Design wish list for a better Budget 2013

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LOOKING AHEAD: It’s that time of the year when anticipation starts to run high on what the coming Budget will bring. We quizzed some industry professionals on what they would like to see coming to pass

Here’s what some of the movers and shakers of the design, building as well as the architectural related fraternity have to share about their aspirations for the upcoming budget to be announced on 28 September 2012.

Ar. Haji Saifuddin Ahmad, Malaysian Institute of Architects or Pertubuhan Akitek Malaysia (PAM) President 2011-2013 and director of SNO Architects Sdn Bhd.

The two-term PAM president is also the director of SNO Architects that won the Asean Energy Award in 2006 for the Leo Energy Office (LEO) building, long before the Green Building Index (GBI) was established.

Your wish list for Budget 2013?
(i) To provide incentives or rebates for professional consultancy companies to expand training and facilities on Building Information Modelling (BIM).

(ii) To create more housing projects for the medium income (group) based on design competitions organised by PAM with the successful entrants being paid based on Lembaga Arkitek Malaysia’s (LAM) minimum scale of fees.

(iii) To provide more incentives or rebates for green building designs.

(iv) To provide incentives for professional consultancy companies that come up with innovative designs or research.

(v) Any project that employs only local registered professional consultants to be given tax exemption or incentives.

(vi) To create a Jabatan Arkitek Negara or Arkitek Negara (department) to look into the architectural and built environment policies of the country.

(vii) To review the current Real Property Gains Tax Policy to make it more effective and to weed out speculators.

What do you think is the single most important thing the government can do to help the property industry or your industry in Malaysia?
To streamline the approval delivery system by reducing bureaucracy and other unwarranted administrative procedures, especially cost incurred from service providers.

Ronnie Choong, the Malaysian Institute of Interior Designers 2012-2014 (MIID) president and executive director of S.I. Design Sdn Bhd.

The former president of the Malaysian Society of Interior Designers (MSID) and current president of the newly established MIID runs his own private practice in S.I. Design Sdn Bhd.

Your wish list for Budget 2013?
(i) I think the government should remove the current service tax for consultancy or design services as this will add to the cost of engaging a design professional. If the government is serious about developing the design sector, they should seriously look into removing the service tax.

(ii) The government should provide grants or incentives to professional organisations conducting regional and international conferences in Malaysia to enable the profession to develop further.
What do you think is the single most important thing the government can do to help the property industry or your industry in Malaysia?

The government should also look at providing tax incentives or relief to companies renovating their tenanted premises as currently, they cannot write-off or classify renovation cost as an expense.

This is especially very true in the corporate office sector. Companies want to provide a better environment for their staff and workers to enhance productivity, cater to the well-being of the employees as well as retain and attract talent.

However, when they renovate to try to achieve this goal, they end up having to pay tax for their renovation cost. This will deter corporations from spending or investing money in renovations.

Ar. Chris Yap, past president of Institut Perekabentuk Dalaman Malaysia (IPDM) and director of Idea Consult Sdn Bhd.

A past president of IPDM - the second interior design institute that has been dissolved with the recent merger of IPDM and MSID forming MIID, Yap is also the director of his own interior, project management and consultancy firm. He is currently the deputy president of MIID.

Your wish list for Budget 2013?
(i) Better tax incentives for both employers and employees.

(ii) Consideration of reduction in the service tax for consultancy services.

What do you think is the single most important thing the government can do to help the property industry or your industry in Malaysia?
Provide tax relief for more categories of items related to the construction and renovation of buildings and interiors.

Badriyah Abdul Malek, CEO of SEDA Malaysia.

The Sustainable Energy Development Authority Malaysia (SEDA Malaysia) is a statutory body formed under the Sustainable Energy Development Authority Act 2011 [Act 726]. The key role of SEDA is to administer and manage the implementation of the feed-in tariff mechanism which is mandated under the Renewable Energy Act 2011 [Act 725].

