Budget Boost for Malaysian REITs
The government is set to give Malaysian REITs a big boost, as spelt out in the recently Budget 2006 (read our report here).
In a nutshell, the government is proposing tax deduction for legal, valuation and consultancy expenses incurred by REITs. Many of the industry professional were supportive of the this move, as reported by the Star on Oct 1. REHDA president Datuk Jeffrey Ng said that this would bring down the cost of setting up such trusts.
According to the report,
“More developers and REITs promoters will be encouraged to invest in investment-grade buildings to get into the REIT act,” he said.
We think that this is a good move. However, the tax deductions are only a small fraction of the actual sum required by corporations to acquire the investment instruments and to set up the REITs. However, it will serve more as an incentive to those corporations planning to do so already.
At the moment, there are a handful of companies planning to launch REITs soon. We have always emphasized that perhaps a larger number of counters should be encouraged for it make a significant impact on investors’ interest.
For further reading, check out the following articles in Property Malaysia:
Budget 2006: Effects on Housing & Property Sector
About Malaysian REITs
YTL to Launch Starhill REIT in October
