State intervention in housing the urban poor in the developing State of Terengganu in Malaysia: An institutional analysis of low-cost housing regulations and their impacts on low-cost housing provision

Abstract

About a billion of the world's population live in slum settlements. The poor housing conditions carry various socio-economic implications on both the affected low-income groups and the society overall. The issue of inadequate affordable housing for low-income groups is prevalent especially in developing nations which are experiencing rapid urbanisation. Low-cost housing has low effective demand, which is unattractive for private housing developers. Thus, the state has to step in and employ measures to rectify the inequities caused by market failures. State regulation is a form of indirect intervention, used to secure market engagement in adequate and proper affordable housing for the urban poor. In Malaysia, 'low-cost housing' is a specific type of housing meant for low-income groups. Since 1970, low-cost housing has been employed as a measure to promote social cohesion among the multiple ethnic groups. Towards this aim, the Malaysian government has implemented various regulations to boost private low-cost housing supply, including (i) the low cost housing quota requirement on new developments, (ii) building standards to control low-cost housing quality and (iii) enforcement and monitoring procedures governing the low-cost housing development process. These regulations have been reported as cost inflationary and quantity restrictive by a World Bank study that adopted econometric modelling as the main methodology. Nevertheless, little insight was provided on how regulations were mediated by various institutions operating within the Malaysian housing market. Low-cost housing forms about 20 per cent of the total housing stock, with the private sector remarkably supplying two-thirds of the low-cost housing stock. This study examines the regulatory context and institutional dynamics that have resulted in the production of approximately 950,000 low-cost houses. The institutional Structure of Provision (SOP) thesis (Ball, 1983, 1986, 1998, 2003b) approach was adopted to frame a three-tier analysis of low-cost housing regulations in the developing region of Terengganu in Malaysia. Terengganu is a rapidly urbanising State that is facing increased low-cost housing demand despite being overlooked in previous Malaysian housing studies. The SOP framework allows an in-depth analysis of how the Federal low-cost housing policy is rolled out at the State-level by examining the regulatory environment, the behaviour of planners and developers and case studies of actual low-cost housing developments. This thesis provides the first comprehensive analysis of the regulatory environment governing the planning and production of low-cost housing in Malaysia. The analyses also identify the institutional structures that have evolved to provide low-cost housing in a previously neglected housing market in Malaysia. The thesis presents the first substantial Malaysian study that explicitly recognises and highlights the role of the State Authority in administering Federal low-cost housing policy. Additionally, the findings strongly suggest that the seemingly opaque set of regulations is tempered by institutional dynamics in the regulatory environment, enabling developers to engage in low-cost housing production. Generally, developers did not show support of deregulation. Rather, both planner and developer interviews emphasised weaknesses in regulatory implementation including communication weakness, technical and support staff deficiencies, political inputs and power play between different agencies. Significantly, developers indicated that they would not provide low-cost housing unless mandated by law.