The authorities' arbitrary and unconstitutional implementation in the real estate and housing sector of Article 153 of the Federal Constitution relating to bumiputera quotas is among the industry's most pressing issues, said an expert.

Real Estate and Housing Developers' Association (Rehda) former president Jeffrey Ng Tiong Lip said Rehda understands its social obligations as contained in various national policies and guidelines, such as requiring housing developers for a period of up to six months to reserve 30 percent of their units for bumiputeras to purchase at a discount of five percent.

However, he said the implementation of such policies have deviated from their original intent and resulted, among others, in the violation of the property rights of housing developers, lost revenue, as well as hindrances in the government's own attempt to revamp the delivery system.

"If over time such policies and guidelines have deviated from the original intent, then we should undertake to engage our government to review such guidelines and put matters back on track within the context of our Constitution," he told the 14th Malaysian Law Conference yesterday.

Ng was speaking at the 'Property Rights Under the Malaysian Constitution' forum of the three-day conference being held at the Kuala Lumpur Convention Centre.

He said among the most concrete examples of the issue was the Selangor state government's imposition of a penalty of five percent sales price on developers who have sold their bumiputera quota units without obtaining prior approval from the state government.

"I put it to you all that if a developer is in financial distress and has no choice after six months and after due consultation with the authorities sells the unsold bumiputera quota units to non-bumiputeras without approval from the authorities in order to survive, is it right for the authorities to penalise the developers and make him suffer more cash deficit and more business losses resulting from the five percent penalty?" he asked.

"Under the circumstances, has the state not infringed Article 13 (which provides that no person shall be deprived of his property) by virtue that it was not possible for the developer to fulfill such conditions?" he added.

Financial burden

Ng also cited the huge financial burden placed on housing developers due to the inability to release unsold bumiputera units for sale to non-bumiputeras.

Several state governments have 'release mechanism guidelines' to release unsold bumiputera quota units back to developers for resale.

However, Ng said in practice, approvals of such release are very discretionary and non-transparent.

"Unsold bumiputra quota units are a huge financial burden in terms of holding costs to the housing industry because resources are tied up as unproductive assets.

"If these units can never get sold, say, due to mismatch of locations and demographics, and remain reserved permanently as bumiputera quota units until they get sold one day, then one can argue that Article 8(2) of the Constitution (pertaining to equality before the law) is infringed because such the units can never be sold to other races," he said.

Ng said the irony is in the fact that while the government seeks to revamp its public delivery system, the private housing industry is made to suffer delays due to the state governments and local authorities reluctance to release unsold bumiputera units.

Another issue, he added, was the practice of some state governments to stipulate the setting aside of lots for bumiputera as a condition for the approval of land titles, layout and other plans.

"Endorsing land titles with such restrictions by state governments are tantamount to creating de facto Malay reserved land and without obtaining consent from the landowner," said Ng, who noted that the Constitution does not authorise the declaration as Malay reserve any land owned or occupied by a non-Malay.

"Such practice must be stopped, because it is not consistent with our Constitution," he said.

Grossly unfair practice

According to Ng, another questionable practice was that of the Selangor state government and Kuala Lumpur City Hall in imposing a levy on property developers equivalent to the discount for bumiputeras in exchange for the release of unsold bumiputera quota units.

In the first place, he said housing developers should sell at prevailing market prices Secondly, unsold units after the six month period should rightfully be returned to the developers without having to make further contributions.

"This is grossly unfair and unjustified on the part of the authorities... There is absolutely no justification for imposing such levy or contribution and such guidelines must be reviewed in accordance with our Constitution," said Ng.

He said the existing laws and regulations governing real estate and the housing industry are generally well-respected and observed in terms of compliance.

However, he said the administration of the evolving nature of government policies and their implementation by some state governments and government agencies is of great concern.

"The crucial issue is: what is the limit of these discretionary powers exercised by government agencies in administering government policies?" he asked.