Financing for homebuyers key to promote homeownership, says Mah Sing CEO

Monday 06 May 2024

PETALING JAYA (Jan 21): At the Rehda Institute’s CEO Series 2022 panel discussion titled “Charting Malaysia’s recovery: How can industry stakeholders work together to rebuild Malaysia’s economy” held on Thursday (Jan 20), Mah Sing Group Bhd chief executive officer (CEO) Datuk Ho Hon Sang stated that financing for homebuyers is an important component to encourage homeownership.

“To revive the property sector, the Home Ownership Campaign should be extended to spur the economy and to clear some of the unsold stocks in the market,” he said.

The panel was moderated by Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip. Other panellists included former Bank Negara Malaysia deputy governor Tan Sri Dr Lin See Yan, Socio-Economic Research Centre economist and executive director Lee Heng Guie as well as Master Builders Association Malaysia (MBAM) deputy president Oliver Wee.

Wee highlighted that the construction and property development sector is a significant contributor to the economy. There are challenges, however, such as the shortage of skilled labour and rising cost of building materials. Therefore, more initiatives should be taken by the government to impose less tax, like the import duty on raw materials, to harmonise standard prices of materials.

To boost economic recovery and create more domestic and foreign demand, Lee said that the government needs to provide continuous support to ensure a strong recovery in the short term while continuing to strengthen resilience for the medium and long terms, and be prepared for any other shocks that may come along. “Action must be taken to address the structural problems that we face — whether it is in terms of loans, skilled labour, innovation, culture or creativity.”

“In the post-Covid-19 world, we are going all the way up to attract not just foreign direct investment but also to sustain domestic investment. One area that we noticed over the last few years was that domestic investment was on a declining trend. We have to support domestic investors in particular as 98.4% comprise small and medium enterprises (SMEs) in the country. To support them, one can look into areas of regulatory, investment incentives and combined costs,” Lee noted.

When talking about the economy, whether it is politicians or the private sector, Lee said that they often recommend very general policies. “How can it be done to achieve high-skilled labour? You cannot have high-skilled labour even if you train them because it depends on policies regarding investment. If the investment does not promote high-skilled investment, what is the point of having high-skilled jobs? Civil servants nowadays do not have operational experience and, as such, it will be a struggle.”

Meanwhile, the country recorded a five-month-high inflation rate of 2.2% in November last year with expectations that it will moderate in 2022, but this remains uncertain.

Lin stated that inflation is a cost and it will not come down on its own unless there are policies implemented to bring it down.

“Malaysia is so used to low inflation and whenever it goes up, people expect it to come down. It is important for the government to change its policies and businessmen have to push the government for further action.”

Lee concurred, saying that the impact of inflation on earnings of different sectors depends on how the degree passes through to preserve the margin and hence profitability. In the case of inflation and the central bank raising interest rates, the financial sectors are going to benefit from the perspective of an equity market.

“When there is inflation, the cost of doing business in the construction industry will increase. Unless contractors are able to maintain the costs, they will still face difficult times.”

When asked about the nation’s gross domestic product (GDP) that is expected to grow at between 5.5% and 6.5% in 2022, Lee reckoned that to what extent the economy will recover depends on the strength of private consumption and the government’s public expenditure. "Based on our latest survey findings from the business community, they appear to be confident in the recovery but there are headwinds, such as the cost pressure, supply chain disruption and headwinds from the western world induced by how impressive the rate hikes are and the consequential impact on financial markets."

Lin stated that the reason why it is not interesting to look at GDP is because of the components that make the difference. “If you look at the components of GDP, investment is the main aspect that worries the most. The GDP [growth] figure was in double digits in the past 10 years but now it is in a single digit. This is why 70% of new graduates are leaving the country to work in Australia due to limited career opportunities locally. Malaysia is a developing country that needs support from other countries for economic growth. This can be achieved by receiving massive foreign direct investment, which contributes to a higher employment rate and a better living among Malaysians while increasing its GDP.”

Edited ByWong King Wai

Text Size