‘Banks rejecting Kedah Malay reserve land as security’


GEORGE TOWN: Almost all banks in Kedah have stopped accepting Malay reserve land as security or mortgage for loan applications, including those for housing, says Gerakan Youth.

The party’s national and state youth chief, Tan Keng Liang said this followed the Court of Appeal’s decision in the case of Jamaluddin Jaafar vs Affin Bank Bhd last September that mortgages on Malay reserve land with banks or financial institutions not listed in the second schedule of the Kedah Malay Reservation Enactment were null and void.

The ruling means all institutions not on the second schedule cannot accept Malay reserve land as security or mortgage for loans or funding applications.

Tan said only two institutions, Bank Bumiputra Malaysia Bhd, which no longer existed, and Bank Pertanian Malaysia, which operated as Agrobank, were listed under the second schedule.

“The first bank doesn’t exist anymore since it merged with Commerce-Asset Holdings. It is now CIMB Bank Bhd.

“This means only Agrobank can deal with Malay reserve land mortgages now. But Agrobank only provides loans for agricultural activities, not housing,” he said.

Following the ruling, the Kedah land and minerals office issued a directive on Nov 16 to postpone all mortgage registrations of Malay reserve land, except those involving the banks listed in the second schedule.

The directive, which took effect immediately, states the Kedah government cannot endorse the titles for Malay reserve properties mortgaged to unlisted banks.

Tan said the situation was serious and asked the Kedah government to find a solution.

Although the case was now pending appeal in the Federal Court, he said many were already affected by the Court of Appeal’s ruling.

He said those who had just signed sale and purchase agreements and had their bank loans approved were confused and appealing to Kedah Gerakan for help.

“Everyone who owns Malay reserve land, except those who have a lot of cash and do not need bank loans, are affected. Even the state government and government agencies have parcels of land in Malay reserve areas.

“Average citizens buying homes, especially young people who do not have a lot of savings, and developers are stuck. They may face problems like forfeiting their deposits and late delivery of projects. Businesses with expansion projects are stuck, too, if their land is on Malay reserve land.”

Tan said he could not give an exact number of how many were affected but it could be as many as 80% of Malay reserve land owners.

“Over 80% of land in Kedah is Malay reserve land. In Kota Setar, over 95% is Malay reserve land, and this also includes those held by non-Malays,” he said.

Malay reserve land that is held by Malay owners cannot be sold to non-Malay persons or businesses. This excludes land in Malay reserve areas that were owned by a non-Malay before the Kedah Reservation Enactment came into effect in 1965.