The failure of the Middlemen: the Scourge of Development Compensation



All over Southeast Asia, large iconic developments are sprouting up in spaces known for their natural assets, many of which support the traditional livelihoods of surrounding communities. Forest City, a mixed development just across the western Tebrau Straits is one such example, but it is not the only one. Seafront developments built on reclaimed land or cleared coastal areas to fetch a high selling price. Similar projects are being promoted or are quietly breaking ground in Alor Setar, Langkawi, and Melaka.

While most construction projects try to meet some level of the environmental standard under the guise of sustainable development and global commitments to combatting climate change, it is far harder to ensure that projects are as inclusive as they are ‘green’. As countries and states step forward to become new leaders in environmental action, there is hardly a whisper of concern for the marginalized communities that are most affected by new developments.

The unfortunate reality of large urbanization projects in rural or coastal areas is that they tend to benefit the top few. In the case of residential projects, potential buyers and property owners tend to be foreign, or at least from locales beyond the immediate vicinity. Those who are most directly affected by the development, the locals who depend on the natural habitats that are invariably damaged, can only dream of perhaps getting a job in the urbanization around them, let alone participate as a buyer.

Of course, these projects have the potential to provide employment, infrastructure; even wifi and transportation connectivity for surrounding communities. Some offer replacement homes to those who have to be completely displaced. But how much of this truly meets the needs and wants of the community at risk and how much of the counter offer is a bad deal in terms of property value, livelihood compensation and infrastructure quality? Affected communities are usually implored to move with the times and evolve; traditional livelihoods are often seen as backward.

Communities such as these are not homogenous. There are always several different factions within these societies. Not only are there differences between those who are for or against development, but also between those who can take the difficult step to embrace new job opportunities and those who simply cannot do anything but the work that has been in their family for generations. Access to opportunities and benefits dished out by developers is also rarely equitable.

Johor’s Forest City project is a classic illustration of this predicament. Country Garden PacificView (CGPV), Forest City’s developer, issued a one-off contribution of RM3 million through the local fisherman’s association 6 months before reclamation began. But most of the community did not know about the payout or the impending project. From the very beginning, CGPV tried to involve the community by offering jobs in landscaping, which would need minimal qualifications, but these opportunities were not disseminated to the wider local populace.

Standing in between the decision-makers and those on the ground is a middle layer of appointed leaders, committee members and other self-elected ‘representatives’ of the people that developers and government agencies deal with. It is against hierarchy and regular practice to deal directly with the locals. This is especially so when it comes to financial compensation. This then results in a gaping hole through which these benefits slip away – leaving but drips and drabs for those most affected and most in need of financial support.

In the case of the villagers around Forest City, the scenario is much the same. There are myriad examples of compensation for accidents going astray, arbitrary decision-making on those qualified to receive cash payouts and job opportunities restricted to only a fortunate few. This phenomenon is common across the country; almost a matter of course wherever development affects local communities. The villagers usually resign themselves to ‘fate’.

On the other hand, there is the question of the authenticity of a developer’s CSR efforts. At the end of the day, a developer exists as a business, with its bottom line being to make a profit – it cannot be held to the benchmark of an NGO when it comes to being inclusive. Forest City says it has achieved an overall local hire rate of 68% with a 90% Malaysian population in its Phoenix Hotel.

While most of these staff are not from the immediate vicinity, it is of course far harder to look into the training of a community that is so far-removed from the Forest City domain. Yet, CGPV has signed an MOU with a local university to provide internships and job opportunities to graduates, and are looking into disbursing university scholarships. It has also contributed to community initiatives for local entrepreneurship development and other capacity-building efforts. But in order to do this, it had to find a way around those who are determined to gain sole personal benefit from available opportunities.

The community around Forest City is less educated, with several (even in their 30s) largely illiterate. The web of regulations and paperwork that surrounds legal ownership of land and property is often bewildering to the average villager. This leaves them vulnerable to those who can take the opportunity to make claims, broker deals and sign agreements ‘on their behalf’, yet do not necessarily represent their interests.

There are few independent or government-linked agencies who actively look into the rights and well-being of these impacted communities. Thus far there has not been any investigation into health and safety impacts of such a huge construction smack in the middle of formerly idyllic coastal fishing villages. While there might be agencies tasked (directly or indirectly) with providing coping strategies, training or micro-financing to enable villagers to participate in and benefit from the development around them, news of these opportunities is not disseminated to all and access is restricted.

While there might be agencies tasked (directly or indirectly) with providing coping strategies, training or micro-financing to enable villagers to participate in and benefit from the development around them, news of these opportunities is not disseminated to all and access is restricted.

But even if information were available, survival in the face of development hinges upon an individual’s willingness to evolve. Of the fishermen around Forest City, few fully comprehend the extent of the impact of the project on their futures – some refuse to learn or change. The lure of quick money to clear mangrove forests for a developer is oftentimes a better immediate balm for diminishing incomes than having to bear with tightened belts to preserve natural treasures for the longer-term.

The people most affected by development cannot be painted with a monochrome brush. There is a rainbow of personalities, power battles, intentions and interests at hand. While it is easy for the armchair analyst to proclaim the issues, the reality on the ground is murky and complicated. Developers, agencies and the local authorities need to engage with all levels of society so that they can get past the gatekeepers and self-serving little Napoleans; perhaps only then can individuals be adequately assisted – if they choose to help themselves to begin with.

Dr Serina Rahman is a Visiting Fellow under the Malaysia Program at the ISEAS – Yusof Ishak Institute in Singapore. 

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