Economic Policy and Global Government

Question: Critically review the economic policy that is relevant to the housing policies in Malaysia. Answer: Introduction The main aim of the assignment is to critically review the economic policy that is relevant to the housing policies in Malaysia. The author in the report analyzes the affordable housing policy in Malaysia and its economic implication in the country. Housing is one of the basic necessities of the people and one of the rising concerns for the government. The housing process is continually rising making it unaffordable for the low income group people. Both the public and private sector play an important role in providing houses to the people. The five year plan of the government aims at providing low cost housing to the poor people. The housing policies should be such that it is affordable by the poor (Abdul-Rahman et al., 2012). The government needs to frame the economic policies that aim at eradicating poverty. Government is the main entity to provide the quality housing to all and this can be achieved by framing proper housing policies and schemes. One of the important national agend a of the Malaysian government is to provide quality housing to the citizens of Malaysia. The housing policies have been included in the five years Malaysian plans that are long term plan from the year 1991-2000. The government has enacted the National Housing Policy in the year 2011 (Aziz et al., 2014). In order to achieve sustainability in the housing needs it is essential to concentrate on the low income group people. Malaysia is a multi cultural country where there are three groups that are prominent. Housing provisions depends on these racial religious groups. Most of the Malays live in rural areas, Indians in rubber and oil palm estate and Chinese in urban areas. It was essential for the government to break this stereotype and implement a new economic policy in 1970. The main aim of the economic policy is to foster unity by eradicating poverty and changing tax structure for the benefit of the society (Bakhtyar et al., 2013). National housing policy The main objective of the National housing policy is to provide adequate and good quality house with comprehensive facilities and a conductive environment. It specially aims at providing affordable housing to the low income group and at low cost. The policy was formulated to provide adequate housing to all the citizens of Malaysia (Baqutayan, 2014). Malaysian housing policy is divided into various stages that are as follows: regal period (Before 1957) Early stage of independent (1957-1970) New economic policy (1970-1990) National development plan (1991-2000) The main propose of the colonial period is that government is the main player and the public sector plays an essential role in providing housing facilities. It specially aims at providing housing facility to the low income group in the town area. In the early stage of development the main emphasis was on the housing for low income people in urban area. The public sector focuses on the low cost housing and the private sector is involved in providing medium and high cost housing. In the stage of new economic policy development private sector played an essential role. The main emphasis was on the development of the low, medium and high cost housing too all the citizens in Malaysia (Hamzah Murphy, 2014). It concentrated on sustainable development to ensure that all the people in Malaysia lived in a decent house regardless of their income. Public and private sector played an essential in provision of housing. In the last phase or stage that is the vision development plan, government play s an essential role. Emphasis was on the sustainable urban development and providing adequate housing to all the income groups. The policy does not only focus on housing development but it is linked with the industry and commerce development as well (Doling Ronald, 2014). In order to make the housing facility affordable it is essential for the government to match the demand and supply promoting sustainability housing provisions. Malaysian five year plan The housing provision in Malaysia is laid in the five year plans. The main aim of the first and the second five year plan is to promote the welfare of the people irrespective of the ethnic background. The third plan aims at eradicating poverty. The fourth plan aims at providing housing provisions to all the people in the society. The fifth plan aims at providing the basic social facilities such as schools, hospitals and community in spite of the basic infrastructural facilities. In the sixth and the seventh plan housing provisions were divided into low, middle and high income group. The plan requires both the private and public housing to cooperate and meet the demand of housing plan specially the low income group (Labin et