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Kuala Lumpur Structure Plan 2020



1 Introduction

2 International and National Context of Growth

3 Vision and Goals of Kuala Lumpur

4 Economic Base and Population

5 Income and Quality of Life

6 Land Use and Development Strategy

7 Commerce

8 Tourism

9 Industry

10 Transportation

11 Infrastructure and Utilities

12 Housing

13 Community Facilities

14 Urban Design and Landscape

15 Environment

16 Special Areas

17 Strategic Zone

18 Implementation
  18.1 Introduction
  18.2 Existing situation and issue
    18.2.1 Organisation
    18.2.2 Legal
    18.2.3 Financial
  18.3 Objective
  18.4 Policy and proposal
    18.4.1 Organisation
    18.4.2 Legal
    18.4.3 Financial



18.1 Introduction

927. Many challenges and opportunities face the city of Kuala Lumpur in this new millennium. The Kuala Lumpur Structure Plan 2020 will be the instrument to guide it over the next 20 years and will also form the basis for the preparation of the Kuala Lumpur Local Plan. Strategies and policies have been formulated in earlier chapters of this Plan, which are derived from the all-embracing vision of Kuala Lumpur as A World-Class City. In order to realise these strategies and policies, implementation measures encompassing the organisational, legal and financial aspects of CHKL must be determined.
928. These measures must be forward looking if they are to be effective and must be aimed at creating a world-class governance that can maintain the impetus necessary to keep Kuala Lumpur at the forefront of major cities both in the region and internationally.

18.2 Existing situation and issue
 18.2.1  Organisation
 i.  Existing situation

929. The responsibility of managing the development of Kuala Lumpur is entrusted to CHKL headed by the Mayor of Kuala Lumpur. The Federal Capital Act 1960 provides for the appointment of an Advisory Board to advise the Mayor. The Mayor is assisted by a Director General who heads the administration of CHKL, which comprises 23 departments. The existing organisational structure of CHKL is shown in Figure 18.1.
930. CHKL is one of the biggest employers in the City with over 8,000 employees of which more than 300 are professionals and managers. It is responsible for providing and maintaining roads, drains and community facilities such as public open spaces, parks and cemeteries. In addition, it performs other functions such as urban planning, traffic management as well as management and enforcement of business premises, hawkers and petty traders and public housing. Ten branch offices have been established with the objective of improving the efficiency of its services and closer relation with the general public.

 ii.  Issue

931. Coordination problems have arisen with authorities both from within and outside Kuala Lumpur. Ineffective coordination has been evident in land use planning, urban design, implementation of infrastructural projects, traffic management, flood mitigation, housing and squatter management, waste collection and disposal, enforcement and monitoring of the environment.
932. The relocation of the federal government’s administration from Kuala Lumpur to Putrajaya, together with other major developments in the region, notably the KLIA and Cyberjaya, has resulted in a substantial dispersal of the City’s functions to areas outside the City. Each of these entities is separately administered and determines policies independent of each other. This situation may not be conducive for overall planning control and management in the long run and some form of coordination will be necessary to enhance effective development.

• Lack of coordination with other government bodies and agencies.

 18.2.2  Legal
 i.  Existing situation

933. The Federal Territory (Planning) Act 1982 introduced the structure and local planning systems for Kuala Lumpur. The Kuala Lumpur Structure Plan 2020 is prepared under the provisions of the Act.
934. The Planning (Development) Rules 1970 were enacted under the powers conferred by the Emergency (Essential Powers) Ordinance No. 46 of 1970. These set out in details the procedures for making applications for planning permission and the fees payable.
935. The City of Kuala Lumpur (Planning) Development Charges Rules 1979 and the City of Kuala Lumpur (Planning) (Use Classes) Rules 1980, which set out the permissible uses for the different categories of land use, were gazetted under the powers conferred by the City of Kuala Lumpur (Planning) Act 1973.

