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PR1MA: Private sector JVs can help deliver affordable housing for Malaysia

Affordable housing group PR1MA Corporation Malaysia says it has teamed up with private developers as part of its efforts to meet the accommodation needs of the south-east Asian nation.

The PR1MA project was established under a 2012 government act to plan, develop, build and maintain high-quality housing for the country's growing middle class in key urban areas.

Finished properties will be located within integrated communities in various types and sizes, ranging in price from 100,000 to 400,000 Malaysian ringgits ($27,500 to $110,000). The scheme can be accessed by all Malaysians with monthly household incomes of between 2,500 and 10,000 Malaysian ringgits.

In order to achieve its ambitious goals, the programme has agreed a series of joint ventures (JVs) with private backers - a move project officials insist will offer significant advantages in terms of efficiency and delivery speed. Leveraging private capital also places less burden on the state.

'Private partnerships can benefit PR1MA and Malaysia'

PR1MA has been quick to stress that teaming up with private companies does not equate to the corporation abandoning its goal of delivering affordable housing for hundreds of thousands of Malaysian families. Indeed, it stressed that its JVs would actually bring significant benefits to the programme.

However, the organisation came under fire this week for a perceived focus on making money, rather than delivering truly affordable housing for the masses.

Malaysia's National House Buyers Association argued that some of PR1MA's initial housing requirements have been relaxed. For instance, it noted that the scheme is now open to second-time buyers, despite the country's housing market lacking enough properties to satisfy first-time buyers. It also questioned whether the involvement of private partners would make the programme too profit-oriented.

But in a statement reported by the Malaysian Insider, PR1MA explained that these partnerships - far from leading to more expensive homes sold to the highest bidders - would help the large-scale housing development to be completed more quickly and cost-effectively.

Project leaders have identified a whole host of measures designed to improve the implementation of its affordable housing programme, particularly focused on the issues of delivery speed, efficiency and customer requirements.

"Joint ventures with private developers are one of the measures that have been adopted, in order for PR1MA to deliver 500,000 homes to middle income families that meet their lifestyle requirements," the organisation said.

"PR1MA remains committed to delivering affordable homes to middle-income families and will continue to focus on strategies that will assist in keeping residential property prices at a sustainable level over the long term."

By late March, the corporation had approved 111,933 housing units, with construction work already underway on 37,063 of these.

Public-private partnerships are nothing new in Malaysia

Joint ventures such as those undertaken by PR1MA have been an important tactic of Malaysian prime minister Najib bin Tun Abdul Razak's government.

The model was adopted for the country's economic transformation programme (ETP), designed to transform Malaysia by bolstering development, increasing per-capita income and attracting $444 billion in mostly private investment. All of these measures were intended to break the country out of a lengthy period of economic stagnation.

Early efforts under the ETP saw cuts made to the wide variety of licences required to establish new businesses, as well as a significant reduction in the state's role in the economy, with stakes divested in 33 companies.

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