SPEECH OF REHDA PRESIDENT, DATUK NG SEING LIONG, J.P.
AT THE OFFICIAL OPENING CEREMONY OF MAPEX 2010
AT MVEC ON 19 MARCH 2010

Ladies and Gentlemen,

On behalf of REHDA, I would like to record our sincere gratitude to YBhg Datuk Yeo Heng Hau, Deputy Secretary General, Ministry of Housing and Local Government for being with us at MAPEX 2010 Official Opening Ceremony, representing the Honourable Minister of Housing and Local Government, YB Dato’ Seri Kong Cho Ha.

MAPEX is a testimony of REHDA’s commitment towards promoting the housing and property investment and home ownership amongst the Malaysian public. Held over the last 12 years to drive investment and ownership based on the “under one roof” concept, MAPEX has proven to be very relevant to the industry, both in good and trying times. We at REHDA will ensure that developers and buyers alike will continue to benefit from the organizing of MAPEX which has remained the only nationwide property exposition in the country.

Ladies and gentlemen,

The uncertainties of the global economy has resulted in weakened demand and decelerated buyers’ and business confidence across all sectors and the housing sector has not been spared from such challenges. Whilst there are hints of better market conditions ahead of us, the experience has led to greater circumspect on the part of industry players in order to ensure that investments do not turn into holding costs due to lower market absorption. Whilst the housing market may have strong underlying demand due to the country’s demography and young population, the pressure of increased costs and buyers’ confidence crisis pose huge challenge to industry players. We therefore seek the Ministry’s understanding that the industry at this point of time could ill afford any further imposition of additional cost compliance.

Whilst the market may have been able to absorb these increased costs in the past, the challenging downtrend in recent times and the continuous imposition of additional financial contribution and charges on the industry have led to breach of tolerance level on the part of developers as investors. Inevitably, wherever feasible, such increase in costs would be passed on to the end users. As a result, house prices may soon be too prohibitive and beyond the reach of the general rakyat. In some cases, the added costs may be too punitive for development projects to even be economically viable.

As it currently stands, the Malaysian housing market is already confronted with problems of affordability gaps. If the trend of imposing monetary compliance is left unchecked, efforts to bridge such a gap for the greater good of the country by the Government through its numerous home ownership programmes will only be counter-productive. Among the punitive financial compliance requirement that has far reaching impact on the industry and requires an urgent review is the proposed deposit of 5% of construction costs for issuance of developers’ licence. Based on a linear estimation of average 150,000 housing units being approved per annum at an average price of RM180,000 and 60% construction costs, such a proposal would translate into some RM810,000,000 per annum being held in unproductive deposits with the Ministry for 2 to 3 years at the very least. Such huge amount would be better utilised for reinvestment into the business than be left idle. This would also mean if the proposal is not duly reviewed, over RM2.4 billion in unproductive deposits will accumulate through the 3-year construction period. REHDA understands the intent of the proposal to ensure there are adequate resources to rehabilitate projects in the event of abandonment, but we firmly believe that any policy change should be just and fair to all, and should also serve the interests of the majority. The industry, which has over the years successfully delivered over 4 million units of houses, should not be punished due to wrong doings and business failures of negligible percentage of property developers.

A more dynamic measure, in REHDA’s view, is the establishment of a Home Completion Guarantee Scheme to provide warranty of home completion to house buyers. The scheme will eliminate the possibility of project abandonment as REHDA as the underwriter will step in to complete the project should any problem arise. The proposal has been submitted to the Ministry and we hope to fine-tune its mechanism in due course. We trust that this will bring the Malaysian property development to a whole new level of professionalism and confidence.  

Ladies and gentlemen,

The housing and property market is in dire need of new sources of demand and against the backdrop of current market conditions and lacklustre domestic demand, we should tap fully on the potential of foreign property FDIs into the market. Malaysia’s property market has its strengths and advantages that could attract foreign investors through various Government backed promotional programs, including the Malaysia My Second Home, given the right pull factors. It is however, very unfortunate that the recent amendments to the FIC guidelines raised the threshold of minimum property pricing allowed for purchase by foreign interests from RM250,000 to RM500,000.

REHDA is of the view that the ‘one size fits all’ policy of FIC is not relevant, particularly in the context of property pricing as location has always been the key determining factor. The increase of the threshold level to RM500,000, including for residential properties, is not only impractical but punitive to less urbanized markets with potential for foreign participation as there is very limited, if any at all, property beyond the prescribed floor price at these locations.

Towards this end, we have made an appeal to the Right Honourable Prime Minister for review of the RM500,000 threshold to a 3 tier location based approach which we believe is a more practical and efficient way of promoting foreign investment in Malaysian properties without compromising the interests of local buyers and the general rakyat.

Ladies and gentlemen

As we move forward and face the challenges of the new economy, it is very crucial that we competitively position the housing and property industry as an efficient value adding sector of the economy. Towards this direction we should equip ourselves with new knowledge and skills that could help us weather the storm. The authorities, on their part should also move in tandem and undertake a total review of impracticable policies, legislative provisions, guidelines and practices that inhibit progress so that we can take concerted steps in charting the future direction of the industry.

Last but not least, on this occasion of MAPEX 2010 Opening Ceremony, I would like to take the opportunity to thank all participating members and developers for your unwavering support and active participation in MAPEX over the last 12 years. It is our genuine hope that through these expositions, members have generated greater interest and/or awareness towards their projects and the general house buying public have had the chance to make better informed decisions in the property purchases.

On that note I thank Y Bhg Datuk Yeo again for being with us today and wish all participants a successful outing at MAPEX 2010!!

Thank you.