PROPERTY WRITER ALI ZARA OFFERS HER VERDICT ON THE STATE OF THE PROPERTY MARKET AND SUGGESTS THAT THE MALAYSIAN PROPERTY BUBBLE IS NOT SET TO BURST ANY TIME SOON.

The Malaysian real estate market has been chalking up solid growth year after year. The government has relaxed homeownership rules for foreigners, including Malaysia My Second Home programme participants, and introduced new tax incentives, as well. Those eligible can buy any number of residential properties in the country, subject to minimum rates set by the different states, with RM500,000 as the minimum purchase price in most states.

Foreigners may also buy existing commercial properties in their own names or under their company name. For purchase of land, however, the rules vary, so foreigners should be sure to check state laws before making any commitment. Financing is available to buyers through both local and foreign-based banks operating here and attractive loan packages are usually on offer.

While Malaysia – with its exotic locations, rich culture, and natural beauty – has long been a magnet for individual international investors, conglomerates from China and the Middle East have now begun to park their money with confidence in multibillion-ringgit projects, spurred by the country's rapid economic development, infrastructure expansion, and growing foreign investments.

In early March, the RM22 billion Mersing Laguna in Johor – a high-end international eco-tourism destination to be completed by 2019 – was launched with the signing of agreements between the master developer, Radiant Starfish Development Bhd, and its four partners, Chinese construction conglomerate Sinohydro Group, China-based theme park developer Shengrong Company International, Johor education foundation YPJ Holdings, and CIMB Insurance brokers.

RETAIL GROWTH
On the retail property front, Parkson Holdings Bhd, a Lion group company with over 105 Parkson department stores in Asia and seven shopping malls in China, plans to have a total of 10 malls carrying the Festival City brand name in Malaysia alone within 10 years. It recently unveiled its first, the KL Festival City in Setapak, a 1.1-million square foot mall planned to contain various outlets, with a total net lettable area of 500,000 square feet.

Despite the uncertain global economy, Malaysian retailers in 2011 sold RM83.2 billion worth of items ranging from clothing and jewellery to F&B and souvenirs, and exceeded the projected 8.1 percent growth, reflecting the vibrant retail and tourism sectors.

According to United Nations World Tourism Organisation-sanctioned figures, Malaysia ranked ninth in tourist arrivals marked by earnings of RM58.3 billion in 2011. For 2012, the Ministry of Tourism is looking at 25 million tourist arrivals generating an estimated RM60 billion in revenue.

A RESILIENT ECONOMY
Malaysia is not overly dependent on Europe and the United States for investments in its manufacturing sector, the leading contributor to its economy. According to Minister of International Trade and Industry Datuk Mustapa Mohamed, Malaysia is expected to equal or surpass the RM56 billion in manufacturing investments attained in 2011, of which 70 percent came from Asian countries such as China, India, Japan, and Korea, and from ASEAN.

Although the world economic environment is getting tougher and China has reduced its growth figures, Mustapa remarked, China's growth forecast of 7.5 percent for 2012 is still high and will cushion Malaysia's investment figures. Moreover, Malaysia is getting new investments in Johor for upstream and downstream businesses in the oil and gas sector – new investments that will further boost the 2012 figures.

Also ensuring economic stability is the government's Economic Transformation Programme (ETP), involves many new projects designed to enhance the country's economy by stimulating private sector-led growth and private investments; implementation has already begun for some projects.

Minister in the Prime Minister's Department Datuk Seri Idris Jala said Malaysia has exceeded most first-year targets of the ETP.Among them, the gross national income where the ultimate goal is to raise it to RM1.7 trillion by year 2020, the 2011 figure of RM841 billion surpassed the RM797 billion target.

The Statistics Department is expected to release the full 2011 figures in April. At the same time, the government is optimistic on achieving RM113 billion (after factoring in the current global scenario) in private investments in 2012, said Mustapa, noting that the RM94 billion in private investments achieved in 2011 surpassed the RM83 billion target by a considerable margin.

"We now have a strong foundation with some projects already taking off. There will be more to come and announcements will be made," Mustapa stated, adding that the country is targeting an average private investment of RM115 billion every year for five consecutive years under the 10th Malaysia Plan.

Meanwhile, Jala, who is also chief executive officer of the Performance Management and Delivery Unit, said no companies had cancelled their investment plans in the country despite the uncertain global economy.

Meanwhile, central Bank Negara Malaysia (BNM) expects the local economy to moderate to between four and five percent growth for 2012 after expanding 5.1 percent in 2011, pointing out its pace of growth will largely depend on how the global economy performs, which for now remains challenging.

Should the improvements in the US and resolution of the debt issues in Europe which have resulted in more stabilised financial markets continue, BNM said Malaysia's economic growth would then be at the upper end of the range. If these developments take a turn for the worse, growth would then be closer to the lower end of the range.

STEADY KEY INTEREST RATE
BNM announced in the second week of March that it has maintained the overnight policy rate at three percent after weighing growth concerns against inflationary pressures, noting high global commodity prices continued to pose risks to inflation. It said latest indicators and surveys of businesses point to continued expansion in private consumption and business spending. However, it cautioned that while global financial conditions have improved, downside risks to the global economy remain.

Economists expect BNM to have at least one rate cut this year in view of the uneven growth in Malaysia's key export markets, and based on the fact that growth momentum in Asia is still easing in 2012.

BLESS: BUSINESS MADE SIMPLE
As time is of the essence in the business world, the Business Licensing Electronic Support System (BLESS) was developed to streamline the process of acquiring licences, permits, and approvals to make Malaysia a better place for business.

It improves investment and business by simplifying the entire process of gathering information, applying for licences, permits, and approvals, tracking applications, feedback, and payment for investors and the business community. This has resulted in a substantial reduction in the time required for approval in various agencies and departments. Moreover, businesses can use a "one-stop" approach to apply for all licences, permits, and approvals online instead of going through individual channels.

As a directory, BLESS provides all the necessary information and a checklist of items required for each licence, permit or approval. This 24-hour business licensing and resource portal (www.bless.gov.my) is valuable for Malaysia's aims to be a progressively seamless business nation that constantly improves to better compete with other industrialised countries.

SAFEST IN SOUTHEAST ASIA
Malaysia's success in reducing its crime index (its overall crime index has decreased 11 percent) makes it Southeast Asia's safest and most peaceful country. It also gains international recognition with the Global Peace Index 2011 ranking it 19th out of 153 countries, up from 26th spot in 2009.

The increase in the level of security and peace, thanks to the joint efforts of police and local authorities, has led to a higher confidence level among foreign investors with foreign investments up by RM33 billion in 2011 compared to the RM29 billion achieved before the world economic crunch in 2007, according to Deputy Prime Minister Tan Sri Muhyiddin Yassin at the launch of the Johor-level safe city programme in early March 2012.