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Who benefits from bumiputera discounts?

“Jadi adalah wajar diskaun kepada bumiputera untuk pemilikan hartanah ini tidak dikekalkan kerana ia melibatkan nilai yang tinggi…Maknanya, bumiputera perlu berdikari dalam soal pemilikan hartanah berkenaan.”

PETALING Jaya Utara Member of Parliament (MP) Tony Pua suggesting to the Selangor government to remove the 7% bumiputera discount for residential and commercial property above RM500,000.  Pua, who is also economic adviser to the DAP secretary-general, argued that those who could afford such high-end properties did not need to be supported by affirmative action. He added that the discount could lead to profiteering where bumiputera who enjoyed such discounts could then sell the property at a much higher price. (Source: Mansuhkan diskaun hartanah bumiputera, Utusan Malaysia, 26 July 2010)

“If we are suggesting that such discount should continue, are we suggesting that rich Malays like Tan Sri Syed Mokhtar, Tan Sri Rozali Ismail or Dato’ Seri Nazir Tun Razak, who earn six-figure or seven-figure monthly income, also qualify for the seven percent discount whenever they buy any residential property above RM500,000 or commercial property above RM2 million, even though they [can] afford to pay the market price?”

Kampung Tunku assemblyperson and DAP member Lau Weng San agreeing with Pua’s suggestion. Lau argued that the bumiputera discount policy was to encourage house ownership as most “under-privileged Bumiputeras live in rented property”. However, he said, high-income bumiputera were “financially sound” and able to compete in the open market. (Source: 7% Bumiputera discount for high-end property should go, Lau Weng San’s blog, 30 July 2010)

“I’m asking YB Tony Pua not to play with fire…Don’t even light a match.”

Umno information chief Datuk Ahmad Maslan warning Pua. He said Pua’s proposal totally disregarded the sensitivity of Malay Malaysians and the bumiputera who comprised two thirds of the population.

Maslan argued that the current bumiputera ownership of shop houses and business premises in urban areas was only 14%, and doing away with the discount would worsen the situation. He declared that Pua’s suggestion was one among DAP’s long list of suggestions made to question Malay and bumiputera privileges. (Source: Ahmad Maslan to Tony Pua: Don’t play with fire, Bernama as quoted in Malaysiakini, 1 Aug 2010)

“I concede that it may not remain forever but at the moment, it (abolition of the discount) is not appropriate yet.”

Prime Minister Datuk Seri Najib Razak clarifying that although Pua’s proposal fell under state jurisdiction, the federal government itself had no plans to review the bumiputera discount.  He also warned DAP against placing pressure on Malay Malaysians and bumiputera as this could lead to anger and dissatisfaction. (Source: Government Does Not Want Other Graduate Officers To Be Involved In Politics — Najib, Bernama, 28 July 2010)

“Tetapi hakikatnya, sekiranya kita melihat kepada pegangan hartanah Bumiputera di setiap peringkat, angkanya jauh ketinggalan berbanding kaum lain. Statistik pada tahun 2007 menunjukkan peratus pemilikan bangunan oleh Bumiputera cuma 15.7 peratus. Bagi hartanah komersial pula, Bumiputera hanya memiliki sekitar 29.2 peratus untuk kompleks perniagaan dan serendah 3.5 peratus untuk premis perindustrian. Statistik ini menggambarkan suatu ketidakseimbangan yang terlalu ketara.”

Rembau MP and Umno Youth chief Khairy Jamaluddin arguing that although Pua’s suggestion made theoretical sense, when compared to the overall figures, Malay Malaysian and bumiputera ownership still lagged behind the other races. He added that abolishing the discount would widen the inter-racial economic gap.

Khairy said removing the discount would also deny bumiputera the opportunity to own property in strategic locations. He added that a moratorium could be imposed on the reselling of such property to prevent profiteering. (Source: Isu ‘ Diskaun Bumiputera’, Khairy Jamaluddin’s blog, 29 July 2010)

“If the Government has no intention to reform its affirmative action policies as it stands today, then the Prime Minister and UMNO leaders should stop the hypocrisy and pretense that the Government is going to implement a ‘New Economic Model’ which will be based on ‘market-friendly’ or ‘merit-based programmes’. It’ll only prove to investors that the Government is ‘all talk, no action’ and that the Barisan Nasional is completely incapable of change, much less the transformation that is required to take us to a developed nation status by 2020.”

