In Malaysia, the National Land Code (Revised 2020) (Act 828) (the ‘NLC‘), provides for 3 categories of land use – agriculture, building, and industry. The category of land use is endorsed on the registered document of title.
“Agriculture Use” of Land
The category of use determines what can be done with, or on, the land.
Agricultural land can only be used for the specific purposes of agriculture. This includes:
- Cultivating crops
- Extracting or processing raw material from the agricultural produces
- keeping or breeding any honey-bees
- keeping or breeding of livestock, or reptiles
- preparing for distribution any produces from the crop, livestock or aquaculture
Activities incidental to these are also permitted. The whole area of the land must be applied towards cultivation (subject to certain exceptions provided for in the NLC).
Unless expressly provided for otherwise, cultivation of the land must commence within 12 months of the land becoming part of that category, or when it becomes amalgamated with agricultural-use land. The land must be continuously cultivated from then on. (See Implied Conditions under the NLC S.115)
The State Authority may prescribe any further purpose for which land can be put to agricultural use and authorise a purpose if it thinks fit, having consideration of the circumstances of a particular case.
Infrastructure to Support the Agriculture Activities
Only a dwelling-house for the owner of the land or any person lawfully employed for carrying out agricultural work on the land, or any servants of such dwellers of the land, is allowed to be built on the land. The dwelling-house cannot occupy an area of more than one-fifth of the whole land area or up to 2 hectares of land area, whichever is less.
Facilities that relate to providing educational, medical, and sanitary are also allowed on the land. Facilities for the purchase of goods and other commodities used primarily by staff employed on the land are also permitted.
Activities on Agricultural Land
From the outset, it must be remembered that agricultural activities can only be carried out on land designated for agriculture use. Forestry activities are governed by a separate, distinct set of laws. The same applies to mining activities.
It should also be remembered that any activity relating to the industry and building categories of land use cannot be carried out on land designated for agricultural purposes. For example, no building other than a dwelling-house or facilities infrastructure may be built, albeit within very specific and narrow guidelines. A warehouse is a facility under the industry category and therefore cannot be built on land designated for agricultural use.
The policy of Malaysian law governing agricultural use would be to protect this land use, not to reduce or derogate the area assigned for agricultural purposes (other than by application to the State Authority to change the category use of the land). It would be to preserve this rich Malaysian resource and ensure that agricultural produce is a continued output.
Buying agricultural land must therefore be to maintain and deliver on this policy.
Choosing Land To Deliver on the End-Game
The lie of the land would determine the activity. Key features include:
- Terrain, contour with steep hills and slopes
- Presence of a water source, such as a river
- Land size (acres, hectares, or square feet)
- Sustainability and fertility of the land
- Accessibility of land (easement and right to access land)
- Environment impact considerations
The document of title would typically provide for the cultivation of a specific crop eg. palm oil, rubber, or coconut. It is common to see plantations only consist of one crop type. Sometimes there may even be a prohibition on planting a particular crop.
There are many idle plots of land all around Malaysia ready to be made productive once again. Recently, the farms.my team visited a successful 3,800 acres agriculture operation in Kelantan. See our blog on Cameron Harvest: Creating a Farm Enterprise.
The common purposes of agriculture land are:
- Agri-commercial production farms
- Commodities plantations (such as palm oil and rubber)
- Family leisure farms
- Vegetable farms
- Livestock farms such as poultry, cattle, and dairying
- Beekeeping (see 2016, A Review On Beekeeping In Malaysia: History, Importance And Future Directions Vol.11 (2) Journal of Sustainability Science and Management pgs. 70-80 for an overview of the beekeeping scene in Malaysia and its future. See the article “A Potential treasure trove is found in Malaysia’s stingless bees“ on the buzz on Malaysia’s stingless bees or lebah kelulut.)
It is advisable to visit the land in person to gather information and have a tangible sense of the land. Talk to landowner and neighboring landowners to learn more about the land and its surroundings. It would be wise to do a land survey to verify the details of land being considered for prospective purchase. The land survey will clearly demarcate the boundary lines. To this end, proper due diligence of the land is necessary.
** A Note to Readers – For the Avoidance of Doubt
This blog post serves to, from the outset, raise various points of consideration that a potential purchaser of agricultural land may wish to take note of or by way of general information. It does not purport to provide any legal advice/opinion on the subject matter, nor does it suggest that such information should be relied upon as a whole or in part.
Please engage a qualified lawyer to advise on dealings with land and ensure that thorough due diligence of matters relating to the property to be purchased is conducted.