PETALING JAYA (Nov 5): Prime Minister Datuk Seri Najib Razak said he would study the full implications of making residential properties a zero-rated product under the Good and Services Tax (GST) system.

"I take note of the request by REHDA, but I would need time to study the full implication of the request because we receive a lot of requests from people to put their products under zero-rated," Najib said when he officiated Wisma Redha, the home of the Real Estate and Housing Developers' Association Malaysia (REHDA), earlier this evening.

It was previously reported that REHDA chairman Datuk Seri FD Iskandar had called upon the government to consider REHDA's recommendation for residential properties to be zero-rated so that developers can claim input tax from the building materials used in their development.

According to FD Iskandar, residential properties are currently exempted from GST even though the inputs, materials and services for their construction are subject to GST. 

This means that developers are not allowed to claim input tax on the building materials they used on building the properties, which will inevitably affect house pricing in the long run, he said.

Speaking to about 400 housing and property industry players, Najib lauded their contribution to the country's economy as well as fulfiling their responsibility in helping Malaysians meet their homeownership dream.

"We want steady growth, not bubble economy. Bubble economy is very short sighted. We know what happens to bubble," he said.

The prime minister also assured them that the government will remain vigilant to macroeconomic risks that affect the sector.

However, he said some issues revolving housing policies concern policies that have been adopted by state governments, in which the Federal government cannot interfere.

In order to strengthen the sector, the government will continue to find the most amicable solutions on longstanding issues, from low cost housing to unsold Bumiputera quotas, Najib said.

"Often, the main challenge involving low cost housing boils down to a mismatch between supply and demand. I urge all states to revamp outdated policies and come up with an inclusive and transparent approach for an equal distribution system, so that low cost housing is available where it is needed," he added.