environmental impact assessment in Malaysia

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Devolution of environmental regulation: environmental impact assessment in Malaysia P. A. Memon

a

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Division of Environmental Management and Design , Lincoln University , Canterbury , New Zealand E-mail: Published online: 20 Feb 2012.

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 To link to this article: http://dx.doi.org/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

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P A Memon

Based on an empirical case study surrounding the fragmentation of a hitherto apparently cohesive national environmental impact assessment (EIA) system in Malaysia, this paper argues that effectiveness of planning tools such as EIA cannot be isolated from wider issues of governance. Integration of environmental and developmental objectives in decision-making by using tools such as EIA poses important political implications. This is because state institutions do not function independently from the rest of society and influential interest groups within it. A political will and willingness openly to debate development proposals by a vibrant civil society able to access information are prerequisites for tools such as EIA to be effective.

Keywords: environmental regulation; environmental impact assessment; Malaysia

P A Memon is in the Division of Environmental Management and Design, Lincoln University, Canterbury, New Zealand; E-mail [email protected]. The author takes full responsibility for the views expressed in this paper. He is grateful to James Dawos Mamit, Controller of Environmental Quality, Sarawak and Professor Murtedza Mohamed (University of Malaysia, Sarawak) for discussing the Malaysian EIA system and to Alan Ambury for assistance with data collection. Impact Assessment and Project Appraisal December 2000

I

NTEGRATION OF ENVIRONMENT and development in decision-making has emerged as a dominant theme in the recent debate on sustainable development (IUCN 1991; Dwivedi and Vajpeyi, 1995). Effective environmental regulation of public- and private-sector development initiatives is necessary to promote ecological and social wellbeing in the particular context of the developing world and environmental impact assessment (EIA) is seen as an essential tool for this purpose. However, experience in designing effective EIA systems as an instrument for environmental planning and management in developing countries has been variable. For this reason, there is growing cognisance of the significance of the wider institutional dimensions of environmental management as a determinant of EIA effectiveness. These institutional dimensions relate broadly to the political and related administrative arrangements for EIA including allocation of responsibilities between national and sub-national levels of jurisdiction, inter-governmental relationships, coordination and co-operation amongst agencies and stakeholder participation in the EIA process in an open civil society. The objective of this paper is to examine the recent changes to the Malaysian EIA system from this perspective. Malaysia, a federal state (Figure 1), was one of the second generation of Asian countries to adopt EIA formally compared to countries such as the Philippines and Thailand which adopted EIA legislation in 1977 and 1978 respectively. Until recently, EIA in Malaysia has been a federal government responsibility. This situation has changed during the last few years with the peripheral, resource-rich states of Sarawak and Sabah having enacted impact 1461-5517/00/040283-11 US$08.00 © IAIA 2000

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Figure 1. Malaysia

assessment procedures for natural resource management and it is possible that other states may follow suit. At the moment, other states only have a limited role to administer preliminary EIA reports under the jurisdiction of the federal government. The discussion will focus on the circumstances which have precipitated this trend towards devolution of EIA and the implications of fragmentation of a hitherto unitary national system in terms of its effectiveness. Institutional arrangements There is a substantial body of recent literature focused on EIA which advocates the development of EIA systems particularly suited to the needs of developing countries (for example, Lim, 1985; Biswas and Agarwala, 1992; Strömquist, 1992; Ebisemiju, 1993; Wood, 1995; Boyle, 1998; Glasson et al, 1999). A major consideration in the development of institutional arrangements for an effective EIA system is the extent to which responsibility for environmental decision-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 a system would ensure consistency in terms of applying uniform national standards and norms and avoid inter-jurisdictional competition amongst states or provinces to attract development at the expense of environmental considerations. It would enable effective use of limited human resources with capability to administer EIA procedures. A unified national system recognises a legitimate public interest across jurisdictions in terms of participation in EIA decision-making, for instance, when making submissions during the preparation of EIA reports. However, by the same token, a unified national EIA system would need to ensure that it does not become too centralised and top-down and that there are adequate opportunities for public participation in decision-making. It could be argued that an ideal arrangement is for responsibility to be shared between 284

