“GUIDELINES ON THE RELAXATION OF THE CONDITION THE ACQUISITION OF PROPOERTIES BY FOREIGN INTERESTS BACKGROUND”

Background
This guideline is to clarify the criteria for the relaxation of the condition for the acquisition of properties by foreign interest, in order to assist the property sector due to the current difficult economic condition. This relaxation is made after taking into consideration the proposal made by the National Economic Action Council (NEAC) as a result of the discussion with various parties involved in the property sector. The Guidelines containing the relaxation will be reviewed once the economic conditions improve.

Guidelines
The Guidelines are as follows:

• foreign interests will be allowed to purchase all type of residential units, shophouses, commercial and office spaces subject to the purchase price is above RM250,000 per unit. This relaxation is only applicable to projects that are newly completed or at least 50% in progress;
• property developers should not modify the existing design or the structure of their respective buildings with the intention of increasing the unit price to more than RM250,000;
• the financing for the above acquisition must be obtained from overseas financial intstitution outside Malaysia;
• all acquisitions under this Guidelines must obtain 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 22 May 1998; and
• 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 Guidelines.

Effective Date
This Guideline wil be effective from 22 April 1998.

Submission
All applicants are required to submit the following information:

• Name and particulars of the purchaser;
• Copy of the Sale & Purchase Agreement;
• Source of Financing;
• A letter from a Qualified Consultant on the status of the construction progress;
• Form FIC 1/95 or FIC 2/95.

All application information are to be submitted to:

“GUIDELINE ON THE OWNERSHIP OF MALAYSIA PROPERTIES BY FOREIGN INTERESTS”

Guideline on the Ownership of Malaysia Properties by Foreign Interest (1 November 1995)

Introduction
These guidelines are to clarify the new rules and regulations on the purchase of properties by foreign interests which was imposed at the Federal and State levels as announced by the Deputy Prime Minister on 23rd June 1995.

General Guidelines

• All purchases of land by foreign interests must be with the approval of the FIC regardless of its value.
• Foreign interests are not permitted to purchase all types of land valued RM250,000.00 or less except industrial land.
• All land purchased by foreign interests cannot be resold within three (3) years from the date of FIC approval.

Residential Property
Foreign interests are not permitted to purchase these residential properties:

• Double storey terrace houses
• Low and medium cost houses
• Low and medium cost flats
• Houses on Malay Reserve Land
• Bumiputera quotas

Foreign interests are not permitted to purchase the following types of residential properties:

• Terrace houses which are more than 2 stories, provided the houses purchased do not exceed 10% of the total number of units of each such type in a particular housing project. The purchase is subject to a minimum price of more than RM250,000.00 as has been fixed by the relevant State Authority.
• Land/ bungalow houses and semi-detached houses provided the houses do not exceed 10% of the total number of unit of each such type in a particular housing project. The purchase is also subject to minimum price of more than RM250,000.00 as fixed by the relevant State Authority. If the land purchased is further developed for investment purposes, the buyer is required to form a company, which is incorporated in Malaysia and of which at least 49% is owned by Malaysians, comprising at least 30% Bumiputra.
• Condominium/ apartment units valued below RM250,000.00 provided that the units do not exceed 30% of the total number of units in each block.

Foreign interests (for individuals which includes married couples) are not permitted to own more than one residential unit. The purchase of a second unit or more is treated as being for investment purposes and can only be made by a company, which is incorporated in Malaysia and which of at least 70% is owned by Malaysians, comprising at least 30% Bumiputra.

The purchase of more than one residential unit by foreign interests for use as a holiday retreat for their employees can be considered.

Business Property
Foreign interests are not permitted to own the following types of business property:

• Shops which are 2 stories or less
• Service workshops and
• Low cost shops
• Business Property or Malay Reserve Land
• Stall

Foreign interests are permitted to own the following types of business property:

• Shophouses which are 3 stories or more subject to a minimum purchase price of more than RM250,000.00 as fixed by the relevant State Authority and
• Business complex space or office space, provided that:
  • It does not exceed 20% of its type in any particular project, and
  • The purchase is made by a company which is incorporated in Malaysia and of which at least 49% is owned by Malaysians, comprising at least 30% bumiputra. This condition relating to the equity structure of the company applies only in respect of the intended ownership of relevant landed property.

Agricultural Land
Foreign interests are not permitted to purchase existing traditional agricultural land for the purpose of conducting upon it, farming activities such as cultivating rubber trees and palm oil trees. Foreign interests are permitted to purchase agricultural land for the following purposes.

• Conducting commercial farming activities using advanced technology
• Operating an industry based on agriculture; and
• Operating a tourist project; provided that the purchase is made by a company, which is incorporated in Malaysia and of which at least 49% is owned by Malaysians, comprising at least 30% bumiputra.

Foreign interest are permitted to purchase agricultural land, for the purpose of providing goods for export, as outlined by the Ministry of International Trade and Industry (MITI). The equity structure of the foreign interest is to be in accordance with the guidelines determined by the MITI.

Industrial Land
Foreign interests are permitted to buy industrial land for the purposes of operating a company subject to the following conditions:

• They must have a manufacturing license issued by MITI; and
• In respect of a company, which does not have a manufacturing license from MITI, the foreign equity participation in that company shall have the FIC’s prior approval.

Land for Development
All purchases of land by foreign interests for the purpose of development as a housing project, business property of industrial area shall be made by a company, which is incorporated in Malaysia and of which at least 70% is owned by Malaysians, comprising at least 30% bumiputra.

Effective Date
These guidelines came into force from June 24, 1995. The FIC guidelines on the purchase of residential property by foreign interests which were released on 17 December 1992 have been repeated.

Application

1. All applications can be made using the following forms:
• FIC 1/95 and Appendix A/95 forms for the purchase of residential units
• FIC 2/95 and Appendix A/95 forms for the purchase of shophouses, business complex space and office space, factory and factory lot.
2. All completed forms should be sent to: