Property help may last longer

Finance Minister Suchart Thada-Thamrongvech

Suchart says industrya key economic driver

The Finance Ministry may extend tax and fee-reduction incentives for real estate purchases beyond next March, said Finance Minister Suchart Thada-Thamrongvech.

Real estate associations submitted a request for an extension yesterday, along with other proposals, including one that the Bank of Thailand cut interest rates in line with other declines in the region.

They also urged the government to speed up investment in mass-transit projects and to encourage commercial banks to relax approval conditions for home loans.

Dr Suchart said the real estate tax incentives were set to expire in March but the ministry would consider their extension because real estate is a key sector in stimulating economic growth.

On March 4 the government announced a reduction in the specific business tax from 3% to 0.1%, in transfer fees from 2% to 0.1%, and in mortgage fees from 1% to 0.1%.

The minister said the property industry feared an impact from the fragile economic situation. Without additional government support, the industry has a target of 74,000 newly registered residential units this year.

He also said that Thailand’s policy interest rate should be in line with others in the region. He added that pressure from inflation and rising oil prices had eased and countries in the region like South Korea had already reduced their policy rates by 0.75 percentage points.

He also urged commercial banks - while protecting themselves from the global financial meltdown - to relax conditions for releasing housing loans. He said these loans carry lower risk than other types of credit as they are secured by property. Applications should therefore be considered by banks in a “straightforward manner.”

The real estate industry proposed the government speed up its investment in mass transit projects to spur housing development. The 300-kilometre mass transit network would cover an area of 800 square kilometres.

The government is currently at the bidding stage for constructing the Purple Line and expects to open bidding for the Red and Blue lines next year.

Dr Suchart said the government had tried to establish confidence in the country’s economic system with the proposal to extend the Deposit Protection Act’s 100% deposit guarantee for three years beyond next year.

The government has also urged state-run banks, from Nov 1, to speed up the release of 80-90 billion baht in credit to small and medium businesses, and for agricultural and housing loans.

The government will also fast-track approval of the 70-billion-baht local administration budget within the first quarter of fiscal 2009. In the meantime, local administrations have been asked to plan bids for government-guaranteed construction projects.

Each year, the government approves a budget of around 400 billion baht for local administrations.

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