AS we celebrate Malaysia Day tomorrow, it is perhaps an opportune time to reflect on certain government policies that have brought us thus far and whether they in any way require fine-tuning due to changes in circumstances or whether our policies are indeed outdated.
Malaysia has always been an investor friendly nation and this I mean not only to foreign direct investments (FDIs) but also to property investors as we do not restrict ownership of properties by non-citizens or non-residents.
In fact, subject to individual state laws, foreigners are free to purchase properties of certain price thresholds and above while in certain states, a differentiation is made as to what a foreigner could buy depending on whether it is landed or strata or in certain states by zone or location where a different floor price is imposed, which is mostly at about RM1mil, with the exception of places like Perlis and Sarawak at RM500,000, RM600,000 in Kedah and strata properties in Melaka at RM500,000.
In addition, foreigners are restricted to purchase properties built on Malay reserved land, low and medium cost residential units as defined by the state authorities and properties distributed to bumiputra interest in any development project as determined by each individual state.
In Selangor, foreigners are also not allowed to purchase landed residential unless it is issued with strata title as well as purchase of auction property and agriculture land.
Hence, when Prime Minister Tun Dr Mahathir Mohamad announced late last month that foreigners will not be allowed to buy residential units in the US$100bil Forest City, a stone’s throw away from Singapore, there was confusion as to what the PM actually meant. In addition, Dr Mahathir also highlighted that Malaysia is not going to issue visa for property buyers of Forest City to enable them to stay and live there.
We all know that Forest City was built to cater for the Chinese market, after all the developer, Country Garden, is from China. But at the same time the company have sold property units to other nationals, especially Singaporeans as well as Malaysians and buyers from 20 other countries, despite the seemingly high price, by Malaysian standards.
Luckily the matter was cleared at a later stage and Dr Mahathir said foreigners can buy residential units in Forest City, but, reiterated that no visas will be issued to the buyers, who are subject to different rules and regulations.
With the Pakatan Harapan government just going into its fifth month in office, a policy missteps or flip flops is the last thing the market needs. What the market needs are clear rules on investments and these rules must be adhered too by applying the rule of law, something that this government has promised to do so.
Stamp duty hike
With Singapore recently raising buyer’s stamp duty and New Zealand imposing a ban on foreigners (excluding Australian and Singaporean who are exempted due to free-trade deals as well as foreigners with residency status) from buying existing homes in the country, it was feared that Malaysia was making a similar move, not only within Forest City but across the country to restrict foreigners from purchasing Malaysian residential homes.
However, one must understand the market dynamics in these two nations were different as there were price pressures building up. In Singapore, prices were up by about 9% the past year while in New Zealand, rising prices made homes to a certain extent not affordable to locals that drove the government to impose the ban.
To a certain extent, we are lucky that we have clear rules that define what foreigners can and cannot buy, which is applied across different locations and types of properties. In addition, it would be totally unfair to impose a rule that targets a certain developer at a certain location while other developers or the same developer in other locations are not imposed a similar rule.
We also cannot impose a condition that targets certain nationality that has purchased a property at a certain location. This would be unfair on two counts.
Does the rule then apply to buyers from other countries for the same project and what about buyers from that country but in different development projects? Hence, it was good that the government realised that a housing policy needs to be more holistic and not imposed or targeted at a certain location.
Thus, we hope the government receives enough feedback from all stakeholders before a policy is introduced or changed and that policy too needs to be applicable across the market segment. We cannot afford a policy misstep at a time when we want foreign investors to continue to invest in Malaysia, be it in the form of FDIs or property investors.
While the rules are clear on what foreigners can or cannot buy, Pankaj is still wondering why foreigners are not allowed to purchase landed residential unless it is issued with a strata title in Selangor.