Stricter laws needed for abandoned projects in Sabah - Borneo Post Online (2025)

KOTA KINABALU (April 18): Advisor for the buyers’ group of the abandoned PacifiCity project, Datuk Seri Winston Liaw urged the state government to enact stricter laws to punish developers responsible for abandoned projects.

Liaw expressed extreme disappointment over the move by Deputy Chief Minister II Datuk Seri Dr Joachim Gunsalam to table a bill to reduce the maximum jail term for developers responsible for abandoned projects by two years.

He stated that with a growing number of abandoned and problematic projects in Sabah, stricter laws are necessary to ensure that the people’s hard-earned money is not defrauded.

“Since getting involved with the abandoned PacifiCity project two years ago, I have realised that there are many legal loopholes in Sabah’s real estate industry.

“These loopholes allow unscrupulous developers to defraud Sabah buyers of their hard-earned money.

“Therefore, the state government should increase the penalties, not decrease them,” he said to the press today.

On Thursday, the state assembly had passed the amendment bill to the Housing Development (Control and Licensing) Enactment 2023, tabled by Joachim.

This amendment includes reducing the maximum prison sentence for developers responsible for abandoning housing projects from five years to three years.

However, during the debate on the bill, Kapayan assemblywoman Jannie Lasimbang (DAP), Tanjung Aru assemblyman Datuk Junz Wong (Warisan) and Tungku assemblyman Assafal Alian (Warisan) expressed their disagreement with lowering the prison term.

Liaw stated that in fact, Sabah’s real estate laws need a comprehensive overhaul.

“Besides allowing the state government to intervene in abandoned housing projects, its powers should be expanded to regulate abandoned commercial property projects as well,” he said.

He added that the government must also explicitly legislate that banks should immediately stop charging interest on loans for abandoned projects until the issue is resolved.

Furthermore, developers should compensate buyers, similar to liquidated ascertained damages (LAD) for late delivery, during the defect rectification period after the Occupancy Certificate (OC) has been issued.

“A prime example is a project in the Likas area of Kota Kinabalu that recently obtained its Occupancy Certificate (OC).

“Even though the Kota Kinabalu City Hall (DBKK) has issued the OC, subsequent extensive repairs meant buyers could neither occupy nor rent out their units, effectively amounting to a late delivery.” he said.

Liaw added that banks providing bridging finance for the development project and those providing end-financing to purchasers should be responsible for verifying construction progress, disbursing loan amounts only in proportion to the certified stage of completion.

He argued that for long-term thorough protection of the real estate market, the government should immediately amend the law to mandate a ‘Build-Then-Sell’ (BTS) system, where projects can only be sold after obtaining the OC.

“This BTS approach ensures buyers’ interests and prevents problems like contractors cutting corners or shoddy workmanship.

“Buyers can inspect the completed unit and only pay a deposit once satisfied.

“For instance, I bought several double-storey terrace houses in Tuaran about ten years ago. Four years after taking possession, leaking pipes inside the walls required repairs.

“It was then discovered that the walls were filled with straw and newspaper. In an earthquake, they could collapse instantly,” he said.