PPAM job cancellations will affect more developers

This article first appeared in The Edge Malaysia Weekly, on March 11, 2019 - March 17, 2019.

Ho: If the people can see how many affordable housing units have been launched and where they are located and so on, they would be able to hold the government accountable and push it to do better

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IN the light of the recent termination of contracts to build affordable homes for civil servants under the Malaysia Civil Servants Housing Programme (PPAM) by the government, more of such projects are expected to be either put on hold or shelved.

At least one developer, Protasco Bhd, has received a letter from Putrajaya Corp (PjC), the project owner of PPAM in the federal administrative centre, to “temporarily postpone” the development in Putrajaya, according to sources with knowledge of the matter.

A spokesperson for Protasco declined to comment on whether the group had received such a letter. The contract worth RM442.6 million was supposed to be carried out by a joint venture between Protasco Development Sdn Bhd and Kop Mantap Bhd, a wholly-owned subsidiary of Koperasi Polis Diraja Malaysia Bhd.

“We do not know why the government is terminating or postponing these PPAM contracts. From what I understand, developers who have not launched their projects are likely to be cut off,” an official with a property developer and construction outfit tells The Edge.

On Feb 27, Damansara Realty Bhd announced that PjC had terminated a contract to develop 1,350 residential units and 45 commercial units in Precinct 5, Putrajaya.

The Nov 30, 2015, contract involved a gross development cost of RM467.3 million. Damansara Realty said the cancellation was due to the government’s move to unify the development of affordable homes under the Ministry of Housing and Local Government.

The following day, TRC Synergy Bhd announced that its contract to develop 500 PPAM units, 316 public residential units and 20 commercial units for a GDV of RM292.74 million in Precinct 18, Putrajaya, had also been terminated by PjC.

Other developers that have been awarded contracts to build PPAM houses include Ahmad Zaki Resources Bhd, Hap Seng Consolidated Bhd, Iris Corp Bhd, Zecon Bhd, LBS Bina Bhd and Spring Gallery Bhd. The level of progress of these projects could not be ascertained.

Minister of Housing and Local Government Zuraida Kamaruddin has made the consolidation of the entire affordable housing schemes at the federal level as her first order of the day. The National Affordable Housing Council was formed last November.

The ministry has targeted to build one million affordable homes between 2018 and 2028, or about 100,000 units a year on average. The ministry has also launched the DepositKu programme to help first-time homebuyers with their down payments.

The previous Barisan Nasional government put affordable housing programmes under several agencies catering for different segments of the population.

For example, the Prime Minister’s Office oversees Perbadanan PR1MA Malaysia and PPAM, while Syarikat Perumahan Negara Bhd (SPNB) is under the purview of the Ministry of Finance. The Ministry of Housing and Local Government oversees the People’s Housing Programme (PPR). Meanwhile, the Ministry of Federal Territories has Rumawip, an affordable housing scheme for the federal territories of Kuala Lumpur, Labuan and Putrajaya.

And these are just agencies under the federal government. Each state has its own affordable housing programmes. For example, Rumah Selangorku is an affordable housing programme in Selangor and Rumah Mampu Milik Johor is managed by the Johor government.

“It is good that the minister (Zuraida) wants to consolidate all of the affordable housing programmes at the federal level under her ministry to avoid confusion among the public,” Ishmael Ho, CEO of Ho Chin Soon Research Sdn Bhd, tells The Edge.

However, he points out that while the agencies on the federal level can be consolidated, each state still has its own agencies for people’s housing programmes. At the end of the day, the benefit of streamlining agencies at the federal level might be limited to the federal territories.

Ho also questioned whether the state affordable housing programmes are effective in providing affordable houses for the people. This is because programmes that require private developers to build affordable houses will only raise prices of non-subsidised units.

The recent termination of contracts to build PPAM houses should not be prolonged, says a property developer, because there are still many people who cannot afford to buy a house, especially the youth and low-income families. “The government should quickly come up with a replacement programme, if indeed those programmes launched under BN have been scrapped. People want to know what kind of affordable housing programmes they can apply to,” he says.

Issues such as eligibility criteria will have to be properly communicated by the ministry. At the moment, what is known is that the price would be fixed at between RM90,000 and RM300,000, depending on the location and the average income of the local community.

When launching the National Housing Policy in January, Zuraida said the government would focus on providing houses for the bottom 40% over the next five years.

This raises questions about where the middle 40% income group falls into when it comes to affordable housing schemes. The government will also promote the rent-to-own scheme, whereby prospective buyers rent a unit for the first five years and apply for a mortgage in the sixth year.

At the same time, the Ministry of Housing and Local Government’s target to build one million affordable houses within 10 years is quite a tall order, considering that supply of residential properties in 2017 was only 94,198 units, according to data by National Property Information Centre.

The issue of affordable housing has been talked about for many years, especially when the property market was hot a few years ago prior to the drop in commodity prices and the trade war between the US and China that dampened economic growth.

However, under the previous government, there had been hardly any success stories among the various affordable housing programmes, says Ho. He attributes the failure to the government’s lack of transparency when it came to information on residential properties.

This is an area that the current government will have to tackle if it wants to improve its affordable housing schemes, he says. “For example, there must be a database on how many affordable housing units have been launched, where exactly they are located, what type of properties have been built, which projects are being planned, being constructed, under construction or completed, and so on.

“Transparency creates accountability. If the people can see how many affordable housing units have been launched and where they are located and so on, they would be able to hold the government accountable and push it to do better,” says Ho.



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