duty, urge construction industry players
05/06/2009 The Star
KUALA LUMPUR: The construction industry has appealed to the Government to
reconsider its decision to impose stamp duties on service agreements as it
is burdening the sector.
The Government had imposed a duty of 0.5% of the contract value effective
Jan 1, covering, among others, loans, services and equipment lease
Previously, the stamp duty chargeable was fixed at a nominal sum of RM10.
Master Builders Association Malaysia (MBAM) president Ng Kee Leen said
such an increase in the cost of stamping charges had resulted in an
upsurge in construction costs.
“For instance, a conventional RM10mil construction contract will now
attract an ad valorem duty of RM50,000 compared with RM10 previously,” he
told a press briefing yesterday.
He said the impact of stamping all agreements including sub-contracts and
out-sourcing agreements at 0.5% of the contract value was exponential.
“This is because the nature of the construction industry with multiple
levels of sub-contracting works of construction, engineering, labour,
procurement, transportation and maintenance,” Ng said.
“More importantly, we do not want the extra cost to trickle down to
“The association also believes that the imposition of the additional stamp
duty on construction contracts is inconsistent and counter productive to
the policy and objectives of the stimulus package to help drive the
economy out of the financial crisis,” Ng said, noting that the
construction industry had been hit by the economic slowdown, registering
only a 0.6% growth in the first quarter.
“It is expected that the effect of the stimulus package will be only the
felt by the third quarter of this year,” he added.
The Building Industry Presidents’ Council has also written a letter to the
Finance Ministry asking for the issue to be resolved.
“We need the changes to be made fast as it is affecting the cost of doing
business,” said Ng, who is also a member of the council.
Ng noted that neighbouring countries like Singapore did not impose stamp
duties on service contracts while Indonesia only imposed a nominal sum of
Also present were the Malaysian Institute of Architects, Association of
Consulting Engineers Malaysia and the Malaysian Indian Contractors
Association which all supported the call made by MBAM.