Government To Consider Incentives,Tax review To Encourage REITs

The government is considering more incentives to stimulate the competitiveness of the local real estate investment trust (REIT) sector,Deputy Second Finance Minister Datuk Dr Awang Adek Hussin said. (The Edge (29/1/07)
While launching the prospectus of Amanah Raya REIT,he also highlighted the potential of REIT in Malaysia by disclosing the following statistics:
·         REIT is a new growth area and Malaysia is a new market for this.
·         The number of listed REITs in 2005 was six,with RM2.1 billion in total assets and RM2 billion market capitalisation.
·         By end-2006,there are nine REITs with RM3.1 billion in total assets and RM2.4 billion market capitalisation.
·         Globally,REITs have become more significant. Global market capitalisation is about RM2.3 trillion and in Asia there are 55 REITs listed with a market capitalisation of RM133 billion.
In his speech,he said that the government:
·         Is looking into various incentives to promote and facilitate the sale of properties from property holders to REITs.
·         to promote REITs and to be in line with other countries,Malaysia needs to be competitive vis-a-vis our neighbours and other markets hence cannot lagged behind,in terms of new REITs or incentives.
·         Might review its withholding tax in particular corporates on REIT investors as it  depend on what happened in other markets. (The latest withholding tax is 15% for local individuals and institutional investors,foreign institutions pay 20% and corporates – both local and foreign – pay 27%

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