IRDA clears the air over BT’s conflicting information

ON March 4 2013, Singapore’s Business Times (BT) highlighted the conflicting information given to Singaporean investors when buying land and properties in Iskandar Malaysia.

Entitled “Iskandar beckons, but investors beware”, the article brought up issues on lending, administrative matters and the 30% bumiputra quota.

The article said although Iskandar Malaysia “may hold promise to Singapore firms seeking a reprieve from high costs, or to property investors hunting a lucrative residential project, the process of making an investment there appears tricky.”

Regulatory authority Iskandar Regional Development Authority (Irda) and Iskandar Investment Malaysia (IIB), tasked to promote investments into the economic corridor three times the size of Singapore, issued a joint statement on Monday.

They say the standard rules on sale and purchase of residential properties apply for the whole of Iskandar, except for specific exemption granted in designated areas.

“Non-Malaysians are allowed to purchase properties RM500,000 and above, plus a levy of RM10,000. There are no different rules for the different flagship zones in Iskandar Malaysia,” the statement says. It also advise investors to engage professional business advisors.

Among the issues brought up by BT were zoning or the lack of it and the control of plot ratios. Developments have to comply with standards approved by the local authorities. Citing Puteri Harbour in Flagship B (Nusajaya), the statement says every development there has to be compatible with neighbouring projects. While developers can appeal to increase the plot ratio under certain circumstances, approval will not be done at the expense of jeopardising prior agreements or promises made to buyers, the statement says.

The joint statement also refuted claims that a Malaysia-incorporated firm must be set up to own properties.

They can own land (except for agricultural land, which foreigners can only lease) and properties under their own names. For those who purchase properties under a company, that company need to be incorporated and registered in Malaysia. A company with 100% foreign ownership may still own properties in Malaysia. A company with 51% or more of its shares being held by foreigners will be deemed as a foreign company, the statement says.

A private limited (Sdn Bhd) company may be 100%-foreign owned with its entire board of directors comprising foreign nationals if it has a registered business address in Malaysia.

However, foreigners are not allowed to register for sole proprietorships and partnerships. The statement says there are certain regulated businesses which will require local directors or shareholders and companies with IDR (Iskandar Development Region) status are exempted from the 30% minimum bumiputra equity.

The statement says foreigners can purchase properties subject to certain quota and conditions as well as the types of properties and the loan tenure differ between financial institutions, which are governed by Bank Negara.

Those with projects approved for implementation are advised to engage Irda’s Iskandar Service Centre to help obtain land and development approvals (subject to the nature and magnitude of their investment), as well as immigration and incentives approvals.

Irda says it will continue to engage with Malaysian and Singaporean business promoters, business development consultants, financiers and other relevant parties to update and clarify policies and rules to avoid any future misconceptions.

Meanwhile, Singapore Business Federation (SBF) director (Asean and South Asia, global business division) Alan Tan (pic) says Singapore investments have “traditionally” gravitated towards Johor.

“Malaysia offers opportunities to market their products and services as well as to procure products and services. The manufacturing clusters seem most keen to expand into Iskandar,” he says.

Although its members hail from various sectors of the economy, the top three sectors are trading (26%), manufacturing (15%) and banking and insurance (13%).

SBF has 19,400 member companies, of which 70% are small and medium enterprises and the rest multinational companies.

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