M'sia to ease investment rules

Salesmen in astronaut garb with a visitor at last week's housing exhibition in Wuhan. But sliding growth is putting the brakes even on China's once red-hot property sector.

KUALA LUMPUR: MALAYSIA plans to loosen investment rules to lure foreign funds and will review guidelines to ease rules on foreigners buying property, Finance Minister Najib Razak said yesterday.

The government will also inject RM5 billion (S$2 billion) to double the size of a local fund that invests in undervalued companies to reduce the impact of a global slowdown.

'We have to make Malaysia more competitive,' Datuk Seri Najib said, adding that it is inevitable that the country's real economy would feel the impact of the financial turmoil.

While insisting that the country will not slide into a financial crisis, he said its economic growth forecast for next year will have to be cut from the current estimate of 5.4 per cent.

'Malaysia is not in a crisis and we will not go into a recession,' he was quoted as saying by Bernama news agency.

He added: 'Yes, our stock market is affected by the sentiments in other markets but I would like to stress that we are not in a financial crisis, and certainly we should not talk ourselves into one.'

Mr Najib said the government may also review its budget deficit targets for this year and next, and postpone some infrastructure projects.

Details will be revealed on Nov 4 in Parliament.

Mr Najib said some investments and property purchases may no longer require the approval of the Foreign Investment Committee (FIC).

Industry players say top foreign property buyers include Singaporeans and those from the Middle East, Britain, Europe and, more recently, China.

The government last liberalised the property market in April last year with measures including a blanket exemption on real property gains tax, the removal of FIC approvals for foreign ownership of houses costing RM250,000 and above, and unlimited loans for non-residents.

The measures paid off, with developers reporting higher sales, more than half of which went to foreigners, and prices in popular areas up too, said property consultant Ho Chin Soon.

Real Estate and Housing Developers' Association (Rehda) president Ng Seing Liong said that this time around, the government might further relax the rules on commercial or industrial properties.

Not many analysts were impressed with the measures announced, and some said the government needed to present more concrete economic policies.

Bank Islam senior economist Azrul Azwar said the measures would not provide the immediate results needed.

'The results of the liberalisation will be seen only in two to three years. The measures do not really respond to the needs of the hour,' he said.