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Impact Assessment and Project Appraisal

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Devolution of environmental regulation:environmental impact assessment in Malaysia

P. A. Memon

To cite this article: P. A. Memon (2000) Devolution of environmental regulation: environmental

impact assessment in Malaysia, Impact Assessment and Project Appraisal, 18:4, 283-293, DOI:10.3152/147154600781767295

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Impact Assessment and Project Appraisal, volume 18, number 4, December 2000, pages 283–293, Beech Tree Publishing, 10 Watford Close, Guildford, Surrey GU1 2EP, UK.

Environmental regulation

Devolution of environmental regulation:

environmental impact assessment in Malaysia

P A Memon

Based on an empirical case study surrounding the fragmentation of a hitherto apparently co-hesive national environmental impact assess-ment (EIA) system in Malaysia, this paper argues that effectiveness of planning tools suchas EIA cannot be isolated from wider issues of governance. Integration of environmental and

developmental objectives in decision-making byusing tools such as EIA poses important politi-cal implications. This is because state institu-tions do not function independently from therest of society and influential interest groupswithin it. A political will and willingness openlyto debate development proposals by a vibrant civil society able to access information are pre-requisites for tools such as EIA to be effective.

Keywords: environmental regulation; environmental impactassessment; Malaysia

P A Memon is in theDivisionof Environmental Management andDesign, Lincoln University, Canterbury, New Zealand; [email protected].

The author takes full responsibility for the views expressed inthis paper. He is grateful to James Dawos Mamit, Controller of Environmental Quality, Sarawak and Professor MurtedzaMohamed (University of Malaysia, Sarawak) for discussing theMalaysian EIA system and to Alan Ambury for assistance withdata collection.

I NTEGRATION OF ENVIRONMENT and de-velopment in decision-making has emerged as adominant theme in the recent debate on sustain-

able development (IUCN 1991; Dwivedi andVajpeyi, 1995). Effective environmental regulationof public- and private-sector development initiativesis necessary to promote ecological and social well- being in the particular context of the developingworld and environmental impact assessment (EIA) isseen as an essential tool for this purpose. However,experience in designing effective EIA systems asan instrument for environmental planning andmanagement in developing countries has beenvariable.

For this reason, there is growing cognisance of thesignificance of the wider institutional dimensions of environmental management as a determinant of EIAeffectiveness. These institutional dimensions relate broadly to the political and related administrativearrangements for EIA including allocation of respon-

sibilities between national and sub-national levels of jurisdiction, inter-governmental relationships, co-ordination and co-operation amongst agencies andstakeholder participation in the EIA process in anopen civil society. The objective of this paper is toexamine the recent changes to the Malaysian EIAsystem from this perspective.

Malaysia, a federal state (Figure 1), was one of thesecond generation of Asian countries to adopt EIAformally compared to countries such as the Philip- pines and Thailand which adopted EIA legislation in1977 and 1978 respectively. Until recently, EIA in

Malaysia has been a federal government responsibil-ity. This situation has changed during the last fewyears with the peripheral, resource-rich states of Sarawak and Sabah having enacted impact

Impact Assessment and Project Appraisal December 2000 2831461-5517/00/040283-11 US$08.00 © IAIA 2000


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assessment procedures for natural resource manage-ment and it is possible that other states may followsuit. At the moment, other states only have a limited

role to administer preliminary EIA reports under the jurisdiction of the federal government. The discussionwill focus on the circumstances which have precipi-tated this trend towards devolution of EIA and the implications of fragmentation of a hitherto unitarynational system in terms of its effectiveness.

Institutional arrangements

There is a substantial body of recent literature focusedon EIA which advocates the development of EIA sys-tems particularly suited to the needs of developingcountries (for example, Lim, 1985; Biswas andAgarwala, 1992; Strömquist, 1992; Ebisemiju, 1993;Wood, 1995; Boyle, 1998; Glasson et al , 1999). Amajor consideration in the development of institu-tional arrangements for an effective EIA system is theextent to which responsibility for environmental deci-sion-making should be centralised or decentralised(Doern and Conway, 1994; Doyle and Kellow, 1995;Harrison, 1996; Holland et al , 1996).

There are manifest advantages in a centralised or unitary EIA system in a developing country. Such asystem would ensure consistency in terms of applying

uniform national standards and norms and avoidinter-jurisdictional competition amongst states or provinces to attract development at the expense of en-vironmental considerations. It would enable effectiveuse of limited human resources with capability to ad-minister EIA procedures.

A unified national system recognises a legitimate public interest across jurisdictions in terms of participation in EIA decision-making, for instance, whenmaking submissions during the preparation of EIA reports. However, by the same token, a unified nationalEIA system would need to ensure that it does not be-

come too centralised and top-down and that there areadequate opportunities for public participation indecision-making. It could be argued that an ideal ar-rangement is for responsibility to be shared between

the different tiers of government, basedon a system of checks and balances in the EIA process.

