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Budget 2017 can provide much more affordable housing

It is regrettable that 59 years after Merdeka, we are still so uptight over the continuing problems of unaffordable housing. How come this basic need has been so neglected and remains unsolved for so long? This sad state of affairs is not acceptable and the Budget 2017 can and should reduce this major problem and provide much more affordable housing.

Why are we in this quandary? Is it because all parties - the federal, state and local authorities and the developers as well, are in one way or another, guilty of protecting their own narrow vested interests, at the cost to the poor and unfortunate low income house buyers?

How come there are still 1.5 million Malaysians who are first-time buyers, who find it so difficult to get affordable housing? Why have we somewhat neglected this basic cause of hardship, and high cost of living and indeed how is it we have denied so many, this basic human right?

What are some of the reasons for this bad housing situation?

They could be as follows -

1. The lack of supply to meet the rising demand for housing

The rising demand has been strengthened by the growing young, energetic and independent working population. Unlike in the past, the Gen Y and young employees and new enterprising graduates do not want to stay at Papa and Mama’s house - if they can be in his own home sweet home? And why not?

This is therefore a major challenge for Budget 2017. It should provide more funds for affordable housing and especially tax incentives to encourage large scale and even compulsory Industrial Building Systems (IBS). This is a thriving industry in many countries, including some neighbours, who have beaten this housing shortage problems, so easily and so fast, so long ago?

All we need is an Industrial Building System that can be sustained by economies of scale or high volume production. It will cut costs, standardise and enhance building quality, reduce imported workers, speed up construction and meet basic housing needs all over the country.

2. Why has the supply of affordable houses been slow?

It’s because there are too many vested interests who have constrained the supply of affordable housing as they want to protect their own interests and profits.

i) For instance I know that the federal government has been trying for along time to promote the IBS. But there has been resistance from those who enjoy the questionable continuing bad practice of reaping agency fees from the import of cheap foreign labour.

ii) The state governments rely largely on their limited land revenues, because the federal tax system is highly centralised. The state governments therefore tend to keep the good land to be sold to the businessmen and the wealthy at higher prices. Low-cost housing projects therefore do not get the required preference.

Hence low-cost housing projects get land way outside the town centres. This is very inconvenient to those who work in the towns, as they have to incur higher transport costs and long and time wasted journeys to office. It’s a vicious circle and the low cost house buyers are again penalised. The solution - allocate land in the towns for affordable housing at subsidised rates please.

iii) The local authorities also add constraints and higher costs to developers. Rules and regulations can differ among local councils all over the country. Some councils can be more difficult than others and it can be a hassle dealing with some council. Corruption and cronyism can also add to costs and delays and more wastage.

iv) Developers themselves are all not free from blame either. Some unscrupulous developers find ways and means of avoiding the construction of affordable housing. Others provide poor quality finish in order to cut corners and maximise profits, especially if they are small timers, with no high branding reputations and good names to preserve and protect.

Bumi quotas for contractors and house buyers can also aggravate the housing shortages. So refine these inhibitive rules that suppress supplies one more needed housing.

3. Conclusion

The provision of more housing and especially affordable low cost housing can have a major positive wide range impact on the whole economy. Budget 2017 should thus give top priority to reducing the burden of the 1.5 million first-time buyers of affordable housing. This could mean about 4 million household members. More housing will not only boost economic growth, but reduce the adverse impact of unduly rising prices of housing and the general cost of living

Developers should not be easily provided with Lending Licences, as they may not use the licences with prudence and financial discipline. In the end the whole industry can lose out due to higher household debts, that Bank Negara is in fact trying hard to better manage. We do not want the sub-prime problems that the US and the whole suffered from not so long ago.

The federal government Budget 2017, should develop stronger cooperation with the private sector and the state governments, to ensure more dynamic and innovative initiatives to finance much more Affordable houses for the millions who do not own their own homes and the homeless.

Then the Budget 2017 will be seen by the rakyat and especially the voters as more meaningful and beneficial to the rakyat, and not as another ordinary and business as usual Budget. This would inadvertently create the unfortunate public perception, that the Budget 2017 cares more for the rich and powerful, than the deserving poor and underprivileged.

This would be an ugly Budget. We want a beautiful and bright Budget that will lift the Bottom 40 percent from their miseries.

So please provide more affordable housing in the 2017 Budget - because you can.


RAMON NAVARATNAM is chairperson of Asli/Centre of Public Policy Studies.

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