the different tiers of government, based on 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 and functions between different tiers of government and the complex interplay of political interests they represent. With the exception of countries such as Singapore, environmental regulation functions in many nation states are shared between the central and sub-national levels of government. Challenges of integrated environmental management are compounded in federal states such as Nigeria and Malaysia where inter-governmental relationships are constitutionally defined. Issues relating to jurisdiction over environmental management functions are often politically controversial on account of their broader implications for access to, and allocation of, natural resources in growth-oriented, increasingly market-driven societies. The discussion of the Malaysian situation in this paper exemplifies some major political and related administrative challenges in undertaking effective environmental regulation within the recent policy phase of deregulation and market expansion, which are only now beginning to be acknowledged adequately in the environmental 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 in operation now for 12 years within the framework of the Environment Quality Act 1974 (EQA), which was enacted in 1974 as the major federal environmental statute; a new Department of Environment (DOE) was established to implement this statute. The need for better environmental management was formally endorsed in the Third Malaysia Plan (Government of Malaysia, 1976) and the EQA is the basic instrument for achieving national environmental objectives. During the first ten years of its administration, emphasis was put on curbing pollution by means of Impact Assessment and Project Appraisal December 2000

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Devolution of environmental regulation: EIA in Malaysia

regulations gazetted under the Act. The emphasis on control of pollution and the taking of remedial actions was a reflection of the magnitude of environmental pollution problems and increasing public concerns. During the 1970s and 1980s, wastes from agro-based industries (palm oil and rubber) were major problems. It was not until 1987 that EIA procedures were introduced under the EQA to emphasise the importance of preventative controls. Once again, this action was a response to the increasing magnitude of environmental 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 the early 1980s within the framework of the five-year national development plans, and liberal investment policies were introduced by the federal government to attract foreign capital. The shift from raw material production to manufacturing as the basis of the country’s economy became evident in the 1970s, and the rate of industrialisation and urbanisation has accelerated since then. Between 1960 and 1990, real GDP (gross domestic product) increased sevenfold, at an annual growth rate of 6.8%. Manufacturing now accounts for over 30% of GDP and 60% of exports. Together with the benefits of development have come negative environmental impacts and cumulative environmental degradation (Sani, 1993). The Malaysian EIA procedures are modelled on the National Environmental Policy Act 1969 (NEPA) framework in the United States. The Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987 was gazetted as a project planning tool for new projects or the expansion of existing ones. Section 34A of the Environmental Quality (Amendment) Act 1985 requires anyone who intends to undertake a prescribed activity to first conduct a study to assess the likely environmental impacts that will occur from that activity and the mitigating measures that need to be undertaken. The Environmental Quality (Prescribed Activities) (EIA) Order 1987 specifies some 19 categories of

Figure 3. Federal EIA reports according to prescribed activities, Malaysia, 1988–1998 Source: Department of the Environment, personal communication

activities requiring EIA reports prior to implementation (DOE, 1987). The EIA procedure is shown in Figure 2. EIA reports submitted to the DOE by project proponents are reviewed by special technical panels comprising individuals from government agencies, universities, the private sector and non-governmental organisations (DOE, 1992). It has taken considerable effort on the part of the DOE to improve the understanding and acceptance of the EIA requirements by state and federal agencies and private-sector developers. The Department has gradually established offices in state capitals to promote more effective co-ordination with state government bureaucracy and developers and the processing of EIA reports has been progressively decentralised to these regional DOE offices since 1993. The Malaysian system has been portrayed as a working example of decentralisation of EIA activities among participants and tiers of government and an effective mechanism for inter-governmental and inter-agency co-operation (Ebisemiju, 1993; Sani, 1993). In this respect, the Malaysian federal EIA system may be described as gradually tending towards a functionally decentralised model from its centralised

Figure 4. Federal EIA reports by state, 1988–1998 Figure 2. Federal EIA procedures, Malaysia

Impact Assessment and Project Appraisal December 2000

Source: Department of the Environment, personal communication

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Devolution of environmental regulation: EIA in Malaysia Table 1. Federal EIA reports according to type of report and state, 1998 and 1999 Type of report Pre-assessment State

