Insider knowledge? FundMyHome and Budget’s P2P framework not the same thing

Tun Dr Mahathir Mohamad and Datuk Tong Kooi Ong launch the FundMyHome project in Semenyih November 4, 2018. — Picture by Azinuddin Ghazali
Tun Dr Mahathir Mohamad and Datuk Tong Kooi Ong launch the FundMyHome project in Semenyih November 4, 2018. — Picture by Azinuddin Ghazali

KUALA LUMPUR, Nov 10 — My friend Datuk A. Kadir Jasin posted on his blog on November 9 the possibility that there might have been a leak of the contents of the recent Budget given the launch of FundMyHome just two days after the presentation of Budget 2019 in Parliament.

This was also previously mentioned by Datuk Seri Najib Razak, to which I have responded both through social media as well as in The Edge Financial Daily.

Rest assured I share the same concerns as every Malaysian on the sanctity and confidentiality of the government’s national Budget. It is a highly confidential document, protected by the Official Secrets Act.

I believe the misunderstanding comes about due to legal complexities.

What the minister of finance announced was that the government is considering approving regulated property exchanges under the peer-to-peer framework and the Securities Commission of Malaysia (SC) is entrusted with the task. Lim mentioned that the target for approving such regulated property exchanges is the first quarter of 2019.

Meanwhile, I assume the SC is reviewing the rules and regulations, investors’ protection, possible mechanisms and so forth. It will then proceed to issue a consultative paper as per their guidelines and all stakeholders will be consulted before any new guidelines governing the new P2P framework are issued.

The SC will then proceed to invite applications and review compliances before licenses are issued.

The new Malaysia does not tolerate rent-seeking or monopolistic behaviour and I am sure this will be the case as well.

What the prime minister launched last Sunday, two days after the Budget, was a digital property platform that does not require regulatory approvals.

It is NOT the same as what the finance minister mentioned in Budget 2019, although it is the intention of EdgeProp to turn FundMyHome platform, which was launched on November 4, into a regulated property exchange upon future SC approval, sometime in early 2019.

What is the difference?

The SC regulates investments by the public with the aim of protecting individual investors. Currently, FundMyHome does NOT solicit public investments, but is instead funded only by institutions.

On whether FundMyHome will really help home owners and make homes more affordable, I am convinced it will and in the course of the weeks and months ahead, I suspect most will agree.

All innovations go through stages of perception — from “ridicule” to “debate” and finally, to “it was obvious”.

In any case, given that FundMyHome involves no public money, concessions or guarantees of any kind from the government, and that this is just an additional possible solution over and above existing ones, what can be wrong?

For those who think they have better solutions, this launch and this innovation in no way impedes anyone else from doing and proposing what they have in mind.

To those who say the way to make homes more affordable is to produce them at a lower price, I hope you can be successful too. We all share the same objective — to help fellow Malaysians have a roof over their heads that they can afford.

In the end, there will probably be many solutions, with each complementing the other.

The only real argument against FundMyHome is therefore the possible cost to the economy and society that may arise out of the implementation of this scheme.

I know there is none.

The various regulators will, and must, review and ensure this to be the case before approvals are given. I, too, want to ensure that it does not create more problems than it solves.

I am aware many think this creates a possible subprime crisis in the future. I have no space here to elaborate but I can assure you that you are dead wrong and you should go read up the topic first on the conditions under which subprime happened, that is, overbearing debts.

FundMyHome has the opposite effect — it reduces debt (bank mortgage) by using equity (investors).

*Datuk Tong Kooi Ong is the chairman of The Edge Property and FundMyHome.

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