Stiff New Requirements For Malaysia My Second Home
"For those who didn't attend the BHCKL/MM2H presentation yesterday (21 March 2018), the word is out (official), even backed by tiny fold-out MM2H pamphlets. From the "middle of the year" but excluding applications presently in the pipeline:
1. Proof of liquid assets rises to RM600,000 (presently RM350,000)
2. FD [Fixed Deposit account in Malaysian Bank] rises to RM500,000 (presently RM150,000)
3. Requirement to show off-shore income of RM10,000/month exempted for over-60s
The deputy/assistant director of MM2H who was one of the speakers and unashamedly said (backed by a giant slide) that they were looking for "quality not quantity". Quite how they intend to achieve it with this sledgehammer & indiscriminate approach I'm not sure."
It sounds as if the changes will be made sometime after June, If you were intended to join the MM2H it might behoove one to apply quickly, under the old rules. Even if you can't immediately move to Malaysia you'd still have the 10-Year Visa under the "old rules".
Given that wealthy individuals could already qualify for MM2H under the old rules, and even they don't want to liquidate their high interest/dividend generating assets into a lower interest long-term FD [@4%], this change will likely eliminate the middle and upper middle class retiree/applicant as well as many wealthy. It's hard to understand what economic model they are using.
Sarawak and Sabah will likely retain their old rules as they have control over their own "tourism" and Immigration programs. In fact they may well take advantage of the Peninsular "mistake".
I affix the current Sarawak M2H program rules contrasted with the "old" though still current) MM2H program requirements.
https://www.sarawak.gov.my/web/home/art … w/221/279/
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Mine is also in tax 'deferred' retirement accounts that work out great for maintenance withdrawals to live on - esp in Malaysia. Under US tax code the first $24K taken out is tax free for married couples (assuming no Social Security or US based income) and the next $10K (all USD) is at 10%. We can live on $2000 US per month easily so end up paying no US taxes.
However taking out RM500K at one time would require about $200K withdrawal at least and you'd end up paying 30% in taxes. So I'd be giving about $50-60K USD to the US government, not a smart way to manage my retirement savings-give a big chunk away in US taxes, then tie up a bigger chunk into very low yielding investments.
Edit to add, the Sarawak plan actually looks interesting. I actually like Kuching and it's a place I could live easily. I have a brother-in-law that teaches there, I don't think he'd qualify has a sponsor, but could help find one. I could keep the house in Kuala Lumpur (can't sell it anyway for family reasons) and have an apartment in Kuching and bounce back and forth.
I've made some suggestions to the Sarawak State Chief Ministers Office as to how they could
1) improve the attractiveness of the program for applicants (part-time work, discount card- mainly for off season tourism, Parks and Park facilities ),
2) promotion of the program (taking advantage of the changes in the Peninsular Program and making sure people don't think that Sarawak is affected), and
3) increase the direct benefit to the State by allowing more withdrawal options for those that opt for the Fixed Account such as: a) withdrawals for any Sarawak produced product or services (textiles, antiques, crafts, paintings, etc.) b) domestic tourism (air tickets, hotels, tours, car and driver rental, event tickets, etc.); c) property purchase/maintenance/security/housekeeping and improvements - such as landscaping, d) charitable donations, e) club memberships, etc.
The Fixed Account is likely invested in many different countries and not Sarawak, it also will be drawn out, with interest when the Sarawak M2H recipient leaves. There is little benefit. But direct purchase and expenditure in Sarawak is money in the pockets of Sarawakians, plus is taxed as their income. It creates employment, fosters entrepreneurship, and maintains a more steady annual income through seasonal tourism cycles.
Gravitas wrote:Thinking (like every other recent policy) now seems to be to attract direct and indirect wealth to Malaysia now its two main income streams have diminished. How does the country become developed - by putting money into the government coffers and hands of Malaysians.
How does the Fixed Deposit really do this? I don't think it's a Malaysia-only investment. It comes in, parks itself, and then walks out again (with accrued interest). Only the bankers make money in this case.
