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Showing posts with label Property developers. Show all posts
Showing posts with label Property developers. Show all posts

Sunday, September 22, 2019

Home Is Where The Heart Is

https://youtu.be/a_B80AIQegE

Harking after a home: Officials have acknowledged that the lack of affordable housing is one of the issues that sparked the unrest in Hong Kong, which has been going on for months. — AFP
Owning a house is the standard ambition of any individual, however, getting there is increasingly becoming not only a local, but global struggle.

THERE’S a lesson to be learnt from the protests in Hong Kong – politics is about selling hope. So if the young people living in a depressing environment feel they have no future, then the alarm bells should ring loudly.

In the case of Hong Kong, the leaders – mostly technocrats and government officials – didn’t see it coming, or maybe they were just indifferent.

Many young people in Hong Kong feel they stand no chance of becoming a homeowner in their lifetime, and officials have acknow-ledged that the issue is one of the causes that sparked off the unrest.

The controversial Extradition Bill, which allows a Hong Kong resident to be sent to mainland China to face trial, was merely a catalyst. Those protesters couldn’t all possibly believe they’d fall on the wrong side of the law and face the consequences, could they?

Last week, former Hong Kong chief executive Leong Chun-ying was in Kuala Lumpur for appointments with businessmen, opinion leaders and officials, to update them on developments on the island.

I was among the lucky Malaysians picked to hear his thoughts and views on Hong Kong, while he, too, listened to our concerns during the two-hour closed-door meeting.

My co-host and meeting organiser, Datuk Seri Azman Ujang, and I both feel that of all the problems faced by any country in nation- building, none deserves greater priority than housing the people.

What expectation could be more basic than having a roof over our heads, and with it being a decent and affordable one at that? And when we talk about affordable, it should be truly attainable by the low-income people who form the bulk of the population in most countries.

Azman, the Bernama chairman, rightly outlined the consequences of the failure that stems from a lack of will in resolving the housing problem of the masses. And as he said, this could easily lead to people pouring into the streets protesting issues not even directly related to housing.

It’s a fact that many poor Hong Kong people live in a room less than 75sq ft, and millions live in deplorable conditions.

More recently, “nano” flats – tiny apartments less than 200sq ft – have fast become the norm in overcrowded Hong Kong.

According to a South China Morning Post report, the cost began at HK$2.85mil (RM1.52mil) for an apartment no bigger than an average Hong Kong car park space, but the lack of interest forced a rethink by the developer.

But what’s mind-boggling is that while there are plenty of poor people in Hong Kong, or many who feel poor, Hong Kong’s fiscal reserves stood at HK$1.16tril (RM620bil) as at the end of January.

In a report, Financial Services and the Treasury Bureau said there was a surplus of HK$86.8bil (RM46.2bil), bringing the cumulative year-to-date surplus up to HK$59bil (RM31bil).

All this wealth belongs to Hong Kong and not mainland China, so a lot can be done with that money for a population of just seven million people, especially low-cost housing!

In comparison, Malaysia’s official reserve assets amounted to US$102.03bil (RM425bil) as at end November 2018, while other foreign currency assets stood at US$51.6mil (RM215mil) for the same period, Bank Negara said. Malaysia has a population of 32 million.

It can’t be denied that Singapore has done well in housing its population, with over 90% of the seven million population reportedly living in homes of their own, and the home-ownership ratio is said to be the world’s highest.

The Singapore Housing Development Board (HDB) deserves global recognition for its feat in solving the housing problem of the people, especially the poor.

The middle-class and poor must be able to have a roof over their heads. That’s an essential human need. No country can have peace and stability if the poor are not able to own a home in their lifetime.

A prosperous and satisfied middle-class will lead to political stability. A huge middle class will also mean greater purchasing power, and this will lead to a better economy with spillover effects for everyone.

When there are angry citizens protesting everything from the escalating food prices to housing, then even the elite (including politicians and businessmen) will not feel safe. In South Africa, the rich live in houses with high walls and electric fences to protect themselves, but that’s not the best way to live. It’s living dangerously.

Malaysian politicians who still wield the race and religion card will realise that at some point, these will be “dead issues”.

With well-documented shrinking numbers, the Chinese and Indian population will no longer be the proverbial bogeymen in the future. Instead, it is class stratification that will be a matter of concern.

Last year, it was reported that the gap in income between the rich, middle class and poor in Malaysia had widened since 2008, according to a study by Khazanah Research Institute (KRI).

