Kota Kinabalu: Heavy fine is more appropriate than jail for developers of abandoned housing projects in Sabah.
According to Sabah Housing and Real Estate Developers Association (Shareda) President Datuk Sr Chua Soon Ping, jailing them would not help homebuyers recover their losses.
Instead, ordering them to pay hefty fines in millions of Ringgit would directly compensate buyers’ losses in repaying housing loans.
“When housing projects are abandoned, we (Shareda) are of the view that the punishment should not be imprisonment, because if we put the errant developers in prison and make them bankrupt, then they have no money to pay the affected homebuyers.
“Some developers may even prefer to be in jail to avoid paying the fines. Therefore, fine them two or three million and use that money to compensate the buyers. You imprison the developer(s), the buyer gets nothing.”
Shareda did propose penalties to the Ministry of Local Government and Housing, but the latter wanted to standardise the jail term provision with the Federal law for the offence.
Chua said this after signing Memoranda of Understanding (MoUs) between Shareda and GreenRE Sdn Bhd and Shareda with the Borneo International Centre for Arbitration and Mediation (BICAM) at Baysuite, Likas Bay, here.
He was commenting on a recent amendment to the Housing Development (Control and Licensing) (Amendment) Enactment 2023, passed in the State Assembly on April 17, 2025.
The approved amendment saw the maximum jail term for errant developers revised from five years to three – a move that sparked debate, with some viewing it as a reduction in punishment.
He claimed the adjustment was not a reduction in penalty but a “rectification,” aligning Sabah’s laws with the national standard already practised in Sarawak and Kuala Lumpur.
“It was never supposed to be five years. That was a mistake passed last year. Now it is corrected to three years, consistent with the rest of the country,” he said, when asked to comment to criticism from several assembly members who argued for the five-year jail sentence to be maintained.
Chua also said imposing jail which is criminal punishment could also push developers away from building residential homes and impose risks which discourage them from engaging in residential projects.
“Developers may consider not to build residential projects anymore as too risky under these laws. Instead, Many are shifting to commercial, industrial or tourism projects,” he said, although he has never seen a developer being prisoned for abandoning housing projects in the country.
While supporting regulations to protect buyers, he said Shareda believes the current legal framework could turn unintentional business failures into criminal acts.
“Many cases of project abandonment are caused by circumstances beyond developers’ control such as economic downturns, tariffs, or global disruptions like the Covid-19 pandemic.
“Every businessman wants to complete the (housing) project and make a profit. Nobody benefits from abandoning a development,” he said, adding that some rogue developers, mostly from peninsula and Sarawak, who are not Shareda members, have tarnished the industry.
On another important amendment, Chua said the Minister is empowered to exclude bodies or agencies under the control of the Local Government and Housing Ministry or Federal government from any or all provision of the Enactment.
“Previously, agencies including Lembaga Pembangunan Perumahan dan Bandar (LPPB) can be charged for incomplete or abandoned housing projects
“After the passing of the Bill, the key change involves exempting LPBB (Lembaga Pembangunan Perumahan dan Bandar), a government-linked company (GLC) tasked with developing affordable housing, from being criminally charged if their projects are abandoned.
“The exemption was necessary because LPBB operates under high risk due to the nature of affordable housing projects. “If civil servants working in a GLC could be imprisoned, nobody would want to work there, it may seem unfair, but there’s no choice,” he said.
Chua added that LPBB had appealed to the Chief Minister for this protection, warning that without it, staffing and completing government-backed affordable housing projects would become even more difficult.
