US containing a rising Chinese power

Might the rush to arbitration be nothing more than a US provocation to provide an excuse for military engagement? asks Shannon Ezra

The most effective way to halt China's global rise is to exert control over its gateway to the sea, through which it conducts 80 percent of its trade, says the writer. File picture: Eugene Hoshiko. Credit: AP

Dialogue 06/05/2016 South China Sea & Sino-US ties - CCTV News - CCTV.com English

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Video: South China Sea Is Indisputable Part of China

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Johannesburg - If the containment of China is one of the key strategic pillars of US foreign policy, the impending outcome of The Hague’s arbitration on the South China Sea dispute is of critical importance to the US.

Even though China disregards the arbitration process as illegitimate, the decision of the tribunal, which is due in the next 10 days, will ratchet up tensions in one of the world's most hotly contested bodies of water. It will set the stage for what could degenerate into a serious conflagration, as the US pulls out all the stops to encircle China, and China takes measures to assert its sovereignty.

America’s objective is to contain a rising power, which presents itself as a major challenge to US global hegemony. Geo-strategically, the most effective way to impede China’s rise is to exert control, through proxies, over China’s gateway to the sea, through which it conducts 80 percent of its trade and transports its energy supplies.

This strategic waterway has turned into a game of chess between China, which claims sovereignty over four main archipelagos, and some of its neighbours along the South China Sea, which have made a series of territorial claims and are backed by the US.

The US claims its interest in the South China Sea is to protect the freedom of navigation as US trade through this waterway is worth $1.2 trillion (R17.6 trillion) annually. To date, China has posed no threat to international navigation in the waters of the South China Sea and also seeks to protect its annual $5 trillion worth of trade.

Despite the tug of war, the situation was under control prior to 2009. When President Barack Obama took office in that year, he announced his keystone foreign policy undertaking as a “strategic pivot to Asia” or rebalancing strategy to the Asia-Pacific. The entire region intuitively recognised that the rebalance was, and is, about China.

A new determination emerged within the US administration to support the territorial claims in the South China Sea of China’s neighbours. It was in this way that the US was arguably the invisible hand behind the rising tension in the region since 2009.

From the Chinese perspective, it was the US that plotted behind the scenes the arbitration of its South China Sea dispute with the Philippines. There have been allegations that the US staffed a team of lawyers to lead the Philippines through the arbitration process, and encouraged them to launch their arbitration case when a Japanese national was president of the International Tribunal for the Law of the Sea. The Japanese national in question had been previously opposed to China’s positions in previous cases and became one of the five arbitrators in the case.

From the time that the Philippines took the unilateral initiative of taking the South China Sea arbitration to the tribunal in January 2013, China has refused to accept or participate in the arbitration. It maintains that territorial sovereignty issues are beyond the purview of the UN Convention on the Law of the Sea (UNCLOS).

As for maritime delimitation, China made an exclusion declaration in 2006, thereby lawfully excluding itself from any compulsory dispute settlement procedure by a third party. Apart from China, more than 30 other countries, including the UK, France, and Russia have made the same exclusion declaration.

China also maintains that, together with the Philippines, they have reaffirmed settling the South China Sea dispute through bilateral negotiations. This is in keeping with the Declaration on the Conduct of Parties in the South China Sea, signed between China and the Association of South-east Asian Nations, which explicitly states that the parties concerned should undertake to resolve their disputes through consultations and negotiations.

From the perspective of the Philippines, there have been a number of exchanges of views with China since 1995, which led to no resolution. But China argues that the two states have never engaged in any serious negotiations on the dispute. According to UNCLOS, China has the right to choose the means of dispute settlement, which means it cannot be forced to accept dispute settlement which is imposed on it, including a third-party settlement. But this has not stopped the arbitration from continuing without China’s participation.

What kind of consequences could the rush to arbitration, encouraged by the US, result in? Would China withdraw from UNCLOS and expand its Air Defence Identification Zone over all its territories in the South China Sea?

This was always a likely scenario, which begs the question of whether the US is keen to provoke a military confrontation as part of its containment strategy. Why else would it be deploying 60 percent of its naval fleet and 60 percent of its overseas air force to the South China Sea by 2030?

By Shannon Ebrahim who is the foreign editor for Independent Media http://www.iol.co.za/

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The nine-dashed line was first discovered and owned by China. It is a maritime boundary line formed after China’s long-term jurisdiction and development of the South China Sea islands.

China holds sovereignty and jurisdiction rights within the nine-dashed line. Other countries’ ships have the right to freedom of navigation and their aircraft enjoy rights to fly over the territory.
There had been no problem with the nine-dashed line before the 1970s, but with Vietnam, the Philippines and other countries pushing further territorial claims, more governments are beginning to deny legitimacy of the nine-dashed line.

The United States and other countries have intervened in the South China Sea issue; using the so-called freedom of navigation in the South China Sea to deny the nine-dashed line to disregard China’s territorial rights.

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Immediately prior to Rodrigo Duterte's inauguration as the new Philippine leader, The Hague-based Permanent Court of Arbitration announced it would deliver a ruling on July 12 in the Philippines' case against China over their South China Sea dispute.

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A seminar on the South China Sea Arbitration and International Rule of Law was held on Sunday in the Hague, the location of the Permanent Court of Arbitration's arbitral tribunal. At the seminar hosted by both Chinese and Dutch academic institutions, experts from various countries warned that the unilateral filing of the South China Sea arbitration case by the Aquino administration of the Philippines and the arbitral tribunal’s overreach and abuse of power is a desecration of the spirit of the rule of law and pose a threat to current international order.

Exclusive interview: Limitation of UNCLOS Dispute Settlement System

A legal expert at the University of Oxford has published a paper on resolving disputes in the South China Sea. It relates to the arbitration unilaterally initiated by the Philippines against China.

With this move, the Philippines is just adorning itself with borrowed plumes. First of all, estoppel is a basic principle of international law. As is known to all, China and ASEAN countries, including the Philippines, signed the Declaration on the Conduct of Parties in the South China Sea (DOC) in 2002, in which all sides agreed to settle disputes over the South China Sea through friendly negotiation and consultation by parties directly concerned.

Experts call for reasonable and effective dialogue on China South Sea issue

A group of experts on international law have called the arbitration that was unilaterally filed by the Philippines against China over the South China Sea "questionable".

In 2011, the Philippines and China issued a joint statement, reiterating their respect and observation of the DOC. However, just two years later, the Aquino administration unilaterally submitted the South China Sea case for arbitration in spite of its previous commitments.

Secondly, the Philippines ignores basic historical facts by presumptuously claiming that the Chinese people never lived or conducted activities in the South China Sea region, thus bearing no sovereignty over the islands in the region.

Cambodia criticizes arbitration filed by Philippines

Cambodia's ruling party has spoken out against the arbitration court's upcoming decision over the South China Sea issue.

Yet no one can deny the historical fact that those islands have been part of China’s territory since ancient times. Successive Chinese governments have continued to govern the islands through multiple approaches including setting administrative divisions, military patrols and conducting salvages at sea.

Respecting historical fact is an important principle of international law. Through its lack of respect for the facts, the South China Sea case violates this principle.

Chinese Foreign Ministry condemns Japan

Chinese Foreign Ministry spokesman Hong Lei has condemned Japan's remarks over the South China Sea arbitration unilaterally launched by the Philippines. He urged for Japan to stop making such irresponsible remarks.

Moreover, the Philippines’ interpretation of the legal status of the islands and reefs in the South China Sea is not in line with the United Nations Convention on the Law of Sea (UNCLOS) and other international laws.

South China Sea FAQ ep12: Why does Beijing reject Manila's arbitration case?

The requests raised by the Philippines in the arbitration case are, in essence, about territorial sovereignty and maritime demarcation.