In its “The State of Households 2018” report, the research outfit of sovereign wealth fund Khazanah Nasional Bhd noted that the gap in the real average income between the top 20% households (T20) and the middle 40% (M40) and bottom 40% (B40) households had almost doubled, compared to two decades ago.

The report, titled Different Realities, pointed out that while previous economic crises, in 1987 and the 1997/98 Asian Financial Crisis, saw a reduction in the income gap between the T20 and B40/M40, post-2008/09 Global Financial Crisis (GFC), those disparities had not reduced.

But the Gini coefficient, which measures income inequality in the country, had declined from 0.513 in 1970 to 0.399 in 2016, denoting improvement in income inequality in Malaysia over the past 46 years.

Explaining the phenomenon, Allen Ng, who is the lead author of the KRI report, said income of the T20 households had continued to grow, albeit at a slower pace than that of the M40 and B40 since 2010.

“However, because they (the T20) started at a higher base, the income gap between the T20 and M40/B40 had continued to grow despite the fact that the relative (income growth) is actually narrowing post-GFC, ” Ng explained at a press conference after the launch of the report yesterday.

In his bestselling book The Colour Of Inequality: Ethnicity, Class, Income And Wealth In Malaysia (2014), economist Dr Muhammed Abdul Khalid wrote that “the future does not look rosy for Malaysia; the current policies are encouraging wealth disparity between rich and poor, and between ethnicities.

“Unless bold and drastic actions are taken urgently, a harmonious future for Malaysia is uncertain. There must be an urgency to give every Malaysian economic security, a better and sustainable future.”

Muhammed, the managing director of the research and consulting firm DM Analytics Malaysia, said last year that contrary to popular belief, most Chinese (70%) are wage-earners, as are most Malays (72%). In fact, the poverty gap between races has dropped compared to 40 years ago, though the disparity remains.

And what about Malaysia? We have a disastrous, if not scandalous, record, particularly the pathetic business activities, dealings and performance of the 1Malaysia People’s Housing Programme’s (PR1MA) set up to build affordable homes.

More than RM8bil has gone up in smoke because PR1MA’s management failed to meet its targets, despite all the assistance and facilities accorded to their projects by the previous federal government and most state governments.

PR1MA reportedly built only 11,000 homes, compared with its target of half a million residential units to be delivered by the end of 2018. That’s less than 5% of the original plan.

PR1MA Malaysia was set up to plan, develop, construct and maintain high-quality housing with lifestyle concepts for middle-income households in key urban centres. Its homes are priced between RM100,000 and RM400,000.

PR1MA is open to all Malaysians with a monthly household income of RM2,500 to RM15,000.

A total of 1.42 million people registered for PR1MA, a promise of one million homes by 2020, but only 16,682 units, or 1.6%, of the target, were completed between 2013 and 2018, costing the government billions in public funds.

Poor management, exorbitant land acquisition costs and unsuitable sites have turned the people’s housing project into a major financial flop. PR1MA’s failure, which could cost the new government billions, is apparently already saddled with ballooning debts, rendering the loss-making company untenable.

It’s the responsibility of the government to build affordable homes – not the private developers. Private developers, especially those who helm public listed companies, have profits and dividends to answer for to shareholders. They are in the business of making money, and with the expensive land bank they have acquired, they need to build expensive homes, too.

Even if there are requirements with the obligated mixed homes for social housing needs, it still won’t resolve the problems.

Our politicians shouldn’t pass their responsibilities to them. They just need to have qualified and competent professionals with integrity to run a set-up like HDB. Obviously, the people who ran PR1MA didn’t do their jobs. We can help Malaysians own homes, or at least rent them at affordable rates, if we’re truly committed. The question is, are we?

As for Hong Kong, there is another lesson the young protesters need to learn: a full democracy doesn’t guarantee you a home and a decent job. Just ask the homeless in the United States and Britain.

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Friday, November 16, 2018

Money for favours: millions demanded and paid, bribes from property developers

https://youtu.be/ZhJZVmg-vhc
https://youtu.be/DocPACTXoeQ

The court cases involving Datin Seri Rosmah Mansor, her former aide Datuk Rizal Mansor and ex-Cabinet member Datuk Seri Tengku Adnan Tengku Mansor centre upon allegations that millions have been demanded and paid in connection with projects pursued by companies. 

