Suruhanjaya Perkhidmatan Air Negara (SPAN) is a government regulatory body established under the Water Services Industry Act 2006 to regulate Malaysia’s water supply and sewerage industry. Meanwhile, Indah Water Konsortium (IWK) is the operator appointed to operate and maintain Malaysia’s public sewerage system.
Sewerage Capital Contribution (SCC) is a payment required from developers under the Water Services Industry Act 2006 and the Water Services Industry (Sewerage Capital Contribution Fund) Regulations 2011, administered by Suruhanjaya Perkhidmatan Air Negara (SPAN).
The key purpose of SCC is to finance the construction and upgrading of public sewerage infrastructure in Malaysia. When a newly completed development connects to the public sewerage system, it increases the load on the system. As such, developers are required to contribute towards the cost of expanding the system so that the sewerage network can handle the additional wastewater. The fund may also be used to replace existing old individual sewage treatment plant (STP) systems, as Malaysia is gradually shifting towards centralised regional sewerage systems.
As part of the process for calculating the Sewerage Capital Contribution, a registered valuer or a valuation firm in Malaysia (IWK valuer) play a role in determining the market value of “unsold” development units and properties not intended for sale.
Sewerage Capital Contribution is applicable to buildings intended for sale, whether they have been sold or remain unsold, as well as buildings not intended for sale. This includes most types of buildings, except for certain specific categories such as low-cost residential buildings, places of worship, government or government-aided schools, community buildings, and charitable buildings. These specific buildings are charged at special rates respectively.
Under the “1% Rule”, the calculation of Sewerage Capital Contribution is as follows:
Buildings intended for sale and already sold – 1% of the selling price stated in the Sale and Purchase Agreement (SPA).
Residential buildings intended for sale but not yet sold – 1% of the selling price submitted for the application of the advertisement and sale permit.
Buildings intended for sale (excluding residential buildings) but not yet sold – 1% of the market value as determined by a valuation firm in Malaysia*.
Buildings not intended for sale (for example, office buildings, hotels, factories, or other buildings held for own use or investment) – 1% of the market value as determined by a valuation firm in Malaysia*.
Specific buildings (such as low-cost residential buildings, places of worship, government or government-aided schools, community buildings, and charitable buildings) will only be charged according to their respective special rates.
*A valuation report prepared IWK valuer for “submission to Suruhanjaya Perkhidmatan Air Negara (SPAN) for the calculation of Sewerage Capital Contribution” will therefore be required for this purpose.
For illustration purposes, an example of the calculation is tabulated below for ease of understanding.
Frequently Asked Questions
FAQ 1: What is Sewerage Capital Contribution (SCC)?
Sewerage Capital Contribution (SCC) is a statutory payment imposed on developers under the Water Services Industry Act 2006 and the Water Services Industry (Sewerage Capital Contribution Fund) Regulations 2011.
The contribution is administered by Suruhanjaya Perkhidmatan Air Negara (SPAN) and is used to finance the construction, upgrading, and expansion of public sewerage infrastructure operated by Indah Water Konsortium (IWK).
The purpose is to ensure that new developments contribute towards the cost of expanding the sewerage network to accommodate additional wastewater generated by the development.
FAQ 2: When is a valuation report required for SCC calculation?
A valuation report prepared by a registered valuer in Malaysia is generally required in the following situations:
Buildings intended for sale (excluding residential units) that remain unsold and buildings not intended for sale.
In these cases, the market value of the property must be determined by a professional valuation firm for submission to Suruhanjaya Perkhidmatan Air Negara (SPAN) to facilitate the calculation of SCC.
FAQ 3: How is the Sewerage Capital Contribution calculated?
SCC is generally calculated based on the “1% Rule”, which is applied as follows:
Buildings intended for sale and already sold → 1% of the selling price stated in the Sale and Purchase Agreement (SPA).
Residential buildings intended for sale but not yet sold → 1% of the selling price submitted for the advertisement and sale permit.
Non-residential buildings intended for sale but not yet sold → 1% of the market value determined by a registered valuer.
Buildings not intended for sale → 1% of the market value determined by a registered valuer.
The calculated amount is payable to the SCC Fund administered by SPAN.
FAQ 4: Are all types of buildings subject to Sewerage Capital Contribution?
Most developments are subject to SCC. However, certain categories of buildings are charged at special rates or may receive special consideration, including:
Low-cost residential buildings
Places of worship
Government or government-aided schools
Community buildings
Charitable buildings
FAQ 5: Why is a professional valuer required for SCC submissions?
A professional valuer provides an independent and objective assessment of the market value of unsold units or buildings not intended for sale.
This valuation is necessary because the SCC payable is calculated as 1% of the market value in such cases. A properly prepared valuation report ensures that the valuation:
Complies with Malaysian valuation standards
Provides a defensible market value assessment
Meets the submission requirements of Suruhanjaya Perkhidmatan Air Negara (SPAN)
This ensures transparency and consistency in the calculation of Sewerage Capital Contribution.
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