Municipal Land Management in Asia:
A Comparative Study
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Chapter 6. Availability of public land and public land acquisition
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- 6.1 Overview
6.2 Expropriation
and nationalization
6.3 Land banking
6.4 Government-owned
land
6.5 Green areas
and green belts
6.6 Case-studies
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- 6.6.1 Expropriation
6.6.2 Land banking
6.6.3 Government-owned
land
6.6.4
Green areas and green belts
Direct land acquisition is often the only method available
for governments to implement some of the duties with which
they typically are charged. These duties include the provision
of an infrastructure network and public services (schools,
hospitals, parks etc), as well as to some extent the redistribution
of wealth to less affluent income groups. The intention of
public land acquisition is to reduce the costs to the
public for obtaining these government services.
The basic difference between the available approaches are
based on whether land acquisition is compulsory or not. Examples
of compulsory land acquisition include nationalization and
expropriation. Land banking (purchase of land reserves) is
a comprehensive long-term approach including both compulsory
and non-compulsory land acquisition. Land readjustment is
an example of a mostly non-compulsory approach, whereas
land negotiations are non-compulsory.
A commonly used argument for public land intervention is
that government provision of infrastructure and services
and changed land zoning creates land values (betterment) which
are considerably higher than what landowners are charged.
The landowners have not earned the increased land values and
the argument is that these values should belong to the community
which created the values. The failure to collect betterment
is considered the major flaw of the existing land development
system. However, other negative consequences include (partly
from Hall, 1976):
- The inequity between landowners depending on the zoning
layout. Some may gain a great deal and others nothing;
- The cost of land is raised for essential public services
(e.g. roads, sewerage and schools). Often public authorities
have to pay prices for land which had been increased
by projects initiated by the same government;
- The process of providing infrastructure itself may encourage
unhealthy land speculation. However, this point has been
debated as some research shows that rapid increases in land
values occur in countries independently of the level of
land-use control.
Public land acquisition has to be used very carefully and
large-scale government intervention in land development has,
in general, not been very successful in developing countries.
There are many reasons behind the poor performance and this
chapter intends to discuss these and other issues related
to public land acquisition.
There are cases when the municipal government has no alternative
but to acquire land compulsorily for a specific public purpose,
such as road development. Methods to obtain access to land
by judicial procedures are available in almost all countries
if negotiations fail and this option has often been used
in, for example, many South Asian countries. However, expropriation
is rarely used in most countries and the option acts more
as a deterrent to private landowners from keeping land which
is required for public purposes. The right of governments
to use the power of compulsory land acquisition can be
described as follows:
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- "The concept of expropriation is based on a sovereign's
power of eminent (ultimate) domain; this power is generally
accepted worldwide and allows the State to take private
land for the good of the society. Much of the laws pertinent
to eminent domain in developing countries is inherited from
former colonial powers. The cost and time required
to implement these outdated laws make them almost
useless." (Kitay, 1985)
An option of direct public land acquisition is nationalization
of land. This option was used by Algeria based on
a 1974 legislation. It implied that all land exceeding the
"personal needs criteria" could be nationalized and local
governments were provided full control over land transactions.
The policy proved to be extremely difficult to implement.
Today nationalization is not likely to be implemented
in any country. However, many countries are facing major challenges
owing to formerly implemented concepts such as communal ownership
of land which was common in traditional societies.
Karachi, Pakistan, is an unusual municipality for the region
in the sense that it is using expropriation for property development.
They are purchasing land at a value which is 30 per cent of the
value of the land for the currently allowed land use. While
this study was being compiled they had several law suits
pending before the supreme court.
As previously mentioned the system for compulsory land acquisition
has not proved very successful in developing countries.
The legal and administrative process of obtaining the right
to expropriate is often too time-consuming both for the
developer and the government. It is also costly as the acquisition
procedures are complicated and require a considerable number
of skilled staff. It is obvious that expropriation is very
unpopular among almost all governments and various actors
in the land development process.
The concept of land banking implies that a government acquires
land areas in advance of needs. The main advantages are
that it allows the purchase of land, relatively cheaply, for
public purposes and provides a tool to influence the pattern
of development in accordance to overall planning objectives.
It can also be used as a means to control the land market,
prevent land speculation and recapture some of the betterment
created in connection with rural-urban land development. Land
banking has especially been implemented in urban fringe areas
where vast agricultural areas can typically be purchased at
the value of current permitted land use.