1999

Johore

23

12

4

1



Kedah

10

4







Kelantau

2

6







Kuala Lumpur

2

2





Labuan



1



Melaka

6

2



Negeri Sembilan

12

4

Pahang

13

9

Perak

1998

Detailed EIA

1998

Pulau Pinang

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Risk analysis 1999

1998

1999

All reports 1998

1999



27

13



10

4



2

6





2

2

1







2







6

2









12

4

5

1





18

10

5

6









5

6

13

3









13

3

Perlis



1











1

Sabah

11

5









11

5

Sarawak

4

5









4

5

Selangor

9

10





1

2

10

12

Terengganu

7

9

2

1

2



11

10

More than one state

1

2



1





1

3

118

81

11

5

3

2

132

88

Total

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

genesis. Figure 3 shows the distribution of EIA reports for 1988 to 1998 according to the type of prescribed activity specified in the EIA Order, with housing, 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 and Johor in Western Malaysia as the focus of most development activity. In Sarawak State, on the island of Borneo in Eastern Malaysia, the majority of the EIA reports have been related to petroleum and related industrial 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 the Federal government EIA procedures in Malaysia pertains to constitutional limits on its jurisdiction with respect to environmental management. Under the

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 state matters

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Malaysian Federal Constitution land and water are under the purview of state governments. Each state is empowered to enact laws on forestry, water resources, mining, wildlife and fisheries. The management of these resources is beyond the scope of the EQA and the role of the DOE. State government decisions over the allocation and management of these resources tend to be politically sensitive issues and the federal government has to tread warily to avoid being perceived to interfere in state matters. As discussed below, this is particularly the case with the two Borneo states of Sarawak and Sabah in Eastern Malaysia on account of their distinct ethnic identity and the special provisions in the Malaysian constitution when they became members of the Federation in 1963. A number of other EIA issues and problems have been identified in Malaysia (Harun, 1994), and these are comparable to those experienced in other developing countries. Examples include: ·

·

·

·

·

·

Lack of awareness of the strength of EIA as a planning tool: many still perceive it as a stumbling block to development. Perception that carrying out an EIA study would delay project approval and implementation. EIA not carried out prior to final project design, so that issues such as siting and technology are not considered. Lack of base-line data on environmental quality. Poor prediction of impacts. Limited public participation. Impact Assessment and Project Appraisal December 2000

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Constitutional jurisdiction over environment The Ninth Schedule of the Malaysian Federal Constitution provides for the general distribution of legislative powers between the federal and state governments 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 (Supplement to Concurrent List for the States of Sabah and Sarawak) which accord even greater control to the two states over natural resources when Sabah and Sarawak joined the Federation in 1963. The state of Sarawak has exclusive jurisdiction to make laws affecting land use, forestry (which includes the removal of 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 coupled with its distinctive ethnic identity, the state has over the years zealously guarded its constitutional autonomy against perceived encroachment by the federal government. Thus, the scope of many federal statutes is limited in Eastern Malaysia, while the bulk of the natural resource legislation in Sarawak comprises state enacted laws. The jurisdiction of the majority of natural resource federal laws does not extend to Sarawak as these matters are in the State List or the Concurrent List in the Federal Constitution. During the last six years, Sarawak has been successful in partially wresting control from the federal government of EIA procedures specifically for resource-based development projects. On the strength of its legislative powers under Article 77 of the Malaysian Constitution, in 1993 the state amended its Natural Resources Ordinance 1949 to the Natural Resources and Environment Ordinance 1993 and established the Natural Resources and Environment Board (NREB) to enforce the Ordinance. The purpose of the Ordinance is to enable the state government to promote sustainable management of natural resources, specifically items that are enumerated in the State List: land use, forestry, agriculture and inland water resources. It is an enabling statute that is implemented by making subsidiary legislation or by cross-referencing it in other statutes which it overrides. The state of Sarawak has recognised that ‘environment’ is not enumerated in any of the Legislative Lists and thus comes under the ‘residual’ category under state jurisdiction. The Natural Resources and Environment Ordinance is a pre-Malaysia statute enacted in 1949 when Sarawak was governed by the British colonial administration which succeeded the Brook administration in 1946. Under this Ordinance, a state Natural Resource Board could prescribe certain activities which “may injure, damage or have adverse impact on the quality of the environment or the natural Impact Assessment and Project Appraisal December 2000

