September - The Real Estate and Housing Developers

September 2006 • PP9309/12/2006
MAPEX 2006 SHOWCASES
11,500 UNITS OF PROPERTY
MAPEX, now in its ninth year, was held at
the Mid Valley Exhibition Centre, from 15
to 17 September 2006. The opening of the
expo was officiated by YB Dato’ Seri Ong
Ka Ting, Minister of Housing and Local
Government.
The 3-day expo brought together 64
developers and 11 financial institutions.
MAPEX 2006 also featured two new
participants from the public sector, namely the
Ministry of Housing and Local Government’s
Tribunal for Homebuyers Claims and the
Ministry of Tourism who promoted their
Malaysia My Second Home programme.
MAPEX showcased more than 11,500
units of properties valued at over RM4.6 billion in total.
Whilst the bulk of these properties were located
in the Klang Valley, there were also participating
developers showcasing development in Negeri Sembilan,
Kedah and Kelantan. About 45% o f t h e r e s i d e n t i a l
properties offered for sale were strata properties,
i.e. apartments and condominiums, and 37% were
linked houses. Majority of the properties offered were
The Malaysian economy maintained its growth momentum
in the first half of 2006 despite of the persistently high world
crude oil prices, rising inflationary pressures and monetary
tightening in major advanced economies. Real GDP expanded
at 5.5% in Q1 2006, and continued to grow at 5.9% in Q2
2006. Overnight Policy Rate was raised to 3.50%, the highest
since 2004 (2004: 2.70%)
The economy is expected to perform well for the rest of
the year as reflecting from the strong investor confidence
indicated in the leading indicators: Leading Index of the
Department of Statistics (Q2 2006: +6.3% vs Q1 2006: 2.9%)
and Business Conditions Index of the Malaysian Institute of
Economic (remained above the threshold level for the first
(From left): Minister of Housing and Local Government YB Dato’ Seri Ong Ka Ting, Mr. Ng Seing Liong, Mr.
Teh Boon Ghee, Dato’ Jeffrey Ng, Mr. Ricque Liew, Dato’ Francis Lee
priced below RM200,000.
This time around, the expo featured a special section of
completed houses ready with Certificate of Fitness for
Occupation (CFO) for buyers looking for properties to
move in immediately.
Speech by YB. Dato’ Seri Ong Ka Ting at official launching of MAPEX
2006 on page 3
ECONOMIC REPORT 2006 :
MALAYSIAN ECONOMY RESISTANT
half of 2006). With the announcement of Fiscal Expansionary
Policy by the Prime Minister in Budget 2007, the economy is
expected to be stronger in the second half of 2006 to achieve
an estimated 5.8% growth rate as a whole (2005: 5.2%).
Overall domestic demand for year 2006 is estimated to
increase by 7.8% (2005: 7.3%) underpinned by the estimated
steady increases in private consumption expenditure
(+7.1%), stronger growth in private investment (+10.1%),
and expansion in public investment expenditure (+10.6%).
External demand is expected to remain strong, with exports
estimated to increase by 7.7%, while imports by 10.0%.
(cont. on page 5)

02
Editorial
It has not come as a surprise that response to property fairs in
general has been lukewarm. This is probably a fair reflection of
the broader market sentiments, which is typified by a lack of
feel-good factors. Buying a house is arguably the largest ticket
item that a consumer would spend on in his lifetime. That
demand for houses would be the first to dip when consumers
shy away from spending should therefore be expected. This
seems to be borne out by the marked reductions in product
launches as witnessed in REHDA’s recently released Property
Survey 2006, reflecting developers’ prudence and wary
response to the market.
At the Property & Housing Summit 2006 jointly organized
by REHDA and ASLI, the limitations of the local market in
sustaining the housing and property sector were highlighted.
The natural suggestion pointed to creating new demand in the
form of foreign purchasers. But this is something easier said
than done. There will need to be commitment from all relevant
parties – developers, relevant federal and local authorities,
service providers – to pull in the same direction and to work
towards achieving certain set objectives and targets.
For starters, we will need a more efficient and business and userfriendly
delivery system. Onerous bureaucratic requirements
and suffocating laws that are outdated only add to costs. There
should be urgent efforts to rationalize the various laws, policies
and approving processes that encumber the delivery process
and add to unnecessary compliance costs. The regulatory
environment should be liberalized to facilitate a market-driven
economy, not impede and cause lethargy in the sector. What
is critically needed to stimulate the housing industry, aside
from tangible incentives from the Government, is support in
the form of relaxation in requirements for the Government’s
social engineering programmes, especially the imposition of
quotas for low cost housing and bumiputra discounts.
In the meantime, REHDA continues its work in building
bridges with regional counterparts to help members gain more
information and inroads into opportunities for housing and
property projects overseas, as well as to promote Malaysia as an
attractive second home venue. If the numbers come through,
demand for our property should hopefully pick up, and provide
the necessary fillip to the current lackluster market.
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C O N T E N T S
MAPEX 2006 Showcased 11,500 Units Of
Property
Economic Report 2006: Malaysian Economy
Resistant
Editorial
Speech By YB Dato’ Seri Ong Ka Ting at
MAPEX 2006 Official Launching
Highlights From The National Property &
Housing Summit 2006
Economic Report 2006: Malaysian Economy
Resistant (continued)
The 9th Malaysia Plan And The Housing &
Property Sector : What Is The Impact?
Rehda Submits Feedback On Public Ruling No.
