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

. Requirements applicable on all kinds of property:
With effect from 1 January 2010, the minimum value of foreign acquisition of a residential property is now set at RM500,00. The acquisition can be by a corporate entity or an individual. At the state level, 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 RM500,000 but less than RM20 million:
Residential Units: No approval required;
Commercial Units: No approval required;

Agricultural Land: Must be at least 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 by a foreign entity; and
b)         indirect acquisition of property through acquisition of shares of the owner, 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

The above acquisitions that require approval are subject to the condition that the property must be registered under a locally incorporated company.

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