Help lift poor people out of poverty and to own a home, says Berjaya Group founder

 By Sharen Kaur - Published in NST Property, April 30, 2021

Berjaya Group founder Tan Sri Vincent Tan Chee Yioun wishes more Malaysians in the B40 category can own a home.

sharen@nst.com.my

Berjaya Group founder Tan Sri Vincent Tan Chee Yioun urge the government and banking sector to strengthen the financials of low-income Malaysians and lift them out of poverty.

Tan said one issue in the current banking system is that it is not designed with low and middle-low class households in mind.

"Banks currently offer many services and if they can serve the poor, they could help low-income individuals plan for the future and build financial stability. It is important to offer low-income individuals access to financing, especially to buy their first home," Tan told NST Property in an interview.

Tan said the majority of low-income earners or the B40 (bottom 40 per cent or poor) households do not own a home because they cannot get a loan.

"Their loans are rejected and among the reasons is their household income is low. Instead, they can only rent. What happens if they become jobless and they cannot pay their rent? We will have more homeless people in Malaysia.

"We want Malaysia to be a good country. We don't want too many homeless people. We want people to have a better understanding of living. There are so many poor people around and with the current state of the economy, more people will be jobless...more people will get poorer.

"We want security. You don't want barbed wires or arm guards. You look at Johannesburg, every house is equipped with barbed wires. If you want Malaysia to be like Japan, Korea, Taiwan, Singapore, and European countries, we have to start by uplifting the living standards of the B40 group so more people here will be employed and have good jobs," he said.

"That is why I set up Better Malaysia Foundation (BMF) with a solution to help the urban poor or B40s out of poverty but we need government assistance to do this," he said.

BFM has launched a new social enterprise programme to assist the government in addressing homeownership aspirations of low-income Malaysians, namely for B40 households.

Tan, who is chairman and founder of BFM said the social enterprise would facilitate the construction of properties with a low monthly cost of ownership.

Better Malaysia Foundation in collaboration with Berjaya Land Bhd has designed a 900 sq ft five-bedroom, four-bathroom show apartment with a low monthly cost of ownership. Courtesy image

BFM in collaboration with Berjaya Land Bhd, has designed a 900 sq ft five-bedroom, four-bathroom show apartment specifically for this initiative.

Early this month BMF submitted its proposal to the government. The proposal includes recommendations to the government to guarantee loans for the B40 group to own a home, 100 per cent financing, and longer tenure of up to 60 years for the housing loans.

Tan is basically calling on banks to lend to the B40 group and for the government to be a guarantor for these home loans.

He said if the government can guarantee the loans then the banks would have no issues with credit risks.

"If there is a government guarantee, I am sure the banks will lend. The banks would have no fear that they would not be able to get their money back if they have to foreclose. If there should be a foreclosure, the house would be sold back to the government, which is the guarantor," he said.

Buy a home instead of renting, Tan says

Tan said the B40 group should consider buying a house instead of renting but banks must assist them in terms of giving out the loans so they finally get their dream home.

"If banks give them 100 per cent financing with 40 to 60 years payback period, I am sure the B40 group will be able to pay the monthly installment. If they are renting a house for RM900 a month, they can convert the rental into a housing loan that pays for their own house and build up equity. So instead of paying rent, they can use that same amount to pay for the loan and at the end of the day, they will own a home," Tan said.

Tan said the B40 group should look at buying a property as a retirement fund.

"If banks give them 100 per cent financing over 60 years for a property that cost RM300,000, in 20 years they would have paid at least one-third of the loan amount, or around RM100,000. On top of that over the 20 years, there will be price appreciation. If the property doubles in value after 20 years, they would make a lot.

"Let's say 20 years later the property is worth RM600,000 and they want to sell it, they just have to pay off the balance loan amount of RM200,000 and take home about RM400,000. They will have an RM400,000 retirement fund and they can reinvest some of the money and buy a bigger property to upgrade their livelihood.

"Currently, our low-income earners don't have this opportunity. If they have been renting for 20 years from the landlord, they will have zero value, zero equity. Malaysia today would have been a much better country if this was thought of years ago. We don't want to be like some countries where the poor are getting poorer," Tan said.

Build more affordable housing

Tan said there is an urgent need to build affordable housing and he hopes more developers will focus on building this type of property for the B40 group, especially with the ongoing Covid-19 pandemic.

"Developers don't want to build affordable homes in their housing project so their land can be more valuable. They want to build more expensive homes and can get away with it," Tan said.

Tan said the other reason is because of the high loan rejection rate for the B40 group, and low margins.

