KUALA LUMPUR, March 24 — The developer interest bearing scheme (DIBS), which is used by many property developers in Malaysia, is actually pushing property prices higher, Bank Negara Malaysia (BNM) deputy governor Dr Sukhdave Singh said today.

The scheme allows buyers not to service their loans throughout the construction period, which is borne by developers instead.

Sukhdave however said that the scheme has an adverse impact in house prices.

“What happens at the end of the day is that the property becomes 20 to 30 more expensive,” he said during his keynote address to the Malaysian Economic Association here.

“That is why there are actually calls to do away with this scheme,” he added.

Sukhdave said that the scheme encourages taking up more credit for buyers, which he said would not sustainable in the long run.

Property prices in Malaysia have stagnated due to the recent economic slowdown as well as increasing supply of both residential and commercial spaces.

Putrajaya also recently noted that real estate investments had dropped by 70 per cent.