Figure 18.1: City Hall Kuala Lumpur Organisational Chart, 2003
936. Both these rules and regulations were enacted prior to the Federal Territory (Planning) Act 1982 and are in urgent need of review.

 ii.  Issue

  • Rules and Regulations enacted prior to the Federal Territory (Planning) Act 1982 need to be revised.

 18.2.3  Financial
 a)  Background
 i.  Existing situation

937. The major sources of operating revenue for CHKL in year 2000 are derived from property assessment (comprising approximately 62 percent of the total revenue), returns on investment (about 11 percent), charges for development planning and control (about 6 percent), rentals from public housing (about 6 percent), grants from the federal government (about 6 percent) and licences and fines (about 5 percent). About 58 percent of property assessment revenue is derived from commercial sector and the other 42 percent from residential sector (refer Figure 18.2).
938. CHKL’s operating expenditures include costs relating to the provision of services (accounting for approximately 43 percent), public housing (18 percent), social, sports, recreation and culture (10 percent) and enforcement and licensing (9 percent) (refer Figure 18.3). Analysis of the operating accounts indicates that CHKL has had comfortable surpluses in net revenue from 1990 to 2000 (refer Table 18.1).
939. Development expenditure generally covers spending on projects such as construction and improvement of public facilities, sports complexes, public housing for the low income groups, road network, drainage and landscaping. Development expenditure was funded predominantly by contribution from General Rate of Fund (50 percent), federal government grants (27 percent) augmented by loans (19 percent) and contributions from developers (2 percent) (refer to Table 18.2).
940. Past trends indicate that CHKL has been financially able, and has no difficulties in sourcing funds for its development projects.

 b)  Operating expenditure and revenue growth rates
 i.  Existing situation

941. Prior to 1991, CHKL’s operating expenditure always exceeded revenue and growth rates for expenditure were also much higher than those for revenue. The situation improved with the upward revision of the property assessment charges in 1992. Since 1997, CHKL has continued to experience a larger average annual growth rate for operating expenditure as compared to operating revenue (refer Table 18.3). This situation if left unchecked could lead to financial deficits, which, in turn, will affect the efficiency of CHKL’s public services.

Figure 18.2: Operating Revenue, 2000

Figure 18.3: Operating Expenditure, 2000

Table 18.1: CHKL Operating Revenue and Expenditure, 1980 - 2000

Table 18.2: CHKL Sources of Fund for Development, 1995 - 2000
942. Increases in development and operating costs in Kuala Lumpur have arisen as a consequence of rising land prices, higher construction costs, the accelerating deterioration of the urban fabric and difficulties involved in carrying out public works in the older, more congested areas of the City Centre.

 ii.  Issue

  • Increasing growth rate of operating expenditure.

Table 18.3: CHKL Operating Revenue and Expenditure, 1995 - 2000

 c)  Costs, income and population
 i.  Existing situation

943. The City’s residents contribute to CHKL’s revenue directly by way of payments of assessment rates on their properties and indirectly by spending on locally sold goods and services. The traders of these goods and services, in turn, pay higher rates on the enhancement of real property value and other local taxes due to growth of new businesses. Higher income groups are better able to pay for their properties and have a greater propensity to spend on goods and services sold or provided locally as compared to the lower income population. Business premises, in turn, will reflect a better turnover or profitability, thus, increasing the economic base of the City. Population movement in relation to income is, therefore, significant as a population with a larger personal income can maintain the City better than a population with a smaller income, as it is able to provide a better revenue base.
944. The declining proportion of high and middle cost housing and the generally high cost of living in the City are expected to affect the population profile of Kuala Lumpur. An outward movement of the urban population comprising a relatively high proportion of the middle and upper income groups will lead to a fall in the City’s per capita income and a decline in economic activity leading to a fall in total revenue.
945. Already, many people work in Kuala Lumpur but stay in residential areas outside the City in the neighbouring townships of Petaling Jaya, Subang Jaya or even further afield in Klang or Seremban. People are attracted to these areas by the lower cost of living and because improvements in the road network and public transportation, in particular the LRT and the KTM commuter train services, have greatly facilitated commuting into the City.
946. If this trend continues, CHKL’s resources will be significantly affected by the increasing need to meet the costs of maintenance and providing services in the City for both residents and nonresidents alike, while at the same time suffering reduced revenue as a consequence of the decreasing proportion of middle and upper income groups residing in the City.