Institutional arrangements for EIA in a particular

country are shaped by the distribution of power andfunctions between different tiers of government andthe complex interplay of political interests they repre-sent. With the exception of countries such as Singa- pore, environmental regulation functions in manynation states are shared between the central andsub-national levels of government. Challenges of integrated environmental management are com- pounded in federal states such as Nigeria and Malay-sia where inter-governmental relationships areconstitutionally defined. Issues relating to jurisdictionover environmental management functions are often politically controversial on account of their broader implications for access to, and allocation of, naturalresources in growth-oriented, increasingly mar-ket-driven societies.

The discussion of the Malaysian situation in this paper exemplifies some major political and relatedadministrative challenges in undertaking effective en-vironmental regulation within the recent policy phaseof deregulation and market expansion, which are onlynow beginning to be acknowledged adequately in theenvironmental planning and management literature(Memon and Gleeson, 1995; Gandy, 1997; Rangan,1997; Clark, 1998; McDermott, 1998).

Federal environmental impact procedures

The Malaysian federal EIA requirements have been inoperation now for 12 years within the framework of the Environment Quality Act 1974 (EQA), which wasenacted in 1974 as the major federal environmentalstatute; a new Department of Environment (DOE)was established to implement this statute. The needfor better environmental management was formallyendorsed in the Third Malaysia Plan (Government of

Malaysia, 1976) and the EQA is the basic instrumentfor achieving national environmental objectives.During the first ten years of its administration,

emphasis was put on curbing pollution by means of

284 Impact Assessment and Project Appraisal December 2000

Devolution of environmental regulation: EIA in Malaysia

Figure 1. Malaysia


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regulations gazetted under the Act. The emphasis oncontrol of pollution and the taking of remedial actionswas a reflection of the magnitude of environmental pollution problems and increasing public concerns.During the 1970s and 1980s, wastes from agro-basedindustries (palm oil and rubber) were major problems.

It was not until 1987 that EIA procedures were in-troduced under the EQA to emphasise the importance

of preventative controls. Once again, this action was aresponse to the increasing magnitude of environmen-tal problems in Malaysia as a consequence of greater emphasis on growth-oriented structural adjustment programmes and liberalisation of the economy.Privatisation has been strongly encouraged since theearly 1980s within the framework of the five-year national development plans, and liberal investment policies were introduced by the federal government toattract foreign capital.

The shift from raw material production to manu-facturing as the basis of the country’s economy

became evident in the 1970s, and the rate of indus-trialisation and urbanisation has accelerated sincethen. Between 1960 and 1990, real GDP (grossdomestic product) increased sevenfold, at an annualgrowth rate of 6.8%. Manufacturing now accounts for over 30% of GDP and 60% of exports. Together withthe benefits of development have come negative envi-ronmental impacts and cumulative environmentaldegradation (Sani, 1993).

The Malaysian EIA procedures are modelled onthe National Environmental Policy Act 1969 (NEPA)framework in the United States. The EnvironmentalQuality (Prescribed Activities) (Environmental Im- pact Assessment) Order 1987 was gazetted as a project planning tool for new projects or the expansion of existing ones. Section 34A of the EnvironmentalQuality (Amendment) Act 1985 requires anyone whointends to undertake a prescribed activity to first con-duct a study to assess the likely environmental impacts that will occur from that activity and themitigating measures that need to be undertaken.

The Environmental Quality (Prescribed Activities)(EIA) Order 1987 specifies some 19 categories of

activities requiring EIA reports prior to implementa-tion (DOE, 1987). The EIA procedure is shown in

Figure 2. EIA reports submitted to the DOE by project proponents are reviewed by special technical panelscomprising individuals from government agencies,universities, the private sector and non-governmentalorganisations (DOE, 1992).

It has taken considerable effort on the part of theDOE to improve the understanding and acceptance of the EIA requirements by state and federal agenciesand private-sector developers. The Department hasgradually established offices in state capitals to pro-mote more effective co-ordination with state govern-ment bureaucracy and developers and the processingof EIA reports has been progressively decentralised tothese regional DOE offices since 1993. The Malay-sian system has been portrayed as a working exampleof decentralisation of EIA activities among part-icipants and tiers of government and an effectivemechanism for inter-governmental and inter-agencyco-operation (Ebisemiju, 1993; Sani, 1993).

In this respect, the Malaysian federal EIA systemmay be described as gradually tending towards a func-tionally decentralised model from its centralised

Impact Assessment and Project Appraisal December 2000 285


Figure 2. Federal EIA procedures, Malaysia

Figure 3. Federal EIA reports according to prescribedactivities, Malaysia, 1988–1998

Source: Department of the Environment, personalcommunication

Figure 4. Federal EIA reports by state, 1988–1998

Source: Department of the Environment, personalcommunication


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genesis. Figure 3 shows the distribution of EIAreports for 1988 to 1998 according to the type of prescribed activity specified in the EIA Order, withhousing, recreation and resorts, infrastructure and

quarries as the dominant categories.Figure 4 shows the geographical distribution of

EIA reports for the same period, with Selangor andJohor in Western Malaysia as the focus of most devel-opment activity. In Sarawak State, on the island of Borneo in Eastern Malaysia, the majority of the EIAreports have been related to petroleum and related in-dustrial development projects in Bintulu region(Rasol, 1994). The type of EIA reports by states for 1998 and 1999 is shown in Table 1.

