Malaysia has exempted the area of Medini in Johor state from the 30 percent property gains tax announced in October, a move that could support a US$800 million IPO of the region’s developer in 2014, media reports said.
Developed by Medini Iskandar Malaysia, it is the biggest township across the Singapore Strait and is the only area within the Iskandar Development Region to receive the tax break.
Explaining the exemption, Ismail Ibrahim, chief executive of Iskandar Regional Development Authority (IRDA), said: “Medini in 2006 and 2007 was a sparsely populated area and not a preferred investment location.”
“The objective is to provide the catalyst to drive investments into Medini,” he added.
Notably, the area has been exempt from property gains tax since its inception in 2006.
Medini Iskandar declined to comment on the latest tax break.
This will enable the company to draw more funds into the area, boosting its prospects for IPO and helping the government, which is looking to attract more investors, particularly from cash-rich Singapore, into the Iskandar region without causing a property bubble.
“It (the exemption) gives it an edge over others in Iskandar,” noted a banker involved in the IPO, which is expected to be launched in 1H2014.
Merrill Lynch, Bank of America, Maybank and Goldman Sachs have reportedly been appointed to manage the planned listing.
Other major listed developers in Medini include Sunway Bhd, Mah Sing Group, Eastern & Oriental and WCT Holdings Bhd.