Developers want to hand over the baton

Private developers want the government to take over the responsibility of building low-cost houses, but say they are willing to partly contribute to such projects.

Glomac Bhd's group managing director and chief executive officer Datuk FD Iskandar said this role can be taken up by Syarikat Perumahan Negara Bhd (SPNB), a government-owned entity.

SPNB, a wholly-owned subsidiary of the Minister of Finance Inc, was established in 1997 with the objective of building quality affordable homes.

However, Iskandar said, SPNB should not be left on its own to raise fund for the low-cost homes. Developers should partly contribute to such projects as part of their social obligation.

Iskandar is also the Real Estate and Housing Developers' Association deputy president.

Towards this end, he suggested that developers pay certain amount to be channeled to SPNB, in lieu of not building such homes.

"There is already a formula in Kuala Lumpur where for every low-cost (unit) developers don't build, they have to pay to Kuala Lumpur City Hall (DBKL).

"For example, say you have to build 100 low-cost units and you don't want to build them ... In lieu of not building them, for each of the low-cost unit, you have to pay RM3,250 to DBKL.

The money collected should be channeled to SPNB so that it can build low-cost units elsewhere, he added.

He said it makes sense for the government to build affordable houses for the lower income group, with private developers helping with the funding.

Private developers lose RM15,000 to RM50,000 for each low-cost unit they have built. "Stop, don't ask us to build anymore low-cost (units) as the demand is no more there," he told Business Times in an interview recently.

Iskandar said private developers do not try to run away from their social obligation, noting that they have, in fact, over-achieved in delivering the low-cost housing targets.

The government, in 1982, imposed the 30 per cent low-cost housing quota on developers as a social obligation. Since then, developers have been building low-, low-medium and medium-cost houses at prices that have been maintained at between RM42,000 and RM99,000 each.

Under the Eighth Malaysia Plan (2001-2005), developers built more than double the target 40,000 units by delivering a total of 97,294 houses.

Between 2006 and 2010 under the Ninth Malaysia Plan, developers again exceeded the target by building 78,500 compared with 77,700 imposed by the government.

"For the hardcore and urban poor, they cannot buy a house (even) at RM42,000 as they don't have the capacity to buy at that price," said Iskandar.

He noted that places like Bukit Beruntung, Klang, Semenyih and Bukit Sentosa have thousands of low-cost units priced at RM42,000, which are empty.

"Today, when the low-cost houses are auctioned, they're only sold at RM12,000 to RM15,000 ... so there is no demand," he said.

Furthermore, he said, what is more worrying is that most low-cost apartments in Malaysia are not well maintained.

Iskandar said the registration and distribution system of low-cost housing leaves much to be desired, with many units not fully taken up by low-income households.

"As business entities, we have to meet profit expectations of shareholders as well, and building homes and selling them at RM42,000 or below is certainly not going to help meet those expectations," he said.

By Business Times