Movin’ Out

After recent comments about leaving Penang and moving to Thailand once our lease expires later this year, I’ve received a lot of questions asking what’s wrong with Malaysia so I thought I’d address the topic. In one short sentence, there’s nothing inherently wrong. Simply put, Malaysia offers the best long-term retirement visa in Southeast Asia and while the application requirements are not inexpensive and the process is a bit tedious, the benefits far outweigh the hassles when compared to other neighboring countries. For example, Thailand’s never ending revolving door policy of visa runs and short-term non immigration visas with endless reporting requirements and lack of permanent residency options for most applicants makes Malaysia’s MM2H look like an expat’s dream come true. For anyone looking at Malaysia as a retirement option or a temporary escape from the United Trump States of Draconia, I highly recommend the Malaysia My Second Home (MM2H) program and I’ve written extensively about it on this blog.

My best ant-Trump shirt

My best anti-Trump shirt

Having said that, our situation is exactly what the blog’s title implies; an experiment. While Malaysia offers excellent infrastructure, English-speaking citizens and a myriad of annual festivals featuring three different cultures, it’s not everything we’d hoped it might be and it’s simply time for us to move on. Given our situation, it makes sense to stay in the MM2H program since we paid the annual fee for six years (when our passports expire). Additionally, the timing of our fixed deposit purchases was one rare case in our married life where we got hosed big time. (MM2H requires participants to keep a 150,000 ringgit fixed term deposit in a local bank while on the program). Arriving when the exchange rate was 3.7613 per USD, 150,000 Malaysian ringgit cost us $39,879 USD. Even with an annual reinvested interest payment of 3.3%, the current exchange rate of 4.42 means our fixed deposit’s current value hovers just over $35,000 USD. Even though the fixed deposits need to stay intact for as long as you stay in the program, local banks won’t let you take a term longer than one year. Suiting them perfectly, Malaysian fixed deposit rates rise with terms exceeding one year and since the central bank lowered interest rates twice during our first year in Penang we’re now earning only 2.9%. With nobody on Wall Street anticipating a rising Ringgit, even after six years of interest payments, we’ll probably just break even when we leave Asia and cash in our fixed deposits.

relationshipReturning to the topic at hand, I’ll offer two structural concerns with Malaysia and a few personal reasons why we’re leaving. Beginning with the economic and political concerns, it’s no secret that Malaysia’s relationship with China is an important one. While expat life tends not to be affected by political aspirations (except perhaps in less developed nations where political instability might lead to trouble) we use a nation’s standing with its citizens and neighbors as one factor that potentially influences quality of life. Here in Penang, over-development is a major concern of long time locals and an insane number of large-scale residential and commercial projects have blighted much of the island’s charm. Funded by mostly Chinese owned developers, you’ll find dozens of high-priced luxury high-rise condos all over Penang and many more on the way. Affordable only for the wealthiest Chinese Malaysians, foreign investors from Singapore and China purchase most of the units and either rent them out or leave them unoccupied since most have no desire to live here. Our condo’s occupancy rate during most of the year hovers near 30%.

Traveling the long 65 kilometers from either of Kuala Lumpur’s shiny new airports to the city center, it’s a hundred times worse than Penang with city sprawl now encompassing every square foot of available land. Unlike anything the government touts in official press releases, speaking with Penang’s majority Chinese population as well as many Malay and Indian citizens uncovers a more realistic picture. Discussions ensue about tensions between the nation’s three ethnicities, political overtures designed to keep the world’s longest running political party in power forever and frustration with a disturbingly large disparity of wealth. Penang’s grandest project is a massive commercial endeavor by multinational Chinese developers that involves reclamation of the entire waterfront area lining luxurious Gurney Drive. Promotional signage comparing the completed project to world-class waterfront developments like San Francisco’s Pier 39 are preposterous given how 95% of Malaysian citizens can’t afford to live or shop in luxury developments and tourism from Malaysia’s main visitors (mainland Chinese people) has dropped significantly.

