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MARCH 10 — To make affordable housing a reality, an inter-locking trio of fiscal, administrative and housing industry reforms should be set in motion.
The previous Pakatan Harapan government had aspired to build “one million” affordable homes within 10 years. Presumably, Prime Minister Tan Sri Muhyiddin Yassin intends to carry on with the same — as part of the national agenda to mitigate the cost of living for the rakyat.
Although not currently the case, ideally, affordable housing (both single-storey and multi-storey) should be predominantly driven by the federal government while state governments focus on low-cost flats.
Decentralisation of fiscal powers will enhance the financial capacity of state governments to engage in building more quality low-cost flats and reduce waiting times.
One of the ways fiscal decentralisation can take place sustainably is via amendments to the Constitution (Article 111) and legislation (for example, sections 41 & 42 of the Local Government Act, 1976).
This is to allow state governments and local governments to raise funding via bond issuance (and other financial notes/ instruments).
Accessing and tapping the international markets should be considered.
The role of the Ministry of Housing and Local Government (KPKT), then, should be focussed towards providing the backup support and coordination alongside the broader institutional and regulatory framework for the state governments.
At the same time, there should be a dedicated role for federal government-linked companies (GLCs) in partnership with state governments, where necessary and relevant, to focus on smart cities and self-sustaining/self-containing townships (mixed development).
Federal-state synergy could also be forged and fostered in urban redevelopment to unlock land value of, for instance, the Malay reserve and waqf lands and improve public transportation ridership.
Not least, in also providing the pre-conditions and spatial framework for affordable housing.
This proposed arrangement would also have the advantage of overcoming the lack of holistic and effective coordination between the federal and state government in affordable house-building.
And thereby also ensuring a more optimal use of resources that avoids or minimises the duplication of efforts by federal and state agencies.
It would also enable more targeted and focussed efforts based on local market needs and demand rather than to meet certain quotas.
Now, there are essentially two administrative conditions by which the federal government could step in to support the state governments — without usurping the role of the latter.
Both of these administrative conditions operate on the basis of strategic partnership and coordination between the federal and state governments.
The federal government would only step in to provide affordable housing under certain conditions, e.g. land swap or deficient supply caused by failure of both thepublic and private sector involvement.
Direct intervention by the federal government by-passing the particular state will be made based on:
- current data such as that provided by the National Property Information Centre/NAPIC;
- market conditions; and
- after consultation with the state government.
Going forward, Prima1, Syarikat Perumahan Negara Bhd (SPNB), (Projek Perumahan Rakyat Miskin Tegar), and the 1Malaysia Civil Servants Housing could be abolished or amalgamated into an Affordable Housing Authority (AHA) under thejurisdiction of KPKT.
The Real Estate and Housing Developers’ Association (Rehda) and Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) have called for such a body to be established.
The AHA will be involved in the entire supply chain — from start to finish — for the construction of both affordable housing as well as low-cost flats (ownership and rental) if need be or when requested by the state governments.
Mortgage, however, continues to be under Cagamas Berhad.
The AHA shall coordinate with the state governments including those which are already pro-active in providing affordable housing for the purpose of ensuring adequate supply to meet the growing demands of the local market.
It will also determine the design, specification, standards and quality, and size of affordable housing and of low-cost flats across states that have come under its jurisdiction.
Other forms of coordination with the state governments including working together to help developers absorb the costs when, for example, there is fluctuation in the ringgit.
Raw materials could be partly subsidised by the AHA via a special fund set aside.
Otherwise, for certain raw materials, the AHA together with the state governments could purchase in bulk quantities to be distributed for discounted prices to the developers.
The federal government will also provide backup and support in the form of government agencies and GLCs that will engage in the manufacturing, operating and supplying as well as direct import of cement, gypsum, steel and metal.
That is to say, the creation of a parallel market. Materials will be supplied to the state governments and local authorities at a controlled/fixed price (floor) level that is lower than the prevailing market price.
Therefore, state governments will not be competing with the private sector for raw materials.
All construction work will be carried out by private sector contractors under joint-supervision by a consortium and AHA which will perform monitoring and supervising roles. These include ensuring quality control and assurance and timely completion.
In short, the AHA will be involved in the full-spectrum of up-, mid-, and downstream activities — directly and indirectly, and in backing up and partnering with the state governments.
Alternatively, funding could also be derived from the housing industry itself through a Special Industry Contribution (SIC) as per Rehda Institute’s policy proposal on social housing rental for the B40 in its Affordable Housing: The Game Plan Transformation report.
As for home ownership, the SIC could be utilised in return for joint-development projects where the AHA provides subsidised raw and semi-finished materials to the private sector or bears most of the compliance and utilities costs.
A fund similar or analogous to the Malaysian Road Records Information System (Marriss) could also be set up and placed in a trust or deposited in Bank Negara to earn interest.
The fund could be allocated to state governments for use in low-cost housing.
As a public good, affordable and low-cost housing are integral to our Shared Prosperity Vision (SPV) 2030 and enables to us to achieve the SDGs in the long-term.
* Jason Loh Seong Wei head of Social, Law and Human Rights at think tank EMIR Research
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.