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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