Land which is acquired for the land bank can be purchased
compulsorily or non-compulsorily. Another option of extending
the land reserve is government preemption of land coming onto
the market (purchase of land which is for sale at market value).
However, it would be necessary to use the compulsory
method if land banking were to have a major impact on the
development of the city. Moreover, wherever the concept has
had an impact, as in Indian and Swedish cities, the implementation
has been on a large scale. But the concept of land banking,
acquiring land before needs, is actually used by very many
actors from individual households to national governments.
Box 6.1 shows an example of an extensive land banking operation
in Delhi.
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Box 6.1.
The land bank in Delhi
Delhi's largest landowner, without comparison,
is the municipal Delhi Development Authority (DDA).
The land bank in Delhi was developed during the 1950s
and 1960s to direct and control the development of the
city. However, apart from the fact that DDA now is extremely
wealthy, the land bank has not become an efficient land
management tool mainly because of problems caused by
acquisition, disposal and development policies. The
root of the problems stem from the fact that the objectives
of the land bank never were clearly defined.
The scheme, which was started in 1961,
allowed DDA to take control over all land designated
for urban development. DDA would subdivide and service
the land. The acquisition process under the applicable
law, the 1894 Land Acquisition Act, is both cumbersome
and expensive in terms of time and money. The level
of compensation has also been debated since it is
based on the value of the land at the date of notification
which can be 20 years before the actual transfer takes
place.
It was stipulated that the serviced land
should be disposed of by auction to the highest bidder
except in some specified cases. The financial success
of the land bank is indicated by the increase of
the revolving fund set up for the purpose. The fund
increased from 50 million rupees in 1961 to 2068
million rupees in 1981, an increase of 4136 per cent.
DDA became the largest landowner during the same time
period. Problems with the disposal process include high
auction prices and cumbersome administrative procedures.
Land, which is disposed of by other means than
auction, faces problems with inappropriate allocation
procedures favouring more influential population groups.
Another problem was that the objectives
of the land bank were not clearly defined from the outset.
There were no targets attached to very general objectives.
For example, one objective was "To prevent the concentration
of land ownership in a few private hands and safeguard
the interests of the poor and underprivileged" (Acharya,
1987) without specifying any targets. It can be
concluded that DDA has not been very successful in distributing
land to low-income groups. As of 1982 14669 plots
had been distributed to low-income groups which is about
44 per cent of the total amount of plots distributed.
Although the high-income group only constituted eight
per cent of the population, they received 38 per cent
of the plots and 58 per cent of the residential
land area.
It is also interesting to note that instead
of achieving its objective of regulating land values,
these have actually increased considerably since the
introduction of the scheme.
Sources: Acharya (1987) and ESCAP
(1993)
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The municipality which attempts to extend its land bank through
regular purchase on the market, face some particular
problems. These problems are due to the large amount of land
which is typically required, to the organizational
structures of public authorities and to regulations for public
land acquisition. In many countries, land values increase
from the very outset because of information leakages
within the governments or even speculation by government officials
themselves. It is possible to avoid revealing government
intentions in some instances by using middlemen. Furthermore,
in many other countries there are even regulations which force
the public authority to announce its intention to
buy land in advance causing escalating prices in the area of
demand.
A successful implementation of an extensive land bank requires
that there is a clear purpose for its existence. Government
ownership in itself does not lead to more efficient land use.
It is, therefore, necessary for the land bank policy
to be an integral part of the overall national and municipal
planning and policy framework. A land bank would be very difficult
to implement where planning instruments and land-use control
mechanisms are not efficient.
As the government will become the major land owner, it is
vital to realize the impact which the land bank will have
on the land market. An extensive land bank may remove land
market mechanisms and the private sector may have a relatively
small role in land development. Since "the record of land
banking as an instrument for acquiring and operating a public
monopoly of urban land supply is not one to inspire confidence,
land banking as an instrument of public-private partnership
in land development is definitely preferred, if it is
to be used at all" (Farvaque, 1992). However, land banking
has been used successfully in many European countries as well
as Asian countries such as Malaysia and Singapore.