Pua questioning the government’s sincerity in implementing the New Economic Model (NEM). He said Najib was backtracking from implementing the NEM’s “affirmative action approach” that was based on needs, not race. Pua said it was a contradiction to award affirmative action discounts to “wealthy individuals who could afford properties in the range of millions of ringgit”. (Source: Where’s NEM’s “Market-Friendly” Affirmative Action Programme?, Tony Pua’s blog, 3 Aug 2010)

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19 Responses to “Who benefits from bumiputera discounts?”

  1. nik says:

    Spot on Tony! I think it’s best to do away with freebies for the rich – instead, if the government can use that additional 7% paid to go towards the poor in the country (i.e. instead of free 7% to the houseowner nor the developer – the money goes to the poor), then wouldnt this be more a win-win situation? When the rich get richer, the poor get poorer, the Sheriff of Notingham is really creating his own Robin Hood… No one wins. Tony is not saying get rid of all discounts – just that how does one justify giving discounts to the rich?

  2. Sean says:

    UMNO. The ultimate benefactor of an undeniably racist benefit is the racist party who claims to represent that race. Defending the benefit is defending an apparent gift to members of that race. To question the benefit is to attempt to take away that gift.

    Maslan, Razak and Jamaluddin are all quite right – even if two of them did attempt intimidation to varying degrees. It is unarguable that the discount is failing to deliver its often-claimed target, and a worsening of the statistic on removal of the discount is inevitable, conspiracy theories notwithstanding.

    I agree that Tony Pua is wrong to suggest a modification of the discount. That he does it is a fine example of everything that is wrong with a 2-party system. The two sides don’t need policies or planning, all they need is a well-known set of issues and to take up pugilistic stances for and against them.

    There is an apparent problem: a large discrepancy in economic power between Malaysians when we use race as a measure. Malaysia has tried only one solution in 40 years. It’s as clear to Tony Pua as it may be to anyone else that it’s the wrong solution. 40 years is more than long enough to test it. What he is suggesting however, is to stop trying to solve the underlying problem. That’s wronger. It’s too easy for UMNO to reject his solution. Meanwhile the electorate is trapped between racists with a bad solution and a B-team who goad them and offer something worse.

    • Peter says:

      Instead of referring to the issue as bumiputra discount, Tony Pua should just propose to remove property discount for the rich.

      After all, he’s on right track i.e. to reduce the gap between the rich and poor. Race has nothing to do with it.

  3. neptunian says:

    Any talk of removing “freebies” to the Bumiputra – rich, super rich or poor is just beating on a dead horse! Even a billionaire Bumiputra wants his 7% discount.. that is his entitlement, so you non-bumiputra please shut up!

    NEP, NEM, NKRA etc is just so much talk.

  4. JayCKat says:

    Rembau MP and Umno Youth chief Khairy Jamaluddin is arguing that although Pua’s suggestion made theoretical sense, when compared to the overall figures, Malay Malaysian and bumiputera ownership still lags behind the other races.

    Right… I see. We must even help rich multi-millionaire Malays own more property to balance out property ownership in the country.

    Amazing, I didn’t know even the rich Malays need financial help to hold their own against the non-Malays.

    The Indians and Chinese who live in Malaysia must be such awesome people, monsters even. They probably all stand 7 feet tall, spit fire and fart thunder.

  5. Shafiq says:

    House prices are always on the rise in Malaysia and it will never go down. In other countries due to the economic downturn, house prices have gone down to an unimaginable low level. Here in Malaysia (or at least in urban areas) it seems that there are not that many young first time home owners. This is because a decent home is so expensive and with our measly pay it is definitely out of reach. That is why even graduates that have been working for a few years still can’t afford to own a house of their own and hence still live with their parents. You would be a fool to think that house prices here are determined by the market. NO! They are determined by the evil developer corporation who decides the price. Plus they are in cohorts with the banks as well. How do you think they justify the selling price of the houses they built? By putting in words like “exclusive”, “chic”, “hip”, “golden triangle”, “Damansara” and etc. The extortionate amount for a home is artificially raised by these vague descriptive adjectives. And since they also work with the banks, therefore they get to control the price.

