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Tuesday, June 30, 2009

States may put brakes on property liberalisation

PETALING JAYA: Any move to relax restrictions on foreign property investments may face hindrances at the state level.

While the industry is expecting the government to announce further liberalisation of Foreign Investment Committee (FIC) guidelines on property investments, players hope the measures will be recognised at the state level as well.

Prime Minister Datuk Seri Najib Razak is expected to announce further liberalisation of the property sector at the InvestMalaysia conference today.

Previous measures have met with some “impediments” at the state level as land matters come under the jurisdiction of the respective state, said Kumar Tharmalingam, chairman of property advisory company Hall Chadwick Asia.

“The federal government has to work with the respective states to ensure the measures are implemented across the board and not just subject to the state’s approval,” he added. For example, he said, the state could impose a substantial levy on the developer for a property sold to a foreigner.

The industry also wants the government to liberalise the commercial property sector next.

Currently, foreign investors may acquire commercial properties of below RM10 million for own use. However, for properties valued RM10 million and above, or a building or development project, land or land with building for commercial redevelopment, the foreign interest must incorporate a local company with a 30% bumiputera equity.

But investors face a tough task getting a bumiputra partner especially during a downturn as commercial property investments can run into millions of ringgit, said Kumar.

He suggested that “free market” zones be established in certain parts of the country such as at the Kuala Lumpur city centre where foreigners could invest in without such restrictions.

The government last announced liberalisation measures in the residential property market in April 2007 and those included an exemption on real property gains tax, and the removal of FIC approvals for foreign ownership of houses costing RM250,000 and above.

By The EDGE Malaysia (by Financial Daily)

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