The Government’s decision to scrap the 30% bumiputra equity requirement for 27 services sub-sectors is a step in the right direction to raise Malaysia’s competitiveness in the global business front.
But in order to bring back the spotlight on the country as the place to do business and to attract more foreign direct investment (FDI), there should be proper follow through to unshackle the mantle of protectionism in the other economic sectors and create a more level playing field. One area is the property industry.
The world is certainly going through very troubled times and we have to gather all our resolve and resources to ensure the country is favourably positioned for a comeback when the global economy finally recovers.
Despite some signs of economic stability due to stimulus measures undertaken by the authorities, the International Monetary Fund sees long months of economic distress before the world economy recovers in the first half of next year.
Having lost much wealth and resources to the global financial crisis, countries worldwide will be desperately seeking to rebuild their strengths and sharpen their competitiveness to make a quick comeback when the world economy shows any signs of a recovery.
In order not to be left behind, Malaysia has much to catch up with the rest of the countries, including those in the region such as Vietnam, Thailand and Indonesia, which are making big strides in their competitive rankings.
To ensure a more competitive playing field for our local businesses and foreign investors, all the stifling rules and guidelines that affect the efficiency and competitive edge of businesses and industry groups should be removed eventually.
Given its link to the other 160 industry sub-sectors, the property industry has a huge role to play to breathe more life and activities in the local economy. But it also one of the most regulated industries and is made to fulfil various socio-economic objectives.
The local property industry is one of the most impacted by the global financial crisis as the people’s confidence in the state of the economy and their well-being nosedived since the middle of last year.
With plunging property sales and having to slow down or defer their projects, developers are bracing for tougher days ahead and do not want to be further burdened by some of these practices.
While the national housing policy should help all needy Malaysians to own their own homes, and if the bumiputra housing quota has to be continued, it should be streamlined so that there will be a consistent one across all the states in Malaysia.
Both the Federal and state governments should work together to streamline and have a consistent policy and implementation across the country.
Without clearer and more consistent implementation of the bumiputra quota policy, it will be hard for developers to continue their projects successfully and offer their best to buyers.
At present, the quota for bumiputra buyers ranges between 30% and 70% of the number of houses built, while price discounts for bumiputra buyers vary between 5% and 15%.
Although most states adhere to a 30% quota, it is 40% in Johor, while in some suburbs in Selangor such as Shah Alam, it is between 50% and 70%.
Industry players want the quota to be standardised at 30% while discounts for bumiputra buyers should be capped at 5% and should only be applicable for houses priced at RM250,000 and below. Buyers of houses that are priced higher than that are more financially secure and do not need such discounts.
An automatic bumiputra quota release mechanism that is standardised and transparent should also be in place. There should be an automatic release of the quota units after six months of a project’s launch or when a project has reached 50% of construction.
As property remains one of the most viable investment instruments around, there is huge potential to be tapped from raising Malaysia’s profile and competitiveness as a property investment hub.
To attract more foreigners to invest in Malaysian real estate, more consistent policies to attract FDIs should be implemented.
Developers lament that the policies in the various states contradict the Federal Government’s initiatives to attract foreign investors.
The abolishment of Foreign Investment Committee approval for foreigners purchasing properties priced at more than RM250,000 and the exemption of property gain tax on sale by foreigners reflect the Government’s initiative to promote FDI in real estate.
However, state governments still impose their own rules on foreign property sales and purchase. Such foreign quota restrictions make it hard for developers to sell properties to foreign buyers.
While more enabling and liberalising measures by the Federal Government are expected to be announced soon, the success of such measures, especially those pertaining to land matters that come under the purview of the state governments, is dependent on the willingness and efficient implementation by all involved.
● Deputy news editor Angie Ng believes that regardless of the good or bad times, much more can be achieved when all Malaysians unite and forge ahead as one.
By The Star (by Angie Ng)
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