    We all know that the homes are built by cheap foreign labour and materials that are plentifully and readily available locally. In Malaysia, house builders and financiers work hand in hand with the government to keep its citizen bounded. Why you ask – because debt incumbent home owners will never go on strike!

    I am supposedly Malay (as the government wants me to be). However the 7% discount doesn’t actually make any difference for my dream to own a home in a decent place. Sure I could buy a low cost flat that costs less than a 100k but buying a low cost flat would mean buying a place where there will be crime, dodgy living environment and flat mentality. Just look at places like Kerinchi and Pantai Dalam. These are actually places where the government wants the majority of Malays to live. Places where it is dirty and where your hope and dreams go to die! There are equivalent places for the other races similar to Kerinchi and Pantai Dalam. For the small “lucky” number of Malays who get to stay at a decent place, they are forced into a mortgage that ties them up until they retire or worse until they die. How else do you think the government keeps its people in line? Remember debt incumbent home owners will never go on strike.

    If you ask me, that 7% discount should be raised to 10%. It should be given to all first time buyers. That is it. You only get a 10% discount on your first home. If you can afford to buy a second home that means you can afford to pay it without the discount. Discounts should be given to all Malaysians wanting to own their first home. Furthermore the discount can only be given where the housing development follows a quota system. The quota system should generally follow the demography of this country just like how the Singapore government allocates housing for its people. That means in an area where 100 houses will be built, 55-60 units would go to the Malays, 25-28 units to the Chinese and 10 or so would go to the Indians. The 5% remainder would go to the others including foreigners. All the buyers will get the 10% discount for the new houses. I notice in KL, places with a good demographical mix tend to fetch a good price for their homes later on. Plus there are less dodgy people in places where the demography is mixed. Furthermore it shows that Malaysians want to live together.

    • Kong Kek Kuat says:

      @ Shafiq

      Even in your attempt to help, you appear prejudiced and self-centred.

      “That means in an area where 100 houses will be built, 55-60 units would go to the Malays, 25-28 units to the Chinese and 10 or so would go to the Indians. The 5% remainder would go to the others including foreigners.”

      FIVE PERCENT remainder to OTHERS, INCLUDING foreigners!? Come on dude.

      Nevermind that you are bad in economics, and simplistic in social studies; you don´t even know what Malaysia is made from.

  6. Fern says:

    Datuk Ahmad Maslan (paraphrased by TNG): Pua’s proposal totally disregarded the sensitivity of Malay Malaysians and the bumiputera who comprised two thirds of the population.

    Somehow, I don’t think that the underprivileged Malay Malaysians, who I assume, are the majority of the two-thirds, would feel the pinch in their pockets if this is revoked. But then again, this is how Malaysia eradicates ‘poverty’. Keeping the bumiputera discounts doesn’t close the gap between the rich and the poor. It widens it.

    “I’m asking YB Tony Pua not to play with fire…Don’t even light a match.”

    I sigh every time I read about someone saying that we shouldn’t talk about ‘sensitive issues’. It’s everywhere, especially the Form 4 and Form 5 Sejarah textbooks. It’s been 51 years since Independence. Yet, Malaysia still hasn’t manned up enough to talk objectively about these issues. I hope I won’t die before I see that day. Meanwhile, my generation would all readily ‘flee the country’.

  7. Tecky says:

    Race-based discounts, preferential allocations, lower admission standards for educational institutions, freebies etc etc. The recipients of these ‘privileges’ are actually being enslaved. They won’t become more competitive or independent, which is what Umno claims it is trying to achieve for them. Actually it’s in Umno’s interest to keep its voter base ignorant, uncompetitive and dependent on handouts.

    So whose interests do these privileges really serve?

  8. Jamie Khoo says:

    Sorry, Tarani Palani, but I don’t see the point you are trying to make other than repeating what politicians have said.

    Do you have a particular stand on the issue? Is this an op-ed piece or is it a summary of points?

  9. Joon says:

    Who benefits? The bumi buyers themselves. The non-bumi are actually subsidising the discount to the bumis. Think about it. If the developer keeps his profit unchanged, he could easily average the price down for non-bumis if he does not need to give discount to the bumis. So in effect, the poor non-bumi fellow could be subsidising the rich bumi. Make sense? Why should Malaysian put up with such discriminatory policy?

  10. Anon C says:

    Pua is playing politics to the max. He is not inconsistent.

