Bumiputra discount for house purchase

A plan that went awry

I grew up with the notion that Chinese are better off in this country than the Malays. Somehow, I did not feel the same. My Malay neighbours WERE better off than us. Mum and dad had to work hard to make ends meet. We even had to sublet one room to make the budget. What a life. We did not have sofa set, just some non-descript set of chairs and a simple coffee table, which today would not even make it into my dog kennel. That bad eh? You betcha.

My Malay neighbours were a lot better off. Mostly government servants with stable income and yes, sofa set! How I loved visiting them and sink bony bottom into their latex cushion. Life is good. Yet, the irony is that they get the 7%, my folks did not? Odd? Even odder still when a non-Malay couple today who is struggling to make ends meet pay at full price and a Malay buyer who drives a Beemer (Mercedes parked at home) is given 7% for a nice semi-dee in Damansara costing RM2.1m. Cool.

This is anectdotal evidence where this system needs tweaking. You see, we like to talk about social justice among races and as a result, we end up with situations like these. Why? Because policies driven by macroeconomic consideration without an understanding of the micros always go wrong and as Murphy as it can get, it does. So it is not working. Period. Let's us fix it.

OK, it is broken. How do we fix it?

I propose that we go on the basis on a colour-blind policy that is based on means test method on individual basis without racial aggregation or limit. That is simply to say that if you need help, we would help you and we would not deny you help because too many of the same race received help already. That is social justice. The Beemer owner does not need the money. He would probably spend it on a chandelier or a Camry for his dad or something. The same amount can help a large number of people who really need the money.

Additional food for thought, who actually pay the 7%?

But you know, the thing that really gets to me is that the 7% is not really from the developer but from the neighbours. As a developer, you look at the net profit of the project. So the 7% is merely spread over the rest of the houses. So old chap, if you are non-bumi, you are paying probably about 3.0% extra for your house! You are paying 100% plus a "help thy neighbour" amount of 3.0% or so. This is based on the Selangor code of allocating 30% of houses to bumi purchases at 7% discount.

In Johor, it can be as high as 15% discount and 40% allocation to bumi buyers. This is effectively 10% premium, i.e. a Chinese buyer pays 110% of the actual price. Hence, in the whole of Malaysia, nobody pays the "original price". If you are bumi, you pay 85% or actual price (get a 15% discount) in Johor and a non-bumi buyer pays 110% to cover the discount.

The main aims of the Bumiputera Lot Quota Regulation, is as follows:

1. Public unity among the ethnics in Malaysia.
2. Encourage social integration and unity among the population.
3. Assist the bumiputera to own houses. Fair and balance distribution in housing sectors. The bumiputera is given discounted rate between 5 to 15 percent.
4. Most of the Malay and Indian ethnics only afford to buy low cost housing in urban area. Through the regulations it will encourage them to buy and own house and stay in town area.
5. The involvement of private sector

Fine, but is this benefit accruing to the bumi from non-bumi made known to the bumis? If they do not understand what their neighbours are doing for them, I wonder if we are not missing out on opportunities to help people realise that non-bumis are willing to help and they have.