According to the Malaysian State Land Code, foreigners who wish to purchase real estate in West Malaysia must first obtain prior approval from the relevant state government agency.

In line with the government’s initiative to promote development, the Economic Planning Department of the Prime Minister’s Department (“Economic Planning Department”) has introduced new real estate purchase guidelines (“Economic Planning Department Real Estate Guidelines”) that relax restrictions on foreign ownership of real estate.

For the purposes of the EIA Real Estate Guidelines, “foreign equity holders” refer to persons who are not Malaysian citizens or permanent residents, companies incorporated in foreign countries and/or local companies with 50% or more of the equity held by one or more of the above categories of persons. Incorporated company.

According to the Real Estate Guidelines of the Ministry of Finance and Economics, foreign interests are free to purchase commercial, industrial, agricultural and residential properties with a value equal to or exceeding RM1,000,000, except in the following circumstances:

• Residential units classified as low-cost and low-moderate-low-cost types as determined by state agencies;
• Real estate built on Malay reserve land; and
• Real estate allocated to Malay equity holders in any real estate development project determined by a state agency.

If approval from the EIA is required under the EIA Real Estate Guidelines, the EIA also requires that real estate purchased by foreigners (other than residential properties and real estate transfers by immediate family members to foreigners) must be registered in Malaysia. under the name of the company established.

Since land is a state matter, the relevant state government will continue to have jurisdiction and can impose conditions on real estate transactions involving foreign interests.

Real estate transactions that result in the dilution of Malay or government interests in the relevant real estate will require approval from the Regulatory Authority as follows:

Direct purchase

Direct purchase of real estate under the following circumstances:

1. Result in the dilution of Malay or government interests in the relevant real estate; and
2. The value of the relevant real estate is equal to or exceeds RM20 million; and

indirect purchase

Indirect purchase of real estate through share purchase by foreign equity holders under the following circumstances:

1. The transaction results in a change of control of a company owned by Malay interests and/or government agencies;
2. Real estate represents more than 50% of the company’s assets; and
3. The value of the relevant real estate is equal to or exceeds RM20 million.

If the approval of the Bureau of Economic Regulation is required under the Real Estate Guidelines of the Bureau of Economic Regulation, the Bureau of Economic Regulation will set certain equity and equity conditions for the real estate purchaser as follows:

Equity conditions

Have and maintain at least 30% Malay shareholding in its shareholding structure; and

Paid-in capital conditions

1. If the purchaser is a local company with local equity, the issued paid-up capital must be at least MYR 100,000; or
2. If the purchaser is a local company owned by foreign interests, the issued paid-up capital must be at least MYR 250,000.

Since the ECB Real Estate Guidelines are not laws but merely reflect government policies, there are no statutory penalties for non-compliance with the guidelines. However, the guidelines can be enforced through administrative means, which is manifested in the fact that government agencies play a supervisory role in granting relevant licenses, approvals, and permissions, and the relevant land bureaus may not handle real estate transfers that do not comply with the regulations.

The following transactions are not subject to regulatory approval requirements:

• Purchasing a residential unit under the Malaysia My Second Home program;
• Companies with Multimedia Super Corridor (MSC) status purchase real estate within the Multimedia Super Corridor area, provided that the relevant real estate is used solely for business activities (including as employee housing);
• Purchase real estate within approved areas in any regional development corridor by government-identified companies that have obtained relevant status from local state agencies;
• Purchasing real estate by companies that have obtained approval from the Malaysian International Islamic Financial Center (MIFC) Secretariat;
• Producing companies purchase industrial land;
• Purchase real estate by companies that have obtained international procurement center, operating headquarters, representative office, regional office, Labuan offshore company, bio-center status or other special status issued by the Ministry of Finance, Ministry of Trade and Industry and other ministries and commissions; and< /li>
• Purchasing real estate in a privatization project (whether at federal or state level), provided that the company involved is an original signatory to the privatization project contract.