The Southeast Asian nation claims that the Huangyan Island and the Nansha islands cannot be considered islands as such no one can establish exclusive economic zones or claim the continental shelves there. Such an argument flies in the face of objective reality.

• South China Sea FAQ ep13: China's solution for resolving the disputes

• 
  South China Sea FAQ ep13: China's solution for resolving the disputes. As tensions in the South China Sea region continue, China continues to insist on a dual-track approach to resolve disputes. This is governed by the Declaration on the Conduct of Parties in the South China Sea made in 2002 between China...

The Philippines deliberately misrepresented factual information about the islands and reefs in the South China Sea during the trial and carelessly negated the integrity of the Nansha islands as well as the island status of Taiping Island and other large islands in area. However, its claims are not only inconsistent with reality, but also incompatible with UNCLOS and other international laws.

The legal representatives of the Philippines also withheld necessary information concerning other islands in the South China Sea (not included in its arbitration request) on purpose, and refused to present them to the court. It is safe to say that the Philippines’ argument concerning the South China Sea islands and reefs lacks basic credibility.

Taking this into consideration, the arbitral tribunal has clearly violated UNCLOS, abused the UNCLOS settlement procedure and exceeded its jurisdiction by accepting the unilateral request of the Philippines and even trying to deliver a verdict on the South China Sea issue. Its self-proclaimed “jurisprudence” and “normative power” demonstrate great irony.

The core of the South China Sea issue between China and the Philippines are territorial and maritime delimitation disputes. Territorial issues do not fall within the scope of UNCLOS authority. Additionally, as early as 2006, China has excluded compulsory settlement procedures from maritime delimitation disputes in accordance with Article 298 of UNCLOS.

As a temporary institution founded on UNCLOS, the tribunal has zero jurisdiction over this case. Arbitration and other international judicial methods to resolve disputes means resorting to third-party settlement. However, this option has already been excluded by internationally binding bilateral agreements between China and the Philippines.

The tribunal chose to ignore these binding documents and breached the premises, exclusions and exceptions for compulsory settlement procedure stipulated in UNCLOS to establish jurisdiction on its own.

The tribunal’s blatant disregard for the agreement China and the Philippines made concerning settling disputes has irresponsibly broken the consensus reached between the two states and has seriously violated China’s right as a sovereign state and UNCLOS signatory to choose its own dispute settlement method.

What’s more, by repeatedly referencing UNCLOS and extending the convention’s coverage to all maritime issues, the tribunal has in fact turned a blind eye to conventional international law.

Any practitioner of international law is aware that articles in UNCLOS are a summary of the historical maritime practices and common will of all countries. UNCLOS shows nothing but respect to conventional international law. However, the tribunal today has discredited all previous practices, contradicting the basic purpose and spirit of UNCLOS.

International law has played a significant role in maintaining a relatively stable international order after World War II. In the decades after the war, hundreds of international treaties were drafted to regulate the conduct of states and people’s lives.

From the planet where we live to outer space, from security to arms control, from economic development to environmental protection, from human rights to judicial cooperation and other areas, these international laws are ubiquitous. The diplomatic actions of every county call for international law. In other words, it is a commonly recognized standard for the international community. The world would fall into chaos without it, and the law of the jungle would once again dominate.

Therefore, the abuse of international law by the Philippines and the tribunal has undermined the authority of the law, which will in turn greatly impact the stability of international order.

It is worth mentioning that the US, a country outside the region, has been eager to play a hand in the issue. Those who are familiar with the “America-style” of dealing with international affairs know that “safeguarding the integrity of international law” is a catchphrase for the country when it comes to international dealings.

However, as a country that attaches such importance to the protection of international law, why has the US supported the illegal acts of the Philippines and the tribunal? The answer is simple: The US only protects those international laws that benefit itself. In the eyes of the US, any illegal act can be considered “an act that protects international law” so long as it benefits its own strategic interests.

