Environmental Technologies Industries
||Environmental Technologies Industries
|Malaysia Environmental Export Market Plan|
|Chapter 3 - Legal and Regulatory Review|
The enactment of the 1974 Environmental Quality Act (EQA) ushered in formalized environmental management in Malaysia. Before then, there were provisions in federal and state laws addressing the state of the environment and matters related to environmental pollution. However, none were specific to environmental quality management. In addition, there were no regulations defining standards for emission or pollutant discharges. The EQA specifies that waste must not be discharged into the environment in violation of acceptable conditions.
Under the EQA, 20 sets of regulations were introduced to address issues covering the control of pollution of the atmosphere, soil, inland waters, and the marine environment; noise pollution; and the establishment of environmental impact assessment (EIA) requirements. Requirements of the EQA led to the establishment of the Department of Environment (DOE) in 1976 under the Ministry of Science, Technology, and Environment (MOSTE). A list of laws and regulations enforced by DOE is on its web page at http://www.jas.sains.my/doe/r_law.html.
In 1989, environmental regulations on the handling and management of hazardous wastes went into effect. In 1993, comprehensive controls on the import and export of industrial waste were outlined in compliance with the Basel Convention.
In mid-1996, the Malaysian Parliament passed amendments to the EQA that were intended to allow authorities to cope with new hazards, strengthen enforcement, and close loopholes in the law. The Environmental Quality (Amendment) Act 1996, which went into effect in August 1996, called for clarification and strengthening of existing provisions (see table 5) and introduced new requirements relating to hazardous substances. It mandated new measures tightening global and transboundary movement of hazardous wastes, environmental labeling, compensation for pollution violation, and enforcement. The most sweeping change in the act was the adoption of higher penalties for pollution offenses, although some industry experts believe the fines are still minimal compared with those in developed countries. The low fines have been one of the most damaging loopholes in regulations.
Table 5: 1996 Amendments to the Environmental Quality Act 1974
Source: Malaysia's Department of Environment.
Penalty• Fines for pollution of air, soil, and inland waters, as well as for noise pollution, raised to RM100,000 ($30,000) from the previous RM10,000 ($3,000) and/or a five-year jail term.
• Fines for noise pollution raised to RM100,000 ($30,000) from RM5,000 ($1,500) and/or a five-year jail term. Previously, it was a one-year jail term for noise pollution.
• Fines for discharge of oil into Malaysian waters raised to RM500,000 ($150,000) and/or a five-year jail term. Previously, it was RM25,000 ($3,000) and a two-year jail term.
• Fines for discharge of waste into Malaysian waters raised to RM500,000 ($150,000) and/or a five- years jail term from RM10,000 ($3,000) and/or a two-year jail term.
• For other offenses not specified, fines raised to between RM10,000 and RM50,000.
Recycling and Environmental Labeling• Use of environmentally unsound substances will be reduced by requiring some “prescribed product” to contain a minimum percentage of recycled material. These goods will carry labels declaring their content of recycled substances.
• The DOE can specify rules for a deposit and rebate scheme for disposal of products considered environmentally unfriendly to ensure recycling or proper disposal of the waste.
Pollution Control and Environment Reporting• Owner or occupier of vehicle, ship, or premises can be ordered to install pollution-control equipment as well as to measure, analyze, and report on emission of hazardous substances.
Prohibition Order• The director-general can order industrial plants or processes to stop release of pollutants or to stop all operations if public health is at risk. In the past, court permission was needed.
Control of Scheduled Waste• To control deposit and transboundary movement of scheduled waste according to the Basel Convention.
Definition• Terms have been better defined, such as for “carrier” of toxic waste or hazardous substances, which now includes aircraft.
Environmental Audit• The director-general can order firms to prepare and submit audits.
Environmental Quality Council• Membership of the council, which advises the government on environmental policies, will be extended to relevant ministries, agencies, and organizations as and when required.
Environmental Fund• DOE can collect fees from waste generated, and the fees will go into the Environment Fund for pollution prevention research and conservation measures.
