Malay Reserve vs. Bumiputra Unit (Property)

This is an excerpt of part of my second book or consider it as a sequel to my first book '40 QUESTIONS YOU SHOULD ASK YOUR LAWYERS BEFORE BUYING A RESIDENTIAL PROPERTY IN MALAYSIA' which is still to be published. It is an attempt by me to differentiate the meaning of Malay reserved property and bumiputra property or better known as bumiputra unit in housing development. As it is still a work in progress, to be proof-read and edited, due to my skepticism in my success in explaining these two terms without all the controversies, I am still open to criticism but please keep in mind of me trying to explain about the current situations with regards to the two terms than trying to give new meanings to the two issues.  Here goes :

A property which has been labeled as a Malay reserved property and a property which is known as a bumiputra property are two different types of properties. Each type of property can be transacted but there are restrictions on any transaction done on them. A whole lot of chapters have been devoted to the word ‘Malay reserved’ and ‘bumiputra’ but let us look at the differences of these types of properties according to the land law in force. A Malay reserved property is always marked with the word MALAY RESERVED on the individual title. Some called such individual title as the Red Grant or Geran Merah due to the red ink which is used to write those words.

As for any property which is known as bumiputra unit, there is rarely such label on the individual title of the property. In the usual case, the Sale and Purchase Agreement will determine whether the property is a bumiputra unit or not. In certain state, the label ‘Bumiputra lot’ can be found in the restriction-in-interest and in much rarer case, you can find the label ‘Bumiputra lot’ labeled much like as the case with Malay reserved property. The term bumiputra lot relates on the bumiputra quota set on the housing developer by the authority. In some cases, the quota is set for the whole development and requires the bumiputra ownership to be of certain percentage at any one time without any mention of it at all on the Sale and Purchase Agreement. That is why the control for any transaction of a bumiputra lot is in the hand of the housing developer which sell the property in the first place.

Who can transact a Malay reserved property? According to the Malaysian’s Federal Constitution, a Malay is defined in Article 160(2).  In that Article, there are two criteria of a Malay. The first criteria is for a Malay person to profess to be a Muslim, habitually speaks the Malay language, and adheres to Malay customs. Second, the person must have been either domiciled in the Federation or Singapore on Merdeka Day, or born in the Federation or Singapore before Merdeka Day, or born before Merdeka Day to parents whom one of them was born in the Federation or Singapore (collectively, the "Merdeka Day population") or is a descendent of a member of the Merdeka Day population. These are what defined Malay in the Malaysia’s Federal Constitution and is used to define the word ‘Malay Reserved’ on any individual title.

Here is the general rule on the transaction of Malay reserved property. A Malay reserved property can only be transacted between Malays. An owner of a Malay reserved property cannot sell it to a non-Malay or a foreigner. The signature on the Sale and Purchase Agreement can be witnessed by a lawyer but any document which is use at the land office for any transaction, such as Form 14A of the National Land Code which is use to transfer the property from one party to another, must be witnessed by a Registrar of Mineral and Land, the District Officer or Assistant District Officer of any land office. It does not has to be the officer of the land office where the property is situated but the signature of the transferor and transferee must be witnessed by either one of them.

As for bumiputra property, the restriction is imposed on anyone who is regarded as a bumiputra. Anyone who is regarded as a bumiputra is given special privileges and is reserved certain quotas on certain matters including property. They are even given a special discount when buying a property from a housing developer. There is no specific clause which define the word ‘bumiputra’ in the Malaysia Federal Constitution unlike the word ‘Malay’. However, in Article 153 of the Malaysia’s Federal Constitution, it is mentioned that there is a quota for Malays and natives of any states of Sabah and Sarawak. This has been used to define the word bumiputra which also relates to bumiputra lot in a housing development.

For bumiputra property, as it is a quota set on housing developers but is rarely written on the individual title for property sold with title, the housing developer will controls any sale to the general public and make sure the quota imposed is met. Usually, the amount of thirty percent of the total houses sold is set on the housing developer to sell to bumiputra buyers. A special price, which is usually set at seven percent discount, is usually given to any bumiputra buyers. When you buy a bumiputra unit from a housing developer, and get a bumiputra discount, your property is restricted from being sold to non-bumiputra. There are exceptions to the rule in certain cases. In the case where the property is not labeled as a bumiputra unit on any of its documents, either on the Sale and Purchase Agreement or on the individual title itself, a bumiputra owner can apply using a consent to transfer to transfer the property to a non-bumiputra buyer. If you bought a property without title where you must acquire consent from the housing developer of the property to sell the property, the housing developer may have to consider whether at that particular time whether the quota of the bumiputra units in the whole scheme is at the current percentage of the quota imposed on the housing developer initially by the authority.