Bringing Malaysians back to the cities

PAM Gold Medal 2023 Dinner

There is a need to rethink cities and housing as Malaysia embarks on a new mission. I would like to touch on three major points on how we should move away from the Garden City idea of separating where we live and where we work. We should bring Malaysians back into the cities.

The garden city idea

The first one is the critique of the idea of the garden city movement, which started with British urban planner Ebenezer Howard in 1898. It was essentially a response to the poor condition of industrial cities of 19th century England such as those portrayed in the writings of Charles Dickens, Karl Marx and Friedrich Engels. They wrote about cities of contrast, of messiness, of crowdedness and of many other problems.

In the UK, cities were always treated with ambivalence and doubt. Therefore, the idea of a garden city was an attempt to maintain the benefits of the cities while enjoying the perks of the countryside, which were thought to be more noble and virtuous.

What we did not realise is that the garden city idea degenerated into a situation in which the city centre became the place of work while the townships around it became “dormitory cities” or “commuter towns”. Such a garden city essentially separated us from where we work to where we stay and play.

Without realising it, we have entrenched the idea of zoning and treat it as a norm, to the extent that we have forgotten that these are just man-made ideas for us to challenge, and to change for the better.

Who says industrial zones have to have industrial parks only, and without residential areas? Who says business centres mean people cannot live in their vicinity?

In the case of Malaysia, particularly Kuala Lumpur, this idea that cities are congested and therefore there is a need to build satellite cities, started with Petaling Jaya. Petaling Jaya started in 1956, a year before the nation’s independence, because Kuala Lumpur was thought to be congested with traffic and people. That was how the garden city movement influenced our thinking.

That was taken to a different level in the 1970s. My father was from the cemetery area in Kuala Lumpur behind Jalan Dewan Bahasa while my mother grew up in the squatter area where Sun Complex now stands. After they were married, they moved to Subang Jaya, which at that time was an area for the less affluent. I was just a month old.

This developer-, architect-, planner-planned city model of Subang Jaya turned out to be extremely successful. The idea of having cities entirely planned by private enterprises and not by the government was extended to many other places because of a major incident that happened in 1981.

That year, Tun Dr Mahathir Mohamad became the prime minister. Two months after that, with the petrodollars earned since the 1973 oil crisis as well as the establishment of Petroliam Nasional Bhd in 1974, the government launched a surprise major international takeover via the London Stock Exchange known as the Dawn Raid. The Malaysian government “nationalised” Guthrie and other British plantation interests in the country.

To maximise profits in the shortest time span, these government-linked companies turned the plantation estates into housing estates. The Guthrie corridor, UEP and USJ are legacies from those years.

Urban sprawl

My second point is about sprawling and how Malaysians inadvertently become Americans before we even get rich. We now see the hollowing-out of Kuala Lumpur. That means the city has become a doughnut city where the centre is hollow. We have the best public transport system in the country in the heart of Kuala Lumpur but very few people are living inside the city.

Sprawling becomes a major problem when we think about the fuel price. We are still paying RM2.05 a litre for RON95 but that comes at a major cost — the government was shouldering a RM50.8 billion fuel subsidy in 2022 alone, when the national budget was only RM380 billion that year.

Datuk Seri Anwar Ibrahim has announced in his Budget 2024 speech that the government will embark on subsidy reduction in phases for diesel. Although there is yet any decision on petrol (RON95), I encourage all stakeholders to imagine that, at some point, as the prime minister signalled, the petrol price would eventually have to go up, at least to the current level of Saudi Arabia. We have to start thinking about revamping and rethinking the sprawling of our cities.

There is also an added element to sprawling in this country. The state governments have very limited revenue. This is the construct of the Federal Constitution in both 1957 and 1963. At that time, the distribution of revenue was considerably equitable because we were mainly focusing on agriculture. Natural resources and land are given to the states while the federal government collects income taxes, but as we industrialise, it becomes a problem.

