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.
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).
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.
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”.
This 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
As 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
Almost 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).
If 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.
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