Two years ago, the government said it wanted to simplify stamp duty assessment by revising the rate on all construction services agreements that do not require collateral to 0.5 per cent of contract value.
This covered consulting contracts, operation and maintenance contracts and facilities services contracts. Therefore, a RM10 million construction contract would attract a total stamp duty of RM50,000.
After appeals from trade bodies the Finance Ministry gave a temporary relief by revising the stamp duty to a flat RM50 fee. But this ends at the end of the year.
"The reversion ... will inflate construction costs," Master Builders Association of Malaysia (MBAM) president Kwan Foh Kwai told reporters after Works Minister Datuk Shaziman Mansor launched the third Malaysian Construction Summit in Kuala Lumpur yesterday.
Eventually, these extra but unnecessary costs will be passed on to the government and the public because all construction contracts are either government jobs or packages awarded by property developers in the private sector.
MBAM also appealed to the government to table the Construction Industry Payment and Adjudication Bill for enactment at Parliament. The draft Bill, which was given to the Attorney General's Chambers in early 2007, has yet to make its way to Parliament.
This proposed new law is meant to minimise payment defaults in the construction industry via timely and cost-efficient recourse to adjudication.
By Business Times