A scholar at the seminar pointed out that what the Philippines has done to China today could happen to other countries in the future. If the tribunal comes to a conclusion that does not conform to the facts and the law, then the same twisted logic could be misapplied to other countries with territorial disputes.

Such apprehension is not without merit. If the irresponsible actions of the Philippines, the US and the arbitral tribunal are not faced head on, they will severely affect the authority of international law. From this perspective, China's fight against the abuse of international law is not only the country safeguarding its territorial sovereignty, but also a contribution to lasting peace and stability in the world. - People daily

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Young adults in developed countries rent, we buy for good

While young adults all over the world are renting homes, Malaysias prefer to own homes as soon as they get their first pay cheque.

Instead of blowing their cash on pricey gadgets, young Malaysians are saving up for their first home.

While most Gen Y shy away from owning property in developed countries and big cities, demand from millennials here is still holding, especially with parents assisting them with the downpayment, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri F.D. Iskandar said.

(Gen Y, also known as millennials, are commonly referred to those who are born in the early 1980s to 2000s. They are sometimes referred to as the strawberry generation).

Demand from first-time buyers, including the younger generation, remains strong although housing affordability is a challenge, said Bank Negara.

The central bank added that they accounted for 75% of 1.47 million borrowers.

Owning and investing in a house remains a priority for many Malaysians.

This is reflected in the household borrowing trend where the buying of homes continues to be the fastest growing segment of household lending, with annual growth sustained at double-digit levels (11% as at end-March 2016), said Bank Negara in a statement.

Those who cannot afford it themselves, and do not have parents to help, turn to their friends.

In his 30s, Daryl Toh, and two of his college mates own a condominium in Penang; they pooled their resources to purchase the unit five years ago.

“It’s in a premium area and since we couldn’t afford a place on our own – at least not prime property, we became joint owners.”

Financial adviser Yap Ming Hui said it makes perfect sense to own.

“Of course the Gen Y here are still keen on buying. You pay the instalments and eventually own a home. Only those who can’t afford to buy are forced to rent.”

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia adviser Wong Kok Soo said property prices in Hong Kong have escalated beyond the purchasing power of the Gen Y but the trend hasn’t caught on here – yet.

Wong, who is also a consultant with the National House Buyers Association, however, said there were signs that the Gen Y could no longer afford to live in big cities like Kuala Lumpur, Penang Island, Johor Baru and Sabah.

“Parents are chipping in for the downpayment. And, commuting from the suburbs to the city centre is still an option.

“But when prices get inflated far beyond their means, the same will happen here (as in Hong Kong),” said Wong, who, however, felt that even if demand dropped, it would not be substantial.

Iskandar agreed, saying that although the property market was slow now, the drop was manageable. “Like everything else, it’s cyclical. “The property market goes up for years and after some time, begins falling before rising again.”

He said the market would pick up with the completion of infrastructure development and public transportation facilities.

Rehda, he said, was working closely with the Government to find ways to facilitate home acquisition especially among first-time buyers.

“We proposed a review of the financing guidelines that have negatively impacted buyers’ ability to secure financing,” he said. - The Star/Asia News Network

Demand from first-time buyers still strong despite affordability challenge

PETALING JAYA: Instead of blowing their cash on pricey gadgets, young Malaysians are saving up for their first home.

While most Gen Y shy away from owning property in developed countries and big cities, demand from millennials here is still holding, especially with parents assisting them with the downpayment, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri F.D. Iskandar said.

(Gen Y, also known as millennials, are commonly referred to those who are born in the early 1980s to 2000s. They are sometimes referred to as the strawberry generation).

Demand from first-time buyers, including the younger generation, remains strong although housing affordability is a challenge, said Bank Negara.

The central bank added that they accounted for 75% of 1.47 million borrowers.

Owning and investing in a house remains a priority for many Malay­sians.

This is reflected in the household borrowing trend where the buying of homes continues to be the fastest growing segment of household lending, with annual growth sustained at double-digit levels (11% as at end-March 2016), said Bank Negara in a statement.

