The Budget 2004 proposals unveiled last Friday seem to be putting the Government in the driver’s seat of the property sector as it has so far fallen short of the goals it set itself under the Eighth Malaysia Plan (8MP).

The private sector formed by developers and co-operative societies, meanwhile, can afford to play a smaller, albeit more rewarding role in the industry as its obligations are on track to be met.

Although statements made by the Government since the economic downturn of the late 1990s that its efforts are intended to steer the economy in a direction where the private sector can be in the position as driver of the economy, the fact that the Budget has pushed the public sector into the housing limelight says otherwise.

There are a couple of reasons that could be attributed to this.

Assuming a duty
First, the Government is anticipating demand for low- to low-medium cost housing to increase by 500,000 units over the next five years, as the population in the 20- to 24-year-old age group grows.

Traditionally, this need had been passed to the private sector to fulfil. But with many companies still reeling from the shocks on the country’s economy, and with slow demand for such units as evidenced by the take-up in many projects, the Government now has to assume the task via its national housing vehicle Syarikat Perumahan Negara Bhd (SPN).

Fulfilling the goal
Second, and maybe more important, is the achievement by the public and private sectors.

As it stands, the 8MP target for housing called for the creation of 615,000 housing units between the years 2001 and 2005, of which the Government was tasked with shouldering responsibility for 50.7 per cent of the volume, or 312,000 units.

Of this, 192,000 were for houses low-cost in nature, 37,300 low-medium-cost, 46,700 medium-cost and 20,000 high-cost. For the private sector, its responsibility for the balance of 303,000 included the construction of 40,000 low-cost houses.

However, as at Dec 31 last year, the public sector only managed to complete 49,659 units or 16 per cent of its total obligation, including 23,507 low-cost houses. The private sector, meanwhile, finished 200,103 units or 66 per cent of its responsibility, including exceeding its 40,000 low-cost housing target by 1,352 units.

In the low-medium cost category, the public sector had so far achieved 26.4 per cent of the 8MP target, building 9,864 of the total 37,300 units, while the private sector posted a 13.5 per cent rate, completing 12,134 of the 90,000 units it has to build.

Up in the medium- and high-cost segments, the Government created 10,283 units or 15 per cent of its intended target - a far cry from the private sector which overshot its medium-cost target of 64,000 units by 12 per cent, while in the high-end zone, it had a third more to go in its duty to complete 105,000 units.

Both sectors combined, 249,762 units have so far been accomplished, made up of 70,297 low-, 23,623 low-medium-, 77,220 medium- and 78,055 high-cost houses.

In an apparent attempt to address its short-comings insofar as the 8MP targets are concerned, the public sector is putting SPN at the forefront of an aggressive building campaign to make up for lost time.

Under the Budget proposals, SPN will also take over and manage housing projects under the Low-cost Housing Revolving Fund, which is now managed by TPPT Sdn Bhd.

In 2004, it will also utilise RM558.8 million to undertake several low-cost projects, of which 87 per cent (or RM484 million) will be set aside for the construction of 62,672 low-cost houses under Program Perumahan Rakyat (PPR), a scheme designed to resettle squatters in urban areas.

The balance of RM74.5 million will be given as loans to State Govern-ments to construct another 28,541 low-cost houses, which would put it 15 per cent closer towards attaining the 192,000-unit public sector target.

Interestingly, the 8MP goal of 35,000 PPR housing units has almost been met, with 34,148 units now in various stages of construction. Nevertheless, with the additional funding of RM484 million, the Government has seen fit to increase the allocation to 97,672 units.

Shouldering responsibility
SPN will really have its work cut out for it should private developers opt, as the Budget is permitting, to pay a contribution for the Govern-
ment to assume their low-cost housing obligation instead of undertaking the construction on their own steam. For beyond money considerations, there are construction obstacles, quality issues and State Government red tape to overcome.

Should developers elect to make a contribution instead of building the 30 per cent quota of low-cost housing in their projects, they need only complete the low-cost housing units they have embarked on in their current projects.

According to the Ministry of Finance’s Valuation and Property Services Department, the number of low-cost housing units in the country at the end of last year stood at 739,685 units - or 25 per cent of all the residential stock in the country.

For the larger states of the Peninsula, the existing numbers of low-cost housing are Selangor with 104,356 low-cost flats and 75,587 low-cost houses; Johor with 33,043 low-cost flats and 115,008 low-cost houses; and the Federal Territory of Kuala Lumpur with 43,352 low-cost flats and 4,360 low-cost houses.

Further, as at the end of last year, the posted figure for the incoming supply of low-cost houses and low-cost flats in the stock report is 158,884 units, or 28 per cent of the new incoming supply of housing.

Of this number, 122,316 low-cost units will be in the four major states of KL (45,601 flats); Selangor (38,364 flats and 1,270 houses); Johor (5,366 flats and 6,552 houses) and Penang (5,719 flats and 2,123 houses).