 ii.  Issue

  • Loss of revenue from residential population due to out-migration of middle and highincome group.

 d)  Revenue and expenditure
 i.  Existing situation

947. The projection of revenue and expenditure (2000 - 2020) for CHKL is shown in Table 18.4. This projection takes cognisance of past financial growth trends, population growth, property value by sector (at current rates) and future requirements.

Table 18.4: Operating Revenue and Expenditure Projection, 2000-2020
948. Despite the differences in growth rates between revenue and expenditure CHKL is expected to have surplus budgets throughout the Plan period. However, the surplus is expected to diminish over the years due to increasing rates of expenditure.

 ii.  Issue

  • Decreasing surplus of revenue over expenditure.

18.3 Objective

949. In order to create a world-class governance which is able to meet the challenges of the 21st century and which is able to effectively implement the Kuala Lumpur Structure Plan 2020, CHKL aims to:

• enhance its organisational and management structure and practices;

• establish a proper legal framework to make enforcement more effective;

• ensure the sufficiency of funds available for development of programmes and projects; and

• ensure the optimal efficient and effective utilisation and management of all resources.

18.4 Policy and proposal
 18.4.1  Organisation

950. The management of a world-class city requires a world class organisation. Such an organisation does not emerge by chance but is built by design, directed by visions, nurtured by ambitions and perfected by its actions. Such an organisation possesses a level of strategic and operational excellence which is at least on a par with similar organisations elsewhere in the world. It must have a clear vision, understand its functional obligations and place emphasis on quality. It must also be efficient, responsible, accountable and flexible enough to change with changing situations. In addition, management must be able to set its priorities clearly and manage available resources optimally.
951. The implementation of the Kuala Lumpur Structure Plan 2020 and the formulation of local plans require the best elements of organisation and management. This is to ensure that the management resources within CHKL are well in place to provide the necessary planning, monitoring and control of the City’s development. Sufficient funds will have to be invested in new technology, manpower training and in research and development. There will also be the need to carry out regular reviews on systems and procedures and to introduce new management tools. Improvements to the system must be consciously introduced on a regular basis so as to ensure that it can cope with the changing demands of society.
952. Services must be customer oriented and leadership, which is mission driven, must be responsive and sensitive to the needs and values of the City’s population while, at the same time, being pro-active in planning ahead to anticipate future needs and expectations.
953. Being a local government organisation, CHKL has to deal face to face with the City’s residents and their everyday problems. Its decisions, or lack thereof, have profound and immediate effects on people’s everyday lives. There are many ways that CHKL can improve the quality of its services including strengthening institutional coordination, improving its planning capabilities, promoting business development, encouraging public participation, enhancing its ICT capability, improving monitoring and enforcement, conserving resources and expanding departmental responsibilities.

 a)  Strengthen institutional coordination and integration and enhance planning functions

954. CHKL has to take a more effective holistic approach in addressing Kuala Lumpur’s future needs. It is strategic that CHKL collaborates more effectively and closely with relevant outside organisations. This will involve institutional strengthening through a greater understanding of the capabilities and perspectives of other agencies in order to forge more effective working relationship.
955. In so far as Kuala Lumpur forms part of the wider Kuala Lumpur and its conurbation (KLC), Kuala Lumpur cannot be planned and managed in isolation. CHKL must interface with the local authorities of surrounding areas and, in terms of planning and development, it must also work closely with other governmental agencies and utility
956. The services provided by CHKL may not yet be of a world-class standard, but most of the ingredients to produce good governance are in place, such as a strong organisational set up and a properly qualified workforce. However, in managing the increasing demand for better services, the departments in CHKL must be more pro-active in addressing the needs of the City’s population. In this respect, there is a need to improve the planning functions of all departments in order to support the control and operational functions. All departments in CHKL will place emphasis on proper planning prior to the implementation of programmes and projects.
957. The present CHKL organisational set up which consists of three major functions; administration, management and development shall be reviewed to strengthen its planning and coordination functions.

