'Don't let Malaysia be the next Hong Kong' - Economist

SHAH ALAM - In addition to ensuring an adequate supply of food and clothing, comfortable living spaces are a fundamental necessity for every individual but not everyone is fortunate enough to have them due to life's pressures and financial constraints.

This predicament is widespread in modern countries like Hong Kong, Japan, and South Korea, which face high population density and a soaring cost of living.

For example, in the Sham Shui Poi area of Kowloon, Hong Kong, a dire housing crisis resulted in home prices that were affordable to only a minority of the population.

Scarce and expensive land further contributed to the housing problem, which led to the construction or renovation of residential properties to accommodate hundreds of mini-rooms in order to meet the needs of the less fortunate.

Imagine living in a room that housed up to 20 'cages,' often built across three levels.

Tenants were charged approximately US$200 (RM938) per month for a 'cage' measuring three metres (six feet) by 0.8 meters (two and a half feet).

The 'cages' on lower floors were more expensive because they offered slightly more space, but the conditions remained far from comfortable.

As the name suggests, these living spaces resembled bird cages and chicken coops, which evoked feelings of confinement rather than comfort.

However, these cramped living spaces were their only option for many low-income individuals such as janitors and general labourers, senior citizens, and those living on their own.

Furthermore, these tiny rooms often come with unpleasant odours and a lack of privacy, with family members sometimes compelled to live separately due to space constraints.

Tenants must also share restroom and laundry facilities and most of these residential units lack a kitchen, forcing renters to spend their insufficient income on food.

In Japan, developers and landlords addressed the issue of affordable housing especially in major cities like Tokyo by constructing 'geki-sema' or shared housing – with windowless rooms which barely have enough space to accommodate a few personal belongings.

Even though these rooms were stacked on top of one another like lockers, the rent for 'geki-sema' could reach up to US$600 (RM2,816) per month.

These units were often favoured by young professionals who spent most of their time working outside and only came 'home' to sleep.

In Malaysia, the problem of 'bird cage' and 'windowless' rental rooms was increasingly widespread, with advertisements for such cramped rentals easily found on social media platforms.

The main reason people were forced to live in such conditions was due to financial constraints that made more comfortable accommodations unaffordable.

Simultaneously, this situation presented opportunities for homeowners or property owners looking to exploit the situation for profit by modifying their premises into tiny rental units.

UNHEALTHY ECONOMIC INDICATORS

From an economic perspective, the issue of rental rooms could indicate an unhealthy economy where the population cannot meet a basic need: comfortable housing.

Future Labor Market Research Center (EU-ERA) economist Muhamad Zharif Luqman Hashim said that the inability to afford comfortable housing especially among the younger generation was seen as a sign of financial constraints and economic challenges.

"Essential needs like housing are crucial for a good quality of life, and when a significant portion of the population cannot meet this need, it reflect critical economic issues.

"Factors such as high costs, insufficient income levels, a lack of affordable housing options, and income inequality can contribute to this situation," he said.

He said that exploitative homeowners or property owners also sought to profit from the difficulties individuals faced in finding suitable housing.

"This includes charging excessively high rents for uncomfortable and cramped living spaces or engaging in unethical rental practices.

"However, it is important not to label all homeowners or property owners as 'capitalists' seeking to exploit others," he added.

Zharif said he believed Malaysia could face similar challenges as other countries if the issue was not effectively addressed.

"Proactive steps are essential to prevent Malaysia from following in the footsteps of countries with chronic housing issues like Hong Kong.

"This includes tightening the regulations for affordable housing ownership to ensure that only those who meet the criteria can purchase these properties, preventing those who already own property or affordable homes from buying additional houses," he said.

Additionally, Zharif said regulations should be implemented to ensure fair rental practices, urban planning that prioritises adequate housing for low-income groups, policies to address income inequality, and mechanisms to protect both tenants and property owners.

DIVERSE ECONOMIC INITIATIVES

Zharif said to address the issue of capitalist rental rooms from an economic perspective, a multifaceted approach was needed.

"First, affordable housing programmes should be a key strategy component. The government needs to reexamine the criteria and qualifications for homeownership to prevent it from being exploited by property players.

"Initiatives involving subsidies, tax incentives, or partnerships with private developers to increase the supply of low-cost housing units aim to ease the financial burden on low-income individuals and families by offering accessible housing options," he said.

Second, he noted that rent control measures could play a significant role in reducing the problem.

"By implementing policies limiting excessive rent increases, the government can make housing more affordable.

"However, it is important to strike a balance that prevents landlords from reducing maintenance and property investment due to overly strict regulations, which could affect housing quality," he said.

Zharif also emphasised the importance of raising workers' wages.

"The progressive wage policy proposed by the government is a crucial mechanism to align wage increases with skill improvements that benefit both workers and employers.

"Increasing wages makes it easier for people to afford decent housing with their income, thus reducing their reliance on cramped living conditions driven by financial constraints," he said.

He also stressed that efforts to diversify the economy and create jobs should be a priority.

"A diverse economy with sufficient job opportunities can increase household income and reduce poverty, ultimately enhancing the population's purchasing power.

"Moreover, financial reforms related to housing that ensure access to housing finance options, such as affordable mortgages or housing assistance programs, can facilitate homeownership and provide alternatives to cramped rental spaces for those seeking housing," he said.