• The minister may also order those handling, storing, or using oil, hazardous substances, or waste to contribute to the fund.
Compensation• Offenders can be ordered by the courts to compensate those who have suffered loss or damage of property, something not provided for before the amendments.
Forfeiture and Disposal• The director-general can seize vehicles or ships used to transport and dispose waste in contravention of the Act. He can also detain or sell any vehicle or ship involved in discharging or spilling oil mixture or scheduled waste in order to pay for costs and expenses.
New Regulations• The minister will have powers to draft new regulations on ambient water quality standards and discharge standards, and to maximize permissible loads discharged by any source into inland waters.
• He can also prohibit or regulate the import and export of environmentally hazardous substances, as existing legislation only covers hazardous waste.
Whereas other environmental laws appeared insufficient to tackle problems resulting from rapid economic development, the EQA amendments focused on both controlling and minimizing pollution. But even government officials acknowledge that much more remains to be done to strengthen at least 45 other pieces of legislation related to environmental protection. Some of these laws are out of date while others overlap or have unclear division of responsibility. In 1991, the government undertook a comprehensive review of environmental laws with the aim of streamlining them. However, the law review committee found the task too daunting when it appeared that streamlining the laws meant transferring jurisdiction between agencies.
While the 1996 amendments are considered a milestone in the country's environmental regulatory history, analysts point out that many of the existing laws focus on specific activity in sectors but fail to encourage an integrated approach to environmental policy implementation. In fact, the government effectively ruled out the possibility of a complete overhaul of the environmental laws. This apparent softening of the government's stance is probably caused by its increasing concern over the impact of stricter environmental laws on the economy.
In addition to the amendments, regulation of mobile sources of pollution was enacted for diesel vehicles in September 1996 and for gasoline engines in November 1996. This effectively put control of emissions from gasoline and diesel vehicles directly under DOE and raised the maximum fine to RM100,000 ($30,300 at RM3.3 to $1). Recent reports indicate that the government expects the Clean Water Law to be introduced and implemented by the end of 1998 to address continuing pollution at most rivers and dams, particularly those adjacent to industries and housing. (Table B-2 in Appendix B indicates the proposed interim National Water Quality Standard for Malaysia.) The government also appears to be moving toward a phased implementation of the Clean Air Act plan.
Since January 1, 1997, DOE has enforced regulations of motor vehicle (excluding motorcycles) to control carbon monoxide, hydrocarbon, and nitrogen oxide emissions from gasoline engines of new motor vehicles (excluding motorcycles). Diesel engine regulations were introduced for both smoke and emissions of carbon monoxide, hydrocarbons, and nitrogen oxides. These new emission standards, which replaced 1978 regulations under the Road Traffic Ordinance of 1958, have been enforced.
Department of Environment
The DOE has the executive power to implement and enforce the EQA. It is responsible for all aspects of environmental management, but DOE has focused on the industrial sector, particularly in issuing licenses and permits. DOE is charged with formulating and implementing environmental management policies; approving and documenting technologies; and approving or recommending suppliers for environmental or environmental impact assessment (EIA) consultancy, wastewater treatment, and waste management. The department has a federal mandate, although there are some constitutional limitations between federal and state governments, particularly in water quality control, which is basically a state issue.
For various reasons, DOE’s enforcement is restricted. Current sanctions have not resulted in regulatory compliance. The department has lacked sufficient technical staff and, until recently, the sophisticated monitoring capability. The installation of the nationwide air and water quality monitoring network under way should be a dramatic improvement.
Financial resources have also lagged (figure 1). In response to mounting budgetary demand, DOE’s 1997 budget allocation rose to RM265.4 million ($80 million at RM3.3 to $1) from RM17 million ($6.8 million at RM2.5 to $1) in 1995 and RM34 million ($13.6 million) in 1996.
However, with the severe economic crunch, the DOE budget was slashed by almost half for 1998 to RM142 million ($43 million at RM3.3 to $1). DOE officials have said that the drastic cuts will not affect monitoring and enforcement programs, although several development projects will be delayed. These projects include seawater monitoring plants on several islands to collect baseline information on marine water quality.
