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.
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.
Returning 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.
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.
The 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.
Suffice 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.
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.
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.
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.
Finally, 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.
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.