KUALA LUMPUR: The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia, also known as PEPS, is appealing to the Ministry of Finance for several measures to lessen the outbreak of Covid-19’s impact valuation firms in Malaysia.
With the movement control order (MCO) likely to be prolonged, PEPS is fearful of the repercussions on the practitioners of this industry.
According to PEPS president Michael Kong, the extension of the MCO will leave many member valuation firms with no income.
The core business of the majority of the valuation firms is to value properties for banks who use their valuation reports as a benchmark to issue loans to their borrowers.
With the looming recession in the wake of the Covid-19 outbreak, the association was informed that commercial banks would likely be tightening loan eligibility requirements after the MCO, resulting in less valuation and subsequently less revenue for member valuation firms.
PEPS pointed out that the majority of the commercial banks had slowed down loan approvals substantially during the MCO period.
“The valuation profession, comprising registered valuers, valuation officers and sub-professionals, plays a very important role in the country’s economy as banks will only disburse the loans on receipt of full valuation reports.
“Any delay in completing the reports will adversely affect the liquidity in the economy. As valuers, we are the custodians of the property wealth of the country,” said Kong.
The majority of member valuation firms are sole proprietors and small partnerships, with limited cash reserves. Based on the preliminary survey with member valuation firms, gross salaries and wages constitute between 40% and 60% of the overall overheads of their valuation firms, meaning that the cash reserves will not last beyond three months.
Without any government assistance, many will have to cease business, resulting in a massive loss of employment. Another likely consequence will be that skilled professionals will be compelled to look for jobs overseas, resulting in a brain drain for the country.
To enable the professional valuation firms to survive over the coming months, PEPS is proposing the following recommendations for the government to consider:
1/ Instead of the wage subsidy of RM600 for three months with conditions, PEPS is recommending for the government to implement a wage subsidy to full salaries and wages of all employees for March and April, and 50% of the employees’ salaries and wages for the subsequent months of May, June and July.
2/ To provide unsecured loan at an interest rate of 2% for the following categories of firms:
|Size of firm||Loan amount|
The size of the firm is to be determined by the turnover of the firm and subjected to application.
3/ Suspension of employer’s contribution of EPF for their employees and employers’ contribution of EPF until the end of the year.
4/ Deferment of income tax instalment payment by the firm to the Inland Revenue Board and also individual employee income tax payment until the end of the year.
5/ Waiver of Sales and Services Tax (SST) contributions until the end of the year.
6/ The government to issue a statement to all building owners to show leniency and provide a discount on office rents for the next six months.
7/ Towards ensuring recovery from the anticipated downturn in the property market, the following measures to be implemented as well:
a) We recommend a full and unbiased market and feasibility study by banks.
b) Perhaps real estate investment trusts could take the lead in reducing rents to keep office buildings and retail complexes going, and as for government support, to give a reduction in terms of SST rates and utilities to keep them going.
c) Income tax on rental incomes to be waived for six months.
d) Rates to be waived for six months or halved.
e) New launches to have beneficial stamp duties, meaning that stamp duty is waived for new launches after the MCO.
f) Banks to pass even first-time sales of residential properties to valuers for a valuation.
8/ To allow a maximum of two people during the MCO period, to go to the office once a week to settle urgent matters like completion of the assignment, arrange to deliver reports to banks, billing and collection matters. Otherwise, serious cash flow problems will arise.
9/ Tax rate to be halved for the 2020 year of assessment for companies which made profit in 2019.
“PEPS will strive to work together with the government to assist in the revival of the economy and property market during this economic crisis caused by the Covid-19 Virus outbreak. Before that, we urgently need the government assistance in order for our firms to maintain our employees and keep our firms intact,” said Kong.