Actually to put "money into the hands of Malaysians" you'd want that Fixed Account to be used for spending on Malaysian property, goods and services. That generates employment, local investment, entrepreneurship, and buffers the economy from the cycles of tourism. One would want it to diminish over time to almost zero so that nine of it was expatriated when the MM2H recipient left the program.
Only 3% of the Fixed Deposit was used for property or vehicle purchases over the last 15 years. They don't mention how much was used for health care and education. The rest went back out...with interest. My view is why not allow withdrawals for almost any sort of domestic expenditure. If people are living on a tight budget because they can't spend down their Fixed Account then they'll spend less in Malaysia. Allow them to use that money for domestic purposes and that's RM150K into the Malaysian economy vs. ZERO.
It will deter many of those from the subcontinent who already are not sure they can afford to move to Malaysia.
iskandarhack wrote:One thing it does is convert a currency into ringgit, increasing the value of the currency. And the money is available for loans given the amount of time it sits parked.
True, there is the exchange ratio...which would, however level off unless the program expanded. Maybe they have a bunch of crappy economists (or none) suggesting "just increase the FD and the amount £, $ and Euros will go up". Doesn't work that way, though. Both the wealthy and the "poor" (actually Middle Class and Upper Middle class) will go to greener pastures.
And yes, the loans. And those must be paid back. I'm sure, though, that a small shop owner would rather have sales than the debt load of a loan. The loans go also be made to large companies expanding into other countries very far away from Malaysia. You don't even have the option of putting money into a Grameen-type system of small loans exclusively to locals.
Weird though, the same banks that were so willing to take my fixed deposits were often so reluctant to accept my savings accounts. The theory is that hundreds of smaller savings accounts cycling through is the same as a number of larger fixed accounts...same amounts = same amounts available for loans regardless of tenure.
Have to have more money than sense to enter the market at this point in time, at least on the peninsular.
Gravitas wrote:Perhaps the Department think it will stimulate property purchases as a way of getting some money out of the FD?
Have to have more money than sense to enter the market at this point in time, at least on the peninsular.
Maybe...less than 3% of Fixed Deposits placed over time have been used for property and vehicle purchases.
If they allowed more of the FD to be applied to Property purchase (maybe 90-100%) that would stimulate things. That could have been done with the previous Fixed Deposit, though.
In the preliminary proposal (suggested last March) they were offering that RM250K could be withdrawn from the RM500K. But the net amount that must be held also goes up...from RM100,000 or 150, 000 (below 50) to RM250K. That's a big chunk of change that you can't touch that might have been used for property purchase. I think that this will actually DETER property purchase.
I've still got two to sell and when sold will invest my money elsewhere.
My two apartments are newly built, so will have many units for sale, but fortunately well located in terms of transportation and facilities, shopping malls etc.
These days, with new developments a profit of 10% is considered reasonable, compared to the old days when you could double or triple your price.
One of my properties has been on the market for 3 months and has had a few visits. but no offers yet. The other cannot be put for sale until August this year because I signed the S&P less than 5 years ago.
As the ship sinks the rats leaving the ship take dollars. Eg the 4 billion USD stolen from the 1 mdbd fund. This causes problems.
Gravitas wrote:On the contrary. Malaysia wants to attract HNW not riff-raff and their spending power should be greater and the idea is the property market will start moving again
I'm puzzled by this logic. What about the old requirements prevented HNW from applying, and what about this new program will entice more of them to apply?
I liken this to McDonald's requiring it's customers to wear Tuxedos and evening gowns while still serving the same burgers at twice the price. Or to make a Biblical reference "New Bottles for Old Wine".
Of course, there is a reason why wealthy people are wealthy, and they aren't likely taken in by such nonsense. Were they really discouraged by all the "riff-raff" coming in on MM2H?
