Business Commentary Politics

Housing is a state’s jurisdiction, not federal’s. Land matters too

Part of the Forest City project that is being built.

Written by Aziz Hassan

August 31, 2018.

Recollections & Reflections – A commentary

IT’S a classic case of utter confusion and it all began when Prime Minister Tun Dr. Mahathir Mohamad out of the blue dropped another bombshell when he announced that foreigners will no longer be allowed to buy properties at the Forest City being developed out in the straits separating Johor and Singapore.

This was followed by a statement from Mahathir’s office to say that while Malaysia welcomes foreign property buyers and investors, the transactions do not guarantee residency. No one has said it does. The latter is a privilege accorded to purchasers under the Malaysia My Second Home (MM2H) programme and many people know this, so it is not an issue.

And not for the first time, the shock delivered by Mahathir was followed soon after with a decision to review the deals concerning the sale of properties at Forest City, where work began in 2014 and completion of the plans thus far is schedule for 2035. The plan is to house 700,000 people eventually.

The review panel is chaired by Housing and Local Government Minister Zuraida Kamaruddin. But seriously, what is there to review when you have already made up your mind, although that decision goes against statements by others in the government and also existing laws and regulations.

What is clear is that in Malaysia, apart from a national housing policy that seeks to provide Malaysians with quality and affordable housing, foreigners are by and large free to buy real estate, subject to a few restrictions. And unlike in some countries in the region, Malaysia does not impose restrictions on the purchase of freehold properties.

The restrictions involve real estate built on Malay reserve land, a ceiling on the percentage of units vis-à-vis non-Bumiputra lots and that a property must not be in the low- and medium-cost categories.

Then there is a ceiling price for residential properties that can be bought, for example, which differ from state to state but many impose a minimum of RM1,000,000. Penang has a maximum of RM2 million for the island but half of that for the mainland, which is similar to the ceiling in most other states.

Crucially, it must be noted that since real estate is inter-twined with land, the matter becomes one of a state’s jurisdiction, which means that no matter how strongly Mahathir feels against allowing foreigners buying real estate at Forest City, he legally can’t impose his mind of the developer or the state of Johor, which has a stake in the project. 

Where Forest City is concerned, there is another catch, with those in the know pointing out that since it is a project sprouting out from four man-made islands, it is out of the ambit of the strict definition of land.

It should also be noted that it was only on August 2 that Water, Land and Natural Resources Minister Dr. Xavier Jayakumar replied to a Parliamentarian’s query to confirm that foreigners indeed can buy freehold properties at Forest City, in line with the ruling by the National Land Council on March 2014 according to Section 344 (b) of the National Land Code. To decide otherwise will first require the Code to be amended.

After Mahathir’s statement, the developer reacted to say this went against what he had told a meeting with them earlier in August, when he made known to them that foreign buyers and investors were welcomed.

Three days after Mahathir spoke out, Johor Mentri Besar Datuk Osman Sapian also sought to clear the uncertainty by reiterating that foreign buyers were free to buy properties in his states, but also adding that part about not guaranteeing residency status. The latter comes only when a foreigner’s application under the Malaysia My Second Home programme is approved (MM2H) but no one said that foreigners with properties at Forest City are automatically granted this privilege.

Since the law and rules are crystal clear, there is absolutely no need for anyone to seek further clarifications from any authority.

There is also no reason for developer Country Garden Pacificview to feel jittery so long as all the legal provisions are adhered to and all permits/approvals in hand.

If investor confidence is what the Pakatan Harapan is looking for, this is precisely the kind of situation the country doesn’t need, conflicting statements and all.

(Journalist Zaidi Azmi did some of the background checks for this commentary.)






About the author


Aziz Hassan

A journalist since July 1976 with both the English and Malaya press and was with two newspaper groups before The Mole. Does corporate report-writing and translation in his free time. Currently also a contributing weekly rugby columnist for the New Straits Times.