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The Passion behind PR1MA
 
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The Passion behind PR1MA
2013 will be an interesting year for the property industry
Posted Date: Jan 31, 2013
By: Rakesh Kumar


2013 will be an interesting year for the property industry with the development of Perumahan Rakyat 1Malaysia (PR1MA) homes, with locations in three states already confirmed last year. - By Rakesh Kumar

In 2011, there was already a government program in place called Rumah Mesra Rakyat, implemented by Syarikat Perumahan Negara Bhd for those earning RM2,500 and below. Following that, the Perumahan Rakyat 1Malaysia (PR1MA) initiative was announced on 4 July of the same year to address the needs of middle income earners, i.e. those earning a household income between RM2,500 and RM7,500.

The initiative was intended to help address the needs of the ‘middle 50’, according to Dato’ Abdul Mutalib Alias, chief executive officer (CEO) of the PR1MA unit at the office of the Prime Minister and also CEO of PR1MA Bhd (later established under the PR1MA Act). Together with his team, he started analysing the available statistics and compared the average household income, including those who does and does not own a home.

Of the total, 40% belong to the category of those earning below RM2,500, while those earning between RM2,500 and RM7,500 form 50% of that group, while the remaining 10% earn RM7,500 or more. Hence, it was the ‘middle 50’ that interested Dato’ Abdul Mutalib and his team.

Among those earning below RM2,500, 64% have their own home, while the rest do not. The same percentage applies to those in the ‘middle 50’.

Dato’ Abdul Mutalib pointed out, “However, there was already a program catering to those earning below RM2,500. The group that is left out is the ‘middle 50’.” This was how the group became the target for the PR1MA scheme.

Later, a question arose whether the scheme should target only first time homebuyers, or should it also be extended to those who already had a home. He said, “We had a discussion, and I felt that those who already have a home should be given a chance too.”

Dato’ Abdul Mutalib cited an example of two types of people from the target group. Person A wanted to own a home, so he buys a home in Klang, although it was not located at his choice location or fitted his lifestyle (before the launch of PR1MA). On the other hand, person B preferred to rent a home and use the excess money to pamper himself.

Later, person B decides to buy a PR1MA home, one that fits his preferred location and lifestyle. Person A, in the meantime, does not have the opportunity to do the same, as the initiative was not launched when he bought his home.

“We need to be fair to those who did not have this opportunity before the launch of PR1MA,” he said, noting that the current owners of one property can now look at alternative locations offered by the initiative.

In the meantime, a lot of work had to be done to get the program off the ground.

Kicking things off

When the PR1MA initiative was first announced, Dato’ Abdul Mutalib was not even in the picture, although he was part
of the small informal group called by the Prime Minister to discuss housing issues. He said, “Our first idea was to get the developers to spearhead the development of affordable homes.”

Shortly after, he was appointed as PR1MA’s CEO. During this time, the initiative, also known as unit PR1MA, was under the purview of the Economic Planning Unit (EPU).

Dato’ Abdul Mutalib then met with the Director General of EPU to present his ideas, soon after EPU presented theirs. Interestingly, there were many differing views from both presentations, especially on PR1MA’s role and authority.

He said, “I told them that PR1MA would not be sustainable if it was given to a developer. We should be the developer.” Another point he brought up was on PR1MA’s regulatory power. He added, “If PR1MA was not given full authority, the initiative would not be sustainable. I felt we should have the regulatory power, and also be the developer or the catalyst to facilitate other developers.”

He gave an example that regular occurred in public housing schemes. He said, “The environment is not maintained; the same goes for the facilities. Some owners rent out a single room to eight students, and even when you have guidelines, there is no power to enforce it.”

That was why Dato’ Abdul Mutalib felt PR1MA must have the necessary regulatory power. This also explains why one of its conditions to the applicants stated that, ‘once allocated, there is a 10-year moratorium, whereby the properties cannot be sold or transferred to another party. Another condition included is the homes must be owner-occupied and no sub-letting would be allowed.’

From July to December 2011, a mandate was taken by the newly formed PR1MA team (at the time, Dato’ Abdul Mutalib only had one staff, one who was seconded from EPU) to work on the PR1MA Act, which was passed at the end of December in both Dewan Rakyat and Dewan Negara.

The year 2012 was perhaps the most crucial as the team spent time identifying the right towns or good locations, and the land banks, both belonging to the federal government and state government, that they can optimise.

Dato’ Abdul Mutalib said, “We had to explain to the chief ministers, their excos, the EPU department of each state and other relevant authorities. At the same time, we managed to get useful feedback from them.”

For example, he pointed out that Kota Kinabalu was identified as one of the best locations in Sabah. “However, Sandakan, Tawau and Lahad Datu were also recommended as these towns were developing rapidly and affordable homes were needed,” he said. In Sarawak, apart from Kuching, other suggested locations included Miri and Bintulu.

It was stated in Budget 2013 that 80,000 affordable homes would be built this year, of which PR1MA would develop 50,000 homes on its own, while facilitating the private sector to develop the remaining 30,000 homes.

For example, the Nusantara Prima project, which has commenced, is a collaborative effort between developer Denia Development Sdn Bhd and landowner UEM Land Bhd, while PR1MA will administer the open balloting process (more on this later).

Putting ideas into action

In the meantime, it was time for more meetings for Dato’ Abdul Mutalib and his team. They met up with the top 15 developers in the country, and gave talks that were attended by the respective CEOs or their deputies. Dato’ Abdul Mutalib also met up with the Real Estate And Housing Developers’ Association of Malaysia (Rehda) to explain the purpose of the initiative.

On its own, PR1MA’s team also organised many talks to create awareness among the professional groups, such as the various organisations for engineers, surveyors, contractors, etc.

The most important element of the initiative was to gain the confidence of the people. This would be achieved via the balloting process, which would be fully audited by a third party accountancy firm.

Dato’ Abdul Mutalib said, “In a typical scenario, when there are developments that are being sold below the market price, people will camp outside the sales gallery for hours or even days before the launch. But here, everyone gets a chance through the balloting process and there is no Bumiputera discount or quota.”

He noted that those who did not get selected the first time around would still have their name registered in the system. “We would regularly update them with news of new launches,” he said.

He also pointed out that these homes are not considered low-cost to lower middle-cost type of homes. These are indeed lifestyle homes.

For example, he noted how the Taipan area (in USJ) was originally targeted at middle-income earners. Now it is flourishing with lifestyle retail shops and the likes of Baskin Robbins and Starbucks outlets.

Dato’ Abdul Mutalib said, “The point is, people in the middle income bracket also have certain expectations in terms of lifestyle.” Apart from Kedai Rakyat 1Malaysia, some of these housing areas will also have childcare centres.

“This will help alleviate their worries, reduce the cost of living (no need for a maid) and increase the level of their disposable income,” he said.

The houses, he pointed out, are not necessarily the usual 2- or 3-bedroom units, but will also comprise 1-bedroom and studio units. “If you have just started working at your first job, earning about RM3,000 and you are not married, you obviously do not need a 3-bedroom home. A studio unit will do,” he said.

 

 

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