Your wish list for Budget 2013?
(i) Individual tax rebates up to RM5,000 for those who purchase and install solar PhotoVoltaics (PV) systems on residential rooftops. This rebate should be valid for one system installation yearly;

(ii) Individual tax exemption on income from energy generation under the Feed-in Tariff (FiT) mechanism;

(iii) Stamp duty exemption on Memorandum of Transfer for residential properties equipped with solar PV installations;

(iv) Individual tax exemption up to 50% from course fees for individuals attending Renewable Energy (RE) courses accredited by SEDA Malaysia; and

(v) Solar Thermal Cooling to be listed as one of the RE technologies eligible to apply for Investment Tax Allowance.

What do you think is the single most important thing the Government can do to help the property industry or your industry in Malaysia?
SEDA Malaysia is grateful enough for all the support being given by the government towards the implementation of the FiT mechanism in Malaysia.

If the proposals above can be granted especially on the tax exemptions and rebates for individuals as listed in item (i) and (ii), it would definitely benefit the public directly whereby more individuals will be able to participate in the FiT mechanism to generate electricity from solar PV systems installed on rooftops.

Ir. Wong Loo Min, president of the Association of Consulting Engineers Malaysia (ACEM) and managing director of T.Y. Lin International Sdn Bhd.

ACEM is a professional association established in 1963 with the primary objectives of:-

• Promoting the advancement of the profession of consulting engineering;

• Providing a forum through which its members can consult and cooperate with one another on all matters of professional interest for their mutual benefit;

• Promoting the professional interests, rights, powers and privileges of consulting engineers;

• Giving the legislature, public bodies and associations facilities for conferring with and ascertaining matters of professional interest; and

• Undertaking other things incidental to or conducive for the association.

Your wish list for Budget 2013?
(i) We urge the government to increase spending on infrastructure that must be carried out in an open and transparent way.

(ii) Public land should be auctioned to the private sector for more viable business development that will also be a major source of public funding for instrastructure.

(iii) To propose financial incentives for the usage and application of BIM in building projects. The government to consider a matching grant to be provided for the purchase of BIM software and training of personnel to improve productivity.

(iv) To propose the need for a special fund to be made available through the Malaysia External Trade Development Corporation (MATRADE) for specific programmes to encourage export of engineering consultancy services, including maintaining a presence in international organisations.

(v) To propose that the Registration of the Engineers Act 1967 be further amended for 100 per cent equity to be open to anybody or persons.

Has any of your wish list for Budget 2012 been fulfilled so far?
Based on earlier memorandums submitted to the Ministry of Finance, issues that were brought up by ACEM that had been considered by the ministry include:

(i) Reduction of stamp duty imposed on the consultancy services agreement and the upward adjustment of the salary scale for personnel and multipliers in (terms of) the consultancy fees;

(ii) Partial adoption of ACEM’s proposed Quality Based Selection system for the procurement of consultancy services.
What do you think is the single most important thing the government can do to help the property industry or your industry in Malaysia?

The government should encourage Malaysian firms, government-linked companies and government agencies to promote the export of professional engineering services and capacity building.

Ir. Looi Hip Peu, president of the Malaysian Green Building Confederation (MGBC), 2012-2013; honorary secretary, ACEM 2011-2012; member of the GBI accreditation panel and fellow of the Institution of Engineers Malaysia.

A practising engineer with more than 30 years experience as a consulting and building service engineer, he has been involved in the design of heavy engineering, commercial and township projects for Mektricon Sdn Bhd. An active member of the engineering community having been involved in national issues pertaining to this industry in his role as the honorary secretary of ACEM from 2003-2006 and from 2010-2012, he also specialises in topics covering sustainability and professional practice, being a member of the GBI accreditation panel. He is currently the president of the MGBC, promoting “sustainability” in the built environment.

Your wish list for Budget 2013?