The state government has very few incentives to promote economic development apart from that related to natural resources and land. Therefore, poorer states have to sell logging rights while richer states offer either development rights or reclamation rights, which is not good for the climate. Clearly, we need to rethink the federal-state fiscal relationship.

Financialisation of housing

The third point is the financialisation of housing. I meet many people who tell me that buying a house or owning a house is our tradition, a part of Asian culture. The problem is, it is not true.

As I mentioned earlier, my father used to live next to a graveyard. His family owned a wooden house, but not the land. It was the same with other squatters in Kuala Lumpur. When my father was in his early adulthood, he was staying in one of the rooms above a shoplot in the Petaling Street area in Kuala Lumpur. Interestingly, those shoplots had no carbon footprint because you lived upstairs and worked downstairs.

The way we understand housing and housing financing is very recent, not more than 60 years old. Mass ownership of housing by ordinary people is also a very recent phenomenon.

Even in the UK, it was only during the administrations of Margaret Thatcher in the 1980s that we saw widespread house ownership for ordinary people. After witnessing nearly five decades of financialisation of housing, we got used to thinking that every piece of housing has to be owned even if you are in the poorest strata of society.

Did you know that the most lucrative housing or pieces of real estate in the country are not in the KLCC area? It is actually in Semenyih, Selangor, and in Nilai, Negeri Sembilan, in the memorial parks, for those who know. I am talking about the places for the dead, where land was rezoned from agricultural land to recreational, but a small hole of a crematorium, which you will have to pay tens of thousands for.

We will have to think about how to move away from or at least rethink financialisation.

Industrial parks

In my position as Deputy Minister of Investment, Trade and Industry, I am worried about the potential excess construction of industrial parks. We are now seeing a massive increase of manufacturing investment into this country because of the US-China conflict.

At the same time, the massive glut in the housing market that we have seen in the past few years means developers are switching to building industrial parks instead. Uncontrolled development of industrial parks will eventually lead to their being excessive and underutilised.

I would like to use the shopping mall analogy on industrial parks. Twenty-five years ago, shoplots in shopping malls were sold to individual owners, and the mall had no say over the type of business being run. Nowadays, all the successful malls no longer sell the lots to individual owners but instead to the real estate investment trust, which would eventually lease them to individual tenants, and the tenants have to bring together a coherent shopping mall.

Likewise, industrial parks have to be thought through in this way, where we will have to think of a new way of financing industrial parks and build clusters among them.

I am also challenging the idea that the industrial park can only be an industrial park, and people do not live in these places. I go back to the idea of a garden city, and to ask a question. Of course, these questions are somehow challenging and there are some in-between solutions.

Today, many industrial park developers are building foreign worker housing/centralised labour quarters (CLQ) inside industrial parks. But does our economy need more foreign workers? Or do we actually need more young Malaysian engineers and provide them with housing near the industrial park where they work, so that they do not have to travel for hours to get to work?

Envisaging a new future

These are the issues we have to deal with in the next five, 10, 15, 20, 30 years and we will have to start envisaging more expensive fuel prices and how we are going to adapt, and see it as an opportunity for a green transition.

We will have to start thinking about building houses for people to come back to the inner city of Kuala Lumpur, and not necessarily having to own them. They can rent and we can retrofit some of the old buildings in KL inner city and build some rental housing without car parks, so that no one needs to drive because they can take public transport.

These are the ideas that we will have to come together to think about, to envisage a new future for Kuala Lumpur, for the Malaysian industry and the Malaysian economy.

I am optimistic about the Malaysian economy because I think we have come to a stage where we may have a second economic take-off. In the context of global geopolitical competition, there is so much movement away from China coming into Southeast Asia, and Malaysia occupies an indispensable middle in Southeast Asia.

All these conditions for a second economic take-off are similar to the ones we saw from 1988 to 1997. To take advantage of the second economic take-off, however, the built environment, outer cities and the way we do things will have to be very different. This is something that we should ponder upon.

This article is adapted from my speech delivered at the PAM Gold Medal 2023 Dinner on 26 October. It first appeared in The Edge on 4 November.

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