There wasn’t much cheer among property developers when Budget 2009 was unveiled last Friday.

They were hoping the government would adopt the Budget 2009 Memorandum prepared by the Real Estate and Housing Developers Association (Rehda).

Instead, they were only granted a few wishes, one which was the reduction in withholding tax on Real Estate Investment Trust (REIT) dividends to 10 per cent for both individuals and foreign institutional investors, valid for two years beginning Jan 1 next year.

Though short on quantity, the quality of the incentives provided was well received.

Mah Sing Group Bhd managing director Datuk Seri Leong Hoy Kum said the reduction in withholding tax should help to stir up interest in the country’s REIT opportunities which he said are very attractive even when compared to others in the region.

Khong & Jaafar Sdn Bhd managing director Elvin Fernandez said with the government acceding to the reduction and with the Securities Commission's recent easing of rules relating to trust management, REIT managers now "need to perform and Malaysia a hub for REITs".

"The ball is now squarely in their court," he said.

Supporting Budget 2009, Fernandez pointed out that "the industry should not always rely on government hand-outs … it should match demand and supply".

"There are already many positives the industry can capitalise on, such as the nation’s young population with increased income, the comparatively free property market and good infrastructure … with these enabling factors, developers have every chance to prosper.

"The industry should not merely depend on the government for incentives every time the market slackens … if too many incentives are provided, there won’t be any revenue in the government coffers!

"What has been proposed is the best that can be done under the circumstances … already, the fiscal deficit is ballooning."

Rehda president Datuk Ng Seing Liong said he hopes that with Budget 2009 mandating the National Housing Department and Syarikat Perumahan Negara Bhd to provide low-cost houses, private sector developers can be exempted from having to provide such units in their projects so they can focus on the market driven segments of housing.

Another proposal that Ng wants the government to look at is its goal of enhancing the productivity and quality of construction workers through training programmes to be provided by the Construction Industry Development Board (CIDB). While lauding the move, he said the challenge of attracting local youths to the industry remains.

Mah Sing Group's Leong described the 100,000 industrial training positions to be implemented by CIDB as good news, noting developers can look forward to a pool of skilled workers in management and physical construction.

Master Builders Association Malaysia also welcomed the move given the shortage of skilled and quality construction workers, but its secretary-general Yap Yoke Keong said in order to reduce dependency on foreign labour, the government should encourage the use of the Industrialised Building System.

One form of encouragement, he said, is by extending the reduction in import duty on port cranes to include all cranes used in property development.

On the government’s proposal to enhance public transportation in the Klang Valley with the extension of the light rail transit (LRT) system to more areas, Mah Sing Group’s Leong gave the thumbs up, saying it would benefit some of his projects “such as Hijauan Residence in Cheras”.

He added that the 50 per cent stamp duty exemption on loan documentation for the purchase of houses costing less than RM250,000 would also be a boon as buyers of both primary and secondary units "could save up to RM2,000".

He noted the 50 per cent stamp duty waiver for similar properties in previous Budgets had produced good results. On the lowering of personal income tax to 27 per cent in the highest bracket and to 12 per cent for the marginal bracket, Leong said it would help the property sector as it would give the rakyat more cash for investment.

Meanwhile, Iskandar Investment Bhd managing director Arlida Ariff said the additional RM300 million allocation under the Strategic Investment Fund to finance private- public partnership projects in public transportation, healthcare services, education and creative industries in Iskandar Malaysia is a positive move that supports the development region’s viability and signals the government’s commitment to the project.