Heated discussions on stricter MM2H conditions

This article first appeared in City & Country, The Edge Malaysia Weekly, on August 23, 2021 - August 29, 2021.
The MM2H programme plays an important part in the recovery of the property sector (Photo by Low Yen Yeing / Edgeprop.my)

The MM2H programme plays an important part in the recovery of the property sector (Photo by Low Yen Yeing / Edgeprop.my)

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The Malaysia My Second Home (MM2H) programme has been well received since its inception in 2002. Offering a renewable 10-year multiple-entry visa, it has attracted applicants from mainly Asian countries, including China, Japan and South Korea.

Various news reports indicate that the MM2H programme had generated RM40.6 billion from 21,841 approved applications from 2002 to 2018.

The programme was temporarily suspended for review and improvement by the federal government in August last year. More than 1,000 applications were pending approval.

This month, the MM2H programme made a comeback, with stricter conditions to attract only applicants who can contribute to the country’s economy. The programme is now under the purview of the Immigration Department, instead of the Ministry of Tourism, Arts and Culture.

The new conditions include the requirement for applicants to have a minimum of RM1 million in a Malaysian fixed deposit (FD) account. This is an increase from the previous condition of at least RM150,000 for applicants above 50 years old and RM300,000 for those 50 years old and below.

Applicants must also have an offshore income of at least RM40,000 a month, compared with RM10,000 previously. They must also show proof of an additional RM1.5 million in liquid assets and spend at least 90 days a year in Malaysia.

The quota for MM2H participants is now limited to not more than 1% of the Malaysian population. There has also been an increase in the processing fee and levy.

The new conditions apply not only to new applicants, but also those looking to renew their MM2H passes. New applications can be submitted from October.

The new conditions do not state the requirements for potential applicants who have retired with no fixed monthly income. There is also no information on parents who intend to have their children educated in Malaysia, which was one of the main reasons foreigners applied for the MM2H pass.

Stricter conditions

The stricter conditions have stirred heated discussions online and among those in the industry. Many have commented that the requirements are stringent and the government may not achieve its goal.

Ben Huang is a Chinese businessman who moved to Malaysia in 2018 on a student visa. He had been thinking about applying for the MM2H visa after he finishes his studies here as he likes the slower pace of life in Malaysia and his job allows him to work remotely.

Commenting on the new conditions for the MM2H programme, he says, “It is too harsh ... and there are too many requirements. There are other countries in the region where you can get a residency visa with a sum of money and without the requirements. 

“Also, the required monthly income of RM40,000 translates into about US$10,000. For people commanding this level of salary, how would they have the time to stay in Malaysia for 90 days a year?”

Poloair Consultancy (MM2H) Sdn Bhd managing director Jaime Chew notes that many existing MM2H holders have responded that they will give up on the visa following the requirements to have a monthly income of RM40,000 and RM1 million in an FD account. The new requirements, she reckons, can be detrimental to the MM2H programme and will have a negative effect on the economy as many MM2H holders are feeling insecure and have lost confidence in the Malaysian government.

“[If this happens,] Malaysia will lose billions of ringgit in bank deposits and monthly spending from these groups. Besides, the country will lose its own credibility as well. With such a drastic jump in income and fixed deposit requirements for new applications, many foreigners will stay away from Malaysia,” Chew tells City & Country.

“If they are able to meet such high requirements, they have many other options to choose from. Some may prefer to go to our competitors such as Thailand or Vietnam, which offer a similar programme with more friendly terms.”

Several associations have expressed their concerns about the stringent financial requirements and have called for a review of the new conditions as well as the renewal applications of existing pass holders.

The Malaysian Institute of Estate Agents (MIEA) says the requirement to have a monthly income of RM40,000 is a drastic move, and that different classes of applications can be tailored to cater for the various types of foreign applicants.

“Having liquid assets of RM1.5 million is a dramatic change, [while] placing a fixed deposit of RM1 million in a Malaysian bank is a dramatic rise. [These conditions] should be based on the different classes of application. This sudden move will discourage foreigners from participating in the programme and it will not be a stimulus for the agents to secure them,” it said in a recent press release.

“Applying this new rule to existing MM2H recipients will be dampening and not practical. Policies need to be consistent in order to promote confidence. We propose that all existing MM2H pass holders should not be affected by this new ruling. It is more to show our credibility in the laws we introduce and uphold it as there exists trust and goodwill from those who have participated in the programme. It is important to state that we are involving people’s lives.”

The MIEA proposes that the implementation of the new conditions be deferred to December 2022 in the light of the pandemic, and to allow sufficient time for preparation. The programme, it points out, plays an important part in the recovery of the property sector, which has been badly impacted by the pandemic.

In a press statement, the Malaysia-China Chamber of Commerce (MCCC) expressed its reservations on the new stringent terms imposed as it believes they will have an adverse impact on the intended results of relaunching this programme. “It is especially unfair to apply the new ruling to existing MM2H participants when they renew their passes. It is more acceptable if new requirements are only applicable to new applicants,” it stated.

“While MCCC believes that this programme may be useful and relevant for Malaysia, and in particular its economic and trade relationship with China, we feel that under the current circumstances of the Covid-19 pandemic, we should ensure people’s lives and livelihoods are given the utmost priority … Our focus now should be on quickly ramping up vaccinations and achieving herd immunity so that businesses can be restarted. Once we have achieved this, we can look at MM2H and explore other programmes that are beneficial to our economic recovery.”

The MCCC believes that now is not the right time to revise upwards the terms and conditions for MM2H applications. Instead, the government should formulate more benefits and favourable terms for local and foreign capital to be involved in the revival of the country’s post-Covid-19 economy.

IQI Global group CEO Kashif Ansari points out that an economics report by Chinese international property portal Juwai.com and IQI Global shows that mainland Chinese buyers contributed an estimated RM8.4 billion to the Malaysian economy in 2018 alone. “They also purchased RM9.5 billion worth of Malaysian residential and commercial properties in 2018. More than four-fifths of the investments were in the residential sector,” he tells City & Country.

“In the first half of 2019, Malaysia was the fifth most popular country for the Chinese to buy property in. A typical overseas home budget for buyers from China ranges from US$283,000 to US$424,000.”

Chew suggests that the government review the new conditions so that the MM2H programme can continue to be attractive to those who are keen to make Malaysia their second home. “The government should come up with better benefits, incentives and favourable terms for the programme in order to attract more potential participants, who can then help to revive our economy post-Covid-19,” she says.

“The tenure should remain the same at 10 years as it is one of the points that really attracts many to join the programme. When they look at investing in real estate or relocating their families here, many consider it a long-term commitment.

“For new applications, the process should not be longer than three months. With the pandemic still going on, the government should really review this new ruling with care, as it involves the livelihoods of many of our MM2H friends.”