
Malaysia enters phase two of water sector roadmap 2040 under 13MP
Deputy Prime Minister Datuk Seri Fadillah Yusof made this announcement during the opening ceremony of the Langat 2 Water Treatment Plant.
He stated that AIR2040 aims to ensure affordable, sufficient, clean and quality water supply for the people.
The roadmap also serves as a national agenda to transform the water sector into a dynamic economic sector.
It will drive development and innovation of local water technology through strategic collaboration.
Fadillah highlighted the Langat 2 Water Treatment Plant as proof of local capability in large-scale water infrastructure.
The plant features modern water treatment technology meeting international standards.
He acknowledged that such infrastructure projects involve high costs due to modern technology.
Pengurusan Aset Air Berhad played the role of financier and implementer for this project.
This enabled construction at more optimal costs compared to commercial financing.
Fadillah serves as both Deputy Prime Minister and Minister of Energy Transition and Water Transformation.
Under national restructuring, PAAB manages financing for water supply infrastructure in participating states.
The financing model allows water operators to focus on operation and maintenance.
This ensures management efficiency within the water supply system.
It also helps maintain resilient and stable financial positions for water operators.
AIR2040 plans to introduce alternative financing to strengthen sector sustainability.
This approach reduces dependence on government funds for water projects.
The ministry is exploring alternative water sources like reclaimed water for industrial use.
Non-food industrial applications such as data centers are being considered.
PETRA is focusing on reducing Non-Revenue Water through the 13MP.
The Critical Pipe Replacement Programme will address this issue nationwide.
Holistic NRW solutions and rebates for meeting targets form part of this effort.
The NRW rate is expected to drop to 28.8 percent by 2030 through these programmes.
Cooperation with state governments will continue for planning new water infrastructure.
This ensures water supply needs for domestic and industrial users are met.
State development requirements remain a priority in water infrastructure planning. - Bernama
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The Star
an hour ago
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Reforming sell-then-build home delivery system
The government has recently announced its intention to make the build-then-sell (BTS) housing delivery system mandatory, replacing the current sell-then-build (STB) system in the 13th Malaysia Plan (13MP). A similar call made in 2012 failed to materialise due to weak enforcement and limited support from industry players. At present, BTS and STB coexist, with only 2.6% of development projects delivered through BTS between 2013 and 2016, according to a 2019 report by the Khazanah Research Institute. The main reason for the push to replace STB with BTS is the disadvantage inherent in STB that shifts construction risks from developers to buyers. Under STB, houses are sold before completion, with buyers' loan funds financing developers' construction costs. If projects are abandoned, buyers are left servicing loans for houses that may never be delivered. Data from the Housing and Local Government Ministry (KPKT) as of July 31 reveal a total of 97,323 abandoned houses since 1989, involving 62,017 buyers. Of these, 69.5% (46,437 buyers) have had their projects revived by the government, 27.7% (13,927 buyers) are still in the planning or recovery stage, and 2.7% (1,653 buyers) remain permanently abandoned. By contrast, BTS shields buyers from construction risks, as they only begin loan repayments once houses are fully completed. Developers under BTS rely on bank financing and capital markets for project funding. This model is widely practised in developed markets such as the United States, Britain, Australia, and Hong Kong. However, the extent of housing abandonment in Malaysia and the costs of fully adopting BTS must be carefully studied based on empirical data. While BTS undoubtedly offers stronger protection to buyers, it carries potential downsides, including higher house prices and slower supply, as smaller developers may struggle to access project financing. It is therefore important to estimate the cost of full BTS implementation on housing affordability. Based on my tabulation of KPKT housing project data for 2010 to 2020, approximately 44.6% of houses were developed by private developers, while 53.4% were undertaken by publicly listed developers. A sudden shift to BTS could concentrate the market in the hands of a few large developers and trigger supply shortages, particularly in suburban areas currently served by small-scale developers who lack access to bridging loans under BTS. Taken together, these developments are unlikely to augur well for housing affordability. Moreover, project financing loans of about 5% to 7% secured by developers under BTS may ultimately be passed on