Tweaks Needed To Resolve MM2H Impasse

Chief Editor Jan Yong weighs in on the MM2H debacle in an Opinion piece.
The new criteria imposed for Malaysia My Second Home (MM2H) programme, effective since October 2021, has drawn a massive backlash from the industry and foreigners due to its significantly more onerous requirements. In particular, opponents have cited the increased financial threshold which they believe would deter many would-be applicants – an offshore income of RM40,000 per month compared to the current RM10,000; and a Fixed Deposit of RM1 mil instead of the current RM150,000 for over 50’s and RM300,000 for under 50’s.
Furthermore, applicants must show proof that they have liquid assets of RM1.5 mil, compared with RM350K for over 50’s and RM500K for under 50’s previously.
The new criteria however are only applicable to new applicants who have yet to be approved. Existing MM2H participants are exempted from all except two of the requirements i.e. a 90-day per year requirement to stay in the country; and an increase in annual fee to RM500, from RM90 previously.
The Ministry of Home Affairs (MOHA) has cited national security as the main reason for the change and mentioned further that the country needs “genuine, high quality foreigners who ca n contribute positively to the country’s economic growth” instead of those who come here “for undesirable activities”.
It would help if the government can give an idea of the percentage of participants who have been found guilty of criminal activities. And whether these convicted felons’ passes have been revoked.
The Auditor-General’s Report 2019 Series 2, which was tabled at the Dewan Rakyat on Sept 28, has also cited the absence of a letter of good conduct (LOGC) verifying that the applicant’s dependants are free from criminal misconduct.
This document, variously known as Police Clearance Certificate or Certificate of Good Character, is a common requirement for immigration visas in many other jurisdictions. It can be easily obtained either from the applicant’s home country’s police authorities or their Home Ministry. This will ensure the long stay pass holders and their dependants have sufficient clearance in terms of their character i.e. no criminal record.
Technically, the MM2H programme is not an immigration visa but a long-stay pass. But it is similar in many respects to an immigration visa. Hence, to get the Immigration Department to process the application instead of the Ministry of Tourism, Arts and Culture (MOTAC) is the right move.
The former would be the best people to weed out undesirable applicants as they already have the expertise to do so. For example, if there is reason to suspect that the Police Clearance Certificate is forged or is illegally obtained, the Immigration Department will be able to verify its authenticity through its usual channels.
And if any ‘criminals’ were to slip past the new vigorous checks, then it is a risk that’s similar to the risk that any country takes when admitting foreign travellers.

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Other weaknesses cited by the Auditor-General’s Report includes “inefficient management of the programme due to the absence of an integrated database and weaknesses in the internal controls of the Malaysian Immigration System (MyIMMs)”, which it concludes, “made it difficult for MOTAC and the Immigration Department to effectively monitor and evaluate the achievement of the programme”.
This is an enlightening piece of revelation by the Auditor General and should be acted upon swiftly. It goes without saying that it is incumbent upon the Immigration Department to upgrade their database and integrate it with the other relevant ministries, as well as to fix any weaknesses in its internal controls.
FD too high, really?
The significantly higher requirement of RM1 mil FD and offshore income of RM40,000 per month has attracted the most flak with opponents arguing that the thresholds are too high, and that if they had that kind of savings, they would have gone to other more attractive destinations like Singapore, Europe or even our neighbours like Thailand, Indonesia and the Philippines.
But if we analyse it further, there are three reasons why the FD amount is reasonable, in my opinion.

  • Assuming the target is primarily retirees aged 50 and above from developed countries like Japan, Hong Kong and Europe, or even experienced expatriates, RM1 mil is not such a huge sum when converted into Ringgit Malaysia. As it is, the Ringgit has been depreciating over the last few years against many currencies including even ASEAN currencies;
  • Furthermore, after one year, half of the FD amount can be withdrawn to buy property or be utilised for health purpose or their children’s education;
  • Criminals can easily circumvent the requirement through their illegal incomes, thus even this higher threshold is not a deterrent to them.

On the other hand, the monthly income requirement of RM40K and above, is the biggest stumbling block. Perhaps, this is the area that requires some fine-tuning in order to find a middle ground between the competing interests of national security and being foreign-friendly.
After all, Malaysia does need the investment and spending of long-term foreign residents. In particular, the housing, education and health sectors have benefitted a lot from them. With the pandemic, it becomes more urgent to allow more foreigners to come in and participate in our recovery through their consumption and expertise.
Since its inception in 2002 until 2019, the reported cumula tive revenue from MM2H progra mme has ranged between government statistics of RM11.89 bil and RM38.17 bil as claimed by a private association. The correct figure is probably somewhere in the middle. The revenue comes from visa fees, property and vehicle purchases, fixed deposits a nd monthly household expenditure.
There are ways to resolve the current impasse:

  • Re-packaging the visas/passes into more types with different tenures and conditions. Examples include a Retiree Pass, Family Pass, Digital Nomad Pass, Expert Pass, Investor Pass.
  • Tightening the screening process e.g. verifying that a Certificate of Good Conduct from the applicant’s home country is genuine, and even randomly checking out the applicant’s home address through their overseas channels;
  • Limiting the source countries – if Malaysia is getting too many ‘undesirable applicants’ from a certain country, then ban or impose quotas on the number of nationals from that source country, and screen them more vigorously;
  • Imposing a lower quota for applicants under 50 years old.

In my opinion, the objective of the MM2H programme is to provide an opportunity for high-quality retirees and experienced expatriates to live and spend in Malaysia. However, due to its previously lax and very low threshold financial requirements, some ‘undesirable applicants’ have slipped through.
With some tweaks in the new criteria however, the revised MM2H might prove to be better at controlling who gets approved yet appearing friendly at the same time.
Having said that, the timing for revising the conditions could have been better; and having retrospective effect is never a good idea.
Little wonder that the initial reception has been one of outrage and ridicule. 

Note: Since its introduction in 2002, there is an estimated 57,478  MM2H passholders in Malaysia. The MM2H programme was suspended for one year due to Covid-19, and has since been  reactivated in October 2021. MOTAC is still the authority responsible for its promotion and appointment of MM2H agents.


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