resources of the State” to require the approval of the Board before it could be implemented. However, these powers were not exercised until 1994. The Natural Resources and Environment (Prescribed Activities) Order 1994 besides prescribing certain activities which require the Board’s approval, also lays down procedures for the application for such approvals. 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 statute with one significant departure. The scope for public participation is limited under the state EIA process compared to the federal EIA process. The EIA reports submitted to the NREB are evaluated by a panel of experts drawn primarily from relevant government agencies, and the recommendations from the panel are taken into consideration in the approval process by the Controller of Environmental Quality. In granting approvals to project proponents, the NREB prescribes environmental conditions for protection and management. Project proponents must undertake in writing to the Board to comply with all the conditions. Post-EIA monitoring is carried out by the project proponents and the NREB secretariat. The fundamental difference between this Sarawak order and the federal guidelines is essentially the entitlement in the federal EQA to a copy of the EIA report by the public and the subsequent public comments to the Review Panel before an approval can be granted by the Director-General. The Sarawak Order excludes these provisions. The NREB comprises a committee made up of ex-officio members drawn primarily from state government ministries and departments which have responsibilities for natural resources management. The committee is formally responsible for charting the policy and direction of environmental protection and management in Sarawak. Following a 1997 amendment to the Ordinance, greater management responsibility 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 federal authority has proved to be a controversial issue and has been tested recently in the Malaysian courts. The case discussed below relates to the consent application by a Malaysian entrepreneur for the proposed 2400MW Bakun hydroelectric project which was reviewed under the new Sarawak EIA procedures. It was alleged that the state government, with the apparent collusion of the federal government, had used the state EIA procedures to facilitate the approval of the controversial Bakun Hydroelectricity project on the 287

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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 public participation upper Rajang river in the heart of the remaining vestiges of the tropical rainforests. Credence to this view was provided by the manner in which the amendment to the federal EQA was enacted to exempt the state of Sarawak from its purview and the consequent confusion that arose about the manner in which the Bakun EIA reports were reviewed. As discussed here, the Court of Appeal, however, has rejected this Machiavellian explanation in favour of bureaucratic ineptitude within federal government. The Federal Cabinet of Malaysia announced in September 1993 its approval of the proposed development of the Bakun hydroelectric project (HEP) in Sarawak. This was to be one of the most ambitious development projects ever undertaken in South East Asia and was designed to meet the long-term energy requirements of the nation with the possibility of export to the neighbouring countries. The project comprises the creation of a reservoir, construction of a dam, and the transmission of the generated electric power from Sarawak to Western Malaysia by a transmission cable submerged across the South China Sea. There has been considerable concern within and outside Malaysia about possible environmental and social impacts of such a large dam (Bocking, 1997). With the support of international environmental groups, three local native longhouse residents lodged High Court action because the project entailed the destruction of their longhouses and ancestral burial sites as 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 and subsequent to this there were various public pronouncements by federal government that the EIA report would be made available to the public for their comments before approval. The Minister had assured certain public interest groups that all EIA procedures under the federal EQA had to be complied with by the proposed project, and public views would be considered. According to the Handbook of Environmental Impact Assessment Guidelines (DOE, 1987), a detailed EIA prepared by the proponent of the project must be made available to the public, as noted earlier (Figure 2). The public is invited to comment on the proposed project to a Review Panel which is an independent 288

