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MALAYSIA can become an attractive destination for high net worth foreigners looking to set up their second home if the approval process for application to reside in the country and for property purchase is made simple and hassle-free.  

In order for Malaysia to join the ranks of other international and regional favourite spots for foreign investors, the guidelines governing foreign participation should be further liberalised.  

Competition is heating up in many parts of the world to attract foreign investors to set up homes and businesses as this would result in a more dynamic real estate sector and stronger economic growth.  

The Malaysian government, aware of this, has over the years introduced changes in the Foreign Investment Committee (FIC) guidelines that govern property purchases by foreigners. 

The guidelines on the acquisition of property by foreign parties, which came into effect in 2003, stipulated that any acquisition of a property by a foreign interest, including a permanent resident, required FIC approval.  

A foreigner is allowed to acquire a residential property priced at more than RM150,000 a unit. 

At the state level, each state authority has the discretion to consider acquisition by a foreigner based on the location and type of property and the percentage of total units in a project. The transfer of property title is under the jurisdiction of the local authorities.  

To attract greater foreign investors to Malaysian shores, the Government on Dec 20 abolished the need for FIC approval for housing units priced from RM250,000. 

Restrictions on the usage and number of units they can purchase have also been lifted. 

Together with the Malaysia My Second Home programme, which is being promoted by the Tourism Ministry, the latest relaxation should augur well to attract greater foreign investment in local properties.  

While hailing the relaxation of FIC guidelines for foreign buyers as an excellent decision and a move in the right direction, industry players said its effectiveness would depend on whether the state authorities gave their full support. 

SP Setia Bhd group managing director and chief executive officer Tan Sri Liew Kee Sin said it would be good for the state government to complement the FIC move to further drive foreign ownership of local properties. 

“The quota for foreign purchasers should also be reviewed by the state authorities. In states like Johor, only 10% of double-storey terrace houses in a development project are allocated for foreigners,” he noted. 

There is a need to expedite the approval process when applying for state consent to transfer properties to foreigners, as banks will not disburse loan before the state consent is obtained.  

Lowering the real property gains tax for foreigners from the current 30% for the first five years of purchase and raising the financing margin from the present 70% to 90% for foreign buyers would also help. 

Sunrise Bhd chief executive officer Datuk Michael Yam said the missing link clearly lay with the state authorities. 

“It is common knowledge that the delays in completion of transactions where the purchaser is a foreigner have always been delays in state consent rather than FIC approval.  

“It is not only the purchaser who loses patience but also the vendor, who is exasperated at having to wait at least five to six months before he sees his money. To quicken the process, perhaps the state can designate or pre-approve projects which can be sold to foreigners and specify the maximum number of units that can be sold beyond which consent must be sought.  

“These improvements would create more certainty and increase the number of transactions and economic multiplier effect. The tax and stamp duties collected by the authority will also add to the state and federal coffers,” Yam said.  

Ireka’s Lai said by having uniform and clear guidelines at both the state and national levels would go a long way to instil confidence in investors by removing uncertainties.  

“We need strong leadership support to ensure that we achieve this objective,” Lai added. 

TAN SRI LIEW KEE SIN 

Tan Sri Liew Kee Sin

Group managing director and chief executive officer 

SP Setia Bhd 

THE recent move to relax FIC (Foreign Investment Committee) rulings for purchases of properties by foreigners signals a strategic shift in the government policy to liberalise the property sector, cut red tapes and harness the potential of the industry to drive the economy.  

While core domestic demand is still strong, local players need to spread their wings and market their products to the international audience to further grow their business. 

Malaysia has a lot going for it, given its stable economy and low cost of transaction. We have many world-class developments that can hold their own against other regional offerings. This is where the Government can act as the enabler by implementing pro-business policies, reduce bureaucracy and ensure speedy approval for the development process.  

P. K. POH 

Dijaya Corp Bhd 

The powers-that-be should also ensure that there is no flip-flop or U-turn of any of the relaxed policies for at least five to eight years.  

DATUK LEONG HOY KUM

Property investment is a long-term game, and the investor’s time horizon is at least five years. If we only make it easy for them to enter but difficult to exit or sell due to a return to the old restrictive policy, it will be a long time before they will come back to our shores again.  

Foreigners should be made to feel comfortable and be clear about our rules, which must stay consistent.  

DATUK LEONG HOY KUM 

Mah Sing Group Bhd 

The latest relaxation is the most investor-friendly so far, with foreigners being allowed to purchase unlimited units of residential properties above RM250,000 for any purpose without having to seek FIC approval. 

Information about these updated and more flexible conditions should be circulated efficiently and extensively to foreigners. The efforts under Visit Malaysia 2007 could also assist in publicising Malaysia as an ideal international destination for tourists and investors.  

We see more foreigners are becoming interested in our projects. From the enquiries we have received, the good news must have reached them. A hassle-free application and approval process, which has shortened the time needed to make purchases, coupled with the ease and convenience for foreigners to set up homes under the Malaysia My Second Home (MM2H) programme and the high affordability, has been effective in encouraging more foreigners to come to Malaysia to reside and invest.  

DATUK MICHAEL YAM 

Sunrise Bhd  

DATUK YEOH SEOK KIAN

We are prepared to work with the Ministry of Tourism and other credible institutions to mount exhibitions and roadshows overseas to promote MM2H on the back of Visit Malaysia Year 2007 efforts.  

Although there may be an increase in foreign investment in the property market in the short term, it is not expected to be significant unless the Government, the industry and the public make a concerted effort to promote it. 

It simply means that not only must the property be wholesome and good, the quality of life – especially law and order – must be ensured to safeguard the well-being of the investors. At the same time, the community and Government must be seen to welcome them.  

DATUK YEOH SEOK KIAN 

YTL Land and Development Bhd  

Overall, this is a great time for Malaysia to capitalise on positive economic trends across the region, such as the strong stock market performances recently witnessed in Hong Kong and Singapore.  

I’m confident we’ll enjoy some of the spill-over effects of this excess liquidity, especially since the Malaysian property market offers high quality products at competitive prices while the current exchange rates favour foreign buyers.  

And, of course, the Government’s investments under the Ninth Malaysia Plan definitely help to increase confidence in Malaysia as a place for prime investment opportunity. 

LAI VOON HON

We have signed on as a MM2H agent to help make the process as smooth and stress-free as possible for foreign buyers, many of whom are managing their investments from abroad.  

Our new MM2H office, located at the YTL Homes Sales Centre at Starhill Gallery (Relish floor), will be open from the second week of January onwards, basically to advise and assist foreign buyers throughout the entire process.  

LAI VOON HON 

Ireka Land Sdn Bhd 

We would certainly highlight such advantage (FIC rules' relaxation) to the foreign buyers of our various high-end i-Zen properties.  

On a longer term, we would also try to promote this FIC relaxation to foreign investors through our future AIM (Alternative Investment Market)-listed property fund.  

The success of Malaysia My Second Home and the abolishment of the requirement for FIC approval for houses costing more than RM250,000 have opened up new possibilities for developers to venture into.