The Bumiputra Discount

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 Hello All
 I can understand the Bumiputra discount (not sure whether I agree with it) but I'm not sure why it applies to the purchase of upmarket condominiums. Taken at an economic level it has the ability to distort the market in that a class of buyers is obtaining the property at a discount to the remaining buyers. From a social viewpoint one must question whether the benefit is the total reverse of the usually accepted progressive tax model in that the discount provides a larger dollar saving to the wealthier of the community.

On a more practical level, what is the discount? Is it fixed or variable. An agent told me that the units marked as reserved could be released in certain circumstances. Anybody know about this?

 Have a great day. I have decided I will only look at my share portfolio every second day. That way I will avoid the daily swings between ecstasy and despair !!

Cheers
Donohue

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Hi Donohue

The Bumiputra discounts that I have seen vary between 5 and 7% (7% being the standard discount figure). One of the drawbacks of buying a property with the Bumiputra discount is that the Bumi vendor can in almost all circumstances only sell the property to another Bumiputra.

A section on Wikipedia should help shed some light to your question:
A certain percentage of new housing in any development has to be sold to Bumiputra owners for limited period. Housing developers are required to provide a minimum 7% discount to Bumiputra buyers of these lots. This occurs irrespective of the income level of the potential buyer. Remaining unsold houses are allowed to be sold to non-bumi if the developer proves attempts have been made after a given time period. There is no bumiputra discount on established housing.

Paul

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This disciminatory pricing is rather unfair as it is robbing Peter to pay Paul. The housing developer has to jack up the prices of non Bumi lots in order to subsidise the Bumi portion. It is fair if the differential pricing is only confined to low cost properties (under RM 48,000) or even properties below RM 120,000 or for Bumi who earns less than RM 2,000. This housing policy which is spelt out in the New economic Policy introduced after the May 13, 1969 racial riots has in it the original spirit to help the poor Bumis. As it is the super rich Bumis will always  enjoy a 7% discount whereas the middle income non Bumis who are struggling to earn a living are bearing the cost of these discounts given to this bunch of undeserving Bumis. The developers are also jeopardised when they are forced to allocate 30% of the units for Bumis even in locations where predominantly the residents there are non Bumis.   And we are not even talking about the holding cost of unsold properties. They have to hold these properties for up to 18 months or more until they get clearance from the government to offer them to the non Bumis. They must show the government that they have exhausted all efforts before they apply for such exemption. Meantime the developers will be bleeding financially with the holding cost and their high cost of marketting to woo Bumi buyers. And tell me which Bumi will buy any property from another Bumi at full price when he can buy direct from developers at 7% discount. This is a very discriminatory and unhealthy practice which is helping the undeserving.

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Thanks guys/ladies.
 Good to have some lively debate.
 I must say while I see merit in the Bumiputra discount etc for those who are less well off, the permeation of the discount through all areas of the socio economic population is one issue I am yet to understand.