The Housing and Local Government Ministry recently blacklisted 109 property developers and their boards of directors, for failing to adhere to regulations for their projects. But many say simply blacklisting errant developers doesn’t truly address the problem of abandoned housing projects. On this episode of #ConsiderThis Melisa Idris speaks with Datuk Chang Kim Loong, Founder and Honorary Secretary-General of the National House Buyers Association.
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00:00Hi, welcome back to Consider This. I'm Melissa Idris. Let's continue our conversation about
00:16abandoned housing projects in Malaysia. Why does this keep happening despite the government
00:21blacklisting errant property developers? Joining me on the show now to discuss this further is
00:27Datuk Chang Kim Lung, who is the Founder and Honorary Secretary-General of the National House Buyers
00:33Association. Datuk Chang, thank you so much for being on the show with me today. The government
00:37has blacklisted over 100 developers for non-compliance. And on the surface, I think that
00:43sounds tough to many people. They think that's strong action. But you have called this approach
00:48not a cure. You've said that this isn't the solution. Why is that? Well, to be exact, the
00:55government has identified 109 licensed housing developers. They are blacklisted. We are
01:00saying that blacklisting housing developers is not the answer to all their follies. There
01:05are more to it than just blacklisting. Now, let's talk about why are this group of people
01:09blacklisted? Now, the Ministry has reported this 109 developers and the board of directors
01:15have been blacklisted for a group of problems, for a myriad of problems, most of which are due
01:22to non-compliance with regulatory requirements for their projects. This is like administrative
01:29process whereby you file your documents late or you don't file in time or non-compliance.
01:34These are delays and neglects done by some clerical staff of the developers. So, well, the government
01:41want to penalise them and blacklist it. It is a good thing that the government blacklist, but
01:45there's more to it than just blacklisting. Very importantly, the government must now invoke
01:52their power, the powers of abandonment. There are a lot of cases of abandonment and it is very important
01:58that the Ministry of Housing got to do something about abandonment. Blacklisting of developers
02:03according to Ministry of Housing, the board is going to be blacklisted. But you must understand that the developers
02:10normally set up separate legal entities when it comes to undertaking any projects whatsoever.
02:17You will realise that a lot of these companies appoint nominees to be in there. So, to circumvent developers
02:24the Ministry of Housing blacklisting, this developer is going to set up new nominee companies. They will appoint their
02:30grandmothers, their in-laws, their outlaws to be new directors. So, does the Ministry of Housing have got a family three
02:36to blacklist every one of them or not? No, they do not have. That's the issue.
02:42Okay. So, blacklisting doesn't work because developers just set up new companies, new proxies, right, using proxies.
02:49So, what will work if blacklisting is not enough? You said for the government to invoke its powers over abandoned housing projects.
02:58What were you referring to, Datuk? Well, we have got the laws under Section 18 of the Housing Development Act.
03:04The law was already amended effective 1 June 2015. That's 10 years ago. None of the developers have been prosecuted at all.
03:15We have been telling time and again to the Ministry of Housing, the law is there for a purpose.
03:21It cannot just be an ornamental piece left to appear that the law is stringent but not invoked. So, the Ministry of Housing must have a program trying to invoke
03:32Section 18a whereby developers are prosecuted on element of criminality because this Section 18a basically entails that any housing developer
03:43who abandons or caused to be abandoned housing project or any phase of the housing project is liable to be guilty of the offence on conviction of a fine of 250,000
03:54to 500,000 ringgit or an imprisonment not exceeding 3 years. But these are good on papers only.
04:02Where have there been any prosecution whatsoever for the last 10 years that has appeared in newspaper?
04:09I have not seen anything in the media. I have not seen anything of processing papers or prosecution against any of those wayward developers that abandoned housing projects.
04:20So, the problem here is basically, what went wrong? Is our law not good enough or nobody knows how to invoke this new law?
04:28Why do you think it is? Why do you think that no developers have been prosecuted under the Section for 10 years?
04:33Well, I have seen, I have complained so many times with Ministry of Housing and the only reply they could tell me is that,
04:40yeah, the law is good down there. However, the process of actual invoking the Section is not there yet.
04:46Their usual word is, tiada mekanisma. Apa makna tiada mekanisma? I mean, there is no system to do it.
04:53If the law has been passed 10 years ago, a similar housing development regulation must be already approved and regulating how to prosecute developers.
05:03So, we got to go back and ask the Ministry of Housing, what is it that is holding up the whole thing?
05:09Apalah kekangan ni semua? Why the delay? It is not fair to victims of abandoned projects when the government just merely blacklist developer.
05:18How does blacklisting developer benefit the house buyer who is a victim of abandoned projects?
05:22Right. Okay. So, if we were to think about abandonment, addressing the abandoned housing issue,
05:32let's think about stopping the problem from happening in the first place.
05:37Now, you've spoken a lot about Malaysia's sell-then-bill model, the problems with Malaysia's sell-then-bill model,
05:43and you have called for a build-then-sell model. What's stopping us from moving towards this model that will then shield home buyers from taking on the risk of the property developer?
05:56Well, first and foremost, we must realize that, let's face it, there's no solution for abandoned projects.
06:02What the government does now is basically firefighting. If there's abandoned projects, they bring in rescue plans,
06:09they bring in liquidators to try to rescue the project,
06:12or not use the government funds to revive abandoned projects.
06:16In that process, I have this adage for them.