body of experts and representatives of interested organisations appointed to review an EIA report and to evaluate the environmental and developmental costs and benefits to the community. The Review Panel makes recommendations to the Director-General for his/her consideration and decision on project approval. Large-scale hydroelectric power generation and transmission projects are listed as a prescribed activity under the EQA. However, on 27 March 1995, the Federal Minister of Environment exempted resource development projects in Sarawak from the ambit of the EQA and made this exemption retrospective from the 1st of September 1994. The explanation given for this was that the state of Sarawak had enacted the Natural Resources and Environment (Prescribed Activities) Order 1994 about that time (August 1994). Contrary to public expectations, the project applicant claimed in April 1995 that the first segment of the EIA submitted by his company had been approved by the Sarawak state and he intended to commence preparatory works which involved clearing 69,000 hectares of forest. The plaintiffs insisted on a right to a copy of the EIA report and to be heard and make representations under the rights granted to them by the EQA 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 federal Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Amendment Order 1995 in relation to the procedural aspects of its enactment. This piece of subsidiary legislation came into force on the 1st of September 1994 although it was only gazetted on the 20th of April 1995. The High Court found no provision in the EQA to permit the Minister to make any amendments retrospectively. The Judge noted in his decision that in the federal guidelines, public participation, in the form of obtaining a copy of the EIA report, commenting on it, and making representation, is explicitly provided for, and a valid assessment of an EIA prepared by the project proponent cannot be made without some form of public participation. This process is mandatory and the entitlement to a copy of the EIA report and the option to comment on it becomes a public right. The Amendment Order which repealed this law and therefore affected the rights of the plaintiffs was declared invalid. He concluded that, since the very essence of EQA is to formulate measures that shall be taken to prevent, reduce or control adverse impacts on the environment, public participation was necessary because “the interaction between people and their environment is fundamental to the concept of [environmental] impact” and it was “indeed mandatory for the authorities to hear the views of the public first before granting its approval … It makes a mockery of the whole issue to say that the EIA can be approved first and if the public had any constructive ideas, they can submit later. This certainly is illogical, Impact Assessment and Project Appraisal December 2000

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deprivation of good sense and sound reasoning.” (High Court Judgement, page 34) The High Court declared the Federal Amendment Order invalid and directed the project proponent to comply with the EQA 1974. The federal government and the state of Sarawak appealed against this decision to the Court of Appeal. The High Court had treated the Amendment Order as the focal point of the case. The Court of Appeal changed 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 Constitution in 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 and water, and thus the ‘environment’ in question lies wholly within the legislative and constitutional province of the state of Sarawak, it concluded that the state has 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 the Sarawak Ordinance co-exists with the EQA, each operating within its own sphere based on the constitutional authority of the state of Sarawak to regulate by legislation those components of the environment that fall within its domain. The Judge concluded that “[in] my judgement, Parliament, when it passed the EQA, did not intend, and could not have intended, to regulate so much of the environment as falls within the legislative jurisdiction of Sarawak.” (Court of Appeal Judgement, page 24) He agreed with the submission of the Senior Counsel that the Amendment Order was made “not for the purpose of cutting the ground from under the feet of the respondents as suggested by their Counsel, but for the purpose of making it abundantly clear to all concerned that the 1987 order was not, for constitutional reasons, meant to apply to Sarawak.” (Court of Appeal Judgement, page 24) Effect of court decision While it has cleared the statutory hurdles and some aspects of the project are in the implementation phase, the ultimate completion of the Bakun dam is uncertain at this stage on account of the recent economic crisis in Asia. In hindsight, it is ironic that economic uncertainty is much more effective than environmental regulation instruments such as EIA in determining the fate of large-scale development projects with significant environmental impacts. One can only speculate as to why the Bakun project applicant chose in the first place to seek consent under the state rather than the federal EIA procedures. Apart Impact Assessment and Project Appraisal December 2000

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 undertaken by SESCO, a statutory corporation owned by the state. The recent move to deregulate the Malaysian economy, including the electricity sector, created the opportunity for the Bakun project as a private-sector initiative and the contract to build and operate the dam was awarded to a Sarawak-based business consortium. Ostensibly, the manifest advantage of the Sarawak EIA procedures from the applicant’s perspective was that they offered a faster track, since the right to obtain and make submissions on the EIA report was denied to those opposed to the project. Yet this factor could not possibly have weighed so heavily on the minds of the federal and state governments, simply because it was not such a big hurdle to cross. Those concerned about the dam’s environmental impacts could have been given the opportunity to have their say as a token gesture and the project could still have been granted approval. It would appear that the desire on the part of the Sarawak business and political élite to ‘manage’ their own affairs was at least as significant a factor as the desire for fast-track approval when the decision was made to seek consent under the state EIA procedures. The federal government has been sympathetic recently to some degree to such aspirations in Sarawak. Historically, Sarawak has served as a resource-rich hinterland, exporting timber, oil and gas, while other sectors of its economy have remained relatively under-developed. Even though it is not visibly Malay dominated, 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 states to regulate by legislation aspects of the environment that fall within their constitutional domain is now unquestionable, there are aspects of the Court of Appeal decision which are arguable. These concerns relate to the role of judiciary in developing countries such as Malaysia in helping to provide guidance on how environmental concerns should be addressed in the development planning process. The Appeal Court has demonstrated in its decision scant regard for the issues of environmental justice by rejecting the finding of the High Court that the longhouse applicants had vested rights under the federal EQA which were denied to them under the Sarawak EIA Order. Even though it may have been correct in its ruling in this respect in a strict legal sense, it could, nevertheless, have encouraged or recommended to the Sarawak government to amend its EIA Order to make provision for public participation comparable to the federal provisions. The Appeal Court had ample opportunity to do this, since the Federal EIA Order and Guidelines are quite explicit about 289

