Reduce house prices or SST exemption will be revised: LGE (Updated)

KUALA LUMPUR: The government will reconsider the exemption of Sales and Services Tax (SST) on construction materials if house prices are not reduced, said Finance Minister Lim Guan Eng.
"I hope developers would pass on the expected saving from the exemption to home buyers in the form of reduced home prices. If this does not happen, then the government may have to rethink the exemption given and find new ways to make homes affordable, especially to first time home buyers," he said in his keynote address at the Rehda Institute CEO Series 2018 Annual Property Developers Conference today.
He said the government's focus is on the residential property segment, especially for homes priced RM400,000 and below, and the ministry is waiting for Rehda's response on how many percentage house prices can be reduced.
"We want to see price reduction. I am not interested to see additional freebies. That is meaningless. We want to see prices lowered, that's all," he said.
Rehda Malaysia president Datuk Soam Heng Choon urged all developers to pass on all savings back to house buyers, on top of any discounts and rebates that they are offering.
He said Rehda Institute is conducting a study on the impact of the exemption and will present the findings to the ministry before the tabling of Budget 2019.
Lim also announced today that skilled foreign workers in the construction industry who wish to extend their employment duration here will have to fork out 80% of the RM10,000 annual levy, while the balance 20% will be paid by employers.
"This leeway would help reduce the need to recruit new inexperienced foreign workers who would require additional on-the-job training that adds to construction cost. In the long run, the government hopes to reduce reliance of foreign workers but no abrupt changes will happen so that market does not suffer a shock," he said.
Lim said the Human Resources Ministry is expected to announce the effective date of the changes to the levy programme, which is expected to raise about RM1 billion in three years.
It was previously announced that skill foreign workers in the construction industry who have worked here for 10 years can have their permits extended for up to three years. The RM10,000 annual levy was to be paid by employers.
However, Master Builders Association Malaysia president Foo Chek Lee, who spoke at a panel session, said that the changes to the levy is not business friendly, as workers are likely to choose to go back when faced with the cost.
"This does not fit the purpose of us wanting to increase our efficiency and cut the cost of doing business. I think the government should seriously look into this policy as this is not business friendly," he said.
Meanwhile, Lim also said that the government welcomes foreign direct investments, especially high-quality investments that create high-quality jobs for Malaysians.
"Jobs must be made available to our workers and not reserved for foreigners. Homes must be built for Malaysians too and not reserved for foreigners. Foreigners buying homes in Malaysia are not the issue here, but townships built exclusively for foreigners are," he said.