Mixed views by property, construction players on Budget 2023 measures

Mixed views by property, construction players on Budget 2023 measures

KUALA LUMPUR (Oct 7): The increase in stamp duty exemptions in relation to real estate transfer documents and loan agreements for homes valued at RM500,000-RM1 million was among the government's announcements on Friday (Oct 7) under Budget 2023 to spur the property sector.

For the construction sector, the government also announced a budget of RM16.5 billion for the continuation of key infrastructure projects including the Pan Borneo Highway, the Gemas-Johor Bahru Electrified Double Tracking, the East Coast Rail Link and the Central Spine Road.

In the bigger picture, government-linked companies and government-linked investment companies have committed to pumping RM45 billion in the form of domestic direct investment, including for the continuation of ongoing projects, said Finance Minister Tengku Datuk Seri Zafrul Aziz when tabling the Budget 2023 on Friday.

Below are excerpts of comments by property and construction sector players on Budget 2023:
Rehda president Datuk NK Tong

Real Estate and Housing Developers' Association Malaysia president Datuk NK Tong (Photo by Low Yen Yeing/The Edge)

We applaud the measures announced by the finance minister to further ease home ownership amongst first-time homebuyers with the increase in stamp duty exemption to 75% from 50% for residential properties priced above RM500,000 to RM1 million, which will end on Dec 31, 2023.

The government's generosity to only impose a RM10 stamp duty on transfers made by way of gift between family members is also deeply appreciated, and is expected to provide a positive impact on the housing sector. Currently, only transfers between husband and wife are given a full 100% exemption, while transfers between parent and child are given an exemption of 50%.

Real Estate and Housing Developers' Association Malaysia (Rehda) also welcomes the government's renewed commitment to the lower income group with a RM367 million allocation for new Program Perumahan Rakyat projects in Terengganu and Perlis, and RM358 million for Program Rumah Mesra Rakyat.

The measure to increase the allocation for constructing and repairing houses in rural areas from RM361 million to RM460 million, and the increase in ceiling rate to build new homes and the construction of 3,000 new homes including in Sabah and Sarawak further prove the government's dedication to ensure quality living and homes for all Malaysians.

However, we appeal to the government to consider extending the 75% stamp duty exemption to all buyers and not just first-time house buyers as it will benefit a wider pool of buyers especially the upgraders.
Master Builders Association Malaysia president Oliver HC Wee

Master Builders Association Malaysia president Oliver HC Wee (Photo by Low Yen Yeing/The Edge)

We thank the government for the list of construction projects announced. However, in reality, they are insufficient for the industry at large. Some of the projects announced are already in progress while the others are projects to enhance the infrastructure for public use.

We observe that these other projects would benefit part of the industry players mainly in the G1 to G4 categories of contractors. This would be alarming for the construction industry as the 12th Malaysia Plan also saw no major allocation towards new mega infrastructure projects despite an allocation of RM400 billion for projects for 2021-2025.

We also observe that there is an increase in levy for foreign workforce which would increase the cost of construction. Incentives should also be provided to projects that utilise Industrialised Building System as the government has also promoted the industry to move into the digital construction era.

Stimulus packages for investors to invest in new developments in the private sector should be introduced.
Mah Sing Group Bhd founder and group managing director Tan Sri Leong Hoy Kum

Mah Sing Group Bhd founder and group managing director Tan Sri Leong Hoy Kum (Photo by Sam Fong/The Edge)

This year, we see many practical measures which will benefit the M40 group including RM100 e-wallet credit, and more significantly, the personal tax rate will be reduced by 2% for Malaysians earning between RM50,000 to RM100,000 annually. This will increase the cash in hand, easing the financial burden on individuals and allowing them to make long-term plans such as property purchases.

Another welcomed measure is the exemption of 75% of stamp duty on the sale and purchase agreements of properties priced between RM500,001 and RM1 million (signed by Dec 31, 2023). For instance, a 75% exemption on a RM750,000 property purchase will save the buyer up to RM15,000. This will pique the interest of middle- to upper-income first-time homebuyers as well as those who are looking to upgrade their property.

The government has made various allocations of homes in rural areas and People's Housing Projects, and private developers like Mah Sing can continue to serve the market with its affordable range of high-rise and landed homes.
Ireka Corp Bhd group managing director Datuk Mohd Hasnul Ismar Mohd Ismail

Ireka Corp Bhd group managing director Datuk Mohd Hasnul Ismar Mohd Ismail (Photo by ireka.com.my)

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With the largest infrastructure budget to date at RM95 billion to focus on the development and restoration of transportation networks and systems such as roads, Mass Rapid Transit and bridges to enable mobility of communities and movement of goods nationwide, the budget will allow greater participation from rural communities in the growing world commerce and facilitate different commercial endeavours such as ecotourism and the growing need for agro-food enterprises.

The measures under the Budget 2023 such as the construction of 500,000 affordable homes across Malaysia by 2025, the allocation of RM367 million for the development of People's Housing Projects in urban areas, and the allocation of RM358 million for the construction of 4,250 affordable homes under the Rumah Mesra Rakyat programme will be crucial to promote home affordability and inclusivity of home ownership, especially among the B40 and M40 communities.

The increase of tax exemption to 75% for purchase of homes valued between RM500,000 to RM1,000,000 will likely spur economic growth in the real estate industry, as the industry steers towards recovery from the after-effects of the pandemic and sectoral lockdowns.

The introduction of Kontraktornita initiative and the absorption of veterans into the construction industry will feed more local talents into the ecosystem, and will contribute towards alleviating our nation's labour crunch and dependency on foreign labour.

Get our comprehensive coverage of Budget 2023 here.