develop

Recently, I came across a well written article highlighting the cushy relationship between Malaysia’s government and China. Apparently, down in Johor, the government is constructing a mega sized offshore development built mostly with Chinese money that’s slated to be larger than all of Singapore. Criticized as selling off the nation in exchange for political favors, the article goes into details about how China allegedly paid off lawsuits involving 1MDB, currently the world’s largest public financial scandal that involves the Prime Minister and the nation’s now defunct wealth fund. Originally slated to achieve “fully developed” status by 2020, billions of dollars went missing and the fund dissolved amid a flurry of accusations from American and European investment banks. Given that MM2H rules prohibits holders from engaging in political activities and it’s never wise to write negative comments about your host nation, it would be inappropriate for me to comment further but if you’re interested in learning more, here’s the link. 

plungeThe second structural concern involves the Malaysian Ringgit. Fluctuating all over the map in 2016 with a range of 3.85 to 4.51, Malaysia’s currency acted more like a Sub Saharan African nation than a country with luxury condos and shopping malls whose economy is supposedly Southeast Asia’s strongest. Unhappy with the currency’s inherent weakness, the central bank stepped in last November and implemented rules for foreign investors designed to curb large fluctuations. A bit technical, they basically set limits for foreign investors buying and selling currency futures that spooked foreign investors enough to withdraw several billion in ringgit positions since last fall. Although the fluctuation has subsided a bit, the currency now lies in a wasteland that sits above 4.40 USD. While this benefits expats lucky enough to use “no foreign transaction fee” credit cards denominated in USD, it’s certainly not improving life for locals. Officially, the government claims the Ringgit is not properly reflecting commodity prices and other factors normally affecting currencies but a recent article from Bloomberg tells a different story. You can read more about it here if you’re interested in learning more.

closingSuffice it to say that we’ve noticed a negative effect on the average Malaysian over the last six months. Many small businesses are disappearing, portion sizes of food from hawkers to luxury restaurants is decreasing and food prices are up in the supermarkets. While we’re not personally that affected (financially speaking), many locals seem grumpy and a bit less open to foreigners perceived as being rich. Combining a sinking currency with a still new GST (goods and service tax) that started two years ago yields a drop in prosperity and it’s clearly hurting many average Malaysians.

Moving on to personal reasons why we’re moving on, living way out in the beach town of Batu Ferrenghi had a certain charm when we arrived but it’s quickly losing all the reasons we had for choosing it over a more convenient location. The beach itself is dumpy, dirty, eroded, and almost always empty except for the hoards of watersports vendors desperate for business. Malaysian solutions are always used to solve problems which means trucking sand from one part of the island to another when heavy rains cause erosion. Crowded only on national holidays, year-end and during Hari Raya, the Muslim celebration of Ramadan’s end, those days are annoying as hell with traffic, noise, and dirty working class people dumping trash all over town. Promising no further development on the one part of Penang not yet ruined by construction crews, property agents say anything and proved totally incorrect. Aside from the multi tower condo we knew was coming next door, the entire one lane road town is now inundated with heavy equipment, trucks and noise. With no car, we’re stuck with the bus and Uber when we need anything which was OK for a while but gets old quickly. Planning on looking for a suburban moo baan (gated community) in Chaing Mai, we’ll finally give in and buy a car despite the budget busting expense.

Our beautiful sunsets are one reason we chose to live out here

Our beautiful sunsets are one reason we chose to live out here

Recently, someone decided every single piece of road in the whole of town needs re-paving and unlike the developed world, Malaysians begin paving work at 11 PM and work through the night ensuring everyone in town gets no sleep. Then there’s the internet compromise. Defying the otherwise decent infrastructure, this end of the island has no high-speed internet and we’re limited to sad speeds of 8 Gb. Writing this blog often takes four reboots. Promising upgrades, crews came in last fall and spent weeks on end digging up the main road for several weeks to install fiber optic cable and our condo management claims the service is coming soon but when you speak to anyone privy to information, you’ll find there’s not even negotiating talks underway that might begin the process.

