Saturday, September 17, 2016

Noh Omar should eat humble pie and ditch his developers-moneylenders plan.

Media Statement by Yeo Bee Yin, State Assemblywoman of Damansara Utama on Saturday 17 September 2016 in Petaling Jaya.

Noh Omar should now eat humble pie and ditch his developers-moneylenders plan.

On 8 September, we were shocked by the announcement made by Tan Sri Noh Omar on his ministry’s plan to allow property developers to give out loans to homebuyers at interest rate as high as 12 to 18%[i].  Since the announcement, except for the former Menteri Besar of Selangor Tan Sri Khalid Ibrahim, [ii] his idea doesn’t seem to get support from the people. Not only did he draw flak from the opposition parties, he also doesn’t seem to have received support from his UMNO colleagues and many others.

The second finance minister Datuk Johari Abdul Ghani said that Noh Omar’s plan is unsustainable and illogical[iii] while CIMB chairman Datuk Seri Nazir Razak in his instagram has described this plan as “dangerous”. The National House Buyers Association of Malaysia (HBA) Secretary General Chang Kim Loong also weighed in to say that the proposal is “ridiculous”[iv]. Even the deputy prime minister Zahid Hamidi and Treasury Sectretary-General Mohd Irwan Serigar Abdullah were very reserved in their responses to this proposal.

Yesterday, rating agency Fitch Ratings has also stated that the scheme, if implemented, will add to the risks associated with rising household debt and many households could struggle to service the loan at such high interest rates.
 With that, we hope that Noh Omar will ditch his unsustainable, illogical, dangerous and ridiculous plan of allowing developers to be moneylenders to the homebuyers. It is time for Noh Omar to eat humble pie and announce the cancellation of the plan instead of leaving the stakeholders hanging in the air while his ministry “studies the proposal” as suggested by the cabinet[v].  In fact, it is perplexing how a minister could make announcement of such important policy without first studying it comprehensively.

It is about three months since Noh Omar is back to the cabinet. We understand his eagerness to perform but it should not come with such ill-conceived policy. We would like to suggest Noh Omar to focus on the following aspects instead.

Firstly, the 11th Malaysia Plan has a target of providing 653,000 units of affordable housing during the period of 2016-2020, which is an average of about 130,000 affordable houses per year[vi].  We would like to know how is his ministry is going to deliver that.

Secondly, Khazanah in its report “Making Housing Affordable” stated that housing unaffordability problem is mainly due to structural problem caused by unresponsive housing sector to the market demand. It has recommended Putrajaya to do National Housing Survey that will be able to provide an integrated database on housing to ensure housing supply matches the demand according to the location, price and target group as well as to develop measures to improve the efficacy of the construction industry’s delivery system, which is currently highly fragmented. We would like to know what is his ministry plan on these policy recommendations.  

Noh Omar must know that housing policies must be studied comprehensively and should not be determined according to his whims and fancies because an ill-conceived housing policy will not only affect housing market hence the shelters of the people but also the financial strength of the country.