Ahmad Fuad: Policy paper on non-profit vehicle will be presented to Cabinet soon

08/05/2008 The Star

KUALA LUMPUR: The setting up of a special non-profit vehicle to revive abandoned residential projects in the country is in the offing.

Housing and Local Government Ministry secretary-general Datuk Ahmad Fuad Ismail said the policy paper to set up a national Housing Development Corporation (HDC) was done and would be presented to the Cabinet soon.

In 2002, there were 270 abandoned housing projects in the country but the number had been reduced to 129 today as 141 projects were able to be revived.

He said the special purpose vehicle, which would be non-profit oriented, would follow the Danaharta model.

Danaharta, a national asset management company, was incorporated in 1998 to tackle non-performing loans during the Asian financial crisis.

Its main goals were to ease the liability on financial institutions and realise as much value as possible from the non-performing loans.

“The moment we classify a project as abandoned, we have an open tender.

“Some projects make money (after being revived), some will incur losses. So we take the profits from those that make money to cover for those that incur losses. The HDC’s purpose is not money-making,” he said at his office.

Fuad said once the Cabinet has given its nod to the formation of the HDC, he would try to have it gazetted within a year.

He said it would be a complex process, as it involved amending existing acts such as the Housing Development Act, and introducing new ones such as a Corporation Act.

Fuad said they were also considering revising the deposit,fixed at RM200,000 currently, for developers to obtain a licence to sell residential units.

“We are studying whether to change the quantum. Right now, the deposit is fixed at RM200,000 whether it is a big or small project.

“Maybe we will use the Gross Development Value model. We are thinking of 1% or 2% of the project value.”

Before going ahead with the idea, Fuad said he planned to meet industry players to get their feedback first.

“If we were to do that (adopt the Gross Development Value model), many people might not want to do big projects (any more) as it would then involve placing a big deposit.”