TAX WAIVERS: Datuk Ahmad Zaini, President & CEO of Malaysia Building Society Berhad suggests tax breaks for ‘white knights’ of abandoned projects
I believe that over 70 abandoned housing projects remain in the country even after the revival of over 100 projects since 2009. This is a critical issue that has affected thousands of purchasers. I applaud the government’s efforts in addressing this matter by reviving many projects. As a financial institution which is also plagued with abandoned housing projects that we financed, we know too well of the difficulties involved in resolving these issues. While we have managed to restructure a number of sizeable corporate loans in the last three years to revive abandoned housing projects, it has not been an easy task.
One of the main challenges is finding a “white knight” - a new developer to resume abandoned construction and complete the project. Profits earned by the white knights from this project must also be able to settle the existing corporate Non-Performing Loans (NPL). Hence, we do wish that some kind of tax waiver or reduction be extended to these white knights taking into consideration the aging of these abandoned projects, the number of affected purchasers and the costs of redevelopment. These tax exemptions can be in the form of waiver of stamp duty on the facility agreements. Such a move may encourage participation of more developers in the revival of abandoned housing projects.
One of the most pressing issues confronting the property industry is “affordable homes”. There must be a clear definition of “affordable homes” before the government introduces any fiscal policies to curb speculation and prevent further escalation of property prices.
One consideration that the government could look at is income tax exemptions for developers of low-cost housing which would also help reduce prices of normal housing that usually subsidises low-cost developments.