By Khairie Hisyam
While PR1MA is a good concept, it is insufficient to address the country’s affordable housing needs on its own, with much room for the government to undertake more measures. After examining the issue, KiniBiz highlights the importance of centralising housing efforts.
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One quote attributed to German politician and writer Johann Wolfgang von Goethe is that one is happiest, whether a king or a peasant, when one finds peace in one’s own home.
Sadly many Malaysians are yet to find out whether von Goethe speaks the truth, because many do not yet own their own homes as skyrocketing house prices far outstrip their income levels. But slower household income growth rate compared to price escalation is but one contributing factor to the affordable housing conundrum.
At a macro level, the free market is always going to skew towards the high-end segment eventually since demand, driven by the ever-growing human population, is inexhaustible while land — and housing — is finite.
When demand trumps supply by a large margin, selling price rises. That is how the free economy works. Hence housing is a social concern worldwide, not just in Malaysia.
And because the problem arises from a fundamental level, addressing the problem requires a holistic approach, rather than surface fixes that treat symptoms but fail to assault the core issues.
For one, we have heard suggestions for harsher real property gains tax (RPGT) rates to discourage speculation. While increasing RPGT rates even higher may discourage fast-flipping among speculative buyers, all it does is delay the subsequent sale — it just buys time, because the root issue of demand outstripping supply, that enables speculation in the first place, remains.
And if the speculators are willing to accept reduced gains, higher RPGT rates is a non-factor.
But that concerns the open housing market. At the end of the day, ensuring adequate housing for the people is ultimately the government’s responsibility.
Abdul Rahman Dahlan
Ultimately land belongs to the government, who is further empowered — at the state level — by land acquisition legislation that upholds the eminent domain concept, which means should state governments wish to, they can acquire any private property deemed necessary for the greater public good so long as adequate compensation is provided.
Credit is due to the housing minister Abdul Rahman Dahlan, by the way, because he seems to have his priorities in order. He had gone on record acknowledging the housing issue among middle-income Malaysians and revealed some initiatives to provide some relief to the public.
But the way the government has gone about providing housing over the years has been disjointed at best.
The tangled housing web
In 2011, we were introduced to the 1Malaysia People’s Housing Programme (PR1MA) to provide affordable housing, notwithstanding the issues surrounding its implementation.
Recently, we were also told that the People’s Housing Programme (PPR) will soon have ‘transit homes’ for newly-weds below 30 years of age to stay in for up to two years, provided they earn below RM3,000.
Second Finance Minister Ahmad Husni Hanadzlah was quoted this week as saying that the upcoming Budget 2014 will focus on affordable housing for the people, reiterating the government’s promise that Syarikat Perumahan Negara Bhd (SPNB) will provide one million homes within five years.
Earlier this year we heard that 1Malaysia Development Bhd (1MDB), that mysterious fund that some criticise as a “ponzi scheme”, is going to build affordable homes in Penang.
The Selangor state government promised 20,000 affordable homes, to be proposed under its 2014 state budget. The list goes on and on.
Underlying all these initiatives is the problem of having too many authorities and bodies handling housing matters. One would naturally presume that all housing matters eventually fall under the purview of the Ministry of Urban Wellbeing, Housing and Local Government, but that presumption would be wrong.
As an example, PR1MA was established under the prime minister’s office. Neither is 1MDB reporting to the housing minister. Many other housing initiatives are handled outside the housing ministry.
Of course PR1MA, with its own separate legislation to boot, was completely unnecessary in the first place, since there are already various agencies and sufficient legislation dealing with housing matters. Shifting focus to the middle-income segment would have been easily done with existing bodies and laws, but that is an issue to ponder some other time.
Further, the Malaysian land legislation places power over land matters with the respective state governments, not the federal government — the housing minister has limited powers.
The result is a fragmented housing system that has a number of people and agencies in charge of and handling overlapping things. While they all may seem to have the same common direction — providing affordable housing — the roads taken to get there may not necessarily be the same.
Compounding the issue is that most of the time, differing agendas and ideologies make co-operation prospects difficult.
Time to regroup
Housing minister Abdul Rahman Dahlan has addressed this lack of centralisation before, going on record to say that he has already put in place a co-ordination mechanism where he would chair co-ordination meetings between various agencies concerned.
“This is to ensure that all these agencies work towards the government goal of ensuring the provision of sufficient affordable houses for the people,” Abdul Rahman was quoted as saying.
But is a co-ordination mechanism enough?
Even in the unlikely event that it is, centralising housing initiatives completely under one umbrella agency or, better yet, under the housing minister himself, would be more effective.
With such a centralisation, there are no toe-stepping, no overlapping initiatives, no time-consuming, resource-wasting (albeit necessary at present) co-ordination efforts. In contrast there will be more consistency, more cohesion and subsequently we will make more progress at a faster rate because more resources can be brought to bear on the housing problem.
We need only look at countries with relatively successful public housing programmes to understand how important consistency is in terms of achieving long-term housing objectives.
The closest and oft-quoted example is of course Singapore, who launched their Housing Development Board (HDB) programme in the 1960s. Today, 82% of Singaporeans live in HDB housing units.
What stands out about HDB is the programme does not carry the image of poverty of lower living standards, with even the upper middle-income Singaporeans calling HDB flats home. Their flats are equipped with amenities like schools, supermarkets, clinics, and so on, not unlike what PR1MA is trying to achieve with its own projects.
Of course, HDB has had a few decades to do this, and our own affordable housing conundrum would not be resolved overnight. But it is important to note that HDB’s success comes down to several fundamentals — centralised planning, adherence to operating procedures and enforcement rules and regulations.
Do we have such ingredients in our own public housing efforts yet?
Looking further, half of Hong Kongers stay in some form of public housing or another, and there housing matters are mainly handled by the Hong Kong Housing Authority, a government agency, and the Hong Kong Housing Society, a non-profit NGO.
Realising the urgency of housing needs
As things stand, it is unclear whether our various housing initiatives have sufficient cohesion to wholly address the affordable housing dilemma before things get worse.
Until we do have that sort of cohesion in our national housing initiatives, the people will continue to be the loser in this equation. But to centralise all housing matters under a single entity, there must be enormous political will on both political divides to see the affordable housing conundrum resolved.
Therein lies the biggest hurdle. Can politicians from all corners agree to quietly work together in addressing this fundamental social issue?
That remains to be seen and signs are not encouraging. From recent news reports and developments, the current fragmentation of housing efforts look set to continue well into the foreseeable future.
We can only hope things do not get too much worse before we see the right actions taken to get us really going in housing the people.
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