EPF to provide RM1.5 bil

By Pauline Wong

PETALING JAYA (Jan 30, 2012): Some RM1.5 billion will be channeled from the Employees Provident Fund (EPF) to finance the special funding scheme for the sale of houses in public housing programmes in Kuala Lumpur.

Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Raja Zainal Abidin said the funds will be given to the Federal Territories Foundation to help some 20,000 eligible tenants and interested buyers living in the National Economic Action Council's People Housing Programme (PPR) and KL City Hall public housing units.

"The scheme, announced by Prime Minister Datuk Seri Najib Abdul Razak, will help those who are eligible to buy public housing units but are unable to obtain loans from banks, due to them being retired or not having steady income," he told theSun yesterday.

A typical unit in a public housing programme in Kuala Lumpur costs below RM35,000.

Raja Nong Chik said the foundation will disburse the RM1.5 billion in stages through Syarikat Perumahan Wilayah Persekutuan, which is incorporated under it.

The company is expected to start operations by Mar 1, and the first stage of loans to be disbursed will amount to around RM400 million to RM500 million.

"These loans will be repaid over a period of 15 to 25 years, depending on the agreement," he said, adding that there will also be interest charged on the loan.

"Of course there will be an interest charged, but it will be much lower than current housing loan interest rates charged by banks."

Bank home loans interest rates are at 1.5 to 2% off the base lending rate (BLR) which is currently at 6.6%.

Allaying fears that EPF could be at a losing end if the buyers default on their loans, Raja Nong Chik assured the loan is secure as it is guaranteed against the housing unit itself.

"If the buyer does not repay the loan, then action will be taken. The house will be forfeited and sold to some 30,000 other housebuyers who are eagerly waiting for a chance," he said.

Najib, in announcing the scheme on Saturday, said it was proposed by the ministry and received cabinet approval on Jan 18.

"Through the special scheme, problems in obtaining loans can be overcome and this, in turn, will help the low- and medium-income families to own a house.

"I'm confident that the scheme will be able to assist prospective buyers and resolve numerous problems in obtaining loans all this while," the prime minister said when launching the 2012 Federal territories' Day at Dataran Merdeka.

According to a news report last September quoting Federal Territories and Urban Well-being deputy minister Datuk M. Saravanan, as of last September, the number of vacant PPR units in the nation's capital numbered fewer than 2,000, with over 20,000 applicants on the waiting list.

In an immediate response, Federation of Malaysian Consumer Associations (Fomca) CEO Datuk Paul Selvaraj said, the scheme is commendable, but caution must be exercised by the foundation.

"We support any move which will help put a roof over the people's heads, but there must be thorough consideration of an individual's ability to service the loan, as well as stringent eligibility checks to ensure the scheme is not abused," he told theSun.

"The whole process of choosing who is eligible and who is not must be open and transparent," he stressed.

He also said the EPF has a responsibility to its members to protect their interests, and so there can be no excuse to being lax about conditions set on eligibility.

Meanwhile, the Malaysian Employers Federation also applauded the move. "The EPF is assisting the rakyat to own houses, it is commendable that EPF is doing a public service," MEF executive director Shamsuddin Bardan said when contacted.

He said he is assured that any loan defaulters will be hauled up for action.

"The loan may be guaranteed against the housing units, so the house will be forfeited if the buyer does not service the loan," he said.

Under Section 26 of the EPF Act 199, loans can be given to the federal and state governments, as well as to companies incorporated under the Companies Act 1965, pending approval from its Investment Panel and the Finance Ministry.