How should we judge a government?

In Malaysia, if you don't watch television or read newspapers, you are uninformed; but if you do, you are misinformed!

"If you're not careful, the newspapers will have you hating the people who are being oppressed, and loving the people who are doing the oppressing." - Malcolm X

Never argue with stupid people, they will drag you down to their level and then beat you with experience - Mark Twain

Why we should be against censorship in a court of law: Publicity is the very soul of justice … it keeps the judge himself, while trying, under trial. - Jeremy Bentham

"Our government is like a baby's alimentary canal, with a happy appetite at one end and no
responsibility at the other. " - Ronald Reagan

Government fed by the people

Government fed by the people

Career options

Career options
I suggest government... because nobody has ever been caught.

Corruption so prevalent it affects English language?

Corruption so prevalent it affects English language?
Corruption is so prevalent it affects English language?

When there's too much dirt...

When there's too much dirt...
We need better tools... to cover up mega corruptions.

Prevent bullying now!

Prevent bullying now!
If you're not going to speak up, how is the world supposed to know you exist? “Orang boleh pandai setinggi langit, tapi selama ia tidak menulis, ia akan hilang di dalam masyarakat dan dari sejarah.” - Ananta Prameodya Toer (Your intellect may soar to the sky but if you do not write, you will be lost from society and to history.)

Sunday, February 13, 2011

From Sell-Then-Build to Build-Then-Sell is the way to go

An excellent article, 'House buyers are customers not stakeholders' by Chang Kim Loong, Secretary-General of the National House Buyers’ Association, which was published in The Sun, in rebuttal to an earlier article by Rehda President, Datuk Michael Yam.


"We would like to reiterate that under the Sell-Then-Build (STB) progressive payment system, it is the banks that are financing the property industry through loans to buyers. Few buyers use their own funds. Thus, it is the banks that are supporting the property industry. The Build-Then-Sell (BTS) 10:90 system that we are proposing streamlines and makes more orderly the system of financing, ie banks finance the developers to build their projects with buyers locked in with the 10% deposit. When the houses are completed, then end-financing kicks in to pay for the balance of 90%."

"Under the STB, as soon as the developer starts to sell the houses within that project and when the buyers’ loans start to be drawn down, the fragmentation of the collateral (ie that parcel of land) starts. Each lot that is progressively sold will be released to the house buyers’ banks. Hence the project financing (bridging financier) bank’s security (the parcel of land) is progressively diminished. Worst of all is the situation where if the developer gets into trouble (like project abandonment), it is virtually impossible for the project financing bank to cash out on whatever collateral remaining, due to multiple parties’ interests. This is one of the perennial reasons why so many abandoned projects are facing difficulties being revived. Against such a backdrop, is it surprising that banks adopt an ultra cautious attitude?"

"Why should a more orderly and fairer system like the BTS 10:90 make sales and marketing more difficult? It would be easier to market products based on the BTS 10:90 because buyers will feel safer. He should ask the developers already practising the BTS 10:90 system (though few in number)."

"Although buyers may pay more for their houses due to the increase in the developers’ finance costs, this is well offset by not having to pay progressive interests while the developer is building the houses."

"If Yam contends that the BTS 10:90 is a raw deal for developers, then the STB progressive payment mode is an even worse deal for buyers. Is he saying that it is OK for thousands of buyers to face the risk of project abandonment but not OK for developers to face the risk of buyers reneging on their purchase? The truth is that when a buyer reneges on his purchase, he immediately losses his 10% deposit. The developer can then sell the same unit to another buyer at a 10% discount and not lose anything. This is a far better scenario as compared to a situation whereby when a developer abandons his project, hundreds of buyers suffer the devastating effects."

"But there is no other industry where the failure of one player drags down with it so many unwary customers. These buyers are not stakeholders. They are purely customers and they have no reason to be financially devastated just because they unwarily bought into a project destined to fail."

"When a branded developer’s name is used, potential buyers’ placed their trust and confidence in it. In some cases, they realise too late that the failure and the liabilities of the subsidiary developer cannot be linked to the branded one. We believe this is cunning strategising. It is a case of benefiting the effects of the brand vis-à-vis insulating the branded parent company against any liability in the event of failure."

For more of that article:

I have one small point which I wish to add with reference to STB progressive payment system.

Many house buyers used to complain when they were charged interest by developers for late payment after the 14-day grace period. Other than the few days delay due to unavoidable circumstances like delay because of postal delivery, due to inefficiency by solicitor's staff, or even just delay in issuance of banker's cheque, what the purchaser need to pay to the developer as interest should be viewed against the interest which he would have had to pay had the payment been prompt. If my memory serves me right, the standard S&PA used to provide for 8% interest p.a. chargeable by the developer. If, for instance, the housing loan incurs interest at 10% p.a., the purchaser actually stood to gain from the small difference in rate for the short period of delay in progress payment. I think the present interest rates for housing loans are lower than 8% which would make my example invalid. But still, my argument is that the difference between the loan rate and that chargeable by developer for late payment is minimal and for only a short period, which did not warrant the usual indignation of some purchasers when complaining about being charged for late payment through no fault of theirs. The developers would prefer that all aspects of documentation are complete for prompt payment by the banks than charging for late payment.

But, this cannot be said for civil servants who applied for government housing loans which are at a significantly lower rate of interest. There is also the expected delay in documentation and release of progress payment cheques which made the civil servants vulnerable to being charged for late payment, and with a bigger difference in rate.


No comments: