While the exemption of sales and services tax (SST) on basic building materials, which constitute 67% of the cost of a residential housing project, will definitely result in savings, the extent of cost savings will only be known after the full list of SST-exempt materials is released by the Royal Malaysian Customs Department.
In welcoming the government’s move to exempt construction services and materials from SST, Construction Industry Development Board Malaysia chief executive Datuk Ir Ahmad Asri Abdul Hamid told SunBiz that the exemption is expected to have a positive impact in reducing the cost of construction.
“For a typical residential project, building materials contribute to 67% of construction costs, while labour at 31% and machinery and equipment make up 2%,” he said.
“However, we will need to validate the percentage of cost savings through a simulation based on full list of materials with SST which will be released by Customs.”