3/2006
TNB Service Level Agreement (SLA) : Quick
Info
Quality – The Elusive Factor In Housing
Branch News
REHDA Diary
ANNOUNCEMENT
A s h o r t m a n u s c r i p t e n t i t l e d “ A n A n a l y s i s o f
Competitiveness of Housing Developers in Malaysia” by
Assoc. Prof Abdul Rashid Abdul Aziz and Ho Shiew Yi of
the School of Housing Building and Planning, Universiti
Sains Malaysia Penang is now available for download.
Kindly log on to http://www.rehda.com
Chairman:
Dato’ Michael K.C. Yam
Members:
Datuk Eddy Chen Lok Loi, Ms. Ng Kuai Heng, Pn. Rusnani Abd
Rahman, Ms. Debbie Loh
REHDA BULLETIN is published by:
EDITORIAL
COMMITTEE
Real Estate & Housing Developer’s Association Malaysia
No. 2C, Jalan SS5D/6, Kelana Jaya,
47301 Petaling Jaya, Selangor.
Tel: 03-7803 2978 Fax: 03-7803 5285
E-mail: secretariat@rehda.com
Website: www.rehda.com

SPEECH BY YB DATO’ SERI ONG KA TING
AT MAPEX 2006 OFFICIAL OPENING
First of all, I thank REHDA Malaysia for inviting me to officiate
MAPEX 2006. I have been informed by the organizer that
MAPEX is now in its ninth year. Having officiated many MAPEX
official openings, it is encouraging to note that after nine
years of opening its doors to over 1.7 million visitors, MAPEX‘s
nationwide exhibitions are still going strong and continue to
provide the avenue for the Malaysian public in finding their
dream homes.
MAPEX’s continued relevance in the housing and property
industry signifies 2 main characteristics of the market. At one
end, it is a testimony that the underlying demand for properties,
particularly houses, is still strong. This is well supported by
the country’s demographics. Malaysia has a sizeable younger
population and the last census recorded that 3.72 million or
16% of the population are in the 25 years – 34 years old age
group.
This generally forms the pool of demand for houses at entry
level. Malaysia’s Purchasing Power Parity (PPP) - adjusted per
capita income, is estimated to have doubled in the last 15
years to US$10,318 in 2005, resulting in higher purchasing
power. If such improvement retains its momentum, such
positive impact will also translate into more house purchase
by the population.
Secondly, the encouraging response to MAPEX also reflects
that the housing and property market is becoming more
competitive. Developers today are cognizant that buyers are
becoming more selective, giving them no other choice but
to demonstrate greater commitment towards ensuring that
buyers get better value from their house purchase. Many
developers have come up with innovative alternatives to place
themselves ahead of competitors and MAPEX provides the
right exposure for such developers who want to promote their
“brand” to house buyers.
Y Bhg Dato’ – Dato’, Ladies and Gentlemen,
The 9th Malaysia Plan has set out a target of 709,400 units
of houses to be completed during the 5-year Plan period.
The Plan will see greater participation of the private sector as
72% of such targets will be driven by private developers. The
Government is confident that the private sector has adequate
capacity to meet the 9th Malaysia Plans housing targets as
demonstrated in previous Plans achievements. Nevertheless,
it must be stressed that one of the strategic thrusts of
housing development during the Plan period is to provide
adequate, affordable and quality houses, particularly to meet
the needs of the low-income group, with greater emphasis
on appropriate locations and conducive living environment.
As such, the challenge on the private sector is not only in
meeting the housing targets set in terms of numbers, but also
in terms of affordability, quality, suitability of location as well
as provision of conducive living environment.
On the Government’s part, we have taken a step forward
towards this direction by introducing the 10:90 housing
system. Whilst the system is to be implemented on a trial basis
for a period of two years, we hope all parties involved, be it the
authorities, developers,
financiers and also
house buyers, make
genuine efforts in
ensuring its successful
implementation so
that 10:90 will provide
a practical alternative
to Malaysia’s existing
system of sell then build.
Hopefully over time,
this minimizes if not
eliminates buyers’ woes
Dato’ Seri Ong Ka Ting delivering his
speech
of abandoned housing. My Ministry is committed to see the
successful implementation of 10:90 and has been in regular
discussions with REHDA and other related parties on practical
issues of the system.
At the same time, the Housing Development (Control and
Licensing) Act will be further amended to tighten possible
loopholes and make clearer any grey areas. With these
amendments, we are confident that the Act can be enforced
in a practical manner to ensure proper development of the
housing sector.
Y Bhg Dato’ – Dato’, Ladies and Gentlemen,
Acknowledging the significant spillover effects of
the housing and construction industry, the recent Budget
2007 a n n o u n c e m e n t b y the Honourable Prime
Minister has brought about some cheer to the sector
including:-
• Enhanced and more t r a n s p a r e n t t a x treatment to
the construction sector;
• An additional allocation of RM1 billion allocation for
building and public facilities maintenance to ensure proper
maintenance of infrastructure and public amenities
We understand that the private sector has contributed
significantly in the provision of these facilities and it is
only fair that a culture of effective maintenance of such
facilities be properly fostered;
• The increase in housing loan entitlement for civil servants
by 20%. This is a very positive move for the housing sector,
as eligible civil servants, who form a big segment of the
housing market will now be able to buy reasonably priced
houses in better locations and even upgrade to better
homes; and
• On the public sector front, efforts to provide housing
facilities for the lower income group will be intensified. The
National Housing Department and Syarikat Perumahan
Negara Berhad (SPNB) will build over 68,500 units of
houses under various housing programmes. Another
46,000 units of government quarters are also being built
in 2007 for uniformed services personnel and other civil
servants.
