Cut reliance on land, development charges, state govts told

PETALING JAYA: State governments need to diversify their sources of revenue instead of relying heavily on land and development charges, which contributes to high property prices.
Speaking at a panel session at Rehda Institute's Budget Commentary 2017 yesterday, Khazanah Research Institute director of research Dr Suraya Ismail said state governments should have different sources of income instead of relying on revenue from land and related matters as the main income.
Real Estate and Housing Developers' Association Malaysia (Rehda) president Datuk Seri FD Iskandar concurred, saying that increasing conversion premiums is not a sustainable way to boost state revenue.
“If over 80% of your revenue is from land and development-related matters, it is not going to be sustainable. Selangor, being a state right in the middle of everything, you have the port and airport, you have to be innovative and create more jobs, high-paying jobs. When you have high-paying jobs, you create a niche for yourself.
“All states must find their own niche, where to find more revenue. When you keep on charging developers, there is a threshold. Once the developer cannot take it, they will pass it on to consumers,” he added.
Iskandar said land cost is the highest for property developers, followed by construction cost, labour cost and compliance cost.
On Monday, Selangor Mentri Besar Datuk Seri Azmin Ali announced a forecast of RM2.55 billion revenue for the state next year, of which 81.7% is expected to come from land and development-related matters.
Rehda vice-president Datuk Wan Hashimi Albakri W.A.A. Jaffri said state governments must have the will to change their revenue structure.
“Putting collaboration aside, the state must be more innovative in generating revenue,” he added.
Currently, Wan Hashimi said, property developers have no choice as the charges are imposed by state governments although some developers try to negotiate for lower charges.