DOE’s structure has been increasingly regionalized to allow closer monitoring and supervision, as well as faster processing of EIA statements. There are 13 regional offices, including one in the Federal Territory of Kuala Lumpur, with a combined staff of more than 500. The agency also decentralized other functions, such as pre-siting evaluation, written approvals for effluent treatment systems and fuel burning equipment, and response to public complaints.
Figure 1: DOE Operational Allocation vs. Expenditure
Source: Malaysia Environmental Quality Report 1996, Department of Environment, Ministry of Science, Technology and the Environment, Malaysia.
Malaysian Industrial Development Authority
Malaysian Industrial Development Authority (MIDA), under the Ministry of International Trade and Industry (MITI), is responsible for the promotion and coordination of industrial development. It is the principal agency that evaluates applications for incentives under the Promotion of Investments Act, 1986, and for manufacturing licenses. Most federal approvals, including DOE approval, are available at MIDA’s one-stop investment center. However, even though there is a DOE representative in MIDA, no internal environmental procedures exist, and MIDA tends to give little priority to environmental issues.
MIDA is also responsible for policy recommendations and economic feasibility studies on industrial development and industrial promotional work, both at home and abroad, and related work. In fact, MIDA has relatively little environmental expertise and few environmental functions. It does house a Secretariat for Hazardous Industries and has a cooperative arrangement with DOE in the Council of Hazardous Industries to control hazardous materials and ozone depleting chemicals and substances.
Ministry of Local Government and Housing
Ministry of Local Government and Housing (MLGH)’s responsibilities to local governments are primarily policy-making and advisory. These include formulating standards for wastewater treatment facilities in public and private housing projects and developing programs for privatizing solid waste management. It is also involved in recycling programs in several areas.
Public Works Department
The Public Works Department or JKR, as it is more commonly known in Malaysian circles, manages all public sector infrastructure development, including roads, highways, ports, and buildings. It also supervises and coordinates water supply development and has been involved in privatizing water supply services.
Ministry of Health
The Ministry of Health sets drinking water quality standards and monitors water quality in the water supply network.
State Governments and State Economic Development Corporations
In Malaysia's 13 federal states, the states are in charge of implementing water supply projects and operating the water supply systems with JKR supervision. The state economic development agencies are in charge of developing industrial zones and industrial estates.
There are more than 140 local authorities in the country responsible for solid waste management under MLGH’s supervision.
Environmental Impact Assessment
The EQA requires several DOE approvals of proposed industrial activities. Since it was implemented in 1988, the Environmental Impact Assessment (EIA) has been the major DOE enforcement instrument. EIA is mandatory for prescribed industries only. These include 19 development categories:
Most industry in Malaysia is in industrial estates managed by state economic development corporations or privately owned agencies. For nonprescribed activities, such as aquaculture or agro-based industries, the government requires that all potential industrial sites not subject to EIA (particularly the small and medium-scale industries) be referred to DOE for evaluation of site suitability. The agency may require industries with potentially hazardous waste trails to submit a risk analysis as part of the site approval process.
|- Agriculture||- Petroleum|
|- Airport||- Ports|
|- Drainage and irrigation||- Power generation and transmission|
|- Fisheries||- Quarries|
|- Forestry||- Railways|
|- Housing||- Resort and recreational development |
|- Industry||- Transportation|
|- Infrastructure||- Water supply|
|- Land reclamation||- Waste treatment and disposal|
Under the EQA amendments, large-scale earthworks, coastal zone reclamation, iron and steel mills, pulp and paper mills, and projects involving major chemical processes now require detailed EIA preparation. In addition, DOE’s director general can order firms to prepare and submit audit reports.
In the wake of disasters caused by building on hills or in highlands, and of controversial golf course developments, state governments are reviewing the environmental impact of proposed development in these categories under the existing project planning and approval process.
