Fiasco of the factories to end - The Star

April 30, 2008 By GEETHA KRISHNAN

MAJOR changes are in the offing for the Illegal Factories Rehabilitation Programme introduced by the previous Selangor state government in 2006.

According to Selangor State New Village Development and Illegal Factory Task Force Committee chairman Ean Yong Hian Wah, the policy reviews are necessary because the illegal factories legalisation programme has flaws.


Ean Yong: 'It must benefit entrepreneurs and citizens of the state which isn't the case now'
“It must benefit entrepreneurs and citizens of the state which isn't the case now,” Ean Yong told the StarMetro during a recent interview at the state secretariat in Shah Alam.

“Factory owners feel that the premiums being charged for land use conversions are too high while those living near the factories are complaining about pollution, fire hazards, non-existent buffer zones and social issues,” he said.

“The process will take time because we intend to pursue this on a case-to-case basis to draw up new rules and regulations,” Ean Yong said.

By definition, factories operating without permits, business licences or certificates of completion and compliance (CCC) on land meant for residential, agricultural or commercial purposes or on government reserve land are illegal.

Responding to a question on illegal factories during The Star's Cafe Latte Chat in March, Selangor Mentri Besar Khalid Ibrahim said: “I’m not closing them down. I’m trying to work with them, to make them follow us. The existence of illegal factories is due to corrupt practices”.

A 2006 census recorded 3,165 illegal factories in Selangor with exports worth RM4bil annually and 150,000 job opportunities for locals and foreigners.

But Selangor State Local Government, Study and Research Committee chairman Ronnie Liu said the number of illegal factories was more than 4,000 because cottage industries were also involved. (See table for comprehensive data).


Under the incentive package offered, factory owners will enjoy a 50% discount on land premiums paid within three months of the conversion approval while those paying within six months are entitled to a 30% discount and 10% discount for those who pay up within nine months.

According to Balakong Chinese Chamber of Commerce and Industry and Balakong Jaya Industrial Area Land and Factory Owners Associa-tion joint chairman Lam Koong Sum, factory owners are forced to pay higher premiums due to the higher value of industrial land.

“Furthermore, light industries were told to pay premiums for medium industries and medium industries for heavy industries. This has affected the small players,” he said.

Under the incentive package, temporary operating licences and temporary building permits are issued yearly for a maximum of three years to premises located in industrial zones or areas to be rezoned for industrial use.

Owners and operators must first submit land usage conversion applications, planning permits and build ing plans to be reviewed by authorities such as the Fire and Rescue Department, Environment Depart-ment, state water supplier Syabas and Tenaga Nasional Berhad.

For premises not in industrial zones or in areas that cannot be rezoned, temporary licences and permits would still be issued on a yearly basis for a maximum of three years but operators would either have to move to an industrial zone or cease operations within the time.

The ultimate agenda should be to create a win-win situation for residents, factory owners and the state that also stands to benefit from collecting quit rent.