The major constraint on the effectiveness of theFederal government EIA procedures in Malaysia per-

tains to constitutional limits on its jurisdiction with re-spect to environmental management. Under the

Malaysian Federal Constitution land and water areunder the purview of state governments. Each state isempowered to enact laws on forestry, water resources,mining, wildlife and fisheries. The management of

these resources is beyond the scope of the EQA andthe role of the DOE.

State government decisions over the allocation andmanagement of these resources tend to be politicallysensitive issues and the federal government has totread warily to avoid being perceived to interfere instate matters. As discussed below, this is particularlythe case with the two Borneo states of Sarawak andSabah in Eastern Malaysia on account of their distinctethnic identity and the special provisions in theMalaysian constitution when they became membersof the Federation in 1963.

A number of other EIA issues and problems have been identified in Malaysia (Harun, 1994), and theseare comparable to those experienced in other develop-ing countries. Examples include:

Lack of awareness of the strength of EIA as a plan-ning tool: many still perceive it as a stumbling block to development.

Perception that carrying out an EIA study woulddelay project approval and implementation.

EIA not carried out prior to final project design, sothat issues such as siting and technology are notconsidered.

Lack of base-line data on environmental quality. Poor prediction of impacts. Limited public participation.



Table 1. Federal EIA reports according to type of report and state, 1998 and 1999

Type of report

Pre-assessment Risk analysis Detailed EIA All reports

State 1998 1999 1998 1999 1998 1999 1998 1999

Johore 23 12 4 1 – – 27 13

Kedah 10 4 – – – – 10 4

Kelantau 2 6 – – – – 2 6

Kuala Lumpur 2 2 – – – – 2 2

Labuan – 1 – 1 – – – 2

Melaka 6 2 – – – – 6 2

Negeri Sembilan 12 4 – – – – 12 4

Pahang 13 9 5 1 – – 18 10

Pulau Pinang 5 6 – – – – 5 6

Perak 13 3 – – – – 13 3

Perlis – 1 – – – – – 1

Sabah 11 5 – – – – 11 5

Sarawak 4 5 – – – – 4 5Selangor 9 10 – – 1 2 10 12

Terengganu 7 9 2 1 2 – 11 10

More than one state 1 2 – 1 – – 1 3

Total 118 81 11 5 3 2 132 88

Source: www.jas.sains.my/doe/egeiar01.htm

In Malaysia land and water are under

the purview of the states, whose

decisions on allocation and

management of these resources tend to

be politically sensitive issues: the

federal government has to tread

warily so as not to interfere in statematters


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Constitutional jurisdiction over environment

The Ninth Schedule of the Malaysian Federal Consti-tution provides for the general distribution of legisla-tive powers between the federal and stategovernments as follows: List I (Federal List) List II(State List) and List III (Concurrent List). In addition,the Ninth Schedule includes list 2A (Supplement to

State List for Sabah and Sarawak) and List 3A (Sup- plement to Concurrent List for the States of Sabah andSarawak) which accord even greater control to thetwo states over natural resources when Sabah andSarawak joined the Federation in 1963. The state of Sarawak has exclusive jurisdiction to make laws af -fecting land use, forestry (which includes the removalof timber and biomass), impounding of inland water,diversion of rivers, electricity and the production of electricity generated by water, and local government.Items not enumerated in the Ninth Schedule fall under state jurisdiction under the ‘residual’ category.

As a reflection of the dependence of the Sarawak economy on the export of natural resources coupledwith its distinctive ethnic identity, the state has over the years zealously guarded its constitutional auton-omy against perceived encroachment by the federalgovernment. Thus, the scope of many federal statutesis limited in Eastern Malaysia, while the bulk of thenatural resource legislation in Sarawak comprisesstate enacted laws. The jurisdiction of the majority of natural resource federal laws does not extend toSarawak as these matters are in the State List or theConcurrent List in the Federal Constitution.

During the last six years, Sarawak has been suc-cessful in partially wresting control from the federalgovernment of EIA procedures specifically for re-source-based development projects. On the strengthof its legislative powers under Article 77 of theMalaysian Constitution, in 1993 the state amended its Natural Resources Ordinance 1949 to the NaturalResources and Environment Ordinance 1993 andestablished the Natural Resources and EnvironmentBoard (NREB) to enforce the Ordinance. The purposeof the Ordinance is to enable the state governmentto promote sustainable management of naturalresources, specifically items that are enumerated in

the State List: land use, forestry, agriculture andinland water resources. It is an enabling statute that isimplemented by making subsidiary legislation or by cross-referencing it in other statutes which itoverrides.

The state of Sarawak has recognised that ‘environ-ment’ is not enumerated in any of the Legislative Listsand thus comes under the ‘residual’ category under state jurisdiction. The Natural Resources and Envi-ronment Ordinance is a pre-Malaysia statute enactedin 1949 when Sarawak was governed by the Britishcolonial administration which succeeded the Brook

administration in 1946. Under this Ordinance, a state Natural Resource Board could prescribe certain activ-ities which “may injure, damage or have adverseimpact on the quality of the environment or the natural

resources of the State” to require the approval of theBoard before it could be implemented. However,these powers were not exercised until 1994.

