Budget 2010 and the Construction Sector Part 2

Salam and dear all, The following is the second and final installment on Budget 2010 and the Construction Sector; Construction Special attention to construction; in 2010 RM9 billion is allocated for the construction sector. From this amount, RM4.7 billion is for roads and bridges, RM2.6 billion for water supply and sewerage services, RM899 million for rail facilities, RM820 million for port and sea services, RM276 million for airport projects. Special attention towards green technology; the Green Building Index was launched on 21st May 2009. Owners of GBI Certificate from 24th October 2009 to 31st December 2014 enjoy income tax exemption equivalent to the additional capital expenditure in obtaining the certificate. Buyer of building with GBI certificate will be given stamp duty exemption on instruments of transfer of ownership equivalent to the additional cost incurred when signing the S & P within the same date stated above. Allocations that would benefit construction includes RM137 million for drainage and irrigation, RM70 million for the Paya Peda Dam project in Terengganu, and RM82 million for the aquaculture industry; RM30 billion for primary and secondary education including RM1.6 billion for building 80 new schools, RM1.1 billion to refurbish schools nationwide; TNB will spend RM5 billion to implement electricity generation, transmission and distribution in 2010; RM1.9 billion for the armed forces to construct and upgrade sentry posts; RM14.8 billion to upgrade, build hospitals and clinics; and RM3l.2 billion to construct and upgrade rural infrastructures mainly rural and village roads. Others related to construction includes: under the regional economic corridors 126 out of the 195 planned projects are at various stages of implementation, total investment has reached RM221 billion (in excess of the 9th Malaysia Plan target of RM145 billion. In 2010 a sum of RM3.5 billion is allocated for infrastructure and basic amenities under the regional corridors initiatives. In terms of key policies affecting the construction sector, they include; Local Authorities must speed up issuance of Development Orders, individuals only use their Mykad number (known as MyID) and companies use their CCM business registration number (known as MyCOID) when dealing with government agencies; the government reduces its involvement in economic activities and therefore companies under the MOF Inc and other viable agencies will be privatized; the practice of PPP will be enhanced, projects identified under the PPP include the CIQ in Bukit Kayu Hitam, 6 UiTM campuses and a MATRADE Centre. Five percent (5%) tax on gains from the disposal of real property from 1st Jan 2010 (with certain exemptions such as disposal of a residential property once in a life-time). However, there is no detail on how or the style of privatization and PPPs that the government intends to apply. Others considered related to the construction sector; steps being taken to strengthen R&D&C activities (Malaysia’s spending on R&D is at 0.6% of GDP whereas US 3%, S Korea 3.5% and Taiwan 2.4% of their respective GDPs; RM11.3 billion will be spent on High Speed Broadband, initially 10 megabytes/second in selected areas in KL and Selangor by March 2010, other areas between 2010 and 2012 and individuals with broadband will be given tax relief of RM500 for 201-2012 for broadband subscription fees (broadband penetration in Malaysia is at 25% whereas 95% in S Korea, 88% in Singapore, 64% in Japan and 60% in US). In terms of Islamic banking, assets under the scheme account for 18.8% of Malaysia’s total banking assets, takaful contributes 7.7% of the total insurance and takaful industry; Malaysia is the world’s largest sukuk issuer with US$94.7billion or 62% of outstanding global sukuk in 2008. In terms of combating corruption a Whistle Blower Act will be introduced in 2010. To the individual tax payers; those with credit cards have to pay service tax of RM50.00 (principal) and RM25.00 (supplementary) commencing 1st January 2010; maximum individual income tax reduced from 27% to 26% for the year of assessment 2010 and personal relief increased from RM8,000.00 to RM9,000.00. Wassalam.