The REAL deal: Get MM2H right once and for all

Does Malaysia want the Malaysia My Second Home (MM2H) programme to succeed? Given how clearly the benefits outweigh the drawbacks, the answer should be obvious — so it's time to get serious about fixing what's holding it back.

MM2H's rocky history

MM2H was launched by the government in 2002 to attract foreigners to retire and live in the country long-term, replacing the failed 1987 Silver Hair programme, which had targeted applicants aged 55 and above from Japan and Western Europe with five- to 10-year visas and a requirement of RM200,000 in savings or a RM5,000 monthly pension.

MM2H built interest slowly before being abruptly suspended for review in August 2020. The suspension lifted on 1 October 2021, but under a new custodian — the Home Ministry took over from the Ministry of Tourism, Arts and Culture — and with far stricter terms billed as targeting "high-quality participants": a cumulative 90-day annual residency requirement (previously none), offshore monthly income of at least RM40,000 (up from RM10,000), a fixed deposit of at least RM1 million (up from RM150,000–RM300,000 depending on age), liquid assets of at least RM1.5 million (up from RM350,000–RM500,000), and visa validity cut from 10 years to five, renewable for another five. The backlash from existing participants was severe enough that the government ultimately required them to meet just two of the ten new criteria — the higher RM500 annual renewal fee and the 90-day stay.

Stronger competition, from neighbours and from within

Malaysia can't afford to ignore the growing competition for this segment of the market — including from its own states. Sarawak introduced its own S-MM2H scheme back in 2007, and Sabah has approved in principle the framework for a Sabah-Malaysia My Second Home (SBH-MM2H) scheme. Both require only 30 days of residency, compared with MM2H's 90 — one of several inconsistencies between the three programmes. More than two decades after pioneering this space, Malaysia has struggled to capitalise on its first-mover advantage, hampered by inconsistent direction and weak execution. Closer engagement with industry stakeholders is overdue, especially as neighbouring countries step up their own efforts to attract second-home and retirement migrants.

MM2H versus the Premium Visa Programme

What actually defines a "high-quality" MM2H participant — offshore income and bank balances alone? And would people who meet that bar even want to retire in Malaysia? Security considerations are non-negotiable, so if current safeguards prove insufficient, a review is warranted. Notably, exactly one year after MM2H's unpopular 2021 revamp, the government launched the Premium Visa Programme (PVIP) on 1 October 2022 to draw wealthy foreigners to invest in and reside in the country for 20 years. Unlike MM2H, PVIP has no minimum age and asks for a similar offshore income of RM40,000 a month, plus a fixed deposit of at least RM1 million (no withdrawals in year one, up to 50% after that for property, health or education). Applicants pay a one-off RM200,000 participation fee plus RM100,000 per dependant (spouse, children under 21, parents, in-laws and domestic workers are eligible; children over 21 must apply separately). With PVIP now competing for the same wealthy-migrant pool, MM2H needs to be recalibrated to serve its own distinct purpose.

The case for getting MM2H right

Malaysia checks nearly every box for foreigners seeking a retirement or second home: an affordable, high quality of life — a bowl of curry noodles or assam laksa for a couple of dollars in Kuala Lumpur's Chinatown — a forgiving climate free of the earthquakes, typhoons and snowstorms that plague other markets, a rich mix of cuisines and cultures, widespread fluency in Bahasa Malaysia, English, Mandarin and various Chinese dialects, solid healthcare and education, and easy mobility between striking landscapes, coastlines and mountains. Yet MM2H hasn't caught fire internationally — largely because it's no longer a unique proposition.

The scale of what's at stake is considerable: industry estimates put MM2H's known revenue at roughly RM58 billion between 2002 and 2019, with then-tourism minister Datuk Seri Nancy Shukri citing over RM2.7 billion generated in 2018 and RM2.5 billion in 2019. The programme has drawn participants mainly from China, Japan, Bangladesh and South Korea, followed by Hong Kong and Indonesia. Property purchase isn't a requirement of MM2H, nor is MM2H membership required to buy Malaysian property, but participants' home purchases and rentals still benefit the real estate sector — something Johor, in particular, is counting on given its persistent housing overhang: as of last September, Johor held 5,348 of the country's 29,534 unsold housing units (worth RM19.95 billion) — behind only nothing, ahead of Penang's 5,222 and Selangor's 4,386 — and more than 62%, or 14,780 units, of the national serviced-apartment overhang of 23,688 units (worth RM20.21 billion).

Foreign ownership of Malaysian real estate remains a low single-digit share of the market, and any purchase is ultimately governed by individual state land authorities, so fears of foreigners buying up the country are overstated. What MM2H really lacks is ownership — a clear, transparent, consistently executed strategy, since the programme's success was never just about sign-up numbers. MM2H is a genuinely valuable asset for Malaysia. The only question is why the country is still stuck at the starting line.

Source: The Edge Markets