There is really no additional benefits of any significance to attract the quality. No road to citizenship. No right to work. No easy route to open a business (or tax write-off). If anything it simply requires you have to put more liquid assets in an illiguid account for a decade. You can't shop for a new account with better rates, or take much of that FD account (RM250,000) to buy property or invest in your own (Labuan-based) business.
So...it will exclude the "riff-raff" (I suspect 90% of the individuals currently on the program would not have applied under these new requirements) and perhaps some percentage of the "elite" who find better programs elsewhere. Also it's really bad PR to let people who feel that they are contributing to the economy (and who have served a lifetime as devoted civil servants or hard-working careers) know that they are not considered "quality". I guess we don't wear several Rolex or Bulgari watches or our wives sport expensive Bulgari and Tiffany jewelry. Maybe we should stock up on costume jewellery.
Throw in the fact that China has instituted a whole host of new currency control mechanisms that prevent Renmimbi from moving abroad (particularly to shelter it from Chinese government control) and you have some serious issues with this strategy.
cinnamonape wrote:Gravitas wrote:On the contrary. Malaysia wants to attract HNW not riff-raff and their spending power should be greater and the idea is the property market will start moving again
I'm puzzled by this logic. What about the old requirements prevented HNW from applying, and what about this new program will entice more of them to apply?
I liken this to McDonald's requiring it's customers to wear Tuxedos and evening gowns while still serving the same burgers at twice the price. Or to make a Biblical reference "New Bottles for Old Wine".
Of course, there is a reason why wealthy people are wealthy, and they aren't likely taken in by such nonsense. Were they really discouraged by all the "riff-raff" coming in on MM2H?
There is really no additional benefits of any significance to attract the quality. No road to citizenship. No right to work. No easy route to open a business (or tax write-off). If anything it simply requires you have to put more liquid assets in an illiguid account for a decade. You can't shop for a new account with better rates, or take much of that FD account (RM250,000) to buy property or invest in your own (Labuan-based) business.
So...it will exclude the "riff-raff" (I suspect 90% of the individuals currently on the program would not have applied under these new requirements) and perhaps some percentage of the "elite" who find better programs elsewhere. Also it's really bad PR to let people who feel that they are contributing to the economy (and who have served a lifetime as devoted civil servants or hard-working careers) know that they are not considered "quality". I guess we don't wear several Rolex or Bulgari watches or our wives sport expensive Bulgari and Tiffany jewelry. Maybe we should stock up on costume jewellery.
Throw in the fact that China has instituted a whole host of new currency control mechanisms that prevent Renmimbi from moving abroad (particularly to shelter it from Chinese government control) and you have some serious issues with this strategy.
No problem getting money out of China. Why do you think Genting exists? Big "winners" there are often not winners. They paid for it in China. It's driven by a massive money laundering exercise from China!
But I agree it isnt about housing. Its about the almost bankrupt state of Malaysian banks.
Gravitas wrote:The highest density of expats is on Penang island at 6%. You make 500k the FD released through property purchase and voila
I thought it was a million ringgit property? And only partial release.
"Additionally, should you purchase a property in Malaysia worth RM1 million and above in Malaysia, you are allowed to reduce the amount of money you need to place in the aforementioned fixed deposit account, in the following way:
• For MM2H participant below the age of 50, your fixed deposit commitment is reduced from RM300,000 to RM150,000.
• For MM2H participant aged 50 and above, your fixed deposit commitment is reduced from
RM150,000 to RM100,000."
I'm not sure if, or how, they will structure this under the new revamped program. But this really doesn't look much different than the current "you are allowed to make approved withdrawals". In the above the participant was allowed to use RM150,000 of their fixed deposit on their purchase of a RM1million property...leaving RM150,000. Total (before) RM1 million+RM150,000.
It sounds as if in the new program they'll allow RM250,000 to be used on the RM 1 million purchase, leaving RM250,000. Total (after June 1) RM1 million + RM250K. Is this better?
