GEORGE TOWN: The government was today urged to stop granting exemptions to developers from the three per cent Gross Construction Cost (GCC) deposit for the Housing Development Account (HDA).
Consumers Association of Penang president Mohideen Abdul Kader said the Housing and Local Government Ministry should not grant exemptions to developers who were considered by the ministry’s officials as having “good track record” and “sufficient financial capabilities”.
"Such discretionary powers will open the door to corruption, favouritism, and influence peddling," he said today.
"In the first place, a developer who has no 'good track record' and 'financial capabilities' should not be licensed by the ministry and be in the business."
By granting exemptions, Mohideen said the government was expressing its trust that developers would religiously stick to their end of their bargain in completing their projects within the given time-frame, of the expected quality and would not short-change the buyers.
"The government should not take this risk as when a developer fails to deliver, it will mean that the government has to bail out the project and to find a white knight.
"As such, we seriously urge the government to stop granting exemptions to any developer," he said.
A developer is required to deposit three per cent of the GCC into the Housing Development Account (HDA) for each phase of the product development.
However, it was raised in the Dewan Rakyat early this month that selected developers were exempted from paying the deposit.
Housing and Local Government Minister Zuraida Kamaruddin, in clarifying the Dewan Rakyat statement given by her deputy, Datuk Raja Kamarul Bahrin Shah, had said that the exemption was only given to developers with a good track record and had sufficient financial capabilities.
She had said that the ministry would then take “10 per cent of that (GCC) to put in the Advertising Permit and Developer’s License (APDL) fund”.
It was highlighted in the Dewan Rakyat that 21 exemptions were granted in 2016, 72 in 2017 and 48 in 2018. Forty-three exemptions were given between January and November this year.
Mohideen said the purpose of imposing a deposit of three per cent of the GCC on developers was to ensure that they complete the project on time and the homes were of acceptable quality.
"Between 2011 and 2019, a total 107 projects were abandoned, and until March this year, none of the developers have been charged with abandoning a project," he said.