Those who cannot afford it themselves, and do not have parents to help, turn to their friends.

In his 30s, Daryl Toh, and two of his college mates own a condominium in Penang; they pooled their resources to purchase the unit five years ago.

“It’s in a premium area and since we couldn’t afford a place on our own – at least not prime property, we became joint owners.”

Financial adviser Yap Ming Hui said it makes perfect sense to own.

“Of course the Gen Y here are still keen on buying. You pay the instalments and eventually own a home. Only those who can’t afford to buy are forced to rent.”

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia adviser Wong Kok Soo said property prices in Hong Kong have escalated beyond the purchasing power of the Gen Y but the trend hasn’t caught on here – yet.

Wong, who is also a consultant with the National House Buyers Association, however, said there were signs that the Gen Y could no longer afford to live in big cities like Kuala Lumpur, Penang Island, Johor Baru and Sabah.

“Parents are chipping in for the downpayment. And, commuting from the suburbs to the city centre is still an option.

“But when prices get inflated far beyond their means, the same will happen here (as in Hong Kong),” said Wong, who, however, felt that even if demand dropped, it would not be substantial.

Iskandar agreed, saying that although the property market was slow now, the drop was manageable.

“Like everything else, it’s cyclical.

“The property market goes up for years and after some time, begins falling before rising again.”

He said the market would pick up with the completion of infrastructure development and public tran­sportation facilities.

Rehda, he said, was working closely with the Government to find ways to facilitate home acquisition especially among first-time buyers.

“We proposed a review of the financing guidelines that have negatively impacted buyers’ ability to secure financing,” he said. - By Christina Chin The Star

A pricey priority

Wary of big, life-changing purchases, the ‘Strawberry Generation’ – those ‘easily bruised’, coddled young people in their 30s – prefers to rent, global reports say. Malaysians, however, are bucking the trend despite steep property prices. Mainly thanks to supportive parents, it seems.

BEST friends Leh Mon Soo, 38, and Brandy Yu, 39, are finally buying their first home.

After months of serious scouting, the two managers found units that matched their budget and needs, coincidentally, in the same condominium in Petaling Jaya. Leh is getting a three-bedroom unit while Yu is happy with a 48sqm studio apartment.

Yu feels that the RM365,000 she’s paying is affordable as she can still save about RM1,700 monthly after paying the loan instalment.

“I’m only paying RM400 more a month than what I’ve been forking out for rent. And unlike the rental, this unit will be mine one day,” she says.

Leh ended up forking out a whopping RM690,000 even though she dreads the long-term commitment. While “not a bargain, and at the upper limit of what I can afford”, she says that it’s still a pretty good price, as other, smaller, units were going for higher prices.

“I was only willing to pay RM500,000 initially. Then I saw a two-bedroom in the same condominium going for RM680,000. So I bit the bullet and got this. Property prices won’t be dropping any time soon and our ringgit’s shrinking. It’s now or never. I’ll have to cough up even more later if I don’t get a place now,” she says pragmatically.

The soon-to-be neighbours think property is still in demand, even among Gen Y-ers, aka Millennials (those born in the 1980s and 1990s, typically perceived as brought up and very familiar with digital and electronic technology).

But they’re more privileged because their parents have either already invested in property for them or are helping them buy it, Leh offers. Renting is not for the long-term, she says firmly, and even the younger ones know that.

The Malaysian mindset, Yu quips, is that everyone must own at least one property.

Gym owner Chip Ang, 26, agrees. He got the keys to his new 78sqm unit in Shah Alam last week.

Although it was his parents who suggested he get the RM168,000 place under the Selangor Government’s affordable housing scheme, Ang says property ownership is always a hot topic between him and his friends. Young professionals want to own property. The issue is affordability, he thinks.

“Many are unrealistic. They want their ideal home in the ideal place. Of course that’s unaffordable. Most affordable homes are in up and coming townships, not prime locations.”