And that will probably apply to under 50's and over 50's. So an over 50 year old has to increase their FD from RM150,000 to RM500,000. If they purchase that 1 million property, they can do the same as above. But they still have to have RM150,000 MORE in their deposit (RM250,000) than they would have had to keep in before. In this case they commit RM1Million + RM100K (before) vs. RM1Million +RM250K (after June 1). Again, a worse deal.
Totally agree with Nemodot's last comment. Hope I can sell my last two apartments.
GrannyNanny wrote:I am new to this site. Really glad that I caught your info about the raised financial requirements for expats to retire in Malaysia. This is really too bad and shortsighted of them. Sadly, I will need to "cross it off my list" of potential places to retire
Sarawak still retains a much lower set of financial requirements. In fact. there are both a "retirement pension" and a Fixed Deposit option. You do need to be over 50 years of age and find a Sarawak resident as a sponsor. But other requirements are also reduced. You don't need to show any amount of "liquid assets" and there is no requirement for a "Good Conduct" record from your local /State/ national police. Plus they are very fast and the cost is reasonable. Usually within three months. Make sure you get an actual visa abroad to avoid paying the "Journey Performed Fee".
BrentD wrote:Thanks for the information regarding the upcoming changes, can you please specify the new requirements for both under and over 50s?
in the original post.
They are consolidating both categories for the MM2H. The financial requirements for over 50 will be treated the same as under 50. Thus BOTH age groups will be required to
1) demonstrate RM600,000 liquid assets,
2) and both age groups will have to place a RM500,000 fixed deposit once accepted.
3) Everyone below 60 years of age must also demonstrate that they have RM10,000 of offshore income. That's waived for those over 60.
************
In Sarawak they do not require any demonstration of liquid assets. They also have a pair of options...either 1) demonstrate pension income (RM10,000/couple) OR 2) place a Fixed Deposit (RM150,000). Either...Not "And".
As well, if you are a single applicant you get a discount on the financial requirements .
1) Pension income = RM7000/single OR 2) Fixed Deposit = RM100,000.
https://www.sarawak.gov.my/web/home/art … w/221/279/
Do you know what categories of spend the fixed deposit can eventually (after 12 months?) be used for?
Also, what does the process to get access to this money entail?
http://www.mm2h.gov.my/index.php/en/app … quirements
Meantime....
1. 10- year visa. For those who qualify today, what happens in 10 years and you can no longer qualify? What person would sell out, move across the world, drop everything into this environment only to be told (XXX) in 10 years which may cause a re-move? Deals like this have to come with permanency or bye-bye, IMHO.
2. Economic models and increases. Well, you can thank two expats for that who I know by name. The expats who came here under the first, original plan immediately tried to shut the door to keep out future riff-raff. I know this because I was also interviewed for what I believed would be improvements to the program (and I wasnt even in MM2H) but I refused to take the position that any retiree should be relegated to being riff-raff and wanted to keep the program easy. They didnt like that. Second, the government dreams things and puts them into play without thinking them through, only later to retreat and try again. But now today there is such a scramble for money that the government is literally putting their troubles on the backs of any human on the planet with ready cash. "Quality not quantity" is a sort of ruse or excuse. Najib knows his personal plans cant survive without huge money, note the second "Iskandar" business city will only allow Fortune 500 tenants-- who can pay super taxes.
3. Reading the whole thread this far, its clear that MM2H is not longer suitable for the average retiree. It makes no sense. As I have come to understand this country, the UMNO government wants to create its own playground and nevermind what boondoggles create money loss in the future. Better they make mistakes with someone elses money. As far as the government is concerned, since MM2H is a form of foreign direct investment, the perfect Malaysia customer is someone looking for a place to dump cash without too much care about what happens to it. Maybe win, maybe lose, who cares, I have more where that came from.
