KUALA LUMPUR: Construction costs of residential properties are expected to be reduced by 3% to 5% due to the Sales and Service Tax (SST) exemption on basic construction materials, said Construction Industry Development Board (CIDB) chief executive Datuk Ahmad Asri Abdul Hamid.
"We have done an overall study, and we believe if all parties follow the tax exemption, the construction costs of residential properties are expected to go down by 3% to 5%," he said in a press conference related to the Malaysian Construction Industry Excellence Awards 2018 on Friday (Sept 28).
However, he said whether or not the reduction in construction costs would translate to a reduction in housing prices would depend on market conditions and developers.
Other factors such as land and compliance costs also come into play, he added.
As such, he said the decision to take action against construction and property industry players if housing prices do not drop may not be the most appropriate.
This is in response to a statement by Finance Minister Lim Guan Eng that the SST waiver on construction services and materials would be reviewed if housing prices are not reduced.
Datuk Ahmad Asri also urged, however, for all property developers to take active measures to drive down prices.
On Aug 12, Finance Minister Lim Guan Eng announced that construction services and building materials cost would not be charged the SST.
So far, the Finance Ministry has only mentioned SST exemption for basic materials such as bricks, cement, sand and iron.
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