KUALA LUMPUR- Currently, many stakeholders are finalising their budget proposals to be handed to the government before it is finalised in Parliament in October. As a concerned industry stakeholder, internationally renowned property consultant Dato’ Sri Gavin Tee states that the upcoming Budget 2015 will greatly impact the economy of Malaysia due to recent unfortunate events which have negatively affected investors’ sentiments of Malaysia.
Tee, who is the Founding President of Swhengtee International Investment Alliance, will be sharing his experiences with Malaysians following his numerous overseas travels as part of his “Swhengtee Property World Tour” where he was promoting Malaysian property to overseas investors. As the Property Ambassador of Malaysian properties, he has been meeting up with thousands of foreign property experts and investors through his trips and via his overseas offices. Swhengtee International Investment Alliance, of which he is the leader, is an alliance of the largest established international investment networks in the Malaysian property industry. It has branched out overseas and has offices and alliances in Beijing, Shanghai, Xiamen, Tokyo, Taipei and Hong Kong.
Following his survey among the thousands of investors overseas, Tee feels the urgent need to share with Malaysians the need for greater foreign participation in our economy and in particular our property market. The main purpose for this Press Conference is to propose to the government that in order to maintain the nation’s stability amid a number of destabilising events, the government needs to proactively address the issue through its Budget 2015. There is currently a big gap in perception between how foreigners view Malaysia and how Malaysians view foreigners and the world. In particular, the Chinese from China are avoiding Malaysia due to their negative perception following the two MAS incidents. Tee stresses that contrary to all the negative perceptions from both foreigners and locals, Malaysia in fact is still a very safe and peaceful country to live in. He presented facts and figures to prove his point that Malaysia is still a very good investment destination. “As such, Malaysians should not remain passive but make an effort to aggressively promote Malaysia.” He quoted his recent self-supported work in China which was effective to a certain extent to debunk the negative perceptions held by the Chinese.
He described the cooling measures and policies implemented so far by the government as rather general in nature which may even limit our potential economic growth. He stressed that the solutions should be more targeted and take into account our current circumstances.
Some of his proposals include the following:
1) Open-ended minimum amount for purchase of properties by foreigners
In a country which encourages tourism and economic growth, factors like affordability and value for money often attract foreign buyers and investors into the country. But this liberal policy has been curtailed due to the imposition of the minimum purchase price by foreigners. For example, some properties are excluded altogether from being bought by foreign buyers even though the selling prices per square foot are very high; this is because of the much smaller built-up area which translates to prices going below the required minimum amount stated by the policy (RM1 mil). With the increase in the supply of hotels, resorts, SOHOs, studios, etc.; which are in high demand by foreigners, this policy has the negative effect of discouraging such purchases by foreigners, thus having a negative effect on our economy. As such, Tee proposed that the minimum floor of RM1 million should only apply to residential properties while it should be more flexible when it comes to commercial properties. “This will help to attract more foreign investments in these developments.”
2) Foreign quota should not be applicable to MM2H
The trend of MM2H applicants clustering in designated areas will cause an imbalanced and segregated social environment which in turn contradicts the idea of MM2H. As such, the “foreign quota” should be abolished with the foreigners being treated as locals when it comes to purchasing properties.
3) Bulk purchases should be allowed for commercial properties
The government’s policy of requiring developers to submit purchasers’ details for purchase of 4 units and above should apply only for residential purpose and be waived when purchasing commercial properties such as complexes, hospitality and tourism properties, as well as projects within the education and medical industries. Exclusive investment programs should be introduced to allow for the participation of corporate investments and funding managements as this will not affect the public’s affordability with respect to residential properties. A healthy supply and demand scenario in the case of commercial properties will add to our cultural and economic vibrancy.
Some local banks practise unfriendly and strict policies in regards to loan applications. Tee recommends that banks should be more flexible when dealing with commercial properties such as hotels, shopping malls, resorts, student accommodations, etc which require them to be managed by professionals. Guaranteed Rental Return schemes (GRR) may be the only solution to ensure good returns to the investors, thus making the property secured for the loan more secure for the bankers which in turn is beneficial to the nation’s property development industry.
5) Maintenance fee adjustments
Currently, maintenance fees are calculated based on per square foot rule of thumb instead of by the number of rooms per unit. If such fees are calculated based on number of rooms, this will help to stimulate the residential sector as more people will be encouraged to move from landed properties to high-rises especially in the wake of urbanisation. Take for instance a 5,000-sq-ft unit with 3 rooms. The maintenance fees imposed is five times that of a 1,000-sq-ft unit with 2 rooms based on the current calculation method. Both units have the same number of occupants, yet the ones staying in the 5,000-sq-ft unit have to pay 5 times more in maintenance fees!