7.5% of loans approved must come from Sabah — Shareda

KOTA KINABALU: The Sabah Housing and Real Estate Developers Association (Shareda) is calling for the imposition of a fixed rate regional exposure of 7.5 per cent for all commercial banks in the State.

Its president, Chew Sang Hai, said the fixed rate regional exposure of 7.5 per cent essentially means that for every RM100 billion of total loan approvals in Malaysia, RM7.5 billion of the loans must come from Sabah.

In addition, Shareda has also requested Bank Negara Malaysia (BNM) to impose the requirement for all commercial banks to establish a regional risk committee in Sabah with an approval authority of up to RM150 million.

Chew said the association had presented a letter dated June 8, this year to Chief Minister Datuk Seri Panglima Musa Haji Aman detailing several of its proposals, including the establishment of regional risk office and imposition of fixed rate regional explore for all commercial banks in the State, in order for Musa to raise these matters to the National Financial Council and BNM.

The proposals were endorsed during the recent 22nd Malaysian Developers' Council (MDC) in collaboration with the Real Estate and Housing Developers' Association (REHDA) Malaysia and Sarawak Housing Real Estate Developers' Association (Sheda) held on May 19 this year.

According to Shareda's data, Chew said the regional exposure, or percentage of loans approved for Sabah, was one per cent or less against the loan amount approved nationwide.

“If the whole banking industry approved loans up to RM100 billion, then RM7 billion must be in Sabah while another RM7 billion in Sarawak.”

He said the banking industry could not only allocate RM1 billion of loans for Sabah, leaving the remaining sum for Kuala Lumpur, Klang Valley or West Malaysia.

“That is unfair (for us) because an imbalance of loan exposure and distribution will also cause an imbalance of development in all businesses. “We need the banks' support. “We cannot start business without the banks' help,” Chew said when speaking on the financial issues and challenges facing the property industry during the CEO Roundtable Conference organized by Shareda here yesterday.

The event was officiated by Local Government and Housing Minister Datuk Seri Panglima Hajiji Haji Noor, representing Musa.

Chew said banks could not steer away from Sabah just because its market was not matured.

Instead, he said banks should help property developers to grow in the spirit of corporate social responsibility (CSR).

“If developers cannot get loans, how can we start our projects? There is nothing we can do. We cannot proceed (with our projects) or create job opportunities.”

On the other hand, he said Shareda called for the setting up of regional risk committee by all commercial banks in Sabah because the committee could not be controlled or monitored by analysts in Kuala Lumpur who knew little about local data, such as the Sabah Land Ordinance and business environment.

At present, he said only Malayan Banking Berhad, or Maybank, had a regional risk committee in Sabah, albeit with an approval authority of RM20 million only.

On August 4, Chew said Shareda had a dialogue with the BNM Governor during which BNM decided to initiate the first regional risk forum in Sabah involving stakeholders and KualaLumpur based chief risk officers from the banks.

“This is the first step towards setting up a risk committee in Sabah,” he said, adding that the dialogue would be held in November this year.

Secondly, he said the BNM would also set up a task force to study and improve banking infrastructure and facilities in Sabah.

Chew thanked Musa for his proactiveness in forwarding Shareda's proposals to the National Financial Council which had led to the regional risk forum and task force in the State.