Penang South reclamation ruling explained

PETALING JAYA: A debate has ensued over whether state authorities can carry out land reclamation without federal approval, following a ruling by the Court of Appeal recently on the Penang South reclamation project.

At the heart of the issue is the question: who has authority over an area of sea that is meant to become land?

Land development within a local council area requires planning permission from the local planning authority, such as the city or municipal council, or the director of the state town and country planning department, now known as PlanMalaysia.

Earlier this week, the Court of Appeal dismissed an appeal by seven fishermen and two environmental groups against the planning permission granted for the Penang South Reclamation project, now known as Silicon Island.

The appeal was rejected because it was filed out of time.

Legal question

However, appeal court judge Wong Kian Kheong also dealt with what the court called a novel legal question: whether a local planning authority such as PlanMalaysia could issue planning permission for land reclamation.

The judge said the town and country planning department director or the state planning committee had no power to issue the planning permission (reclamation)”.

The court said the reclamation site was in the territorial sea off southern Penang island; the territorial sea, seabed and subsoil came under federal authority.

The state authorities had contended that the planning law was wide enough to cover reclamation as it treats “land” as including areas covered by water. But the court ruled that the project site was not simply “land covered by water” but was still territorial sea.

While the older planning law uses broad terms, later federal laws on maritime boundaries and sea areas are more specific on who controls the sea, seabed and subsoil. To the appellate court, the latter takes priority.

Confusion over the ruling

The ruling has led to some confusion because the court found a serious problem with the planning approval, but did not overturn it.

An expert in maritime law, Jason Chuah of the Maritime Institute of Malaysia, said the court’s position was that even if there was no power to issue the planning approval, the approval was not set aside because the appeal was filed out of time.

Nonetheless, he said the ruling still matters because the Court of Appeal has now answered a previously undecided question.

In future, anyone challenging a reclamation project could point to this ruling and argue that planning authorities cannot approve sea reclamation. However, Chuah said there is still a separate question: whether reclamation needs planning permission in the first place.

Chuah said the Court of Appeal judgment does not specify whether land reclaimed from the sea would become state or federal land. He said the new land would not automatically belong to the state if it is deemed federal land since it used to be part of the seabed.

Urban planning lecturer Ismail Isa of Universiti Sains Malaysia said reclaimed land was likely to come under a local planning authority only after it is officially recognised as land.

State govt position

The Penang state government has disputed any suggestion that the ruling meant that the state lacks the power to carry out reclamation.

State executive councillor Zairil Khir Johari said the Court of Appeal’s finding was limited to the planning permission issued by the Penang town and country planning department and the state planning committee.

He said the project was already included in the Penang Structure Plan 2030 and considered by the National Physical Planning Council. He contends that this meant the reclamation went through the necessary planning process.

According to the state government, the planning permission issued in 2023 was not what authorised the reclamation. It argued that since the site was still territorial sea and not yet land under a local planning authority, separate planning permission for the reclamation itself was not required.

Civil society objection

Sahabat Alam Malaysia, one of the parties in the suit, disagrees with the state’s interpretation.

The applicants argued that the state planning committee should have sought the advice of the national planning council before granting planning permission.

They said all parties had treated the Town and Country Planning Act 1976 as applying to reclamation, on which basis the Penang PlanMalaysia director issued the planning permission in the first place.

The state government’s position was that no further referral to the NPPC was needed, which the High Court agreed with previously.

SAM said the Court of Appeal took a different route, finding that the Penang PlanMalaysia director and state planning committee had no power to approve the reclamation planning permission because of the Territorial Sea Act.

The approval should therefore not be treated as valid, even though the court did not set it aside, said the green group.

Expert opinion

Ismail said the Court of Appeal’s finding was defensible, in terms of law and local planning. He said planning permission is usually for development on land, but before reclamation is completed, the site is still a seabed under federal control.

He said the ruling appeared to separate reclamation from later development. Reclaiming land may be one issue, while building roads, buildings and infrastructure on it later would normally still need planning approval.

Senior lawyer Gurdial Singh Nijar said the ruling was correct because the issue was one of jurisdiction, or whether an authority had legal power over the area in the first place.

“Jurisdiction is key. Who has the right, and within what powers can they act? They can only act within their powers.” Gurdial added that if an authority has no power over an area, it cannot make decisions over that area.

The outcome

The ruling does not necessarily mean Penang, or any other state, can never carry out reclamation. However, the immediate effect on Silicon Island remains disputed. For future reclamation projects, however, the ruling may become an important reference point, especially if a challenge is brought in time.