ANDY DAVISON COMMENTS ON THE RECENT CHANGES TO THE PROGRAMME.

The MM2H programme continues to undergo significant changes. We have had some clarification of the changes announced in last month’s issue and there have been yet more minor changes to the programme. We were pleased to see that the decision was made not to increase the Fixed Deposit which was being seriously considered a few months ago. That proposal was driven by the desire to see the programme attract high net worth individuals to Malaysia. We lobbied hard not to have this change made as, in our opinion, it would have severely damaged the flow of retired applicants which has been flat for the last few years. I was invited to share my views with the Economic Council of Malaysia at the Economic Planning Unit and expressed my concerns about the direction the programme was moving and my views on the loss to the Malaysian economy by not addressing the real needs of the programme.

I would have preferred to see the FD removed for people who purchased property. The final decision was not to increase the basic FD but to raise the minimum requirement applying to people who need some of the funds to buy property, pay for their medical expenses or children’s education. HIGHER MINIMUM FIXED DEPOSIT Under the existing rules people who buy property are allowed to lower their FD to RM60,000 but this has now been increased. Those under 50 have to keep a minimum of RM150,000 on deposit in a Malaysian bank and those over 50 have to place a minimum of RM100,000. This new rule apparently only applies to people who joined the programme after 1 April, 2009. We are disappointed by this latest change
as it can only serve to deter applicants and we can see no real benefit for Malaysia. To our simple minds it does not make sense. Surely the point should be to maximise the number of qualified applicants and ensure they make a financial contribution to Malaysia. Insisting on visa holders putting
in sizeable cash deposit even if they buy property does not seem to achieve anything except persuade some people not to buy property and others not to join the programme.

In fact one person contacted us who planned to move here and join the programme and was very upset by the news. They are in their late 40s and purchased a house for RM3.5 million, partly financed by a loan from a Malaysian bank. They were planning to join the programme however they are now not able to do so. They had kept RM60,000 back to place on FD and do not have the RM150,000 to meet the new higher minimum limits. They have a sizeable monthly income but not the cash savings to cover the FD. Having made a sizeable investment in Malaysia they cannot understand why the government insists on asking for a large cash deposit as well.

POLICE CLEARANCE CERTIFICATES
The government has decided that applicants who apply for a visa themselves no longer need to find a sponsor. For a short time they were given the option of placing a small cash deposit with the government but this has now been withdrawn. They are now told they must obtain a police clearance certificate from their last country of residence. Expats who have tried getting one of these will know it is often quite difficult so this certainly seems like another change which will discourage applicants. Applicants using an agent are not required to obtain a police clearance certificate as the agent will sponsor them.

WORKING IN MALAYSIA
It has been confirmed that MM2Hers who invest in Malaysia by setting up a company here can work without a work permit based solely on their MM2H visa. The company must be set up in accordance with the prevailing rules for that business sector and it must have a minimum of 30 percent Malaysian ownership to qualify. Those who want to take advantage of the part time working option must obtain approval from the MM2H department at the Ministry of Tourism. The application has to be submitted by the company who will be doing the hiring and state the job description, planned working hours and remuneration. Only jobs which in the opinion of the approving committee could not be done by Malaysians will be approved. Any income earned will be taxable in Malaysia.

TAX FREE CARS
There is now a requirement that cars imported tax free have to be owned for at least six months before applying for the visa. This is because the privilege is intended for people who have a strong attachment to their existing car. The government would, understandably, prefer applicants to buy a car in Malaysia. Unless the MM2Her really feels strongly about bringing their car with them then in terms of maintenance and obtaining spare parts we think it’s best to buy a tax free one in Malaysia.

ID CARDS
ID cards are now available but unfortunately only for the primary applicant. We have repeatedly asked that the spouse and other dependents also get an ID card but so far the government seems reluctant to issue them. The real value of this card is that you will,probably have the option of not having your passport chopped with an entry and departure stamp when you pass through immigration. It also removes the requirement to carry your passport with you in Malaysia. The law requires everyone in Malaysia to carry identification. However, for those people who do not have an ID card we recommend carrying a photocopy of the relevant pages of your passport. Most police will accept this in lieu of carrying your passport.

MARKETING
Of course the major reason for the number of approved applications staying flat is the absence of any co-ordinated marketing strategy. The practice of holding “one off” events in selected overseas cities has done little to generate applications but because the programme’s. potential economic contribution is not fully recognised the programme receives little marketing funds.

Interestingly Malaysia Property Inc, the private, public sector initiative to raise awareness of the Malaysian property market internationally is embarking on a similar narrow marketing programme. Given the fact that many MM2Hers who relocate to Malaysia buy property it is a pity that MPI and the Ministry of Tourism cannot combine their resources.

I was asked to come up with a marketing policy for MPI for the UK market. It was rejected in favour of participating in property shows. Given the hundreds of thousands of Ringgit that is spent on participating in property shows we wish this money could have been invested in a strategic marketing campaign which would have built up wider awareness of Malaysia as a place to buy property and possibly set up home. There have been many cancellations of property shows in the UK in the last year and they are no longer seen as a cost effective way to sell property. In fact the one which we were advised MPI would attend did not even list Malaysia in their country information section on their Website.

We are not expecting any material changes to MM2H marketing or overall policies anytime soon. Too many people have influenced the policy over the last few years. Each person has had their own view of what the programme should look like. Many influential people have contributed their views about what the programme should look like which invariably differed. The net result is a programme which has seen constant rule changes, received low priority and which has failed to get close to realising its potential. I remain convinced that properly managed it could contribute billions of Ringgit to the Malaysian economy but as long as the current practices continue it will drift along as a niche programme of limited importance and consequently make a minimal contribution to the country.