THE GLOBAL RACE FOR INVESTMENT
Malaysia’s pursuit of wealthy investors is part of a larger global race among nations to secure foreign capital and talent. In 2022, global foreign direct investment (FDI) flows reached US$1.3 trillion. For Malaysia specifically, FDI accounted for 61.7 per cent of total approved investments in the country last year, or RM163.3 billion (US$34.8 billion).
The infusion of wealth and capital from rich investors can have a transformative impact on Malaysia’s economy. These investors bring not only financial resources but also expertise, networks and connections that can stimulate local industries.
One of the key strategies Malaysia has implemented to attract overseas retirees and wealthy investors is the Malaysia My Second Home programme (MM2H).
Launched in 2002, the programme grants eligible participants a multiple-entry social visit pass, allowing them to stay in Malaysia for up to 10 years, with the option of renewal. Between 2002 and 2019, close to 50,000 foreigners were approved under the MM2H programme.
In a surprising move, however, the government in 2021 introduced more demanding requirements, reducing uptake for the scheme. This included a quadrupling of the minimum monthly income to RM40,000 and increasing the required period for physical presence to 90 days in a year.
This was not all. More onerous was the new bank deposit requirement of RM1 million, up from the previous amount of RM150,000 to RM300,000, and that of liquid assets of RM1.5 million (up from RM350,000 to RM500,000 previously).
It was almost as if the revised MM2H wanted to dissuade potential applicants since other countries in the region had less stringent thresholds. Since the regulations were tightened in 2021, there have been a 90 per cent drop in the number of applicants.
A second programme to attract wealthy foreigners is the Premium Visa Programme (PVIP). This programme is not by any stretch of imagination less demanding in its requirements than that for MM2H, with applicants having to open a local fixed deposit account of about RM1 million.
PVIP differs from MM2H in that it allows applicants to conduct business and seek employment; it does not require a minimum period of stay in Malaysia and waives the need to show proof of liquid assets.
At first glance it is quizzical why a country that seeks to attract wealthy investors should raise the thresholds; and why it should position itself to be less competitive than other countries in the region.
There have been calls from various quarters for the MM2H regulations to be eased, with the Johor sultan urging the government on multiple occasions to revise the conditions. In April, the government confirmed that it would review the criteria for the programme.