Houses meant for the low income group are actually medium-cost because prices are absorbed by the private sector. But how long can this go one. (The Star_6 July 2011)
By Midin Salad Yu Ji
THE state’s affordable housing price bracket is between RM50,000 and RM60,000. These prices seem reasonable enough, but the private sector is crying foul, and has been for many years.
At the State Legislative Assembly last month, Housing and Urban Development Minister Datuk Amar Abang Johari Tun Openg conceded that the real cost of affordable housing is anywhere between RM90,000 and RM120,000 per unit, depending on locality.
Johari was speaking to reporters after chairing a meeting with more than 10 bank representatives. Even among the bankers, when Johari uttered the amount, there were gasps all round the room.
Under state laws, every housing development larger than four hectares must include 30% low-cost units priced between the mandated bracket. That requirement alone is the reason why residential development in recent years has been rather small, rarely exceeding 4ha.
The state is caught between a rock and a hard place. Its responsibility is to ensure that enough low-cost units are built, catering to Sarawak’s rural-urban migration.
Johari is right to insist that the private sector, if unwilling, be forced to do some corporate social responsibility (CSR).
In response, the Sarawak Housing and Real Estate Developers Association held a press conference two days ago.
Its adviser Alex Ting told reporters: “It is not fair to (force) private developers to build low-cost houses because we have to buy the materials and land at market prices and sell the houses at low prices.”
Ting said the material suppliers should be forced to subsidise costs as well. He said the housing developers were aware of the importance of CSR but it must not cause serious financial losses.
This matter has been directed at Johari many times, and each time he gives the same answer like: It is up to the private sector to find where cost savings can be made, and it is also right for the state to will the industry and society’s better-offs into subsidising the poor.
This latter point is the basis of taxation, which of course the private sector will always want to minimise.
So far, the developers have done this by passing on the costs to medium and high-end house buyers. Most peninsula Malaysians will balk at house prices in Sarawak’s inner-towns and cities.
But what is really upsetting is that the developers are also finding “creative” ways to inflate the prices of affordable housing.
It is an open secret in the industry that many buyers of affordable units are signing two sales and purchase agreements.
The first, which is the official agreement that banks will consider for housing loans, is always within the mandated price; the second is on added facilities like floor tiles, electrical outlets and other amenities.
This second agreement, however, defeats the purpose of affordable housing laws.
Most two-agreement buyers are not exactly poor and squatter woes are not fully addressed. The issue is not new. It has been debated in the State Legislative Assembly many times.
This system is not a win-win solution, even if the law’s original intent is good and commendable.
A better mechanism must be found, but I suspect that the best remedies will have little to do with the housing industry per se. It has to be a wider solution to society’s mechanism to cope with global inflation — minimum wages.
The passing of the minimum wage council in Parliament is a big step forward. However, as is often the case in matters as complicated as minimum wages, some concerns have been highlighted.
The Malaysian Trades Union Congress is urging the Senate to send the Act back to Parliament because it believes the Act over-empowers the Government of the day. There is no doubt that affordable housing and minimum wages will benefit the lower-income segment the most.
These are issues that matter. If not addressed, the development headaches will become worse.
