The cabinet has imposed a “temporary ban” on approvals for shopping complexes, offices, serviced apartments and luxury condominiums priced over RM1 million, effective Nov 1.

The freeze came after Bank Negara’s report on the substantial supply and demand imbalance within the country’s property market. Bank Negara stated that the oversupply of properties in the country has been persistent over the past few years. Bank Negara itself had raised this issue in its 2015 annual report.

In the Klang Valley, the report found that office vacancy rates had increased from 20.9 percent in Q1 2015 to 23.6 percent in Q1 2017. The situation is only set to get worse as there is an incoming supply of 38 million square feet of office space.

However, what Bank Negara and the cabinet did not say was that among the biggest culprits causing the supply-demand imbalances in the property market are the government-linked companies (GLCs) and government-linked investment companies (GLICs).

A report by The Star on April 6 this year highlighted the increasing involvement of GLICs in the property sector, both directly and indirectly. The Employees Provident Fund (EPF) has been directly involved developing the new Kwasa Damansara township, which has a massive size of 2,300 acres and RM50 billion in gross development value (GDV).

Pemodalan Nasional Bhd (PNB) on the other hand, is developing the 118-storey Menara Warisan project next to the historic Stadium Merdeka. It will offer 4.3 million square feet of residential, hotel and commercial space.

PNB is also the single biggest shareholder of S P Setia, one of the largest, if not the largest property developer in Malaysia. S P Setia is renowned for some of the biggest luxury developments in the Klang Valley, including the 25-acre KL Eco-City, Setia Sky Seputeh and many others.

UDA’s Bukit Bintang project

In addition, EPF and PNB jointly own 63 percent of Sime Darby Bhd, which has a property arm that is also one of the largest property developers in the country. The company recently launched its RM8 billion GDV AYLA Kuala Lumpur project, which covers an area of 360 acres.

There is also the Bukit Bintang City Centre (BBCC), which sprawls over 19.4 acres with a GDV of RM8.7 billion. The project is spearheaded by UDA, a wholly-owned subsidiary of the Ministry of Finance.

No listing of high-end property projects in Kuala Lumpur will be complete without also mentioning the 76-acre RM20 billion GDV KL Metropolis project. While on paper, it is developed by a private company, Naza TTDI, the project is in effect a controversial land-for-building deal with the Ministry of International Trade and Industry (Miti).

Elsewhere, Khazanah-owned UEM Sunrise also specialises in the high-end residential market in prestige locations such as Mont Kiara. In Johor, which was highlighted as having the largest share or 27 percent of all unsold properties in the country, UEM Land is developing 14 new projects which are all listed as high-end developments.

All of the above do not yet include the two mega-property developments linked to the scandalised 1Malaysia Development Bhd (1MDB) – the 70-acre Tun Razak Exchange (TRX) and the 486-acre Bandar Malaysia.

The issue here is two-fold. First, it is clear that GLCs contribute overwhelmingly to the glut that is threatening our property space in the country today. No policy prescription without recognising and reviewing the role of the government, GLCs and GLICs has played in our “imbalanced” property development sector will be effective or successful.

The second more important economic question is, will the government also be granting ‘ban’ exemptions to all these projects of the GLCs, as it has done for TRX and Bandar Malaysia? What then, will be the implication for the private sector in Malaysia? Should they all just pack they bags and take their money to other countries to invest?

TONY PUA is Petaling Jaya Utara MP and DAP national publicity secretary.