KUALA LUMPUR: In view of rising inflation pressures and increasing traveler expectations, is Malaysia competitive enough to attract tourists and retirees from around the globe under the Malaysia My Second Home (MM2H) scheme?
In order to move up the competitive destination ranking and attract more participants for MM2H, experts, real estate developers, and insiders in the tourism industry caution that the government needs to reevaluate the program and broaden Malaysia's appeal.
"This could encourage foreign investment in real estate and resolve overhang problems in the nation's luxury property market in Kuala Lumpur, Johor and Penang. Developers who concentrate on high-end residential properties would benefit from the MM2H conditions being relaxed," they said.
Minister of Tourism, Arts, and Culture Tiong King Sing announced an evaluation of the MM2H scheme early this year in response to a 90 per cent decline in applications since 2021.
This decline was brought on by the startling alteration in eligibility requirements made by the previous government. The minimum liquid financial asset threshold was raised to RM1.5 million as a result of new financial requirements, which also demanded a sizable RM1 million fixed deposit and quadrupled the monthly income requirement to RM40,000.
"Thus far, it seems that the modifications are focused on streamlining the application process. A comprehensive overhaul of the eligibility requirements is not on the table. The scheme lost its appeal because it became unaffordable for most people, particularly retirees. However, since 2021, more applications have been received, and the situation has improved," an industry insider told NST Property.
Since late 2021, the MM2H program is said to have received 2,164 applications, of which roughly 88 per cent, or 1,905 of them, have been approved.
Kashif Ansari, co-founder and group chief executive officer of Juwai IQI, said that Malaysia's distinct combination of lifestyle, cultural diversity, and economic benefits will draw more foreign residents this year despite competition from neighbouring nations.
According to him, Malaysia is competing with Thailand, Indonesia, Cambodia, and the Philippines for the same tourists in terms of the MM2H scheme.
All of the four Asian countries offer visa programs that compete with the MM2H programme and Sarawak-MM2H. However, Malaysia has the competitive edge as the MM2H allows foreigners to own property, he said.
"Purchasing property here is a straightforward process, and foreigners can buy houses that sit on land rather than just apartments, which Thailand prohibits.
"Malaysia's cost of living is also appealing. For example, the cost of living in Manila, Philippines, is 12 per cent higher than in Kuala Lumpur. Living in Bangkok costs 25 per cent more, while Phnom Penh costs 27 per cent more," he said.
According to Kashif, each country regularly updates its program to stay competitive with the others.
He said that based on the cost-of-living data from Numbeo, of the four capital cities whose residency programs compete with MM2H, only Jakarta has a cost of living on par with Kuala Lumpur's.
Kashif said that despite competition from the four Southeast Asian countries, he foresees a bright future for MM2H.
When tabling the 2024 Budget in October, Prime Minister Datuk Seri Anwar Ibrahim said he intended to revise the federal MM2H program to attract more participants and increase its economic benefits.
"Whether the program is revised or not, we see a bright future. Malaysia already has a strong brand name with global tourists and travelers. The program and our lifestyle are competitive with Thailand, Indonesia, Cambodia, and the Philippines," he said.
Kashif said that the relatively slow launch of the Malaysia Premium Visa Program (PViP) also reveals MM2H to have high name recognition among foreigners.
Despite having similar requirements to MM2H and despite offering a much longer and renewable 20-year term, PViP has not been a hit with tourists, according to him.
"Only 57 applicants filed requests for a PViP visa in its first year, and only 28 obtained approvals. That's many fewer than the 700 MM2H approvals we expect this year," Kashif said.
Kashif said that Juwai IQI projects that the number of applicants for MM2H and Sarawak-MM2H will remain steady in 2024.
The success of MM2H and Sarawak-MM2H underscores Malaysia's enduring appeal with expatriates and retirees, he said.