The Natural Resources and Environment (Pre-scribed Activities) Order 1994 besides prescribingcertain activities which require the Board’s approval,also lays down procedures for the application for suchapprovals. The federal government has removed these

activities from the ambit of the federal EIA Order made under the Environment Quality Act in 1987(NERB, 1995).

The process of preparing and evaluating EIA reports is parallel to that under the federal EQA statutewith one significant departure. The scope for public participation is limited under the state EIA processcompared to the federal EIA process. The EIA reportssubmitted to the NREB are evaluatedby a panel of experts drawn primarily from relevant governmentagencies, and the recommendations from the panelare taken into consideration in the approval processby

the Controller of Environmental Quality.In granting approvals to project proponents, the NREB prescribes environmental conditions for pro-tection and management. Project proponents must un-dertake in writing to the Board to comply with all theconditions. Post-EIA monitoring is carried out by the project proponents and the NREB secretariat. Thefundamental difference between this Sarawak order and the federal guidelines is essentially the entitle-mentin the federal EQA to a copyof the EIA reportbythe public and the subsequent public comments to theReview Panel before an approval can be granted bythe Director-General. The Sarawak Order excludesthese provisions.

The NREB comprises a committee made up of ex-officio members drawn primarily from state gov-ernment ministries and departments which haveresponsibilities for natural resources management.The committee is formally responsible for chartingthe policy and direction of environmental protectionand management in Sarawak. Following a 1997amendment to the Ordinance, greater management re-sponsibility has now been delegated to the Controller of Environmental Quality, the head of the NREB(Mamit, 1997).

Development of recent EIA case law

The constitutional jurisdiction of the state of Sarawak to take over the administration of EIA from the federalauthority has proved to be a controversial issue andhas been tested recently in the Malaysian courts. Thecase discussed below relates to the consent applica-tion by a Malaysian entrepreneur for the proposed2400MW Bakun hydroelectric project which was re-viewed under the new Sarawak EIA procedures. It

was alleged that the state government, with the appar-ent collusion of the federal government, had used thestate EIA procedures to facilitate the approval of thecontroversial Bakun Hydroelectricity project on the




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upper Rajang river in the heart of the remaining ves-tiges of the tropical rainforests.

Credence to this view was provided by the manner in which the amendment to the federal EQA was en-acted to exempt the state of Sarawak from its purviewand the consequent confusion that arose about themanner in which the Bakun EIA reports were re-

viewed. As discussed here, the Court of Appeal, how-ever, has rejected this Machiavellian explanation infavour of bureaucratic ineptitude within federalgovernment.

The Federal Cabinet of Malaysia announced inSeptember 1993 its approval of the proposed develop-ment of the Bakun hydroelectric project (HEP) inSarawak. This was to be one of the most ambitious de-velopment projects ever undertaken in South EastAsia and was designed to meet the long-term energyrequirements of the nation with the possibility of export to the neighbouring countries. The projectcomprises the creation of a reservoir, construction of adam, and the transmission of the generated electric power from Sarawak to Western Malaysia by a trans-mission cable submerged across the South China Sea.

There has been considerable concern within andoutside Malaysia about possible environmental andsocial impacts of such a large dam (Bocking, 1997).With the support of international environmentalgroups, three local native longhouse residents lodgedHigh Court action because the project entailed the de-struction of their longhouses and ancestral burial sitesas well as land and forests which provided shelter,livelihood, food and medicine, to which they claimed

to have a strong cultural attachment.The EIA for the Bakun HEP was commissioned by

the project proponent on the 7th of March 1994 andsubsequent to this there were various public pro-nouncements by federal government that the EIA report would be made available to the public for their comments before approval. The Minister had assuredcertain public interest groups that all EIA proceduresunder the federal EQA had to be complied with by the proposed project, and public views would be consid-ered. According to the Handbook of Environmental Impact Assessment Guidelines (DOE, 1987), a detailed

EIA prepared by the proponent of the project must bemade available to thepublic,as noted earlier (Figure2).The public is invited to comment on the proposed

project to a Review Panel which is an independent

body of experts and representatives of interested org-anisations appointed to review an EIA report and toevaluate the environmental and developmental costsand benefits to the community. The Review Panelmakes recommendations to the Director-General for his/herconsideration and decision on projectapproval.

Large-scale hydroelectric power generation andtransmission projects are listed as a prescribed activ-

ity under the EQA. However, on 27 March 1995, theFederal Minister of Environment exempted resourcedevelopment projects in Sarawak from the ambit of the EQA and made this exemption retrospective fromthe 1st of September 1994. The explanation given for this was that the state of Sarawak had enacted the Nat-ural Resources and Environment (Prescribed Activ-ities) Order 1994 about that time (August 1994).