The experience of getting his own place was a “blur” because it happened so fast, he says, though he does recall that, “because it’s affordable housing, I had to fulfil a number of requirements including proving that I’m a bachelor”. While the RM700 monthly mortgage payment is doable, he’s still nervous about being “tied down”.

Writer Teddy Gomez, 29, doesn’t think people have given up on owning property but sees a new trend emerging.

“Buying property is still big here but I see more renters because it’s cheaper and more flexible,” says Gomez, who got “a little help” from his dad buying a 83sqm apartment in Kuala Lumpur last year. Although the cosy RM400,000 unit is “not really affordable”, he says it’s time to leave the nest.

Like Gomez, a blogger who only wants to be known as Robyn, 24, thinks it’s nice to have your own space. She’s moving into an apartment in Petaling Jaya soon. The fresh graduate admits being lucky because her dad’s the owner. She’s getting the three-room unit for less than RM140,000 although it’s valued at over RM750,000.

“For the next three years, I’ll pay the RM3,800 monthly loan instalments. Now, I’m only contributing RM2,000 because I just started working. Dad’s helping until I can afford to take on the full amount myself.”

She knows she’s better off than most her age and is thankful for her family’s support – many of her friends are also looking for properties to buy but are resigned to living outside the city in places like Bangi and Kajang in Selangor. Still, with a RM200,000 budget, they’re willing to travel and own property rather than pay rent indefinitely.

Federation of Malaysian Consumers Association (Fomca) secretary-general Datuk Paul Selvaraj says it’s unfair to tell consumers to live on the outskirts of city centres because public transportation is still a problem in the Klang Valley. Unless the homes are accessible, living far away from the workplace isn’t practical.

National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong sees a very strong demand for affordable properties in Malaysia because of our young population and urban migration.

For instance, the Government’s First House Deposit Financing (MyDeposit) scheme that was launched on April 6 received more than 6,000 online registrations within a week, a sure sign that Malaysians are still keen on owning property.

Fomca’s Selvaraj says property is a priority for most Malaysians because it’s a sound investment. They just can’t afford it in most urban areas.

“If you’re living on bread and water after paying your loan, then the house is unaffordable. For most young families, RM300,000-plus is affordable but it’s RM600,000 homes that are being built.”

Property is the best hedge against inflation so demand will always be strong, says HBA’s Chang. But there’s a “serious mismatch” between what’s classified as affordable by developers and the rakyat’s definition. To developers, an affordable property for first-time buyers is RM500,000. For upgraders, it’s up to RM1mil. Definitions on the ground are much lower. First-time buyers deem RM150,000 to RM300,000 affordable while those looking to upgrade can only pay between RM300,000 and RM600,000.

But if you can afford it – with family help, perhaps – M. Rajendran, 53, says invest early. The air traffic controller got his double-storey home in Kajang 21, Selangor, years ago for RM146,000. It’s worth at least RM600,000 now.

“If I hadn’t bought it then, I definitely wouldn’t be able to afford it now with the financial commitments I have. And at my age, no bank is going to give me a loan. Buy when you’re young because it’s cheaper and you can settle your loan faster.”

However, he warns that current economic challenges could result in a rise in the number of abandoned projects, so those looking at new properties should be cautious and do their homework.

“Scout around. Choose locations with infrastructure and amenities so that the potential for property prices to appreciate is higher.” - By Christina Chin The Star

Don’t bank on the banks

 Chang Kim Loong

RELAXING lending conditions won’t help more people buy their own homes. It will only worsen the situation as developers increase prices further to match the lending surge, predicts Chang Kim Loong, honorary secretary-general of the National House Buyers Association (HBA).

Datuk Paul Selvaraj also doesn’t think it’s a good idea. The Federation of Malaysian Consumers Association secretary-general says home ownership is a right, and it’s the Government’s responsibility to make it a reality. The Government, he stresses, must either build more affordable housing or force developers to cater to the neglected market. It’s wrong to force banks to take bigger lending risks by calling on them to relax lending conditions, he feels.

