The Consumers Association of Penang (CAP) warned that the reduction of the price threshold for foreigners purchasing properties in Malaysia could be taken advantage of by some to launder money and drive up the prices of goods.
The association’s president Mohideen Abdul Kader cautioned that the reduced threshold to RM600,000 from RM1 million could result in undesirable people placing their ill-gotten wealth in homes here.
He said it would also result in increased speculation in property prices, reported Free Malaysia Today.
“Can the ‘Malaysia My Second Home’ programme unwittingly enable some applicants to launder their money, particularly from offshore accounts, in the form of property investment in Malaysia? The government has to be cautious about this possibility,” said Mohideen.
He said the lowering of the threshold would make developers reckless and urge them to go on building luxury homes, knowing the government would come to their aid.
“The developers had overproduced luxurious housing units even though there were already signs of a softening market as early as 2017. They should not be bailed out. Why should the government show favour to the developers?” Mohideen asked.
“In fact, the government’s priority should be for housing the lower income group, but developers are not keen on producing affordable housing,” he added.
He explained that the previous RM1 million threshold was already attractive to foreigners when the US dollar was stronger than the ringgit.
During the tabling of the 2020 Budget proposals, the government announced that it will lower the price cap to reduce unsold properties, which has amounted to RM8.3 billion in the second quarter of 2019.