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Sunday, August 31, 2008

'Good initiatives for people but more can be done for REITs'

BUDGET 2009 is announced amid very challenging times in view of the rising food and energy costs.

The government has introduced various measures to help increase disposable income to mitigate the impact of the higher cost of living, thus demonstrating that it is a caring government.

Ngian Siew Siong Managing Director Sunway City Bhd (property development division)

* Enhancing training and skills programmes is a timely move by the government to attract more locals into the industry and avoid being too dependent on foreign labour.

However, the current incentive of giving 50 per cent waiver of the CIDB levy to encourage use of the Industrialised Building Systems (IBS) is inadequate.

We urge the government to seriously consider providing additional incentives.

* Reducing the withholding tax rate on real estate investment trust (REITs) for foreign institutional investors to 10 per cent from 20 per cent puts us on par with Singapore.

However, we are still not competitive as local and foreign corporations are still subject to 26 per cent tax compared with 18 per cent in Singapore.

As for domestic and foreign individuals and domestic institutions, we are still subject to 10 per cent tax. In Singapore, REITs are exempted from tax.

As such, more can be done to make Malaysia more competitive regionally where REITs are concerned.

* The benefit of the tax exemption on interest subsidy for housing loans by employers is insufficient, taking the market average of two per cent subsidy. To encourage home ownership, we prefer that mortgage interest be fully tax-deductible.

* While it is good that the government is putting more emphasis on greater use of renewable energy and energy efficiency, there could be more incentives for the local property industry to incorporate "green" building designs and construction.

This could be achieved by abolishing taxes and duties, not only for local but also imported materials and equipment such as low E glass (to reduce heat emission) and inverter air-conditioners (which regulate thermal power flow).

We applaud the government's efforts to promote use of renewable energy and energy-efficient products. However, we hope the government will extend further incentives to the property industry to promote green building designs for sustainable developments that reduce long-term operation and maintenance costs.

By New Straits Times

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