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Revised Foreign Investment Committee (FIC) Guidelines (Effective from April 25 2001)

• Acquisition of properties costing less than RM10mil by Malaysian citizens is exempted from FIC approval. (Previous limit was RM5mil). The intention is to facilitate and expedite the completion of all transactions of less than RM10mil at state authority level.

• The following property sale transactions of less than RM20mil need only be reported to the FIC Secretariat. In such cases, state authorities do not have to wait for FIC approval. They are as follows :

  • Sale by bumiputera to bumiputera

  • Sale by non-bumiputera to bumiputera

  • Sale by foreign interests to Malaysian citizens

• Foreign interests undertaking manufacturing activities but are exempted from getting manufacturing licenses from the Ministry of International Trade and Industry, are allowed to own industrial lots or factories for manufacturing activities only. This is to facilitate acquisition of industrial properties by foreigners, without equity conditions, only for the purpose of manufacturing and not for rental.

• Further relaxation of the Special Guidelines (April 22 1998) :

  • Foreigners are allowed to acquire all types of residential units, shop-houses, office space and retail space in either old or newly launched projects costing more than RM250,000 each without having to set up a company with local equity. (Previously, foreigners were only allowed to acquire properties in projects that had already been completed or 50% completed.)

  • Foreigners are allowed to obtain their funding for the above acquisitions from local sources (previously funding are only provided by external sources)

• To encourage the establishment of headquarters or regional offices in Malaysia, foreign companies are allowed to own offices or office space, including for their branch offices (costing more than RM250,000 each) without any limit on the number of units they can own or any equity conditions.

• Foreign companies incorporated in Asean countries intending to set up joint ventures or engage in trading and commercial activities in Malaysia are allowed to own office or office space (costing more than RM250,000 each) without any equity restrictions.

• For acquisition of residential units under the “silver-haired program”, foreigners are allowed to buy residential units costing RM150,000 and above with a condition that the property must be in an area designated for the program.

Foreign Investment Committee's Guidelines (as on May 22 1998)

Foreigners are allowed to purchase property, but they are subjected, to certain controls. All acquisitions require approval from the Foreign Investment Committee (FIC) and respective state governments.

As on May 22, 1998, the guidelines for the purchase of property by foreigners have been stipulated as follows:

General Guidelines

• All purchases of property regardless of value require the approval from the FIC.

• Foreigners are not allowed to purchase interests in any type of property worth less than RM250,000 except industrial land.

• Foreigners are not allowed to sell their property within 3 years of the approval of the FIC.

Residential Property
1. Foreigners are not allowed to purchase any residential properties as follows :

• Double/single-storey terrace or linked houses

• Low cost and medium cost houses

• Low cost and medium cost flats

• Houses on Malay reserve land

• Bumiputera-quota units

2. Foreigners are allowed to purchase :

• Terrace or linked houses above 2 storeys, but limited to 10% of the total number of units built of its type. It must worth RM250,000 per unit and above OR as followed to the respective State’s Guidelines.

• Lands/bungalows and semi-detached houses, but limited to 10% of the total number of units built of that type. It must be worth RM250,000 per unit and above as exercised by respective State’s Guidelines. If the purchase of land is for investment purposes, they have to establish a local company with 49% Malaysian (inclusive of at least 30% bumiputera) equity for that purpose.

• Condominiums or apartments worth RM250,000 and above, but limited to 50% of the total number of units built within each block.

3. Foreign individuals (including husband and wife teams) are not allowed to own more than 2 residential units (either condominiums OR one condominium and one non-condominium). Foreign interests will not be allowed to purchase more than one non-condominium residential property. Those who wish to own more than 2 units are considered for investment purpose and therefore must establish a local company with 70% Malaysian equity (inclusive of at least 30% bumiputera equity) for that purpose.

4. Local companies/ industrial firms owned by foreign interests can considerably purchase more than 2 residential units for their staff. They are allowed to purchase residential units worth more than RM60,000 per unit except low-cost flat, low-medium house, houses on Malay reserve land and bumiputera-quota unit.

5. Permanent residents are allowed to purchase residential units worth more than RM60,000 per unit, subject to conditions as follows :

• Husband/wife must be a Malaysian citizen; OR

• They must be qualified to apply as a citizen and have submitted the necessary applications.

