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Thursday, November 1, 2007

Housing quota questioned

The Sun (29/10/2007): The imposition of a bumiputra housing quota is unconstitutional and is one of the property sector’s most pressing issues, Datuk Jeffrey Ng Tiong Lip said today.

Ng, the immediate past president of the Real Estate and Housing Developers’ Association Malaysia (Rehda), said Article 153 of the Federal Constitution, which allows for positive discrimination in favour of Malays and the natives of Sabah and Sarawak, does not include housing at all.

"The positive discrimination (in Article 153) covers only the specific areas of employment in public service, education, training or special facilities given by the federal government, and business permits.

"Housing is implicitly excluded," he said at a "Property Rights under the Malaysian Constitution" panel discussion at the 14th Malaysian Law Conference.

Ng noted that the sub-clauses under Article 153 made it apparent that the positive discrimination enjoyed by bumiputras should not deprive any other persons in the same areas of enjoyment.

"The positive discrimination allowed in our constitution is not done at the expense of others and is not a zero-sum game," he added.

He said it was highly problematic from a constitutional perspective when bumiputra quotas are imposed on all housing developers by the state authorities.

"In my opinion, a state’s imposition of bumiputra quota in our housing industry, if it was made into law, can be challenged on the grounds of Articles 8 and 153 of the Malaysian Constitution," he said.

(Article 8 states that all persons are equal before the law).

Ng added that Article 4 also stipulates that the constitution is the supreme law of the land and any law passed which is inconsistent with it shall, to the extent of the inconsistency, be void.

He said that when the bumiputra housing quota policy was implemented in the 1980s, property developers had to reserved 30% of available units in a housing scheme for a limited period of six months for purchase by bumiputras at a discount of 5%.

"Surely, the understanding then was based on satisfying the government’s social agenda and after enduring the six months reserved period, such unsold bumiputra allocated units can be released back into the open market for resale at prevailing market prices.

"However, today’s guidelines imposed by various state governments and local authorities have changed drastically at the expense of housing developers," Ng said.

He cited how the bumiputra housing quota imposed by all the states now ranges between 30% and 70%, the discount imposed varies between 5% and 15%, and the reserved period of six months is extended without any definite period of release.

He also said some state governments have introduced heavy monetary penalties and compensations before release of unsold units is granted.

For example, Ng said, the Selangor government and Kuala Lumpur City Hall recently introduced a new system of levy where an amount equivalent to the

discount given to bumiputra buyers must now be paid to the authorities in exchange for the early release of unsold bumiputra quota units.

"What is unsold after a fixed period must be rightfully returned to us without making further contributions. After all, such units are rightfully owned by us as provided for under Article 13," Ng said.

Article 13 states that no person shall be deprived of property except in accordance with the law, and no law shall provide for the compulsory acquisition or use of property without adequate compensation.

"There is absolutely no justification for imposing such levy or contribution and such guidelines must be reviewed in accordance to our constitution," he said.

Ng said Rehda continues to struggle to convince state governments and local authorities to streamline conditions for release of unsold bumiputra quota units via an automatic release mechanism which is time-based.

He noted that certain state governments have also taken to inserting and endorsing a condition for bumiputra reserved lots on land titles, and marking bumiputra lots on layout and pre-computation plans.

"The restriction endorsement on land title is permanent whereas under the marking method, plans will be unmarked and restriction lifted once release of unsold bumiputra reserve lots are approved.

"Endorsing land titles with such restrictions by state governments is tantamount to creating de facto Malay reserved land and without obtaining consent from the landowner," he explained.

Ng said many well-educated bumiputras avoided buying bumiputra reserved quota lots in urban areas, where land titles have been endorsed, because they are less marketable upon resale in the secondary market and the market value of property is generally lower due to its restriction.

He said the National Land Council and National Council for Local Government have a big role to play in streamlining government policies and existing legislation which have been inconsistently and inappropriately applied in the housing industry.


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