(cont. to page 3)
03

04
Y Bhg Dato’ – Dato’, Ladies and Gentlemen,
Whilst the economy is projected to grow at an improved
pace this year at 5.8% with continued strong prospects
forthe sector, the importance of due diligence on the part of
industry players before embarking on new launches cannot
be overstated. The increasing oversupply numbers reported
by the National Property Information Centre must be viewed
warily as unsold units in the market will inevitably have an
impact on new product marketability. This is particularly so in
locations where there readily exist many unsold units or sold
but unoccupied houses. Towards this end, I urge developers
to continue to exercise greater prudence. Today, there
are ample choices of houses for buyers to choose from as
The much-anticipated National Property & Housing Summit
2006 that was jointly organised by ASLI and REHDA saw the
flocking together of industry leaders and corporate decision
makers. Themed “Creating New Business and Investment
Opportunities in the Property and Housing Sector in
Malaysia”, the two-day Summit served as a platform for the
exchange of ideas and business contacts between 220 odd
delegates.
The Summit featured outstanding businessmen,
researchers and Government officers who delivered
carefully drawn out presentations on a well rounded
combination of topics.
The event kicked off with feet firmly grounded as YB
Dato’ Seri Ong Ka Ting, Minister of Housing and Local
Government, expressed deep regret toward developers who
cut corners and deliver shoddy products. He sternly warned
that the Ministry was serious about penalizing irresponsible
developers. With his emphasis on adherence to regulations,
consumer orientation and confidence building, one could
not help but sense the growing expectations placed on
developers today as the industry continues to mature.
Topics from previous Summits were revisited, revealing
new industry trends and direction. Of greater relevant
interest this year was the release of the 9th Malaysia Plan,
which revealed that housing targets were to be shouldered
primarily by the private sector. Of significant mention was
that low cost housing targets for the private sector had been
(cont. from page 3)
competition is getting stiffer. It is to the developers’ benefit
that they carry out proper study before embarking on new
launches so that their valuable resources will not end up
being tied unproductively in the form of unsold products.
Last but not least I wish participants of MAPEX 2006 in Mid
Valley Exhibition Centre a very good outing. I also hope that
house buyers will take the opportunity available at MAPEX
2006 to make a well-informed decision in purchasing their
homes.
On that note, I thank REHDA again for inviting me here today
and officially open this 3-day MAPEX 2006 exhibition. Thank
you.
HIGHLIGHTS FROM THE NATIONAL
PROPERTY & HOUSING SUMMIT 2006
Delegates seated in a packed hall
doubled under the plan.
The standard wares of statistical
information regarding housing supply and
trends were presented to the audience,
with the residential sub-sector continuing
to be the major driving force of the
industry. It was opined that commercial
properties were expected to be reaping
spillover benefits from the boom in the
service and manufacturing sectors.
I n t e r e s t i n g l y , d i s t i n g u i s h e d
panellists for the “Property Taipan
Roundtable Discussion” agreed that
the Malaysian property market was
limited in demand volume. They opined
that developers who were interested in
taking their business to greater heights
should consider marketing to foreigners or simply take their
business abroad, if they were not doing so already. Having
one of the lowest property prices in the region, Malaysian
property has great potential for foreign investment.
The Summit also featured a presentation on “Malaysia My
Second Home” (MM2H) Programme. Senior officers from the
Ministry of Tourism and the Foreign Investment Committee
presented a detailed rundown on the requirements and
structure of the revamped MM2H. The speakers urged all
developers present to pursue this window of opportunity
to build quality homes with added services that meet the
needs of the MM2H participants.
The current performance and future of the Malaysian REIT
market was also addressed. Whilst the Malaysian REIT
market had a lot of unlocked potential, the heavy tax
regime in Malaysia is already eroding competitiveness and
is fast becoming a major deterrent to potential investors.
The Summit also communicated the heartfelt cry of
environmentalists who urged developers to have mindsets
pointing towards sustainable developments that would not
jeapordize living standards of the future. The workings of
the EIA report were also addressed.
The National Property and Housing Summit was, all in all, a
healthy and balanced diet for all delegates.

ECONOMIC REPORT 2006:
MALAYSIAN ECONOMY RESISTANT
On the production side, with the supports from
domestic demand and expanding trade-related
activities, the services sector is expected to expand
by 5.7% for the year as a whole (2005: 6.5%). For
the year 2006, the manufacturing sector has been
benefited from the global uptrend in demand for
electrical and electronic (E&E) products, while the
higher external demand for other export-oriented
industries has spurred a higher anticipation in the
growth of the manufacturing sector to expand
at 7.3% as compared to the growth of 5.1% in
2005.
