Press Release – PEPS Budget Wishlist 2024
Share story
The GDP growth rate is expected to slow down to 4.5% in 2023, compared to the growth rate of 7% in 2023. This can be attributed to the slowdown in China economy, Malaysia largest trading partner, drop in domestic manufacturing activities, drop in Foreign Direct Investment, weaker exports and global technology downcycle and lower oil palm output.
The property industry is still compounded with many complex problems such as oversupply, particularly in the office, retail and service apartment sectors, labour shortages, increasing material costs and high compliance costs. As the property market is imperfect, there is mismatch in supply and demand.
Under the Madini Government, there is renewed emphasis in providing affordable housing for the rakyat. It is PEPS Wishlist to promote a home owning society so that every rakyat will have a home to live in.
Our economy have not recovered to its pre-Pandemic level and our property market is still on a slow recovery path.
As a responsible professional NGO, PEPS is coming up with our recommendations on our Budget Wishlist for 2024, which PEPS hope will act as a stimulus to spur and revive the property industry and property market.
Below is PEPS Budget Wishlist for 2024 under the various subheadings:-
1. PROPERTY TAXES
Real Property Gains Tax (RPGT)
PEPS Budget Wishlist 2024 is for the waiver of RGPT to include all sectors and to be extended to foreigners and foreign companies. Currently, the RGPT waiver from the disposal of real property from the 6th year onwards is only for Malaysian Citizens, permanent residents and Malaysian companies.
Stamp Duty
We hope the government will provide stamp duty exemption on MOT to employers upon their purchase of affordable and overhang properties for their staff housing. In addition, full stamp duty exemption on MOT should be given to first time buyers
2. AFFORDABLE HOUSING
In Malaysia, the main demand for housing is in Affordable Housing. Affordable Housing is beset with a lot of problems.
- The Affordability Gap
For most Malaysians, with their existing disposal household incomes, the majority will not be able to purchase affordable housing.
- High Land Cost & High Compliance Cost
In the big cities of Kuala Lumpur, Penang and Johore Bahru, land cost is too high for developers to build affordable homes. The other constraint to developers are the high compliance cost
- Non-Eligibility for Housing Loan
With their disposable household income, inflation and slow income growth, many Malaysian buyers will not be eligible for a housing loan.
- Slow Income Growth
In Malaysia, house prices rise at a disproportionately higher rate than the increase in wages and salaries.
- Poor Coordination
There is a lack of public data on the current supply of affordable housing. And also each State Government sets its pricing for their affordable housing.
To address some of the problems and issues of affordable housing, PEPS Budget 2024 Wishlist are as follows:-
- To get the State Government and its agencies and GLCs such as Telekoms, IWK, FELDA, etc. to release their surplus lands to joint venture with property developers to build affordable housing.
- Malay Reserve Land and Wakaf Land can also be released to do joint venture with Bumiputera property developers.
- To set up a Unit within the Ministry of Housing to purchase all unsold units of affordable housing to:-
-
- To be resold to private companies to buy for their staff housing.
- To create a Rent-To-Own Scheme for deserving B40 income groups.
- Government to set up a Revolving Fund to purchase unsold affordable housing, youth housing etc. under the Ministry of Housing
- Before the commencement of any affordable housing project, to make it mandatory for the housing developers to conduct a Market Study to determine its viability
3. INDUSTRIALISED BUILDING SYSTEM (IBS)
Since Budget 2021, when the Government had given some incentives to manufacturers of IBS building components only, there were no further incentives to assist the IBS players.
PEPS Budget Wishlist for 2024 is for the Government to extend this investment incentives to property developers adopting the IBS system to promote the IBS model as an alternative to the traditional construction method, especially for affordable housing.
The Adoption of IBS model in construction will also help to reduce the current pressure on labour shortages.
4. ENCOURAGING GREEN TECHNOLOGY IN BUILDINGS
Buildings that are certified “green buildings” and with installation of solar panels, rain water harvesting, etc within their buildings to reduce the carbon footprint and reduce electricity should be given incentives, including tax relief and grants under Budget 2024.
