FIC Guidelines

Foreign Investment Committee (FIC) Guidelines

The Foreign Investment Committee (FIC) has set various guidelines for the regulation of acquisition of properties by foreign interests. The FIC approval is compulsory for any acquisition of property by a foreign interest, including a permanent resident.

“Foreign Interest” means: -

individual who is not a Malaysian citizen or
a foreign company or institution or
a local company or institution whereby parties mentioned in (a) and / or (b) hold more than 50% of the voting rights therein.

The current applicable guidelines are in the “Guideline on the acquisition of properties by local and foreign interest” which came into effect on May 2003. Any approved acquisition of property by a foreign interest is usually subject to conditions imposed by the FIC (hereinafter referred to as the “conditions for acquisition”).

Residential Property

On a general rule, the foreign interest is allowed to acquire a residential property valued at more than RM150,000 per unit, with no limit on the number of property acquired with financing from internal and external sources allowed. Each State Authority will have the discretion to consider acquisition by a foreign interest, based on the area or location of property, types of property and
percentage of total units in a project.

However, there are also exceptions to the general rule as follows: -

a permanent resident may acquire a residential unit valued at more than RM100,000
a local manufacturing company, owned by foreign interests, may acquire residential units valued at less than RM150,000 but more than RM60,000, provided the residential units are to be used by the company’s employees.

Commercial Property

A foreign interest without having to incorporate a local company may acquire commercial property valued at less than RM10 million, provided that the commercial property is for its own use.

Agricultural Land

A foreign interest may only acquire agricultural land valued at more than RM250,000 or in an area of at least 5 acres, whichever is higher provided the acquisition is for the purposes of agricultural activities on a commercial scale using modern or high technology, or for an agro-tourism project, or for agricultural or agro-based industrial activities for production of goods for export, subject to conditions for acquisition.

Industrial Property

Subject to conditions for acquisition, a foreign interest is permitted to acquire industrial property, without any price limit, provided that the property shall be registered in the name of a locally incorporated company.

Public Auction

Foreign interest may acquire property valued at more than RM150,000 per unit, in a public auction, subject to conditions for acquisition.

Love and Affection

A transfer of property to a foreigner for love and affection requires approval of the FIC and approval is generally allowed for transfers among immediate family members only.

Lease

The approval of the FIC is required for any lease of property for a term of 10 years and above to a foreign interest.

Disposal

Other than regulating the acquisition of properties by foreigners, the FIC also regulates the disposal of properties by foreigners. For example, the disposal of a property by a foreign interest to another foreign interest requires FIC approval. Meanwhile, the disposal of a property valued at less than RM20 million by a foreign interest to a local interest does not require FIC approval. However, the FIC must be notified of the said disposal.

Charging

Any charging of property to a foreigner in Malaysia requires the approval from FIC. Such charging is only allowed provided if all loans taken shall be utilized solely for the operation of business in Malaysia.

Exemptions from approval

The following acquisitions of property by foreign interests are exempted from FIC approval: -

acquisition by Multimedia Super Corridor (MSC) status companies of any property in the MSC area, provided the property is used for operational activities (this includes using the property as residence for their employees)
acquisition of residential unit under Malaysia My Second Home Programme
transfer of property pursuant to a will or court order
acquisition of industrial property by a manufacturing company licensed by the Ministry of International Trade and Industry, for own manufacturing

Exemptions from conditions for acquisition

Although some acquisition of properties by foreigners requires FIC approval, some are exempted from conditions for acquisition and these include: -

acquisition for own residential use
acquisition of one or more contiguous properties with a total value of less than RM10 million

Note that the acquisition of an industrial property by a foreign interest for own manufacturing operations is exempted from the equity condition only and may be subject to other conditions for acquisition.

Restrictions

Foreign interests are not allowed to acquire: -

low – and medium / low cost properties
properties built on Malay Reserve Land
any properties allocated for bumiputeras in any development
stall and service workshops
agricultural lands developed on the basis of the homestead concept

Conditions for acquisition

When an acquisition is permitted by FIC subject to conditions for acquisition, some of these conditions relate to equity (for example: 30% bumiputera equity), share capital (for example: paid up capital of at least RM250,000), employment (for example: recruiting and training Malaysians), property development (for example: at least 75% of the total value of building materials and fittings used for construction should be of local interest), and registration (for example: property to be registered in the name of a local company).

Compliance period

Imposed equity conditions must be complied with within two (2) years from date of the FIC approval or from the date of commencement of the development of the property, whichever is earlier. This compliance status must be reported at least one (1) month before the compliance deadline or whenever requested by FIC. The compliance period may be extended for one year depending on merits of the case.