Walking through town, every available piece of land that’s not jungle is now a huge open lot with five feet tall signs showing the names of contractors engaged in enormously large-scale development projects. Even worse, our condo owner told us the surrounding jungle is off-limits for future development because it’s all government protected land but conversations with long time residents contradict that story. Apparently, all the surrounding jungle by our condo was already sold to private developers before the 2008 financial crisis so it’s really just a matter of time until the bulldozers destroy what remains of the island’s beauty.

Enormous trucks clog up the two lane street in Batu Ferrenghi every day

Enormous trucks clog up the two lane street in Batu Ferrenghi every day

Many of you know I spend lots of time with monkeys. Amazingly adaptable and relatively non aggressive, large groups of long-tailed macaques and clown faced dusky leaf monkeys hang out within walking distance across the street from the town’s only worthwhile hiking trail paralleling the island’s water pipeline system. Sadly, they began constructing a large hawker center across the street from one of my favorite monkey watching spots. Unlike luxury condos, structures built for use by locals use all unskilled foreign laborers wearing no safety equipment that have no regard for anything. While enjoying some quality time with a few monkey buddies the other day, I walked away for a breather and returned to find an enormous dump truck filled with construction site garbage literally backing up right into the trees where dozens of monkeys frolicked. Watching helplessly while they squashed an enormous section of jungle where monkeys live, I noticed them dump the garbage as well as a crane and some surveyors began looking around while scribbling down notes.

They drive a giant truck through the monkey's habitat

They drove a giant truck through the monkey’s habitat

Clearly this means another enormous chunk of jungle slated for destruction not to mention a blatant disregard for the natural habitat. In addition to an inevitable noisy disaster right outside our window that involves clearing jungle to make a roadway to the new condo towers, they’re also going to ruin my last form of daily enjoyment by forcing the monkeys further away from town. Many expats have no issue with “progress” but we’re not among them. Enjoying hiking, outdoor activities and wildlife, the cooler mountains surrounding Chiang Mai sounds like a better choice for us. Having attended many of Penang’s festivals and tourist attractions in our first year, we’re not really impressed and its feels like everything in Malaysia is kind of average compared to neighboring countries. Chinese New Year celebrations are OK if you’ve never seen one but mostly it means a big 15 day inconvenience where Chinese owned shops and logistics companies limit supplies and take as much time off as they can afford. Although the Chinese New Year is technically 15 days long, only Malaysia goofs off for the entire 15 days and even workers in China only get 7 days for time off.

img_9795Finally, there’s the social aspect. Retiring at an age when many westerners are hitting the peak of their careers means it’s an awkward age for making friends. Not exactly a haven of social activity, Penang’s opportunities for meet-ups are quite limited compared to the big city. More laid back, the island attracts some younger working expats with its high-tech factories but that means they spend every second of free time being overly active or traveling which makes it hard to spend time with them. Contrasting that, our older expat friends offer good conversation but don’t often want to do very much besides have dinner and we’re not wild about most restaurants here. Neighbors in luxury condos tend to be couples with young children and we’ve tried some InterNations meet up groups but didn’t really find many folks we’d want to hang out with. And with the bulk of expats being British, it’s often difficult to click with them due to cultural differences and their proclivity for drinking alcohol every night.

Beginning our research about all things involving a move to Chiang Mai, we noticed an enormous difference just in social media compared to Penang. With an over abundance of Facebook groups about every topic from real estate to “stupid questions”, several people went out of their way to help us answer questions from the visa hassles to finding the right neighborhood, Voluntarily sending personal messages instead of just responding on Facebook, Chiang Mai’s expat community seems to be a more helpful and tight-knit group than Malaysia. Already finding a Dutch couple our age that also lived in Penang and moved as well as a retired Canadian guy that agreed to help us open our bank account on our first visit, it’s easy to make friends from all walks of life without even trying. Constantly posting activities from impromptu yoga sessions to weekly open mic nights, the social scene is clearly much more vibrant albeit also filled with digital nomads, backpackers and people looking to avoid work. But there’s also a lot of North Americans, many middle class retirees and scores of active Europeans that are more in line with our lifestyle than here in Penang.

