INCEIF Proposes Special Fund For Affordable Housing

Kuala Lumpur, 3 October 2019, – INCEIF congratulates Subject Matter Expert (SME) on Islamic Banking & Finance Prof Saiful Azhar Rosly, SME on Accounting Prof Zulkarnain Mohd Sori, and alumnus Dr Mohamed Ariff Mohd Daud on the acceptance of their proposal on special fund for affordable housing by the Ministry of Housing and Local Government.

“The Ministry, through National Housing Department (NDH), is honoured to collaborate with INCEIF to draft the Proposal for The Affordable Housing Development Restructure Fund. The collaboration is in line with the Government’s wish to involve expert researchers in issues affecting the national housing industry,” The Ministry said in a letter to inform INCEIF on the appointment.

NHD is set up to implement and coordinate housing development of the country with provision of affordable housing for various target groups in line with the goal ensuring housing development is managed systematically, livable and sustainable for all.

In order to achieve such goal, NHD has launched the National Housing Policy 2018-2025 as well as the National Affordable Housing Policy where policies are designed to meet the industrial needs, to overcome issues and challenges as well as to drive overall housing sector by emphasising systematic planning development and management at all levels i.e. federal, state and local authorities.

The issue of housing supply, affordability and home ownership have been in focus in recent years. There is a shortage of affordable housing in Malaysia with only a quarter of houses launched nationwide from 2016 to March last year priced under RM250,000. The Financial Stability Review by Bank Negara Malaysia for the first half of last year reported that “the mismatch between housing demand and supply” is exerting “upward pressure on house prices”.

The increase in prices had then led to hundreds of thousands unsold units, including uncompleted projects. As of end June last year, there were 146,196 unsold units, including uncompleted units that have been launched, with 80 percent of these priced above RM250,000.

As a university that places importance on the practical implementation of policies affecting society at large, INCEIF recently undertook a research to look into making houses more affordable for the majority of Malaysians.

With a grant provided by Khazanah Nasional Berhad, INCEIF recently completed a two-year study on funding issues affecting developers in building affordable houses. The findings were first presented to the National Action Council on Cost of Living (NACCOL), in a monthly meeting chaired by Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail in Putrajaya. INCEIF was among a number of institutions invited by NACCOL to present findings and proposals on how to address current issues affecting consumers. Since then, the findings and proposed solutions have been presented to a number of government representatives.

In the presentation, INCEIF highlighted that surveys carried out for the research identified five components affecting house prices:

  • Land cost
  • Compliance cost
  • Construction cost
  • Finance cost
  • Developers’ profit margin

INCEIF’s research zeroed in on the finance cost incurred by developers in building affordable houses. Based on this, the proposal focused on reducing finance cost through the setting up of a and ESG-based Sukuk Fund as there are interests from institutional investors such as Employees Provident Fund and Lembaga Tabung Haji to invest based on the ESG (environmental, social and governance) principles.

Another viable option is through Investment Account Platform (IAP) where affordable housing projects can be funded by investment accounts of Islamic banks.

October 11, 2019 10:01 am
  • Bank Negara Malaysia
  • Finance Accreditation Agency (FAA)
  • International Shari’ah Research Academy for Islamic Finance
  • Securities Commission Malaysia (SC)
  • Shariah Advisory Council
  • Chartered Institute of Islamic Finance Professionals
  • Malaysia International Islamic Financial Centre (MIFC)
  • Islamic Banking and Finance Institute Malaysia