Iskandar Malaysia is the southern development corridor in Johor, Malaysia. It was officially launched in November 2006 and covers 221,634 hectares of land area within the southern-most part of Johor. The development region encompasses an area of about three-times the size of Singapore and two-times the size of Hong Kong, and has been identified as one of the catalyst developments to spur the growth of the Malaysian economy.
In mid-2005, the federal government of Malaysia, along with the state government of Johor, identified the need for a focused and developmental approach to the region of South Johor. Iskandar Investment Berhad (IIB) was set up in 2006 to drive the development of catalyst projects in Iskandar Malaysia.
The Iskandar Regional Development Authority was established as a statutory body tasked with the objective of developing Iskandar Malaysia into a strong and sustainable metropolis of international standing.
One of the five flagship zones in Iskandar Malaysia, Nusajaya, includes the Legoland Malaysia theme park which opened to the public in September 2012, Puteri Harbour (a 688-acre integrated waterfront development) and EduCity, an education hub comprising universities and institutes of higher education, including Newcastle University and Marlborough College Malaysia. Nusajaya also encompasses Medini, a 2,230-acre international mixed-used development within Nusajaya.
Among the notable projects in Medini which have been announced include the joint development between Khazanah Nasional and Temasek Holdings, sovereign wealth funds of Malaysia and Singapore, respectively, to develop retail, residential, commercial and wellness-related offerings on these sites, and other prominent developments by reputable developers like WCT, Sunway and E&O.
A number of the real estate transactions in Iskandar, in particular in Medini, have been structured using an innovative lease structure whereby what is transacted is development rights up to a specified GFA and not the land area itself. It is not common in Malaysia to transact development rights referenced to GFA compared to transacting land area per square foot.
Another innovation is the extension of the lease term to one of more than 99 years. Under the Malaysian National Land Code, the maximum term for which a lease may be granted is 99 years. Under the innovative lease structure in Medini, the lease term builds in a mechanism to cater for the extension of the lease, subject to prescribed criteria, for up to 30 years. A lessee or purchaser of the lease may apply to IIB for the extension of the lease. The ability for extension which allows a lease term of up to 99 + 30 years allows for a term of the lease to extend beyond 99 years, similar to the position in Singapore.
The Medini lease structure affords greater clarity to the purchaser at the outset in terms of extension, tenure of extension and premium payable.
Various incentives are available in relation to properties in Medini and approved companies operating in that area.
Generally, non-Malaysians purchasing a property in Malaysia will need to apply for approval from the relevant authorities for the purchase, and non-Malaysians may not purchase properties below RM500,000 (approximately $165,000). Non-Malaysians purchasing a property in Medini are, however, eligible for incentives including an expedited approval process.
Tax and fiscal incentives as well as non-fiscal incentives are available to approved companies located in Medini. An application to the Iskandar Regional Development Authority may be made for such incentives which can include income tax and withholding tax exemptions in certain prescribed situations. Approved companies operating in Medini can also enjoy flexibilities under the foreign exchange administration rules and unrestricted employment of foreign knowledge workers.
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