IM 1: CHKL shall review its organisational set up to ensure that planning and coordination functions are more effective.
958. Tourism is destined to become the largest single industry worldwide. Malaysia and Kuala Lumpur in particular, as the main gateway to the nation, have benefited greatly in recent years from the growth in tourism. Chapter 8: Tourism covers policies and proposals related to tourism development. A dedicated department needs to be set up to implement policies and proposals related to tourism marketing and promotion, development of tourism resources, facilities, infrastructure and support services. This department will enhance the efforts of the Kuala Lumpur Tourism Council (KLTC) and other related agencies. In order to maximize the tourism potential in cultural and sports facilities, the department must also coordinate with other relevant authorities and agencies to promote the development of related facilities and activities.
959. Policies and proposals pertaining to the physical structure of Kuala Lumpur have been formulated in this Plan, which are intended to enhance the urban environment to be equivalent to that of a world-class city. In addition, other policies relate to the need to conserve and preserve Kuala Lumpur’s unique historical and cultural elements as integral parts of the modern city. Chapter 14: Urban Design and Landscape covers policies and proposals related to urban design and landscape.
960. In order to ensure that greater emphasis is given to urban design and conservation, it is imperative that a dedicated department is set up. This department would be responsible for the overall planning and coordination of urban design, landscaping and conservation including the drafting and implementation of urban design programmes
and guidelines.
961. The provision of adequate and appropriate housing, particularly for the lower income group, is a matter of utmost importance in any city. Although various projects and programmes undertaken since 1984 have been relatively successful in providing sufficient low-cost housing, there is still a mismatch between the types of housing required and those that are being developed. Chapter 12: Housing covers policies and proposals related to housing
962. The challenge of addressing these new expectations requires the upgrading and expansion of the responsibilities of the Housing Management Department. Apart from ensuring that adequate housing for squatter relocation is provided and managing the process of relocation, the department will also need to concern itself with the availability of an adequate land bank to ensure that future housing needs can be fulfilled.

 b)  Initiative and promote development

963. Due to the ever changing needs of City businesses and the global influences of the City’s operating environment, city managers can no longer afford to react to market forces, but must rather take a pro-active approach to face the impact of globalisation and increased competition. The challenges of globalisation must be met and full advantage must be taken of the opportunities presented. Development has to be initiated and actively promoted to attract businesses and, therefore, priority must be given to facilitate the economic development of the City. Particular attention shall be given to the development of the International Zones and Comprehensive Development Areas due to their strategic locations and economic importance.
964. The development of Kuala Lumpur is taking place at a rapid pace. In order to be efficient and pro-active in decision-making, CHKL must enhance its research and development programmes and also work closely with other related local, regional and international organisations. CHKL must also facilitate business partnerships, networking and marketing of the City’s businesses. In addition, a comprehensive depository of data and information on urbanisation needs to be collected, analysed, categorised and disseminated.

IM 2: CHKL shall enhance its resources to develop and promote the City’s economy.

