The Informal ‘Guanxi’ Institutional Culture of the Malaysian Housing Development Industry

Abstract

There has been limited understanding of the relationship between private developers and the housing delivery mechanism in Malaysia. This paper seeks to bridge the research gap by analysing the social relationships and informal institutions embedded in the Malaysian housing development industry. Empirical data were collected for Kuala Lumpur and Johor to compare and contrast developers’ views and their working relationships with government departments. Informed by various arguments that ‘guanxi’ can reduce transaction costs and supplement/complement the formal legal regime, this paper examines the ways developers are engaged in such transaction cost reduction activities. Policy and theoretical implications of the informal cultural practice in the housing development industry are then drawn out.

Keywords:

• Informal culture
• guanxi
• housing planning
• housing developers
• Malaysia

Acknowledgements

The findings of this paper are drawn from the doctoral dissertation of the first author that is funded by the Graduate Assistantship awarded by the School of Environment, Education and Development, The University of Manchester. The authors are grateful to Professor Vincent Nadin, the Editor-in-Chief, for accepting this paper. We appreciate the comments given by the reviewers, not forgetting the contribution of Dr. Mark Baker in providing his proof-reading support and encouragement throughout the journey to get this paper published.

Notes

1. It is situated at the southern tip of Peninsular Malaysia. Singapore, its neighbour, is easily accessible through the Causeway link.

2. It is predominantly the public-listed and private-limited firms that develop the key products, i.e. landed and strata housing units.

3. Formerly known as the Ministry of Housing and Local Government.

4. It means ‘son of the soil’ in Malay language and refers to a Malaysian of indigenous Malay origin.

5. For small- and medium-sized enterprises, the Malay (Ali) partner would be responsible for securing contracts and licences from the government and the Chinese (Baba) partner would implement the projects (Gomez, 2003, 64).

6. According to the 2010 Malaysian Census, Bumiputera, Chinese and Indian ethnics constitute 67.4, 24.6 and 7.3% of the population respectively.

7. The costs of running the system.

8. The Act is administered by the Federal Town and Country Planning Department under the Ministry of Urban Well-being, Housing and Local Government.

9. The 1965 National Land Code accords the state authority to administer the use of land.

10. Despite its housing market suffers from the oversupply problem, the confidence of the JH market is based on the speculation of the potential boost of investment from the Singaporeans and those Johoreans who work in Singapore and have a stronger purchasing power.