Government 'very serious' about MM2H

By Allison Lee of City & Country of The Edge October 2, 2006. If anyone has any doubts about how serious the government is on promoting the Malaysia My Second Home (MM2H) programme, this is the government's reply: "We are very serious." Moreover, says Datuk Dr Victor Wee, the secretary-general of the Ministry of Tourism, the government is also learning from its mistakes, such as ensuring there is no more confusion about the programme. Wee concedes that this was the case in the past. One of the key lessons learnt is the need for interagency cooperation and open communication with those involved in MM2H. "People would go to our embassies to make enquiries but the officers themselves were not sure about the rules. In the past, the rules were changed too often and too much without first deliberating with the relevant parties and this resulted in confusion," Wee says. In May this year, City & Country reported that while property market players recognised the importance of MM2H, they questioned the rationale behind some of its rules. A new set of rules had been put in place in April. Under these rules, MM2H participants are no longer required to have a local sponsor and agents registered with the ministry will assist them to settle down in the country, among others. MM2H evolved from the Silver Hair Programme, which the government introduced in 1996 to convince foreign retirees above 50 years of age into making Malaysia their second home. The fact that tourism is the second highest foreign exchange earner for the country is reason enough for MM2H to be promoted aggressively. Foreigners who reside here will boost the economy in more ways than one, given their needs. One can also expect regular visits from family members and/or friends, which will again help stimulate the economy. Wee tells City & Country that the Cabinet — well aware of the programme's initial problems — has decided to "take the bull by the horns". A Cabinet committee on tourism, chaired by the Deputy Prime Minister, has been formed in a move that signals how much the government wants the programme to succeed. Wee chairs the MM2H steering committee, which was formed in end-2004. The government's goal: To reposition MM2H on the right path. One-stop centre Wee's office is on the 36th floor of Menara Datuk Onn in Putra World Trade Centre in Kuala Lumpur. On the 23rd floor is the MM2H one-stop centre. Set up just four months ago, it is brightly lit and manned by a team to guide those interested in the programme. However, the centre is not complete. It will not be until a vital component in the form of an Immigration branch is set up there physically, which is expected sometime next year. "We want to expedite the approval process for MM2H. Currently, the process can take up to six weeks because all applications for the MM2H visa need to be checked first. With an Immigration branch within the centre, we will be able to shorten the processing time to three to four weeks," Wee shares, adding that a request for this has been made to the Public Ser-vices Department. He says the promotion of MM2H will be stepped up once the one-stop centre is fully operational because it would be unwise to "promote something we cannot deliver quickly". The ministry has documented and included essential MM2H information on its website. At the same time, Wee and his team are working hard to publicise MM2H to the target markets of Japan, South Korea and the UK. So far, some 81 agents have been signed on. As expected, some of the agents are property developers who are naturally eager for MM2H to gain steam. The ministry organises forums and discussions for the agents and monitors their activities. Agents are required to include "MM2H" in the set-up of their companies for this purpose. Meanwhile, the number of MM2H participants has increased over the years, with the total since 2002 to August 2006 standing at 9,576 (see Table 1). Retirement homes Local developers' interest in MM2H is obvious. All the participants will need a roof over their heads as will visiting family members or friends. While some may rent homes, others will consider investing in houses here, creating demand in the local property market. Wee sees retirement villages as an exciting option for local developers, noting that such villages are abundant in Spain. "I have spoken to local developers and many are keen to build retirement villages. These are popular because they provide retirees with opportunities to mingle because many of them live on their own after the children have left the nest." However, for a retirement village to work, it will need to have medical facilities within 20 minutes' reach and easy access to major highways and transport hubs, Wee adds. Need for higher fixed deposits? One of the questions raised about MM2H conditions is the fixed deposit requirement. The new rules state that MM2H participants aged below 50 need to deposit a minimum RM300,000 while those aged 50 and above need only put in RM150,000. After a year, participants can make withdrawals but must maintain a minimum balance of RM60,000 in the account. The withdrawals can only go towards house purchase, education for children in Malaysia and medical expenses. Although the amount of deposit has been raised, some quarters feel this should be higher. Veteran developer Datuk Alan Tong, who is also the immediate past world president of International Real Estate Federation (Fiabci), has suggested that the amount be raised to US$500,000 (RM1.842 million) to ensure the programme attracts the right target group, which should ideally be "high net worth individuals". At the recent National Property Summit 2006, Glomac Bhd's managing director and Selangor chairman of the Real Estate and Housing Developers' Association (Rehda), Datuk F D Iskandar Mansor, felt the amount should be raised to RM500,000. "A higher limit will ensure that quality foreigners reside in the country, not just backpackers. In Rehda's Budget Consultation 2007 submission, we proposed the creation of a new tier. Those in the new tier must bring in RM1 million each. And 50% of this must be invested in fixed assets-, like property," Iskandar said in his paper entitled "Securing More Foreign Buyers for Malaysian Properties: MM2H, Making It More Attractive". Rehda Kuala Lumpur's chairman Teh Boon Ghee echoed Iskandar's views at the forum on Malaysia: My Second Home Programme held on Sept 22. "Our fixed deposit amount is relatively low in comparison to that of countries like Singapore, Thailand and Australia. Relevant issues such as work permits for MM2H participants also need to be addressed," stressed Teh, who is senior general manager of IGB Corp Bhd. When asked to comment on the calls for a higher fixed deposit, Wee says the current amount is the "right amount required to ensure that MM2H works". "The fixed deposit required is just the minimum requirement. We are targeting retirees and this amount rests well with them. Besides, most of them have bought houses here which cost above RM800,000," he adds. Japanese target Japanese baby-boomers are a key market for MM2H. "We already have a lot of Japanese residing in the country under the programme. There is even a Japan Club formed by expatriates living here. The Japanese are at the top of our list because they are very sensitive to the needs and feelings of others and also very law abiding," says Wee. Other countries targeted by the ministry are the UK, South Korea, Bangladesh and China. There is no denying that the ministry is determined to take MM2H places.