Meanwhile, a property developer is charged with bribing Tengku Adnan and the names of other companies and businessmen have appeared in the charges  - The Star

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Rosmah slapped with graft charges




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    Ku Nan charged with receiving RM3mil bribes from developers - Nation

    Facing the law: Tengku Adnan being led to the Sessions Court in Kuala Lumpur.
    Facing the law: Tengku Adnan being led to the Sessions Court in Kuala Lumpur.



    Property developer Tan is a self-made businessman - Nation

     

    Wednesday, October 3, 2018

    Don't let developers take control, councils told

    Do not let developers take control, deputy minister tells councils

    KUALA LUMPUR: Property developers are behaving more and more like local councils, Deputy Housing and Local Government Minister Datuk Raja Kamarul Bahrin Shah said, noting that this has given rise to the current form of townships that are not centralised and are dominated and led by private developers.

    There are developers who are acting like local councils as the latter have not been taking the lead, and this is a cause for concern, he said.

    Raja Kamarul noted that traditionally, the local governments were the decision makers but this fact has changed of late.

    “Long ago, it was the local government that determines what developers should build, creating markets, shopping malls, commercial, industrial, agricultural and entertainment areas, and of course, knowing how many homes need to be built because they know the population in the area,” he said in his keynote address at the opening of the one-day Housing and Property Development Colloquium on “Reimagining the Housing and Property Industry in the New Malaysia” here yesterday.

    “But now, the role has shifted to the developers, giving rise to the current form of townships that are not centralised and are dominated and led by private developers,” he said.

    “Most concerning is the recent trend that developers are behaving more and more like the local council themselves, in having their own private security for substantial portions of residential and commercial areas as an example, and other provisions of services and infrastructure.

    “Although the local governments retain power and control where their approval is needed to build, they have often failed to take a more proactive role,” said Raja Kamarul.

    He also highlighted that some local governments have failed in providing basic services to the people, causing developers to step in to fill the void.

    “Local governments must find the will and desire to see their own town, cities and districts develop into comfortable townships and not allow developers to take entire pieces of land and create their own defacto privatised local government,” he said.

    He also said this is why the government is looking to bring back local government elections, in order to bring back a sense of accountability by local governments.

    “Once constituted, citizens can take leaders of the local government to task when services and facilities are not up to par. This should lead to more tangible and improved living conditions for the rakyat,” added Raja Kamarul.

    Credit: Ahmad Naqib Idris The Edge Financial Daily

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    Saturday, October 1, 2016

    When will the property market pick up?

     
    Affordable living: The history of Stuyvesant Town, Manhattan New York dates back to 1943. In October 2015, Blackstone Group LP led a deal to buy New York’s Stuyvesant Town-Peter Cooper Village, a transaction that would put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

    Experts predict between 2018 and 2019


    AT a recent property seminar organised by Asian Strategy & Leadership Institute, several developers and property consultants had a debate predicting when the property market will pick up.

    Real Estate and Housing Developers’ Association Malaysia (Rehda) patron Datuk Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.

    Ng was the moderator for the session on The Future Outlook and Challenges of the Housing and Property Sector.

    Property consultants Savills Malaysia managing director Allan Soo, who specialises in the retail malls, expects a 2019 recovery.

    Office market specialist Jones Lang Wootton executive director Malathi Thevendre declined to make any predictions. “It all depends ...,” she says.

    Ng says the current slow housing market is actually good over the long term, although it is painful in the short term. It all depends on how we manage “the noise”, he says.

    There are lots of noises at present, both on the national and international level.

    “If next year is election year, the recovery – if there is one – will be after that because between now and then, there are so many uncertainties.

    “There is a lack of clarity at the moment,” says Ng.

    His reading of the property crystal ball of a 2017/2018 turnaround is by far the most positive and contrasts with Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh.


    Lim expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.

    Her rationale for a longer down-cycle is simple. If your destination is Genting Highlands, but you are driving in the opposite direction, you will need a longer time to arrive there when you finally realise you are driving in the wrong direction.

    Although it is widely accepted that the property cycle is between eight to 10 years, within this cycle are “mini two-year cycles. There were two-year up-cycle in 1999-2000 after the Asian Financial Crisis, and another in 2003-2004 and 2007/2007.

    But after the 2008 Global Financial Crisis, Malaysia had an extended five-year up-cycle between 2010 and 2014 with prices peaking in 2013, and this was largely due to quantitative easing (QE).

