Not enough money?

The Star Malaysia - StarBiz - - Viewpoint - Food for thought ALAN TONG star­biz@thes­tar.com.my Datuk Alan Tong has over 50 years of ex­pe­ri­ence in prop­erty de­vel­op­ment. He is the group chair­man of Bukit Kiara Prop­er­ties. For feed­back, please email bkp@buk­itkiara.com

AF­TER I shared about the les­sons learned from our neigh­bour­ing coun­try in build­ing af­ford­able hous­ing in my last ar­ti­cle, I re­ceived many pos­i­tive com­ments plus a painful but very rel­e­vant ques­tion, “Where are we go­ing to find the money to sub­sidise pub­lic and af­ford­able hous­ing?”

Last year alone, Sin­ga­pore’s pub­lic grants and sub­si­dies to its Hous­ing De­vel­op­ment Board (HDB) was S$1.2bil, equiv­a­lent to RM3.6bil, ac­cord­ing to the HDB fi­nan­cial re­port.

How can we al­lo­cate such sub­si­dies or even higher grants to af­ford­able hous­ing in con­sid­er­a­tion of our grow­ing pop­u­la­tion?

When the pre­vi­ous gov­ern­ment tabled Bud­get 2018 last year, they al­lo­cated RM2.2bil to in­crease home own­er­ship via PR1MA, Syarikat Peruma­han Ne­gara Bhd, and other agen­cies.

How much of that fund had been chan­nelled to af­ford­able hous­ing? We can roughly as­sess the progress of af­ford­able hous­ing in our coun­try based on the clues below.

PR1MA was ini­tially set up in 2011 to build 500,000 af­ford­able homes by 2018. How­ever, the agency sub­se­quently re­vised their tar­get down to 210,000. At the end of 2017, only 4% of that re­vised tar­get was met. This means only 8,400 af­ford­able homes were built over six years!

The un­der­ly­ing prob­lem of this is­sue was land scarcity. PR1MA es­ti­mated that it would need about 12,500 acres (based on the as­sump­tion of 40 units per acre) to build 500,000 units. How­ever, it only ended up get­ting 108 acres, of which only 39 acres were suit­able for de­vel­op­ment.

It is a clear il­lus­tra­tion that more is needed to be done to pro­vide af­ford­able hous­ing for the peo­ple.

Ac­cord­ing to a study by Real Es­tate and Hous­ing De­vel­op­ment As­so­ci­a­tion (Re­hda) In­sti­tute, our gov­ern­ment would need RM22­bil per year and 4,100 acres to de­liver its prom­ise of one mil­lion af­ford­able homes over 10 years.

The above study is based on only high-rise de­vel­op­ment, be­fore cal­cu­lat­ing land costs.

It would re­quire a huge fi­nan­cial com­mit­ment to achieve this goal. As men­tioned pre­vi­ously, we would have achieved our needs for af­ford­able hous­ing long ago, if the bil­lions of ring­git re­ported stolen from 1MDB were al­lo­cated in­stead to the af­ford­able hous­ing sec­tor by the pre­vi­ous gov­ern­ment.

Like­wise, if the to­tal ac­cu­mu­lated fuel sub­si­dies from 2006 to 2013, amount­ing to RM120­bil, were spent in­stead on af­ford­able hous­ing, the is­sue would also have been solved. Peo­ple may com­ment these are all on hind­sight now. Where are we go­ing to find the money in the fu­ture?

There is a say­ing that his­tory is a great teacher. If we can learn from the past, we can source the fund­ing for af­ford­able hous­ing.

In May this year, The Star pub­lished a news ar­ti­cle on “Cost of Cor­rup­tion”. Ac­cord­ing to Trans­parency In­ter­na­tional Malaysia (TIM), cor­rup­tion had cost the coun­try about 4% of its gross do­mes­tic prod­uct (GDP) value each year since 2013. Added to­gether, this amounts to a high fig­ure of some RM212.3bil since 2013. And for 2017 alone, that fig­ure was a whop­ping RM46.9bil.

To put things in per­spec­tive, the de­vel­op­ment ex­pen­di­ture al­lo­cated for 2017 was RM48­bil. If the cor­rup­tion fig­ure above was ac­cu­rate, our de­vel­op­ment fund was al­most “wiped out” due to cor­rup­tion.

On the amount of cor­rup­tion, TIM pres­i­dent Datuk Akhbar Satar was re­ported say­ing, “This is our es­ti­mate. It is likely to be higher in re­al­ity.”

Can you imag­ine what we could do with these monies if there was no leak­age in the sys­tem?

Go­ing for­ward, with the prom­ise of a cleaner gov­ern­ment un­der Pakatan Hara­pan, we hope we will have re­moved the legacy of cor­rup­tion from the pre­vi­ous gov­ern­ment, and there­fore gen­er­ate a healthy sur­plus to re­de­ploy.

With that, it an­swers the ques­tion of “Where will the money come for af­ford­able hous­ing?” and any ad­di­tional sub­si­dies on the hous­ing sec­tor would not be a bur­den on the peo­ple.

It then re­mains the re­solve of the gov­ern­ment to com­mit sub­stan­tial sub­si­dies to­wards af­ford­able hous­ing to re­solve the prob­lem once and for all.

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