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Guan Eng: Land Prices Decided By Market Forces

One of the moves undertaken by the federal government to reduce home prices is to slash construction cost, as it’s not easy to influence land prices, said Finance Minister Lim Guan Eng in a report by The Edge.

“Land prices are decided by market forces. It is too big for the government to influence market prices. But what we can do is to try to save costs for housing developers.”

He said this in reply to former prime minister Datuk Seri Najib Razak, who commented on Facebook that the largest cost factor to building houses is not construction expenses but land costs. Hence, to significantly bring down home prices, the government should reduce land cost.

However, Lim pointed out that land prices during the previous administration was also high. In addition, construction services and building materials like sand, bricks and cement were not exempted from the former goods and services tax (GST).

“During the GST regime, basic materials such as bricks, cement, sand and other construction materials were subjected to GST at six percent. In addition, construction services were also subjected to six percent of GST,” Lim previously said.

He also revealed that the Pakatan Harapan-led federal government has given property developers or home builders until 31 October to start reducing their prices. Lim said it is only right for them to slash home prices on the back of lower construction costs given the SST exemption.

“We hope that housing developers will give us a positive response,” he said.

Regarding the RM10,000 levy for skilled foreign workers, Lim said this is an easing of the rules introduced by the previous federal government.

“It’s normal for companies to ask for the levy to be reduced because they want to cut down costs. But if you take into account the fact that the government wants to retain skilled workers but at the same time not have too many foreign workers staying for too long in Malaysia, I think this is a good compromise,” he added.

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