Malaysia starting to execute of 6% consumption tax on year 2015, land and construction price will definitely increase 6%, now is the best timing to do the

The Malaysian government announced in Budget 2014, six percent consumption tax (Good & Service Tax, GST) will effective from April 1, 2015. Real estate-related consumption tax is limited to commercial and industrial units, land transaction, construction material. Residential is excluded, but constructor had mention that as the land transaction and construction material cost rise, the property price will inevitably rise. Expected to have 6% markup.

Executive vice president of TW House International Sdn Bhd Mr. Jeff Fang said that, although the residential is exempted from consumption tax, but for sure the GST tax will reflect on the housing price.

In additional, Mr. Jeff Fang pointed out that since the Malaysia’s government requires developers to provide low- cost housing, but the construction cost is much higher. Implement of GST for construction material will lead constructor shift the burden to others non-subsidized property. This mean that non-subsidized property will markup for more than 6%.

The notable is, Malaysia’s vision is to be a “high-income countries” in year 2020. Therefore, since January 2014, implementation of the minimum wage system biennially, hope to improve income level, narrowing the gap between the rich and the poor. This means that constructor not only bear the high cost of land and material, but also burden of increasing labor costs. In future, property price will only rise and not fall.

According the research of TW House International Analysis Centre, strong demand of real estate industry in Kuala Lumpur lead the housing price to rise continuously. Compare for year 2009 and 2013, housing price had an amazing increase, at least 40% to 50%. Mr. Jeff Fang reminded, implement of GST tax will influence the housing price trend. Now is the best timing for Taiwanese to invest in Malaysia’s property.