A Budget to delight developers

For me, the biggest news in the Budget today was the bit slipped in: foreign buyers will now be allowed to buy urban high-rise condos above RM600,000 to ease the glut whereas previously they could only buy condos above RM1m.

Mind you, this glut arose due to some developers’ greed in overbuilding expensive properties that few locals could afford to buy.

Now, Christmas has come early for these developers.

Rather than now allowing local market forces (low demand and excessive supply) to lower prices, the government has  intervened. It will now allow foreigners to come in and mop up expensive properties priced beyond the reach of most Malaysians.

Many were hoping the glut – an RM8.3bn overhang in the second quarter – would lower expensive condo prices to a more affordable level. Now, they are disappointed.

Another problem then arises: how will the government now prevent developers from  building new condos priced above RM600,000 and targeted at foreigners instead of genuinely affordable homes for ordinary Malaysians?

Is this move also aimed at the excessive land reclamation – ongoing and in the pipeline – all over the place, especially the massive reclamation in Penang?

Remember, they are supposed to find 446,000 extra people to fill the proposed three artificial islands in the south of Penang Island – especially Islands B and C, the playgrounds for the wealthy. Nobody knows where these people are coming from, given the declining total fertility rate in Penang and nationwide.

The finance minister recognises this: “Today, the fertility rate in Malaysia has fallen alarmingly from 4.9 children per woman in the 1970s to 1.9 children per woman, which is below replacement level.” [The replacement level is 2.1 children per woman.]

But why should that be alarming? It means there will be less pressure to find new land and we won’t need massive land reclamation, will we? We should be happy, no?

What he didn’t say is that in Penang, the fertility rate is even lower – 1.4 children per woman. Where on earth are we going to find 446,000 people to pack into those artificial islands?

Don’t fret.

“Therefore, to assist couples seeking fertility treatment, EPF will introduce a new category of withdrawals, allowing for fertility treatment such as in-vitro fertilisation (IVF) procedure,” he said.

Still, we won’t have that many new people in Penang, let alone wealthy people.

So, with this budget announcement, will foreign buyers now be able to snap up expensive “sea-view” condos on the vast swathes of reclaimed artificial islands? Christmas has come early for developers. (Update: apparently not, as the government now says the lowering of the threshold only applies to existing condos, not those in the pipeline.)

Take a look at this as well: “New investments in international theme park projects will be given income tax exemption of 100% of statutory income or Investment Tax Allowance of 100% to be set off against 70% for 5 years”. Is this a priority for Malaysians?

The other disturbing news is that RM100m is to be allocated for the Penang Hill cable car.

“The funicular train service to Penang Hill will achieve more than 2 million passengers per year, exceeding its capacity. The Government will contribute RM100m towards the construction of a new cable car system to Penang Hill, with any additional costs to be financed by the State Government.”

Final note: does Socso really need a RM500m “rehabilitation centre” in Perak? Or wouldn’t the money be better spent on improving our public healthcare system?

Observation: Apart from some mention of renewable energy, there was no mention of building climate resilience. We act as if climate change won’t hit us. How can we be so short-sighted.

Instead, we are pandering to motorists by trying to lower tolls, including for the RM4.5bn second Penang bridge, which is still largely underused. And now the government is spending over RM6bn to acquire four highways from Gamuda, which should find the money handy in view of its “PTMP” mega projects in Penang.

Why not maintain the tolls and tax the toll concessionaires at a higher rate and use that money to improve the public transport system, starting with buses, ferries and water taxis? Ah, but that would be too cheap compared to the RM50bn “PTMP”.