Contrary to public expectations, the project appli-cant claimed in April 1995 that the first segment of theEIA submitted by his company had been approved bythe Sarawak state and he intended to commence pre-

paratory works which involved clearing 69,000 hect-ares of forest. The plaintiffs insisted on a right to acopy of the EIA report and to be heard and makerepresentations under the rights granted to them by theEQA and all the subsidiary legislation related thereto,while the defendants denied this.

The High Court Judge found that the nucleus of the plaintiffs’ challenge was on the validity of the federalEnvironmental Quality (Prescribed Activities) (Envi-ronmental Impact Assessment) Amendment Order 1995 in relation to the procedural aspects of its enact-ment. This piece of subsidiary legislation came intoforce on the 1st of September 1994 although it wasonly gazetted on the 20th of April 1995. The HighCourt found no provision in the EQA to permit theMinister to make any amendments retrospectively.

The Judge noted in his decision that in the federalguidelines, public participation, in the form of obtain-ing a copy of the EIA report, commenting on it, andmaking representation, is explicitly provided for, anda valid assessment of an EIA prepared by the project proponent cannot be made without some form of pub-lic participation. This process is mandatory and theentitlement to a copy of the EIA report and the optionto comment on it becomes a public right. The Amend-

ment Order which repealed this law and therefore af-fected the rights of the plaintiffs was declared invalid.

He concluded that, since the very essence of EQAis to formulate measures that shallbe taken to prevent,reduce or control adverse impacts on the environ-ment, public participation was necessary because “theinteraction between people and their environment isfundamental to the concept of [environmental] impact” and it was

“indeed mandatory for the authorities to hear theviews of the public first before granting its ap-

proval … It makes a mockery of the whole issueto say that the EIA can be approved first andif the public had any constructive ideas, theycan submit later. This certainly is illogical,



The Judge noted that in the federal

guidelines, public participation is

explicitly provided for, and a valid

assessment of an EIA prepared by the

project proponent cannot be made

without some form of publicparticipation


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deprivation of good sense and sound reasoning.”(High Court Judgement, page 34)

The High Court declared the Federal AmendmentOrder invalid and directed the project proponent tocomply with the EQA 1974. The federal governmentand the state of Sarawak appealed against this deci-sion to the Court of Appeal.

The High Court had treated the Amendment Order as the focal point of the case. The Court of Appealchanged the focus of deliberations from the validity or otherwise of a federal or state law to a much narrower “question of interpretation of the Federal Constitutionin relation to the applicability of the EQA to Sarawak”(Court of Appeal Judgement, page 23). Since the place where the power is to be generated is land andwater, and thus the ‘environment’ in question lieswholly within the legislative and constitutional prov-ince of the state of Sarawak, it concluded that the statehas exclusive authority to regulate by legislation, the

use of it in such manner as it deems fit.On the strength of this reasoning, the Court of Appeal has accepted the appellants’ argument that theSarawak Ordinance co-exists with the EQA, each op-erating within its own sphere based on the constitu-tional authority of the state of Sarawak to regulate bylegislation those components of the environment thatfall within its domain. The Judge concluded that

“[in] my judgement, Parliament, when it passedthe EQA, did not intend, and could not have in-tended, to regulate so much of the environmentas falls within the legislative jurisdiction of Sarawak.” (Court of Appeal Judgement, page24)

He agreed with the submission of the Senior Counselthat the Amendment Order was made

“not for the purpose of cutting the ground fromunder the feet of the respondents as suggested bytheir Counsel, but for the purpose of making itabundantly clear to all concerned that the 1987order was not, for constitutional reasons, meantto apply to Sarawak.” (Court of Appeal Judge-

ment, page 24)

Effect of court decision

Whileit has cleared the statutory hurdles and some aspects of the project are in the implementation phase,the ultimate completion of the Bakun dam is uncertainat this stage on account of the recent economic crisisin Asia. In hindsight, it is ironic that economic uncer-tainty is much more effective than environmentalregulation instruments such as EIA in determiningthe fate of large-scale development projects with sig-

nificant environmental impacts.One can only speculate as to why the Bakun projectapplicant chose in the first place to seek consent under the state rather than the federal EIA procedures. Apart

from the size of the venture, this project is distinctive because it was conceived as the first private-sector hydroelectric power project in Malaysia. Hitherto,electric power generation and supply has been under-taken by SESCO, a statutory corporation owned bythe state. The recent move to deregulate the Malaysianeconomy, including the electricity sector, created theopportunity for the Bakun project as a private-sector

initiative and the contract to build and operate thedam was awarded to a Sarawak-based businessconsortium.

Ostensibly, the manifest advantage of the Sarawak EIA procedures from the applicant’s perspective wasthat they offered a faster track, since the right to obtainand make submissions on the EIA report was deniedto those opposed to the project. Yet this factor couldnot possibly have weighed so heavily on the minds of the federal and state governments, simply because itwas not such a big hurdle to cross. Those concernedabout the dam’s environmental impacts could have

been given the opportunity to have their say as a tokengesture and the project could still have been grantedapproval.

