The government will take back sales and services Tax (SST) exemption on local property developers if property prices are not reduced.
"We want the cost saving from the SST exemption to be passed on to consumers. We may reconsider the exemption if they fail to reduce prices," finance minister Lim Guan Eng said when delivering his keynote speech at Rehda Institute CEO Series 2018 earlier today.
He said there is also another cost cutting measure other than SST exemption for construction sector that has been introduced as a way for property developers to reduce house prices.
Lim said construction players will now only have to pay 20 per cent of RM10,000 levy for the extension of temporary foreign worker permit (PLKS) from 100 per cent previously.
The remaining 80 per cent will be be borne by foreign workers, he added.
"For property demand to rise, (individual) income has to increase but it is going to take some time. But if we want developers to reduce prices, they will come to us and complain.
"So we have introduced some measures for the property developers to reduce the prices. We understand the burden of the rising cost in property development, so construction players will now have to pay only 20 per cent of the levy," he said.
Real Estate and Housing Development Association (Rehda) president Datuk Soam Heng Choon said the association is currently undertaking a study on the amount of savings property developers will get from the government's new policies.
"The amount of savings will then be passed on to consumers. We expect to present in a month time before the Budget 2019 announcement," he said.
He said Rehda noted that SST exemption on construction materials and services would provide a six per cent direct savings to consumers.