"Developers can still make money from affordable housing but the margins are lower. Normally, some lucky developers can make about 15 per cent, 30 per cent, or around 40 per cent margin from non-affordable housing projects. For affordable housing, developers can only make 10 per cent to 15 per cent profit.

"The problem is the developers. They are worried that if they build too many units they cannot sell. If they build 1,000 affordable homes and there are 10,000 buyers, the ministry will choose the people who are eligible to buy the 1,000 units. The 1,000 potential buyers will pay a small deposit and then they will apply for a loan but 60 per cent of the loan applications are rejected and the developer is stuck with the unsold units.  

"Developers want to sell all 1,000 units but only 400 buyers can pay for it, and the other 60 per cent is still dangling there. So what does the developer do? If the developer is making only a 15 per cent margin he needs to raise 85 per cent of the cost to build 1,000 homes. However, in this case, the developer can only raise 40 per cent and he is short of 45 per cent as he is waiting for the remaining 60 per cent of buyers. After one experience like that, do you think developers will want to build affordable homes?"

KLCCP hopeful for a better year with vaccine roll-out

 By NST Property - April 27, 2021 

KLCCP Stapled Group has a diverse property portfolio largely located within the KL city centre comprising prime Grade A office buildings, Suria KLCC, and Mandarin Oriental, Kuala Lumpur hotel. Bernama/Photo

KLCCP Stapled Group, which comprises KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (KLCC REIT), remained hopeful that 2021 would be better than last year given the effective roll-out of the Covid-19 vaccines that will bolster market confidence.

  Its chief executive officer Datuk Hashim Wahir said the roll-out of vaccines would help boost consumer and business sentiment despite the challenges and uncertainties.

  Hashim said in a statement yesterday that KLCCP will continue to explore opportunities and flexibilities to strengthen its resilience and long-term sustainability in response to changes in its operational and business landscape.

  However, he said the retail and hotel segment of KLCCP will continue to operate in a challenging environment due to the prolonged Covid-19 pandemic, whilst the office segment is expected to remain stable backed by its long-term, locked-in leases.

  Despite all the uncertainties, KLCCP remained committed to positioning KLCC (Kuala Lumpur City Centre) as The Place, progressively adapting to the new norm while embracing digital in meeting the future needs, he said.

  Hashim said the group would continue to ensure long-term sustainability as it continued to streamline its operations, embracing digitalisation through its four-year digital roadmap.

  KLCCP has a diverse property portfolio largely located within the KL city centre comprising prime Grade A office buildings, a premier retail mall, and a luxury hotel.

  The stabilised and wholly-owned assets under KLCC REIT are PETRONAS Twin Towers, Menara ExxonMobil, and Menara 3 PETRONAS and the non-wholly-owned assets and assets with development and redevelopment potential under KLCCP are Suria KLCC, Mandarin Oriental, Kuala Lumpur hotel (MOKL) and a vacant land (Lot D1).

  KLCCP has a 33 per cent stake in Menara Maxis and the group's assets also include Menara Dayabumi.

  The year 2020 was a reset of the whole business ecosystem for KLCCP as the group managed risk holistically and embedded controls into its business operations in pivoting to the new normal.

  Despite the tumultuous year marred by the pandemic, KLCCP sustained a stable performance for the financial year ended December 31, 2020.

  For the financial year ended December 31, 2020, KLCCP posted a pre-tax profit excluding fair value adjustment and impairment of RM722 million, down 19.1 per cent from RM943.5 million in the preceding year.

  The group's revenue fell 12.9 per cent year-on-year to RM1.24 billion on the back of a resilient office segment.

  Driven by its solid occupancy with long-term tenancies, the office segment comprising PETRONAS Twin Towers, Menara 3 PETRONAS, Menara ExxonMobil, and Menara Dayabumi remained the major revenue driver, contributing 48 per cent of the group's total revenue, and recording a pre-tax profit of RM396.5 million.

  According to KLCCP, the office segment retained its full occupancy and continued to drive strength and provide strong asset stability against the backdrop of soft market conditions.

  Meanwhile, Suria KLCC and the retail podium of Menara 3 PETRONAS, which represent the retail segment, saw revenue contracting 19.6 per cent to RM413.8 million while pre-tax profit fell 26 per cent to RM290.4 million attributable to the RM90 million in assistance packages to its affected tenants from quarter two, 2020.

  Despite the challenging retail landscape, Suria KLCC maintained its resilient occupancy at 97 per cent, the group said.