    She is, therefore, expecting a longer consolidation period of between four and five years, starting from 2015, before the next up-cycle, barring any policy changes and the global economic climate.

    She is also expecting the property market to experience structural changes due to affordability and liquidity factors, among others.

    More realistic pricing

    Notwithstanding the fuzzy horizon, there are nevertheless a few certainties which may well put the sector on a better footing.

    First, home ownership has become a national issue.

    Second, the government, at both federal and state levels being landowners, are stepping up on affordable housing.

    Third, prices are expected to be more realistic going forward.

    Rehda president Datuk Seri FD Iskandar Mohamed Mansor is seeking government cooperation to reduce or waive development charges and other charges, collectively known as compliance costs, in order to bring down prices as this is “too challenging” for private developers to go it alone, considering today’s high land prices.

    “If the Government wants developers to build more affordable housing, give us cheaper premiums or don’t charge at all.

    “We will then see more stability in prices, or even a reduction, if development charges and all sorts of other charges imposed on developers come down,” said FD Iskandar at a Rehda first half-year review recently.

    He says property development and land matters have been the biggest revenue earner for every state. Both federal and state governments own large tracts of land. Although FD Iskandar had made this call before, he was very passionate and firm this time around. Other developers, previously silent, are also quite vocal about the various land and development charges they have to fork out.

    This is probably the first time developers are coming together to make a collective public call to seek a waiver or reduction of development and other aspects of compliance cost. The effectiveness of that call depends on the Government’s will to act.

    While developers can clamour for such waivers, what is facing the market today is weak sales and this in turn is forcing developers to tweak pricing and strategy a bit, hence the drop in the number of launches as they try push unsold stock.

    Andaman group managing director Datuk Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.

    There will be more affordable housing and this can be seen from the various affordable housing projects being planned by both the federal and state government although the end-products are slow in coming.

    This, says Tiew, can be seen in the various agencies under the federal and state governments, among them being PR1MA Corp mandated to build 500,000 units of affordable housing units by 2018, as outlined in Budget 2013.

    A total of 240,000 houses were due by end-2015, with an annual mandate for 80,000 between 2013 and 2015. The number of completed units was 883 at the end of 2015, says Tiew. By the end of this year, 10,000 units are scheduled to be completed. The number of units approved to date are 232,807 against 1.24 million PR1MA registrants as of February 2016. All eyes will be on the affordable segment in the coming Budget 2017.

    Healthy demand

    The demand for housing has always been there. The issue is affordability, says Kenanga’s Sarah Lim.

    “Of late, developers are beginning to price units at RM500,000 and below,” she says.

    The current change in direction is attributed to societal and government pressure. Unsold stock and government pressure forced developers to relook their pricing strategy.If developers keep building RM1mil homes, when the threshold is RM500,000 and less, they will be left holding unsold stock. In order to move stocks, creative marketing/financing strategies are employed to move these stocks.

    Lim says if developers were unable to meet at least 40% of their sales target by mid-year, they would be unable to meet this year’s targets.

    More than two-thirds missed their sales targets last year.

    “Prior to this, what was booked was considered sold. Now, this is no longer true,” Lim says.

    Lim says there are two issues here, the pressure on the sector as the rate of aborted sales crept up and the people’s demand for realistic prices.

    “What we are seeing today is the government’s influence. It is actually steering the market in the right direction,” she says.

    Renting the way forward

    The other certainty is observed in the rental market, which is expected to continue to be soft next year.

    There will be “low occupancy rate” for projects completed last year (2015) and this year, with rental yield at less than 3% a year, says Andaman group’s Tiew.

    It is cheaper to rent than to buy. There is so much supply going around and the purchasing power of the ringgit is shrinking.

    Selangor State Development Corp (PKNS) senior manager (corporate planning and transformation) Norita Mohd Sidek advocates renting.

    She says if there is a 50% loan rejection rate for affordable housing, and considering the limited supply by private developers, renting may be the only option.

    She suggests building affordable housing cities the likes of Stuyvesant Town’s Peter Copper Village, Manhattan New York and counters the argument that there is no money to be made from affordable housing.

    In October 2015, Blackstone led a deal that put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

    Blackstone and Canada’s real estate company Ivanhoe Cambridge Inc acquired the 80-acre enclave for about US$5.3bil. Rent is kept below market rates for some 5,000 units. Public transport and other amenities must be part of the development for it to succeed. “Government grants and resources are needed to identify the right location to built more council homes,” she says in her paper.

