Parallel system to create balance
15/04/2007 Sunday Times Sunday Interview:

A day after Prime Minister Datuk Seri Abdullah Ahmad Badawi unveils a package of incentives to boost property investment, Housing and Local Government Minister Datuk Seri Ong Ka Ting speaks to NISHA SABANAYAGAM about the impact of some of the initiatives on all stakeholders, from the housing industry to buyers.

Q: When developers adopt the Build Then Sell (BTS) system — one of the initiatives announced by the prime minister — they are exempted from building low-cost housing. How does this affect the low-cost housing sector?

A: The supply of low-cost houses will not be disrupted. Through government agencies such as the Jabatan Perumahan Negara (JPN) and Syarikat Perumahan Negara (SPN), the building of low-cost houses will continue. Don’t forget there are many development projects that are still being implemented under the current system, and as such, the developers are required to fulfil the quota for low-cost houses.

Q: What is the guarantee that there will be sufficient low-cost houses?

A: The government guarantees that there will be a constant supply of low-cost houses. In areas where there is a need for low-cost houses, we will make sure that the government builds a certain number and the private sector — those that do not adopt the BTS system — covers the rest. There is a target under the Ninth Malaysia Plan for JPN, SPN, state agencies and the private sector to build low-cost housing. There is also a high demand for medium-cost houses. With the BTS system, a part of this demand will be met. Don’t forget that medium-cost housing is also important. Many mid-level income people want this type of houses as opposed to low-cost houses which have only 650 square feet of space. We are looking for a more balanced situation. We don’t want to have just low-cost and high-cost housing. We want to address the medium gap as well.

Q: What of developers who say that with the rising costs, they can’t afford to build low-cost houses?

A: Developers often do not want to build low-cost houses but as long as they choose the old system, they will have to do so. If they choose the new system, the government will ensure that the low-cost houses are built by the relevant government agencies and the developers will build medium-cost houses. This has been outlined in the Ninth Malaysia Plan.

Q: People are worried that with the BTS system, the prices may rise as they wait for the houses to be completed. How do we overcome this?

A: Well, that’s why we can’t make the new system compulsory. There are still many projects where the houses are being sold as they are built. This will ensure there are many houses available. Hence, the two systems are now running concurrently because if we just depend on the BTS, then there might be a problem of the cost of houses rising. In order to create a balance, we now have parallel systems running. At the same time, the government will continue to control the ceiling cost of low-cost houses. For the other types of property, we will monitor the situation.

Q: What of developers who do not follow proper procedures, such as having proper drainage? How will the new Building and Common Property Act 2007 help?

A: When a big project is approved, it should have a proper drainage system or the project will not be approved. I understand that in recent years, there are strict regulations, especially for big projects, with regards to issues like the drainage system. But that comes under the jurisdiction of the Ministry of Natural Resources and Environment. They set the criteria to ensure that the system can handle floods, especially flash floods. In the act, there will be funding for issues dealing with damage to common property. But if these issues deal with something outside the area of the common property, then the act cannot be held liable. If it is an issue of erosion or environmental damage, then that comes under a different act.

Q: The prime minister also announced yesterday that there would be an inspectorate committee set up to monitor the implementation of the new initiatives. Will you head the committee?

A: The inspectorate will be formed under the Ministry of Housing and Local Government. The ministry will get the approval of the Public Service Department for the new position (the committee head). We will also get an officer from the PSD to fill the position. As the minister, I will chair the monitoring committee.

Q: Who are the members of the inspectorate committee?

A: The members of the inspectorate will be government officials. Its formation will be discussed as soon as possible.

Q: At your meeting with stakeholders yesterday at the national conference to improve the government’s delivery system, what was the feedback?

A: Overall, all parties were satisfied with the new initiatives and changes. The local councils and land offices have not raised any issue, except to ask for further clarification about some of the new processes. The National House Buyers Association congratulated the government and they have no issues either. The National Association of Architects or PAM said they were clear with the policies and ready to implement them. The developers were also satisfied.

Q: What is the biggest challenge in this whole scenario?

A: The biggest challenge is the actual implementation to obtain the expected results. I told the participants at the meeting yesterday that it was the collective responsibility of the federal and state governments and the local councils to work together. Without the co-operation of any one layer or level in the administration, we will not succeed.

Q: Some have said that with the new initiatives, the power of the local councils has been reduced.

A: Actually, we have not changed any rule that will reduce the power of the local councils. With the One-Stop Centre, the process of application has been rearranged. It really is not a question of power. But speaking in terms of power, if it is utilised properly, there is no loss of power. The fear is that the power is not streamlined accordingly but instead is compartmentalised. This results in lack of co-ordination between the different departments, resulting in repetitive or overlapping mechanisms and processes. This is what has been causing the delays. I hope the local councils understand that this is a shift in paradigm, one that is very important in improving the delivery system, and increasing the nation’s competitiveness.

Q: Any last word to the stakeholders?

A: These initiatives are important to attract foreign investors and also contribute to the nation’s economy. It will put us on par, in terms of global competitiveness, so that we won’t be left behind. This is a big challenge. Let us compare the property sectors of our neighbours. Our Southeast Asian neighbours have been extremely competitive by reducing bureaucracy and offering many incentives to foreign investors. If Malaysia does not step up to the plate as soon as possible, we will be left behind. This is the message from the government.

Q: Under the new regulations, the CFO (Certificate of Fitness for Occupation) is replaced with the CCC (Certificate of Completion and Compliance), which will now be issued by a Principal Submitting Person (PSP) who is a professional architect or professional engineer or a registered building draughtsman. Should we just have one person signing off on such a significant document?

A: A PSP is assigned by the developer from the start. Under the new system, there will be 21 types of gazetted forms for different processes. There will be one person responsible for each component. For example, the structure of the building will be the responsibility of the structural engineer. He will sign the legal forms which states that the building structure conforms to legal requirements. This will be countersigned by the PSP. Then, for the laying of the pipes, there will be another contractor, who will sign saying he has done the job in accordance to specification. Once again, this is countersigned by the architect. At every stage of building, there will be a different person responsible who will sign each form. In the event the PSB dies or is indisposed, then all these other people will still be around and it will not be a problem. In the old system, only one submitting person signed everything and passed it on to the local authorities, and so there would be a problem if he was not around.