As construction activities account for 40% of carbon emissions, encouraging the adoption of green technology in buildings will assist the nation to attain our net zero carbon footprint by 2050.
5. ASSISTANCE FOR THE MANUFACTURING INDUSTRY
In 2023 the manufacturing output and activities had slow down. Malaysia is also losing its market share of Foreign Direct Investment to our neighboring countries.
PEPS is recommending the following Budget Wishlist to provide assistance and to spur the Manufacturing Industry.
- To get the respective SEDCs in all the States to made available more land for manufacturing and warehousing at more affordable prices
- To reduce the red tape in the various Ministries and government departments in granting approvals and licences
- To increase the intake of engineering and science undergraduates in universities and colleges and increasing training courses for sub professionals
- To increase infrastructure for power and electricity supply, natural gas supply to cater for the specific needs of industries such as data centres that requires high power supply.
6. ASSISTING SMALL & MEDIUM ENTERPRISES (SME)
SME are the backbone of the manufacturing industry and it is the largest employer in the manufacturing industry, providing over 4 million jobs and contribute more than a third of the Gross Domestic Product.
For Malaysia to become a developed nation, the SME will require more assistance from the Government and PEPS Wishlist in Budget 2024 to assist the SMEs are as follows:-
- Currently, many SME’s operations are located not in proper industrial areas but in illegal lands and buildings and without proper infrastructure. PEPS are encouraging the SEDCs, MIDF and developers to build SME Industrial Park with Industrial buildings to be rented to SME operators, workers housing and amenities such as multipurpose community hall, sport facilities, food court and canteens. The Government can encourage the building of SME Industrial Parks by offering lower conversion premiums, tax incentives, lower utilities contributions, etc.
- Government to set up a Revolving Fund to provide financial assistance to SMEs at interest rates lower than the prevailing commercial bank rates for their business expansion, training programmes.
7. REDUCING OVERHANG
In the 1st half of 2023, there were 54,844 residential units unsold under construction and 26,286 residential units completed and unsold with a value of RM18.30 billion.
Property overhang is a waste of economic resources. To reduce the property overhang, PEPS 2024 Wishlist are:-
- To review the conditions of Malaysia My Second Home (MM2H) programme to make it more attractive for foreigners to buy properties.
- To encourage developers with unsold properties to offer these properties to eligible tenants under the Rent-To-Own Scheme and after 5 years to sell it to the tenant at pre-agreed price.
- To provide a one-off grant of RM 25,000 to assist in initial deposit for 1st time home buyers of overhang properties.
- Developers to reduce their prices to clear the property overhang stock
8. PROMOTE RENT-TO-OWN (RTO) SCHEME
With the stagnant economy and the increase of OPR rates resulting in increasing the house loan interest, many Malaysians will still be unable to afford to buy a house.
PEPS Wishlist is for Bank Negara to provide a Revolving Fund to the commercial banks to work with developers to purchase unsold house units at a discount and for the commercial banks to finance the home buyer for a period of 5 years and at the end of the 5th year, for the tenant to exercise the option to purchase the house at a pre-determined price.
This Rent-To-Own scheme shall also be applicable to PRIMA homes, where there is an oversupply.
Working with some selected commercial banks, this will give an opportunity for the B40 income group to own homes for the 1st time.
9. ASSISTING THE AGEING POPULATION
Malaysia is deemed an ageing population as 7% of Malaysia’s total population had reached 65 years, which is equivalent to 2.5 million.
To date, throughout the country there are only a few seniors housing accommodation with aged care facilities, with demand more than supply.
To promote the seniors’ population to age gracefully, the Government can assist the developers of seniors housing accommodation with aged care facilities by providing them with grants for construction, deprecation allowance on capital expenditure and tax relief for the 1st 10 years of operation.
10. ENCOURAGING FOREIGN OWNERSHIP OF PROPERTY
To relax the stringent amendments to the Malaysia-My-Second-Home Scheme and revert back to the original guidelines to encourage more foreigners to stay long term in Malaysia.
To retain foreign talents and to encourage foreign professionals who have worked and reside in Malaysia for the past 5 years, to provide a lower minimum housing threshold price for them to buy houses.