I was very impressed by our Minister for Housing, Local Government and Urban Well-being Tan Sri Noh Omar when he went to the media with the word that he has this brilliant idea of making developers into loan sharks, by giving them the authority to issue out housing loans at a rate of 18 percent per annum.
However, I do judge how this Cabinet comes up with policies, especially in this specific case. Apparently, Noh had not yet briefed his colleagues on this brilliant idea of his.
In fact, the word is now out that even his ministry has yet to do a study on this matter to determine its feasibility.
Thus, to summarise, Noh went out and talked to the media first before briefing other ministers and even getting his ministry to do a study on the matter.
So, what exactly is the decision making process for this government? Do ministers just come up with random ideas, tell it to the media, and then begin the process of determining if the idea was good or bad?
This does not bode well for Malaysia, to be sure.
Thus, the concern here is manyfold. Firstly, who will regulate these developers and their moneylending business?
The issuance of licenses for developers to even to be able to issue loans falls under Bank Negara Malaysia, thus will developers then have to be audited by the central bank to determine if they qualify to give out loans?
In fact, what has Bank Negara said about this matter?
Secondly, how exactly are you going to determine the financial health of a developer to gauge how much they can hand out in loans? Will we be looking at the assets held by developers as collateral to issue loans at an interest rate higher than credit cards?
And thirdly, what if a person defaults on such a loan? Will they be kicked out of their homes, with the developer then taking back the property and auctioning it off?
On top of all of this, Noh’s idea solves nothing.
Malaysians are already struggling with depressed wages and an ever increasing amount in household debts.
They are already struggling to cope with a four percent per annum education loan in the form of the National Higher Education Fund (PTPTN). The PTPTN wanted to blacklist all those who refused to pay, thus making them unable to get other loans.
However, Youth and Sports Minister Khairy Jamaluddin believes it is alright to allow more people to take loans and live beyond their means, so who am I to judge his amazing line of thought.
But that is the largest problem of all – people are living beyond their means. If you cannot afford a house, rent one. If you cannot afford a car, take Uber, Grabcar and even the LRT, which hopefully doesn’t break down yet again. (If it does, I do hope they now have a backup plan.)
Honestly, we need to fix the Malaysian mentality first before we even think of giving them 18 percent per annum housing loans.
They cannot even manage a four percent per annum education loan, cannot even balance a five percent per annum personal loan for their wedding, cannot even handle a 14 percent per annum credit card without half of Malaysians paying just the minimum amount and then subsequently defaulting.
In March, it was announced that 200,727 Malaysians were barred from leaving the country due to bankruptcy, a quarter of this caused simply by car loans.
And as much as we want developers to be able to register better profits, this is not the way they should do it. In fact, the best idea came from ironically from Khairy himself – rent-to-buy housing schemes.
Awkwardly enough, the only ones actually making headway on such an idea seems to be the Penang Regional Development Authority – which began offering such deals in May.