M'sia slashes red tape to boost property sector

Published April 12, 2007

M'sian property stocks fly on global interest

Rosy outlook comes on heels of govt's moves to woo more foreign investors

By S JAYASANKARAN
IN KUALA LUMPUR


THE prospect of international investors entering Malaysia's property market has sent shares of property firms - especially those with land in the Iskandar Development Region (IDR) in Johor - soaring.

The standout example is state-owned UEM World, the largest landowner in the region. Its stock price has more than quadrupled in the past three months to above RM4.

Part of the allure could be a change in government mindset, with Kuala Lumpur seemingly determined to woo foreigners to increase Malaysia's share of foreign direct investment, which has been dropping relative to gross domestic product.

Prime Minister Abdullah Badawi first removed restrictions on foreign ownership of residential property. And he followed that up by scrapping a 30-year-old tax on property gains in late March. He has also indicated that he will make a 'significant' announcement regarding property this Friday.

'The property sector is set to boom and the gains could be spectacular,' said Lim Beng Leong, a director of UOB Kay Hian in Kuala Lumpur. 'Over the next two or three years we could see land price increases of between 50 and 300 per cent.'

Jason Chong, a fund manager with UOB-OSK Asset Management, isn't so sure about land prices but agrees that property stocks are a buy. 'Some of these counters are grossly undervalued as they are trading at hefty discounts to their book values,' he told BT.

The optimism over property is underpinned by the fact that a regional boom in real estate, fuelled by rising equity markets and commodity prices, has so far not spilled over to Malaysia. Malaysian property, for example, trades at a 20 per cent discount to similar property in Bangkok and is at least 80 per cent cheaper than Singapore. And house sales in Malaysia actually declined 7 per cent last year.

Analysts say foreign interest in Malaysian real estate is increasing. Last year, foreign investors sank RM11 billion (S$4.8 billion) into Malaysian property. And interest is growing. 'These guys look at Singapore and Bangkok and think that Malaysia is cheap in comparison,' said Previndran Singhe of Zerin Properties in Kuala Lumpur. 'Frankly, my phone hasn't stopped ringing since the PM announced the cancellation of the property gains tax.'

A new phenomenon is the emergence of Middle Eastern investors on the Malaysian real estate scene. In March, the Saudi Al-Batha group teamed up with local builder Glomac to buy 0.5 hectares of land in the Kuala Lumpur City Centre area for RM1,000 a square foot, 20 per cent higher than the previous transaction in the area.

Also that month, a Saudi prince bought the Four Seasons Resort on Langkawi island for RM435 million - a record for Malaysia.

But the biggest draw could be the Johor development. Mr Previndran of Zerin Properties helped launch Malaysian firm S P Setia's property development at Nusajaya in the IDR in Singapore yesterday and was amazed by the response. 'There is tremendous interest in the project over here,' he told BT. 'This thing is going to fly.'

April 13, 2007, 7.07 pm (Singapore time)

Malaysia announces measures to boost property sector


KUALA LUMPUR - Prime Minister Abdullah Ahmad Badawi on Friday unveiled measures aimed at reducing bureaucracy for housing construction in a bid to boost investment in Malaysia's sluggish property sector.

Key among the measures was a move to speed up approvals by local councils for development applications from the present three to five years, to just six months.

'Shortening the timeframe will have a positive impact on the construction industry, investors and business people, who have long waited for less bureaucracy and the lowering of hidden costs in Malaysia,' said Mr Abdullah.

'Today's initiatives will also contribute to improving the performance of the property and construction sectors,' he added.

The approval time will be further reduced to four months for certain projects such as those involving foreign investment, and government projects, he said.

Mr Abdullah said the initiatives would see an improvement in the performance of civil servants, often accused of being inefficient and slow.

'If the services that are provided can be sped at the local council level, more than 70 per cent of the complaints and grouses from investors, businessmen, consumers and the public concerning the public sector will be answered,' he said.

Other measures are aimed at encouraging developers to adopt a 'build and sell' strategy, where properties are only sold once completed, in order to protect investors from developers who run out of funds before construction is finished.

Malaysia in recent months has announced measures to boost investment in the property sector, which collapsed during the 1998 Asian financial crisis and has seen a lacklustre recovery.

On April 1, the government removed capital gains tax on property, while in December, it relaxed property ownership rules to allow foreign nationals to buy high-end residential properties without government approval. -- AFP

Published April 14, 2007

M'sia slashes red tape to boost property sector

Measures include fast-lane approval for projects involving foreign investors

By PAULINE NG
IN KUALA LUMPUR


MALAYSIA yesterday announced a package of incentives to boost the property sector, including shortening the approval time for projects involving foreign investors to as little as four months.

Prime Minister Abdullah Ahmad Badawi said one-stop centres will be set up at all local councils to approve development projects in 4-6 months - down from as long as five years now.

And special projects will get red carpet treatment. Those with high impact, involving foreign investors, government projects and 'build-sell' housing will be approved in less than four months under a fast-lane concept.

Also, professionals such as architects or engineers working on development projects will issue a certificate of completion and compliance, replacing the certificate of fitness now issued by local councils.

Mr Abdullah said red tape has hampered Malaysia's competitiveness by increasing the 'hidden costs' of doing business. Although the business environment can be improved further, the measures announced yesterday will put Malaysia's practices in line with those in more efficient countries, he said.

Property buyers will also enjoy greater protection through a proposed commissioner of buildings and guidelines for strata titles, to be issued within six months. And to encourage 'build-sell' projects, developers will be given fresh incentives, including allowing them to build medium-cost homes instead of less profitable low-cost housing.

Malaysian Institute of Architects president Tan Loke Mun said it is good to benchmark the local building sector against best practice in terms of speed, clarity and transparency. 'Time wasted in delays to the approval process does not create any wealth for all concerned,' Dr Tan said. 'Addressing this will go a long way towards making Malaysia a better place to invest and live.'

Although the construction and property sectors do not contribute greatly to the gross domestic product, they have significant multiplier effects on the building materials industry and the economy. Several recent initiatives have therefore been directed at the sector. Property saw strong growth from 2000 to 2005 before tapering off, but recent measures to liberalise the sector seem to be breathing new life into it.

Foreign Investment Committee (FIC) approval for the purchase by foreigners of property costing RM250,000 (S$110,000) and above is no longer required. And the number of units they can acquire is not limited also. But last month's abolition of real property gains tax has had the greatest impact, with prices already trending up, boosted by foreign interest.

Mr Abdullah said yesterday he is committed to further improvements to Malaysia's delivery systems. A task force referred to by its Malay acronym Pemudah, and comprising public and private sector bigwigs, has been asked to advise on further measures to improve procedures.

State and local government officers have been given two months to familiarise themselves with the new structure for processing development applications before the new measures are adopted. An inspection team will report monthly on the performance of local councils.

Local and foreign businesses have long complained about the bureaucratic minefields that abound in Malaysia - a complaint verified by a World Bank report that said it takes 25 procedures and an average of 281 days to set up a factory there. A similar move in Singapore requires 11 steps and 129 days.