Foreigners are RUSHING into Malaysia. Here’s Why.

Estimated reading time: 10 minutes

There are more and more foreigners in Malaysia. If you’ve noticed, they are not just traveling here but also living, working, and investing in the country! Why is this happening, and what does it mean for us – Malaysians?

In this blog, we’ll dive into the Malaysia My Second Home (MM2H) program, a government initiative that allows foreigners to live and retire in Malaysia for a set period of time.

What is MM2H?

Based on the graph below, it shows the number of people from foreign countries who have participated in the Malaysia My Second Home (MM2H) program. Basically, this program was introduced in 2002 by the Malaysian government to attract more foreigners to purchase houses here as their second or holiday home. From that time until 2018, it has generated over RM40 billion in revenue, which is substantial enough to help the government manage rising subsidy bills. From here, you can see how impactful this program is.

To put it in a simpler way, MM2H acts like a “Visa pass” that allows people to live, do business, or even retire here for a limited time.

MM2H Silver, Gold, and Platinum Categories

According to the table below (latest updates as of June 2024), you can see that there are three tier categories – Silver, Gold, and Platinum for MM2H applicants, each with different requirements to meet.

For example, foreigners need to pay a minimum fixed deposit ranging from USD 150,000 to USD 1 million, depending on the tier. They also need to purchase a property with a minimum price of RM 600,000 to RM 2 million, which is quite expensive. However, once granted the Platinum tier, they can enjoy the “pass” for up to 20 years. You can check out their website for more details here. Personally, I think this is a great deal, as you not only get the “pass”, but the house is yours too, so there’s really no loss.

MM2H Special Economic Zones / Special Financial Zones

Besides the top three tier categories, there are also special categories – the Johor-Singapore Special Economic Zones.

For this Special Economic Zone (SEZ), the required fixed deposit amount is lower compared to the top three tiers, at only USD 65,000, and applicants need to purchase property directly from the developer. This could bring several advantages, with the first being the potential to revive the struggling Forest City.

Not only that, but this SEZ also offers tax exemption on offshore income. This means that if you earn income outside Malaysia and bring it into the country, you won’t be taxed on it. If you’re a digital nomad, this is definitely great news for you!

For high net-worth individuals who want to work in the Special Financial Zones, there’s a personal tax rate as low as 15%, which is significantly lower than the current rate capped at 30% for Malaysian residents. Another awesome thing is that companies setting up within these zones enjoy a 0% tax rate, offering a huge incentive for businesses. If you’re interested in learning more about the Johor-Singapore Special Economic Zones, be sure to check out this video later!

Sarawak & Sabah MM2H

Not only that, but the MM2H program has also been implemented in East Malaysia, including Sabah and Sarawak. Based on the comparison table below, you’ll see that Sarawak’s S-MM2H is more affordable and flexible compared to Sabah’s.

Reasons Why Foreigners Choose Malaysia

As I’ve shown and explained, you might be wondering why these foreigners choose Malaysia over other countries. Well, here’s why!

Malaysia is Free from Disasters & Culturally Diverse

One of the main reasons is that Malaysia is largely free from natural disasters and enjoys a year-round summer climate, so people don’t have to worry about extreme weather changes like scorching summers or harsh winters. On top of that, Malaysia is considered a safe country, especially in major cities like Kuala Lumpur and Penang, offering both peace of mind and a comfortable lifestyle for residents.

Apart from that, we have a big advantage when it comes to language. I’m sure most of us know at least two languages: English and Bahasa Malaysia, along with other commonly spoken languages like Mandarin, Tamil, Cantonese, and more. This creates an environment with no language barriers, making it easy for foreigners to communicate and feel at home.

Malaysia’s diverse mix of cultures, including Malay, Chinese, Indian, and various other communities, also makes us friendly and open-minded when welcoming people from different backgrounds. You can see this in everyday life, just walk down any street, and you’ll find a variety of cuisines representing different nationalities. It’s something unique to Malaysia and rarely seen in many other countries!