    All our subsidies actually benefit the rich. Petrol subsidies actually benefit cars with higher consumption and cc. They use more gas. Thus, Khalid Ibrahim’s Harrier consumes more petrol than those using kapchai. Also water. Khalid’s grandiose home in Bukit Damansara consumes more water than a person who lives in a PPR. He uses more water for his pond, for his taman and for washing his car.

    But where was Tony Pua on this. Everytime we talk about subsidies he is against it’s implementation. Be consistent at least.

  11. K S Ong says:

    Just to share my experience managing a small housing development company in KL, dealing with Bumi quotas and with the required discounts. I actually worked for a Bumi company though my brother was a key person running it.

    The first project had 60% quota because it was alienated land with the condition that transfer must be subject to Exco approval. DBKL specified that the houses alternate Bumi with Non-Bumi, which worked out roughly 2:1 when deciding allotment. I was glad DBKL decide on the Bumi allotment while we just implement accordingly. Every subsequent sale by a Bumi to a Non-Bumi required another Non-Bumi to a Bumi to maintain the quota! Not sure what happened since.

    From a practical point, Bumi purchasers actually complained that they did not like the mix in terms of allotment alternating Bumi and non-Bumi!

    Later, it was a project with 30% quota and like before, DBKL did the allotment for Bumi purchasers. But the titles were freehold, so no problem with subsequent transfers either way presumably.

    Later, another project with freehold titles, 30% quota and again DBKL did the allotment. But there were a number of unsold Bumi lots. We advertised as required and after 1 year, applied for the release of the Bumi lots to Non-Bumi. DBKL replied that we should rent to Bumi instead! Can you imagine how this would affect a company’s cashflow and future plans? Fortunately, with freehold titles, we could sell to a Bumi and then transfer to a non-Bumi, as an extra arrangement which basically defeated the original purpose and incurred unnecessary extra costs and hassle.

  12. seriati says:

    Dasar ini perlu di ubahsuai bagi mencerminkan kedudukan bumiputra yg telah meningkat. Saya setuju dgn Sdr Tony Pua: bumiputra superkaya tak perlu diskaun, kerana meraka perlu tidak merendahkan maruah kaum.

  13. Radix says:

    Selangor state should allocate the 7% discount to a special fund to subsidise low-cost housing for bumiputera, hence ensuring that every RM of subsidy to the bumiputera community still remains within the community, but redistributed to those who need it more. This way, detractors cannot object on the basis that bumiputera benefits have been infringed.

    • Sean says:

      What actually is the mechanism of the 7% discount? If a shop gives a discount, they accept lower-than-usual revenue for an item, possibly even making a loss on it. Does the seller of a house to a bumi altruistically give up 7% of the value of the house, or is the discount funded from somewhere? Surely if it’s funded from somewhere then it’s not a discount, but a subsidy? Does the discount apply to any house purchase? Would I have to sell my house at a different price depending on the race of the buyer? If houses are built specifically for bumi occupation and the 7% discount, what’s to stop the developer cutting corners on the build to preserve his profit margin? If the houses are built to the same standard as non-bumi houses and there is no subsidising organisation, wouldn’t the discount actually be subsidised by the buyers of the non-bumi houses?

      I’m not sure how any money could be set-aside for ‘low cost housing’ without the automatic understanding that what you’re proposing is a kind of aboriginal reservation.

  14. Eric says:

    Dr Syed Alwi, can you enlighten us on how the bumiputera discounts tie in with Islam? Is it halal?

  15. Radix says:

    Datuk Ahmad Maslan’s warning for YB Tony Pua not to play with fire is clear evidence that Umno is only interested in the welfare of wealthy Malays.

    Khairy’s suggestion that removing the 7% discount for high-end property will widen the home ownership gap between Bumis and non-bumis. How does he know that? What study has he cited? The fact that this discount policy has been in place for decades but has little to show for is evidence that this policy does NOT work. Or that the erstwhile administration has failed in their role of redistribution.

    Like Eric, I’m interested to read what Dr Syed Alwi has to say about this. Where’s our resident theologian when you need him?

    • CSK says:

      “I’m asking YB Tony Pua not to play with fire…Don’t even light a match.”

      Wow! Mat rempit talking? See, this is the type of politician we have and they will continue to run this country to the ground. This country is beyond help.

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