To absolutely no one’s surprise, the strict new conditions introduced in 2021 for the Malaysia My Second Home programme have caused interest in the once-popular retirement scheme to plunge.

Editor’s note: On April 19, the government announced that they would be conducting a review of the MM2H programme’s eligibility criteria.

Introduced in 2002, the Malaysia My Second Home (MM2H) programme was never a massive drawcard for the country, but was popular enough to bring in a steady stream of applicants over the years. The programme did not require residency in Malaysia as a condition for the visa, but although some successful applicants chose not to relocate here – at least not yet – quite a number of them did.

Those MM2Hers, of course, brought the biggest benefits to the country along with them. They not only met the financial criteria upfront to receive the visa, they also lived their lives here, buying houses and cars, investing in businesses, and spending on healthcare, education, shopping, and more. (Our own research here at TEG Media suggested that the average MM2Her spent roughly RM120,000 per year in Malaysia for their living expenses.)

These MM2Hers also served as unofficial goodwill ambassadors for Malaysia – affluent foreigners who had made a personal decision to leave their home countries and settle here instead. Their numbers were small, particularly as Malaysia’s own population continued to grow. After all, what’s a few thousand people when the country is home to over 32 million of its own citizens? MM2Hers were well-behaved, integrated well into local communities, had Malaysian friends alongside their foreign friends, and continually brought money into the country. It’s hard to find any government programme that has only positives and absolutely no negatives, but MM2H may have been the closest thing to it.

PROGRAMME’S REVISION CAUSED CONFUSION, PROBLEMS

In 2021, however, the government upended the programme for reasons that remain unclear. Following a lengthy suspension of the programme, harsh new conditions for approval were introduced upon the resumption of MM2H.

Initially, the new conditions were to apply even to existing visa holders, a complete betrayal of the promise Malaysia had made to these people when enticing them to make Malaysia their home in the first place. Only a huge outcry prompted the government to reverse course and impose only a couple of the new requirements (related to visa fees) on existing MM2Hers.

But the new conditions were so onerous, the pool of potential applicants all but dried up as a result. Instead of requiring a monthly offshore income of RM10,000, the figure was quadrupled to RM40,000. The fixed deposit requirement soared to RM1 million, over triple its previous figure of RM300,000. Applicants were also required to prove RM1.5 million in liquid assets, up from RM500,000. Visa fees surged dramatically, and even the term of the visa was slashed in half.

Almost everyone wondered what the government was thinking, and nearly all predicted doom for the MM2H programme.

That is exactly what has come to pass. Worse, not only has the number of new applications plummeted dramatically, scores of people who were holding the MM2H visa have chosen to exit the programme. In fact, for the period from September 2021 to June 2022, the data show that more than five times as many people have left MM2H than have applied for it.

And now, with the programme’s failure owing to the new conditions clear for everyone to see, from virtually all quarters the calls are growing for the current government to return some common sense to the once-popular MM2H programme.

LOCAL MEDIA CRITICISM GROWS

In just the last week, at least three mainstream media outlets in Malaysia have run four prominent stories on MM2H and called for it to be revised (again). Previous articles were also run in The Malaysian Reserve and The Edge, urging Malaysia to bring back the previous version of the programme.

In The Star, a lengthy op-ed piece was published on April 15.

“Since the change in the requirements, it is of no surprise that the revised guidelines failed to attract a meaningful number of applicants as the minister was quoted as saying only 267 new applications were received between September 2021 and June 2022, while some 1,461 holders pulled out of the programme,” the article said.

“Clearly, the revised MM2H conditions had become unfriendly to would-be foreigners wanting to take up the MM2H programme.

“Malaysia’s move to punish all MM2H holders due to the claim that some 7,000 of them were not residing in the country was unfair and if indeed these holders have violated the requirement, all the government had to do then was to revoke their pass,” the article noted.

If that claim was ever indeed made, we feel it’s more than unfair, it’s completely unjustified. No condition was ever set that MM2Hers had to live in the country, so it’s unconscionable to cry foul when some of them choose to exercise an option that was clearly given to them! Had Malaysia wanted MM2H to solely be a residency programme, that condition could have been set very easily right from the start.

The article goes on to roundly criticise the new PVIP, a “premium visa” that was rolled out last year, supposedly to attract “high-quality” wealthy people to Malaysia outside of the MM2H programme. (To say this visa programme has been a big flop would be an understatement.)

The Star‘s article then returns to MM2H: “As for the MM2H programme, which is a retirement programme, the government’s tighter condition has clearly backfired big time, with net attrition in terms of the number of holders under the programme.

“The biggest hindrance is the RM40,000 monthly income requirement, which does not make sense, given that the applicants are retirees.

