The debates on the role of state and market in housing provision in East Asia countries are still considered new. There is still a huge gap in the literature particularly in the low-income housing segment. Therefore, the paper aims to examine the role of state and market in housing provision in Malaysia, especially for low-income housing. Based on the study in many East Asian countries, there are tendencies for the state to move towards market-oriented housing provision. The situation in Malaysia is rather different since the state is still actively involved in housing provision and allocation of low-income housing. The paper will provide justifications of the state’s continue involvement in the low-income housing provision in Malaysia.

The role of state has been shifting from control to influence and from direct provision to steering and enabling. The role of the private sector and non-governmental organizations has been extended and increasing government relying on the private sector to provide public housing services as described by World Bank (1993). Government was advised to abandon their earlier role as producers of housing and to adopt an enabling role of managing the housing sector as a whole. Most countries now rely on a public policy approach that augments and complements market processes rather than substitute for them. Recent research on the effect of housing policy on the supply of housing has provided empirical support for the view that having public sector enable rather than control or displace the private sector is essential to improving affordability of housing in general and thus for low income groups as well (Buckley & Kalarickel, 2005 pp. 240).