Can the local municipality shut down factories in the Klang Valley?

The answer is to the shutdown question is a ‘No’.

[1] Conflicting statements

On 15 July, the Housing and Local Government Minister, Datuk Zuraida Kamaruddin said that ‘the Federal Government had delegated powers to local authorities to take any action against any company or factory that do not follow SOPs’.

She was referring to the Local Government Act1976 (LGA), and its role in preventing the pandemic.

That is controlled by an Act called, ‘Prevention and Control of Infectious Diseases Act 1988’.

We shall call it ‘PCIDA’.

Zuraida said that local authorities can close factories down under the PCIDA and the Local Government Act.

A day earlier, Selangor executive councillor – for Local Government and Public Transportation, Mr Ng Sze Han said that local authorities ‘have no power to ‘arbitrarily’ cancel, terminate or revoke licences or permissions granted for factories in Selangor.’

[2] So, who is right?

Well, the starting point is to ask which Act gives power to the local authorities – e.g., the Klang Municipal Council – to close factories?

It is the Local Government Act of 1976.

My understanding is this: the local authorities have no such power.

Why?

Because the Federal Government’s power to shut down factories comes from two sources.

[3] The Two Sources — the first is the PCIDA

The PCIDA gives the Federal Government the power to shut down any ‘premise’ if it is ‘likely to lead to the outbreak – or spread of – Covid-19 [section 18].

The PCIDA requires an ‘authorised officer’ to ‘examine’ the premises, and ‘order the premises to be disinfected.’

So, the factory closure must be only for one purpose: ‘disinfection’. Not because some ministers say so.

The Government proclaimed the Emergency on 11 January 2021.

At that time, the Government thought that there was a ‘continuing existence of a grave emergency threatening the security, economic life and public order of the Federation arising from the epidemic of infectious disease.’ [The Emergency Ordinance says so: sec.2 (1)]

Then the Government made some new laws.

The first was the Emergency (Special Powers) Ordinance 2021. [We shall call it the ‘Emergency Ordinance’].

Under the EO, the power to use national laws falls under section 11.

Under the PCIDA – which is a national law – and not a state law – only the Federal Government can ‘authorise’ certain ‘officers’ to assist it –

the Federal Government – to carry out its duties.

These ‘officers could’ be anyone: a health officer, a soldier, or a police officer.

[4] Does the EO allows the Government to shut down factories?

The answer is, ‘No’.  

Why?

[a].  Because, the EO has no such provision.  

[b].  Under sec.18 of the PCIDA, there is no power to ‘close premises’.

Nor is there any arbitrary power in any federal legislation to do so.

But it is possible for the Federal Government to appoint ‘officers’ from the local Government to ‘assist’ the Federal Government to exercise the powers in the PCIDA under section 5.

But that is a power under the PCIDA – not the power under the Local Government Act.

[c]. However, under section 6 of the EO, any person authorised by the King has the power to issue directions, under the PCIDA, for the five purposes of:

(i). ‘treatment’,

(ii) ‘immunisation’,

(iii). ‘isolation’,

(iv). ‘observation’ or

(v). ‘surveillance’.

That person has no power ‘to close’ a factory unless he wishes to ‘disinfect’ it – how long does it take to ‘disinfect’ a factory? Three weeks? [Are you kidding me?]

[d]. Because this is an Emergency, the PCIDA knocks out any activation of the Local Government Act. [This is confirmed by Articles 75 and 76(4) of the Federal Constitution –as you will see shortly].

Again section 18 of the Emergency Ordinance knocks out any other law inconsistent with it.

If the LGA has powers which are inconsistent with the PCIDA or the 2021 Emergency Laws, then the Local Government Act is knocked off.

[e]. Under Article 75 of the Federal Constitution, if a state – e.g., Selangor – makes laws against any of provisions of the PCIDA, then Article 75 knocks out the state law.

[5].​It could be argued that it is a ‘local government’ – e.g., the Klang Municipality – that ‘gives’ permission for a factory to operate.

Yet that law that is subject to sec.107 of the Local Government Act.

That section says that ‘the local authority may at its discretion grant or refuse or renew any licence without assigning any reason for it’: [sec.107 (3) LGA).

But any such ‘discretion’ is limited.

If there is any inconsistency between two federal statutes, then the statute that deals with the ‘subject matter’ of the statute prevails.

If the PCIDA – which deals with the pandemic – contradicts a provision of the Local Government Act, then the LGA falls. End of story.

[6] Now let us deal next with licensing provisions

If you want to open a factory, you need a municipality ‘licence’.

But note that a licensing provision is not the king of its own castle.

There are clear regulations on how such licences should be granted – or revoked.

For instance, look at a set of regulations called, ‘Licensing of Trades, Businesses And Industries (Federal Territory of Putrajaya) By-Laws 2016’.

These explain how trade licences are to be ‘revoked’.

These regulations create a ‘notification procedure’, an ‘appeal procedure’, a ‘hearing of grievances procedure’– after all of which the state authority may be allowed to revoke such a licence.

[7].   If you close factories, profits drop, and it prejudices the society as a whole

When a business entity suffers loss, or there is a drop in profits.

When profits drop, taxes will be low — or cannot be paid.

There is no money – or services – exchanged for any products.

[8]. Who loses?

It is the Federal, the State, and local governments.

[9].  But what is the Government argument?

The Government says, it is ‘afraid’ that people will die because of the pandemic.

That it was necessary to shut down these business enterprises, ‘to save lives’.

This is a very good argument.

This is the reason why we have the PCIDA. All we needed to do was to enforce PCIDA.

And guess what? The PCIDA has been around since 1988 – some 33 years.

So why did we need the Emergency in the first place?

[10]. Is this Emergency effective in combating the pandemic?

Had PCIDA been enforced with greater urgency, we would never have had this pandemic expanding at the rate it is.

The PN Government declared the Emergency on 11 January 2021.

From that time, up to now, the number of Covid-19 cases in the Klang Valley have not diminished.

If anything, the numbers have been rapidly –alarmingly – increasing.

I have made a chart.

It shows that the Emergency laws have failed to prevent the spread of the pandemic.

The PCIDA is not working.

And there have been more factory closures in the Klang Valley – in the last three weeks – than ever in the history of Malaysia.

[11]. Is Zuraida also factually wrong?

Therefore, for Zuraida to make the statement she did, is to defy the facts on the ground.

Think about the psychological factors.

If you coop up millions of people in their Klang Valley homes – which is one of the busiest hubs of economy in the nation – you create poverty, and a population dependent on handouts.

You leave room for depression, a lack of money, and other unhealthy states of mind.

[12]. Therefore, shutting down factories is not very clever.

Factories manufacture goods.

They represent a community’s economic powerhouse.

When their goods or services are transacted, the community generates money for itself, and better taxes for the Government.

[13]. So, there is no economic logic in shutting down factories.

But for the moment I just want to tell you that in my opinion, the law does not support the position taken by the Honourable Minister.

On how to prevent the pandemic, I will write another article.

You May Also Like

Does the King have the Power to Dismiss a Prime Minister?

14 reasons why the Perikatan Nasional government must resign?

What is the legal impact of UMNO’s withdrawal of support from PM Mahiaddin?

Can the Cabinet revoke Emergency laws?