Far from being rotten

23/06/2007 NST-PROP By Datuk Eddy Chen

I refer to the Viewpoint from the National House Buyers Association (HBA) ("Paying for their sins", NSTProperty, June 2) and letters from readers on the issue published on June 9.

The impression they give is incorrect, for the Sell- Then-Build or STB method of housing delivery is far from rotten.

More than 98 per cent of the country?s licensed developers have completed their projects. They have built and delivered millions of houses in the Klang Valley, and this has been duplicated in the cities and towns of Johor Baru, Malacca, Ipoh, Kuantan and Penang.

Of these millions of houses, only a small proportion are abandoned. Unfortunately, it is the minority that is giving the industry a bad name, resulting in calls for policy changes that have far-reaching consequences for everybody.

I am no apologist for the bad hats, but I don?t think the HBA perspective is balanced.

The STB system has enabled the provision of heavily subsidised low-cost housing, infrastructure and other social amenities.

Malaysia is unique in this respect, as nowhere else in the world is the private sector required to play such an active direct role in social and community development.

And nowhere in the world do developers have to juggle with so many constraints in the course of doing business.

They have had to contend with an inefficient public delivery system (though this will hopefully improve with the latest concerted efforts of the government); a financial system that is best described as one that "lends an umbrella on a fine day and takes it away when it rains"; and a construction labour force that direly needs to be beefed up, despite the fact that the Construction Industry Development Board was set up for this specific purpose.

Yet, despite these challenges, the housing industry is a success story.

The government has continuously tightened the laws regulating housing developers, with no less than five amendments made since the original Housing Developers (Control & Licensing Act) 1966 came into being.

We need go no further than to examine the long title of the Act to see the intent and commitment of the government in protecting house buyers? rights.

I urge the government not to be taken in by the HBA's rhetoric and emotion.

Since the association deals only with aggrieved house buyers, it will tend to develop a narrow, emotional view of the Malaysian housing scenario. That there is a national agenda set by the government for more houses to be built to meet the needs of the people seems to be excluded from HBA?s focus. Certainly, more houses have been built under the STB system and at a faster rate than in any other country in the world.

The system, together with No where else in the world do developers have to juggle with so many constraints in the course of doing business. and a housing market that is largely non-speculative, allows the supply of some of the lowest priced houses in the region, if not the world.

The government has adopted a very prudent approach by allowing the market to choose either the Build-Then-Sell (BTS) method, the 10:90 variant of the BTS, or the STB mode of housing delivery. I believe the Ministry of Housing and Local Government has been very responsible for permitting the systems to co-exist.

Many developers are capable of supplying housing under the 10:90 variant or the BTS system, but they have to take into account their financial capabilities, target volumes and riskreturn ratios. I don?t think the HBA can superficially assume that all developers will mindlessly choose the STB system. Many are still waiting for a clearer regulatory framework to surface before making the final decision.

I believe the HBA is doing the industry and our country a grave injustice by joining the likes of Singaporean Jackson Chia to paint Malaysia as a nation littered with abandoned projects when this is farthest from the truth.

The sprawling metropolises of Johor Baru, Kuala Lumpur and Penang are testimony to that.

Yes, there are problems. There are abandoned projects; and yes, there are local and foreign buyers who have suffered at the hands of a small number of developers.

But we must put all these in the right perspective. Offences committed by developers, petty or serious, are lumped together, and statistics cited on abandoned projects are invariably cumulative. This gives readers the impression that abandoned projects are still a bane of the industry ? which of course is far from the reality.

The Tribunal for Home Buyers' Claims has proven to be a very effective channel for aggrieved buyers to seek redress against developers without having to go through a lengthy legal process.

We do not have a perfect system. But the STB is still a very good and efficient housing delivery system. It is not the STB system that is at fault, but the people using it who have wittingly or unwittingly created most of the problems. What is needed now is the collective will to enforce the appropriate measures on the errant parties. Let us not throw the baby out with the bath water.