The civil engineering sub-sector activities remained
slow, recording a contraction of 1.1% in the valueadded
of the construction sector during the first
half of 2006 (2005: -2.2%). However, as some
of the projects under 9MP are expected to begin
Others
(RM27.7b; 29.5%)
Purchase of
passenger cars
(RM14.3b; 15.2%)
Credit cards
(RM6.6b; 7.0%)
Manufacturing
(RM9.6b; 10.2%)
Purchase of
residential property
(RM16.3b; 17.3%)
Wholesale and retail
trade, hotels & restaurants
(RM6.4b; 6.8%)
Finance, insurance
and business services
(RM3.4b; 9.0%)
Construction
(RM4.7b; 5.0%)
Purchase of
passenger cars
(RM17.0b; 6.4%)
Credit cards
(RM6.6b; 7.0%)
Others
(RM82.8b; 23.8%)
Finance, insurance
and business services
(RM20.3b; 7.7%)
Purchase of
residential property
(RM18.8b; 7.1%)
Manufacturing
(RM59.9b; 22.7%)
Wholesale and retail
trade, hotels &
restaurants
(RM47.4b; 17.9%)
Total loans approved : RM94.0 billion Total loans disbursed : RM264.3 billion
2007 OUTLOOK
Loan Approvals and Disbursement By Sector:
Value and Share January - June 2006
Malaysian economy is expected to remain broadly favourable
for the year 2007. Overall, GDP is expected to grow at 6.0%,
supported largely by higher private investment spending (2007:
10.5%, 2006: 10.1%) and sustained private consumption
spending (2007: 6.4%, 2006: 7.1%). Exports are expected to
grow by 7.4% (2006: 7.7%), whilst imports by 8.4% (2006:
its construction activities in the fourth quarter of
the year, the sector is envisaged to rebound to
achieve a positive growth of 0.7% in 2006 as a
whole (2005: -1.6%).
During the first six months of the year, private sector
construction activities in the residential property
sector softened with a completion of 77,027 units
during the period, registering a slight increase of
2.1% in the existing stock of residential properties
to 3,734,280 units as at end-June (end-June 2005:
3,657,253). The 12% increase in housing starts
of mainly condominium and terraced units was
the key contributor to the incoming supply of the
residential sector, which sustained at 631,790
units during the period (end-June 2005: 632,627
units).
Construction
(RM15.4b; 5.8%)
(cont. from page 1)
The slowdown in the
construction activities
of the residential sector
was reflected from the
decrease in the demand
for new launches, due
partly to concern over
further interest rate
hikes.
However, demand
for landed properties
located in prime locations
remained strong during
the period.
All property sub-sectors
experienced decline in
transactions during the
first six months of 2006:
Residential property
–3.4%, Commercial
property –1.0%, and
Industry Property -
9.8%.
10.0%). Implementation of new infrastructure projects under
the 9MP in 2007 is expected to spur the construction sector to
grow 3.7% (2006: 0.7%). Residential property is envisaged to
remain active with sustained demand for housing, underpinned
by higher disposal income and stable labour market as the
economy continues to expand.
05

06
THE 9TH MALAYSIA PLAN AND THE HOUSING
& PROPERTY SECTOR : WHAT IS THE IMPACT?
The following are the driving points of REHDA Past
President Datuk Eddy Chen Lok Loi’s presentation at
the Property and Housing Summit 2006. The national
agenda for the housing industry is essentially contained
8th Malaysia Plan (8MP) Targets and Achievements
9th Malaysia Plan (8MP) Targets
The 9MP for the next five years targets 80,400 units of Low
Cost units to be developed by private developers. In addition
to this, 48,500 units of Low Medium-Cost units and 183,600
units of Medium-Cost units are allocated to the sub-sector.
Under the 9MP, the housing and property sector maintains
its role in the provision of adequate, affordable and quality
housing to all. The private sector is expected to play a larger
role than previously, to deliver 72.1% of total targets as
compared to 49.3% in the 8MP. Notably, the low-cost target
for the private sector has doubled from 40,000 in 8MP to
80,400 units for the following 5-year lap, showing that the
expected responsibility of low cost housing has been doubled
for the next five years.
Datuk Eddy’s presentation advised that the 9MP should be
taken with a pinch of salt in regards to the figures expected
to be in demand. The 9MP target (709,400 units) is lower
than the 8MP achievements (844,043) – indicating that such
targets do not take into account many factors including
capacity of the industry, growing demand from increased
population, higher income levels, etc but is instead
constrained by only demographics.
Challenges in Meeting the 9th Malaysia Plan (9MP)
targets
1. As the industry moves into unchartered territory of the
10:90 system for the next two years, its impact on the
nation’s housing output and economy cannot be accurately
ascertained.
2. Sluggish market sentiments would pose as a challenge to
developers.
3. The current inefficiencies in low cost housing distribution,
if unabated, might pose as a great difficulty even more so
as production of low cost housing is expected to increase.
4. Increasing costs of doing business in terms of labour,
materials and capital.
Prospects for the Housing & Property Industry in the
9th Malaysia Plan
Services Sector
The impressive performance of the services sector is expected
to stimulate demand for quality shopping complexes
and shop lots as well as other related properties such as
warehouses, distribution centres and offices. With the focus
on ICT development, hot spots in Perak, Melaka, Johor and
Sarawak are expected attract the setting up of local MSC
Public Sector
Private Sector
Developers
Cooperative Societies
Total
8th Malaysia Plan (8MP) Targets vs. 9th Malaysia Plan (9MP) Targets
in Thrust 4 : To Improve the Standard and Sustainability
of Quality of Life and meted out in the “Providing
Quality Housing and Urban Services” programme of the
9th Malaysia Plan.
The 8MP witnessed the private sector completing 243.2% of the targeted allocation of 40,000 units of Low-Cost units. Medium
cost targets of 100,700 were also exceeded at 346.9%. High cost achievement surpassed the target of 125,000 at 261.9%.
However, only 59.6% of the targeted 90,000 units of Low Medium-Cost units was achieved.
