GST Will Not Cause House Prices To Increase, Says Abang Johari

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KUCHING, Oct 29 – Prospective house buyers in Sarawak should not fall for the claims by developers that property prices would increase following the implementation of the Goods and Services Tax (GST) come April next year. Sarawak Housing Minister Datuk Amar Abang Johari Tun Openg today said that contrary to this claim, buyers would not be burdened by the six per cent GST, as developers would enjoy an input tax deduction for the building materials they use.

“They have to pay GST for the materials of course.But, at the end of the (building process) chain, developers can claim the GST back on what they had purchased,” he told a press conference here. He said this when asked to comment on the possibility of panic-buying for houses following the fear stirred up by developers.

” The price (of houses) cannot be higher than what it is now. At the moment you are paying 10 (per cent government tax) plus six (per cent sales tax). If it (GST) is (imposed at) six per cent, then it should be lower. That’s the logic,” he added. Abang Johari said that his ministry will organise a special seminar on the GST for all housing stakeholders in the state on Jan 20 next year as a platform to provide a clearer picture on the tax implication.

Meanwhile, he said the state government had in place a mechanism to flood the housing market, should supply be critically insufficient to meet demand. He said his ministry had two subsidiaries, Daya Builders Sdn Bhd and Mutiara Mortgage and Credit, which could take up the role as housing developers and finance facilitator respectively.

According to him, this approach was also taken to create a certain level of competition with private developers who were profit-driven, in undertaking housing projects. “The company (Daya Builders) would not be over inclined on (making) profits as its main objective is to provide quality and affordable houses for the people,” Abang Johari said.

Abang Johari said the Sarawak Housing Development (Control and Licensing) Ordinance 2013 passed by the State Legislative Assembly in 2013, would be enforced effective Nov 1 this year. He said the new law would further enhance the protection of house purchasers’ rights and interests. “The new regulations will address and consider the current issues facing the state housing sector, such as mitigating abandoned housing projects,” he added.

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