THE construction and real estate industries are hoping the 2023 Budget, that will be tabled in parliament in a little more than three weeks’ time on October 7, will have what it takes to pull the two industries out of their current rut.

Master Builders Association Malaysia (Mbam) president Oliver Wee Hiang Chyn, said he hoped the budget has allocation to implement more infrastructure projects, or continue with the suspended ones, to breathe some life into struggling construction companies.

“Next year’s budget must allocate more money for infrastructure projects as the budget allocated this year is not enough to drive economic growth.

“Having more infrastructure projects will get the industry back on its feet. If there is still no money for new projects, then I’m afraid the industry will continue to struggle to stay in business,” Wee told The Malaysian Insight of his hopes for the budget.

He said apart from the multi billion ringgit Mass Rapid Transit 3 (MRT3) Circle Line project in Kuala Lumpur that is temporarily shelved, there is also nothing to indicate what and when the next major projects would be.

“The problem is that no one knows when the MRT3 will be implemented,” Wee said.

“So how are we the builders and the contractors going to survive when the government has frozen the implementation of major infrastructure projects when the economy is also struggling to right itself?” he asked.

Wee said the construction industry is a key sector of the economy and therefore the government should make it a priority to have more projects so that we can gradually recover.

“It’s time for the government to provide more subsidies and incentives to the construction industry to help us be less dependent on foreign workers.”

The Ministry of Finance’s economic outlook for 2022 reported that gross domestic product (GDP) of the construction sector was projected to grow by 11.5%.

Instead, Wee said, the sector experienced a contraction of 12.2% in the first quarter and 7% in the second.

He said therefore, there is a need to increase public project spending.

Wee said he hoped the budget would provide subsidies and tax breaks for them to purchase new construction machinery and ancillary equipment in order to promote mechanisation and automation in the sector.

The snail pace in the recruitment of foreign workers is not helping the industry to recover quickly, he pointed out.

“There must be an effective way to streamline the process of recruiting foreign workers,” he said, and alluding to the Immigration Department’s green lanes at airports, Wee suggested the government have a similar “green lane” to fast track the recruitment process.

He said since the industry is relying heavily on foreign workers, the budget should therefore have incentives and financial assistance for the construction industry to wean them off by encouraging them to mechanise themselves.

“This could reduce our reliance on a huge workforce.”

United Malaysia Contractors Association president Ng Tong Chun said since the government has been encouraging and promoting the use of industrialised building systems (IBS) in construction projects, then the budget should have incentives to encourage us to use the IBS method.

“So far there are no incentives to encourage us to adopt something that is new to us. This is very disappointing.”

Ng also said contractors are hoping the budget will reduce the import duties or offer tax exemptions on the import of construction machinery like mud machines, concrete mixers and cement batching machines.

He said these machinery will reduce labour costs, speed up construction times and therefore could complete projects much earlier.

Like the Master Builders Association, Ng said his association members also hoped the budget would allocate allocations for more large-scale infrastructure projects next year.

The 2022 Budget, he pointed out, did not have money for any major projects.

“Only a few small and medium-sized continuation projects. This was a blow to the construction industry.”

“Hopefully, there will be exciting announcements from the government in Budget 2023. “

The Real Estate Developers Association of Malaysia (Rehda) hoped there would be government intervention in the 2023 Budget to mitigate rising prices of building materials.

Rehda said that could be done by temporarily waiving or reducing duties on certain construction materials “until prices are back to normal or more manageable, and lifting taxes, levy imposed on import materials.

Rehda also hoped the government would review and reduce unnecessary charges, such as charges imposed by utilities companies and authorities and put them in the budget.

The association hoped the budget would not introduce any more charges, conditions, or have upward revisions of contribution charges as developers are already required to lay the necessary infrastructure at their development projects, Rehda said.

President of the Malaysian Real Estate Agencies Association (Miea) Chan Ai Cheng said the secondary market is an important segment of real estate, as a strong secondary market is a prerequisite for the segment to return to strength.

Chan said this was because when buyers see property values appreciate or have good returns from rents, interest in investing in the new housing market increases.

That, she added, in turn helps to address the oversupply in the new housing market.

She said the association hopes next year’s budget will abolish the stamp duty for buyers in the secondary housing market and exemptions from the Property Profit Tax (RPGT) for sellers. – September 15, 2022.