Foreign retirees' interest in Malaysia's MM2H residency scheme declines due to new property requirements

By Minh Hieu   July 2, 2024 | 05:00 pm PT
Foreign retirees' interest in Malaysia's MM2H residency scheme declines due to new property requirements
People walk on a street in Malaysia, 2020. Photo by Reuters
Many foreign retirees have lost interest in the revamped “Malaysia My Second Home” (MM2H) residency visa scheme as it requires purchasing and holding property there for at least 10 years.

Started in 2002, MM2H is a residence by investment program designed to attract foreigner retirees to Malaysia by offering them long-term multiple-entry visas and allowing them to buy property and live in the country, according to the South China Morning Post.

It has been updated twice, and in its latest revamp on June 14, a new criterion was added that mandates MM2H participants to buy a property worth between RM600,000 and RM2 million (US$127,000-424,000) in the country and hold it for at least 10 years.

Since its revision, agencies that process MM2H applications have reported that as many as 90% of their prospective applicants had lost interest in the program.

"Initially, we had over 500 interested applicants, but the number has dwindled to less than 50 due to the revised regulations. Malaysia has revised the MM2H program twice in the past three years, and these changes have made foreigners feel unwelcome and unwanted," Farisa Athirah, senior executive at My Expat MM2H agency based in Kuala Lumpur, told The Straits Times.

Similarly, MM2H Consultants Association president Anthony Liew told The Star that many of his clients cited the mandatory property purchase criterion as the deal breaker.

"Only 30% to 40% of the current MM2H holders would buy property in Malaysia," he said.

While the new rules were meant to draw in more wealthy foreigners and boost the local property market, economists have warned that they may be too restrictive to be effective.

The property purchase requirement is turning away expats without necessarily boosting real estate demand as intended, according to Dr. Geoffrey Williams, founder and director of Williams Business Consultancy.

The revised visa scheme now predominantly targets high-net-worth individuals and is expected to attract fewer expatriates, potentially limiting its impact on the economy, he added.

Whether the government has overestimated foreigners’ interest in Malaysian property remains uncertain, especially given competition from similar programs in neighboring countries like Thailand and Indonesia.

The first iteration of the MM2H scheme managed to attract 48,471 foreign retirees and their dependents to the country, contributing an estimated RM58 billion to the local economy over a 17-year period, industry experts said.

However, revisions to the program in 2021 resulted in an estimated RM9 billion lost from 2020 to 2023.

Some other changes to the MM2H scheme include adjusting the fixed deposits requirement to between $150,000 and $1 million, as reported by New Strait Times.

Participants must now reside in Malaysia for at least 90 cumulative days per year, up from the previous 60 days.

They are also no longer eligible to apply for permanent resident status.

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