DEVELOPERS have been asked to look into property prices after Putrajaya exempted construction services from the sales and service tax (SST). 

Builders and developers have lauded the move, as in the past, construction services were charged the goods and services tax, said Finance Minister Lim Guan Eng. 

“Groups like Rehda (Real Estate and Housing Developers Association) all said ‘bagus, bagus’ (good) but the prices of property won’t be coming down. 

“This I will have to disagree (with them). I may have to reconsider,” he said today at an SST briefing at Eastin Hotel Penang attended by representatives from various industries and businesses. 

Lim said even car manufacturers were now slashing their prices, including BMW on some of its some models. 

“I hope housing developers will take note,” he said. 

The SST was enforced on September 1, replacing the GST that was introduced in 2015 by the previous government. 

Last month, Lim said house prices and the construction of new buildings would be cheaper after the abolishment of GST, and the exemption of SST. 

“The federal government hopes that the construction costs can be reduced with the exemption of SST. Some of the building materials that will not be subjected to SST are cement, sand, and iron.”

Rehda’s immediate past chairman Jerry Chan was quoted as saying yesterday in a report that the SST exemption would unlikely lead to reduction in house prices. 

Even with cheaper materials and construction cost, developers still have to bear other costs. 

Chan said developers must consider labour, property market conditions, land cost, compliance costs and others. 

“Building materials are only part of the cost. That alone cannot ensure that prices will come down significantly,” he was quoted as saying. 

Lim said today the SST list would remain organic with amendments made based on feedback to improve it for the people’s wellbeing. 

“The Customs Department and the finance minister, who has the power to set the tax rate, have to listen to you. 

“The former finance minister didn’t have briefings with the people to listen to feedback. 

“But this new administration is different,” he said, citing how SST rates for several goods and services were reduced after feedback from businesses. 

With the tax rate reduced or even an exemption given, there should be “no excuse to raise prices”, Lim said.  – September 9, 2018.