mm2h

MM2H – The Malaysian Social Visit Pass

One of our most important considerations when researching expat retirement destinations was the host country’s policies on residency. Some places , like Thailand, offer ease of convenience, with relatively few requirements. However, it’s only valid for one year and its liberal policies mean you share the country with almost anybody short of escaped criminals (and there’s probably some of those).

Other countries, like Panama and Ecuador, offer slightly more stringent rules but there are many barriers which include language, shysters looking to scam expats, and most recently the ridiculous new U.S. government tax act known as the Foreign Account Tax Compliance Act (FATCA) which makes it exponentially harder for honest middle class Americans to open foreign bank accounts.

<center>Let's not

Let’s not

As beautiful as the Italian countryside is,  getting through the red tape includes signing an “integration agreement” which compels one to meet specific integration goals, including a working knowledge of the Italian language and earning credits through classes or tests in Italian. No thanks.

Malaysia’s program is quite interesting.  It’s called Malaysia My Second Home (MM2H).

Malaysia  DOES NOT WANT THEM. They can go to Thailand.

Malaysia DOES NOT WANT THEM . They can go to Thailand.

Designed specifically for middle class retirees who do NOT want to work, its financial requirements may seem quite exorbitant  to most. At first glance, the government appears to seek candidates who can benefit their economy without detracting  from the national work force. Malaysia has a large degree of guest workers from developing nations. Unlike Ecuador, Malaysia’s government seeks to avoid the drain of resources on those with limited means.

Malaysia generally doesn’t issue permanent residency. Considered a social visit pass”,  the program allows foreigners to apply while living overseas. Utilizing an agent licensed by the government helps ease the red tape.

This is a brief explanation of the program, courtesy of Joy-Stay, the premier licensed agent in the country  (our opinion only)

Malaysia My Second Home (MM2H) Programme  is introduced by our government to allow people from all over the world to live or retire in Malaysia in a long term basis. This Programme was transformed from the formally known “Silver-Hair Programme” which only applicable for those who were 50 and above. The MM2H is now open to all citizens of the world and has no restrictions on age, race, religion or gender. You may participate in this programme alone or bring along your spouse, dependents (under 20yr+4 months at the time of MM2H submission) and even your own maid from your country.

MM2H visa is actually a Ten(10)-Year Social Visit Pass with Multiple Entry Visa which is renewable every 10 years. It is basically a long-stay programme that allows the participants to live in Malaysia and not worry about their short term visa renewals. You are welcome to stay here for 365 days a year without having to leave the country because the visa renewal can be done in Malaysia.

Malaysia’s status as “almost fully developed” (from a financial standpoint), combined with the torrid tropical climate tend to discourage the super rich from applying since beachfront property in Monaco or The French Riviera will always be more attractive and a better investment. This leaves a middle class that produces a global mix of mostly Europeans, Australians, Kiwis, Japanese, Americans and Canadians. In addition, Malaysia is unlike Ecuador, most Mexican cities or any beach town in Central America. The expat community blends in with everyone else instead of barricading themselves in gated communities that the local population resents and could never afford.

A vibrant expat community with lots of integration holds great appeal for us. Having watched 7,000 episodes of House Hunters International, we decided that all those beautiful beaches in the Caribbean don’t provide enough activities or culture for two crappy swimmers. Regardless of what International Living tells you, Ecuador and Uruguay are still Spanish-speaking countries with economies of scale that stay stuck in neutral.  While this may not matter to most, I want to live in the region that represents the real new 21st century economy. With Singapore on its doorstep, Malaysia is as close as you can get without depleting your savings.

I will not mislead you, however. The MM2H Visa has a ton of little nit-picky requirements, many of which seem ridiculous in a modern electronic based world. There are two ways to apply:

  • DIY – Do it yourself – All the forms are found on the government’s official website.
  • Hire An agent – We have chosen this route and are utilizing the services of Joy-Stay, the agent we believe is the best one in the country.
mm2h rules

MM2H requirements summarized

Choosing an option stirs much debate and your circumstances might differ from ours. If you’re interested, there’s a bunch of forums devoted solely to the topic. We started with best of the bunch, The MM2H Forum. Unfortunately, the website is unavailable as I write this; hopefully this is temporary. It’s the world’s best source for all things MM2H. We learned almost everything we know so far from it. And since we’ve never even visited Penang, that’s saying a lot. Other good forums include Expat Go Malaysia and BritishExpats.com

Rather than explain details of the website, my posts will only focus on our own experience. As for our choice, I’d already done an immense amount of research before being laid off so I was familiar with both methods. When push came to shove, we decided to take the advice of an American on the program who was kind enough to communicate extensively about the agent process.