When contemplating the setting up of an extensive public
land bank there are some other critical issues which
must be considered. First, the skills and capacity of the
(municipal) government to make informed decisions on where,
when and how much land to release as well as for what
purpose and at what price. It is important to realize that
considerable manpower and qualified expertise is required
for a land bank to be efficient. Otherwise, an illegal land
market may grow extensively. Second, the land must be carefully
managed prior to land development. Otherwise it is very likely
that squatter settlements will spring up which are politically
difficult to remove. Third, a land banking operation on whatever
scale requires that a large amount of capital is tied up in the
land for a substantial amount of time. The availability of
such capital needs to be evaluated. The problem of funding
the land bank and managing the land could partly be solved
by acquiring yield from temporarily leasing out the land (Schoup,
1983). Fourth, the accountability of the land banking operation
should be considered. This includes consideration of issues
such as procedural transparency, selection of land and processes
to avoid accusations of favouritism of certain landowners
and misuse by government staff.
Finally, it has been proposed that a land bank evaluation
could be based on the following two general criteria (Lichfield,
1965): allocative efficiency and distributive equity. Does
the bank enable the implementation of planning objectives?
Does it reduce the consumption of time and skilled manpower?
Does it allow for "fair", clear and uniform principles and
methods for compensation? Does it collect betterment and "unearned
increment" (land value increases which are not due to
the efforts of the landowner) to society? In short: Is the
land bank providing more efficient land use and fairer distribution
of wealth?
Government-owned land is an issue which deserves special
attention. National and sub-national governments are large
landowners in many cities, especially capital cities. In Asia,
at a time when many warehouses, factories and
other activities, which do not require a central location,
are relocating to urban fringe areas or even further, a large
part of the institutional land used for government
offices and other purposes could also be relocated.
For instance, as the international and national security
situation gradually has improved in almost all Asian
countries, it should become less vital for military installations
to occupy prime serviced land in central locations. Box 6.2
shows Fort Bonifacio in Metro Manila which is part of a major
relocation scheme of Philippine military camps. An area as
large as 440 hectares in central Manila will be released over
20 years for a major land development project. At the same
time it is an example of private/public cooperation in
land development.
Green areas and open space are very important, especially
in densely populated developing countries since most of them
are located in the tropical climate zone which allows for outdoor
activities all year around. The significance of outdoor space
in residential areas and its proximity is indicated by
the estimate that 75 per cent of essential functions of living
(sleeping, cooking, entertaining friends etc.) can occur in
an open-to-sky space in Bombay (Correa, 1985).
Many Asian cities have precious few parks for relaxation
and improved human and physical environment. Bangkok, for
example, has only two-three major parks in the inner city.
Some Asian cities have introduced a green belt. A green
belt can be defined as:
"An area of land near to and sometimes surrounding a town,
which is kept open by permanent and severe restriction
on building. The form it takes depends on the purposes
it is intended to serve. If it is wanted to prevent two nearby
towns from joining up, all that is necessary is a sufficiently
wide belt of open country between them, leaving
the towns free to expand in other directions. More
often, the purpose is to limit the expansion of a town, and
a virtually continuous belt all round it will be needed.
There are also some groups of towns which are
tending to merge into one solid urban mass. In such a case
the green belt is partly a series of buffers of open land between
the towns and partly a belt around the whole group ..."
(Ministry of Housing and Local Government,
United Kingdom, 1955)
There may also be other less evident reasons for maintaining
a green belt. For instance, a major purpose for extensive
agricultural areas around Bangkok being reserved as a green
belt is flood control.
As much as 5,400 square kilometres or equivalent to 5.4 per
cent of the total area of the country, were designated
as green belts around Seoul, Pusan and other cities in the
Republic of Korea in the early 1970s (Space and Environment,
1993). The green belt has preserved the natural environment
around metropolitan areas and reduced the urban sprawl. However,
it has also caused massive land value increases and over-crowding
often in substandard housing. The Government now plans
to gradually ease development controls in the green belt areas
(Space and Environment, 1993).
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Box 6.2. Land development in
Fort Bonifacio
The 1992 Bases Conversion and Development
Act of the Government of the Philippines gave the mandate
to a government agency, the Bases Conversion Development
Authority (BCDA), to develop or dispose of about 800
hectares of Metro Manila's military camps. The main
objective is to finance the provision of necessary infrastructure
for the conversion of former American base land. Other
objectives include the contribution of funds for the
relocation of military bases, the modernization
of the Philippine military, housing and community projects,
various municipal governments in Fort Bonifacio as well
as an increase in government revenues. A specific
objective for the development of Fort Bonifacio is to
create a new centrally-located and 'environmentally
sound' residential, commercial and recreational area.
By the year 2000, at least three million people are
expected to commute in and out of the Fort Bonifacio
on a daily basis.