to buyers through higher prices. This hypothesis can be tested by comparing launch prices of STB and BTS houses in Malaysia since 2015, controlling for factors such as location, property type, and neighbourhood characteristics. How prevalent is housing abandonment in Malaysia? Table 1 presents housing abandonment statistics tabulated from data obtained from KPKT's website. Rather than showing cumulative totals, the figures capture newly abandoned units each year as a share of newly completed units. The 'abandoned year' is taken as the year the project was supposed to be completed. This approach provides a clearer picture of the prevalence of abandonment over time in Malaysia. Table 1 shows that between 2010 and 2023, the average abandonment rate was 1.5% (98.5% completion rate) a year. When considering only abandoned houses that were sold, the abandonment rate falls to 0.8%. This implies that the probability of a buyer purchasing a house that is eventually abandoned during this period was 0.8%. For comparison, the Australian Bureau of Statistics reported an abandonment rate of 4.4% for new dwellings from 2007 to 2019, of which 0.5% were abandoned after construction had commenced. These statistics suggest that Malaysia's abandonment rate is not high by international standards. That said, a few caveats are necessary. First, the financial pain borne by individual buyers is real. Data from KPKT show that it took, on average, 10 years (ranging from zero to 28 years) to revive an abandoned housing project, underscoring the extremely slow recovery process. Second, of the 258 projects classified as 'settled or revived' by KPKT, only 53% were eventually completed. The remaining 47% were resolved through negotiations and measures such as refunding deposits without actual construction. While the relatively low incidence of abandonment suggests that the STB system generally works, it nonetheless requires reform and stronger safeguards to protect homebuyers. A case in point is Singapore, where housing abandonment is virtually unheard of despite the continued use of STB. STB works in Singapore because undercapitalised developers are filtered out through strict licensing and financial requirements. Developers must secure a financing guarantee equivalent to 140% of the total construction cost before launching, thereby ensuring project completion. A developer's track record is also taken into account: the size of a project (in terms of housing units) that a developer can undertake is tied to its previously completed units and its paid-up capital or deposit amount. Buyers' payments are safeguarded in escrow accounts, while active government monitoring and enforcement provide further protection. Critics may argue that STB is only viable in countries with strong enforcement like Singapore. Yet, with the right safeguards, construction risks under STB can be effectively managed. Three reforms are particularly relevant for Malaysia: > Ring-fence progress payments to prevent misuse of buyers' funds. Although a separate project account is already mandated under the Housing Development (Control and Licensing) Act 1966, loopholes and weak enforcement remain. > Stricter developer screening at the licensing stage, including track records and financial tests to ensure developers are not overly reliant on pre-sales proceeds. > Performance guarantees to protect buyers in the event of abandonment. In Singapore, developers are required to obtain a financial guarantee that insures their projects against construction risks. In Australia, the Queensland Home Warranty Scheme, which protects homeowners from non-completion of construction work, is compulsory for residential building projects valued at more than A$3,300. In Singapore, the premium for financial guarantees is borne by developers, whereas in Australia, the cost of home warranty insurance is borne by homeowners. Financial institutions can also play a role by offering interest moratoriums to buyers affected by abandoned projects. It is worth noting that while the press often highlights the gross development value (GDV) of abandoned houses, the actual loan amounts drawn are usually far smaller, as abandonment often occurs in the early stages of construction rather than near completion. A drastic shift from STB to BTS may disrupt housing delivery and erode affordability in Malaysia. Before moving toward full conversion, regulators should consider a reformed STB model that strengthens buyer protection without compromising affordability or supply, as seen in Singapore. The effectiveness of such reforms should be measured by their ability to significantly reduce Malaysia's current housing abandonment rate. KPKT can take the lead in convening an open dialogue among industry players, financial institutions, homebuyer associations, and academics to arrive at a balanced, win-win solution for all stakeholders. Wong Woei Chyuan is a professor at the School of Economics, Finance and Banking of Universiti Utara Malaysia. The views expressed here are the writer's own.


The Sun
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