06:21Profit privatized, losses nationalized.
06:24If the developer makes money, that's the profit for them.
06:28If there are any losses or abandonment, government must then come in to rescue the plan.
06:32That is very wrong.
06:33Do not use taxpayers' money to rescue projects because it is a developer's business.
06:38Therefore, the concept must change.
06:40The concept must change from sell-and-build, meaning the developer sell and then start building and pay us,
06:45build us progressively, to a system called build-then-sell.
06:49Absolute build-and-sell means the developers are built first before selling.
06:53But however, if it's an absolute build-and-sell, it would be quite a big paradigm shift in the market
06:59where a lot of developers would close down.
07:02So we came up with a hybrid.
07:04Our hybrid was build-and-sell 10,90 concept.
07:0810,90 means you pay 10% down, you lock in yourself in the sale and purchase agreement,
07:15the buyers would then patiently wait for the house to be completed.
07:18As soon as the house is completed, then the 90% is then dispersed over to the developer.
07:24This is called the build-and-sell 10,90 concept.
07:27And that concept is already in the housing law since 2015 also.
07:33We now got not only schedule G, H, we got I and J.
07:37Schedule I is a sale and purchase agreement for landed property, 10,90 concept.
07:42And Schedule J is build-and-sell 10,90 concept for stratified property.
07:46It's not that the law is not there.
07:48The problem is the political and the willpower of the government.
07:52Now, let me tell you recently, I was very happy when the Minister of Housing, Nga Kong, mentioned.
07:57It was in October 2023.
08:01He said, to go forward, to eradicate abandoned projects, we must now have a concept of build-and-sell.
08:08Build-and-sell.
08:09Well, that made us very happy.
08:11We wrote articles to thank him for it, to have the courage to announce build-and-sell.
08:1510,90 concept or absolute build-and-sell.
08:18That was in October 2023.
08:20But, however, he made a U-turn.
08:23When he came to Parliament session in February 2024, he made a U-turn to say that our country is not ready yet.
08:32It all depends on our economic recovery.
08:36That's the problem.
08:38Depending on economic recovery.
08:40Now, I'm, time again, informed the Minister that we have got a national housing policy.
08:46It's called Dasar Perumahan Negara.
08:49Dasar Perumahan Negara has got the tracking, you know, what process must go along for the betterment of the housing industry.
08:56That policy says that build-and-sell 10,90 should be already made law in 2023.
09:03Okay, minus the COVID, minus the MCO.
09:07Then it should be made, build-and-sell 10,90 mandatory this year.
09:11Why is it not made mandatory?
09:13So, what is wrong with you, Phyllis?
09:16What is wrong with the political wheel?
09:18You talk about something, been trying to close the gap solution for abandoned project, but yet you don't want to change the concept.
09:25That's the problem.
09:27Dr Chang, if you had Minister Nga's ear today, what is the single most urgent reform or action that you would insist on to protect house buyers?
09:36And what would you tell him?
09:38How would you caution him if we don't fix this?
09:41What are the long-term consequences for buyers, for the market, for the public, for the public trust in Malaysia's housing system?
09:49Well, the first thing I need to tell him basically is to change the concept from sell-a-bid currently to build-and-sell.
09:55Even buying a car has got lesser risk.
09:57When you buy a car, make a deposit, and then have you heard of any house, any car buyer who don't get their car having paid the full purchase price?
10:05That's the problem in Malaysia.
10:07We must have a build-and-sell in such a way you pay a deposit, you only pay upon delivery, meaning the house is ready.
10:1310,90, the 90% is payable over to the developer only when the house is ready.
10:18This way, the house buys is in control.
10:21We control the house not being abandoned.
10:25We control the quality standard, and we got the opportunity to inspect the property before we pay out the ballot 90%.
10:32The second issue that I'd like to talk about is, recently the government talked about a new law called Urban Redevelopment Act.
10:41There's a new law called Akta Pembangunan Bandar Semula.
10:45He's identified 139 sites in DBKL in Kuala Lumpur that he wants redevelopment.
10:51Now, we in HPA got nothing against redevelopment.
10:55To me, redevelopment or renewal or rejuvenation is good for our country.
10:59It is good.
11:00It is part of nation building.
11:02But when the government talk about a threshold, a consent threshold of 75%, it means that when a law on URA is passed, the government only needs 75% approval if the building is about 30 years old.
11:17Right.
11:18How can that be?
11:19That's not fair to the house.
11:20But what about the balance 25%?
11:22So, you basically are triggering a war between yang nak jual dan tak nak jual.
11:27Okay.
11:28Dr. Chang, I have to ask you, how would you characterize the relationship between property developers and government?
11:34How strong is the property developer lobby?
11:36Wow.
11:37Property developers lobby currently with the current minister, they walk the corridor of power.
11:45The Ministry of Housing and the current government listens to the developer more than the house buyers.
11:51That is how my perception is.
11:53There have been a lot of times you find the Minister of Housing taking nice photographs having visit Melbourne, having visit Hong Kong with the developers and the association.
12:04That picture paints a thousand words.
12:06Okay.
12:07Well, Dr. Chang, thank you so much for being on the show with me today.
12:10I appreciate your time.
12:11Dr. Chang Kim Lunde from the National House Buyers Association.
12:15That wraps up this episode of Consider This.
12:17I'm Melissa Idris signing off for the evening.
12:20Thank you so much for watching, and good night.
12:22Thank you so much for watching, and good night.
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