In Fort Bonifacio, 440 hectares of land
have been designated for development of which 214
hectares will be developed during phase I (1995-2004)
in a private/public partnership. The private sector
has been invited to bid on a 55 per cent share of a
corporation jointly owned by the Government and
the private sector which will be formed for the development
of phase I. The rest of the area will be developed
in phase II which is scheduled for 2005-2014.
Fort Bonifacio is to become a 'clean and
high-technology' district. Therefore, the intention
is to exclude factories from the area, build a mass-transit
system and reserve between 20 to 42 per cent of
each zone for open spaces, roads and recreation. Fort
Bonifacio will have five major zones: 47 hectares
for a central business district (competing with the
nearby business district in Makati); 163 hectares of
mixed high density development; 29 hectares of institutional
area (schools and hospitals); 92 hectares of high-end
residential area for foreign residents and embassies;
and 71 hectares of so-called socialized housing for
the relocated families. In order to cope with the
increased traffic volume, several access roads will
be widened into four to six lane highways, among
other traffic solutions.
The Government is expected to raise at
least 20 billion pesos (approximately 770 million US
dollars) from the sale of the shares in the corporation.
BCDA is expected to raise substantially more government
revenues than from similar government projects because
the sale of developed land in Fort Bonifacio
will fetch a considerably higher price. Previously,
the Government had sold only raw land. BCDA expects
the high-end residential area to fetch 20,000 pesos
(800 US dollars) per and the central business district
to fetch 76,500 to 100,000 pesos (2,500-4,000 US
dollars) per square metre. Government revenues will
be used to fund the relocation of military facilities
and the 5,235 military and temporary households. BCDA
will provide loans with good conditions to the
relocated households (two-year grace period, 12 per cent interest,
20 years repayment period) for centrally-located two-three
bedroom units which will have access to public
transport and services as well as employment opportunities.
Each household will also be granted 50,000 pesos
(about 2,000 US dollars) in compensation.
Some of the major constraints faced by
BCDA include the delay of a major highway project crucial
for the Fort Bonifacio traffic situation, the uncertain
revenues from the project, an unresolved land dispute
and the relocation of military facilities and residents
in the area. The successful implementation of the
first stage was seen as critically important.
Newspaper clippings (e.g. Philippines
Daily Inquirer) and other information from the
Makati Municipality
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The municipalities used expropriation mostly for the provision
of land for infrastructure and public buildings. Typically,
the municipality would file a request for the right to expropriate
a piece of land for the approval by the national government.
Several control mechanisms were included in the expropriation
process in order to ensure the rights of the individual.
A survey of the amount of land expropriated shows that Hué
expropriated most land, about 8.2 per cent (560 hectares)
of its total land area (estimate) and Dhaka almost none during
the latest three-year-period for which data were available
(figure 6.1). Makati indicated that there had only been
a few cases of expropriation. Bandung indicated, as a reply
to the question on how much land was expropriated, that 1.5
per cent of the total land area (252 hectares) was "given"
to the municipality (It is not clear what method
was used to acquire this land).
Figure 6.1. Amount of land
expropriated during the latest 3-year-period for which data
were available as a percentage of the total land area.*
Sources: Bandung (1992/3-1994/5); Dhaka (1991-93);
Hué and Kandy (time period missing).
* The figures on top of the bars indicate the amount of land
expropriated in hectares (estimates in brackets)
Land could be expropriated in Bandung for the "well-being
of the nation". Compensation for building and land was based
on the market value and disputes were settled in court.
Dhaka could request the Government to expropriate land should
it be required for its land development programme. The
land would be acquired by the Deputy Commissioner in the district.
The compensation had four different components: First, the
market value of the land including an additional 50 per cent;
second, the market value for structures and buildings; third,
loss of business income; and, fourth, cost of rehabilitation
(investments in renovations). In the case of land
expropriation in Dhaka, the land value was calculated by collecting
the sale proceeds of land with similar characteristics
in the vicinity during the twelve months preceding the date
when the acquisition notice was publicized. The sale proceeds
were collected from the local Sub-Registry Office which is
responsible for the registration of land transfers.
Land could be expropriated in Hué if it was necessary
for the "benefit of the country". Land expropriation and compensation
had to abide by strict national regulations. There was a process
whereby the Municipal Land Management Office and a contractor
prepared the background material. However, the final decision
on expropriation would be taken by authorities outside the
municipality. Compensation was provided before the land was
used for a project. Provided that the claimant had a Land
Ownership Certificate, the compensation for expropriated land
would be based on two components. Compensation was provided
for the market value of buildings and trees on the plot, while,
on the other hand, compensation for the value of the land
depended on the size and location of the plot.