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Devolution of environmental regulation: EIA in Malaysia

the importance of citizen involvement as fundamental to the exercise of evaluating impacts. The Appeal Court decision reflects a very conservative stance on the right of Malaysian citizens to participate in environmental decision-making. This case may act as a precedent to hamper the development of a vibrant participant democracy in Malaysia. The Appeal Court’s implicit rationale is that participant democracy is not appropriate in the particular cultural, political and economic context of the present Malaysian society. Such views reflect the perspectives of the élite in many Asian countries that generally discourage disagreement with decisions made by those elected to govern and emphasise the tradition of consensual decision-making in Asian societies. The activities of environmental NGOs are still frowned upon as a luxury that developing countries can ill afford. The Appeal Court decision also reflects a lack of understanding of environment as an holistic concept and the need for integrated approaches to environmental planning and management in Malaysia. Federal as well as state government bureaucracies in Malaysia are characterised by a strong sectoral approach to public administration, with limited lateral co-ordination between the activities of different agencies. This is a reflection of the predominance of an economic emphasis in planning and implementing development projects. The Appeal Court took a simplistic 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 Judgement, page 17). It ignored the fact that the project is also located within social and cultural space. EIA in Sarawak Notwithstanding its role in the controversy surrounding the proposed Bakun dam, Sarawak state government has made ostensible progress within the last five years in developing institutional capability for environmental management within the state bureaucracy. The situation in Sarawak today is that the NREB is a functioning environmental agency within the state government bureaucracy. It has been relatively well resourced by the State Treasury and has developed a strong profile, in no small measure due to the efforts of the Controller of Environmental Quality (the chief executive of NREB). While the federal DOE office in Sarawak has a staff of less then 20, all based in a single office in the state capital of Kuching, the NREB has a staff of over one hundred, based in Kuching and in the regional office in Miri in the Northern region while a second regional office in Sibu in the Central region is expected in the very near future. A recent amendment has established the office of the NREB Controller as a statutory position with wider powers to give a specific directive or order to any individual to carry out the protection and 290

enhancement of the environment, including the conduct of EIA for development activities that are not prescribed in the Order or are below the minimum size required in order to protect the environment. While the threat of political interference is always there, the Board has also been given more effective enforcement powers, including specific powers to investigate offences. During its six-year term of office the NREB has evaluated over 250 EIA reports. A number of development projects have either been rejected, abandoned, given alternative sites or reduced in coverage and size (Mamit, 1997). Apart from the threat of challenge to its political clout, there are a number of procedural weaknesses in the EIA system now in place in Sarawak. The most glaring omission is lack of provision for public participation under the state EIA procedures. The state government justifies this policy on the strength of the argument that existing channels of electoral democracy provide ample opportunities for people to have their say. The tradition of participant democracy is weak in Sarawak and there is manifest need to support the development of institutions for local governance. Administering two parallel procedures for EIA in Sarawak necessitates close consultation between the DOE and the NREB to avoid the duplication of authority that now exists. Co-ordination is facilitated by the fact the head of the regional DOE office in Sarawak is a member of the NREB. Nevertheless, it would be useful to find out the views of developers on ways to achieve greater co-ordination. One possibility is for the two agencies to be located under the same roof 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 the effectiveness of the federal as well as state EIA procedures. Because EIA is administered essentially as a project-based tool, its ability to anticipate and manage cumulative impacts is limited. The other major drawback of the current dual EIA procedures is that a number of activities which may impact on the environment, such as shifting agriculture and certain types of timber harvesting, fall outside the ambits of both federal and state procedures. Not all activities which have significant environmental 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 the federal as well as state EIA procedures

