Malay Reservation Enactment only prevents Malay from losing their land to non-Malay, but fails to protect poorer Malay peasants from losing their land to richer Malay peasants and landlords. There is no prohibition to a rich Malay to own more than a piece of Malay reservation. This may render the wealth gap becomes further. And such situation is definitely not the genuine intention of the author of law.

Secondly, the existing law on Malay Reservations bars owners from entering into any deal, such as the sale and transfer, leasing or charging of such land to non-Malays, apparently to “protect” the land. However, this restriction does not in any way protect or safeguard Malay reservations from depletion through the convenient machinery of acquisition by a State. In Selangor, 9000 hectares of Malay reservation were “lost” through compulsory acquisitions under Land Acquisition Act 1960. Although the Federal Constitution requires States Authorities to replace every acre of Malay reservation taken away through compulsory acquisition, there is only one third of the 9000 hectares have been replaced, they failed to abide by constitutional duties.

4.2 Consequences from the Statutory Restriction

As we discussed in the previous chapter, the Malay reservation is totally protected by the legislation, the Malay Reservation Enactments even have a stance higher than the National Land Code. The good intention of the author of the law is appreciated, but somehow there are people hold the opinion that the policy has obsolete and no longer fit into the present society’s circumstances. The strict legislation has become an empty shell, which looks protective from the outward appearance, but no effect in actual sense.

The Malay Reservation Enactment intended to protect the Malay from losing their ancestral lands to non-Malays, but worked against economics welfare. Although the Act proposed certain areas to be reserved for Malay ownership only and prohibited to transfer to non-Malay, the Act indirectly aggravated the problem of credit apply for Malay peasants because it depressed the value of the Malay land since it was not acceptable as collateral by non-Malays. [1]

4.2.1 Low Market Value

The legal restriction imposed on property and the land ownership is the major factor that has reduced the financing potential and the marketability of these areas. It is because the land designated as a part of a Malay Reservation could only be sold to Malay.