(1.1) From my perspective as a professional engineer in the building industry and an advocate of “sustainability”, my wish list for Budget 2013 would be a “deepening” of fiscal incentives for the promotion of “green buildings” under the Income Tax Exemption (ITE) order 2009 namely:-
(i) An extension of the ITE 2009. Currently, the Act is only applicable until 2014. The ITE exemption should be extended beyond 2014.

(ii) A broadening of the stamp duty exemption allowed under the ITE. Currently, stamp duty exemption is only applicable for certified “green cost.” This will, in most cases, make stamp duty exemption negligible or significant to attract members of the property market.

(1.2) Industry grants and tax exemptions for companies and individuals undergoing courses to upgrade skills in the construction industry. These include:
(i) Skills and knowledge in energy efficiency and sustainable design.

(ii) Skills in BIM.

(iii) Others skills that are gaining traction in the international market, BIM, etc.

(1.3) Industry grants and/or tax exemptions for companies upgrading computer software or hardware for implementing cutting-edge design methods such as BIM, dynamic building modelling using software, finite analysis software, computation fluid dynamics, cluster computing, etc.

(1.4) Expanding government grants and tax exemptions for professionals attending or presenting papers at international level conferences or technical meetings.

Has any of your wish list for Budget 2012 been fulfilled so far?

The FiT for renewable energy was operationalised in 2011. Other than that, no new additional incentives or fiscal measures for “green-tech” or the construction industry were put in force.

What do you think is the single most important thing the government can do to help the property industry or your industry in Malaysia?

(2.1) (i) Institute “good governance” practices for public sector procurement. These include doing away with negotiated contracts, implementing the QBS (Quality Based Selection) method in public procurement and subscribing to the Transparency International (TI) concept of “Integrity Pact”.

(ii) Promote cutting-edge technology and skills in the construction industry that include instituting consistent and sustainable policies for foreign workers. Current policies pander too much to “vested interest” so much so that skills and wages remain low in the construction industry.

A good model is Australia whereby technicians and skilled workers are protected and enjoy a high salary comparable to that of a professional. This would also be in line with the concept of a “high income” economy (high income requires higher skills).

(2.2) (i) Also, promoting cutting-edge technology such as BIM, robotics in construction, etc. listed in order of importance for the property market to revamp current ”affordable” housing programmes to be more “effective” and sustainable in the long run. The current model adopts a ”business mode” which may be headed for disaster as it is seen to be part of a ”political gravy train”. Or decouple the national affordable housing programme from political interference.

(ii) To improve infrastructure delivery by the public sector (in connection with ”improving governance” above).

(2.3) Institute real measures to instill investors confidence in the property market. Ideally, foreign investors should be a main pool on which the Malaysian property market can depend on. A consistent policy should be created to:-
(i) Protect local house buyers (e.g. two-tier pricing or taxation system with only high-end segments subject to additional taxation for foreigners, etc.)

(ii) Ensure consistent investor policies.

(iii) Cut down red tape for projects.

(2.4) To institute consistent and transparent policies for investors and property stakeholders (the goal post that keeps moving every few years is detrimental to investors confidence especially foreigners who are/will be our main players).

(2.5) To improve security (this is also related to “good governance” or just to let the security department responsibly and nationally do their jobs). Currently, the “security perception” seems to be a major impediment to foreign investors.
Mohammad Nazli Abdul Aziz, managing director of Threehundredsixty Sdn Bhd and Galeri Chandan Kuala Lumpur.
Chartered building professional Nazli owns the multi-disciplinary art and design consultancy, Threehundredsixty and Galeri Chandan KL. The firms provide interior design and built services as well as manage contemporary art projects in Malaysia and abroad.

Your wish list for Budget 2013?

(1.1) Interior Design Industry
(i) To provide tax incentives for companies that engage the services of designers and pay the full fees for it. Designers are usually shortchanged as clients do not understand that design is an investment in driving commercial values but rather, they view it as an expense. Designers on the other hand, will be encouraged to charge fees based on the agreed fee structure. The selection of designers should be based on merit and capabilities, rather than on the best pricing.