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above, a recent amendment to the Sarawak Ordinance enables the Controller to review any project, irrespective of size. There are a number of state natural resource statutes, particularly those for forestry or mining, which have, as one of their objectives, to mitigate and regulate the detrimental environmental impact of particular activities. However, environmental protection is a subsidiary objective of these statutes in relation to the overriding one of facilitating the utilisation of natural resources. A drawback of such statutes and organisations which combine conflicting environment and development objectives, is that decision-making about environmental concerns is internalised, within a predominantly development-oriented agency and therefore it lacks transparency and accountability. For a number of reasons, it becomes difficult for such an agency to give adequate consideration to its environmental responsibilities. This is an important issue in Sarawak, since the state is the biggest landowner and developer. Now that the state EIA procedures are in place, it would be appropriate to relocate the environmental provisions in these statutes within the Natural Resources 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 development of EIA as an environmental management tool in Malaysia in the wider context of the changing role of the national and sub-national state in environmental management in an increasingly market-driven economy. We can characterise the development of the Malaysian EIA system as progressing from its inception in 1987 as a centralised federal system towards a functionally decentralised model during the last few years and more recently towards hierarchical decentralisation or devolution under shared federal/state jurisdiction. The recent case law discussed here has affirmed the constitutional right of the Borneo states to enact their own environmental regulation instruments, such as EIA for managing natural resources independent of the federal government statutory controls. To what extent this case law has established a precedent for the peninsular states in Western Malaysia to follow the example of Sarawak and Sabah is open to conjecture at this stage. There is no doubt that those states in Western Malaysia which perceive themselves as relatively economically disadvantaged, on account of their peripheral position and poor resource endowment, may harbour similar aspirations. However, while Western Malaysian states also exercise significant control over natural resources within the framework of the federal Malaysian constitution, their situation differs in a number of important respects. They do not enjoy the degree of relative political autonomy within Impact Assessment and Project Appraisal December 2000

the Malaysian federation as the Borneo states do. Moreover, Western Malaysia is more closely integrated within federal bureaucracy which was inherited from the British colonial administration in 1957. For example, while Sarawak and Sabah have their own separate agencies for irrigation and drainage and for public works, in Western Malaysia these services are provided by federal government employees seconded to state agencies. Politically, Malay ethnic interests exercise a strong dominance in Western Malaysia while the Eastern Malaysian population is ethnically more plural and the Malay influence is less clearly apparent. The federal state inter-relationship is not as tense on the Peninsula 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 instruments such as EIA. Nevertheless, a trend towards functional decentralisation and devolution of environmental regulation has gathered increasing momentum in many parts of the world during the last decade (Memon, 1993; Rangan, 1997; Kivell et al, 1998) and further changes in intergovernmental jurisdiction over EIA in Malaysia should not come as a particular surprise. The current policy paradigm, which has emerged in response to the severe financial crises faced by many third world countries, has been aimed towards restructuring their economies by gradually dismantling earlier protectionist policies, diminishing the role of government, and allowing greater administrative and political autonomy to states in federal systems and to other forms of sub-national jurisdictions in unitary systems. The neo-liberal political lobby has been a powerful ally in opposing strong environmental regulation through public intervention in favour of voluntary compliance and market mechanisms (Memon and Gleeson, 1995; Gandy, 1997; McDermott, 1998). Thus, for, example, the authors of a recent paper on effectiveness of pollution regulation in South and Southeast Asia make a strong case for a decentralised regulatory policy based on “informal regulation” built on local arrangements, consistent with a model of local equilibrium pollution which reflects community differences, the market value of the environment and insights from conventional environmental economics (Hettige et al, 1996). The trend towards decentralisation and devolution raises questions about the effectiveness of the role of the central and sub-national state in environmental management. In the Malaysian case, we can debate the relative merits of the recent developments to devolve EIA away from the direct jurisdiction of the federal government. We could argue that one of the manifest advantages of the federal government in Malaysia exercising a key role in EIA and other forms of environmental regulation is that the process is relatively secure from political interference by state-based developmental interests. This is a legitimate concern in developing countries because quite 291