4. For people who have to double check zeros and decimal places in the program to see how to squeeze in and how it can really work for their life, those arent the people Malaysia is looking for. Malaysia wants the money, not the people. This whole idea of "quality not quantity" gets tossed when you consider the government would not turn its back on 100 million expats with $100 million each, correct? Years ago, Mahathir was out in the world somewhere pushing investment bonds under which people could simply give money to the government. When a fund group asked Mahathir what he intended to do with the money, he became quite bitter and basically told them it wasnt their business. That scene became the source of my own cynicism and from where I decided to tread lightly in Malaysia and not try to create roots in which all of my capital was at stake.
5. Many expats incorrectly believe that because they had to jump through so many hoops to join the program there would be reward in the form of special treatment or protections. Myself included, I have never heard of any expat who, in the end, was treated any better or differently than an imported part-time cook in a mamak stall. To the extent MM2H sounds glamorous, in the end its only about government getting and keeping money, nothing else. And the last time I tried to take imported money back out again I had a whale of a hard time. Bank Negara simply said NO because they said my reasons werent good enough. And we fought. Wonderful, yes?
Im not joining MM2H because I dont agree with it. For those who have benefitted, more power to you. For others who really want to come here, I wouldnt put more than 10-20% of capital into this and if under the new rules that prices you out then so be it and move on. I hope you will not stretch your resources to the extreme to meet the criteria because between rule changes, visa revisions and a very unclear property market, you could wind up being the loser and at a future time when you may be least able to go off and re-invent your life again. They HAD a great idea but they trampled it with their own greed or something and which I refuse to feed. Just be careful, you are far from home with no friends or nets. Think less about how to meet the criteria and more about protecting yourself. If trust, protections or peace of mind are not present now, i'll tell you what, it sure wont get better later.
The visa is renewed for a further 10 years (no requirement to requalify)
And where are the "agents" in all of this? They stand the most to lose as the number of applicants who need assistance drop. They will have to raise their fees to compensate. That will likely result in pricing out even more applicants who don't want to deal with the bureaucracy. Some agents will likely have to shutter because of the reduction of customers. Some may remain because they are good and offer superior service...but I can't see more than one or two in any metro market. That will mean they can set their prices fairly high.
Many agents do other types of immigration than MM2H
I belong to several FB groups and I can assure you the stream of people investigating MM2H is very large and growing due to the great publicity Malaysia is getting for the programme.
Gravitas wrote:Who says the number of applicants will drop? They will be different applicants
Name one feature of the OLD MM2H that disallowed or inhibited wealthier applicants from applying? If they didn't come THEN, then why would they come now with even higher financial requirements? Wealthy people are wealthy because they make astute investment decisions...a program that locks in RM500,000 of their capital for a decade isn't as attractive as one that offers them flexibility (or lower lock in).
What new benefit do they get? That they don't have to have their applications tainted by the "peons" in the stack of documents at MM2H KL?
This sort of thinking is akin to McDonalds saying "let's increase our prices by £1 on the same old menu, put table clothes on the tables, and we'll attract the higher class of diners...they'll consider us an elite dining experience".
Gravitas wrote:I belong to several FB groups and I can assure you the stream of people investigating MM2H is very large and growing due to the great publicity Malaysia is getting for the programme.
I am also on these sites and generally review the ones that promote expat retirement abroad. Almost all promote the MM2H as being affordable to average retirees. That's the GREAT publicity they get...that ranks them in there with affordable Central American programs (Panama, Costa Rica, Nicaragua), Equador, and in the EU - Portugal and Malta.
THE High Reviews and Rankings of MM2H have been UNDER THE OLD TERMS. It was the OLD system of MM2H that brought this high regard. Even under the old system some rankings were showing a decline towards parity with other Asian countries. It's a competitive world out there.
But there hasn't been one review or ranking yet under the NEW terms.
It's be interesting to do a survey of current MM2H applicants/recipients if they 1) would have come to Malaysia under the NEW requirements, and 2) would stay if the new requirements were imposed on them when they renewed.
OF course, those wouldn't be the imagined "elites" that will come flooding in.
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