- MemberDecember 26, 2021 at 3:37 pm
Malaysia is one of the countries that practice the Mixed Economic System, that is, the economic system that uses market mechanisms and justify government intervention in the economic activity. The housing market is basically subject to the market mechanism as other goods and services where price plays a major role. Generally, there are seven main forms of government intervention in the economy namely, subsidies, taxation, regulation and legislation, minimum price policies, maximum price policies, quotas, and government ownership. There are various perspectives of policy intervention in the land and property development process, especially when government controls land development.
Government intervention in the property sector implemented through basic and subsidies established by the government (Hoek-Smit, 2003) that is important in:
i. Improving public health facilities provided such as water supply, drainage, and environmental conditions are satisfactory.
ii. Improving fairness and equality and social balance. For example program for slum housing or housing programs for low-income earners.
iii. To overcome inefficient in the housing market. The existence of monopoly profits or home problems those are not qualified.
iv. Stimulate economic growth. Housing is not only creating jobs in the housing industry but also to the industries related to housing, such as industries producing building materials and housing equipment. Thus housing subsidies can stimulate the economy relative to other forms of government spending other. Most of the residential institution in the United States was established by the government during the economic downturn is intended to stimulate economic growth. (Hoek-Smit, 2003)
Basic housing Malaysia is to provide adequate housing, the ability-quality, and all the people from all walks of life, especially for low-income groups. The government has formed the basis and specific programs to achieve the basic goal of state housing. Kementerian Perumahan dan Kerajaan Tempatan who is responsible in the housing development. The government has introduced several incentives that essentially to promote home ownership and stimulate economic growth such as incentives stamp duty, feasibility in raising the repertory Housing Loan spending EPF to Purchase Home Second, Housing Allowance to lay accomplices and so on.
Government intervention in the real estate industry is also important in reducing the problem of growing speculation in addition to raising the price of real estate in the future consistent and relevant to improving the quality of housing and construction costs. Overall, buyers who want to buy homes and investors who buy for rental will not be impressed by short-term investors. Observed that the growth rate for the number of borrowers with three or more active housing loan accounts in 2013 has been reduced drastically to 4%, from 15.8% previously implemented measures to curb speculation. Borrower represents 3% of the total housing borrowers account. Property values also increased a lower rate, 8% for the first quarter of 2014 (4th quarter 2013: 9.6%). It is unlikely that real estate prices to be reduced, but it is likely to stabilize or increase at a slower rate in the future.
Government intervention in the control mechanisms with the developer. For example, the Government in Budget 2014 prohibits developers to implement projects profiled by DIBS to prevent developers incorporate interest rate guarantee loans to buyers during the construction period in house prices. The government also implemented several control mechanisms, namely through reduction Loan To Value (LTV) to 70 percent for housing loans for third-home purchases, HOC (Home Ownership Campaign) Malaysia 2020–2021, and review Real Property Gains Tax (RPGT). The implementation Guidelines for Acquisition of Properties aims to control the ownership of property by foreigners in Malaysia. It is important to stabilize real estate prices from excessive speculation and provide opportunities for local interests to purchase quality properties worth less than RM1 million per unit, mainly residential units.
Government intervention in the property sector is a very large role in influencing the impact of the budget on the property either for a long time or a short-term period. The role of government intervention are covering the entire planning, development, economic, social and political. It is thus indulged, the government has the power to oversee the market mechanism and resolve the problems of economic principles together with the private sector.