    In today’s low yield environment, pension funds around the world are looking at other ways to generate dividends besides equities and fixed income securities. They are buying into infrastructures and large township developments where there are economies of scale for maintenance.

    Malaysia’s national housing dilemma cannot be solved by profit-oriented private developers alone. The golden property years between 2010 and 2014 have been intoxicating, having resulted in expectations of 20% to 30% rise in sales year-on-year, like the manufacturing sector. But the property sector is quite unlike manufacturing. The reflection point was seen in 2014 after the government introduced certain cooling measures and anti-speculation sales gimmick.

    Going forward, the emphasis on housing priced RM500,000 and below means developers have to sell more units to make the same sales value as previous years.

    “They have to sacrifice some of their margins. Higher profit margins can be had from the mid- to high-end segments,” says Lim. They will have to work harder to help buyers secure loans.

    This search for some form of cohesion in the national housing arena has taken a bit of time. Hopefully, the coming Budget 2017 will pave the way for more positive action.

    By Thean Lee Cheng The Star/Asia News Network

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    Check your risk appetite and start investing as this is as good a time as any to invest in real estate be they physical assets, property stocks or real estate investment trusts (REITs).

    Industry experts held this view during a panel discussion entitled “Where to put your money – real estate, stocks or REITs?” at The Edge Investment Forum on Real Estate 2016 (REIF 2016) on April 30.

    For housebuyers especially, this is a good time to buy as the market correction which started last year will continue this year, said panellist Sunway Bhd managing director of the property development division for Malaysia and Singapore Sarena Cheah.

    She said the banking sector is well-capitalised while non-performing loans are declining, which means borrowers still have the ability to service their loans.

    Cheah noted that property prices have been on the uptrend for the past 10 years with an average capital appreciation of 8% to 9% from 2005 to 2015, buoyed by a healthy employment rate and low interest rate.

    “Property price growth for 2015 had dipped 2% compared with 2014, but the compounded annual growth rate (CAGR) of capital appreciation had achieved 12%,” she shared.

    “Property investment is a safe investment as it is one of the basic necessities. Strong demand will continue to support the capital appreciation of properties,” she added.

    However, she advised investors to study the location, the developer and the future growth potential of a property or project before buying.

    Also on the panel were Kenanga Investment Bank Bhd head of equity research Sarah Lim and Axis REIT Managers Bhd chief executive officer and finance director Leong Kit May. The Edge Communications Sdn Bhd and The Edge Property Sdn Bhd managing director Au Foong Yee was the moderator.

    Lim expected property prices to plateau for the next few years before the next upcycle.

    “The big rally in transaction volume and prices in 2010 to 2012 was supported by the baby boomers who were in their late 30s or early 40s. The next upcycle will depend on the next generation which would be the Millennials,” she explained.

    In the near term, Kenanga Investment Bank has placed an “underweight” rating on the property sector as it expected property stocks to be volatile and eventually be range-bound due to the absence of catalysts, while earnings risks remain.

    However, steady defensive big-cap players such as UOA Bhd and S P Setia Bhd have light balance sheets and high exposure to areas in the Klang Valley while Sunway Bhd and Eco World Development Group Bhd are worth looking at, she said.

    Among the small to mid-capital players to look out for is Hua Yang Bhd – it is undervalued and has high yields.

    Lim also noted that Malaysia’s residential supply is outpacing demand in the wrong segment as there is insufficient supply for residential properties priced between RM250,000 and RM500,000.

    “Residential developments priced below RM500,000 constitute less than 35% of most developers’ upcoming projects,” she said.

    Meanwhile, REITs could be the cornerstone of a portfolio of quality assets for investors who are looking for lower risk and stable income from rental properties.

    “A REIT is a listed vehicle that invests in a portfolio of income-generating properties. Rents collected from tenants, less expenses, are distributed on a regular basis to provide stable yields to unit holders,” said Leong.

    She noted that the current dividend yield for Malaysian REITs is at 6.69%, compared to fixed deposits which is at 3.31% and the Employees Provident Fund’s yield of 6.40%.

    “The benefits of investing in REITs include the predictability in income stream in the form of distribution income, having a liquid proxy to physical property investment, transparent daily pricing, high level of disclosures and transparency, low entry cost and professional management,” she added.

    On the future performance of MREITs, Leong said the company foresees no future interest hikes which augurs well for REITs as a higher interest may affect the trust companies’ ability to pay higher dividends. - The Edge Property.


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