Good, he is thinking outside the box. That was my first impression after news that a minister is proposing for developers to act as moneylenders to help non-bankable house buyers and overcome downpayment issues. It was supposed to be a win-win situation for both developers and house buyers.

But my feelings took a turn when he proposed the end-financing facility could be 100 percent as it offers a second profit centre for developers. It would enable developers to overcome the problem of stringent lending conditions imposed by banks and lending institutions.

What developers were actually asking for, is ‘a type of bridging’ for the 10 percent downpayment. Buyers want schemes similar to the developers’ interest-bearing scheme (DIBS) because of the small down-payment requirement. For the records, Bank Negara banned DIBS in 2014 as it promoted speculative buying.

While it may be a noble idea, the minister could have at least discussed it with his cabinet members first before catching everybody by surprise.

If the banks cannot provide the facilities/loan, the Urban Wellbeing, Housing and Local Government Ministry (Housing Ministry) should be talking to the banks on what are the issues at hand. If the conditions are restrictive, are there ways Bank Negara can give some leeway or exceptions? We need to bear in mind the issue of high household debt.

Discounting the risk factors involved, the fact that the proposal offers a second profit centre for the developer is a clear indication of the ministry’s full support for developers.

How about the rakyat that the government is supposed to protect? Have we dropped the ‘Rakyat di Dahulukan’ slogan? While developers are allowed to have additional source of profit, the rakyat have to accept and live with the exorbitant house prices.

How should I put this... is it creating a loophole or side-stepping other regulatory authorities? If so, this is a dangerous precedent.

Given the low salaries of Malaysians in an era of prolonged low growth due to economic uncertainties, unusual global financial markets and higher unemployment figures, this would be the worst time to propose such an arrangement.

As expected, the Real Estate and Housing Developers’ Association (Rehda) looks at it positively. Interestingly, the patron was “surprised” to discover that a few developers even with smaller market capitalisations, already had moneylending licences. Malaysians are surprised, too.

Many parties have spoken that this new scheme is a recipe for disaster and will have a negative impact on the housing industry as property development and financial lending have different risks.

Lack of thought on the real issues

The proposal again demonstrates the lack of thought on the real issues at hand and their root causes. It is the price of the houses that are not within reach. Khazanah Research Institute’s report is very clear on this. I hope our leaders are fully aware of current situation and have sufficient knowledge in problem solving.

The 10th Malaysia Plan had stated that housing development will focus on the provision of adequate housing. We are now in the 11th Plan and still being plagued with this issue which is getting more critical. In addition, the main thrust of the National Housing Policy is to provide accessible, adequate, affordable and quality housing for all Malaysians, particularly the low-income group.

To cater for affordable homes, PR1MA was launched in 2013 to develop, construct and maintain high-quality affordable housing with lifestyle concepts for middle-income households. Up to the 2016 Budget, 460,000 units were budgeted to be built.

During the same period too, Jabatan Perumahan Negara (JPN), Syarikat Perumahan Negara Berhad (SPNB), Felda, Felcra and Risda had budgeted to build around 200,000 units. And another 100,000 units under Perumahan Penjawat Awam 1Malaysia (PPA1M) by 2018.

As at July 2016, PR1MA had 246,400 units approved to be built. There were only 84,100 units in various stages of construction and this figure is below 70 percent of what was budgeted for the year 2013. Progress is rather slow.

It was reported in October 2014, the Malaysia House Buyers Association (HBA) criticised PRIMA for cooperating with the private developers to push up the price of houses under the programme or manoeuvre the price offered slightly lower than the prevailing market price. This was against the objective of the PRIMA project.

There was a proposal for PR1MA (under the Prime Minister’s Department) to be transferred to the Housing Ministry because at present, the PR1MA project is not under the Housing Developers Act. Therefore, whoever buys a PR1MA house is not protected by the Housing Developers Act.

In the 2016 Budget, RM200 million was allocated for a First House Deposit Financing Scheme to assist first-time house buyers of affordable houses to pay the deposit. Rent-To-Own scheme was to be introduced in 2015. Hopefully, these initiatives are fully implemented and utilised.

There are other workable proposals that have been suggested such as, semi-rental or shared equity model. Government including state governments should pledge government land under the PRIMA project. In 1982, the government imposed a 30 percent low-cost housing quota upon private sector developers as a social obligation to complement the government’s effort to provide affordable housing. Perhaps, we should re-introduce this concept.

Too many exemptions

Meanwhile, developers seem to get away by giving the excuse of being unable to build affordable or low-cost homes in certain areas. The problem here is that the state authorities and the city councils are giving too many exemptions

Allowing more withdrawals from the Employees Provident Fund will create long-term issues.

A bigger surprise is the cabinet’s decision for the Housing Ministry to look into the effectiveness of allowing developers to give out loans since it is an existing policy. This decision, besides making the pupil of my eyes dilate, surely will make many jaws drop. I am not very sure which party ‘di Dahulukan’.

Since this is a big problem that has been there for sometime, I would suggest that the prime minister step in and not leave it to the Housing Ministry to solve it. We have had many ministers and many proposals submitted but were somewhat not implemented.

Mr Prime Minister, we need your leadership to settle this problem for the rakyat.

It may be a good idea for the Malaysian Anti-Corruption Commission (MACC) to start investigations at every level of the process.

In closing, when thinking outside the box, I guess we should not be ‘jumping out of the box’.

What say you...