Builders' body urges govt to reconsider SST on construction sector
The Master Builders Association Malaysia said the construction industry was already subject to multiple layers of taxation across various aspects of project execution.
PETALING JAYA : The Master Builders Association Malaysia (MBAM) has called on the government to reconsider expanding the sales and service tax (SST) to the construction industry.
In a statement, MBAM president Oliver Wee said the construction industry was already subject to multiple layers of taxation across various aspects of project execution, including building materials, labour and equipment.
Wee said introducing a new tax – especially with the potential for retrospective application – would seriously disrupt existing contractual obligations, budgets and project timelines.
'Given the critical role the construction industry plays in national development and economic stability, MBAM respectfully appeals to the government to reconsider the imposition of SST on construction services,' said Wee.
'It is essential to maintain a stable, predictable, and sustainable operating environment for the industry to continue supporting Malaysia's growth and development.'
Wee said if the implementation of the 6% SST was 'inevitable', MBAM was of the view that the rate be reduced from 6% to 4% due to the large contract values in the industry.
He suggested that the SST should only be levied on the service portion of the contract value, with the non-service portion – including building materials and other hardware – to be exempted.
Wee also hoped Putrajaya would consider postponing the introduction of the SST on the construction industry as the July 1 implementation date provided insufficient lead time for the industry to respond.
He said a reasonable grace period must be granted to allow all stakeholders to make necessary adjustments and financial preparations.
The finance ministry yesterday said an expanded sales and service tax would be implemented from July 1, which will see a sales tax of 5%-10% imposed on selected and non-essential goods.
The service tax will be expanded to include new services such as construction, rental or leasing, finance, private healthcare, education and beauty.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Free Malaysia Today
2 hours ago
- Free Malaysia Today
Tune Protect and Sunway XFarms launch the ‘Grow & Give' initiative
Tune Protect volunteers kick off the 'Grow & Give' initiative, a strategic programme blending employee development with environmental and community impact. (Tune Protect pic) PETALING JAYA : Tune Protect Group Berhad has partnered with Sunway XFarms to launch the 'Grow & Give' initiative, a strategic programme that combines employee development with meaningful environmental and community impact. In this programme, employees gain hands-on experience in sustainable agriculture through hydroponic farming and contribute to the establishment of a community farm to promote food self-sufficiency among low-income communities. The 'Grow & Give' programme involving 240 Tune Protect volunteers, consists of four sessions, the first held in May, in which volunteers help support the Petaling Jaya-based Medan Jaya community, home to over 4,000 residents, many of whom face limited access to fresh and nutritious food. The initiative began with hands-on training at Sunway XFarms, where employees gained practical experience in urban farming, harvesting pesticide-free vegetables, and packing them for distribution to local beneficiaries. Utilising smart hydroponic farming technology, community farming is remarkably easy to maintain and uses up to 90% less water compared to traditional farming methods. The solar-powered system efficiently circulates water, providing crops with optimal hydration and nutrients, while offering residents an accessible and sustainable way to grow their own food long-term. This modern farming technique ensures consistent yields with minimal environmental impact. Koot Chiew Ling, chief strategy officer and chair of the Sustainability Committee Tune Protect Group said: 'We remain deeply attuned to the social disparities and environmental challenges shaping our world today. 'Through this initiative, we are not only raising awareness but taking meaningful action by delivering practical, ground level solutions in areas such as clean energy, water efficiency, food security, and waste reduction.' She said she hoped the initiative would inspire a ripple effect of positive change, one community, one farm, and one volunteer at a time, that supported both people and the planet for generations to come. Yuvasreetharan Muregesun, chief operations officer of Tune Protect (centre), with Norlizah Jaaman (left), secretary of the Medan Jaya Residents' Association, and Eleanor Choong (right), COO of Sunway XFarms. (Tune Protect pic) Driven by the sustainability vision 'In Tune for a Better Tomorrow', Tune Protect is committed to building a more resilient and sustainable future, targeting 6,000 volunteer hours from 2025 to 2027 with a focus on conservation and sustainability initiatives. The company is expected to achieve 1,200 volunteer hours upon the completion of the four sessions of the 'Grow & Give' programme this year, with the next three sessions to be held in July, September and November. The community farm is projected to yield over 240kg of fresh produce annually, providing residents with more than eight varieties of essential vegetables. The farm has prevented over 1,500 sq ft of deforestation, besides reducing three tonnes of carbon emissions, saving 56 tonnes of water, and avoiding 960 pieces of plastic from being used. Eleanor Choong, COO of Sunway XFarms, expressed her enthusiasm for the collaboration. 'We are pleased to be able to build this community farm alongside Tune Protect, and we are excited to see the fruits of the residents' labour,' she said. Through this initiative, Tune Protect distributed 50 bags of fresh vegetables. Staff also led a clean-up drive in communal areas, collecting over 170 kilograms of recyclable waste, including paper, metal scraps, plastic, glass, and electronic waste. Norlizah Jaaman, secretary of the Medan Jaya Residents' Association said: 'Tune Protect and Sunway XFarms' contributions have empowered our community's economy, raising awareness on sustainable agriculture and recycling practices among the residents.' Tune Protect's collaboration with Sunway XFarms has shown how innovative partnerships can bring about significant change beyond the boardroom. The 'Grow & Give' initiative has shown how with every harvest and act of kindness, a more inclusive, empowered, and sustainable tomorrow comes into view. For more information on Tune Protect, visit their website. For more information on Sunway Xfarms, visit their website.
