The last time the long-term residency scheme underwent major changes was in 2021, under the Perikatan Nasional government.

Recently, the unity administration announced a MM2H revamp to strengthen the economy and offer new visa holders an improved package.

But how exactly is the new MM2H bigger, better, and stronger?

Revised eligibility criteria

The answer lies in the new and updated eligibility criteria.

In 2021, the MM2H set-up was designed to target high-net-worth individuals (HNWIs). Consequently, the MM2H eligibility criteria saw drastic changes that significantly narrowed the pool of potential applicants.

Under the old regime, principal applicants had to make a fixed deposit of RM1 million and top up another RM50,000 for every dependent they brought in to attain a five-year multiple entry visa.

They also needed to have a monthly income of RM40,000 and at least RM1.5 million in liquid assets.

Many of the foreigners interested in making Malaysia a second home are retirees. As they mainly live off pensions and investment income, the RM40,000 threshold automatically disqualified their applications.

The hike in the required fixed deposit – from RM300,000 between 2002 and 2019 – and liquid asset clauses also deterred middle-income applicants.

Now, the rules have changed. The government is:

• rolling out three MM2H categories, where previously there was only one;
• removing the onerous monthly income and liquid asset requirements; and
• lowering the minimum fixed deposit to US$150,000 (RM705,000) for a five-year visa.

Some MM2H requirements are hence more relaxed now. But the visa scheme is also stricter in other ways.

Critically, all new MM2H visa holders must buy residential property of a prescribed minimum value depending on their visa category. They must also hold the property for at least 10 years before it can be sold.

Participants are allowed to upgrade the property or buy a new one with a higher value than the one they already own.

Economic boost

These changes are important for several reasons.

Firstly, MM2H contributes to economic growth. From 2002 to 2019, MM2H attracted 48,471 retirees and their dependents. This brought in an estimated RM58 billion in revenue through real estate investment, medical and education expenses, and other economic multiplier effects.

But the 2021 tweaks cratered the MM2H market. The average number of MM2H applications since then reportedly saw a 90% drop, compared to 2017 to 2019.

Improving onerous financial criteria, and hence attracting more applicants and reversing this slide in MM2H numbers, can further stimulate the economy.

Secondly, with three new categories, the new MM2H is still targeting HNWIs without sacrificing a wider pool of applicants. Wealth migration, including by millionaires and HNWIs, is a growing trend in the global economy.

The investment migration market is worth US$21 billion annually, with an estimated 135,000 millionaires projected to relocate in 2025. Attaining a greater share of that market – in this case, through the newly introduced “Platinum” category – can likewise benefit Malaysia economically.

The revamped MM2H is still targeting more affluent foreigners, too, even with the looser financial requirements. This is partly to account for inflation, which has seen visa schemes everywhere become more expensive.

But it also minimises overlap with the MM2H programmes offered by Sabah and Sarawak, which are more affordable – in line with East Malaysia’s lower cost of living – and cater more to the lower-middle income crowd.

Foreigners thus have several options to relocate to Malaysia, depending on their financial means.

Finally, mandatory property purchases may reduce property overhang in states such as Perak, Johor, Kuala Lumpur and Selangor. This could boost the property market and improve the value of property held by Malaysians in surrounding areas, too.

Welcoming abode

With less stringent financial criteria, Malaysia is once again opening its doors to a wider and more diverse group of MM2H aspirants.

Its current terms are more expensive than what was offered pre-Covid-19 pandemic, but this is again par for the course given inflation. And any cons must be weighed against the pros.

Malaysia remains an attractive destination for long-term residency and retirement. It has one of the lowest cost of living levels in Southeast Asia; robust medical, educational and business infrastructure; and affordable connectivity via its international airports, to name a few.

The weak ringgit is likewise a boon for foreigners, because they get more bang for their buck in Malaysia.

But MM2H still has room for improvement. The new property rule may be too harsh and even somewhat illogical. One wonders, for instance, why the government is forcing foreigners on a five-year visa to hold property for 10 years.

Foreigners and migrants, regardless of income level, have brought and still do bring immense value to Malaysia. They should be given appropriate and proportionate flexibility to live well and freely wherever possible, while contributing to the government’s economic agenda.