“A more palatable income requirement should be the original amount of RM10,000 per month or if there is a need to raise this, the right figure should not be more than RM16,000 per month, which is a reasonable increase given that the original sum was fixed in 2002, and taking into consideration inflation.” (Editor’s note: We’re not sure Malaysia has seen a 60% inflation increase in the last 20 years that would make a corresponding 60% income requirement jump ‘reasonable,’ but let’s move on.)

“Similarly, the high fixed-deposit requirement too is a turn-off while the liquid asset requirement can be further fine-tuned to be more attractive unless the MM2H programme applicants are allowed to place the deposit in a foreign currency account.

“Malaysia’s move to drastically changed the eligibility requirement had backfired on would-be retirees as even new applicants are hesitant due to the flip-flopping nature of our MM2H programme.”

A LOSS OF CONFIDENCE AND TRUST

That particular issue was covered well in an article published by Free Malaysia Today on April 16, titled “MM2H damage done, trust is gone, say foreign residents.”

“Long-term residents under the MM2H programme have lost trust in the government after stringent new rules were applied last year and then later relaxed,” the article begins.

“The damage has already been done, says British national Kate Morgan, who has lived in Malaysia since 2011. ‘Many people already here on the MM2H visa no longer feel they are able to trust the Malaysian government,’ she said.”

The erosion of trust among MM2Hers already living here is compounded by the fact that new programme applications have all but dried up.

“Last week, an MM2H consultant told FMT that the number of applicants had fallen by 90% since the introduction of new conditions, from around 5,000 a year between 2017 and 2019,” the FMT article says.

“MM2H Consultants Association president Anthony Liew said the new requirements were among the major reasons for the drop, as neighbouring countries did not set such conditions.

“Donal Crotty, who has worked in Malaysia for 13 years and lived here for seven, said many MM2H holders he knew had chosen to move away.”

AN EXPAT EXODUS?

The next day, April 17, feature articles were run by both New Straits Times and FMT, chronicling a Penang exco’s call for MM2H conditions to be reset, citing as a reason the fact that expats were looking elsewhere now.

From the NST article: “Many expatriates will shun Malaysia for neighbouring countries if the authorities do not ease the overly strict conditions introduced for new applicants of the Malaysia My Second Home (MM2H) programme.

“State Tourism and Creative Economy Committee chairman Yeoh Soon Hin called on the Home Ministry to urgently review and revise the new MM2H conditions so that the programme could make a meaningful contribution in its revival after the Covid-19 pandemic.

“Yeoh stated, ‘As one of the top tourism destinations in Southeast Asia, Penang is known for its vibrant multicultural scene, savoury street food and strategic geographical location, which have attracted many expatriates. [These] expatriates play a vital role in bringing a multiplier effect for the economic development of Penang and Malaysia as a whole. Thus, it is beneficial for the country, if conditions for the new applicants of MM2H are fair, reasonable, and effective to encourage potential residents or investors from abroad to stay with us,’ he said today.”

According to FMT, Yeoh said, “These unnecessary barriers have hindered attracting long-term foreign residents ever since. If such conditions persist, I believe many expatriates will no longer choose Malaysia and will seek out neighbouring countries. It will be much easier for them to meet the eligibility requirements to settle there.”

CHANGES AND CONSISTENCY ARE NECESSARY

The Star‘s article concluded that Malaysia must make changes to be seen as a viable option to foreigners: “If Malaysia wants to compete with the rest of the world, especially within the ASEAN region itself, to attract the global retirement market, Malaysia must have policies that are consistent and firm.

“After all,” the article continued, “with the current MM2H programme holders attracting barely less than 0.1% of the country’s population, we have a long way to go to be concerned about the social impact of foreign retirees residing in Malaysia.

“On the contrary, these retirees can be good economic generators from their spending habits related to tourism, healthcare, education, and even for the retail segment.

“After all, the target market based on these revised requirements may not even consider Malaysia, as they would rather be retiring elsewhere and in locations that are either deemed as global cities or exotic locations.”

Since the revised terms were announced, we at TEG Media have ceaselessly been advocating for a return to a more commonsense set of requirements for MM2H. We believe that MM2H can easily be a very positive programme for Malaysia, not only bringing in foreign income through the visa holders, but by also showing that the country is friendly and welcoming to foreigners, valuing their contributions and presence in the country. This in turn has a positive influence on decision-makers in overseas companies looking to the ASEAN region for expansion or investment.

We continue to believe Malaysia is an excellent place for expats to live, and join in with the growing chorus of calls for PM Anwar’s unity government to make a significant course correction to the MM2H programme. If steps are taken to make the programme more accessible again, and to restore the broken trust, we believe the MM2H programme can be beneficial for the country and for Malaysians, and hope to see some changes made in the near future.