MRMA urges Budget 2027 policy adjustments to strengthen M-REIT market growth

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MRMA urges Budget 2027 adjustments

Highlights

MRMA proposes reinstating the 10% withholding tax concession on REIT distributions that expired on 31 Dec 2025 to maintain investor appeal.
MRMA recommends retaining the nominal RM10 stamp duty for tenancy novation agreements and classifying REITs as property-based businesses under Section 2 of Act 242.
The expiry of the withholding tax concession increases industry pressure due to volatile financing costs, rising compliance demands and intense global competition for capital.

This article was translated from the original. Read the original version by our correspondent here.

Policy proposals for market competitiveness

According to The Edge Malaysia, citing an MRMA press statement issued on 10 Oct, the association said the proposals remain relevant to supporting capital formation and sustainable growth in an increasingly competitive regional investment landscape.

Key proposals include reinstating the 10% withholding tax concession on REIT distributions, which expired on 31 Dec 2025, to maintain the sector's appeal to local retail investors and foreign investors. MRMA also proposed retaining the nominal RM10 stamp duty for tenancy novation agreements to reduce administrative and transaction costs during property acquisitions and lease-related dealings.

In addition, the association called for a review of the implementation of service tax on utility reimbursements under rental and lease arrangements to minimise compliance burdens and unintended costs for businesses. To enhance operational efficiency and reduce costs, MRMA also recommended that REITs be classified under the definition of property-based businesses under Section 2 of Act 242, allowing M-REITs to manage their own properties and assets.

Industry pressures and implications for the sector

MRMA said Malaysia's REIT industry continues to navigate an environment shaped by volatile financing costs, changing investor expectations, rising compliance demands and intense global competition for capital following the expiry of the withholding tax concession.

According to the association, Malaysian REITs continue to demonstrate resilience through disciplined capital management, diversified portfolios and active asset management. MRMA added that it remains committed to engaging constructively with the government and the Securities Commission Malaysia to provide market insights and advocate measures that enhance capital market competitiveness.

Al-‘Aqar Healthcare REIT sukuk programme of up to RM3 billion that we previously reported highlighted the REIT's efforts to strengthen funding sources for investments, refinancing Islamic facilities and working capital requirements. The structure comprises Islamic notes and Islamic commercial paper programmes under a single aggregate limit, demonstrating how REIT players maintain funding flexibility while investor sentiment remains selective.

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