‘No bailout for troubled developers’

KUALA LUMPUR: The government will not rescue nor “bail out” any developers, especially luxury property players, facing financial difficulties or failing to sell their products.

Second Finance Minister Datuk Seri Johari Abdul Ghani said the government had intervened by freezing new luxury property projects valued at RM1 million and above starting last month to stabilise the property market.

He said this was due to concerns over some developers wanting to sell luxury properties in Kuala Lumpur and Selangor suburbs at a high price of up to RM1 million.

Johari said the government would not object if the luxury properties were developed in areas such as KLCC and Bukit Bintang as demand would come from foreign investors.

“This is a temporary freeze and not a blanket ban and when we see things are better, we will review the situation. There is no particular timeline for the freeze.

“The concern is on the fringes of Klang Valley, Johor and Penang. We want developers to look into the details and the right target market, because at the end of the day, if you (developers) have problems, and the banks have problems, we (the government) will have a problem,” he said, here, yesterday.

Earlier, he witnessed the signing of an agreement between Eco World International Bhd (EWI) and Be Living Holdings Ltd to develop 12 sites in Greater London and southeast of England.

“We have to consider the risks that banks face in funding future development that would worsen the glut in luxury residential units, office space and shopping malls,” Johari added.

“If we don’t control this situation based on Bank Negara’s advice, our banking sector will be at great risk.

“Imagine these developers who borrow from the banks and can’t sell all the premiumly-priced office space and shopping malls. The banks will face more nonperforming loans,” he said.