(ii) Design companies that invest in increasing the multi-disciplinary skills and continuous professional development of their designers should also be encouraged.

(iii) This way, creative design solutions will be paid its rightful due and the selection of design professionals will be based on merit. Design companies will be motivated to spend money in increasing the knowledge and skills of their designers so that they are better at designing around the needs of their customers.

(iv) Multinational clients of design services having projects in Malaysia should be encouraged to use or insist that the designer associated with their brand use local (services) in joint venture with Malaysian companies.

(1.2) Art Industry
(i) Collectors of contemporary art, be it corporations, institutions or individuals, to be given tax incentive if they purchase contemporary Malaysian art, provided that the artist is being represented by an art gallery that is registered as a purveyor of original Malaysian contemporary art and the works having been curated.

(ii) Galleries to be given investment allowance on the cost of setting up galleries as the business has a long gestation period, but (represents) an important eco-system in supporting, promoting and documenting Malaysia’s cultural identity.

(iii) Tax deduction on promotions, printing of catalogues and documentaries on Malaysian visual arts as it is a representation of Malaysia’s contemporary culture.

(iv) Overseas auction houses to be given the incentive to set up shop in Malaysia and be principally involved in auctioning Malaysian and Southeast Asia art so that it can spur an open market validation of the commercial value of Malaysian art in the region.

(v) Tax benefit for Malaysian galleries or companies promoting local art overseas.

(vi) To reward real estate developers who purchase or commission local works of art as part of their built environment.

Ho Lai Kuan, managing director of Quel International Sdn Bhd.

Quel International specialises in providing inspiring furniture solutions to developers for their kitchen and wardrobe requirements. Quel partners an Italian brand, Karati, to combine innovative designs and the latest material trends to complement the lifestyle demands of condominium developments. Some of the prestigious developments Quel is working on include SDB’s 20 Trees in Melawati and Dedaun in Ampang. Quel also continues to gain recognition as the premier furniture solution provider to restaurants, hotels and residences.

Your wish list for Budget 2013?
(i) Lower income tax so that there is more excess cash for improvement to our livelihood. Consumers with more cash at hand will be able to afford to furnish their homes with higher quality finishes.

(ii) Eliminate duties on fabrics and building materials so that Malaysians can afford to purchase higher quality fabrics and materials that will in turn raise the standard of interior design in the country.

(iii) Eliminate capital gains tax in order to boost developments that are expected to slow down in the coming year.

(iv) Provide higher tax rebate for parents supporting children studying overseas. Overseas education especially in the UK, Australia, America and Japan are more developed and mature as compared to the local system. Eventually,

Malaysia’s development will be dependent on these internationally exposed youth.

What do you think is the single most important thing the government can do to help the property industry or your industry in Malaysia?

Based on my past profession as an architect, I hope that the government would be able to expedite approvals on developments, hence reducing developer’s holding cost that will be reflected in the selling price of the property.

Pic of chart courtesy of MGBC and GBI.

MGBC anticipates that “green buildings” will be a major growth sector for the building industry.

MIID president Choong is hoping that the government will remove the current service tax for consultancy or design services.

MGBC president Ir. Looi anticipates that a “deepening” of fiscal incentives to promote “green buildings” under the ITE will benefit the industry.

SEDA Malaysia CEO Badriyah is suggesting individual tax rebates of up to RM5,000 for those who install PV on their residential rooftops.

MIID deputy president Yap wishes for better tax incentives for employers and employees and a reduction in service tax for consultancy services.

Quel International director Ho believes that the elimination of capital gains tax will help boost developments in the country for the coming year.

Threehundredsixty director Nazli wants tax incentives for companies that engage the services of designers and pay the full fees for it.

PAM president Saifuddin is very optimistic that “green buildings” and other incentives will benefit the industry at large.

ACEM president Ir. Wong is proposing financial incentives for the usage and application of BIM in building projects.


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