Navigating EPU Guidelines: A Comprehensive Guide for Foreign Investors in Malaysia

Introduction

Malaysia’s real estate market has long been a top choice for global investors, thanks to its stable economy, relatively affordable property prices, and openness to foreign investment. However, the government has implemented specific laws and approval processes for foreign property acquisitions in order to protect national interests, maintain market stability, and uphold Bumiputera rights. These measures aim to balance foreign investment with local economic growth, ensuring sustainable development.

To strengthen regulatory oversight, the Economic Planning Unit (EPU) introduced the Guideline on the Acquisition of Properties in 2014, which was later updated and/or revised in 2022. This guideline outlines the requirements, restrictions, and approval processes for both local and foreign investors in property transactions to ensure that foreign investment does not negatively impact the local market.

2. Properties Foreign Investors Are Restricted from Buying

Foreign investors looking to purchase property in Malaysia must be aware of the following restrictions under the EPU guidelines:

a. Properties Below RM1,000,000

Foreigners cannot purchase residential or commercial properties valued below RM1,000,000, though minimum price requirements may vary by state.

b. Low-Cost and Medium-Cost Housing

These properties are reserved for Malaysian citizens, especially Bumiputera groups, to ensure that affordable housing remains accessible to locals.
The classification of low-cost and medium-cost housing is determined by state governments and may vary across different states.

c. Agricultural Land

Generally, foreigners are not allowed to purchase agricultural land unless they meet the following conditions:
1. The land must be at least 5 acres (approximately 2 hectares).
2. It must be used for government-approved agricultural investment, such as modern commercial farming or high-tech agriculture.
3. The land is designated for agro-tourism or export-oriented agriculture, where its produce is primarily for international markets.
These restrictions aim to prevent excessive foreign ownership of agricultural land, which could threaten Malaysia’s food security.

d. Malay Reserved Land

Under the Malay Reserved Land Enactment, these lands can only be owned by Malays or Malay-owned companies.
Foreign investors cannot purchase or lease these properties.
This policy is designed to protect the land rights of the Malay community and maintain their economic interests.

e. Government-Designated Land

Some lands are reserved for specific purposes and cannot be sold to foreign investors. These include:
1. Bumiputera Reserved Areas
2. Public Amenities Land
3. Government-Owned Land
These restrictions ensure that state land is used efficiently and that foreign ownership does not interfere with public infrastructure or development projects.

Exceptions Under EPU Approval

Although EPU imposes strict restrictions on foreign property purchases, exceptions may be granted for major investment projects that align with government priorities. These include:

High-tech industrial parks
Infrastructure development
Renewable energy projects

Such investments are subject to rigorous assessments by multiple government agencies to ensure they support national economic development and do not adversely impact local markets.

3. Minimum Purchase Requirements & State Regulations

In general, while foreign investments in commercial, industrial, and agricultural properties do not require direct EPU approval, they must comply with state government regulations.

Property Type	Minimum Investment Amount (RM)	Additional Requirements
Commercial Unit	Value of 1million and above	Must comply with relevant commercial use regulations.
Agricultural Land	Value of 1 million and above or at least 5 acres	Must meet one of the following criteria: 1. Modern or high-tech agricultural production. 2. Agro-tourism projects. 3. Export-oriented agricultural or agro-based industrial activities.
Industrial Land	Value of 1 million and above or at least 5 acres	Must comply with modern agriculture, agro-tourism, or export-oriented agricultural projects.
Residential Unit	Value of 1 million and above	Purchase of such residential units does not require approval from the Economic Planning Unit (EPU) but must comply with state government regulations.
Property Transfer Between Family Members	No minimum investment amount	Only allowed for transfers between immediate family members.

As of 2022, commercial, industrial, and agricultural properties purchased by foreign investors must be registered under a locally incorporated company.

Before purchasing property, foreign investors should review state-specific minimum price requirements and market conditions to ensure compliance with both national and local regulations.

4. Property Transactions Requiring EPU Approval

Not all property transactions require EPU approval, but the following cases must go through the EPU:

(a) Direct Property Acquisitions Affecting Bumiputera or Government-Owned Assets

If a foreign investor’s direct property purchase results in a reduction of Bumiputera or government-held assets, and the transaction value is RM20 million or more, EPU approval is required.

(b) Indirect Acquisitions Through Equity Ownership

If a non-Bumiputera entity acquires shares in a company that owns real estate, leading to a change in control of a Bumiputera or government-linked company, EPU approval is required if:
- The company's total assets include more than 50% real estate.
- The real estate value exceeds RM20 million.

Requirements for Approval

Foreign investors seeking EPU approval for property acquisition must satisfy the following conditions: investors must meet the following conditions:

At least 30% of the company’s shares must be Bumiputera-owned.
Domestic companies must have a minimum paid-up capital of RM100,000.
Foreign-owned companies must have a minimum paid-up capital of RM250,000.
The purchased property must be registered under a locally incorporated company.

📚 Series: Legal Guide to Real Estate Investment in Malaysia (For Chinese Investors)

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