 c)  Public participation

965. CHKL must be sensitive to the needs of the City’s population and take the initiative in finding quick and effective solutions to community needs and services. Public participation should be promoted via consultative committees to provide channels for people to express their views. Public hearings currently practiced provide valuable insights into public opinion regarding CHKL’s policies and procedures and serve as avenues where the public’s views are taken into account. Other methods of facilitating public participation such as dialogue sessions, meetings and exhibitions should also be utilised.
966. Currently the Social Development Division of the Economic Planning and Social Facilities Department plans and implements community development projects for managing current social issues related to urban poverty. Projects for education, health and youth are channelled through community development programmes involving bilateral processes between CHKL and voluntary bodies.
967. Improved partnerships, networking and cooperation must be developed with relevant agencies in order to implement planned programmes and projects. To this end, CHKL must work together with stakeholders including professionals, NGOs, CBOs, institutions of higher learning and voluntary organisations. Through such partnerships, a sense of communal responsibility can be inculcated together with a greater feeling of involvement and belonging. These community-based programmes could be redesigned to be in line with the structure of Local Agenda 21.
968. A neighbourhood matching fund will be established in CHKL’s annual budget to provide grants to Kuala Lumpur neighbourhood groups and organisations for a broad array of neighbourhood initiated improvement programmes and projects. Such neighbourhood groups may be established to undertake specific projects or programmes. Once a project has been approved, the community’s contribution of volunteer labour, materials, professional services or cash will be matched by a grant from the neighbourhood matching fund.

IM 3: CHKL shall promote greater public participation in decisions involving community needs and services.

 d)  Enhance information communication technology capability

969. In the age of information technology, computing capability and information management is essential in the management of cities. With the objective of increasing the quality of work and quality of life, the National Information Technology Council (NITC) has formulated the National Information Technology Agenda (NITA), an integral part of which is the E-Public Services (EPS). The main objective of EPS is to increase the efficiency and skill with which various public services are provided through the electronic medium.
970. CHKL shall provide services electronically to other government agencies, the private sector and the community as a whole. These services are intended to provide pro-active and high quality services, giving value for money while
simultaneously increasing the productivity of the public services, the business community and the general public.

IM 4: CHKL shall enhance its information communication technology capability in all city functions.

 e)  Enhance the effectiveness of the monitoring and enforcement capability

971. Improving CHKL’s monitoring and enforcement capability is a vital factor in enhancing the quality of life in Kuala Lumpur. The need for effective monitoring and enforcement is not only confined to development and building control but also relates to environmental control, industrial pollution control, maintenance of general cleanliness, illegal parking and the unauthorised usage of premises.

IM 5: CHKL shall enhance the efficiency and effectiveness of its enforcement capability.

 f)  Promote development corporations

972. The use of dedicated bodies to facilitate development is well established in other countries. The development corporations, used to boost economic activities, have been a feature of planning since the 1980s. These corporations are essentially business enterprises in which the government owns most of the equity and but which are able to enter into partnerships with the private sector. They operate under company law and are, therefore, relatively free from the administrative constraints of government bureaucracy.
973. Section 49 of the Federal Territory (Planning) Act, 1982 provides the legal basis for the formation of a development corporation.

IM 6: CHKL shall set up development corporations to undertake specific development programmes.

 18.4.2  Legal

974. The current planning rules and regulations enacted under the Emergency (Essential Powers) Ordinance No. 46 of 1970 and the City of Kuala Lumpur (Planning) Act 1973 need to be updated comprehensively and regularised with the provision of the Federal Territory (Planning) Act 1982.

IM 7: CHKL shall undertake to revise, amend and update all planning rules.

