No U-turn on luxury property project freeze: Johari

KUALA LUMPUR: The government will not do an about-turn from its decision to freeze approvals for luxury property projects which came into effect on Nov 1, unless there is "something significant" which warrants reassessment, said Finance Minister II Datuk Seri Johari Abdul Ghani.
"There is no such thing as u-turn. This is a cabinet's decision. Unless there is something that is significant, we will look at it," he told reporters on the sidelines of the Malaysian Institute of Economic Research's (MIER's) National Economic Outlook 2018-19.
This is an issue that should not be u-turned.They cannot send wrong signals to people. If we don't regulate on what has been advised by Bank Negara Malaysia (BNM), it will affect the banking sector," he added.
Johari noted that many developments are funded through bank financing, and the inability of developers to sell their property projects will result in non-performing loans which in turn will affect banks.
The government has not ascertained how long the freeze will be in effect.
"We said the projects will stop for awhile. On how long, it depends on the situation. We will relook back at the situation, especially the unsold units," he explained.
The freeze is applicable to development projects such as shopping malls, luxury condominiums and office above RM1 million, and are yet to be approved.
The government, according to Johari only wants to "relook" at luxury projects exceeding the threshold amount of RM1 million, but is in no way stopping developers from developing.
Projects which have already obtained development orders, those under construction as well as the ones below RM1 million will not be subjected to the freeze and will be able to go ahead with development works.
In addition to that, Johari said that the government which recognises the mismatch in demand (48%) and supply (24-28%) for affordable housing segment, also wants to ensure that the "gap is filled".
The freeze is also unlikely to stop contributions from that particular segment to the economy, Johari said, adding that the construction industry's contribution to the country's gross domestic product (GDP) stood at about 4.5%.