FT and Urban Wellbeing Minister, Datuk Raja Nong Chik Raja Zainal Abidin’s denial that the usage of RM1.5 billion of Employees Provident Fund (EPF) to finance home loans for unqualified home buyers meant the federal government had run out of money, opens up the possibility of alternative funding options for home buyers.
Taking Raja Nong Chik’s statement at face value, I propose that the government consider these the two following options, which the government can rightly consider, since, according to Raja Nong Chik, the treasury has the money.
The first, is to offer financing based on an NFC-like soft loan interest rate of 2% given to a federal minister’s family instead of the announced 6.5 percent interest rate by DBKL’s Deputy DG, Mhd Amin Nordin, for the low income, deemed unqualified home buyers by commercial banks.
Based on an annual 6.5% interest rate for a 25 years loan tenure would increase the price of the units from RM35,000 to RM70,800 as compared to an annual 2% interest rate levied for 25 years of just RM44,400.
The Minister should respond as to why wasn’t the same loan consideration for the NFC extended to the rakyat in this scheme? It would seem that the Minister’s announcement of a 10 percent default rate is connected to the 6.5 percent high interest rate charged to the low income earners.
The second, is to offer a more equitable funding mechanism called the ‘Rent-to-Own and Zero Interest’ Scheme. For example, a RM35,000 unit for 20 years would only require a RM145 monthly repayment not including building maintenance fees. This approach would fulfill a people-centric economic goal since the units offered have already been built and currently occupied with the construction costs already accounted for. This scheme would also eliminate any further administration cost as the existing monthly rental collection system in use can remain. This is a win-win concept for all stakeholders.
Furthermore, this scheme should be expanded to include all Malaysians nation wide because not all lower-income group resides in Kuala Lumpur. The scheme should be available regardless of economic status and race to provide for basic home ownership in an equitable and transparent manner.
In the interest of a ‘people first’ democratic process a referendum should be held for the residents to select which option is preferred; the EPF 5.5% scheme, the ala-‘NFC’ soft loan 2% scheme or the Rent-to-Own, Zero Interest scheme? The two alternative options are even more viable with the minister’s recent statement that the government treasury has the funds in spite of proposing to use EPF for the scheme.
Finally, I accept the minister’s challenge to an open debate which should be titled ‘Which is the best funding option for PPR-PA home ownership?”. This debate should also be telecast live on television similar to the live telecast of the debate between Penang Chief Minister and MCA President by Astro. This indeed would be democracy in practice, predicated upon the right to information for the rakyat. After all, Malaysians want to know for certain that our treasury is really not empty.
Nurul Izzah Anwar
Member of Parliament Lembah Pantai
12 February 2012
