Foreign investments in Johor’
> Economist says federal govt should clarify stance on ownership of properties quickly
PETALING JAYA: The federal government should clarify its stance on foreign ownership of properties in Johor as soon as possible in order to avoid a potential slowdown in foreign investments, said Sunway University Business School Economics Professor Dr Yeah Kim Leng.
“The initial statements were not clarified, which caused a lot of confusion to investors, potential buyers and the developer. This is a case of policy uncertainty, as the initial comment (by the prime minister) conflicts with the state’s development policy, namely the Iskandar Regional Development Authority (Irda),” he told SunBiz.
Although the prime minister subsequently clarified that investors from China can buy residential units at Forest City but would not be issued visas to live there, the Housing and Local Government Ministry has decided to review the guidelines on foreign ownership.
Yeah said urban enclaves such as Forest City are not uncommon and similar projects can be found in Dubai, India and elsewhere in the world. Some of these projects, aimed at expatriates and the elite, have also been criticised.
“There should be further refinement in the development strategy especially in the real estate and construction sectors, so that these high-end projects can be better coordinated … what is important is that the policy is clarified, if not, it could slow down foreign investment projects due to uncertainty in government policy direction.”
Yeah said Malaysia is still “going all out” to attract foreign direct investments and investors do take note of Malaysia’s openness. However, the issue must be clarified as soon as possible so that Forest City, which is a sizeable project, can move on.
“Potential buyers will put their purchases on hold and, due to increased risk, some existing owners may want to sell off their units. This could also affect the value and pricing of the properties. These are some of the possible negative developments if the issue is not cleared up,” he added.
He said the developer should also consider being more open and communicate more with the media and the public, in order to address any misconceptions and lack of understanding about the project.
Meanwhile, a property consultant, who declined to be named, said it is business as usual at Forest City.
“It was just a quote that was taken out of context. So far, it is still premature to comment on the impact and the industry is waiting for the ministry to announce clearer guidelines,” he said.
He said the foreign ownership in Johor policy is already in place and the market is merely waiting to have more clarity on the guidelines.
He also noted that property sales to Chinese buyers have already reduced substantially over the past one year, since the imposition of capital controls by the Chinese government.
The ministry is still reviewing the guidelines after meeting with Country Garden Pacificview Sdn Bhd, the developer of Forest City as well as Irda and the Johor state government.
Earlier this month, it was reported that the ministry is looking at reducing the percentage of foreign ownership in the project but no decision has been made yet.