Here are the qualification requirements:

1) Applicants must show over 350,000 Malaysian Ringgits, also known as MYR, (about $108,000 USD) “cash-in-bank”.

usdThis is very misleading. Nobody in their right minds has over $100,000 in a CD or savings account during a long-term interest rate environment hovering near zero. Fortunately, this can include financial assets considered “liquid”. Written mostly in British-speak, they tell you this means “shares”. This is where it comes in handy to use an agent who’s educated and knowledgeable with North American investments. All public open end mutual funds and exchange traded funds (ETF’s) listed on any U.S. exchange qualify, so you can use assets in your 401k, company profit-sharing plan, IRA’s or taxable brokerage accounts. It can also be spread across many accounts, including joint accounts and even accounts belonging to your co-applicant (a spouse) as long as you give valid statements. More on that later.

2) Applicants must show 10,000 MYR (about $3,500 USD) monthly income with the latest three months statements

incomeAs the most ridiculous rule, it means you need to give bank statements for the 3 months before the application that show consistent income totaling about $3,500. Here is the stupid part: Most middle class people, even those with investment portfolios, would never generate that much simply from dividends or interest and only government pensions count.  If you did have that much, you’d be one of the rich “old lady” clients I used to service in my crappy job as portfolio administrator. My conservative asset allocation of 60% equities, 40% fixed income generates about $200 a month. I’d need about $10 million more to hit $3500 a month.

That leaves employment income. Wait. The whole premise of the MM2H is that you can’t work once approved. But they don’t care. This is a one time only requirement.  It’s understood that you won’t be working in Malaysia so the employment income demonstrated on the application goes away as soon as you arrive in the country. I’m told the idea is to keep deadbeats out. Taking it even one step further, you can use your co-applicant’s employment income to qualify. Perfect for us since I’ve had no employment income since 2013.

3) Applicant must agree to place 150,000 MYR (about $46,000) in a Fixed Deposit in Malaysia

CIMBAlmost everyone thinks we’re crazy when we tell them this part. Simply put, before finalizing the visa, you need to place a sizable deposit in a local Malaysian bank. The deposit gets segregated, earns  local interest (thankfully higher than US interest rates) and is either paid to you monthly or reinvested in the principal (I’m not sure why anyone would do that). Refundable only if you abandon the program, it  can only be partly withdrawn for a purchase of property or medical emergency. We would never buy foreign property because I am too chicken shit.

**Sidenote: You can hold the MM2H and not be physically present in Malaysia or even live elsewhere most of the time. The only catch is once you receive conditional approval, you must travel to Kuala Lumpur within six months and complete the banking requirement, pass a medical exam and buy a form of local health insurance valid for one year  (Easily accomplished for about $200 USD, healthcare costs is an entirely different topic and one of the main reasons we can retire earlier than planned).

fatcaIf you’ve ever tried to open a foreign bank account from the USA, especially since the new FATCA rules took effect, you’ll know this is akin to laundering cash for terrorists as far as the US Government is concerned. We went through dozens of posts, forums and emails on this topic before deciding to use HSBC Bank, mostly due to convenience and ease of access.

With $100,000.00 in combined assets, you can open an HSBC Premier Account, allowing easier online banking in multiple counties and currencies. Once in Malaysia, you can simultaneously open a local account and transfer the required fixed deposit without the long wait associated with international wire transfers. Assuming you’d wire extra cash for living expenses, the local account becomes eligible for Premier status, making you an élite customer in their eyes. Foreign bankers love Americans because they think we’re all rich.

hsbc

The HSBC Premier account minimum cash requirement is $100,000 in the USA and 200,000 MYR in Malaysia. (about 65K USD_

I’ve now covered the basic requirements which is actually the easy part. Discovering the rest of the details once you engage the services of an agent is the fun part. On the bright side, we haven’t paid anything yet. The fees are not payable until they file the application on your behalf.  Using an International wire transfer is the easiest method. We did, however, receive an enormous package with rules, checklists and requirements once we agreed to engage Joy-Stay.

We’ve seen many posts from others, especially those in lesser developed nations (Bangladesh is a big one) who say they’ve been waiting months and months with no response. Wishing to avoid this, I composed hours of emails to the U.S. educated owner of Joy-Stay. She is awesome, having responded to each question, usually within 24 hours. Fully aware of extra precautionary rules that apply to US citizens financial affairs, I’m confident the process will go smoothly and allow an easier transition for us.

Stay tuned and follow our application timeline

17 thoughts on “MM2H – The Malaysian Social Visit Pass

  1. Dr. Jerry Drawhorn

    Rob and Diane,

    I’m applying for the Sarawak version of the MM2H which seems greatly streamlined and with lower costs and proof of income requirements. I’m just worried that I might face the rejections that you did when it comes to having signed and “official” cover letters re. proof of income, accounts, pension, etc. It would seem that they should be satisfied if you could log onto your official government site and show them your account and then print it out.

