(AFP) Malaysia said today it has relaxed its rules on property purchases to attract more foreign investment amid the world economic slowdown.

The new regulations, announced by Prime Minister Dr Mahathir Mohamad in a statement, make it easier for foreign companies and individuals to buy property.

Some restrictions on locals are also relaxed to spur economic activity.

The announcement comes a day after authorities lifted the last capital control affecting foreign investment in the stock market.

Mahathir said the government was committed to ensure an "open and business-friendly economic environment".

"Foreign investment guidelines will be eased to expedite investment processes and to encourage more foreign and domestic investment," he said in the statement.

The new rules, effective April 25, are part of additional fiscal measures in a supplementary three billion ringgit budget announced by the premier on March 27 to shore up the economy.

No restrictions

Foreigners are now allowed to buy all types of residential and commercial properties worth more than RM250,000 ringgit, including old or soon-to-be-launched projects.

Previously, foreigners were only allowed to acquire projects which had already been completed or 50 percent completed.

They no longer need to set up a company with local shareholders and can now borrow the purchase cost from local banks.

To encourage foreign firms to set up headquarters or regional offices here, they are now allowed to buy offices costing more than RM250,000 for each unit.

There will be no equity conditions and no limit on the number of units.

Those foreign manufacturers who are exempt from manufacturing licences will be able to own industrial lots or factories for their own use.

Local and foreign companies or individuals who want to sell property worth less than RM20 million no longer need approval from the Foreign Investment Committee (FIC).

Locals can buy property worth up to RM10 million without getting FIC approval. The previous limit was RM5 million.

Global slowdown

Under an existing "Silver-Hair Programme" to attract foreigners to retire in Malaysia, they will now be able to buy homes costing RM150,000 and above in designated areas.

Malaysia's export-driven economy is bracing itself against a possible global slowdown.

Almost 21 percent of all exports go to the United States, making it vulnerable to the business downturn there.

Last month the independent Malaysian Institute of Economic Research cut its gross domestic product growth forecast for this year, to 4 percent from 5 percent.