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Friday, September 10, 2010

Poser on whether real property gains tax will be raised

Property development in Malaysia. Will real property gains tax be raised?

PETALING JAYA: Hot on the heels of the possibility that Bank Negara will propose tightening the mortgage loan market to curb speculative buying in the upper medium to high-end housing market, questions have arisen whether the Government may also be looking at raising the quantum of real property gains tax (RPGT).

Some analysts have addressed this possibility in their recent research notes.

Hwang DBS Vickers Research, in a report on Monday, said the RPGT might be brought back in its entirety (5% to 30% for property disposal within five years of purchase from the present 5%) in Budget 2011.

Aimed at cooling off the rapid rise in housing prices, the full reintroduction of RPGT could further delay the return of foreign buyers that currently accounted for less than 5% of sales, it said.

Prior to the exemption of the RPGT in April 2007, tax on gains from property disposal was on a progressive basis from 30% to 0% depending on the holding period of the property.

If one buys a property and disposes it for profit within two years of purchase, the profit will attract 30% tax; within the third year will be 20%; fourth year 15%; and fifth year 5%. A sale in the sixth year and thereafter will not be taxed.

When contacted, tax consultants and industry leaders expressed reservation that the Government would revert back to the full RPGT quantum so soon after it was re-introduced in January.

The Government had, under Budget 2010 (tabled last October), proposed to reintroduce the RPGT at a fixed 5% rate on all property disposal regardless of status and duration. The blanket 5% RPGT drew a lot of flak from the public who felt it was unfair and punitive on genuine property owners and investors.

In December 2009, the Government amended the policy, exempting all property disposals undertaken after five years from the RPGT.

PricewaterhouseCoopers Taxation Services Sdn Bhd tax leader and senior executive director Khoo Chuan Keat said that although there had always been the possibility of the Government reactivating the RPGT in its entirety, “the current situation does not warrant it as the property market has not gone off the roof unlike in some countries like Singapore.”

“There is no point in using an elephant to kill a rat. There will always be some speculative buying in the market, but as long as prices have not been inflated by artificial demand and there are no big surges in prices, some speculation is actually quite healthy,” Khoo told StarBiz.

He said the RPGT would not be an efficient tool to raise tax revenue for the Government, and pointed out that the Goods and Services Tax would do a better job for tax collection.

“Malaysia’s property market is at a different stage of development to that of Singapore’s. The city state’s economy is undergoing a strong boom and there are many more property buyers there, particularly foreign investors, which led to the sharp jump in property prices.”

Foreign buyers generally are involved in close to 30% of Singapore’s property sales.

Khoo said Singapore’s market had became too expensive and volatile for local Singaporean buyers and the government had to stabilise prices to ensure the locals were not priced out of the market.

Among the measures introduced are the imposition of a 70% mortgage cap for buyers with more than one property and the launch of 36,000 public housing units within one to two years.

Concurring with Khoo, Real Estate and Housing Developers’ Association president Datuk Michael Yam believes a higher RPGT would not be imposed in the upcoming Budget as there is little sign of high speculation or overheating in the local property market.

“Any such move will be counter-productive to the government effort to stimulate the property market, and it will be another flip-flop in its policy decision that will damage the consistency of government policies,” Yam said.

He added that a higher RPGT would dampen the market and result in a loss of revenue for the Government as revenue collected from property-related transactions, such as stamp duty and tax on profit of service providers including lawyers, estate agents and financiers, should be higher than the RPGT revenue.

Tax expert Dr Veerinderjit Singh has always believed that “since the RPGT was not abolished or repealed, it is likely that it may be brought back when the need arises and the timing is appropriate especially to curb excessive speculation and rise in property prices”.

He said a proper study needed to be conducted on whether the market was under control and if there was a need for new measures such as raising the RPGT to curb speculation.

“If the study shows that the market has regained its footing and there is no need for the low RPGT to be maintained as a support measure, there may be a need for the rates to be lifted. After all the whole purpose of the RPGT is to tax speculative gains and rein in speculation in the market,” he added.

By The Star

Joint venture to build RM100m project in Kuching

Yoshikawa and LCDA in Sarawak’s first ‘corporate lifestyle’ commercial development

KUCHING: Yoshikawa Corp & Development Sdn Bhd and state-owned Land Custody and Development Authority (LCDA) are jointly developing icom.square here, billed as Sarawak’s first “corporate lifestyle” commercial development.