The Star
2 hours ago
- The Star
AirAsia close to buying at least 100 Airbus jets
AirAsia operates an all-Airbus fleet and has previously said it was looking to add smaller planes to its fleet for regional routes. PARIS: AirAsia is in advanced discussions to place an order for at least 100 Airbus jets at next week's Paris Airshow, a deal likely to mark the introduction to its fleet of the planemaker's smallest jet, the A220, industry sources say. Malaysia-based low-cost carrier AirAsia operates an all-Airbus fleet and has previously said it was looking to add smaller planes to its fleet for regional routes. One of Airbus's biggest customers with a few hundred planes already on order, the airline has not placed an order since before the pandemic. It has taken few deliveries in recent years and has been steadily restructuring its order book as it faced financial difficulties. The company, hard hit by pandemic travel restrictions, was classified by Malaysia's stock exchange as financially distressed in 2022. It says it hopes to exit this status by the middle of this year. Capital A plans to sell its AirAsia aviation business to long-haul unit AirAsia X to consolidate long and short-haul operations under a single AirAsia brand. — Reuters
The Star
2 hours ago
- The Star
Export growth hinges on trade talks
PETALING JAYA: The possibility of Malaysia's economic growth outlook being weighed down by the overall exports performance is now becoming more apparent with the latest industrial production index (IPI) and manufacturing data released by the Statistics Department. The government forecasts gross domestic product (GDP) growth of 4.5% to 5.5% this year. For the first quarter of financial year 2025 (1Q25), GDP grew 4.4% after expanding 5% in 4Q24. The prevailing sentiment continues to be that overall exports performance would depend on the outcome of the ongoing trade negotiations to lower the now paused reciprocal tariffs portion of the Liberation Day tariffs imposed by the United States while demand for the country's manufactured goods would depend on global economic conditions and shifts in the supply chain. The April IPI expanded 2.7% compared to the 3.2% growth in the same month a year ago mostly due to the 5.6% rise in the manufacturing index, with the mining and electricity indices contracting 6.3% and 1.6% respectively. Drilling down further, export-oriented industries grew 6.4% after registering a 4.8% increase in March. On a month-on-month basis, the IPI contracted 8%, with export-oriented industries decreasing 10.2%. Socio-Economic Research Centre executive director Lee Heng Guie told StarBiz that the April IPI data presages a weak start to the country's 2Q25 GDP growth and potentially indicates a weakening economy. He expects the front-loading of shipments to the United States under the 90-day reciprocal tariff pause to wane going into May and June. This was reflected in the IPI's April manufacturing index, which rose 5.6% following a 4% gain in March. The reciprocal tariffs portion of the Liberation Day tariffs comes into effect on July 9 following the announcement of a 90-day pause while the baseline tariff of 10% imposed on all goods imported into the United States remains and have been effective since April 5. Malaysia's reciprocal tariff rate was 24%. 'Pending the outcome of tariffs negotiation expected in July, the export-oriented industries are expected to grow moderately in tandem with the anticipated slowing global demand due to the tariffs impact. 'The implementation of the Sales and Service Tax (SST) expansion is expected to soften domestic demand, and hence impacting domestic-market oriented industries,' Lee added. The expanded SST, which would be effective July 1, covers an additional six services categories while there would be higher sales tax rates on selected imported luxury goods. Meanwhile, the April manufacturing data showed manufacturing sector sales value rising 4.8% in April to RM160.6bil compared to the same month a year ago after growing 3.7% in March. Electrical and electronics (E&E) products saw sales value expand 9.8% after increasing 7.4% in March. Month-on-month, sales value dropped by 2.3% compared to RM164.3bil in March. April sales value growth of the export-oriented industries, which accounted for 70.3% of total sales, rose 5.3% compared to the same month a year ago after increasing 4.6% in March. Sales value growth of computer, electronics and optical products increased 10.6% from the same month a year ago after rising 8% in March. On a month-on-month basis, export-oriented industries' sales value growth saw a decline of 3.2%. E&E veteran and Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said the direction of US tariff policy, global economic growth and the ongoing supply-chain shifts would continue to have an impact on the country's manufacturing sector outlook. 'We need to see the outcome of the negotiations on the reciprocal tariffs to know better the impact on E&E, the tariff levels and how we can prepare for it. 'What we can say for now is that Malaysian companies have benefitted US companies in the half-century that we have worked together and that this relationship should continue,' he said. Wong noted that Malaysia has been a beneficiary of the supply-chain shifts related to the US-China trade rivalry in recent years and may continue to benefit as businesses plan for various outcomes, including on policy uncertainty and geopolitical uncertainty. 'There are many plus one strategies today, not just China+1 but also Europe+1,' he said. Wong said the E&E growth outlook would also hinge on global economic growth, which the World Bank projected to be 2.3% for the year, or nearly half a percentage point lower than projected at the start of the year on heightened trade tensions and policy uncertainty in its latest Global Economic Prospects report. 'Growth for E&E will depend on the sub-sector, we are still seeing demand in artificial intelligence, but this could slow in consumer electronics,' he said. MIDF Research expects IPI growth of 2% this year after the 3.7% increase in 2024, with front loading providing a temporary boost to trade activities and support industries vulnerable to external headwinds. 'Although there could be short term support following the United States decision to pause from implementation reciprocal tariffs, encouraging progress from the ongoing trade talks will be crucial to reduce the adverse impacts of trade tensions on future demand outlook and production activities,' the research house said.
