Lee sounds warning on Iskandar Malaysia, but the same occurred in Singapore

CapitaLand's investment in Puteri Harbour, Ascott Somerset Puteri Harbour.
CapitaLand’s investment in Puteri Harbour, Ascott Somerset Puteri Harbour which is still under construction. Photo: Khalil Adis.

When the man speaks, the entire nation listens.

Although retired from politics, former Prime Minister Lee Kuan Yew still wields considerable influence and is regarded as one of Asia’s most critical voices, especially when it comes to Malaysia.

Therefore, when Lee Kuan Yew recently spoke about the risks involved when investing in Iskandar Malaysia in his latest book, ‘One Man’s View of the World’ it caught the attention of both Singaporeans as well as across the causeway.

“This is an economic field of co-operation in which, you must remember, we are putting investments on Malaysian soil. And at the stroke of a pen they can take it over,” Lee was reported as saying.

Iskandar Malaysia was first mooted in 2006 by former Malaysian Prime Minister Abdullah Badawi.

It has now succeeded beyond its wildest dreams with record investments now valued at RM116 billion, according to the latest figure by Iskandar Regional Development Authority (IRDA).

First met with sceptisms and tepid response from Singapore, the city-state has over the years warmed up to Iskandar Malaysia owing to the excellent bilateral ties between the Lee Hsien Loong and Najib administrations.

Space constrains in Singapore versus the abundance of land, natural resources and access to cheap labour has made Iskandar Malaysia a sort of hinterland for land scarce Singapore.

The Republic is now the largest investor in the special economic zone led by Temasek Holdings and CapitaLand.

Figures from IRDA cites Singapore investments at RM6.05 billion followed by Spain, Japan, Netherlands and United Arab Emirates at RM4.18 billion, RM3.42 billion, RM2.80 billion and RM1.89 billion respectively.

Singapore cooling measures were implemented overnight

The aim of this article is to lay down the facts and present both sides of the story so that investors can make a more informed decision.

While Lee is right in raising his concerns about Iskandar Malaysia, the same can be said about policy changes in Singapore’s property sector.

In fact, the seventh property cooling measures that was announced on 11 January 2013 had affected investors overnight, leading investors to rush to sign documents to beat the clock.

Some of these measure that took effect on 12 January included new Additional Buyers’ Stamp Duty rates for Singapore citizens, permanent residents and foreigners buying their second properties at 7 per cent, 10 per cent and 15 per cent respectively.

Another one was the minimum cash down payment for individuals applying for a second or subsequent housing loan.

It was raised from 10 per cent to 25 per cent overnight.

The Loan-to-Value (LTV) ratio was also decreased for those with one or more outstanding loan – investors had to come up with 50 per cent cash upfront.

While the state of Johor had announced it was reviewing property tax on foreign owned properties, it will only be announced and implemented towards the end of the year giving investors sufficient time to react.


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