Yoshikawa, which had completed several major property projects in Sarawak, is the development arm of Nationlink Group. Nationlink executive director Chai Kun Seng said the icom.square project, sandwiched between the busy Jalan Pending and Jalan Datuk Abang Abdul Rahim, would comprise eight six-storey towers, more than 400 strata-titled commercial units and a covered food and beverage street.

“The project, with a gross development value (GDV) of about RM100mil, will be ready in two years’ time,’’ he told StarBiz yesterday. He said the project was named icom.square as it would be an “intelligent” commercial centre, and that it would also be the city centre’s largest property development, covering six hectares (ha).

Chai said icom.square would be equipped with WiFi facilities, round-the-clock CCTV monitoring and more than 1,000 car parks. The developer will provide central management for the entire development.

The commercial units will be priced from RM188,000 to RM500,000 but prices for the corporate towers have yet to be fixed, according to Chai.

He said since its recent launch, icom.square had received overwhelming response, with the ground floors of the commercial units nearly all taken up.

“We have talked to big corporations, including multinationals, for the sales of the corporate towers.

“The response has been good,’’ he said.

Chai said icom.square would cater to the lifestyle of corporate figures and professionals, and that the planned food and beverage street would provide an ideal environment for them to discuss business.

Yoshikawa’s completed projects included the Kuching Bukit Mata shophouses, Yoshi Square, Mukah’s Boulevard Commercial Centre, and the Tebedu new township at the Sarawak-Kalimantan border.

Nationlink’s two other subsidiaries, Polarwood Sdn Bhd and Nation Horizon Sd Bhd, had completed several major residential and commercial development projects, including the Batu Kawa light industrial park in the state capital.

By The Star

SP Setia unit buys land in Johor for RM169mil

KUALA LUMPUR: SP Setia Bhd’s wholly-owned subsidiary, Setia Indah Sdn Bhd, has purchased 259.10 acres in Tebrau, Johor Baru, for RM169.3mil cash.

In a filing with Bursa Malaysia yesterday, SP Setia said its subsidiary had entered into a conditional sale and purchase agreement with Kelana Ventures Sdn Bhd to acquire the land. It said the purchase price would be funded from internally-generated funds and/or external borrowings. The acquisition is expected to be completed by financial year ending Oct 31, 2011.

SP Setia said the acquisition would replenish Setia Indah’s land bank and enable the group to benefit from the strong branding it has achieved in that locality.

“It is also in line with the group’s wider strategy of continuing to acquire strategically located prime land in Johor Baru,” the company said. Based on a preliminary feasibility study and revised layout plan, which is subject to the approval of the relevant authorities, the proposed development is expected to have a gross development value of RM1.5bil and is expected to commence by end-2011 and span over a development period of about eight years.

“It is currently too preliminary to ascertain the total development cost, the expected completion date of the development and the expected profits to be derived from the development of the land,” SP Setia said.

By The Star

SP Setia unit to buy land in Johor for RM169.26m, planned GDV RM1.5b

KUALA LUMPUR: SP SETIA BHD’s unit is buying 259.1 acres of land in Johor for RM169.26 million cash to replenish its land bank as the Setia Indah Johor development was at its tail-end.

S P Setia said on Thursday, Sept 9 its unit Setia Indah Sdn Bhd had entered into a conditional sale and purchase agreement with from Kelana Ventures Sdn Bhd to acquire the land.

Based on a preliminary feasibility study and revised layout plan, the proposed development is expected to have a gross development value of RM1.5 billion. Development was expected to start by end of 2011 and span over eight years.

“However, it is currently too preliminary to ascertain the total development cost, the expected completion date of the development and the expected profits to be derived from the development of the land,” it said.

S P Setia said the acquisition would be wholly in cash from internally generated funds and/or external borrowings.

It said the acquisition would enable the company to continue to benefit from the strong branding it had achieved in that locality. It is also in line with the group's wider strategy of continuing to acquire strategically located prime land in Johor Bahru, it said.

The company said site was near other matured developments such as Taman Mount Austin and Taman Daya and hence also offered several important advantages, in particular the sustained potential demand from upgraders in the area desiring to move-up to larger, newer and better designed houses.