  MOKL's performance was severely affected by the mandatory closure and prolonged pandemic restrictions between March and December 2020, resulting in a 70.2 per cent decline in revenue compared to the previous year. There was lower occupancy and reduced F&B and event sales.

  "I hope that 2021 will be a better year and as the vaccine rollout will offer great hope to turn the tide of the pandemic and get us back to some level of normalcy in our daily lives," Hashim said.

Apartments from RM120,000 in Klang Valley possible, says Berjaya Group's Tan Sri Vincent Tan

 By Sharen Kaur - Published in NST Property, April 28, 2021 

Berjaya Group founder Tan Sri Vincent Tan Chee Yioun plans to develop affordable apartments starting from RM120,000 each via his Better Malaysia Foundation for low-income earners.

sharen@nst.com.my

Tan Sri Vincent Tan Chee Yioun, Berjaya Group founder and non-executive chairman says it is possible to build affordable homes from as low as RM120,000 each in the Klang Valley for low-income Malaysians, namely the B40 (bottom 40 per cent or poor) households.

  The affordable homes can also be developed in urban locations close to transportation hubs to make them attractive but the Federal and State governments' must assist by way of selling development land at a low cost to developers for them to undertake the projects.

  "Low land cost would translate into lower purchase prices for low-income house buyers," he said.

  Tan plans to develop affordable apartments with sizes of 450 sq ft, 600 sq ft, 750 sq ft and 900 sq ft, selling from RM120,000 to RM300,000 each.

  The billionaire philanthropist plans to do this via his Better Malaysia Foundation (BMF), formerly known as the Vincent Tan Foundation.

  BMF recently launched a new social enterprise programme with one goal - to assist the government to address the homeownership aspirations of the B40 group.

  The foundation, together with Berjaya Land Berhad, the property arm of Berjaya Group has designed a 900 sq ft show apartment with five bedrooms and four bathrooms specifically for this initiative.

  Tan said having more bedrooms in a single housing unit will comfortably accommodate B40 families with more family members, providing enough space for their individual needs.

  There is also a show unit of 900 sq ft with dual keys so that spare rooms may be rented out to generate additional income for the household, he said.

  Tan believes affordable housing can realistically be priced from RM120,000 to RM300,000 for an apartment ranging from 450 sq ft to 900 sq ft.

  He said based on the median house price of RM295,000 in the second quarter of 2020 published by the National Property Information Centre (NAPIC) and median household income of RM5,873, the housing price range that is affordable to those with such income level is RM211,000 and below.

  "At this price range, most houses are deemed to be unaffordable to the average Malaysian buyer. We believe this price range of RM120,000 to RM300,000 is achievable with government support in terms of charging lower land premiums and nominal development charges for affordable housing projects," Tan said.

  "Owning your own home is a basic need of everyone. It means that all Malaysians share the responsibility of taking care of the less privileged members of our society and maintaining the nation's harmony so that everyone can live happily. We believe this social enterprise will facilitate the construction of properties with a low monthly cost of ownership, carefully designed for families to grow and prosper," Tan said.

  Tan further said that banks and financial institutions should also play their part by providing loans with 100 per cent financing to B40 house buyers.

  According to him, many developers are reluctant to build affordable homes because many lower-income buyers are unable to obtain home loans.

  "As such, the developers will end up with cash flow problem when a significant proportion of the properties remain unsold as development costs still need to be paid regardless of the level of sales being made. If the Government were to guarantee 100 per cent financed loans by the banks for the low-income and B40 group, the supply of affordable housing could be increased exponentially as developers themselves would be keen to build more affordable homes to meet the demand since there would be a large market of B40 buyers with the available financing to purchase their properties," he said.

  Tan said the majority of the B40 group will not be able to buy a home without some form of financial assistance.

  "We understand that the loan applications of 60 per cent of buyers of affordable homes are rejected by banks and financial institutions due to age or poor credit scores. Many first-time buyers from the B40 group are not able to pay the usual down-payment on a home purchase. A hundred per cent of financing by lenders would resolve this issue.

  "According to our research, several banks are already offering 100 per cent financing loans to house buyers with minimum income of between RM2,000 and RM3,000 per month. The government's support for this initiative will give added confidence to the banking community to lend to the B40 category of house buyers," Tan said.

  Tan said housing loans should also be "two-generation" loans with terms of between 40 and 60 years where loan repayments can be extended over two generations to ensure that monthly repayment instalments are affordable and manageable and there is still sufficient disposable income left to provide the household with a decent standard of living.

