Issue of land ownership is a question of sovereignty

Survey of 13 Asian Countries

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We refer to the article "Law Society airs concern over land ownership" published on Page 4 of the Borneo Bulletin on May 11, 2012.

The Ministry of Development is aware of the concerns raised by the Law Society and various other parties on the amendments to the laws on the use of trust instruments in land ownership. This response seeks to provide some clarity and update on this issue.

The rationale of the proposed changes to the law on property ownership is to prevent the deliberate use of trust instruments and related documents such as powers of attorney, to side-step government policy on land ownership which is elaborated below.

The use of trust instruments in the ownership of land in Brunei Darussalam has become rampant and in the government's view, is in blatant disregard to the policies of land ownership of the country. Restrictions on ownership of property are not recent phenomena. Every country has its own policy touching on property ownership and the eligibility of persons in the ownership of property in the country. Brunei Darussalam is no exception to this. Indeed, land being a finite resource and Brunei Darussalam only 2,226 square miles in size is small compared to our immediate neighbours. Her policies on the type of properties which may be owned and the criteria of eligibility of ownership takes on more importance for a country like ours.

The issue of land ownership is a question of sovereignty. It is common to see limitations and restrictions imposed in the criteria for eligibility of ownership of land for foreign entities and non-citizens. The rationale behind such restrictions is based on the national interest in ensuring sufficient land for ownership by its own citizens. No country will unknowingly allow the perpetual ownership of its land by foreigners and non-citizens. For such purposes, leases are granted to such persons and entities to use such lands for the period of the lease. Limitations and restrictions are often applied in the case of ownership of property by foreigners and non-citizens as shown in the survey and table annexed herewith.

The press has quoted the figure of 47,000 trust instruments used in the ownership of land in Brunei Darussalam. The use of trust instruments in land ownership is usually by owners who are unable to meet the criteria for outright or perpetual ownership of such land. While such a policy for land ownership should not pose any difficulty for properties purchased by citizens for their own use, problems arise when these properties are actually purchased for ownership by persons who are unable to satisfy the criteria for outright or perpetual ownership at the outset.

The provisions in the Land Code are instructive on this issue:

Section 23 stipulates that "Any person wishing to transfer, charge, lease or sub-lease his land shall deliver to the Land Officer an instrument in one of the Forms D, E or F… and the Land Officer, if satisfied as to the transaction, shall register each transfer, charge, lease or sub-lease … provided that a transfer, charge, lease or sub-lease of land shall be null and void and shall not be registered except with the prior approval in writing of His Majesty in Council".

Further at Section 27, it is stipulated that "No claim or interest in any land shall be valid unless it has been registered in the Land Office".

To date, outright transfers of properties held in perpetuity, with certain exceptions have only been approved in the case of transfers to citizens. Purchasers of such property having to do so through the use of trust instruments are unable to deny that they do so for the sole reason that any attempt in transferring the property in their name will result in a rejection or non-approval since they do not qualify and do not satisfy the criteria for outright or ownership of the property on a perpetuity basis. They therefore resort to the appointment of a citizen as a trustee and use trust instruments to secure the ownership of the property, all in the knowledge that if they are honest or truthful in the application for the transfer of the property, a rejection will follow.

It is therefore regrettable that the recent articles published on this topic tend to portray such purchasers as innocent parties who are now exposed to the loss of their rights in the ownership of the lands which they have in fact purchased in outright contravention of government policies. The Land Code has always been clear in this respect - no claim or interest in any land shall be valid unless it has been registered in the Land Office. Since their claims or interests are not registered and has not been approved to be registered in their names, these claims are therefore invalid.

It must be reiterated that the ownership of land through the use of trust instruments have been deliberately deployed to side-step known government policies on the ownership of property. Such purchasers cannot in all conscience shut their eyes to the obvious fact that they would not have to resort to the use of trust instruments were they able to own the properties on the basis of perpetuity at the outset.

Having considered the above position, the impending amendments to the Land Code are intended to provide the opportunity for purchasers of such property who have done so through the use of trust instruments, to register their claims and interests in the Land Register. These claims and interests will be registered subject to the conditions of tenure that have been used by the government in the past. As reported, leases of 60 years from the date of registration are being considered for ownership by foreigners. The applicable tenure for a property used as a residence by permanent residents who are not nationals of other countries is also being considered. The Ministry of Development together with other relevant government agencies will hold discussion sessions at which conditions of tenure, application processes and related matters will be further elaborated.

A system of registration of caveats is also being considered and it is intended that the rules for the registration of caveats to be published concurrently or shortly after the above amendments to the Land Code.

It is regrettable that the Law Society has taken the stand of "condemning the passing of any laws that would have a retrospective effect on property owned through power of attorneys" as reported in the Brunei Times article "Law Society makes firm stand on PA" published on Page A9 on May 11, 2012. The Ministry of Development has taken legal advice on this matter. It is never the intention of the Government of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam to deprive land owners of their rights.

The policy on land ownership has been known and has been in use all this while. The deliberate use of trust instruments to circumvent these policies have to be brought under control. Further the amendments seek to ensure transparency in the ownership of land in Brunei Darussalam.

We wish to conclude by stating that the views of the Law Society and indeed of many other interested persons have been considered in the formulation of the policies behind the amendments to the Land Code. We certainly trust that a balanced view can be presented in any discussion on this issue. The purpose of the amendments have been stated above and the safeguarding of national interests with the goal of continued peace and prosperity for the nation should prevail.

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