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The Budget 2021 announced last week focused on assisting the Rakyat and businesses to ride out the current economic challenges. The Government adopted the theme of revitalizing the economy rather than proposing new mega economic projects.

World GDP decline is projected at -4.4% in 2020, improving to 5.4% in 2021 (as projected by IMF). Correspondingly, the Malaysian economy is projected to contract -4.5% in 2021 and could rebound by 6.5% - 7.5% in 2021 (as indicated by the Finance Minister).

Proposals directly impacting the property market were subdued / minor improvements compared to incentives in previous years:

• All first-time buyers will be entitled to full stamp duty exemption for the document of transfer of title and loan agreement for homes up to RM500,000 completed between 1 January 2021 and 31 December 2025. Most purchases will be new units from developers but we hope that this exemption is also applicable to secondary sales.
• Developers and first-time buyers of abandoned housing projects which have been revived will also be entitled to full stamp duty exemption for the document of transfer of title and loan agreement for the period 1 January 2021 and 31 December 2025. This may assist to rehabilitate some existing abandoned projects.
• RM1.2 billion has been allocated for the development of affordable housing and the Government is collaborating with financial institutions to finance Rent-to-Own Schemes totaling 5,000 units worth more than RM1 billion. This will partly address the current problems of affordable housing facing the B40 and M40 families.
• For eligible borrowers, the loan moratorium has been extended another 3 months while those who elect to service half of the loan repayment, may extend the loan moratorium period up to 6 months. This will cushion the possible number of impending housing loan defaults.
• RM750 million has been allocated to Pelaburan Hartanah Berhad (PHB) to fund the development of commercial properties on Malay Reserve Land (MRL). This will increase the market value of these MRL, tackling the highest concern related to MRL as to marketability and value as well as putting them to productive use.

Budget allocations to other economic sectors that could benefit the property market albeit indirectly are as follows:

• RM100 million has been allocated for industrial infrastructure development, RM42 million for internet infrastructure in 25 industrial parks and RM45 million for a water supply development in Gebeng Industrial Park, all of which will attract industrial investments.
• Customs processes will be streamlined with the launching of the Authorised Economic Operator (AEO) system which will be inclusive of logistics and warehouse operators, increasing productivity and strengthening the future prospects of the logistics sector.
• RM50 million has been allocated for the upgrading of tourist facilities, RM10 million for the preservation of heritage sites e.g. Bangunan Sultan Abdul Samad and Seri Carcosa and RM35 million for health tourism; which will assist in revitalising the tourism industry.
• Infrastructure projects totaling RM3.5 billion will be implemented, including Phase 3 of the upgrading of the Pulau Indah Ring Road which could significantly improve demand and marketability of Port Klang industrial properties.
• The Government’s commitment to continuing major infrastructure projects naming a few; MRT 3, Pan Borneo Highway and HSR will inject confidence in property market recovery.

Overall, we view the budget as being balanced to assist the Rakyat and businesses through this challenging period while maintaining our options to improve productivity and the economy, through technology and re-skilling and up-skilling of our labour force.

There were no additional taxes to burden families and businesses. On the contrary, some additional tax relief will be available especially for medical expenses.

Despite numerous calls by stakeholders on the release of unsold Bumiputera units, this budget did not address this particular issue.

We would have also liked to see the full stamp duty exemption for the transfer of titles and loan agreements clearly extended also to sales in the secondary housing market.

(This commentary is provided by Malaysia’s leading real estate consultant and property services provider, CBRE | WTW, 9 November 2020)