It would appear that the desire on the part of theSarawak business and political élite to ‘manage’ their own affairs was at least as significant a factor as thedesire for fast-track approval when the decision wasmade to seek consent under the state EIA procedures.The federal government has been sympathetic re-cently to some degree to such aspirations in Sarawak.Historically, Sarawak has served as a resource-richhinterland, exporting timber, oil and gas, while other sectors of its economy have remained relatively un-der-developed. Even though it is not visibly Malaydominated, the current political regime in Sarawak enjoys the tacit support of the federal government.

Scant regard for environmental justice

While the constitutional right of the two Borneo statesto regulate by legislation aspects of the environmentthat fall within their constitutional domain is now un-questionable, there are aspects of the Court of Appealdecision which are arguable. These concerns relate tothe role of judiciary in developing countries such as

Malaysia in helping to provide guidance on how envi-ronmental concerns should be addressed in the devel-opment planning process.

The Appeal Court has demonstrated in its decisionscant regard for the issues of environmental justice byrejecting the finding of the High Court that thelonghouse applicants had vested rights under the fed-eral EQA which were denied to them under theSarawak EIA Order. Even though it may have beencorrect in its ruling in this respect in a strict legalsense, it could, nevertheless, have encouraged or rec-ommended to the Sarawak government to amend its

EIA Order to make provision for public participationcomparable to the federal provisions. The AppealCourt had ample opportunity to do this, since the Fed-eral EIA Order and Guidelines are quite explicit about




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the importance of citizen involvement as fundamentalto the exercise of evaluating impacts.

The Appeal Court decision reflects a very conser-vative stance on the right of Malaysian citizens to par-ticipate in environmental decision-making. This casemay act as a precedent to hamper the development of avibrant participant democracy in Malaysia. The Ap- peal Court’s implicit rationale is that participant de-

mocracy is not appropriate in the particular cultural, political and economic context of the present Malay-sian society. Such views reflect the perspectives of the élite in many Asian countries that generallydiscourage disagreement with decisions made bythose elected to govern and emphasise the tradition of consensual decision-making in Asian societies. Theactivities of environmental NGOs are still frownedupon as a luxury that developing countries can illafford.

The Appeal Court decision also reflects a lack of understanding of environment as an holistic concept

and the need for integrated approaches to environ-mental planning and management in Malaysia.Federal as well as state government bureaucracies inMalaysia are characterised by a strong sectoral approach to public administration, with limited lateralco-ordination between the activities of different agen-cies. This is a reflection of the predominance of aneconomic emphasis in planning and implementingdevelopment projects. The Appeal Court took a sim- plistic approach when it defined the environment of the Bakun project as “the land and river on which the project is to be carried out” (Court of Appeal Judge-ment, page 17). It ignored the fact that the project isalso located within social and cultural space.

EIA in Sarawak

Notwithstanding its role in the controversy sur-rounding the proposed Bakun dam, Sarawak stategovernment has made ostensible progress within thelast five years in developing institutional capabilityfor environmental management within the state bureaucracy.

The situation in Sarawak today is that the NREB is

a functioning environmental agency within the stategovernment bureaucracy. It has been relatively wellresourced by the State Treasury and has developed astrong profile, in no small measure due to the effortsof the Controller of Environmental Quality (the chief executive of NREB). While the federal DOE office inSarawak has a staff of less then 20, all basedin a singleoffice in the state capital of Kuching, the NREB has astaff of over one hundred, based in Kuching and in theregional office in Miri in the Northern region while asecond regional office in Sibu in the Central region isexpected in the very near future.

A recent amendment has established the office of the NREB Controller as a statutory position withwider powers to give a specific directive or order toany individual to carry out the protection and

enhancement of the environment, including the con-duct of EIA for development activities that are not prescribed in the Order or are below the minimum sizerequired in order to protect the environment. Whilethe threat of political interference is always there, theBoard has also been given more effective enforce-ment powers, including specific powers to investigateoffences. During its six-year term of office the NREB

has evaluated over 250 EIA reports. A number of de-velopment projects have either been rejected, aban-doned, given alternative sites or reduced in coverageand size (Mamit, 1997).

Apart from the threat of challenge to its politicalclout, there are a number of procedural weaknesses inthe EIA system now in place in Sarawak. The mostglaring omission is lack of provision for public partic-ipation under the state EIA procedures. The state gov-ernment justifies this policy on the strength of theargument that existing channels of electoral democ-racy provide ample opportunities for people to have

their say. The tradition of participant democracy isweak in Sarawak and there is manifest need to supportthe development of institutions forlocal governance.

Administering two parallel procedures for EIA inSarawak necessitates close consultation between theDOE and the NREB to avoid the duplication of au-thority that now exists. Co-ordination is facilitated bythe fact the head of the regional DOE office inSarawak is a member of the NREB. Nevertheless, itwould be useful to find out the views of developers onways to achieve greater co-ordination. One possibilityis for the two agencies to be located under the sameroof or close by.

The absence of a framework for environmental planning at a regional (catchment) level and on a local(urban) level in Sarawak is a major constraint on theeffectiveness of the federal as well as state EIA proce-dures. Because EIA is administered essentially as a project-based tool, its ability to anticipate and managecumulative impacts is limited.

