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Cornell Real Estate Review

Abstract

[Excerpt] Policy Background

A newspaper reported that the Federal Government of Malaysia had indicated its intention of repealing the Control of Rent Act 1966 since the beginning of the 1980s (Kathirasen, 1997), when the current prime minister, Mahathir, took over that position after seeing the economic expansion of the 1970s. Throughout the decades of Mahathir era, the Malaysia Incorporated Policy1 has been intensified to achieve competitive and robust economy moving towards globalization, one that emphasizes the productive relationship between private and public sector. The key concept of this policy is to focus on the liberalization of the Malaysian economy, pursuing export-led growth in spite of the rise of protectionism, and to increase the competitiveness of Malaysian products in the global market (Rahman, 1993).

Rent control had become inconsistent with this trend including pursuing deregulation, a market economy, and the full exercise of property rights. The fact that control hampered urban redevelopment and underutilized scarce land capital for a long time was considered to be problematic. Thus, repeal of rent control was expected to reactivate flows of land capital by encouraging investment in pursuit of further economic development. In terms of the ethnic problem in Malaysia, putting urban properties mostly owned by ethnic Chinese on the market after the repeal of rent control is supposed to mitigate the ethnic imbalance with Malays. Along with the nation’s policy which ensures Malay participation in the modern sectors of economy, the Federal Government of Malaysia recognized that it was important to mobilize a large amount of assets to realize certain share of Malay ownership of capital (Malaysia Prime Minister’s Department, 1991b).

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