Wednesday, May 6, 2015

People of Penang Must Read ! @mpkotabelud Hits Back at @TonyPua & @cmlimguaneng #PRKPermatangPauh


1.​ JKP Sdn Bhd & PERDA are two federal agencies tasked with building affordable housing in Penang.

2.​ YB Tony Pua alleges that these agencies are profit-oriented. They are not. The annual returns for both of these companies clearly show that they hardly made profit since their inception. On good years, they made only about RM2 million a year despite spending huge amount of capital to build affordable houses in Penang. On bad years, they incurred huge lost over the period of 15 years building more than 20,000 units of affordable housing in Penang. In some of the projects, JKP & PERDA incurred losses of up to RM20 million building the low cost houses component.
3.​ Currently JKP & PERDA have, on record, 30,000 applications from Penangites who desperately need low cost & affordable housing. Since DAP/PR state government has not been able to meet these demands, Federal government decided to step-in and build 9,500 units in the first initial phase.

4.​ Unfortunately until now, no approval has been given by the DAP/PR state government.

5.​ It seems to me the DAP/PR state government has been deliberately delaying the approval even though JKP and PERDA have been magnanimous in trying to resolve any issues or concerns raised by the DAP/PR state government. Letters were sent and pleas to meet-up were issued by JKP and PERDA. Three years have passed, yet no approval is in sight.

6.​ After years of "begging on behalf of the Penang people", JKP and PERDA finally managed to meet DAP/PR state government last December 2014. As expected, in the December meeting, the DAP/PR state government reiterated the rules that they wanted to impose on the housing projects by JKP and PERDA.

7.​ JKP & PERDA responded immediately in January 2015. They sent amended proposals to comply and address the DAP/PR state government's concerns even though JKP and PERDA felt the requirements were concocted to give JKP and PERDA a hard time.

8.​ Unfortunately, now we are in the month of May: a 5 month wait (and counting), there is no response or approval from DAP/PR state government given. I thought by taking over the role of local councils through SPC (State Planning Committee of which Lim Guan eng is the Chairman) things would be made easier by the Chief Minister. I was wrong.

9.​ One must wonder why is the DAP/PR state government deliberately delaying approval when they know all along the houses will be built on federal land using federal funds?

10.​ Why are they being difficult when they know there will be no cost incurred by the DAP/PR state government in building these affordable houses?

11.​ Why are they imposing additional requirements when the affordable house prices originally proposed by JKP and PERDA were actually 20-30% lower than existing market prices (and when heavy subsidy given to the low cost houses)?

I let the people of Penang come up with their own answer as to what is the motive of the Chief Minister in placing the power to give approval under his instruction. Before this the local government's approval was sufficient.

12.​ Today, Tony Pua defended the DAP/PR state government by deliberately being mischievous. He said the approval was delayed because the project consists of bungalow houses priced at RM1.8 million per unit.

13.​ Here’s the truth: there were only 20 units of the said bungalow houses. This figure is absolutely irrelevant compared to the 9,500 units which JKP & PERDA intend to build. Many of these bungalows were resort style rest houses meant for use as corporate rest houses for rental. These units were not intended for sale. Anyway, after meeting DAP/PR state government in December last year, JKP & PERDA decided to build lesser numbers of the bungalows.

14.​ Meanwhile, the rest of the 9,500 units is low cost (3,500 units @ RM42k per unit), low-medium cost (2,000 units @ RM72k per unit) and affordable housing (4,000 units @ RM160k-RM400k per unit. For comparison purposes, the developer on the land plot next door is pricing its affordable houses as high as RM700k per unit).

Let's address the issue further.

15.​ Why did JKP and PERDA projects have some pricier houses? It was meant to help cross subsidize (in a small way) the prices for the low-cost and low-medium cost units. Remember, JKP and PERDA needs to build 20,000 more units in the future to cater for the demand from Penangites. The revenue from the limited pricier units could be used for further development of low cost housing in Penang.

16.​ The low-cost and low-medium cost houses JKP and PERDA plan to build are heavily subsidized. The affordable house segment is priced below market prices (about 20-30% lower). The profit JKP and PERDA will stand to make from the 9,500 unit housing project is small compared to the outlay of over RM1 billion. Private developers normally make two to three times more than that. Even then, these returns will be ploughed back by JKP and PERDA into the subsequent low-cost and affordable housing projects in Penang.

17.​ I also notice how easily Tony Pua gets confused. JKP and PERDA housing projects are meant to cater for low- as well as middle-income people. He conveniently forgets that those households earning between RM5,000 to RM15,000 but with several children have serious challenges in buying reasonable priced houses in Penang. That's why JKP and PERDA also builds houses for them as well because JKP and PERDA realizes not all Penangites want low-cost houses. Some of the middle class families want to buy better houses, but they are currently priced-out from the market. Federal government intends to help them through JKP and PERDA's housing projects.

18.​ It is also interesting to hear Tony Pua harping on the issue of JKP and PERDA's land. He said the land were meant for building of houses for the low income families, not million ringgit houses. According to him, Federal government should not profit from Penang land which he said was previously bought by the Federal government at a very cheap price.

19.​ That's just a lame excuse designed to prevent Penangites from having low-cost and affordable houses.

20.​ I have said above that whatever small profits (compared the total investment figure) JKP & PERDA make, if any, will be used to build more houses in the future.

21.​ Tony Pua should understand that there is nothing wrong about the cross-subsidy strategy which is also employed by other developers in this country. What matters is that it can help lower the cost of low-cost and affordable house prices to below the prevailing market rate.


22.​ But since Tony Pua reminded us that governments should not profit from cheap land when they build houses, I would like to ask Tony this question: Isn't true that the DAP/PR Penang government valued the lands in Batu Kawan Estate at RM35 - RM45 per square foot when it acquired those lands from the public at a mere 35 cents per square foot before? Why didn't DAP offer developers to take advantage of the super cheap land and build houses at super cheap prices for the people of Penang? Why did DAP government want to make huge profit from the cheap land when DAP knew all along how desperate Penangites are to find cheap and affordable housing in Penang nowadays?

23.​ In the end, this whole issue boils down to the will of the DAP/PR Penang state government. They can either give the federal government the approval to build those houses, or they can play politics and find one thousand excuses not to.

24.​ That's why I have urged the voters in Permatang Pauh to give a very clear signal to the DAP/PR state government that they are fed-up and not in the mood to tolerate the nonsense coming from the state government.

25.​ The voters need to give the DAP/PR state government a strong wake-up call by not supporting the state government in the by-election.

26.​ I urge the Permatang Pauh voters to give DAP/PR state government a painful but much needed "political slap" in the upcoming by-election so the likes of Tony Pua and Lim Guan Eng can be awakened from their 7 years’ honeymoon slumber in managing Penang.

Rahman Dahlan

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