This will put to rest concerns over the impact of mega projects on housing industry
BEFORE 1984 there was no restriction on non-citizens and foreign companies buying land in Peninsular Malaysia.
After Parliament enacted Act A587, inserting Part 33 (A) into the National Land Code 1965 (the Code), restrictions were put in place. The provisions prohibited them from buying any agricultural land, but in respect of building land, they may do so after receiving the consent from the relevant state authority. There was also no restriction on buying industrial land.
The objective, therefore, was clear. Foreign companies were welcome to invest and open up industries, but they could not participate in the agricultural sector. They could buy residential properties for their own use but must first get the consent from the relevant state authority.
The restrictive provisions in the Code, however, did not last long. In 1986, Act A587 was repealed by Act A658, resulting in the removal of the restrictions. After Jan 1, 1987, foreigners were free to buy any land in the country. This liberal open-door policy fortunately came to an end six years later when Parliament passed Act A832 and reintroduced those familiar restrictions with some important modifications. Act A832 came into effect Jan 1, 1993.
Under the recent amendment exercise affecting the Code last year, (Act A1516) Section 433B, (which imposed restrictions on foreign companies acquiring land in Peninsular Malaysia), was again amended, as a result of which foreigners must now get the consent from the relevant state authority if they wish to buy industrial land.
To sum up, if foreign companies wish to buy our land with the intention of building new townships, they can do so provided they get the consent from the relevant state authority. The hurdle to foreign acquisitions of our national assets is in the hands of the state authority (where the land is located), not the federal government. The latter, however, imposes some measure of administrative control via its 11-page Guideline on the Acquisition of Properties, published in 2010 by the Economic Planning Unit (EPU) of the Prime Minister’s Department.
State authorities impose their own rules affecting purchase of land by foreigners, and these may differ. In Selangor, for example, effective Sept 1, 2014, guidelines had been issued by the state Department of Lands and Mines to restrict foreigners from buying properties costing less than RM2 million in most districts in Selangor. According to the new guidelines, residential, commercial and industrial properties are divided into three zones.
Under Zone 1 (Petaling, Gombak, Hulu Langat, Sepang and Klang) and Zone 2 (Kuala Selangor and Kuala Langat), foreigners can buy properties costing not less RM2 million (residential) and not less than RM3 million (commercial and industrial).
For Zone 3 (Hulu Selangor and Sabak Bernam), foreigners can only buy strata properties. Foreigners are not allowed to buy agricultural land, Malay Reserve Land, non-strata landed residential and auction properties in Selangor. It should be noted that these restrictions mentioned in Part 33 (A) of the Code and the guidelines are focused on acquisitions by the average “small-time investors”.
What is now a matter of concern is when large tracts of valuable and strategically located land are sold (either through outright sale and purchase or via joint-venture) by Malaysians to foreign developers whose mega projects may have a negative impact on the local housing industry, as well as an adverse social impact.
For instance, there are concerns on the possible negative impact of the presence of big investors from China in Johor. According to a report dated Feb 11 last year in the South China Morning Post, a Guangdong based development company, Country Garden, was the first to invest in the Iskandar Malaysia region. This soon attracted other developers from China, including R&F Properties and Greenland Group. However, three years after its presale in 2013, Country Garden managed to sell only 70 per cent of its first project in Danga Bay.
Another massive project, known as Princess Cove (by R&F Properties) and consisting of 30,000 units, was in a worse condition. The company managed to sell less than half of the 3,000 units that went on pre-sale since 2014.
To put these concerns to rest, it is timely for the authorities to have a national policy on foreign acquisitions of land, so that any land-related problems can be addressed with clear guidelines. It would also be wise to establish a national registry of foreign property owners so that it would be easier to retrieve information on the extent of foreign ownership of land in the respective states.
Salleh Buang formerly served the Attorney-General’s Chambers before he left for practice, the corporate sector and, then, the academia. He can be reached via sallehbuang@hotmail.com