The other major drawback of the current dual EIA procedures is that a number of activities which mayimpact on the environment, such as shifting agricul-ture and certain types of timber harvesting, fall out-side the ambits of both federal and state procedures.

Not all activities which have significant environmen-tal impacts come in the purview of the lists of prescribed activities for reasons of the limited scale or the type of project activity being proposed. As noted



The absence of a framework for

environmental planning at a regional

(catchment) level and on a local

(urban) level in Sarawak is a major

constraint on the effectiveness of thefederal as well as state EIA procedures


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above, a recent amendment to the Sarawak Ordinanceenables the Controller to review any project, irrespec-tive of size.

There are a number of state natural resource stat-utes, particularly those for forestry or mining, whichhave, as one of their objectives, to mitigate and regu-late the detrimental environmental impact of particu-lar activities. However, environmental protection is a

subsidiary objective of these statutes in relation to theoverriding one of facilitating the utilisation of naturalresources.

A drawback of such statutes and organisationswhich combine conflicting environment and develop-ment objectives, is that decision-making about envi-ronmental concerns is internalised, within a predominantly development-oriented agency andtherefore it lacks transparency and accountability. For a number of reasons, it becomes difficult for such anagency to give adequate consideration to its environ-mental responsibilities. This is an important issue in

Sarawak, since the state is the biggest landowner anddeveloper. Now that the state EIA procedures are in place, it would be appropriate to relocate the environ-mental provisions in these statutes within the NaturalResources and Environment Ordinance.

Broader implications

This review of recent changes in inter-governmental jurisdiction over EIA in Malaysia poses a number of important questions for the direction of developmentof EIA as an environmental management tool in Ma-laysia in the wider context of the changing role of thenational and sub-national state in environmental man-agement in an increasingly market-driven economy.

We can characterise the development of the Malay-sian EIA system as progressing from its inception in1987 as a centralised federal system towards a func-tionally decentralised model during the last few yearsand more recently towards hierarchical decentralisa-tion or devolution under shared federal/state jurisdic-tion. The recent case law discussed here has affirmedthe constitutional right of the Borneo states to enacttheir own environmental regulation instruments, such

as EIA for managing natural resources independent of the federal government statutory controls. To whatextent this case law has established a precedent for the peninsular states in Western Malaysia to follow theexample of Sarawak and Sabah is open to conjectureat this stage.

There is no doubt that those states in Western Ma-laysia which perceive themselves as relatively eco-nomically disadvantaged, on account of their peripheral position and poor resource endowment,may harbour similar aspirations. However, whileWestern Malaysian states also exercise significant

control over natural resources within the framework of the federal Malaysian constitution, their situationdiffers in a number of important respects. They do notenjoy the degree of relative political autonomy within

the Malaysian federation as the Borneo states do.Moreover, Western Malaysia is more closely inte-

grated within federal bureaucracy which was inher-ited from the British colonial administration in 1957.For example, while Sarawak and Sabah have their own separate agencies for irrigation and drainage andfor public works, in Western Malaysia these servicesare provided by federal government employees

seconded to state agencies.Politically, Malay ethnic interests exercise a strong

dominance in Western Malaysia while the EasternMalaysian population is ethnically more plural andthe Malay influence is less clearly apparent. The fed-eral state inter-relationship is not as tense on the Pen-insula as it is in Borneo. On account of these factors,Western Malaysian states may not find it as easy to break away from federal environmental regulation in-struments such as EIA.

Nevertheless, a trend towards functional decen-tralisation and devolution of environmental regula-

tion has gathered increasing momentum in many partsof the world during the last decade (Memon, 1993;Rangan, 1997; Kivell et al , 1998) and further changesin intergovernmental jurisdiction over EIA in Malay-sia should not come as a particular surprise. The cur-rent policy paradigm, which has emerged in responseto the severe financial crises faced by many thirdworld countries, has been aimed towards restruc-turing their economies by gradually dismantlingearlier protectionist policies, diminishing the role of government, and allowing greater administrative and political autonomy to states in federal systems andto other forms of sub-national jurisdictions in unitarysystems.

The neo-liberal political lobby has been a powerfulally in opposing strong environmental regulationthrough public intervention in favour of voluntarycompliance and market mechanisms (Memon andGleeson, 1995; Gandy, 1997; McDermott, 1998).Thus, for, example, the authors of a recent paper on ef-fectiveness of pollution regulation in South andSoutheast Asia make a strong case for a decentralisedregulatory policy based on “informal regulation” builton local arrangements, consistent with a model of lo-cal equilibrium pollution which reflects community

differences, the market value of the environment andinsights from conventional environmental economics(Hettige et al , 1996).

The trend towards decentralisation and devolutionraises questions about the effectiveness of the role of the central and sub-national state in environmentalmanagement. In the Malaysian case, we can debatethe relative merits of the recent developments to de-volve EIA away from the direct jurisdiction of the fed-eral government. We could argue that one of themanifest advantages of the federal government in Ma-laysia exercising a key role in EIA and other forms of

environmental regulation is that the process is rela-tively secure from political interference bystate-based developmental interests. This is a legiti-mate concern in developing countries because quite




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often the line between politics and business is blurred.Thus, critics may be tempted to question the motivesof sub-national jurisdictions that may seek to adoptand administer their own environmental regulationinstruments.