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often the line between politics and business is blurred. Thus, critics may be tempted to question the motives of sub-national jurisdictions that may seek to adopt and administer their own environmental regulation instruments. For this reason, a number of authors writing about EIA in developing countries recommend that a precondition for the development of an effective EIA system is the establishment of an independent national environmental agency. Such an agency should have considerable political influence over sectoral agencies through placement in the office of the President or Prime Minister or a high profile ministry with responsibility for national economic planning and budgetary control (Ebisemiju, 1993). This high-profile arrangement places the agency in a strong position to exercise its controlling, supervisory and co-ordinating roles in environmental matters, and guarantees adequate funding for its operations. It is also deemed desirable because of the multi-sector character of EIA (Ebisemiju, 1993). Political clout, authority and legal power are seen as essential in the context of circumstances in developing countries to enforce compliance with environmental laws and regulations. However, recent experience in Malaysia relating to the decision-making processes for the Bakun dam points to the dominance of the strong developmental interests within federal government bureaucracy. The federal government has shown itself to be just as vulnerable as the states in this respect, even raising the spectre of possible collusion between the two. Neither the federal or state governments function independently of markets. Furthermore, in contrast to the situation in developed western societies where the judiciary has played a significant role in helping to accord greater consideration to environmental values in the public policy process, this is not necessarily the case in newly developing countries such as Malaysia. It may make good sense to have a uniform national system for EIA for other reasons. For example, in a country where institutional capability is lacking, it is more effective and economic for a single national agency 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 may find it more convenient to operate within such a national system, where there is less opportunity for them to play off one state against another. Fragmentation of environmental regulation within Malaysia may also make it difficult to address environmental problems such as air pollution which transcend state boundaries. On the other hand, a central government environmental agency may lack the resources needed to carry out its functions effectively in developing countries which are geographically extensive with a diverse and differentiated civil society. In the Malaysian case, the Federal Department of Environment has had relatively limited resources to undertake its functions, 292

especially in the peripheral regions in the two Borneo states. Partly because of its control over natural resources, the Sarawak state by comparison has been able to devote more resources to put in place an operational EIA system even though this may have been precipitated by the events surrounding the proposed Bakun dam. Conclusions To integrate environment and development effectively in the policies and practices of a country, it is essential to develop and implement integrated, enforceable and effective laws and regulations through appropriate legal and regulatory policies, instruments and enforcement mechanisms at the national, state and local levels, and to enforce compliance with the laws, regulations and standards that are adopted (IUCN, 1991). Countries need also to establish judicial and administrative procedures for legal redress and remedy of actions affecting environment and development that may be unlawful or infringe on human and environmental rights. Properly mandated, empowered and informed communities can contribute to decisions that affect them and play an indispensable part in creating a securely-based sustainable society. This paper has argued that integration of environmental and developmental objectives in decision-making by using tools such as EIA has strong political overtones, because state institutions do not function independently from the rest of society and influential interest groups within it. A political will and willingness openly to debate development proposals by a vibrant civil society able to access information are a pre-requisite for environmental management tools such as EIA to be effective. This is not to deny a role for the central or local state in market-led societies in promoting ecological sustainability or a call for the withdrawal of the state from natural resource management in favour of ‘community level control’ as the alternative 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 state should or should not be involved in promoting sustainable development. Rather, as Rangan rightly points out, the challenge is to articulate strategies for moving towards sustainable regional development within the recent policy phase of deregulation and market expansion in developing countries, addressing the need both for economic development and ecological 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 unwarranted fragmentation of a hitherto apparently cohesive functional system. On the contrary, it could be argued that it provides the basis for the development Impact Assessment and Project Appraisal December 2000

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of a potentially more effective system of environmental regulation in tune with the needs of Malaysia as a diverse and differentiated society. Other peripheral states in Malaysia may follow the path of Sarawak and Sabah; the challenge for the DOE is to collaborate with the states by providing leadership as well as ensuring some degree of uniformity of practice within different sub-national jurisdictions. Indeed, as noted earlier, other states have now started to exercise a limited administrative input to preliminary EIA reports and collaboration with the DOE is imperative for achieving future effectiveness.

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