Construction Industry Faces Rising Costs: MBAM Urges Government to Re-evaluate SST Implementation
PETALING JAYA – The Master Builders Association Malaysia (MBAM) is urgently appealing to the government to reconsider the recent decision to extend the Sales and Service Tax (SST) to the construction sector. The move, as highlighted by MBAM, is expected to significantly increase project costs, potentially jeopardising ongoing developments and impacting the overall growth of the Malaysian economy.
In a formal statement released today, MBAM expressed deep concern over the potential ramifications of the SST expansion. The association argues that the construction industry is already operating under tight margins, and the added tax burden will exacerbate existing challenges, including rising material costs and labour shortages.
“We understand the government’s need to broaden its revenue base, however, the construction sector is a vital engine for economic growth, providing employment for a significant portion of the workforce and contributing substantially to infrastructure development. Imposing SST will disproportionately affect smaller construction firms and subcontractors, potentially leading to project delays, cancellations, and even business closures,” stated a spokesperson for MBAM.
Impact on Projects and Consumers
MBAM anticipates that the SST implementation will inevitably lead to increased construction costs, which will ultimately be passed on to consumers. This could dampen demand for new housing and commercial properties, impacting the property market and slowing down overall economic activity. The association also fears that the increased cost will make affordable housing projects even more challenging to implement.
“Many ongoing projects are already locked into fixed pricing agreements. The imposition of SST now will force contractors to absorb these costs or renegotiate contracts, leading to disputes and potential legal issues,” warned MBAM. They also emphasized the need for a more consultative approach with industry stakeholders before implementing such significant changes.
Seeking Dialogue and Alternatives
MBAM is requesting an urgent meeting with the Ministry of Finance and other relevant government agencies to discuss alternative revenue-generating measures that would not negatively impact the construction industry. They propose a review of existing tax incentives and a focus on attracting foreign investment to bolster the sector's growth.
“We are not opposed to contributing to the nation’s revenue, but we believe that the current SST implementation is ill-timed and will have detrimental consequences for the industry and the economy as a whole. We urge the government to listen to the concerns of the industry and work collaboratively to find a solution that benefits all stakeholders,” concluded the MBAM statement.
The association is confident that through constructive dialogue, a mutually beneficial outcome can be achieved, ensuring the continued growth and sustainability of the Malaysian construction sector.