Commercial Buildings
1. Foreigners are not allowed to purchase commercial buildings as follows :

• Double/ single storey shop houses

• Low cost shop houses

• Stalls

• Workshops

• Commercial buildings on Malay reserve land

2. Foreigners are allowed to purchase commercial buildings as follows :

• Shop houses of 3 storeys or above worth at least RM250,000 as exercised by respective State authorities

• Lots of commercial complexes or offices, where total units purchased are limited to 20% of the total units available and the acquisition is made through a company established in Malaysia with at least 49% Malaysian equity (inclusive of at least 30% bumiputera equity) for this purpose

Agricultural Land
1. Foreigners are not allowed to purchase agricultural lands for traditional agricultural purposes such as rubber tree and oil palm planting.

2. Foreigners are allowed to purchase agricultural lands if they wish to :

• Operate agricultural activities commercially with high technologies

• Operate agriculture-based industrial activities

• Operate tourism project

Acquisition of agricultural lands must be made through a company established in Malaysia with at least 49% Malaysian equity (inclusive of at least 30% bumiputera). However, foreign interests of those companies, which produce export goods are subject to guidelines from the Ministry if International Trade and Industry (Miti).

Industrial Land
1. Foreigners are allowed to purchase industrial lands for company operations, subject to conditions that follow :

• They have obtained manufacturing license from the Ministry of International Trade & Industry (Miti)

• For those companies without manufacturing licenses, foreign interests of equity must first be approved by the Foreign Investment Committee

Development Land
Acquisition of development land by foreigners for housing, commercial buildings or industrial areas must be made through a company established in Malaysia with at least 70% Malaysian equity (inclusive of at least 30% bumiputera equity)

Application
The application forms for the acquisition of property by foreign interest include :

• Form FIC 1/95 and Appendix A./95 (for acquisition of residential units)

• Form FIC 2/95 and Appendix A/95 (for acquisition of shop houses, commercial lots of complexes and offices, factories and factory lots)

Completed forms must be submitted to :
The Secretary
FOREIGN INVESTMENT COMMITTEE
UNIT PERANCANGAN EKONOMI
Blok B5 & B6
Pusat Pentadbiran Kerajaan Persekutuan
62502 Putrajaya, Malaysia
Tel : 03-88882935
Fax : 03-8883917

Guidelines On The Relaxation Of The Condition On The Acquisition Of Properties By Foreign Interests (May 18 1998)

The guidelines are as follows :

• Foreign interests will be allowed to purchase all type of residential units, shop houses, commercial lots and office space, provided the purchase price is above RM250,000 a unit. This relaxation is only applicable to projects that are newly completed or at least 50% in progress.

• Property developers are not allowed to alter designs or structures of their completed or under construction projects, in order to increase house prices to exceed RM250,000.

• The financing of the above acquisition must be obtained from an overseas financial institution outside Malaysia.

• All acquisitions under this Guideline must obtain the FIC’s approval for the purpose of ensuring that the purchase price is more than RM250,000 and the purchase will be financed through a financial institution outside Malaysia. This is also to enable the Government to have records of the acquisitions. Approval will be granted automatically when these conditions are fulfilled by the purchaser.

• All other property acquisitions which do not fulfill the above criteria will be subjected to the existing FIC Guidelines dated May 22 1998.

• This relaxation will be reviewed once the economic conditions of the country improve. However, any new conditions will not be imposed retrospectively to any purchases that has been approved under this Guideline.

• All applicants are required to submit the following information :
  

  1. Name and particulars of the purchaser

  2. Copy of the sale and purchase agreement

  3. Source of financing

  4. A letter from a qualified consultant on the status of the construction progress

  5. Form FIC 1/95 and Form 2/95

All application information are to be submitted to :
The Secretary
FOREIGN INVESTMENT COMMITTEE
UNIT PERANCANGAN EKONOMI
Blok B5 & B6
Pusat Pentadbiran Kerajaan Persekutuan
62502 Putrajaya, Malaysia
Tel : 03 - 88882935
Fax : 03 - 88883917

Source: www.thestar.com.my