A combination of the government’s actions and inactions during 2020 have crippled the MM2H programme and the biggest loser may be Malaysia. How big? The figure will shock you.

It was hoped that the review of the Malaysia My Second Home (MM2H) terms and conditions would be completed by the end of 2020, but it now looks as though it will be a longer wait. According to our sources, the revised programme will most likely not be approved until the end of the first quarter of 2021.

In August of 2020, the Ministry of Tourism announced that the programme would be suspended pending a complete review, and it was implied at that time the review would be completed by the end of the year. However, as this is being written two weeks before that date, it is unlikely to be the case.

TEG Media’s CEO, Andy Davison, was involved in the last review of the MM2H programme more than 10 years ago, a process which involved a number of ministries. However, even that in-depth review was conducted without shutting down the programme, so many people have asked why it is necessary to stop all new applications this time. This suspension is particularly confusing, given that the closed borders actually give Malaysia an excellent opportunity to process applications and let those who are approved enter as soon as the country reopens its borders, with the resultant benefit to the battered Malaysian economy.

A LOT OF MONEY… AND A LOT OF QUESTIONS

The decision to suspend the programme, combined with other actions (and inactions), have caused considerable damage to the image of both the programme and the country, and based on our research and that of others, is costing Malaysia a serious amount of lost revenue. Malaysia’s own numbers show that, since its inception in 2002 until 2018, MM2H brought RM40.6 billion into the country. In 2018 alone, more than RM600 million came in just from MM2H property purchases! So it begs the question why, at a time when the economy so desperately needs it, would any country intentionally shut down a good programme which brings in that much revenue?

Based on the total foreign exchange brought into Malaysia thanks to MM2H during the 16-year period from 2002 to 2018, it’s an average of about RM2.07 billion per month. That’s significant. And while it’s probably safe to say 2020 wouldn’t have been quite as lucrative, there’s no question a lot of much-needed revenue is being left on the table – literally billions of ringgit.

What’s more, the long-term damage being done to the programme jeopardises future revenue potential for Malaysia, too. At a time when the country’s economy is in serious trouble, it simply makes no sense to shut down – even temporarily – a programme that brings in so much money to the country and fosters a lot of goodwill for Malaysia in the process, which in turn helps to drive both tourism and foreign investment, both of which also positively impact the country and its citizens.

HOW DID THIS HAPPEN?

The problems started when several thousand foreigners who submitted their applications in 2019 were advised earlier this year that they were declined, even though, based on the official qualifying criteria, they should have been approved. According to the MM2H agents’ association, the approval rate, which usually ran at around 90% plunged to just 10%, and despite many requests for an explanation as to how this could happen, none has been forthcoming.

Then, the coronavirus crisis arrived and the MM2H centre had to close for several weeks as all non-essential businesses were required to shut down. Soon after it reopened, however, it was announced that the entire MM2H programme would be suspended. Again, no explanation was offered.

To make matters worse, all the new applications that had been submitted in 2020 were returned to the agents without being processed. This caused a devastating loss of income to many MM2H agents, which apparently has resulted in some of them being forced to close and lay off their staff. But agencies weren’t the only ones who paid the price. Indeed, the association representing MM2H agents said that this bulk rejection cost Malaysia a staggering RM776 million.

Moreover, it is largely the agents who are expected to lead the effort to market the programme, so even beyond the loss of jobs, it was a negative step. It actually seemed that the closure of Malaysia’s borders would provide time, and a good opportunity, to clear the backlog of applications, so returning them all to agents in bulk was quite puzzling. Many parties asked why the programme needed to be suspended at all, and during the last few months, several organisations have asked that the suspension be lifted, but they have been ignored and it seems now that it will be the second quarter of 2021 before it reopens.

Given Malaysia’s relatively low number of Covid-19 fatalities and overall good handling of the pandemic, it would have seemed preferable to use this success to promote the programme and process new applicants. Some people even suggested it would be a smart idea to give special dispensation and allow new applicants to enter, after proper health checks, together with their investment money.

MM2H IS GREAT FOR MALAYSIA

The approved MM2H applicants make a remarkably significant contribution to the country’s economy. Our research shows that the ones who relocate here spend, on average, RM10,000 a month (or RM120,000 a year). In addition, the majority of them buy property and cars, so cumulatively they bring billions in foreign exchange into Malaysia and have a very welcome positive impact on the country’s economy.

Given that the Malaysian population is growing by around 500,000 people a year, the few thousand new MM2Hers who have settled here (most MM2H visa holders do not actually relocate to Malaysia) have virtually no impact on society, and since most are older and retired, there have been no reports that their presence has in any way been a disruptive element. On the contrary, the fact that these people – who often have a choice of where to spend their retirement years – purposefully choose Malaysia acts as a great endorsement of the country and the lifestyle it offers. MM2Hers can, and often are, unofficial goodwill ambassadors for the country.

The MM2H programme has been quite successful up until now and has produced many positive stories in the international press about Malaysia and its people. Unfortunately, that is now being undone, and even reversed. It seems the absence of any powerful champion for the programme has allowed all these negative actions which have caused it so much damage.

On top of all these internal machinations, the existing visa holders who were caught outside the country when the first lockdown was hurriedly enacted have in many cases had a very rough time. In fact, it was reported to us that some people in the government misunderstood and took the name of the MM2H programme literally and assumed this was a second home for visa holders, so they must have another home to go to. That mischaracterisation ignores the programme’s explicit marketing efforts, which have always encouraged MM2Hers to relocate here and make it their home. So for many of these people, there was nowhere else to go and they ended up in hotels or rented accommodation for months. Even now, there are several hundred who still cannot get permission to enter the country, although expats with employment passes, and their dependents and even maids, are now being allowed back in.

AN UNCERTAIN FUTURE

In the absence of full transparency, people inevitably speculate, and we have received many e-mails from expat and MM2H readers who believe the government is sending a message to them that they are simply no longer welcome here. As a result, a number of MM2Hers have told us they are going to exit the programme, and some have already cancelled their visas

While we can certainly understand why they have reached this decision, it is unfortunate. We do not believe the government is putting forth a deliberate effort to kill the programme. It seems likely, from reading the national press and social media, that the current government is fighting to stay in power, making it plausible that they are too busy trying to bolster their political power to focus on a relatively small programme like MM2H, despite its contribution to the economy.

It is indeed maddening that Malaysia is losing out on all this revenue and suffering the damage to the programme’s international image, not to mention the local job losses. We hope, however, that in time things will improve. That said, we feel somewhat guilty that we have been promoting the programme for 15 years, telling the world how openly Malaysia welcomes people with the MM2H visa.

We draw a little comfort, at least, that for those MM2Hers who were lucky enough not to have been outside of Malaysia early in the days of the pandemic, they are still enjoying their time here, and they are getting their visas renewed without any problem. Our fervent hope remains that someone in authority will realise how much Malaysia and the Malaysian people are losing out on by these decisions and take appropriate corrective action to restart the MM2H programme, restore its reputation, and return to reaping the many benefits the programme brings to the country.