Insight - Driving home a message on MM2H

Education facilities: The education sector has also benefited from MM2H applicants, many of whom send their children to the various international schools and colleges throughout the country.

THE global pandemic that has restricted the movement of visitors and activities has put on hold most economic activities throughout the world.

The crucial part in containing the pandemic for the country has been by reducing the movement of people, encouraging physical distancing and to focus on restricting incoming visitors, as well as closing its borders to limit the potential spread of the virus.

In Malaysia, the Malaysia My Second Home (MM2H) programme is one of the casualties as it involves foreigners with Multiple Entry Visas coming to Malaysia to stay.

The federal government has given a directive for a temporary freeze on the MM2H programme to reduce the number of foreigners entering the country.

Tourism Minister Datuk Seri Nancy Shukri said the freeze gives the ministry the opportunity to review and improve the programme and its process. It is hoped that the review will be based on the criteria, conditions, incentives and comparative study on equivalent MM2H programmes within the region such as Citizenship by Investment (CBI) or Residence by Investment (RBI).

Unfortunately, the recent closures of MM2H one-stop centre office at the Tourism Malaysia offices throughout the country and the centralisation of MM2H at the Immigration Office in Putrajaya on July 6, and the recent return of 6,000 applications to MM2H agents, gives an unclear picture of what the new policies are and where the MM2H programme is heading.

MM2H office at the ministryMM2H office at the ministry

It is understood that a lab has been established to relook at the MM2H programme. It is advisable that any policy review should include NGOs like Fiabci, Rehda and other associations that are directly affected by decisions on MM2H and whose views, comments and recommendations can further enhance the programme.

It would be good if the government could indicate the progress of the lab and the reasons for the recent reversals of applications so there is a clear direction on the MM2H status for all applicants and their agents.

The MM2H programme was established as early as in 2002 and was an initiative by the government to attract and allow foreigners who fulfill certain criteria to stay in Malaysia as long as possible on a 10-year renewable Social Visit Pass with Multiple Entry Visa.

This programme is open to all countries that have diplomatic relations with Malaysia, regardless of race, religion, gender or age and applicants are allowed to bring their spouses, children and parents as dependents.

Benefits of MM2H

The foresight of the Tourism Ministry in promoting Malaysia as a tourism destination is to give well-to-do and qualified foreigners the opportunity to discover more of Malaysia by staying and experiencing the unique lifestyle or retirement lifestyle, enjoying travel within Malaysia and hence promoting tourism in a sustainable manner.

This indirect marketing is more powerful than mere advertisements as it captures the first-hand experience that is shared by the MM2H participants.

Since 2002, more than 48,500 participants have been approved under this programme, generating an estimated direct service and consumer spending revenue of about RM4.9bil in 2017 and RM4.4bil in 2018.

The revenue across the board consist expenditure by the participants in having services involving medical checkups and expenses, bank deposits, insurance, food and beverage (F&B), shopping, hotel stays, education, vacation trips, flights, house purchase and rental, car purchase and other incidental expenses on a daily basis.

These have benefited the government, banks, developers, real estate agents, car dealers, insurance company, clinics, hospitals, travel agents, airlines, hotel, restaurants and retailers.

The estimated inflow of investment since 2002 has been about RM40.6bil to Malaysia’s economy. The freeze, which resulted in the rejection of the current 6,000 applicants, comes with a loss of potential investment amounting to RM3.7bil which includes fixed deposits, visa fees, hotel accommodation, medical insurance and checkups. The loss would be higher if expenditures such as the purchase of property, car, children’s education, F&B, retail and consumer spending are taken into account.

It also helps in reducing property overhang especially in high-end properties, as MM2H mainly caters for wealthy foreigners looking for a more enjoyable and relaxed lifestyle for their retirement.

Most of the applicants are mainly focused on Sabah, Klang Valley, Johor Baru, Melaka and Penang as these cities have their own appeal: Sabah as a tropical tourism spot; Klang Valley especially Kuala Lumpur being the centre of all facilities; Johor Baru as it is close to Singapore and also an education hub; Melaka mainly on medical tourism and Penang as a nature and medical tourism hub.

Employment opportunities generated by the existence of MM2H programme are tremendous, especially for the MM2H consultants which are the frontliners in promoting Malaysia as a tourism destination as well as a place for retirement. Currently, there are about 200 MM2H consultants that have offices throughout the country who are greatly affected by the freeze in the MM2H applications.