al., 2014). Housing policies and programs Several housing programs has been introduced by the government to provide housing for the low income group through allocations of the public housing due to the commitment of ten government to provide adequate housing facilities to the low income group people. Te programs are as follows: Low cost and affordable public housing program- the program involves both private and public sector that aims at providing quality housing facilities to the low income group. The main aim is to improve the quality of life of people and eradicate poverty. The program targets at the income group of people earning less than RM1, 500 (Muhsin et al., 2014). Housing development program for the Hardcore poor (PPRT) - the main target is the people that is below the poverty line and in hardcore poverty. The policy aims at uplifting the poor people from the social strata. It involves a project that concentrates on the development of the low cost houses to then poor people with the adequate infrastructural facilities and public utilities. The program involves creating income opportunities for the poor so that they are able to provide good housing facilities to their children and also provide educational assistance. It aimed at eradicating poverty so that people get decent houses with basic amenities (Rahman et al., 2013). Integrated housing program- the program of integrated housing plan was included in the seventh five year plan that aims at providing housing to the poor. The housing policy seeks to create economic growth through building actions mainly for the growth of the low cost accommodation (Ferguson et al., 2014). Affordable housing Affordability of the housing is known as financial ability to purchase the good quality housing to the low income group. Affordability of housing depends on incomes of the people. It is opposed to communal housing, community housing and low cost housing. Affordable housing is the one that is of low cost and in adequate location and of good quality. Housing affordability and housing ownership is often used to make comparison between the prices at which the houses are purchased to the household income. The main issue with the housing provision in Malaysia recently is providing affordable housing to the middle income group people. Malaysia is a developing country and it is a capitalist economy where the market is free. The free market concentrates on providing good quality houses and is skewed towards higher priced properties. This contradicts with the public policy of providing housing to the low income group that is having monthly household income below RM2, 500. The issue arises due to various factors such as rising construction costs and rising labor costs that in turn increase the cost and the prices of housing making it difficult for the middle income group level difficult to afford. The rule of thumb for the houses to be affordable is that the median house price should not exceed three times the median gross annual household income. There are various measures used to measure the affordability of the houses. The most common approach is price to income ratio that is derived by dividing the median house price by the median gross annual household income. (Shuid, 2015). The housing policies and programs should be economically viable, socially feasible and technically acceptable to achieve sustainable housing provisions. The mortgage loans provided by the government should be low in order to make the housing facility affordable by everyone. Home finances should be made more affordable by providing subsides and financial assistance. The public and the private sectors should conduct the market research before formulating any housing plan (Teck-Hong, 2012). The demand for the properties is strong in Malaysia even though the prices of the houses are high. The demand for affordable housing is on the rise due to the rise in the cost of living along with the high prices of the houses. Youth housing scheme was also introduced by the government that was mostly implacable for the first time home buyers. The policy aimed at giving discounts as well as giving monthly allowance. It was specially formulated for the ones who do not have access to bank and loans. Lack of adequate affordable houses in Malaysia has been a problem for a long period of time. It is low when compared to the public demand for housing. Affordable housing has been a necessity because of the prices of the houses is increasing while the income of the middle group is low. The research shows that process of the houses in Malaysia has increased by 12.3 percent annually all over the country. There is a mismatch between the demand and supply of houses in Malaysia by forty percent. Government can play a major role in providing affordable housing (Shuid, 2015). Challenges and issues Private and