By DayakDaily Team
KUCHING, June 17: The Sarawak Housing and Real Estate Developers’ Association (Sheda) has raised a red flag over the impending implementation of the expanded Sales and Services Tax (SST), warning that it—combined with compounded interest burdens and escalating building material prices—will push property prices in Sarawak to a breaking point that is neither affordable nor sustainable for the market.
Sheda president Augustine C.H. Wong said the association is urging the government to defer the implementation of SST for the construction sector, slated to come into effect on July 1, 2025, to prevent a potential market disruption and protect homebuyers, particularly in the M40 and B40 income groups.
“Even without factoring in SST, within the last six months, developers are already grappling with rising labour and compliance costs due to newly introduced policies such as e-invoicing, the Foreign Workers Transformative Approach (FWTA), and the requirement to pay a levy in lieu of building government-sanctioned social housing,” he said in a statement today.
He noted that building material costs have surged by 20 to 30 per cent pre-SST. When compounded with interest rates and the upcoming SST, this would force developers to pass on additional costs to consumers—pushing home prices to unsustainable levels and threatening affordability in an already strained housing market.
Wong also highlighted the risk of double taxation within the construction supply chain if clear guidelines are not issued.
It is crucial that the SST is applied transparently and does not cascade unfairly from developers to subcontractors, which would further inflate project costs.
Referring to recent statements from the Federal Housing and Local Government Ministry, Wong welcomed the assurance that all residential properties, including serviced apartments meant for residential use, would be exempted from the expanded SST.
However, he cautioned that more detailed clarification was needed, especially on mixed-development projects.
“Applying SST uniformly to mixed-use developments or shophouses, which include both residential and commercial elements, would be inequitable.
“Only the commercial components should be subject to tax, as all residential properties are supposedly exempt. We need comprehensive and clear guidelines on how SST is to be calculated, especially as this would also affect ongoing property management and operations,” he added.
Wong emphasised that until such clarity and assurance are provided, the implementation of SST in its current form risks triggering inequitable outcomes and placing unnecessary burdens on both developers and buyers. — DayakDaily