The education sector has also benefited from MM2H applicants, many of whom send their children to the various international schools throughout the country, especially Johor Baru, Kuala Lumpur, Melaka and Penang. It is well known that South Koreans have been attracted to Malaysia due to its quality international school education.

As Malaysia provides the best medical services at affordable rates within the region, our country’s medical tourism has benefited greatly from the MM2H programme.

The long-term financial benefits to the country brought in by MM2H residents are mainly from those having a net income of at least RM10,000 a month which contribute to foreign cash inflows and consumer spending within the country.

The participants may double up further as domestic travellers to remote areas where economic activities are slower and contribute further to consumer spending there. In fact, the participants of MM2H find the countryside of Malaysia unique and charming.

The secondary impact of the MM2H programme is the positive messages it generates to participants’ friends, relatives and business colleagues, which can offset negative views published by some international media about Malaysia.

The MM2H participants here have been a powerful endorsement of Malaysia, especially in the face of Western countries’ perception of Islamic countries and this can be an important selling point to encourage further foreign companies to invest in Malaysia.

The competition

Our neighbouring countries such as Thailand and Singapore have seen the benefits of allowing well-to-do foreigners to stay longer in their countries, not only to promote tourism but to capitalise on their expenditures and investments. The Philippines, Cambodia and Indonesia are venturing into this as they can see the benefits of similar programmes contributing to their GDP. These countries are encouraging foreigners to have a longer stay rather than be mere tourists.

According to data published by New Straits Times on Aug 9,2018, Malaysia’s MM2H was voted as the fifth Best Retirement Destination programme in the World for 2018 after Costa Rica, Mexico, Panama and Ecuador. Japan Long Stay Foundation had nominated Malaysia as its choice destination for long-term residence since 2016.

Such nominations augur well for Malaysia and it would be a shame if Malaysia did not capitalise on its status as the choice destination.

The feedback by current MM2H participants

From the current participants of MM2H, the top factors of attraction are:

> The excellent infrastructure and services – we have the best infrastructure and services within the region and most MM2H participants enjoy the ease of mobility from one place to another within Malaysia.

> The warm weather is suitable for retirement – our constant single season warm climate bodes well for participants, especially those from cold countries to enjoy an outdoor lifestyle throughout the year.

> Variety of accommodation and shopping experience – Malaysia has the best accommodation and shopping facilities which most participants can relate to, as per their own countries.

> Diversity of cultural experience and no language barrier – as English is widely spoken in our country, participants can enjoy the ease of communication and experience the cultural diversity and multi-ethnicity within Malaysia.

> Lower cost of living and friendly people – Malaysia is one of the countries with lowest cost of living compared with our neighbours, and with Malaysians being truly affable, participants are attracted to such affordable living and ease of communication.

> World class medical and education facilities.

As evidenced by the popularity of the MM2H programme, Malaysia has the right ingredients to attract the right choice of participants, and it is our opportunity to enhance the programme further by increasing its economic advantage, especially at a time when there is a need to reduce our dependence on oil and gas and natural commodity sectors which have been greatly affected by the current crisis.

The next step forward

It is understandable that the current pandemic and border closure have had a great impact on the MM2H programme. However, we must be prepared for the potential economic upsurge during the recovery phase once a vaccine is available in the near future.

While we must take steps to enhance the programme from the lab that has been set up by the government, we need to further strengthen the process and procedures of MM2H participants in order to detract unlawful and unwanted applicants.

Should there be a concern over the rise in the number of foreigners in the country as a result of MM2H, the participants only account for less than 1% of the total population. They, however, generate a high turnover based on their spending. There should not be a concern as their numbers are relatively small in comparison with foreign workers who are the main source of significant foreign outflows through repatriation of earnings to their home countries.

Besides attracting residents from countries such as Hong Kong, Japan, China and other developed countries, the Tourism Ministry and the Immigration Office must gear up the programme in order to attract good quality foreigners.

The government should take this opportunity to expedite and finalise the enhanced programme of MM2H by engaging all parties concerned, including state authorities in lowering the threshold residential price and making the MM2H programme as part of the post-Covid economic recovery plan.

Any prolonged delay and silence on the MM2H programme will definitely affect the image of Malaysia as the ideal destination for retirement.

This article is contributed by Fiabci Malaysia, a real estate federation.

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