Syarikat Perumahan Negara Bhd (SPNB) was set up by the federal government in the aftermath of the 1997/98 Asian financial crisis to rehabilitate hundreds of abandoned property projects nationwide. A decade on, SPNB has been handed an even more pivotal task by the government — to help stimulate the Malaysian economy in the wake of the economic maelstrom enveloping many of the country’s major trading partners.
SPNB has been allocated a 10th of the RM7 billion economic stimulus package that was unveiled by Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak last November. The government has since acknowledged that the first stimulus package may not be sufficient and in January, Najib said a second stimulus package would be launched March 10 to ensure that the country did not slip into a severe recession.
The brief given to SPNB was simple: Spend some RM700 million on building homes for the low-income group while helping to boost economic activities as part of the government’s stimulus plan. Of the RM700 million allocated under the stimulus package, RM200 million each will go towards the rehabilitation of abandoned housing projects and the Rumah Mesra Rakyat (RMR) scheme while the remaining RM300 million will be channelled into the affordable homes scheme (Rumah Mampu Milik or RMM).
Rehabilitating abandoned projects
The Housing and Local Government Ministry has identified some 11 abandoned projects nationwide (see table) to be revived by SPNB under the stimulus package. SPNB’s managing director Datuk Mohd Amin Mohd Salleh tells City & Country that these projects comprise 1,525 properties, mainly residential homes. These include terraced houses, semi-detached homes, shophouses and low-cost homes.
“The ministry selects the projects for us to rehabilitate. We got the funds from the government last month and have started the work,” says Amin, adding that the 11 projects will probably take an average 10 to 15 months to complete.
Since SPNB’s inception, the Housing and Local Government Ministry has selected 255 abandoned projects for rehabilitation or some 74,376 houses. To date, the developer has rehabilitated 73 projects (23,089 houses) while 18 projects have been given financial assistance amounting to RM417 million. Besides the 11 projects that will be revived under the stimulus package, SPNB is reviving five projects that comprise 1,469 units at a construction cost of RM108 million.
Established in August 1997 to take over abandoned property projects, SPNB subsequently ventured into building affordable homes, particularly for the low-income group. The company is also involved in construction, building homes and army camps for the armed forces through Syarikat Usahasama SPNB-LTAT Sdn Bhd, its 51:49 joint-venture company with Lembaga Tabung Angkatan Tentera.
SPNB is currently involved in seven residential projects for the Defence Ministry — Kem Kementah, Kem TUDM Subang, Kem Sg Besi, Kem Pasifik, Kem Wardieburn, Kem U Thant and Kem PUKL. These projects will see a total of 6,550 properties with a total gross development value (GDV) of RM1.5 billion.
Building affordable homes
The government’s allocation of funds to SPNB appears to be for the building of affordable homes for the low-income group. Amin says the projects under RMM — or affordable homes — scheme is slated to begin as soon as it gets the funds from the government.
Nine projects will benefit from the RM300 million allocation under the stimulus package. “We planned these projects last year and had obtained all the necessary approvals when the government announced the fund. Thus, we decided to use the funds for these projects,” says Amin.
The nine projects, with a total GDV of RM600 million, are located in Kedah, Penang, Perak, Melaka, Selangor, Negri Sembilan, Johor and Sabah. The projects, which will comprise different types of properties in different locations, are scheduled for completion in two to three years. Some 3,794 low-cost, low-medium and medium-cost homes would have been built when these projects are completed. “Apart from the RM300 million from the government, the remaining funds will come from the sale of the houses. We are not looking to make profits; we only want to cover our costs,” says Amin.
Except for the low-cost houses, the RMM scheme is open to all Malaysians with a monthly household income of less than RM1,500. The homes, with built-ups of 700 sq ft and above, will be priced from RM35,000 each, depending on the location. The houses under this scheme will come with three bedrooms and two bathrooms. SPNB has launched 24 such projects, offering 21,891 houses under the existing RMM scheme, of which 10,660 units or 49% have been sold — for a total sales value to date of RM600 million.
Meanwhile, with the RM200 million allocated for the RMR scheme, SPNB will build 2,600 houses in two years for those in the low-income group. This covers those with an annual household income of less than RM18,000 and are living in dilapidated houses or do not own homes but have land not mortgaged to any financial institution.
“This scheme is mainly to help those in the low-income group who own land inherited from their ancestors or have legal approval from the landowner to build their homes. Therefore, most of the houses built under this scheme are detached homes. These people have to apply to their respective state governments before we can proceed,” says Amin.
This low-cost bungalow concept will offer homes of 700 and 866 sq ft with three bedrooms and two bathrooms, costing RM60,000 to RM76,000 each depending on their location. The government’s special fund will finance one-third of the cost of the building while the buyer will pay the balance, over 23 years or longer, under an Islamic financing scheme.
To date, SPNB has approved some 15,196 of the 30,000 applications received under the RMR scheme, valued at about RM818 million. A total of 7,634 units at a cost of RM353 million have been completed while the remaining 7,562 units (RM466 million) are still under construction.
On concerns that these fast-tracked projects by SPNB will add to the overhang of low-cost properties, Amin dismisses such concerns, saying that the properties under the RMR scheme and rehabilitation projects are to be built on a demand basis.
“In the RMR scheme, the people already have the land and we build houses for them. As for the rehabilitation projects, the properties have already been booked by buyers. We are just reviving the construction of their homes,” says Amin, adding that there is “still demand” for low-cost properties.
So, as SPNB presses on with its social goal of providing affordable homes for the masses with the RM700 million from the government, its expeditious implementation of the housing projects may give a much-needed boost to the Malaysian economy as it totters on the verge of a recession.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 745, March 9-15, 2009.