abdul rasheed ghaffour : solutions for safe, adequate, affordable housing for all opening remarks by mr abdul rasheed ghaffour, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the cagamas - world bank affordable housing conference " solutions for safe, adequate, affordable housing for all ", kuala lumpur, 2 april 2019. * * * thank you for inviting me to deliver the opening remarks for this conference. the issue of housing affordability is close to everyone ’ s heart. having a family myself, i can truly understand the need and desire to own a safe, comfortable and affordable home. as such, i am pleased that the public discourse on this issue around the world and in malaysia has been gaining traction over the past few years. this reflects the significance, concern and gravity of the situation. to ensure a fair standard of living, the united nations recognises the provision of adequate housing as a necessary objective to pursue. adequate housing includes ensuring affordability, habitability and accessibility, all of which are issues that this conference seeks to address. in my remarks today, i will touch on the responsibilities of individuals, the private sector and policymakers to realise the agenda of affordable housing, mainly from malaysia ’ s perspective. for any individual, irrespective of income level, one of the biggest investments he or she will make in life is the purchase of a home. the downpayment and monthly mortgage represents a significant commitment, where for many, may even span a lifetime. as such, it is of utmost importance that we consider the principles of sound and prudent financial management in this undertaking. we cannot in good conscience, overburden and cause anyone to enter into financial difficulty in pursuit of owning a home. this fundamentally goes against the intention of owning a house. therefore, based on the principles of fairness, justice and prudence, it is necessary for us to be absolutely clear on what ‘ affordable ’ means. this will influence both the diagnosis of the issue and the solutions to be implemented. we must be fair and just to the needs of the ordinary person. at its core, affordability is a function of two things ; the income of the individual and the price of the house. a house is affordable if its price does not overburden the person ’ s finances and reflects its true value. it is crucial that the percentage of income spent to service the mortgage does not go beyond the person ’ s financial capacity

mechanisms must, to the greatest possible extent, allow for a reduction in the demand for gas and electricity in order to minimise the risk of shortages. the proposed tiering mechanism, which calls for the application of a regulated tariff of 80 % of the historical annual consumption for households and a tariff at the market price beyond that, preserves an important " price signal ", and therefore provides an incentive for this reduction. there remains the very sensitive question of electricity and gas prices for companies : should there be a regulated spanish - style cap or a strong german - style fiscal buffer? the european commission is actively working on this, and i will simply express three wishes : 1. there needs to be a rapid decision ; companies'worst enemy today is uncertainty about their energy bills – according to our latest monthly business survey conducted in early november among 8, 500 french companies, 36 % of them fear that this situation might have a small or large impact on their activity in the next three months, and 52 % on their margins ; 2 2. a support mechanism for gas and fossil fuels, in whatever form it may take, can only facilitate the transition towards a new energy mix for companies, and cannot decouple tariffs from real prices in the long term. 2 / 4 bis - central bankers'speeches 3. lastly, intermediate solutions are no doubt needed : i do not believe in regulated prices, nor in the obsession with " marginal prices " reflecting all the extreme fluctuations in market prices. neither do i believe that it is desirable for states to compete in domestic spending on large - scale fiscal budgetary shields for companies. this would go against the single market, and against the sustainability of our public finances. we will not beat inflation in the long term with fiscal spending, but with monetary policy and - i will now come to this - with structural reforms. iii. what both our countries are in danger of forgetting : structural reforms although crises require firefighters, we must not become prisoners of emergencies. however, on both sides of the rhine, we are in danger of forgetting that it is just as essential to be architects, through two major transformations to be achieved in the coming years : the ecological transition, even more necessary with the energy crisis and our need for independence vis - a - vis russia ; and the digital transformation, which is also key to strategic autonomy ( or sovereignty ). real supply - side reforms and those to enhance our productive capacity - which are different from tax cuts - are rarely popular ; they have taken too much