“Banks will only lend money if they can get it back. It’s unfair to expect them to do otherwise. Also, if the borrowers cannot pay, they themselves will end up with a big headache.”

Banks are rightly stringent as times are uncertain, says Wong Kok Soo, an adviser to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector of Malaysia and consultant to the HBA.

Lenient policies encourage purchases that are beyond one’s means and are not a good idea; instead, the margin of financing should be increased or the loan tenure extended, for first home buyers. For existing loans, there should be some flexibility in extending tenures and adjusting debt servicing ratio, he feels.

Last year, housing in Kelantan, Penang, Sabah, Sarawak and Selangor, as well as Kuala Lumpur, were listed as severely unaffordable by market experts. Nationwide, only Malacca made the affordable category with housing in the other states deemed either seriously or moderately unaffordable.

Bank Negara’s “Financial Stability and Payment Systems Report 2015” showed an increasing supply of homes above RM500,000 while those priced below RM250,000 accounted for less than 30% of the total launches in the first nine months of last year.

Deputy Urban Wellbeing, Housing and Local Government Minister Datuk Halimah Mohamed Sadique has since called on developers to build more houses priced at RM300,000 for Malaysians.

The next generation won’t be able to own property without financial help from their parents unless concrete measures are taken to increase the supply of properties costing between RM150,000 and RM300,000 and to stem the steep rise in existing property prices due to excessive speculation, says HBA’s Chang.

A Khazanah Research Institute report reveals that Malaysia’s housing market is considered to be “seriously unaffordable”, with a median house price of more than four times the median annual household income. This problem, Chang notes, surfaced a little under a decade ago but if prices continue to soar, the situation could worsen.

Not that there aren’t affordable schemes and funding plans in place to help – in the last 50 years, scores have been introduced but information on them is scarce, he observes. Details of projects by developers, state agencies and federal bodies must be available in a public database, he suggests. And a single umbrella body under the Federal Government must coordinate the distribution and availability of such units.

Chang stresses also that there’s no place for racial profiling when it comes to housing. Whoever deserves a house must get a house, he insists.

There’s never a wrong time to buy property but one must balance the risk of buying with renting, he advices. Owning a house is riskier as buyers take on enormous debts, sign multi-year loan agreements and become responsible for homeowner costs, he cautions.

“Flip through the newspapers – you’ll see many proclamations of sales of units for public auction that are below RM50,000. Some even dip below RM10,000. On bank websites, you’ll find property foreclosure cases.”

A list of properties put up for auction by CIMB bank showed 35 units in Selangor at reserved prices of less than RM42,000 – that’s the price of a new low-cost unit, notes Chang.

Low-cost units auctioned off for half of the purchase price is an alarming trend, he says. Unfortunately, there aren’t any official statistics on how many low income earners have lost their homes or are struggling with their monthly loan commitment. Where do these homeowners and their families end up living, Chang wonders.

Foreclosures can devastate a family’s economic and social standing, possibly leaving them poorer than before they bought the property. Financiers, local authorities and communities benefit from homeowners being better informed of their rights and responsibilities as borrowers. Ensuring that lower income households have sufficient personal financial management skills and support is crucial.

It’s not enough just to provide homes for the low- and medium-income group. Chang recommends that a homeownership education programme be set up to raise financial literacy and prepare households for the responsibilities of owning a home.

“Manuals, advice or information given via telephone, workshops or counselling to help households maintain their homes and manage their finances must be given before first-time buyers sign the sale and purchase agreement. Public housing schemes are only successful if buyers can hold on to their property.”

Specifically, Chang says education should cover:

> Pre-purchase period – understanding the various types of available housing, the process of buying a house, loan process, and financial preparation needed; and evaluating household needs.

> Post-purchase period – budgeting monthly expenses; making payments promptly; avoiding loan defaults; living within a community; social responsibility; property taxes, assessments, insurance, service charges and sinking fund; home maintenance; and handling problems with the property.