“Another source of demand is from young adults planning to move out of their parents' homes without having to leave the comforts of the local support network that they have grown accustomed to.

“Further, the existing population of the surrounding matured housing projects will also form the core catchment area for the proposed development's commercial components,” it said.

S P Setia was confident that the proposed development of mixed residential and commercial project on the land would be well received, and contribute positively to its future earnings and cash flow.

“The proposed development will also ensure S P Setia's continuing presence and efforts in building residential properties in Johor,” it said.

By The EDGE Malaysia

Inaugural HomeTech & Hardware Tools Expo '10

There will be a galore of bargains and prizes in conjunction with the inaugural HomeTech & Hardware Tools Expo '10, held from October 28th to 31st. The four-day event at Putra World Trade Centre's (PWTC) Tun Razak Hall 1 & 2 will showcase a multitude of products and services, targeted at both consumers and businesses. The exhibitors will be companies that are involved in tools, DIY and building hardware, security, locks, furniture, fittings, home appliances, bathroom & sanitary ware, lightings, arts and crafts, interior design and landscaping services.

"With over 100 companies offering fantastic bargains and personalised services, we expect to attract 100,000 to 150,000 visitors over the four days," says Kelvin, director of Marquee Events, the organiser of the HomeTech & Hardware Tools Expo 10.

Kelvin adds that from 10am until 9pm, starting from Thursday to Sunday, visitors can look forward to various events, including lucky draws, seminars and workshops and tips on home renovation.

"Come and find out about the latest trends in home renovations, appliances and gadgets that will make managing your home a breeze and get advice and tips from our panel of experts. And best of all, visitors stand a chance to win cash prizes every single day!" he says.

With a host of bargains and special deals for everything that you need in a home under one roof, the HomeTech & Hardware Tools Expo '10 will be a shoppers' haven. However, it won't be a one-way street — the bigger the spender, the higher the rewards. The "Shop & Get" promotion guarantees a prize for every customer, with proof of purchase. Visitors can redeem prizes based on the total amount spent at the expo.

Even filling out details can get you amazing prizes. Put down your details in a form and you will be eligible for a lucky draw daily and one grand draw on October 31st, where you may walk away with prizes in cash and kind, totaling up to RM300,000.

The HomeTech & Hardware Tools Expo '10 will also be a knowledge-sharing experience as visitors can attend numerous seminars, workshops and talks by experts in various fields. Among the topics that will be featured are interior designing which will be hosted by well-known interior designer Eric Leong. Eric Leong will be sharing his tips on a range of areas, from using the right colours to picking the right material and furnishing to bring the best out of your home.

Find out about the dos and don'ts of renovation, how to choose a good contractor, how to paint your walls the right way and also learn about budgeting and making a checklist for a pleasant home improvement experience. There is also the Do-It-Yourself Workshop that will guide you to the right way of DIY, using the latest tools and equipment. A not-to-be-missed event during the HomeTech & Hardware Tools Expo '10 is a talk on Feng Shui. Feng Shui means wind and water literally and the principles of Feng Shui centre on striking a balance between the elements so that your abode will be blessed with harmony, happiness and luck. Learn from the expert on how to "activate" that wealth energy and enhance your general well-being.

Visitors also get learn cook a couple of dishes while trying out new kitchen utensils. There will be cooking demonstrations where the chefs will introduce nutritious, easy-to-cook dishes that are great tasting as well. Watch the chefs in action and learn how to turn your kitchen into the centre stage of your home by serving up a storm, minus the hassle. The sessions are on a first-come, first-served basis, so be sure to register early.

Apart from visitors, business professionals, participating exhibitors and suppliers will also benefit as this expo will provide a perfect platform for business networking and present a golden opportunity to trade ideas, goods or even strategies.

Those who sign up as an exhibitor of the HomeTech & Hardware Tools Expo ’10 are given the option to set up a Shell Scheme Booth or the Raw Space Booth. With the Raw Space Booth, exhibitors are able to build up their booth based on their company’s preference. “The best looking booths always attract the most crowds,” says Kelvin.

The HomeTech & Hardware Tools Expo '10 is in collaboration with For details, visit or or call 03-6142 3611.

By The Star