THOUGHTS
23/10/2020 08:47 AM
Opinions on topical issues from thought leaders, columnists and editors.
By :
Datuk Koe Peng Kang

The recent global pandemic that restricts the movement of visitors and activities have put a hold on most of the economic activities throughout the world. The crucial part in containing the pandemic for the country is by reducing the movement of people, 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 in particular, the MM2H (Malaysia My Second Home) programme is one of the casualties as it involves foreigners coming over to Malaysia with multiple entry visa to reside with local Malaysians.

The federal government had given direction for a temporary freeze on the MM2H programme to reduce foreigners from entering the country. The Tourism Minister, Datuk Seri Nancy Shukri, mentioned that the freeze gives the opportunity for the ministry 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 closure of the MM2H one-stop centre office at the tourism 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, give an unclear picture of what the new policies are and where the MM2H programme is heading.

It is understood that a lab has been established to relook into the MM2H programme. It is advisable that any policy review should include NGOs like FIABCI, REHDA and other associations which 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 of the recent reversals of applications so that there is a clear direction on the MM2H status to all the applicants and their agents.

The MM2H programme was established as early as in 2002, an initiative by the government to attract and allow foreigners who fulfil 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 which 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 opportunities to well-to-do and qualified foreigners to discover more of Malaysia by staying and experiencing the unique lifestyle or retirement lifestyle, enjoying the travels 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 being 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 RM4.9 billion in 2017 and RM4.4 billion in 2018.

The revenue across the board consists of expenditure by the participants in having services in medical check-ups and expenses, bank deposits, insurance, F&B, shopping, hotel, education, vacation trips, flights, house purchase and rental, car purchase and other incidental expenses regarding service on 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 generated cumulative inflows of about RM40.6 billion to Malaysia’s economy. The freeze has resulted in the rejection of the current 6,000 applicants with a loss of potential investment amounting to RM3.7 billion which includes Fixed Deposits, visa fees, hotel accommodation, medical insurance and check-ups. 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 overhangs especially high-end properties, as MM2H mainly caters for wealthy foreigners looking for a more enjoying and relaxed lifestyle for their retirement.

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

Employment opportunities generated by the existence of the 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 having offices throughout the country which are greatly affected by the freeze in the MM2H applications.

The Education sector has also benefited from MM2H applicants, those of whom send their children to the various international schools throughout the country especially Johor Bahru, Kuala Lumpur, Malacca and Penang. It is well known that 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 on 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 generated to participants’ friends, relatives and business colleagues which can offset selective 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 more 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 being mere tourists.

According to data published by the New Straits Times on 9th August 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. The 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 from current MM2H participants

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

a. 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.

b. The warm weather is suitable for retirement – Our constant single season warm climate bodes well for participants especially from cold countries to enjoy outdoor lifestyle throughout the year.

c. 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.

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

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

f. 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 the oil and gas and natural commodities 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 once the vaccine is made available in the near future. While we must take steps to enhance the said 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 of the rise in number of foreigners in the country as a result of MM2H, the said 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 the regular 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 globally. 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 place for retirement.

-- BERNAMA

Datuk Koe Peng Kang is the President of FIABCI Malaysia. He is also Senior Vice President at S P Setia and oversees the eco-themed series development (i.e. Setia Eco Park, Setia Eco Glades, Setia Eco Templer, Setia Fontaines) for the Group.

(The views expressed in this article are those of the author and do not reflect the official policy or position of BERNAMA)

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