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Tough loan rules stymieing Sabah’s property sector

Chew Sang Hai

11th August, 2017


KOTA KINABALU: The growth of Sabah’s property sector is being stymied by stringent loan approval conditions set by Bank Negara Malaysia (BNM).

“Property developers acutely need the support from the banks; they cannot do business without getting the loans they need, said President of the Sabah Real Estate and Housing Developers Association (SHAREDA), Chew Sang Hai , and stressed the property sector cannot depend solely on the government for funding.

In response to the high rate of rejection for business loans, he said SHAREDA has submitted a list of proposals to the Federal Government calling for fairer policies and measures for the betterment of the local property sector.

Chew said this when met by reporters after attending the opening ceremony of the COE Roundtable Conference which was officiated by Minister of Local Government and Housing, Datuk Hajiji Hj Noor on behalf of Chief Minister Datuk Seri Musa Haji Aman.

“It is imperative to stress here that Sabah’s business situation is very different from West Malaysia, regrettably many loan applications were rejected by the Risk Committee at Kuala Lumpur because they lack knowledge on the state’s developmental progress,” lamented Chew.

Furthermore, he said among the main obstacles faced by property sector in Sabah is attributed to imbalance exposure of loan lending.

With prospects for loans drying up due to stricter bank approval policies, he noted that imbalance of loan exposure and distribution among real estate and property developers will cause imbalance in development projects.

To overcome the disparity, Chew said SHAREDA recommends setting the fixed exposure rate of 5-7.5 percent for Sabah and Sarawak and creation of a Regional Risk Office in Sabah.

When pressed by reporters on the current exposure rate for Sabah, he said Bank Negara Malaysia (BNM) has refused to disclose any details, however he said: “We get the feeling that it’s very low, if we don’t get the loans, how we can start projects?”

Apart from calling for revised rates, Chew outlined the proposals also called for the creation of Regional Risk Committee to be based in Sabah with an approval rate of RM150 million.

At present, Malayan Banking Berhad has a Regional Risk Committee in Sabah but with an approval authority at a meagre RM20 million, which does not match the scale of property development pace in Sabah.

He emphasised for a concerted effort from all parties to work together for the sustainability of the finance industry. “ For example, if the total loan term is RM 100 billion, then RM7 billion must come from Sabah, you cannot say RM100 billion and only RM1 billion come from Sabah, only 1 perc ent doesn’t mean anything,” he said.

In response to SHAREDA’s proposals, Chew said the Bank Negara Governor has agreed to establish a dialogue on August 4 to initiate a Regional Risk Forum for Sabah.

“Chief risk officers from all the banks, mostly based in KL will be invited to attend our talk and we will give them a deeper insight and understanding on the differences between Sabah and West Malaysia,” he said.

Additionally, he noted BNM will also be initiating a taskforce to study on measures to improve the banking infrastructure mobility in the state.

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