The number of EIA reports has been rising (figure 2). Since 1988, DOE has reviewed 1,825 EIA reports. The first prosecutions of violators were in 1993. In 1996, DOE processed 379 EIA reports, including four risk assessment reports. Of the 379 reports received, 98 were for housing projects and 61 were for quarry operations. As of October 1997, the total number of EIA reports submitted was 2,134.
In 1996, DOE conducted 467 enforcement visits to projects subject to EIA, of which 133 resulted in notices for noncompliance and 10 resulted in court cases. In development in the highland areas, 27 projects were inspected and 7 were taken to court for noncompliance.
DOE has been working to improve the EIA process. In 1995, the process was decentralized, with all 13 state offices reviewing EIA reports. Only reports of projects that involve more than one state or especially detailed EIA reports were processed at DOE headquarters in Kuala Lumpur. DOE published 16 sets of specific guidelines and established a one-stop unit for processing EIA reports.
Figure 2: Type of EIA Reports Submitted, 1988-1996 (DOE)
Source: Malaysia Environmental Quality Report 1996, Malaysia Department of Environment, Ministry of Science, Technology and the Environment.
DOE has also made other changes to the EIA process. For the first time, it displayed the terms of reference (TOR) for detailed EIA reports for public comment to accelerate the review process and ensure that they were sufficiently comprehensive. DOE also issued guidelines for enforcement of EIA compliance for use by state officers to clarify the review procedure. Overall, DOE has emphasized improving its professionalism and accountability in assessment and postsurveillance. However, DOE admits that shortcomings exist in the areas of uniformity in EIA processing among state offices, monitoring compliance of EIA approval conditions, and achieving greater public involvement in decision-making. Despite increased fines, penalties still tend to be insufficient compared with project costs, which are typically $100 million and up.
The EQA requires industries to procure a series of approvals from DOE apart from the EIA process. These include
Note: Land-use conversions must be approved by state governments and referred to DOE.
- Site suitability evaluation to determine compatibility with the surrounding land use and land-use planning. This requires information on the industry, site, raw materials, and products, and an inventory of materials to be stored on the premises.
- Written permission to construct any building that will result in new effluents. This rule covers new facilities near residential areas: crude palm oil mills, raw natural rubber processing mills, and facilities that treat toxic and hazardous, or scheduled, wastes, all of which require direct DOE licenses.
- Written permission to increase production capacity that will cause material changes in the quantity or quality of effluents. It requires information on the equipment, fuel or combustion materials, design of equipment, height of the chimneys, and quantity and quality of the emissions.
- A license to occupy and use the facilities (for prescribed industries) to be renewed yearly.
- A license to dispose waste into the continental shelf.
Despite announcements that it would stop doing so, DOE has continued to issue contravention licenses when a company cannot comply with government standards on effluents or airborne wastes. Such licenses are generally issued, with sampling conditions, in cases where there are no immediate alternatives, where contravention does not pose a serious threat, and as an interim measure to enable industries to take up pollution abatement measures.
Fewer contravention licenses were granted in 1996 than in 1995. According to DOE, 93 percent of the applications were for open burning of wastes. Of those approved, most were in the metal finishing, textile, and food industries.
Since the early 1990s, enforcement efforts have gradually intensified. DOE is emerging as an effective enforcement agency, although it is still constrained by lack of resources, staff, and technical expertise. Decentralization helps to ensure that industries in all regions are subject to similar standards of compliance. Its newly tightened regulations and enforcement procedures have improved enforcement in recent months, even though the DOE has been pressured by budget cutbacks and economic uncertainties.
DOE’s teams of inspectors and so-called polluter watchers (common citizens) regularly conduct on-site spot checks in problem industries, particularly palm oil and raw natural rubber factories, prescribed industry sectors with a track record of noncompliance) (see tables 6 and 7). DOE has tried to maintain and verify self-monitoring requirements using analytical results only from accredited laboratories.
Priority has been placed on developing environmental quality monitoring to enable DOE to keep better track of the state of the environment and of industry compliance with the regulations. In April 1995, the government signed an agreement with Alam Sekitar Malaysia Sdn. Bhd. to privatize air quality monitoring and environmental data collection and dissemination. As of 1997, a network of 35 air monitoring stations for total suspended particulates and respirable particulates was operating. By 1999, 50 new automated air quality stations are planned to be in place. In 1996, there were 909 river monitoring stations established under the Annual River Water Quality Monitoring Program.
