MALAYSIA'S excessive building construction is bad for its economy, a prominent tax consultant has warned. Dr Arjunan Subramaniam said the seemingly uncontrolled pace of development in the property market was bound to 'throw the spanner in the wheels of the economy' the official government news agency, Bernama, reported. In the Klang Valley alone, millions of square feet of office space is being built, he said, adding that he doubted there would be sufficient demand due to the overheated economy. 'Of course any expansion gives life to the economy but what we are seeing now in the construction sector is far too fast for the economy. Already speculation in the property market has gone out of hand,' he said. Dr Subramaniam, a former assistant director-general of the Inland Revenue Department, also said the multi-billion Malaysian-dollar deficit in the budget was cause for concern because it could worsen if the construction sector kept developing too fast. He said a substantial portion of the deficit was due to professional fees paid outside the country and was incurred in the process of acquiring foreign technology. It might be necessary to delay some of the mega projects instead of implementing them all at once as they would create tremendous demand on building materials which were mostly imported, he said. He added although the country was actively promoting zero inflation, property values had gone through the roof prompting real cause for concern. Dr Subramaniam said two-storey houses in predominantly middle-class residential areas had gone up from around M$150,000 (about HK$459,000) to M$375,000 and in certain areas even M$470,000. 'We are a creating a caring society but may end up with people who cannot even afford to buy houses,' he said. He felt that local research and development activities were still restricted by too much bureaucratic red tape and this should be addressed by the budget to be presented in Parliament by Finance Minister Datuk Seri Anwar Ibrahim on Friday. Mr Subramaniam said there were high expectations that corporate tax could be slashed by another one per cent to 29 per cent in the budget to further spur investments in the country. A one per cent cut would mean the government foregoing M$400 million in revenue but this could be recouped through other forms of direct taxes including sales tax. 'The day might not be too far off when the government would come up with a service tax on water consumption,' he added. Commenting on the current civil service pay rise demands, he said Malaysia's civil service was too large.