Educate yourself and learn from the mistakes of others to avoid being disappointed or, worse, becoming “house poor” (when most of your income goes towards home ownership), Chang advises. Aspiring buyers must get something that’s within their budget. It could be an older or smaller unit but start small and slowly increase your property portfolio, he says.

“Don’t let friends or family influence you into getting something that’s above your budget, as home ownership is a long term investment. You must be able to service the loan while maintaining an acceptable standard of living.”

The majority may prefer to rent while waiting for the market to soften but it’s better to have your own shelter, says HBA consultant Wong.

The average Malaysian, he insists, can still own property. Consider buying at auctions. Research is a must, though, as inspections aren’t allowed at auctions. It’s an “as is, where is” bid, he stresses. Find out about the surrounding units and the neighbourhood, he suggests.

Better to own but...

PROPERTY investment helps maintain our socioeconomic well-being and must be encouraged, says Datuk Seri F.D. Iskandar, president of the Real Estate and Housing Developers Association Malaysia (Rehda).

Property – a wealth-creation instrument without the volatility of stock markets – has consistently out-performed traditional investment options like bonds, he points out.

But to invest, one must study the property and its market potential. With the right location and strategy, property can be a very profitable investment. The value will appreciate over time, he says.

To many, the most important aspect of owning property is to secure a home. In current conditions, most developers are coming up with attractive packages to close the deal, so it’s a good time to buy. Securing a bank loan now, though, is one of the biggest barriers, he says.

Rehda’s recommendations to the Government and Bank Negara are:

> Encourage innovative home financing packages like the developers interest bearing scheme (better known as DIBS).

> Allow flexible or accelerated tiered payments (longer loan tenure so you pay less now but more later when your salary has increased).

> Relax loan approval criteria with higher financing margins (up to 100%).

Also, banks, he says, shouldn’t just focus on a loan applicant’s current net income; future prospects of higher salaries and other incomes and bonuses must be taken into account.

He dismisses talk that the average Malaysian has been priced out of owning his or her first home.

There’s still a range of prices and options in both the primary and secondary property markets, he says.

With new launches, developers usually offer special incentives, rebates or discounts that will help buyers reduce their initial payment. In the secondary market, however, what you see is what you get. Depending on what you’re looking for, factors like location, surroundings, facilities, transportation and infrastructure will help you decide.

“Property prices in city centres are high because of land value but there are many cheaper options in less-urbanised areas. There are many affordable houses, including those by PR1MA (the 1Malaysia People’s Housing Scheme). The average Malaysian can definitely afford these.

“With an improving transportation system and connectivity, these places are now easily accessible from city centres.”

We are paid enough

Property price and value to Income per country in SEA 20014

WAGES are rising in tandem with the country’s consumer price index (CPI), which is a broad measure of inflation and our productivity.

Both criteria are used to determine wages here, says Datuk Shamsuddin Bardan, executive director of the Malaysian Employers Federation.

While Malaysians lament how their salaries aren’t enough to cope with soaring costs of products and services, their grouses aren’t reflected in the low CPI numbers, he says.

“Measured against the CPI, our average salary growth isn’t lagging. In the region, our salaries are second only to Singapore. Of course, you must consider the currency exchange. Singaporeans earn an average of S$3,000 (RM9,000) while Malaysians take home RM2,800 monthly.

“But bear in mind that the productivity of Singaporeans is 3.8 times higher than ours. Their per unit cost of production per employee is lower than us. In the United States, the productivity level is seven times higher than ours. So when you say we aren’t earning enough, you have to consider our productivity level too,” he states, pointing to how in some of our neighbouring countries, the average salary is less than US$100 (RM400).

However, he acknowledges that houses are beyond the reach of most – and fresh graduates in particular – and adds that even when both husband and wife work, they still may not have enough for the down payment and are forced to rent.

It’s tough, he admits, even for those who have already been working for a decade, to own a house now without financial support from parents.

Related: Renting is OK too

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