Fomca: Rethink plan allowing developers to give loans

Paul SelvarajPETALING JAYA: The government should rethink its plan to allow developers to provide loans to house buyers until and unless it can ensure the loan applicants are fully protected should anything go wrong.

In making this call, Federation of Malaysian Consumers Associations (Fomca) CEO Paul Selvaraj said allowing developers to dispense loans came with a risk.

With bank loans, Selvaraj told FMT the process would be regulated by Bank Negara and the deposits would be insured by Perbadanan Insurans Deposit Malaysia (PIDM).

“Who regulates the loans issued by developers? Are they insured by PIDM?

“Some housing developers cannot even complete projects and now we want to allow them to give loans?”

He said the government must ensure that consumers would be fully protected before allowing developers to give out loans.

Another consumer group, Persatuan Pengguna Islam Malaysia (PPIM), urged the government to put the move on hold until stakeholders, including the domestic trade, co-operatives and consumerism ministry, had a chance to study it and put forth their recommendations to safeguard the loan applicants.

PPIM Lead Activist Nadzim Johan said they did not want consumers to be burdened with high-interest loans for long periods.

“We don’t want consumers to go from the frying pan into the fire.

“For developers, it is all about profits.

“We fear that some developers may take advantage of consumers.”

Yesterday, Urban Wellbeing, Housing and Local Government Minister Noh Omar announced that developers could apply for moneylending licences to provide housing loan facilities to property buyers due to the difficulties faced by them in obtaining loans.

The interest rate for these loans will be capped at 12 per cent a year for borrowers with collateral and 18 per cent for those without.