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FIC Guideline

FIC RELAXES RULES IN PROPERTY PURCHASES
(THE STAR, MAY 04, 2001)

NEW GUIDELINES ON THE ACQUISITION OF PROPERTIES BY MALAYSIANS AND FOREIGN INTERESTS RELEASED BY THE ECONOMIC PLANNING UNIT ON MAY 02, 2001
SPECIAL GUIDELINES ON RELAXATION OF RULES ON OWNERSHIP OF LAND/ INTERESTS IN LAND BY FOREIGNER/ FOREIGN COMPANY
(circular dated June 22, 1998 by Director of Land and Mines, Dato’ Hj. Mohd. Noor Bin Abd. Rahim )

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 anywhere in Malaysia under the Malaysia My Second Home 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.

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: -

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.

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.

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.

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).

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.

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.

In respect of the acquisition of landed properties under the "Malaysia

My Second Home Programme", foreigners are allowed to purchase 2 landed properties priced at RM150,000 and above anywhere in Malaysia.

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

1.	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%.*

2.	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.

3.	All the above acquisition must be financed by Finance Institution
	from abroad.

4.	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 Unit Perancang Ekonomi Blok B5 Pusat Pentadbiran Kerajaan 62502 Putra Jaya. Telephone : 03-8888 3333

5.	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.