Kuala Lumpur - Malaysian property developers on Thursday called for scrapping the special housing privileges given to the ethnic Malay majority, saying an open market is crucial to stimulating growth especially now the economy is slowing.
Under a decades-old affirmative action program to help Malays increase their wealth, developers are required to sell at least 30 percent of homes in their projects to Malays at a discount.
Housing comes under state purview and in some areas, the quota runs to as high as 70 percent.
Malays make up nearly 60 percent of Malaysia`s 27 million people, and also get privileges in state contracts, jobs and education under the New Economic Policy which was started in 1971. Many minority ethnic Chinese and Indians feel marginalized by the policy and critics say it breeds cronyism, corruption and inefficiency because it mainly benefits a well-connected Malay elite.
Eddy Chen, managing director of local developer Metro Kajang, said the housing quota is a setback to the industry, particularly during the current economic gloom when developers are already burdened by high construction costs.
Speaking at a property conference, he said many developers find it tough to sell the allocated Malay units and warned this may force them to abandon projects.
Chen said if authorities cannot remove the quota they should impose it only on low-cost housing.
The value of unsold property allocated to Malays nationwide is believed to "run into billions of ringgit" and if released into the market, will help stimulate sales, he said, without giving figures.
"We should do that now before it`s too late. If we hold on to the quota, developers will face cash-flow problem and may abandon their projects," Chen said. "The government doesn`t lose anything if it (scraps) the quota."
Lee Kim Yew, deputy chairman of property developer Country Heights Holdings, described the quota policy as "outdated."
He said many Malays don`t want to buy the allocated units partly because they are not allowed to resell them in the open market to non-Malays.
"It is not helping the Malays because it is devaluing their property ... you think it`s benefiting your race but it`s not. It`s working against your race," Lee said.
Khalid Ibrahim, chief minister of Selangor state, told reporters at the conference that authorities must be flexible in ensuring the quota doesn`t hurt the property sector.
However, he said there is no need to waive the quota system as many Malays still need help to find affordable housing.
"We have to be practical. We need to balance the social and business needs. We will work with the developers" to find solutions, he said. By Eileen Ng
Source:
http://ap.google.com (November 14, 2008)