The Malaysian government can impose higher property stamp duty on foreign buyers in the upcoming Budget 2019 to bring in more income to the country, said Maybank Kim Eng Research senior economist Chua Hak Bin.
Speaking at a panel session at the “Malaysia: A New Dawn” conference, Chua cited Singapore, where foreign buyers pay an additional 20 percent property stamp duty – resulting to three times more property stamp duty collection than Malaysia.
Aside from Singapore, this kind of measure is also implemented in the UK, Hong Kong and Australia, reported The Sun Daily.
He noted that the ideal rate for Malaysia would be about 10 percent.
Meanwhile, the proposal to impose new taxes such as equity tax and inheritance tax will negatively affect Malaysia government’s prospects, said Peck Boon Soon, chief economist at RHB Research.
“It has to be well thought out before the implementation.”
In recent years, the Malaysian government has been spending 99 percent of its revenue, leading to higher operating expenditure, of which emolument to civil servants account for 60 percent, said Lim Chee Sing, senior economist at Asiamoney Ranked.
“Very soon the government will even have to borrow from the operating expenditure. By then we will have an operating deficit. It’s a very big negative for the sovereign rating, so this needs to be addressed urgently.”
Peck also expressed concern on the higher concentration of banking resources on lending to property sector, saying that this could weigh on the long-term economic growth of the country.
“Nearly half of banking resources was channelled to property lending from 17.7 percent in 1996 to 46.5 percent in June 2018.”
With this, lending to manufacturing, which is a key driver of growth, has been seriously neglected, falling from 16.1 percent in 1996 to 6.6 percent in June 2018.
In expanding Malaysia’s economy, the government has to be more outwardly looking as exports share fell from 110 percent to 120 percent of GDP in 2000 to 2007 to around 70 percent currently.
Image sourced from Central Housing Group
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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