Singapore-based investors can now tap into Malaysian property sector

The next possible stop for venturing investors from Singapore definitely has to be its booming neighboring country, Malaysia, said a government official from the middle-income economy while citing efforts to strengthen business environment.

“With housing prices in Singapore escalating, Singapore-based investors are looking for neighboring investments that offer strong alternatives with less entry barriers. Kuala Lumpur has recently been experiencing a spike in transaction volumes that are reflected by a 10% increase in residential property prices. This is a strong point the Malaysian government is vouching for its promising property sector,” Chris Tan, Director of Performance Management and Delivery Unit (PEMANDU) said in a forum organized by the Eastern & Oriental Berhard.

The forum, “Invest in Malaysia, Invest in Kuala Lumpur”, gathered leaders from the property sector to discuss growth opportunities in Malaysia.

In its thrust to move its economy from a middle-income to high-income, the Malaysian government introduced the “Government Economic Transformation Program” that highlights strong partnership with the private sector to improve delivery system and create healthier environment for investments.

The three major initiatives in this program include strong privatisation and public-private partnerships (PPPs); establishment of a facilitation fund to provide support to private sector of high strategic importance, and striking a balance between the government, government-linked companies and the private sector.

PEMANDU’s Mr. Tan said that the government has asked the private sector to take over majority of its infrastructure projects. Currently, almost 92% of the projects, according to him, were dependent on private companies but are still under government’s monitoring to ensure wise allocation of the resources.

“In building stronger economic atmosphere, the government of Malaysia does not merely talk about vision, mission and strategic plans. “We have programs, instead of plans,” said Mr. Tan

Malaysia, regarded as one of the “four tigers” along with Singapore, Korea, and Taiwan in the early 80’s, hopes to bring its economy by 2020 to a high-income status – defined as a country enjoying a high income per capita of $15,000 by the World Bank. By far, Mr. Tan said that Malaysia is already half through it and the government is driven to double the current income per capita of $7,500 in the next ten years.

“Every part of the country urban or rural, regardless of race needs to have sustainable businesses,” Mr. Tan said noting that as Malaysia falls behind its contemporaries, the so-called “four tigers”, the government is keen on creating an atmosphere conducive for business growth.

High income economy delivers sustainable growth. Such a status will make Malaysia less reliant on resource-intensive industries. This growth will also make the country highly urban with the share of population living in urban areas growing from 64% to 70%. This will be concentrated in the economic centres such as Greater Kuala Lumpur or Klang Valley.

Malaysia currently ranks 23rd in the World Bank Doing Business 2010 Report. It lags behind Singapore, which holds the top place, followed by Hong Kong, Thailand, Japan and South Korea for Asia. Malaysia’s push for investment improvement is thus more than timely.

Aside from improving efficiency of the government delivery system, other issues raised by Mr. Tan that need to be addressed in order to elevate Malaysia as a candidate for a highly global city include eliminating corruption, reduction of crime, improving quality educational system, infrastructure, and putting in place cohesive public transportation.

Moreover, while the government is keen on boosting the economy by focusing on 12 major industries of Malaysia dubbed as the “12 National Key Economic Areas (NKEAs)”, Mr. Tan also highlighted growth potential from the property sectors.