Chart 2 : The 9th Malaysia Plan Housing Targets
Low-Cost Low Medium
Cost
Medium-Cost High-Cost
Public Sector
Private Sector
Total
85,000
80,400
77,700
2,700
165,400
Total (unit) % Share Total (unit) % Share
85,000
80,400
77,700
2,700
165,400
37,006
48,500
42,400
6,100
85,505
37,006
48,500
42,400
6,100
85,505
27,100
183,600
178,000
5,600
210,700
27,100
183,600
178,000
5,600
210,700
28,700
199,095
194,495
4,600
227,795
Chart 3 : Eighth Malaysia Plan vs Ninth Malaysia Plan -
Percentage Share by Sector
28,700
199,095
194,495
4,600
227,795
and global multinational companies. This would stimulate
demand in not only office space and other commercial
property, but also residential property to cater to the influx
of workers.
The distributive trade sector is targeted to grow further at
6.8% annually in the 9MP. Also, it is envisaged that tourist
arrivals would grow at an average rate of 8.4 p.a. Such
growth is expected to create demand for quality shopping
complexes, shop lots, distribution centres, offices, hotel
space and entertainment spots.
Manufacturing Sector
One of the priority areas will be promoting Foreign Direct
Investments (FDI) into the country. As industrial properties
have been sluggish for many years, it is hoped that successful
implementation of this strategy will translate into demand
creation. Industrial parks and logistics parks, which provide
necessary technologies supporting specific industries, will
attract investments from manufacturers and investors from
REIT organizations.
The 9MP’s emphasis to build up efficient and competitive
related services industry (Manufacturing Related Services
–MRS) will also create demand for office space.
Conclusion
The 9th Malaysia Plan needs to be duly executed in order
that the positive domino effects can flow out efficiently to
all sub-sectors. The Government faces a tough balancing act
of implementing the plan in a timely and accurate manner in
line with current economic and social trends. It is the hope
of every developer that the proper structures and systems
will be in place for the plan to run smoothly.

REHDA SUBMITS FEEDBACK ON PUBLIC
RULING NO. 3/2006
Present Position
Gross and adjusted income from property development and
construction contracts are ascertained by the percentage
of completion method directed by Director General in
accordance with the general provisions of the Income Tax
Act 1967 (ITA). Such directions are stipulated in Public
Ruling No. 3/2006, issued by LHDN on 13 March 2006..
Proposal of Public Ruling No. 3/2006
It was proposed that special regulations be formulated
and published in the Gazette with the purpose of bringing
property development and construction contracts within
the ambit of paragraph 36(a)(iv) of the ITA, with the intent
of providing certainty in the tax treatment with respect to
the computation of the gross income and adjusted income
for such contracts.
The salient features of the Ruling are as follows :-
(i) Recognition of income
(ii) Date of commencement of business
(iii) Date of completion of a project or contract
(iv) Revision of estimates
(v) Deductibility of expenses incurred during the defect
liability or warranty period
(vi) Final accounts.
In this respect, REHDA held a discussion with Y Bhg.
Dato’ Kamariah Binti Hussain, chairwoman of Tax Review
Panel, Ministry of Finance on 30 May 2006 to highlight
the urgency for expeditious amendments to the ITA on
the housing and construction sectors. The following
is a summary of REHDA’s feedback to the Ministry of
Finance.
1. Ruling 5.1 : The date of commencement of
a project or contract refers to the date of
purchase of land
It was highlighted that development-related expenses
could be incurred before purchase of land. REHDA
proposed that the date of commencement of the
development should be a date determined by and duly
substantiated by the developer.
2. Ruling 7.7 : The loss on a project or contract
is only allowed to be set-off against income
from other sources upon completion of the
development.
In light of single development companies who may
not be able to reap the allowable set-off upon project
completion, REHDA proposed that this Ruling be
revised to allow losses to be set-off against the income
in the year to which it is charged.
3. Ruling 13 : Date of completion of project
or contract cannot be based on date of
Certificate of Fitness (CF)
Many obligations including defects liability period for
the development may not even have expired by the CF
date. REHDA proposed that the date of completion
of project should be the date of expiry of the defects
liability period of the development.
4. Ruling 13.3.1 (d) : Ascertained Losses (Revised
Assessment)
REHDA viewed that this Ruling creates administrative
difficulties and should be withdrawn.
5. Rule 14.7 : Allocation of Common Infrastructure
Cost
REHDA proposed that the allocation of common
cost such as infrastructure cost on development area
should be in accordance to the Malaysian Accounting
Standards (FRS 201).
6. Rule 14.8 : Interest Expense incurred by a
property developer
As IFRS allows different treatments of borrowing costs,
Industrial Relations Department (IRD) should allow
preparation of tax submissions on a basis consistent with
the accounting treatment. In justifying charging out interest
incurred on loans taken for development land acquisitions,
interests incurred should be treated as a financing cost,
not a project cost.
7. Rule 14.4 & 14.10 : Expenses incurred in the
financing of the project concerned, including
legal and professional fees and guarantee fee
are not allowable
REHDA viewed that expenses incurred to secure financing
for the project development should be a tax allowable
expense as these costs were incurred to obtain financing
towards project completion.
8. Ruling 15.2 : Tax treatment of stocks in trade
which are transferred from trading stocks to
fixed assets.
REHDA opined that the tax treatment contained in Section
24(2) of the Income Tax Act (ITA) should not apply at all to
any stock in trade unless the stock is in fact disposed off
for consideration. Rental income derived from the stock in
trade is assessed under Section 4(a) of the ITA. At no time
should any deeming provision of withdrawal or transfer of
trading stock to asset be applied in assessment of tax.
