Letters - Give priority to affordable housing

BUDGET 2017 should provide more funds for affordable housing and especially tax incentives to encourage large scale and even compulsory Industrial Building Systems (IBS).
Such a system can be sustained by economies of scale or high volume production. It will cut costs, standardise and enhance building quality, reduce imported workers, speed up construction and meet basic housing needs.

Supply of affordable houses has been slow because there are too many vested interests who have constrained the supply as they want to protect their own interests and profits.
The Federal Government has been trying for a long time to promote the IBS. But there has been resistance from those who enjoy the questionable continuing bad practice of reaping agency fees from the import of cheap foreign labour.
The state governments rely largely on their limited land revenues, because the federal tax system is highly centralised.
The state governments therefore tend to keep the good land to be sold to the businessmen and the wealthy at higher prices.
Low-cost housing projects therefore do not get the required preference. Hence low-cost housing projects get land way outside the town centres.
This is very inconvenient to those who work in the towns as they have to incur higher transport costs and long and time wasted journeys to office.
It's a vicious circle and the low-cost house buyers are again penalised. The solution – allocate land in the towns for affordable housing at subsidised rates.
The local authorities also add constraints and higher costs to developers. Rules can differ among local councils. Some councils can be more difficult than others. Corruption and cronyism can also add to costs and delays and more wastage.

Developers are not free from blame either. Some find ways of avoiding the construction of affordable housing. Others provide poor quality finish to maximise profits.
Bumi quotas for contractors and house buyers can also aggravate shortages. So refine these inhibitive rules that suppress supply.
The provision of more housing and especially affordable low-cost housing can have a major positive wide range impact on the whole economy.
Budget 2017 should give top priority to reducing the burden of the 1.5 million first time buyers of affordable housing. This could mean about 4 million household members.
More housing will not only boost economic growth, but reduce the adverse impact of unduly rising prices of housing and the general cost of living.

Developers should not be easily provided with lending licences as they may not use the licences with prudence and financial discipline.
In the end, the whole industry can lose out due to higher household debt that Bank Negara is trying hard to better manage.
We do not want the sub-prime problems that the US and the world suffered from not so long ago.
The Federal Government Budget 2017 should develop stronger cooperation with the private sector and the state governments to ensure more dynamic and innovative initiatives to finance much more affordable houses.
Tan Sri Ramon Navaratnam
Chairman
Asli Centre of Public Policy Studies