Image credit: The Edge Markets
KUALA LUMPUR: The 2024 Budget is regrettably lacklustre, failing to address Malaysia's oversupply and rising property development costs, according to Sr. Adzman Shah Mohd Ariffin, president of the Royal Institution of Surveyors Malaysia (RISM).
While RISM generally supports the 2024 Budget, he believes it should have been more inclusive in order to encourage higher-income taxpayers to increase business activity in the face of rising business costs and challenging domestic and global conditions.
Adzman said that RISM professionals in the four surveying disciplines, namely geomatic and land surveying, quantity surveying, property surveying, and building surveying, are concerned about rising labour costs this year.
They are also concerned about the difficulty in managing variable costs such as the burden of additional overtime working costs, the minimum wage, and the temporary replacement of female employees on maternity leave for 98 days as a result of the Employment Act 1955 amendments that became effective on January 1, 2023, he said.
"RISM hopes that the government will review all the suggestions and ideas shared during the numerous time-consuming engagement sessions with people from all levels during the past few months and take them into account in reviewing Budget 2024," he said.
He believes that the new stamp duty flat rate of four per cent for foreign purchasers of properties is expected to deter foreign investors.
These investors could be those who are already working in Malaysia and plan to retire there, or they could be nomads looking to settle in Malaysia through the MM2H scheme, he explained.
Adzman also said that the decision to lower the threshold for en-bloc sales is unlikely to excite investors because Malaysia still has a lot of land and is not as densely populated as Singapore and Hong Kong.
Nonetheless, RISM welcomes urban regeneration to make way for higher-purpose, sustainable developments in major cities such as Kuala Lumpur/Klang Valley, Penang, and Johor Bharu.
Adzman said that the 2024 Budget is generally viewed as a budget for the Rakyat, specifically for government employees, B40, and minorities such as Orang Asli, farmers, and students.
"On personal basis, the increase in tax relief given for personal income tax will provide taxpaying individuals with the opportunity to reduce their tax payments.
"However, this will then reduce the tax revenue for the government, which will now need to be replaced with other sources of revenue. This explains why the SST needs to be increased to eight per cent," he said.
With rising prices for goods, particularly basic necessities but not all services, the government stands to benefit from higher SST collections to compensate for the drop in collection, he said.
According to Adzman, people will need to reconsider their spending habits and may avoid high-end luxury items and casual purchases.
He believes that professionals such as land surveyors, quantity surveyors, valuers, estate agents, property managers, and building surveyors will be affected as clients become more cost-conscious and press professional fees lower under the guise of business competitiveness.
Meanwhile, he said that the housing credit guarantee for purchasers of government housing projects will undoubtedly assist government employees in purchasing homes.
This, however, will not benefit the private housing sector, particularly in terms of stimulating the slumping domestic property market, he said.
RISM also applauds the RM100 million allocation for low- and medium-cost housing in both the public and private sectors for repairs to water tanks, roofs, electrical wiring, and CCTV.
Adzman said that this will help to alleviate the burden on strata property owners who suffer from building defects and substandard building construction, necessitating high repair and replacement costs.
Source: https://www.nst.com.my/property/2023/10/970347/adzman-2024-budget-should-have-addressed-malaysias-oversupply-rising#google_vignette