9. Ruling 17 : Joint Venture between landowner
and property Developer
In a case of a joint venture between landowners and
developers, REHDA agreed that the recognition of income
for tax purposes would depend on the agreed arrangements
between the parties and assessed case-by-case.
10. Ruling 18 : Effective date of ruling
The Public Ruling was dated March 2006 but released in late
May to early June 2006, causing companies with financial
years ending 30 September 2005 with developments or
phases of a development to be straddled with different tax
treatments. REHDA urged LHDN to allow a grace period to
comply with the new Ruling.
REHDA urged that LHDN take up an accurate interpretation
and understanding of the industry’s unique practices to ensure
that the Rulings are supportive of them, and not counter
productive instead.
07

08
TNB SERVICE LEVEL AGREEMENT (SLA) :
QUICK INFO
The objective of the SLA is to ensure electricity supply is
connected to housing projects within the stipulated time to
curtail delays in handing over houses to purchasers. The SLA is
open to all housing developers applying for electricity supply
for housing developments as prescribed under the Housing
Development (Control & Licensing) Act 1966.
Typical Time Frame Process For Connection For Supply Within 18 Months
(T -2)
Developer
Submits
A pplication
0 mth
(T=0)
Sign SLA
Note : T – D ate SLA is signed
Developer’s Responsibilities : *
1. Submit application form with relevant documents
required by TNB.
2. Sign SLA with TNB with all documents in order.
3. Pay connection charges upon notification from TNB
within agreed time-frame.
4. Substation to be built and completed 4 months prior to
electricity supply ready for connection.
Frequently Asked Questions *
2nd mth
(T+2)
TNB issues
Connection Charge
Notice
A meeting was held with Tenaga Nasional Berhad (TNB)
on 17 July 2006 to discuss the SLA Guidebook and the
FAQs. The Guidebook is published as a simple Brochure by
TNB and is available at Kedai TNBs, throughout Peninsular
Malaysia.
TNB’s Responsibilities : *
1. Sign SLA with developer.
2. Issue Notice of Connection Charges within 2 months
after SLA Agreement is signed.
3. Commence works no later than 4 months prior to
electricity supply ready for connection.
Q1 Is the SLA compulsory for all Developers?
It is compulsory for TNB to offer SLA to all Housing Developers. All Housing Developers are encouraged to sign the SLA.
Q2 What is the cost incurred in signing the SLA document?
The cost incurred is only the stamp duty. The Agreement should be stamped after execution by both parties and each
party should bear its own stamp duty, currently at RM10 per copy.
Q3 What type of projects can be signed under the SLA?
SLA is only applicable to residential projects that comply with the definition found in the Housing Development (Control
& Licensing) Act 1966.
Q4 Is street lighting covered under this SLA?
No.
Q5 Who prepares documentation?
Developers can get a sample copy of the SLA document from the nearest Kedai Tenaga. This document is in standard
form and will be the same across the Peninsular.
Q6 Can the 18 month time frame be shortened?
Yes. The 18-month period is the maximum time frame. A shorter time frame may be possible if mutually agreed by TNB
and the developer.
Q7 When do Developers pay the Connection Charges?
Developers should pay the Connection Charges not later than 8 months before electricity supply connection.
Q8 Is the Developer allowed to change the number of premises after paying the Connection Charges?
Yes. As this may affect the date of electricity supply connection, both Parties must then discuss and mutually agree on
the time frame and other related issues.
Q9 When do Developers have to complete the substations for the projects where substations are required?
4 months before electricity supply connection.
Q10 Are there any penalty clauses under the SLA?
Yes. Compensation will be paid by both parties if they fail to fulfill their respective obligations under the SLA.
* Refer to the Service Level Agreement for details
TYPICAL TIMEFRAME PROCESS CONNECTION FOR SUPPLY WITHIN 18MONTHS
Developer to pay
Connection Charge
10th mth
(T+10)
8 months
14th mth
(T+14 )
Infrastructure
& A ccess to
Site Ready
4 months
18th mth
(T+18)
Electricity
Supply
Ready For
Connection

QUALITY – THE ELUSIVE FACTOR IN
HOUSING
This is the first in a series of six fortnightly articles by
REHDA Malaysia published in The Star, reproduced for
Bulletin readers.
For a long time now, complaints about shoddy workmanship
in our built environment have become a constant refrain.
Newspaper articles on new buildings collapsing, or water
tanks falling through ceilings reinforce the need for the
construction industry to seriously address the issue of
quality.
One of the weaknesses is the lack of priority
and inadequate focus given to training
efforts.
It has been expedient to place the blame for defective works
on developers for the simple reason that developers are at
the apex of the supply value chain. But to understand the
root cause of poor quality in the construction industry, let
us go back to some basics.
Even as far back as the mid 80’s, the issue of poor quality in
the construction sector was identified as a major concern.
From the late 80’s to the mid 90’s, the country experienced
such rapid growth that capacity building could not keep
up with the fast pace of development. The construction
boom led to an unprecedented influx of foreign workers
who were needed to carry out the numerous tasks on
construction sites. But these foreign workers came with
little or no skills in construction work, resulting in many
projects suffering from poor workmanship and defects.
This sad state of affairs prompted the major players in the
construction sector, including developers, contractors,
architects, engineers, surveyors, and others, to call for
the establishment of a body to provide training and skills
development for workers in the construction sector. Out
of these efforts, the Construction Industry Development
Board, or CIDB, was eventually established in 1994 with
one of its objectives being to provide skills training for
construction workers.
