Bank’s CSR on affordable housing

alan tong

FESTIVE season is always a time for sharing and giving. During Chinese New Year, I have seen and heard of organisations lending their hands to the needy. Such events bring cheer to both parties, the contributors and the recipients.

Having said that, charity events are not just confined to festive seasons or special occasions. A sustainable way of contributing to the community will be more impactful in the longer term. This explains why many companies have their own corporate social responsibility (CSR) programme. One of the objectives of such programmes is to channel funds to the needs of the various under-privileged communities. 

In my last article, I shared my wish list for the Year of the Goat. One of them being the bank’s CSR on affordable housing. Some find this wish interesting and have asked for more details. I think this topic is worth discussing in more depth considering its benefits in housing the nation. 

Having browsed through the CSR programme of several banks on the Internet, I find that most of their CSRs are focused on workplace, marketplace, community and environment. What was missing is the piece on affordable housing that will benefit the low-income earners. 

Today, most banks in Malaysia are generating a significant portion of their profits by providing loans. As high as one-third of their loan portfolio comes from the property industry. According to Bank Negara’s Monthly Statistical Bulletin January 2015, bank’s exposure to residential property stands at 29.3% and a further 13.4% is from non-residential property. With such high exposure in property industry, it would be ideal if banks could also contribute back to the community by allocating a CSR fund to assist the rakyat in owning affordable homes. 

In other countries, there are examples where banks contribute to national housing efforts. Wells Fargo & Company, a financial services company headquartered in San Francisco with operations in more than 8,700 locations, has contributed US$42.8mil (RM156.6mil) in grants to support home ownership effort in 2013. 

Their effort includes support for affordable housing, home buyer education, counselling, downpayment assistance and home repairs. 

Another example is Bank of America. The bank has supported Habitat for Humanity’s for more than two decades. They also work with families, volunteers and sponsors to build affordable housing for low-income families in the United States, United Kingdom and a few other countries in Asia Pacific. 

The above shows the various ways on how banks can apply CSR on affordable housing. In our country where affordable housing is in high demand, banks can even create more approaches to assist the rakyat in owning an affordable house. 

Just to share a few, banks can consider offering lower interest rate for low-cost housing loan, and imposing certain quota to provide loan for affordable housing, especially for low income families who are first-time home buyers. To help in increasing the supply of affordable homes, banks could provide financing facility with incentive to small and medium-sized developers who plan to develop affordable housing.

Unlike developers who are required to include low-cost elements for development of land beyond 4.47ha, banks in our country has no obligation to contribute to the housing industry despite property loan being one of their biggest business portfolios. To date, developers have contributed significantly to the 1.06 million low-cost homes in Malaysia. Some form of requirement or quotas imposed on banks to allocate their CSR fund to the housing industry will be instrumental in pushing our housing policy forward. 

For a developing country with a young and growing population like us, housing issue is of priority especially when our country aims to become a developed nation by 2020. On this note, as a major stakeholder in the industry, banks play a significant role in addressing the housing issue and helping our nation to march towards this goal. 

CSR on affordable housing is especially relevant at our current stage of development. If banks can set aside part of their CSR funds to help the rakyat to own a roof over their heads, it will elevate the quality of our peoples’ life tremendously.

> FIABCI Asia-Pacific regional secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com. - The Star