Institute for Democracy and Economic Affairs (IDEAS) senior fellow Carmelo Ferlito said it was normal for private developers to move away from what was perceived as unfair competition.
He also noted that 20 federal and state agencies were involved in housing development.
“The reasoning is simple and easy. As a private developer, it is impossible to compete with the government.
“That is why we are facing a limited supply of affordable housing in the country,” he said in a statement.
According to Bank Negara Malaysia (BNM), from January 2016 to March 2017, only 21% of new house launches were priced below RM250,000.
Ferlito said 17% of the unsold residential units were priced below RM250,000.
While the central bank’s solution was to concentrate the planning and action power into one institution, he said, a central authority could not possibly succeed where the other 20 government bodies had failed.
He said the obvious solution of allowing private developers to move back into affordable projects would allow the market to determine demand.
He added that if there were higher profit opportunities in affordable housing, private developers would certainly invest in them.
“If we want to bring back developers into that specific market, then we have to avoid cutting out their incentives to do so through this direct government intervention that has created an unfair competition in the market.”
Caption: Ferlito says it is normal for private developers to move away from what is perceived as unfair competition.