  For a better understanding of the quantum of monthly instalment payments for loans of differing amounts and tenors, let's say for a 100 per cent financed, 60-year, RM300,000 loan to purchase a 900 sq ft unit costing RM300,000, the monthly repayment is the only RM899, which is relatively manageable for a B40 house buyer, he said.

  Tan said based on a recent survey by BFM of 1,700 employees (within the B40 group) of a private business organisation, it was ascertained that they are paying an average rental of RM900 per month for housing in the Klang Valley.

  These are employees having a combined household income of less than RM5,000 per month and the survey's focus was on the amount of rent they are paying for the rental of a room or a house.

  "From here we can see that the RM900 rental paid each month can cover the monthly loan repayments of RM899 had the employee been able to obtain a 100 per cent financed, 60-year loan of RM300,000. The key takeaway from this is that the monthly rentals can be converted into monthly loan repayments and a B40 person can then buy his own home. It is imperative that housing loans to the B40 group must therefore be 100 per cent financed, of at least 40 to 60 years duration so that monthly repayments are affordable and two-generational such that age and duration of the borrower's earning capacity will not be an impediment to loan approval," Tan said.

Vincent Tan's BCorp under PNB's former CEO to unveil major revamp

 By Sharen Kaur - Published in New Straits Times, May 3, 2021

Its recently-appointed group chief executive officer Abdul Jalil Abdul Rasheed said there were many businesses under BCorp and come June, there would be changes. (NSTP/Photo)

KUALA LUMPUR: Berjaya Corp Bhd (BCorp) will reveal a major restructuring next month that will involve streamlining its businesses and selling off non-core assets.

Its recently-appointed group chief executive officer Abdul Jalil Abdul Rasheed said there were many businesses under BCorp and come June, there would be changes.

"I am targeting by the end of June, we will announce publicly where we will streamline the group, reorganise certain aspects of the business and share what the future BCorp be like. I have in my mind right now what they should be.

"I think that is important to get the foundation first which is reorganising the business, knowing very clearly what business we want to be in, what businesses we don't want to be in. That's the first starting step and then after that, there will be a sequence of announcements," Jalil said in an interview with the New Straits Times here last week.

BCorp is involved in real estate, leisure, hospitality, retail, food, automotive, and gaming, among others.

For the year ended June 30, 2020, it recorded a net loss of RM117.27 million. 

The group posted five years of losses in the past 10 years.

There were some changes recently in BCorp involving its founder Tan Sri Vincent Tan who resigned as executive chairman, in line with his vision to transform the group into an institutionalised corporation managed by professionals.

Tan remains on the BCorp board of directors as non-executive chairman.

Jalil, 38, who previously served as the president and CEO of Permodalan Nasional Bhd, was appointed on March 16 this year with a mandate to transform BCorp into a high-performing organisation.

 He is the first non-family-related member to helm Tan's multi-billion ringgit empire.

Jalil also acquired 70 million BCorp shares at 28 sen apiece, giving him a 1.4 per cent stake in the diversified conglomerate, according to a statement by BCorp.

 The statement did not disclose the seller but based on a Bursa Malaysia filing by BCorp, Tan had disposed of 70 million shares via a direct business transaction. This leaves him with a direct interest of 25.71 per cent or 2.59 billion shares in BCorp.

Shares in BCorp rose 16.6 per cent, or three sen to 21 sen, its highest since August 2020, following Jalil's appointment.

The share is currently trading in the range of 34 sen. This gives BCorp a market capitalisation of RM1.76 billion.

When asked how his first month at BCorp had been for him, Jalil said he was enjoying it.

"The first three months is a learning and discovery exercise for me to meet all the companies and understand their business operation," he said.

Jalil said he was currently assessing what are the synergies between the various aspects of the businesses under BCorp.

"We are studying what have we done particularly better and what have we done not so good, what are things we can move fairly quickly, and what are things we need to kind of build on in maybe about two to three years. There will be elements of some small operational improvements and there are also some structural things that we will change.

"We will unveil that next month. We will announce how BCorp should look like and that will involve a combination of reorganising the businesses, identifying what is core, what is non-core, and then we will take it from there," he added.

Jalil said divestment would be an important aspect of the plan.

"Next financial year June 30, 2022, you should see all the aspects of the changes that we announced in the current year coming to fruition. That is the whole idea that we want the new year to start off with this new strategic plan for Bcorp and enhance value," he said.

In a statement issued recently, Jalil noted that he and BCorp founder Tan Sri Vincent Tan had agreed that the group was undervalued, given the many good assets that could be optimised.

BCorp is currently trading at a steep discount of more than 80 per cent based on its net tangible assets of RM1.21 per share as at end-December 2020.