Gov’t in talks with banks on 10:90 BTS system
The Edge Daily 12/09/2006 By Alfean Hardy & Tho Li Ming

The government is in talks with Bank Negara and financial institutions to implement the proposed 10:90 Build-Then-Sell (BTS) mode of housing delivery, Housing and Local Government Minister Datuk Seri Ong Ka Ting said.

“Upon paying 10% and the signing of the S&P (sales and purchase agreement), the developer will have to complete the whole project by getting their own financing for the remaining 90%.

“They can no longer depend on the buyer’s money any more to complete the houses. This 90% is a big sum of money and only very rich developers who are not building large numbers of houses can use their own cash and build,” he said.

Speaking to reporters after opening the national property and housing summit 2006 in Petaling Jaya yesterday, Ong said: “We are having discussions with Bank Negara and bankers’ association representatives.”

“I have to have discussions with the Finance Ministry. I can’t jump the gun on a Finance Ministry area of authority,” he said.

He said the government would not do away with the existing system whereby the buyer pays the first 10% and makes progressive or staggered payments throughout the construction period.

“The Cabinet feels we want to have both systems running concurrently for the next two years and then see what happens. We just can’t borrow a system from another country and then make it compulsory,” Ong added.

The 10:90 BTS mode is adapted from an Australian system.

Deputy Prime Minister Datuk Seri Najib Razak first mooted the new system in March this year.

Najib had said adopters stood to gain faster development approvals, a waiver of the RM200,000 deposit per licence and flexibility in the construction of low cost units in certain localities.

Ong said financial institutions could encourage the 10:90 BTS system by providing the financial backing for developers.

“In principal, they (the banks) generally say they’d like to cooperate. When it comes to individual banks, we have to see if the banks are as committed as the association or not,” he said.