For this reason, a number of authors writing aboutEIA in developing countries recommend that a pre-condition for the development of an effective EIA

system is the establishment of an independentnational environmental agency. Such an agencyshould have considerable political influence over sec-toral agencies through placement in the office of thePresident or Prime Minister or a high profile ministrywith responsibility for national economic planningand budgetary control (Ebisemiju, 1993).

This high-profile arrangement places the agency in astrong position to exercise its controlling, supervisoryand co-ordinating roles in environmental matters,and guarantees adequate funding for its operations. Itis also deemed desirable because of the multi-sector

character of EIA (Ebisemiju, 1993). Political clout,authority and legal power are seen as essential in thecontext of circumstances in developing countries toenforce compliance with environmental laws andregulations.

However, recent experience in Malaysia relating tothe decision-making processes for the Bakun dam points to the dominance of the strong developmentalinterests within federal government bureaucracy. Thefederal government has shown itself to be just as vul-nerable as the states in this respect, even raising thespectre of possible collusion between the two. Neither the federal or state governments function independ-ently of markets. Furthermore, in contrast to the situa-tion in developed western societies where the judiciary has played a significant role in helping to ac-cord greater consideration to environmental values inthe public policy process, this is not necessarily thecasein newly developing countries such as Malaysia.

It may make good sense to have a uniform nationalsystem for EIA for other reasons. For example, in acountry where institutional capability is lacking, it ismore effective and economic for a single nationalagency to undertake such a role instead of a number of poorly resourced state jurisdictions replicating one

another. Institutional capacity is a prerequisite for sustainable development. International investors mayfind it more convenient to operate within such anational system, where there is less opportunity for them to play off one state against another. Fragmenta-tion of environmental regulation within Malaysia mayalso make it difficult to address environmental prob-lems such as air pollution which transcend state boundaries.

On the other hand, a central government environ-mental agency may lack the resources needed to carryout its functions effectively in developing countries

which are geographically extensive with a diverse anddifferentiated civil society. In the Malaysian case, theFederal Department of Environment has had rela-tively limited resources to undertake its functions,

especially in the peripheral regions in the two Borneostates. Partly because of its control over natural re-sources, the Sarawak state by comparison has beenable to devote more resources to put in place an opera-tional EIA system even though this may have been precipitated by the events surrounding the proposedBakun dam.

Conclusions

To integrate environment and development effec-tively in the policies and practices of a country, it is es-sential to develop and implement integrated,enforceable and effective laws and regulationsthrough appropriate legal and regulatory policies,instruments and enforcement mechanisms at thenational, state and local levels, and to enforce compli-ance with the laws, regulations and standards thatare adopted (IUCN, 1991). Countries need also to

establish judicial and administrative procedures for legal redress and remedy of actions affecting environ-ment and development that may be unlawful or infringe on human and environmental rights. Properlymandated, empowered and informed communitiescan contribute to decisions that affect them and playan indispensable part in creating a securely-basedsustainable society.

This paper has argued that integration of environ-mental and developmental objectives in deci-sion-making by using tools such as EIA has strong political overtones, because state institutions do notfunction independently from the rest of society and in-fluential interest groups within it. A political will andwillingness openly to debate development proposals by a vibrant civil society able to access informationare a pre-requisite for environmental managementtools such as EIA to be effective. This is not to deny arole for the central or local state in market-led societ-ies in promoting ecological sustainability or a call for the withdrawal of the state from natural resource man-agement in favour of ‘community level control’ as thealternative means for promoting sustainable forms of social organisation and resource use (Rangan, 1997, page 2130).

The critical question for environmental scholars,activists, and policy makers is not whether the stateshould or should not be involved in promoting sus-tainable development. Rather, as Rangan rightly points out, the challenge is to articulate strategies for moving towards sustainable regional developmentwithin the recent policy phase of deregulation andmarket expansion in developing countries, addressingthe need both for economic development and ecologi-cal sustainability.

Viewed from this stance, the recent development of state-based EIA procedures parallel to the federal EIA

procedures in Malaysia should not be dismissed as un-warranted fragmentation of a hitherto apparently co-hesive functional system. On the contrary, it could beargued that it provides the basis for the development




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of a potentially more effective system of environ-mental regulation in tune with the needs of Malaysiaas a diverse and differentiated society.

Other peripheral states in Malaysia may follow the path of Sarawak and Sabah; the challenge for the DOEis to collaborate with the states by providing leader-ship as well as ensuring some degree of uniformity of practice within different sub-national jurisdictions.

Indeed, as noted earlier, other states have now startedto exercise a limited administrative input to prelimi-nary EIA reports and collaboration with the DOE isimperative for achieving future effectiveness.

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Devolution of Environmental Regulation Environmental Impact Assessment in Malaysia (1)

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