    Did they eventually agree to accept non-notarized print-outs of your accounts?

    http://www.sarawak.gov.my/web/home/article_view/221/279/

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    1. rodi (Rob and Diane) Post author

      Hello
      We did not need notarized copies of income statements. They only insisted on notary or equivalent (jurats in The case of California residents) for the first two pages of our passports and Diane’s naturalization proof (not a requirement). For everything else they accepted “originals” that were printed off PDF bank and brokerage statements and a letter from the financial institution as proof of assets
      Cheers

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  2. Stu

    Hi Rob,

    Would you be kind enough to share how you / your agent solved the ‘letter of good conduct’ requirement for the MM2H please. Did you just have a boiler plate letter you had your local Police Station sign or did you have to do the fun FYI background check thing etc. Thanks for any info you can share – other blogs talk about the UK etc vs. how folks from the US tackled this one.

    Cheers as always!

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    1. rodi (Rob and Diane) Post author

      Hi Stu
      As odd as this sounds, the ministry didn’t want the standard fingerprint check usually associated with background checks at either the state or federal level. Rather, we went to the local police station in our town and had them run a Simple check through their system which basically says we have no outstanding offenses, traffic or otherwise. The letter itself was literally two sentences with a disclaimer that they have not used state or federal information for the check and one sentence saying we are citizens in good standing. As long as they give you a letter with some sort of official looking letterhead and a signature of a real person, that should suffice. I can send you a copy if you write us offline
      Cheers

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      1. Stu

        Thanks a million Rob, really good news on the local letter requirement. I’ll go that route as well. Just another example of US vs. how rest of the world works I guess – all good! Super helpful as always, Cheers!

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  3. Tarek A. Hassouna

    Hi Rob & Diane,

    Thank you very much for this informative detailed article. It include many points that every body would have to consider.

    I hope your application got approved since long time from my words, I just applied for me and my family and hopefully will have approval by three months and who knows we may see you in Malaysia.

    Best wishes,

    Tarek & family.

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  4. SueLow

    Hi Rob, our Malaysia Government is more than happy to welcome you and Diana and grant you an approval for MM2H program. Regarding the new ruling on proof of the applicant income from their home country bank wef 1/11/2014(will verify this fact with another MM2H consultant on how extensive/intensive the verification of income is). But again it depends on how good your MM2H consultant can convince the officer in-charged that even without the constant fixed income for the past 3 months but if you can substantiate your saving and the saving is sufficient enough for both of you live comfortably in Malaysia I don’t see any reason why you can’t get your MM2H approved.

    I believe if our Government stricken the control on the income proof is basically due to the abuse by some foreigners who used MM2H program to purchase more than 1 second home (many foreign real-estate investors used MM2H to get financing from banks in the past 3 years & speculated the properties price ) and some even faked the income statement (to get 80% bank financing) and flee the country once they default the payment. Heard from banker’s friend, many middle easterners, Koreans have default payment and flee the country lately.

    For the genuine foreign retiree, I believe if you can substantiate that you have enough saving to let you live in Malaysia without an employment income that shouldn’t be an issue just a matter of presentation to the authorities concerned by your MM2H consultant.

    Cheer

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    1. rodi (Rob and Diane) Post author

      Hi Sue

      Thanks very much for this encouraging comment. I have heard about problems with foreigners overstaying the visas but did not know about the real estate banking issues.

      We’re hoping that the ministry will see us as legitimate retirees with more than sufficient means to support ourselves and we have a high level of confidence in our agent and her ability to help us get approved even if the bank has issues verifying the three months’ income.

      Looking forward to enjoying your beautiful country

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  5. dbp49

    A very informative article. Detailed, and inclusive of many points that I never would have considered otherwise. Thank-you. I’m not even necessarily considering this at this time, but I’m interested enough that I’ll be reading at least a few more of your articles. Thanks again.

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    1. rodi (Rob and Diane) Post author

      Thanks very much for your kind words. I have spent literally dozens of hours on back and forth emails with our agent (who has diligently responded to every one). I therefore think I must know every possible question anyone would ever ask. And with all that, there is still no guarantee of approval since they just began implementing new rules whereby certain applicants in the USA are being “selected” for income verification. As I’ve posted recently, the form they request is one that is almost always ignored by the large banks because it is a borderline violation of banking secrecy policies regrading client information. Since we bank at Bank of America, there is nothing I can do if the bank refuses to send back their form so we’re hoping our application is not “selected”.

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      Reply
      1. dbp49

        Sounds like it could be quite the nightmare. Luckily for me, as I said earlier, if I was interested, it wouldn’t be for some time yet, but my heart does go out to you guys, and I hope everything works out all right.

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