FIC RELAXES RULES ON PROPERTY
PURCHASES (THE STAR, MAY 04, 2001)
The Foreign Investment Committee (FIC) has
relaxed its rules to allow foreign citizens to buy all types of local property
costing above RM250,000 without having to form a company with Malaysian equity
participation.
They will now also be allowed to source for funds
to make such property purchases from domestic banks.
Previously, foreign citizens were only allowed to
buy projects that were fully completed or properties that were at least 50%
finished, and financing had to be sourced externally.
The changes in the FIC guidelines have been made
to encourage private investment and improve the investment climate in Malaysia.
"The government is aware that Malaysia is
facing an economic environment that is more challenging as a result of slowing
global economic growth and competition among countries for foreign direct
investment," said Prime Minister Datuk Seri Dr Mahathir Mohamad in a
statement yesterday.
"The government continues to be committed to
maintaining an open economic and business-friendly environment."
Under the revised rules, which are effective
retrospective to April 25, Malaysian citizens and companies also no longer
require approval from the FIC to make property transactions costing below RM20
mil. They now only have to report such transactions.
Malaysians also no longer need FIC approval for
property acquisition below RM10 mil.
Also, companies engaged in manufacturing
activities that are exempted from licensing by the Ministry of International
Trade and Industry are now allowed to buy industrial or factory lots for
manufacturing purposes.
To encourage foreign companies to set up their
headquarters or regional offices in Malaysia, such companies will be allowed to
establish headquarters and branches costing above RM250,000 in Malaysia without
domestic equity conditions.
Companies in other Asean, countries wishing to
establish joint ventures or conduct business in Malaysia will also be allowed to
own offices or office space costing above RM250,000 without domestic equity
conditions.
Foreigners will also be allowed to buy properties
priced above RM150,000 in designated areas under the Silver-Haired Programme.
The sweeping changes to the FIC guidelines were
announced just a day after the government abolished the 10% exit levy on
portfolio investment profits.
Vickers Ballas Malaysia head of research
Sebastian Chang said the revised guidelines would help the local property and
banking sectors.
"They will basically help ease the property
supply overhang and also help banks meet their loans growth targets," he
said.
House Buyers Association secretary-general Chang
Kim Loong complimented the government on the new guidelines and said they would
encourage foreigners to buy houses in Malaysia.
"They will also help with the inflow of
foreign exchange to Malaysia and spur the up market property sector'" he
added.
However, Chang said foreign house buyers,
especially Singaporeans, would like to see no further changes to the FIC rules.
"FIC rules have been changed often in the
past and we hope the committee will stick to the new guidelines for as long as
possible," he said.
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NEW GUIDELINES ON THE
ACQUISITION OF PROPERTIES BY MALAYSIANS AND FOREIGN INTERESTS RELEASED BY
THE ECONOMIC PLANNING UNIT ON MAY 02, 2001
The relaxation of the Foreign Investment
Committee Guidelines on the acquisition of properties is to clarify on the acquisition
of properties by Malaysians and foreign interests with the purpose amongst
others, to expedite and simplify the FIC procedures pertaining to the acquisition
of properties.
GUIDELINES
The new guideline is divided into the following categories: -
1. The acquisition of properties by Malaysians under RM10 million
does not require the approval of the FIC (this new acquisition limit is to
replace the current limit of RM5 million). This measure is taken in order
to simplify and expedite transactions below the limit of RM10 million to be
dealt with by the State Authorities.
2. Transactions for the disposal of
properties below RM20 million, involving parties as follows: -
a. Bumiputera to Bumiputera;
b. non-Bumiputera to Bumiputera;
c. non-Bumiputera to non-Bumiputera; and
d. foreign interests to Malaysians.
With regard to the above transactions, only
transactions which have been duly executed are to be reported to the FIC Secretariat.
In such cases the State Authorities do not need to await for the FIC's approval.
3. Foreign interests involved in
manufacturing activities but are exempted from obtaining manufacturing licenses
from the Ministry of International Trade and Industry (MITI) are permitted to
acquire industrial lots/ factories for manufacturing purposes only.
This is to facilitate foreign interests in acquiring industrial properties,
without equity conditions, for the purposes of undertaking manufacturing
activities but not for renting of the said properties.
4. Further relaxation of the conditions in
the Special Guidelines (22 April 1998):-
4.1 Foreigners are allowed to purchase all types of residential units,
shop houses, commercial and office spaces comprising of old buildings and
newly launched projects, subject to price exceeding RM250,000 per unit,
without having to incorporate a company with local equity participation (the
current relaxation is only for newly completed projects or those that are at
least 50% in progress).
4.2 The above acquisitions are allowed to
be financed by domestic financial sources (currently such acquisitions
can only be financed by foreign financial sources).
5. In order to encourage foreign companies
to be incorporated in Malaysia to operate as the Headquarters or Regional
Offices, these companies are allowed to own offices or office spaces
including office branches (the price exceeding RM250,000 per unit) without any
restrictions as to the number of units that can be owned and without imposition
of equity conditions.
6. Foreign companies incorporated in ASEAN
countries which intend to set up joint-venture companies or to undertake
trading and business activities in Malaysia are allowed to own offices or office
spaces (the price exceeding RM250,000 per unit) without imposition of equity
conditions.
7. In respect of the acquisition of residential
units under the "Silver-Haired Programme", foreigners are
allowed to purchase residential units priced at RM150,000 and above, subject to
the condition that the unit purchased are located in areas designated for such
programme.
EFFECTIVE DATE
This Guideline is effective from 25 April 2001.
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SPECIAL GUIDELINES ON RELAXATION OF
RULES ON OWNERSHIP OF LAND/ INTERESTS IN LAND BY FOREIGNER/ FOREIGN COMPANY
(circular dated 22/6/98 by Director of Land and
Mines, Dato’ Hj. Mohd. Noor Bin Abd. Rahim )
INTRODUCTION
Council for Government Meeting
had its meeting on 24-6-1998 R/M:1532/98 has agreed to enforce a Special Guidelines on
Relaxation of Rules on Ownership on Land/ Interests in land by Foreigner/ Foreign Company.
SPECIAL GUIDELINES
-
Foreign interests are allowed to acquire all types of residential
unit, shop house, business space and office space units provided that the units of the
realty concerned must cost above RM250,000.00 per unit.
This relaxation
is only applicable to projects which have been completed or are still under construction
in which its progress should at least be of 50%.
-
Developers of land are not allowed to change its design
or structure of their projects which have been completed or still under progress, for the
purpose of increasing the price of each unit of the realty concerned to more than
RM250,000.00.
-
All the above acquisition must be financed by Finance
Institution from abroad.
-
All types of acquisition under this special Guidelines
must first obtained FIC approval for the purpose of ensuring that source of finance is
obtained from country abroad is followed. Applications to obtain FIC approval must be
submitted to:-
Secretary,
Foreign Investment Committee
4th Floor, Tambahan Building
Economy Planning Unit
Prime Minister Department
Dato’ Onn Road
50502 Kuala Lumpur
Telephone : 02-293 3333 or 290 3069
Fax : 03-238 2955
Land Ownership/ Interests in land by Foreigner/ Foreign
Company which don’t comply with condition 2.1 to 2.4 above is not qualified for any
consideration under the principle of this Special Guidelines but it is subjected to the
present available principles which are enforceable.
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