Malaysia’s annual budget for 2015 will be presented by Prime Minister Najib Razak on Friday afternoon, and is expected to contain provisions that will continue to stimulate the country’s economic growth, improve its fiscal position and raise living standards.
“It will also help to ensure a smooth transition to the 11th Malaysia Plan which will provide the final push in transforming the country into an advanced and high-income nation by 2020,” said Mr Najib, before chairing the 2015 Budget consultation meeting in May.
But how will it impact the property market? According to analysts, the new budget could provide relief to first-time home buyers by extending the stamp duty exemptions. Notably, the government waives 50 percent of the stamp duty for residential properties priced below RM400,000, but this measure is scheduled to expire by year’s end.
In order to rein in speculation, the authorities could also further increase the Real Property Gains Tax (RPGT), noted Kenanga Research. In 2013, this tax was raised to 30 percent for properties held for less than three years. For those sold within four to five years, sellers have to pay 20 percent, up from 15 percent previously.
But if Budget 2015 introduces more stringent measures to stamp out speculation, it could negatively affect consumption and domestic demand, stated Affin Investment Bank.
Finally, the government may roll out a Goods and Services Tax (GST) rebate for construction materials used in low- to medium-cost houses, added MIDF Research property analyst Ahmad Annuar Abdul Rahman.
Infrastructure
On infrastructure, the authorities may allocate more funds to improve the country’s railway networks. This includes ongoing projects in Kuala Lumpur and the upcoming regional commuter services connecting Singapore and Johor Bahru, said Maybank.
In particular, PM Najib revealed that the government is seeking long-term solutions to tackle traffic woes in the capital and surrounding areas.
“The Klang Valley Mass Rapid Transit (MRT) could alleviate the problem by extending the distance of public transport to 51 km,” he said, adding that every MRT train would have four coaches so up to 400,000 passengers can ride the MRT daily.
They will also extend the Light Rail Transit line by stretching the Kelana Jaya and Ampang route until Putra Heights.
In line with its objective of providing eco-friendly public transport, the Electrified Double Track Project from Ipoh to Padang Besar, Perlis would cater for commuters in the northern region.
Additionally, the government may earmark more development funds for states in the eastern and northern part of peninsular Malaysia, revealed Kenanga Research. In particular, Sarawak could receive more funds, mainly for its rail network and the Sarawak Corridor of Renewable Energy (SCORE), noted Maybank.
Finances
Meanwhile, the administration is seriously considering the Auditor-General’s recommendation on improving government spending. “In this regard, we are taking a holistic approach in order to ensure prudent financial management. Any malpractice and shortcomings in government administration will also be addressed effectively,” said Mr Najib.
As such, they could reduce subsidies on essential food items, such as flour, cooking oil and household gas, noted RHB Research.
To offset this, the authorities could raise the minimum wage accompanied by measures to enhance productivity, said Hong Leong.
Alliance DBS also believes that the government may slash corporate taxes by more than the one percent cut announced for 2016, as Malaysia’s tax rates are still higher than its regional peers. However, other banks feel that the government could implement it sooner rather than implement a larger cut.
To alleviate the cost of living, they may also announce new tax reliefs for households, added Alliance DBS.
The authorities could also increase the cash assistance handed out under Bantuan Rakyat 1Malaysia (BR1M) by 300 ringgit. Notably, this scheme can be taken up by households with a monthly income of up to RM4,000 and individuals earning less than 2,000 ringgit. But this could cost the government RM7.5 billion by 2015, up from RM4.6 billion ringgit last year.
As for the impending GST, the government may include more exemptions, in addition to fresh food, educational fees, healthcare and public transport.
Farah Wahida, Editor of PropertyGuru Malaysia, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
