KUALA LUMPUR, 7 September: The announcement on the reactivation of The Malaysia My Second Home (MM2H) has been eagerly and greatly anticipated by the industry players, especially in services and hospitality. However, the reactivation comes with new policies which are currently having a negative brunt from all sectors and mainly from the existing MM2H holders. With a barrage of criticisms, the Home Ministry has recently announced a possible review on the policies for the MM2H programme.
Malaysia My Second Home(MM2H) programme was established as early as 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 that we have diplomatic relations regardless of race, religion, gender or age and applicants are allowed to bring their spouses, children and parents as dependents. The foresight of the Tourism Ministry in promoting Malaysia as a tourism destination is to give opportunities to well to do qualified foreigners to discover more of Malaysia by having to stay and experience 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 a mere advertisement as it captures the first-hand experience being shared by the MM2H participants.
Since 2002 to date, there are 57,478 MM2H holders and they had generated a direct service and consumer spending revenue of about RM4.4 billion in 2018. The revenue across the board consists of expenditure by the participants in having services in Medical Checkups 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 companies, clinics, hospitals, travel agents, airlines, hotels, restaurants and retailers. Besides the direct service and consumer spending revenue, inflows of investments to Malaysia economy throughout the years since 2002 has been generated, and based on the successful applicants, the investments in terms of services, consumer spending, property acquisitions and compulsory fixed deposits surmounted cumulatively to about RM40.6 billion.
The temporary freeze on the MM2H programme since August 2020 was for the Tourism Ministry and the Immigration Department to review and improve the programme and the review to be based on the criteria, conditions, incentives and comparative study on equivalent MM2H programmes within the region. Despite the good intention in improving the policies, such a review was not discussed with stakeholders involved in providing services in the MM2H programme. The stakeholders were kept in the dark on what the ministry is focusing on and its direction on the proposed policies.
The potential negative impact on the new draconian policies will result in at least RM3.7 billion loss to the country which includes Fixed Deposit, visa fees, hotel accommodation, medical insurance and checkups and that does not include the purchase of property, car, children education, f & b, retail purchases and consumer spending.
The proposed new policies appear to discourage this program rather than provide added incentives. The existing policies have been fruitful. Policies that involve foreign investment must not be quickly reversed as it sends negative signals to the existing and potential applicants.
Our neighbouring countries such as Thailand and Singapore have seen the benefits in allowing well to do foreigners to stay longer in their countries not only to promote their tourism but expenditure in the country and investments brought which give major impact in the economy of these countries. The Philipines, Cambodia and Indonesia are venturing into this as they can see the benefits contributing to their GDP. These countries are encouraging foreigners to have a long stay rather than being mere tourists to further boost spending.
From the policies drawn, it can be seen that the main focus on the policies is more towards the security concerns or on a spiking number of participants from a particular country rather than the economic potentialities. Such security concerns or spike of participants from a particular country can be managed by having separate policies and processes to avoid any misuse of the MM2H visa. The recent announcement by the ministry had expressed concern on the genuinity of the participants and on the lower investment than what was actually reported.
The MM2H participants currently account for less than 1% with half of that total being dependants on the total population but generating a high commercial turnover and multiplier effect based on the spending. There should be more progressive policies to further increase the number of participants as they are contributing to the economy as compared to foreign workers who generating foreign outflows by repatriating money to their home countries. Unlike the foreign workforce, the MM2H participants are net importers of foreign currency and add to the economy by way of multiplier spending. They are socially less problematical as the government does not have to provide medical, social services because all these are paid for and borne by the participants and they do not cause any burden to the Malaysian employers as do the foreign workforce.
PEPS is of the opinion that more engagements with the stakeholders, the NGOs and the expats should be done prior to policies drawn out as the MM2H plays a vital role not only in economic contribution but as an international advertisement as to what the country can offer. The new policies should gear up more on attracting genuine and good quality foreigners globally, not necessarily the upper high-end income earners of which they will always choose developed countries and enhance security features as well as tailor to country’s profile on the process and procedures. Such implementation of policies should have a longer grace period to assist current MM2H holders in adjusting to the new requirements. PEPS feels that a focus group discussion is vital to compare notes between the ministry and the stakeholders prior to the new policies drawn and the policies should be deferred until such solid inclusive policies being drawn out.