In Kandy, land was expropriated mainly for slum upgrading
projects, provision of playgrounds and other recreational
facilities and the provision of staff housing.
Makati was able to expropriate land for specific public purposes
such as projects for the benefit of landless poor. Expropriation
was used only when all other methods had failed and there had
only been few cases. The municipality had to fulfil two conditions
in order to take immediate possession of the land. Initially,
the municipality had to provide a valid offer on the land. Thereafter,
the municipality had to deposit 15 per cent of the current
land value in the tax declaration at the court. The tax declarations
are managed by the Municipal Assessor. The amount which would
eventually be paid was determined by the court and reflected
the "fair market value" at the time of taking possession
of the property.
In Penang, there were several so-called enabling acts which
allowed the municipality access to land. For instance, it
could request the State of Pulau Pinang to compulsorily acquire
land which was necessary to widen and improve public
roads.
Five municipalities responded to this question. Bandung,
Dhaka, Makati and Penang responded that no land bank was available,
whereas Hué had a policy to "keep land for development
until the year 2010". The policy, which had been approved
by the national Government, included land for future residential
projects and infrastructure. Dhaka, however, was considering
introducing a land bank. Presently, the amount of vacant
land in Dhaka was about 7.2 square kilometres (3.1 per
cent). It is interesting to note that 5.0 square kilometres
(74 per cent) of the vacant land was owned by other government
organizations than Dhaka City Corporation.
Although table 5.1 showed that on average the case municipalities
only used 2.6 per cent of its land for institutional
purposes (if the military reservation area in Makati is excluded),
the CITYNET-study in table 5.1 indicated as much as 8.5
per cent of institutional land use. A substantial part
of this land would be owned by governments.
Three municipalities responded to the question on government-owned
land. As it was the capital of Bangladesh; national,
regional and municipal government offices covered most land in Dhaka
(202 hectares) among the case-studies. Government offices
covered 48 hectares in Bandung and only five hectares
in Makati. However, the Government had a vast military area
covering more than one third of Makati.
It is interesting that, in Dhaka, the non-municipal governments
owned about 500 hectares vacant land which represented roughly
one fifth of Dhaka's built-up area (2540 hectares). In Makati,
the municipality possessed 22 hectares vacant land and non-municipal
government almost none. Bandung, on the other hand, indicated
that the municipal, regional and national governments did
not possess any vacant land.
All the municipalities had policies for maintaining and developing
green areas. As expected, the green areas were of very different
nature depending on the city, some were landscaped parks and
others were forests.
Among the municipalities which responded to the question
on government-owned land (previous subchapter), Dhaka had
the largest green area, 195 hectares, Bandung had 172 hectares
and Makati only 15.6 hectares. Some of the cities may
also have private parks which would not be included in these
figures. A comparison can be made with the built-up area of
these municipalities to acquire a general picture of
how "green" the city may be although the definition of "built-up
area" varied substantially. Dhaka's green area was 7.67 per
cent of the total built-up area, while in Bandung it
was 1.72 per cent and in Makati 0.82 per cent. The green areas
were especially important for Dhaka as the population density
in the built-up area was more than six times higher than in
Makati. Two other cities maintained major green areas within
its boundaries, Hué had a green area of 510 hectares
and Kandy had a forest sanctuary of 1100 hectares.
In Bandung, location permits for residential development
had a 60 per cent "BCR" (Built Cover Ratio), 40 per cent being
allocated for social facilities, roads and parks which the
developer had to transfer to the municipality after completing
the project. Dhaka had specific policies for the green belt
area, children's parks as well as open grounds for public
meetings and social gatherings. There were five major
green areas in the city. Although 37 out of 90 wards had
children's parks (average size: 675 square metres), there
was a plan for developing children's parks in all wards.
Hué had attempted to create a green belt around the
city. Plants and trees had been planted on 81.3 hectares
out of 510 hectares of municipal green areas. The municipality
also had policies which aimed at encouraging local residents
to plant trees in areas which were deforested during the Viet
Nam war which ended in 1975. In the Philippines each local
government was required to allot 300 square metres annually
for landscape development. Makati's target output for 1994
was 3.2 hectares of landscaped land and 1100 meters of strip
planting along roads. Penang required each developer to reserve
10 per cent of the total development as open space. However,
financial contribution in lieu of physical provision was also
permitted during to the condition of the sites and
other constraints.
Go to Chapter 7: Land
development
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