Selangor in talks with Dubai investors

The Pakatan Rakyat (PR) Selangor government has entered into talks with seven potential investors from Dubai to boost the state's economy.

Mentri Besar Tan Sri Abdul Khalid Ibrahim said he met the potential investors in his recent trip to Dubai.

"They (the investors) have expressed interest to invest in the state as they are confident in our (PR) management," said Khalid, after chairing a monthly meeting with government department heads today.

He said the investment value could amount to US$10 billion but he did not specify when and how the investments would start rolling in.

He added that the investors were interested in various sectors of the state’s economy, particularly in the food and manufacturing industry.

Khalid said the investments would create ample opportunities for the people of Selangor, especially during the current "stressing" economic climate caused by soaring oil prices.

On another development, Khalid said he would make an announcement on Friday on how the state government will channel profits and revenue from natural resources to the people.

He said the announcement will be part of the government's approach to have a people-orientated economy.

"Civil servants and state executive councillors are just managers of the state's resources as ultimately, the people are the natural owners. We are interested in channelling revenues and profits from the state's natural resources to the people," said Khalid.

He said for example, sand and natural resources, under the previous government, contributed about RM20 million a year in revenue.

"If properly managed, these natural resources can contributed about RM200 million a year," said Khalid, adding that the revenue can then be put to better use to help the people.

Leasehold extension for Penang's industrial, commericial property owners

All industrial and commercial property owners on Penang state land can now have their leasehold titles converted to the maximum of 99 years, while all residential landed properties are to be made freehold.

Chief Minister Lim Guan Eng said the state government's decision is part of its land reformation and renewal policy.

"We want to give ownership of land back to the people," he said in a press conference in his office today.

"This decision will have significant impact on industrial and commercial sectors, especially in their ability to get financing," he explained.

He cited, as example, owners who have 40 or 50 years left in their individual leases can now have them renewed to 99 years, making financing readily available.

"For residential house owners, these houses will be theirs forever."

Lim expressed confidence that all eligible conversion applications, to be done by the Evaluation Department and Land Office, will be completed within the next four years.

Strata title holders who own apartments and flats would have to wait while the state government liaises with the federal authorities because strata titles come under the National Land Code.

He said forms for landowners to apply to have their status converted can be downloaded from the state government's website after tomorrow.

Lim, who is also DAP secretary-general, also said the Pakatan Rakyat (PR) is coming up with a set of standard operating procedures for uniformity in governance in the five states led by the coalition.

"We are having continued discussions on this matter," he said, adding that a committee has been formed to look into the formulation of the procedures.

He said this while acknowledging that the PR administrations in the five states under the coalition did not share a similar structure.

"The process is ongoing for the PR administration to be formalised and structured," he added.

On a report that PAS Youth wants to implement Islamic laws, including prohibition of gambling and liquor, and introduction of dress code for office workers in all PR states, Lim said the issue does not arise.

"We have already made it clear that we are going to be fair to everyone regardless of race, gender, religion or political background," he said.

"As far as we know Penang PAS has not made any request to us on this matter. It was never raised, never discussed. So the matter does not arise."

Review of land status

PROPERTY consultants and developers agree it is time to review the country's leasehold land concept to keep up with the changing needs and overhaul Malaysia's land tenure system.

They concur that such an initiative would benefit individual property owners as well the respective state governments through conversion premium income.

“While owners of individual leasehold property face a steady erosion in the value of their property over time, state governments are sitting on essentially a goldmine which could easily be unlocked by returning the freehold rights to the leaseholders,” Regroup Associates executive chairman Christopher Boyd told StarBiz.

He said it was timely for the Federal Government to take the lead to come out with a Leasehold Reform Act that would enable leaseholders to buy the freehold interest based on a certain premium formula.

“Both the Federal and state authorities should realise that there is no point in holding on to their freehold reversions. An orderly and transparent system for selling the freehold rights to the respective leaseholders would be a wise and popular move.

“The whole leasehold concept is an anachronism and has outlived its usefulness. It's a legacy from the old British system and Britain has also went on to review the leasehold concept that resulted in the Leasehold Enfranchisement Act (1963), giving leaseholders the right to buy up their freehold interest. “It is long overdue in Malaysia and a review is certainly in order,” Boyd said.

He said the Penang state government's initiative to encourage residential leasehold landowners to have their land converted to freehold status would have a far-reaching impact on the property market if it was adopted by the other states.

Penang chief minister Lim Guan Eng had recently urged leasehold landowners to apply to the state government to convert government land into freehold status with a premium payment.

The new land policy would allow 30-year, 60-year or 99-year residential leasehold land to be converted into freehold land on a case-by-case basis. The state is also looking at allowing the tenure of leasehold industrial land owned by the state government to be extended from 60 years to 99 years.

“It is a very far-sighted policy that will encourage a long-term mindset in terms of development plans by developers and enhance the attraction of Penang as a real estate investment venue.

“Leaseholders will substantially enhance the value of their properties, and when renovating or improving their properties, they can take a long-term view,” Boyd said.

He said the land premium price to convert leasehold to freehold status had to be based on a fair formula, taking into account the difference between the freehold land price and the property's current market price.

Real Estate and Housing Developers Association (Rehda) president Ng Seing Liong concurred that the initiative was a positive development for the people as well as the property sector and urged other state governments to look into adopting it.

Rehda Penang chairman Datuk Jerry Chan said land and property value could easily appreciate by 25% to 30%, and property projects would be more marketable and attractive to investors.

“The onus is on the state government to disclose the quantum of premium to be paid based on a fair formula for leaseholders,” he said.

Mah Sing Group Bhd president and group chief executive Datuk Sri Leong Hoy Kum said converting leasehold land to freehold status would certainly enhance the value of the development, depending on the location of the property.

If it is in the heart of the city and at a very strategic location, the appreciation in value could reach 100% to 300%.

“There will be a two-fold benefit to the owners – they do not have to face the hassle of renewing the leases, and they may enjoy a windfall should they decide to sell the land or property later. Bank financing for freehold property will also be easier to come by compared with property with less than 40 years’ lease.

“Besides enhancing the appeal of the development for local buyers, this will also encourage foreign buyers to participate more actively in the property market,” Leong said.

He said Penang was a good state to start with the initiative “since there is not much leasehold land there and other states can observe the effects of the initiative before deciding whether this is viable for the individual states.”

“Developers who may have been hesitant to develop land with short lifespan left on their leases will have a new avenue to explore business opportunities. This will be a stimulus to boost the property market as there will be more land transactions,” Leong said.