The Private Lease Scheme (PLS) was mooted by Iskandar Investment Bhd (IIB) as a way to protect the sovereignty and retain land ownership in the 902ha Medini special zone of Iskandar Puteri, Johor.
IIB senior vice-president of the Medini land office Fauzidah Abdul Rahman said selling leases instead of land enables IIB to remain the landowner and retain control over the special zone.
"We have a lot of foreign investors coming in and they are very familiar with this scheme as it is common in other countries. Investors are all aware of this scheme as we are very transparent, they know that this is for 99 years with optional renewal for 30 years," she told SunBiz.
Fauzidah said the PLS is the best concept for Medini as the majority of investors are foreigners and, to date, they have not had any issues with the scheme as they are familiar with it.
Under this scheme, IIB as the landowner will sell the lease to master lease concessionaires, who will then subdivide the master title and sell down to property developers. These property developers will then develop the land and sell to the end purchasers.
According to Fauzidah, the process for the property developer remains the same, including registration, documentation and approvals.
"They have to go and apply for the building approval, development approval. It is the same, only the concept of land ownership is different. The rest is all the same. You still have to go to the local authorities for approval.
"By doing so, there is a further expansion of the economy, you have more investors coming in. By going downwards like that, the second layer of investors come in and they can get their own funding, whichever country they come from," she added.
Fauzidah said IIB wants investors who are committed to the long-term, not only for profit but to build a population and create an economy within Medini.
On whether end purchasers are aware of the scheme, she said all the guidelines, terms and conditions are spelt out in a document called the lease annexure, which gets registered together when the property developer registers the lease. It is also attached to the parcel titles.
SunBiz recently highlighted a court case in which 107 buyers of The Meridin@Medini, a development on the private lease scheme, are suing the developer, Mah Sing Group Bhd unit Tropika Istimewa Development Sdn Bhd, for not issuing separate strata titles for their units.
Fauzidah said the scheme, which is supported by the Menteri Besar and the land office, is an innovative one that provides an option to landowners who may not have the capacity or funding to develop their land, as they would be able to monetise the land without having to part with it.
On the proposed introduction of a new chapter to the National Land Code to allow PLS, she said it would regulate the scheme and protect all parties involved.
"It is good, it is innovative, we expect to have a lot more development coming in and it is timely for the laws to come in. Otherwise, it is not safe; not safe for end purchasers and not safe for us," she said.
"If we can have good regulation and provision in place, it would be good for us and also give added confidence to our investors," she added.
On whether any gaps have been addressed before the new chapter is introduced, Fauzidah said the legislative amendments are under the purview of the Water, Land and Natural Resources Ministry.
"We are not the ones doing the law, so any engagement (to educate the public on PLS) should be done by the lawmaker. If there are serious concerns, address them and put them in the law," she said, adding that IIB would provide information to the ministry if required.