It has been more than 10 years since the CIDB was launched.
Has the quality in our buildings and houses improved since?
It would appear not, judging from the public complaints
on this matter. What then is problem? Why is the quality
factor so elusive?
One of the weaknesses is the lack of priority and inadequate
focus given to training efforts. Whilst the industry has
contributed vast sums towards the CIDB to enable it to
carry out skills training for the industry, the output has
been anything but disappointing.
The CIDB, admittedly, has a big challenge on its hands
in terms of attracting recruits to the industry. Our youth
and school leavers these days just do not find any appeal
working in the construction industry, viewing it as a “3D”
industry - dirty, dangerous and difficult. And of the small
number of recruits who have undergone training courses
provided by the CIDB, the majority have left the industry
to find work in more genial environments, despite the
construction industry paying better wages. Without an
effective training and recruitment program to develop
and retain a pool of local skilled construction workers, the
industry can only continue to depend on foreign workers
who are subject to the vagaries of policy changes from
time to time.
Notwithstanding all of the above, there is still the very
entrenched impression that the chief cause of poor
quality houses and buildings is the developer’s greed. The
developer is often vilified as the rogue who cuts corners
to make that extra margin, to the detriment of the buyer.
Admittedly there are horror stories of blatant building
failures which are indefensible, and the parties responsible
should be held fully accountable.
But by and large, for the majority of mass market housing,
complaints on poor quality usually revolve around
the quality of workmanship and finishes. This can be
attributed partly to the intrinsic deficiencies in the skills
of our construction workers, and partly to inadequate
supervision by the technical consultants. One consolation
is that buyers do have recourse as the law provides for an
18 month defects liability period after vacant possession is
given. The developer is duty bound to make good defects
during this period.
One pertinent point that needs to be highlighted is the
absence of industry quality benchmarks to help guide
buyers’ expectations. Buyers need to be educated on the
inputs that make up quality – one is workmanship and
the other is the quality of the building material used.
Establishing expectations on building materials is easier
as they are spelled out in specifications contained in the
housing contract. But determining quality of workmanship
may require more effort. One suggestion is to draw up
quality benchmarks for workmanship. This can help alleviate
much of the current agony that house buyers face. With
this, they will be better informed on the whether the quality
of workmanship of the delivered house is within the norm
of established standards. Then, perhaps, the perception of
the shortchanged buyer versus the profiteering developer
can become more balanced.
One pertinent point that needs to be
highlighted is the absence of industry
quality benchmarks to help guide buyers’
expectations.
Embedding quality into our built environment is a task
for all parties involved in the construction supply chain.
The buyer has the right to expect the level of quality
commensurate with what he has paid for. The developer
and the rest of the supply chain have the duty to provide
the quality contractually agreed to. Finally, the CIDB, as
the custodians given the mandate to collect a levy for
developing the required skills to imbue quality into our
built environment, must live up to their role and deliver.
09

10
BRANCH NEWS
WILAYAH PERSEKUTUAN
(KL) BRANCH
HOSTING OF REHDA EXCO & NATIONAL
COUNCIL MEETINGS
REHDA Wilayah Persekutuan (KL) Branch hosted the REHDA
Exco and National Council meetings held on 15th September
2006 at Cititel Mid Valley Kuala Lumpur, which was followed
by lunch.
As part of the program, the Branch hosted a Fellowship Dinner
between National Council and REHDA WPKL Branch Committee
members at San Francisco Steakhouse, Mid Valley Megamall,
Kuala Lumpur later that evening. The social function was an
enjoyable occasion as it fostered closer interaction and better
understanding between parties concerned.
REHDA WPKL Chairman, Mr Teh Boon Ghee (2nd from left) hosting the
REHDA Exco and National Council meetings.
SELANGOR BRANCH
SEMINAR ON ENVIRONMENTAL IMPACT ASSESSMENT (EIA)
One of the participants enquiring more information on EIA from the speakers
during the Q & A Session
NEGERI SEMBILAN
BRANCH
COURTESY CALL ON PENGARAH
PEJABAT TANAH & GALIAN (PTG) NS
22 SEPTEMBER 2006
REHDA NS met up with En. Ab. Radzak b. Ab. Rahman,
Pengarah PTG NS and Pn. Rosidah bt. Khamis, Timbalan
Pengarah (Pendaftaran) on 22 September 2006 to discuss
issues pertaining to land development in the State such as
Bumiputera Quota, strata titles, calculation of land premium
and low cost housing.
REHDA President – Mr Ng Seing Liong JP (3rd from left), Immediate Past
President – Dato’ Jeffrey Ng Tiong Lip (4th from left) and REHDA WPKL
Chairman – Mr Teh Boon Ghee (2nd from right) addressing National
Council members. The following day, a friendly golf game was organised at
the Tropicana Golf and Country Resort, Petaling Jaya.
A half-day seminar on “Environmental Impact Assessment
(EIA)” was held on 18 September 2006 at The Saujana Kuala
Lumpur.
2 speakers who are experts in EIA were invited to present the
following papers:-
1. “EIA Guidelines and Procedures” by Cik Norliza Mohd
Jannes, Pegawai Kawalan Alam Sekitar, Jabatan Alam
Sekitar Negeri Selangor
2. “Latest Requirements in EIA Reports and Sensitive Areas
in Selangor” by Ms Geetha P Kumaran, Lead Consultant,
Europasia Engineering Services Sdn Bhd
A total of 122 participants attended the seminar.
In the midst of the meeting.

