Free trade zone poised to be investors’ favourite destination after Budget 2014 is implemented
By Khalil Adis
With the new ruling on foreign property ownership announced last week by Malaysian Prime Minister Najib Razak, Medini has suddenly become the new foreign investors’ darling.
The pro-Malaysian budget that comes into effect from 1 January 2014 is a significant shift under the Najib administration that requires foreigners to purchase properties from RM1 million onwards.
Taking a cue from policies from opposition-held states such as those by the Democratic Action Party (DAP) in Penang, the increase in minimum sum is to ensure property prices remain affordable for Malaysians.
Previously, foreigners can only buy properties above RM500,000 except in Penang where the price caps are RM1 million and RM2 million for condominiums and landed properties respectively.
With Medini being the only place in Malaysia where there is no such price caps and quota for bumiputras, this has made this special economic zone an overnight goldmine.
Goldrush in Medini
Located in Nusajaya, Johor, Medini is a free trade zone that the federal government has lifted price restrictions and bumiputra quotas in order to spur growth of Iskandar Malaysia.
This Grade ‘A’ site is home to two government-to-government joint-venture projects sealed in 2010 in Singapore as part of the historic land swop deal – Afiniti Medini and Avira Wellness Centre both by Khazanah Nasional and Temasek Holdings.
Divided into three zones – lifestyle, business and living, Medini spans 908 hectares of prime land.
In the lifestyle zone, where LEGOLAND Malaysia is located at, popular condominium projects that have been well-received there include Afiniti Medini by Khazanah Nasional and Temasek Holdings, The Meridin by Mah Sing Group and Paradiso Nuova by Zhuoyuan Iskandar.
The lifestyle zone is also where the Rapid Transit System (RTS) network headquarter station will be located at.
By 2018, it will form a connection from Singapore’s Mass Rapid Transit (MRT) system via the Tuas West Extension.
Different schemes for different folks
Medini offers a glimmer of hope for foreign investors who want to live, work and play in Iskandar Malaysia.
If you are just looking to just buy a property, then Medini will offer you an exemption from the RM1 million price cap.
You can still get round the hefty Real Property Gains Tax (RPGT) by holding on to your property beyond the five year period.
This means taking a long-term investment horizon by not flipping your property during the construction period or in the resale market until the five year period is over.
You can calculate when the five year period will expire by looking at the date when your Sales & Purchase Agreement is signed.
However, do note that a 5 per cent tax will still apply for foreigners and companies after the sixth and subsequent years.
For foreign knowledge workers or returning Malaysians looking to live, work and play in Iskandar Malaysia, you can apply under the ’15 per cent tax rate scheme for knowledge workers in Iskandar Malaysia’.
First announced by Prime Minister Najib Razak in his Budget 2010, those applying under this scheme need to be working in the nine promoted sectors with plans to reside and live in Iskandar Malaysia.
The nine promoted sectors that Iskandar Regional Development Authority (IRDA) has outlined include tourism, financial advisory & consulting, education, healthcare, creative industries, electrical & electronics, logistics, petrochemical & oleochemical and food & agro processing.
You can apply via your employer so that you can enjoy a preferential flat rate of 15 per cent tax on your employment income.
Once approval is obtained, you are also eligible to apply and opt to purchase a duty free car for your own personal use.
Putrajaya has also made exemptions on Real Property Gain Tax (RPGT) for foreign knowledge workers or returning Malaysians.
Outlined by IRDA as the ‘Medini Incentive Support Package’, foreign knowledge workers are exempted from RPGT when they dispose their land and properties in Medini until 2015 and 2020 respectively.
To qualify for the above scheme, you must have a Bachelor’s or Master’s degree with at least ten years of professional work experience in a qualifying activity or has a Ph. D. with at least five years of professional work experience in a qualifying activity.