public sector face many challenges and issues while providing housing needs to the people. The issues that people face needs to be addressed urgently to maintain sustainability. The main problem is with the five year Malaysian plan that does not specify provision of housing needs to the poor. The poor section has been given low priority by the public sector. The main issue with the public sector is that it is slow in approving the application for land developments. The problem with the private sector was that it only targeted the rich people and the cost of the houses provided by them was high. The private sectors are not keen on development of low cost houses as the main aim of the private sector is profit maximization. Another problem is that many projects that targets poorer section of societies has been abandoned and left incomplete. The victims are mostly the middle and the poor section. The builders aims at extracting as much money it can from then poor people for w hich they adopt various ways (Zainun Ismail, 2015). In Malaysia there are two components of private sector housing provisions. The first component is the housing developer that indulges in initiating projects themselves and speculative building. The second component is construction firms that develops and provides organizations and entrepreneurial skills that construct the dwellings themselves. Licensed are required by the private sector builders before starting any construction (Ubale et al., 2013). Conclusion Affordable housing has been a necessity due to the rise in the prices and low income of the people. It is necessary for the government to take proper measures so that the low income group people can afford adequate and good quality houses. Sustainability does not only mean providing healthy environment but maintaining a healthy standard of living as well. Standard of living can be maintained by spreading the income among the different sections of the society equally. The main issue in Malaysia is that the housing facility is only beneficial to the rich while it ignore the poor. The Government should take proper measures to bridge the gap between the rich and poor by concentrating on the low income group. Subsidies should be given to the one who cannot afford a house. The interest on housing loans should be reduced. References Abdul-Rahman, H., Wang, C., Wood, L. C., Khoo, Y. M. (2012). Defects in affordable housing projects in Klang Valley, Malaysia.Journal of Performance of Constructed Facilities,28(2), 272-285. Aziz, W. N. A. W. A., Singaravelloo, K., Doling, J., Hanif, N. R. (2014). Towards a Housing Policy in Malaysia. InHousing East Asia(pp. 140-161). Palgrave Macmillan UK. Bakhtyar, B., Zaharim, A., Sopian, K., Moghimi, S. (2013). Housing for poor people.WSEAS transactions on environment and development,9(2), 126-136. Baqutayan, S. (2014). The Affordable Housing Stress among Middle-Income Group.Journal Of Humanities And Social Science (IOSRJHSS) Volume,19(7), 2014. Doling, J., Ronald, R. (Eds.). (2014).Housing East Asia: Socioeconomic and Demographic Challenges. Palgrave Macmillan. Ferguson, B., Smets, P., Mason, D. (2014). THE NEW POLITICAL ECONOMY OF AFFORDABLE HOUSING FINANCE AND URBAN DEVELOPMENT.Affordable Housing in the Urban Global South: Seeking Sustainable Solutions, 40. Hamzah, H., Murphy, L. (2014). The Role of Institutions in Sustaining Mandatory Low-Income Housing.Pacific Rim Property Research Journal,20(2), 129-144. Labin, A. M. J. E., Che-Ani, A. I., Kamaruzzaman, S. N. (2014). Affordable housing performance indicators for landed houses in the central region of Malaysia.Modern Applied Science,8(6), p70. Labin, A. M. J. E., Che-Ani, A. I., Kamaruzzaman, S. N. (2014). Affordable housing performance indicators for landed houses in the central region of Malaysia.Modern Applied Science,8(6), p70. Muhsin, F., Yusoff, W. F. M., Mohamed, M. F., Sapian, A. R. (2014). DESIGN STRATEGIES TO ENHANCE NATURAL VENTILATION OF AFFORDABLE MULTI-STOREY HOUSING FOR SUSTAINABLE DEVELOPMENT.ON SUSTAINABLE URBAN DESIGN FOR LIVEABLE CITIES (SUDLiC 2014), 122. Rahman, A. M. A., Md, N., Al-Obaidi, K., Ismail, M., Mui, L. Y. (2013). Rethinking the Malaysian affordable housing design typology in view of global warming considerations.Journal of Sustainable Development,6(7), 134. Shuid, S. (2015). The housing provision system in Malaysia.Habitat International. Teck-Hong, T. (2012). Housing satisfaction in medium-and high-cost housing: The case of Greater Kuala Lumpur, Malaysia.Habitat International,36(1), 108-116. Ubale, M. Y., Martin, D., Wee, S. T. (2013). Comparative study between Malaysia and Nigeria formal low cost housing policy issues.Asian Economic and Financial Review,3(7), 923. Zainun, N. Y., Ismail, S. S. (2015, July). Low Cost Housing Demand Factors In Malaysia. InApplied Mechanics and Materials(Vol. 773, pp. 1037-1041).