Table 6: Legal Action Taken Against Palm Oil Mills in 1996
Source: Department of Environment
Number of Mills
Enforcement efforts have focused on medium-sized and large facilities, on the premise that these industries have both the financial resources and technical skills to undertake compliance. Small-scale industries remain largely unmonitored, despite a number of initiatives.
Enforcement in 1996 centered on three sectors: sewage discharge, textiles, and metal finishing. Inadequate wastewater treatment, increase in production without commensurate increases in treatment plant capacity, and slow response to plant changes were the primary causes of violations. DOE suspended the licenses of four palm oil mills and four rubber factories and subsequently revoked their licenses after repeated violations.
Table 7: Legal Action Taken Against Raw Natural Rubber Factories in 1996
Source: Department of Environment
Number of Factories
The metal finishing and leather industries, nonprescribed industries, were principally found in violation of sewage and industrial effluent standards. DOE aims to include these industries in the prescribed list of industries required to submit EIAs. Occasional noncompliance was reported for other nonprescribed industries with respect to certain biochemical oxygen demand (BOD), suspended solids, and other standards. DOE reported 100 percent compliance in 1996 by the machinery and plastic industries.
Despite its successes, DOE is the first to acknowledge that much more remains to be done in all sectors. Many industries operate without adequate wastewater and waste treatment facilities. Industries such as metal finishing and electroplating, food and beverage, textile, rubber, cement, vehicle assembly, paper, and leather, still have difficulty complying with sewage and industrial effluent regulations, with less than an 85 percent compliance rate.
Sewage continues to be the biggest source of water pollution. DOE has increased pressure on the private sector concession holder to improve its performance. In Selangor State, authorities reported in October 1997 that 23 of the 27 rivers, which are the drinking water sources in the state, are heavily polluted with sewage, industrial waste, animal waste, and heavy metals.
The department reported that overall industrial compliance with clean air regulations was “generally satisfactory” in 1996. The leather industry, for instance, achieved 100 percent compliance, but the wood industry only reported 73 percent compliance. DOE noted deteriorating air quality from mobile sources. In August 1996, DOE reintroduced curbside inspections and surprise checks for excessive black smoke emissions from diesel engines. A total of 20,137 vehicles were visually inspected, of which 982 received summons and 531 received prohibition orders. The motorcycle manufacturing industry, which has consistently failed to respond to air pollution concerns, especially the haze threat, has been a major contributor to air pollution.
DOE relies on legal action against persistent violators. These actions include fines, permit suspensions, permit revocations, or a combination of these. In 1996, 256 cases were prosecuted under the EQA and RM1.2 million ($360,000 at RM3.3 to $1) was collected. About 60 percent of the offenses committed in 1996 involved effluent discharges exceeding standards. Malaysia's courts have also shown increasing environmental awareness by imposing stiffer penalties. Eight violators were given maximum fines of RM10,000 ($3,000 at RM3.3 to $1) each for open burning and effluent discharges exceeding standards.
The Environmental Quality (Amendment) Act 1996 gave power to the director general of DOE to mandate environmental audits. DOE is expected to issue industry guidelines that enable authorities to identify industries that require audits, decide who should carry out audits, and determine the extent of audits. According to experts, three types of audits may be introduced: audits of industrial premises, audits of site contamination and environmental impact audits. The industrial premises audit consists of three basic stages: preparatory, site inspection and reporting, and recommendations. Contact
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The guidelines are being studied by a national committee on environmental standards made up of representatives of DOE, Standards and Industrial Research Institute of Malaysia Bhd. (SIRIM), Malaysian International Chamber of Commerce and Industry, Universiti Putra Malaysia, and Universiti Malaya. The Committee will submit a draft proposal to MOSTE for implementation under Section 33A of the Environmental Quality (Amendment) Act 1996.
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