My Space: Time to standardise these rules

The shuffling and reorganising of ministries, on its own, is not sufficient to raise their key performance indicators (KPIs) to the level demanded. What will yield results is political will, and this must be supported by the civil servants’ buy-in.

Take the Housing and Local Government Ministry. Not only does it need to operate in sync with several other ministries, it has to have the support of state governments to effectively thrash out issues confronting the housing development sector.

At the federal level, input from the Prime Minister’s Department, Finance Ministry and the Tourism Ministry is essential — think Foreign Investment Committee guidelines, stamp duties, the Malaysia My Second Home programme and lately, Malaysia Property Incorporated, a government-private sector initiative to promote the country as a preferred property buying destination.

Since land is a state matter, local council chiefs do not report to the Housing and Local Government Minister. They are accountable to the respective states, and this accounts for the glaringly differing rules applied throughout the country.

Review the rules
Developers make no qualms about their wish list. Topping it is a review of so-called politically sensitive policies such as the bumiputera quota and the provision of low-cost housing.

Prime Minister Datuk Seri Najib Razak must be lauded for setting KPIs to gauge the performance of his ministers. It is thus an opportune time for a frank discussion on the requests of property industry and their merits.

Some of the rules governing the industry are archaic and warrant an in-depth study if they are to remain relevant.

Several regulations and guidelines are clearly administratively prescribed, as opposed to being market-driven. The provision of low-cost housing, for example, is noble and necessary but we must take heed of the lessons learnt and changing needs and wants.

According to latest government data, Malaysia as at 4Q2008 had a stock of about 997,620 low-cost houses and flats. This accounts for 24% or about a quarter of Malaysia’s total housing stock of 4.19 million units. Most of the low-cost units are found in Selangor (270,858 units), followed by Johor (167,729). As at the same quarter, there were 2,420 low-cost units unsold, all of which had been on the market for more than 21 months. What happened to the expected take-up?

Someone has to pay for the cost of constructing low-cost housing; often, it is cross-subsidised by buyers of the more expensive buildings in a project.

While we should continue to build affordably-priced homes, it must be done for the right reason, and with our eyes and ears open.

The bumiputera units, which are sold at a discount, would be the other most talked-about issue within the property development fraternity.

The bumiputera quota varies from place to place, from 30% to as high as 70% in some parts of Selangor. The discounts range from 5% to as high as 12.5% for certain projects.

This is one subject politicians try to steer clear of. At a press conference many years back, I posed a question to the then Selangor menteri besar on the state’s bumiputera quota policy. The visibly annoyed politician (who is no longer active), responded, “Which press are you from?” For the record, he did not even attempt to offer a diplomatic answer.

Again, while the intention of the bumiputera quota is noble, overzealous council administrations have found a way through it to boost their coffers. In theory, a developer can apply for a waiver of the quota once he shows proof that he made an effort to promote the units, but without success.

With a waiver granted, the developer can then market the released units to the general public, minus the discounts. Meanwhile, the monetary value of the discounts will have to be channelled to the council instead. What is the rationale for this?

That aside, there have also been complaints about the lack of transparency in the waiver release mechanism.

Meanwhile, while there is an ongoing debate as to whether bumiputera purchasers of luxurious homes should enjoy a discount, developers will tell you that bumiputera units are a significant contributor to the country’s stock of unsold homes.

As at 4Q2008, there was an overhang of 26,029 homes, of which 24,858 units have been on the market for more than 24 months. However, it is not immediately known how many of these are bumiputera units.

Developers are resigned to the fact that for political reasons, the bumiputera quota will remain. What they want is for the rules governing the quota and its release mechanism to be standardised. The latter must also be made transparent to prevent any abuse.

Whatever the decision, the government must stay business friendly and adopt an inclusive and consultative approach with all stakeholders.

Au Foong Yee is editor of City & Country

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 751, April 20-26, 2009

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