Teo explains why Sabah must maintain policy
Published on: Sunday, November 20, 2016
Kota Kinabalu: The State Government will not consider a proposal by Sabah Real Estate and Housing Developers Association (Shareda) to lower the price cap of properties that can be owned by foreigners in Sabah to RM650,000.Special Tasks Minister Datuk Teo Chee Kang said the Government still maintained the Sabah Economic Planning Unit's policy of a minimum of RM1 million."This is not the first time Shareda has proposed to lower the capped value of RM1 million to which the State Government had explained and responded in July 2016. ADVERTISEMENT "On Nov 15, the State Economic Planning Unit received an official letter from Shareda with its proposal to lower the capped value to RM500,000, while on Nov 18, it changed its proposal to RM650,000."It is perhaps helpful to explain the reasons and justifications for the RM1 million and above threshold for foreign acquisition of properties as set by the State Government (approved by the State Cabinet) and also in line with Federal EPU Guideline on foreign acquisition of properties," he said.Teo was commenting on Shareda's strong objection to the Sabah Economic Planning Unit's policy of a minimum of RM1 million.Shareda President Datuk Francis Goh had urged the State Government and its Economic Planning Unit (EPU) to reduce the minimum price for real estate that could be purchased by foreigners to RM650,000 or above per unit to attract more foreigners to participate in the Malaysia My Second Home (MM2H) programme.ADVERTISEMENT Goh said there were few developers in Sabah with real estate products above RM1 million because locals could only afford properties at RM650,000 and below.Teo cited the following reasons and justifications for the State to maintain the RM1 million property value cap for foreign buyers:
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- To discourage influx of foreigners who are not high-end income earners to own properties in Sabah. In addition, with the capped value proposed by Shareda, the influx of foreign buyers will further increase the already high prices of residential properties in the State, which is detrimental to potential local buyers.- The proposed RM650,000 cap will increase undesirable competition between foreign and local buyers. With the 2017 Federal Budget where civil servants' housing loan limit has been increased to RM750,000, such undesirable competition will further cause the prices of houses to go up unnecessarily.- To help the people of Sabah, developers in the State are encouraged to build more houses below RM650,000 per unit or more affordable homes so that more locals can afford to purchase. If the RM650,000 and above threshold is allowed for foreign acquisition of properties, then developers will tend to develop more residential properties priced RM650,000 and above. - In terms of housing provision, the Government's main role is to help the lower income group by building low-cost housing for them. In fact, the main role of the Government is not to build residential properties or affordable homes for the rakyat in the long run if the private developers are doing it. It is hoped that private developers in Sabah will continue to build more affordable homes for the rakyat as it should not be the main responsibility of the Government to continuously build affordable housing in the long run. Private developers in the State will tremendously help to minimise the role of government as developers if private developers will build more affordable homes for the rakyat. - Currently, the high prices of residential properties in Sabah are already comparable to those in Selangor, Johor or FT Kuala Lumpur. It is because residential houses in Sabah are increasingly not affordable that the State Government decided to maintain the cap at RM1 million and above for foreign buyers to prevent further hike in prices and to protect local interests. It is hoped, he said, that the main focus and priority of private developers is to help the rakyat by building affordable housing and enable them to own homes. "It is not the priority of the Government to open up bigger housing market by lowering the capped value to attract more foreign buyers at the expense of the rakyat's affordability.Stay up-to-date by following Daily Express’s Telegram channel.
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"It is not that the Government is discouraging foreign investment in the purchase of residential properties but would encourage foreign investment to purchase at the high end market segment where there is minimal demand from the locals," Teo said.