REHDA DIARY SEPTEMBER 2006
DATE EVENTS
4 MTEN – Meeting on Strategies to Stimulate Property Development. Attended by Mr. Ng Seing Liong, JP, Datuk Eddy Chen
Lok Loi, Dato’ Jeffrey Ng Tiong Lip, Ms. Ng Kuai Heng and Pn. Rusnani Abdul Rahman.
FIABCI – Dinner “Malaysia Property Award 2006”. Attended by Mr. and Mrs. Ng Seing Liong, JP.
5 Mesyuarat Kajian & Keperluan Kepakaran “Sequential Approach” & Pelaksanaanya Dalam Penyedian Rancangan Pemajuan
& Kelulusan Pembangunan. Attended by Ms. Ng Hay Lian of Rehda Penang Branch.
JPBD – Mesyuarat Jawatankuasa Kempen Menanam Pokok & Bunga Raya and Mesyuarat Jawatankuasa Penyelarasan &
Pelaksanaan Program Landskap Negara. Attended by Mr. Woo Mun Kit.
6 Lembaga Hasil Dalam Negeri Malaysia – National Seminar on Taxation 2006. Mr. Ng Seing Liong, JP and Ms. Debbie Loh
attended as speaker and participant respectively.
Planning Policies and Standards Committee Meeting.
7 Kementerian Sumber Manusia – Mesyuarat Panel Perundingan Persyarikatan Malaysia. Attended by En. Wan Hashimi
Albakri.
Mesyuarat Jawatankuasa Pemandu Kebangsaan Projek Malaysia Building Integrated Photovoltaic Technology Application,
Kementerian Tenaga, Air & Komunikasi. Attended by Ir Ng Lip Khong.
8 Negeri Sembilan Mapex Opening Ceremony. Attended by Mr. Ng Seing Liong, JP.
12 ASLI – National Property & Housing Summit 2006. Attended by Mr. Ng Seing Liong, JP, Dato’ Jeffrey Ng Tiong Lip, Datuk
Eddy Chen Lok Loi, Dato’ Michael Yam Kong Choy, Mr. Teh Boon Ghee, En. Che Ariffin Che Omar, Dato’ Wong Choon Kee,
En. Khaidzir Zainuddin, Ms. Ng Kuai Heng, Pn. Rusnani Abdul Rahman, Ms. Karen Seow, Ms. Ong Hui Tse, Ms. Debbie Loh,
Ms. Siobhan Netto, Ms. Yee Chew Ping, Ms. Virginia Ng, Ms. Jessie Ting and Ms. Marina Sern.
13 CIDB – Signing of the Plaque and Launching Ceremony of the Model Terms of Construction Contract for Sub-Contract Work
2006 and Endorsement. Attended by Mr. Ng Seing Liong, JP.
13-14 International Construction Conference 2006, jointly organised by CIDB, CIOB, MBAM, UiTM on the Challenges of Global
Mega Projects. Attended by Mr. Soon Teck Giap.
15 EXCO Meeting.
National Council Meeting.
Opening Ceremony of MAPEX at Mid Valley Exhibition Centre.
Friendship Dinner organised by the Wilayah Persekutuan (KL) Branch held at the San Francisco Steak House, Mid Valley Mega
Mall.
16 Social Golf at Tropicana Golf and Country Resort.
19 ACCCIM – 1st meeting of Construction and Property Committee Meeting. Attended by Datuk Eddy Chen Lok Loi, Ms. Ng
Kuai Heng and Mr. Virginia Ng.
20 Infrastructure and Environment Committee Meeting.
IEM – Technical Committee Meeting on Earthquake Guidelines. Attended by Ir Teo Ching Wee and Ms. Virginia Ng.
REHDA Penang Annual Dinner 2006. Attended by Mr. & Mrs. Ng Seing Liong, JP.
21 Kementerian Tenaga Air & Komunikasi – Forum Kebangsaan Tenaga Boleh Di Perbaharu. Attended by Ms. Debbie Loh.
Malaysian Communication & Multimedia Commission – Mesyuarat Cadangan Pindaan Undang Undang Kecil Bangunan
Seragam Atau Uniform Building By-Laws 1994 (UBBL). Attended by Mr. Ng Lip Chong, Ms. Ng Kuai Heng and Ms. Yee Chew
Ping.
22 CIDB – Mesyuarat Pemandu Industrialised Building System. Attended by Mr. Tiah Toh Twin and Ms. Virginia Ng.
Ministry of Tourism- Lawatan oleh Hanwha Land Development Co. Ltd, Seoul, Korea. Attended by Mr. Soon Teck Giap.
26 Courtesy visit and discussion forum with Syabas. Attended by Mr. Ricque Liew Yin Chew, Mr. Tiah Oon Ling, En. Wan
Hashimi Albakri, Mr. Lau Ming Chien-WP Branch, Mr. Ngian Siew Siong-Selangor Branch Secretary, Mr. Ng Boon Chan
– Selangor Branch Treasurer, Ir Teo Ching Wee, Mr. Kok Hock Bing – Selangor Branch Committee Member, Mr. Soon Teck
Giap and En. Mohd Saiddin Mokhtar.
28 Mesyuarat Bagi Membincangkan Insentif Pengecualian Duti Setem Dibawah Konsep Bina Kemudian Jual. Attended by
Dato’ Jeffrey Ng Tiong Lip, Mr. Ricque Liew Yin Chew, Tn Hj Muztaza Mohamad, Pn. Rusnani Abdul Rahman and Ms. Yee
Chew Ping.
11