you explain the problems faced by developer if the planning approval is subject to off-site
infrastructure provision?
______________________________________________________________________________
______________________________________________________________________________
316
Section C: DEVELOPERS PERCEPTIONS ON THE POSSIBILE APPROACHES IN SECURING
OFF-SITE INFRASTRUCTURE PROVISION
C1 What do you think the most appropriate forms of off-site infrastructure contribution?
______________________________________________________________________________
______________________________________________________________________________
C2 How to encourage or promote private developer in off-site infrastructure provision?
______________________________________________________________________________
______________________________________________________________________________
C3 What is your perception on the requirement that required local planning authority to provide offsite infrastructure during planning approval stage? provision under the concept of planning gain
that might be imposed by local planning authority?
______________________________________________________________________________
______________________________________________________________________________
C4 Would you please suggest the most appropriate methods of private delivery of off-site
infrastructure that could be used in the future?
______________________________________________________________________________
______________________________________________________________________________
C5 What would you suggest to ensure the success of the private sector involvement in off-site
infrastructure provision in local authority?
______________________________________________________________________________
______________________________________________________________________________
C6 Would you describe any WEAKNESSES of the present practice of off-site infrastructure
provision and your SUGGESTIONS to ensure the active-involvement of private developer in
off-site local infrastructure?
i. Weaknesses
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
ii Suggestions
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________