Foreign Investment Committee
Key Points to note before you buy a property in Malaysia:
1. The requirement of state consent
principally there are two types of state consent. not all properties in Malaysia requires state consent. to note that the consent shall usually take some time. so important to have a longer completion period.
2. The need to conduct a land search
3. The need to conduct a requisition and acquisition search.
4. The requirement of FIC rulling
All foreigners intending to purchase a property in Malaysia be it a apartment, shop lot for commercial usage or landed property for residential purposes needs to obtain two consents before the purchase is considered valid and lawful. The first consent is the consent from Foreigner Investment Committee (FIC) and the Second is the respective State Consent of which the property is situated.
The FIC Consent has a few hurdle to pass before the FIC will consider to process the application.
The property concerned has to have a value of not less than [Insert Amount] except for industrial land and once the consent is granted the property bought cannot be sold for at least three (3) years from the date of the consent.
Residential Property : Foreigner can purchase the below kind of property:-
1. Terrace House – a terrace house with more than 2 storeys and with the value of less than [Insert Amount] and provided that the purchase does not exceed more than 10% of the total unit erected in the project concerned OR as the requirement of the respective State of where the property is located.
2. Land/Bungalow and Semi-D Property – the property price has to exceed [Insert Amount] and the purchase is not more than 10% of the total unit or land erected in the project concerned.
If the land purchased is for investment purposes, the purchaser has to set up a company in Malaysia with 49% of the shares belonging to Malaysian citizen including a 30% bumiputra holdings.
3. Condominium/Apartments – purchase price of the property has to exceed [Insert Amount] and purchase must not exceed 50% of the entire unit erected in the respective blocks.
Foreigner Purchaser (including individual and spouses) are not allowed to purchase more than 2 units of property where both are condominium or one condominium and the other one is not a condominium.
Once a third purchase or any subsequent purchase is made, the purchase is considered for investment purposes and it has to be done through a company set up in Malaysia which is 70% share holdings belonging to Malaysia citizen including at least 30% of bumiputra holding.
Factories or any other companies owned by Foreigner can purchase 2 properties for the workers and properties more than [Insert Amount] can be purchased excluding low cost housing, low-medium cost housing or property reserved for bumiputra or properties erected on Malay reserve land.
Permanent residence are allowed to purchase residential properties exceeding [Insert Amount] provided that either the wife or husband is a citizen of Malaysia or that the purchase are allowed to obtain Malaysia citizenship or has a made such said application.
Commercial Property : Foreigner are allowed to purchase commercial property of the below:-
1. Shop lot – of 3 storeys or more and are of the value of at least [Insert Amount]
2. Complex unit or office unit – provided the purchase has to be not more than 20% of the total unit erected in each project and that the purchase is made via a company incorporated in Malaysia and having at least 49% ownership by Malaysian citizen including 30% bumiputra holdings.
Agricultural Land :
Foreigners are not allowed to purchase such land for the purpose of traditional agriculture such as rubber trees or oil palm plantations. Purchase of such land is allowed provided that the land is for the purpose of:-
(i) commercial agriculture using high technology;
(ii) agricultural industry; and
(iii) project for the use of tourism
with the condition that the purchase has to be done through a Malaysia incorporated company with at least 49% Malaysia citizan ownership including 30% bumiputra holdings. However so, for the interpretation of growings for export purposes, the foreigner holdings in the company has to comple with the Kementerian Perdagangan Antarabangsa (MITI) guidelines.
Industrial Land :
Foreign buyers has to obtained a factory license form MITI and for companies which do not have such license, the foreign equity holdings in the company has to obtain the FIC approval first.
DevelopmentLand :
All such foreign purchase for the purpose of development of housing scheme, commercial development or industrial land has to be done through a Malaysia incorporated company with 70% holdings by Malaysian citizen including at least a 30% bumiputra holdings.
FIC application:
All application has to be made using FIC Form 1/95 with Appendix A/95 for residential units and FIC Form 2/95 with Appendix A/95 for shop lots, commercial and office units, factories or land for factories. The forms has to be submitted to:
The Secretary
Foreign Investment Committee
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This Guidelines 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 economy condition. This relaxation is made after taking into consideration the proposal made by the National Economy 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 with the change of the economy condition.
All purchase will be financed through a financial institution outside Malaysia. This is to enable the Government to have records of the acquisition. Approval will be granted automatically when the conditions are fulfilled by the purchaser.
The second consent to be obtained after the FIC approval is granted is the State Consent. Although there is no fixed rule that FIC approval has to be obtained first but it is a general practice that only after the FIC approval is obtained than the second stage of application to the respective State will be proceeded.
The FIC approval will generally take approximately 1 month and the State Consent will take another 1 to 1 1/2 months time.