I will miss these guys

So it’s off to Bali for a week in April as our last trip utilizing the highly inconvenient Penang International Airport before embarking over to the Thai Consulate in Penang and seeking a non immigrant 90 day single entry visa. Still working out details, getting accurate information about Thai visas can often be challenging and their rules change constantly so we’re going to seek help from someone in Penang that comes highly recommended from social media. Planning on using the “over age 50” class to get our first visa, we plan on applying for an “extension based on retirement” shortly after arriving and taking it from there. Radically different from Malaysia’s one time tedious application which grants long-term multiple entry visitor status, I’ll be posting on the semantics as I learn them and we enter the next phase of our Overseas Experimental Early Retirement. So far, the experiment’s been mostly positive with a lot of bumps along the way but anything that keeps us away from the Trump Empire of America is an improvement over the disastrous destruction of my once great homeland. Stay tuned for upcoming details and cheers from wickedly hot and humid Penang.

Comments and questions are always appreciated.

15 thoughts on “Movin’ Out

  1. Young

    I’m looking forward to reading about your new adventures in Chiang Mai soon. I’ll be moving soon, therefore my E-Mail will be changed too. I’m afraid that your website doesn’t accept my new E-Mail address like others, Can you find a solution for this problem? I’d like to write comments from time to time. Thanks in advance.

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    1. rodi (Rob and Diane) Post author

      Hi
      Thanks for following. Unfortunately I am very non technical and was happy I figured out how to set up the blog so I don’t know why the website wouldn’t accept an email. I will send you an email and you can reply directly then you’ll have my email address if you want to ask any questions

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      1. Young

        Yes, send me your E-Mail address through E-Mail, I assume that you know my E-Mail address, right? I will have my current E-Mail address till the end of February. Thank you.

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  2. Adrienne & Dave

    Hi, will look forward to reading your experiences in Thailand. What about the tax situation? MM2H excludes you from having to pay tax in Malaysia, but what will happen in Thailand?
    Don’t be put off Spain because of the Brits. We’re not that bad and some of us do drink in moderation!

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    1. rodi (Rob and Diane) Post author

      Hi guys
      Thanks for the comment. I’m not trying to insult all Brits; just saying we’d prfer to live where the bulk of expats are not all from one country and that includes the USA which is one of the main reasons we ruled out Ecuador. Taxes are a non issue for us at the moment. American citizens, unlike every other nation on earth, pay taxes on worldwide income no matter where they live. The caveat is how much income you earn. We live on cash from the sale of our house for the next twelve years or so and our only income is fixed deposit and savings interest. Even including the MM2H fixed deposit and foreign bank income we don’t qualify for a tax liability

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  3. Rob Culbertson

    aloha Rodi!
    Hey, was that ‘dusky’ in the last photo holding a selfie stick?🙉 Oh my!
    Perhaps my eyes are going bad. Anyway thanks for the explanations and good luck with Thailand. You may have heard about the free visa giveaway at the Thai consulate in Penang town. Not sure what the duration of it was but it certainly was “easy peasy” when I got it in mid December.
    I too lament the intrusions along the aqueduct trail behind Batu Ferrenghi. It was one of the highlights and a worthy public amenity in the area.
    You certainly do look happy to be packing. All big smiles! Or is that my eyes again?
    I look forward to your posts!
    Another ‘Rob’ (still stuck inside the Trump echo chamber and itchin to get out).

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    1. rodi (Rob and Diane) Post author

      Hi Rob
      The free visas are only for tourist class and we need a non immigrant class so unfortunately doesn’t apply to us. It’s been extended until August and yes the Thai consulate in Penang is very loose compared to embassies or other consulates. It’s like a fast food shop for viss. But again, we need a non immigrant visa and getting information from them is not easy and conflicts with the eight million comments you find all over the internet which is why we’re going to see a guy they all recommend. You can’t get the one year retirement visa from outside your home country but you can get a 90 day non immigrant visa based on being over age 50 and then apply to convert that into the longer term retirement visa once in Thailand. Of course then you have to have 800,000 THB in a thai bank for 60 day a prior to applying so it’s a big pain in the ass compared to Malaysia.

      And even when you get it they require you to do 90 day reporting four times a year but you can escape that by traveling before the 90th day and when you return the 90 day clock starts again. They don’t make it easy but that’s why every backpacker, lowlife non working loser and digital nomad chooses Thailand. Thankfully there’s enough cool people form all walks of life to associate with and the cooler mountain air will be very welcomed

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      1. rodi (Rob and Diane) Post author

        We are in the process of learning exactly all the ins and outs of Thailand and wouldn’t want to tell you anything concrete until we’ve actually done it. But long story short; 90% of visas in Thailand are not residency visas. They are non-Immigrant visas and there’s about 12 different types from education to work and retirement. Usually only very wealthy, high paid workers and sometimes spouses of citizens get residency status. And yes, it’s easy to open a bank account in Thailand as long as you know how, what bank and branch to do it and wha to expect. You don’t need a residency visa. Bangkok Bank requires only 500 THB or 1,000 USD for a foreign currency account as well as passports and someone to act as a reference

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      2. Mike

        @ Indo Tom …yes you can open most types of bank accounts here without a resident visa, ie the Bangkok Bank (among others) specifically states that you can open a savings account with ATM access on just a tourist visa. The reality is that policy varies from branch to branch though, I first tried at K-Bank and was told that I need a work permit. I knew that was BS but just walked next door to the Bangkok Bank where I was welcomed with open arms and a glass of orange juice ! At that time I was just on a tourist visa, not a problem ..just copies of my passport was all that was needed.

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  4. Indo Tom

    In the end, you may find that 3% interest on the fixed deposit over time with the currency fluctuations will balance out and maybe even yield a small profit. The good thing is you can decide when to cash out. But the good thing to remember is it’s always good to have a country to return to nearby hat you don’t have to do a frequent visa run. Therr are always other cities and areas of Malaysia to try when you get tired of Thailand. I’ll be looking forward to reading your Thailand blogs. Cheers!

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    1. rodi (Rob and Diane) Post author

      Based on my knowledge of financial markets from my job I don’t expect a rise in the ringgit any time soon but they can’t really lower rates much more because they’d never attract any foreign bond purchasers if they pay the same as more developed nations that don’t have a leader involved in a financial scandal. We hope to break even and that sucks because it’s hard enough to live off CD income when it pays 1.3% but that’s life today. Thankfully we can start small pensions in five years to supplement and we have a sizable amount in the investment accounts so barring a trump based collapse it should be possible once our cash runs out.

      We wouldn’t live anywhere else in Malaysia; there’s way too much preference to Malays over Chinese people and believe it or not it’s not even safe for Chinese people to venture into certain areas at night because Malays will literally rip off their jewelry. This is stuff you’d never know without interacting with people when living here. When we get tired of Thailand it’s time to leave asia and move on. Next stop after 2020 is either Southern Europe in a less expensive mild climate or Costa Rica. Our eventual return to Canada doesn’t look financially practical until we can both withdraw from our tax sheltered retirement accounts without early withdrawal penalties so that’s not for another nine years at the earliest. Thanks for writing

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      1. rodi (Rob and Diane) Post author

        Yes we are considering Spain but now that you told me it’s inundated with Brits I’m not so sure. We don’t have much in common with them and we rarely drink alcohol. Anyway, thanks for the information

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