Lower Cost of Living in Malaysia

Besides this, our cost of living is another key factor that attracts foreigners. If you’re wondering why Malaysia and not Singapore, which also shares many of the advantages I mentioned earlier, let me break it down for you.

Imagine James from China is deciding whether to migrate to Singapore or Malaysia. Let’s use food expenses as an example, since it’s one of our daily necessities. A plate of chicken rice costs around RM8 in Malaysia, which is approximately CNY13. In Singapore, the same dish costs about SGD4, which converts to roughly CNY21.50. With this simple comparison, you can see that food expenses are much lower in Malaysia.

The same applies to property prices, which are significantly cheaper than in Singapore. An additional advantage is that foreigners in Malaysia can buy freehold properties, and there are even plenty of landed house options available. While this might be possible in Singapore, it is not as accessible or affordable as it is here.

Malaysia Education vs Singapore Education

Moving on to another point, if you haven’t noticed, there are more Singaporeans moving to Malaysia with the purpose of sending their children to international schools here.

We all know that Singapore’s education system is way better than ours, so why are they coming here? From my perspective, it comes down to two factors: lower education costs and a less stressful environment. The more relaxed lifestyle in Malaysia is also a big draw for many. Plus, Malaysia’s environment offers more natural surroundings, while Singapore is largely urbanized with buildings everywhere.

With the SEZ or SFZ MM2H programmes that I mentioned earlier, they can even use rental income from Singapore to cover their living costs in Malaysia. I’d say it’s an offer that’s tough to turn down.

Good Healthcare System in Malaysia

Moreover, Malaysia is also well-known for its healthcare tourism. According to the Malaysia Healthcare Travel Council (MHTC), healthcare traveler revenue has increased by 18%, likely due to the affordable healthcare costs here.

For example, IVF treatment in Malaysia costs around USD 4,000, while in the United States, it can exceed USD 12,000. This large cost difference not only attracts medical tourists but also demonstrates that our healthcare system is above average, as people are willing to travel here specifically for medical treatments.

How Do Foreigners Affect Malaysians?

After sharing so many reasons why foreigners are moving here, now it’s time to look at how this will impact us as local citizens.

Improving Malaysia’s Economy

Firstly, if more foreigners choose to start businesses or invest in Malaysia, it could boost our economy. They would contribute by training more Malaysians, creating job opportunities, and promoting skill development. As a result, our local workforce would become more skilled, which would benefit the country’s long-term growth.

Even if they are just spending in Malaysia without running a business, their expenditures would still stimulate our economy by driving demand for local goods and services.

Additionally, when more money coming in from abroad could strengthen our currency (MYR), as more people convert their home currency into MYR for spending or investment purposes.

Also, increased foreign interest would likely boost our tourism and property market, helping to revive dead townships and bring new life to underdeveloped areas.

Higher Competition in the Job Market

However, everything comes with pros and cons. As I mentioned earlier, Platinum MM2H holders are typically in the high-income bracket, meaning they often have strong experience and educational backgrounds. This could lead to increased competition for higher-value or skilled jobs, which are already in short supply for Malaysians.

This competition is even more apparent with foreign entrepreneurs, such as Chinese nationals, who are known for their low-cost business models. This can create strong competition for local brands.

A clear example of this is the milk tea trend. When Mixue and Chagee entered our market, did you still choose Tealive as your first choice brand, like in the old days? The same scenario might unfold in the coffee market. When it comes to coffee, with Luckin Coffee entering the market, what’s going to happen to ZUS Coffee? I guess we’ll just have to wait and see how things play out in the coming days!

Conclusion

All in all, I’d say this is truly a double-edged sword. Having more foreigners move into Malaysia can bring plenty of benefits, like boosting our economy and strengthening our currency, but it also comes with potential risks, such as tougher competition in the job market. Even so, I believe this is also a golden opportunity for us Malaysians to sharpen our skills and enhance our abilities. By doing so, we can become more competitive and confidently hold our ground, no matter who we’re up against.

Checkout the YouTube videos for a visual guide to this blog!

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