 18.4.3  Financial
 a)  Revenue sourcing

975. Acceptable means of financing economic and social activities by CHKL will include all existing sources such as property assessment, development charges, return on investment, licensing charges and fines, rental, grants and assistance from the Federal Government.
976. In addition, in order to be able to improve and expand the provision of the services by CHKL, other means of revenue sourcing will need to be investigated including widening the scope of current sources of revenue, introducing new taxes related to the conservation of resources and protection of the environment and expanding the scope of current user charges and user fees.
977. Whilst the present property tax structure and rates are already bringing in surplus operating revenue for CHKL, it would be prudent to investigate the need to restructure the rates and base values, as well as the valuation principles of the current tax system to determine whether they have kept pace with growth of the City. Other taxes and licenses could also be considered in relation to business and entertainment activities in the City.
978. New taxes could also be introduced not only with the objective of increasing revenue but also as means of promoting resource conservation, protecting the environment from pollution and encouraging enterprises to be more environmentally and socially responsible. These taxes could include various forms of automotive taxes aimed at reducing or easing traffic congestion in the City as well as conserving resources and addressing air pollution problems.
979. User charge financing is the most common method of recovering the costs of providing a service that can be directly linked to the use of the City’s urban resources or facilities. It is a very direct way of generating revenue by charging for the use of public facilities as, for example, the levying of entrance fees for recreational parks or the imposition of effluent discharge fees for industrial premises. Not only may the charges be adjusted to be in line with costs but they can also increase efficiency in the allocation of existing service capacity and help guide investment decisions.
980. Local businesses are important in fostering economic growth in their areas and local business rates are the financial connection between local businesses and the local authority. Business rates give CHKL the capacity to respond to the needs of businesses within its jurisdiction and by improving the local economy, create more revenue with which to budget for future needs. One of the most productive ways of creating jobs and stimulating the local economy is by attracting new businesses and industries or by expanding those that already exist in the area.
981. A means of stimulating the local business environment is through Local Economic Development Actions (LEDA). Possible forms of LEDAs include tourist related events, the holding of major national or international events, tax incentives and rebates for local businesses especially those that contribute to the local economy. Revenue raising exercises to finance special projects can also be implemented through the issuance of securities or municipal bonds by CHKL. Typically, bonds should be used only to finance projects that have both a known and proven life expectancy. In cooperation and partnership with local businesses, activities to promote and establish social and economic regeneration should also be encouraged.
982. It is important to ensure that methods adopted to increase revenue sourcing are not perceived as being exploitative and do not induce inflationary pressures. To that extent, such methods must be acceptable and maintain a reasonable balance between efficiency, financial feasibility and equity.

IM 8: CHKL shall adopt acceptable means of financial sourcing for economic and social activities.

 b)  Cost reduction and efficiency measures

983. CHKL will explore all available opportunities to form partnerships with the private sector in order to reduce the burden of heavy public budget financing. Private and public sector partnerships in the form of joint ventures, services privatisation and leasing or concession agreements can be utilised as a means of financing capital or operating costs.
984. Private sector participation enables the provision of services more economically and effectively. The contribution of the private sector in the form of capital and skills investment has enabled services to be improved, infrastructure development to be accelerated and economic growth to be stimulated. Privatisation and joint venture projects undertaken by CHKL include residential, commercial, recreational & public services as well as services such as garbage collection. Up until 1998, a total of 26 projects were carried out between CHKL and private sector organisations. As of 2000, there were 27 approved projects whilst 22 projects were under consideration.
985. Service and management contracts are entered into with the private sector to render services on CHKL’s behalf. An example would be rendering of solid waste collection and disposal services where a private collector is contracted to take the responsibility under the terms of a service contract. Alternatively, CHKL may collect tariffs from property owners for the contracting of solid waste collection and disposal.
986. Leasing agreements provide an alternative means of financing facilities and limiting CHKL’s liability, while helping to reduce unnecessary administrative expenditure. Under this type of arrangement, a private sector agency would pay a leasing fee to CHKL under a lease agreement to provide a particular service or for the use of land or buildings for a specified period. The private sector agency would be responsible for collecting income from users of the rendered service.
987. Concession agreements awarded to private agencies to manage and develop existing infrastructure are similar to leasehold agreements but are generally for longer periods (generally between 20-30 years). Contractual arrangements in concession agreements specify tariffs as well as the infrastructure that must be developed during the concession period. At the end of the concession period, the infrastructure including that developed by the private sector agency reverts to the local authority.
988. In all privatised contracts, monitoring and public accountability are paramount concerns. Rigorous performance criteria must be set and financial penalties imposed for failure to meet specified minimum standards. Tender procedures must be transparent and conducted as regularly as is desirable depending on the type of privatised service or arrangement.

IM 9: CHKL shall undertake cost reduction measures in the provision of services and management of development of the City.