FOREIGN DIRECT INVESTMENT (FDI) Guide (2) Acquisition of a property in Malaysia

FOREIGN DIRECT INVESTMENT (FDI) Guide (2) Acquisition of a property in Malaysia

(Updated till September 2014)

Foreigners are able to purchase or acquire properties in Malaysia subject to the following requirements:-

Requirements applicable on all kinds of property:

The minimum value of foreign acquisition of a residential property located within Federal Territory (Kuala Lumpur, Putra Jaya and Labuan) is now set at RM1,000,00. The acquisition can be by a corporate entity or an individual. At the state level, there are different minimum purchase prices applicable at different state, but all foreign acquisition of property is subject to approval of the respective state authority’s consent. In most cases, your solicitor would submit the application on your behalf. The approval would usually take 1 month to 3 months, and most likely the consent will be granted if the transaction is genuine.

Property valued at more than RM1,000,000 but less than RM20 million (For Federal Territory):

Residential Units: No approval required;

Commercial Units: No approval required;

Agricultural Land (In Federal Territory): Must be at least RM1,000,000 and 5 acres and for the purposes of:

•         To undertake agricultural activities on a commercial scale using modern or high technology;

•         To undertake agro-tourism projects;

•         To undertake agricultural or agro-based industrial activities for the production of goods for export.

Property valued at RM20 million or more:

(a) direct acquisition of property valued at RM20 million and above, resulting in the dilution in the ownership of property held byBumiputera interest and/or government agency; and

(b) indirect acquisition of property by other than Bumiputera interest through acquisition of shares, resulting in a change of control of the company owned by Bumiputera interest and/or government agency, having property more than 50 percent of its total assets, and the said property is valued more than RM20 million.

The above acquisitions that require approval are subject to the conditions that:-

a)  the property must be registered under a locally incorporated company.

b)  The companies require to have at least 30 percent Bumiputera interest shareholding.

c)  Paid-Up Capital requirements for

• Local company owned by local interest to have at least RM100,000 paid-up capital.

• Local company owned by foreign interest to have at least RM250,000 paid-up capital.

Transfer of property to a foreigner based on family ties:

Approval not required, allowed among family members.

Once you have agreed on the terms with the seller, arranged the financing if required, you need to engage a lawyer to advise and act on your behalf when signing the Sale and Purchase Agreement and making payments until the transaction is completed. The money is paid to the solicitor who will forward the money to the seller when the transaction goes through.