A GOVERNMENT backbencher today called for a review of new regulations for the Malaysia My Second Home (MM2H) scheme, which he said was counterproductive and only for high net worth people.

Kepong MP Lim Lip Eng said the scheme was losing its appeal because of the high requirements.

He said of such requirement was the need for the applicant to buy property in Malaysia and hold on to it for at least 10 years.

He said industry experts were concerned about the new terms.

Tourism, Arts and Culture Minister Tiong King Sing has announced a new three-tier scheme for MM2H applicants – Platinum, Gold and Silver.

The Platinum category requires a fixed deposit of US$1 (RM4.7) million, Gold US$500,000, and the Silver US$150,000. All of them demand the purchase of a property worth at least RM600,000, which must not be sold for 10 years, in Malaysia.

“While the introduction of mandatory property investments can be seen as a positive step to boost the real estate sector, the requirement to hold these properties for at least 10 years is proving to be a significant deterrent and counterproductive,” said Lim.

“This rigidity makes the scheme less appealing compared to the more flexible options available in neighbouring countries such as Thailand and Indonesia.

“Agencies processing MM2H applications report a dramatic decline in interest, with a 90% drop in prospective applicants.”

He said the old MM2H scheme gave applicants greater flexibility and had lower financial thresholds for eligibility.

The conditions were a RM300,000 deposit for applicants aged below 50 and RM150,000 for applicants who were older. A property purchase was not mandatory.

“This approach attracted a diverse group of retirees and expatriates, who contributed RM58 billion to the local economy more than 17 years.”

He said the new scheme focusing on high net worth individuals have significantly narrowed the applicant pool.

Economists have argued that the new MM2H rules offer limited economic benefits because to their restrictive nature, Lim said.

The compulsory property purchases are unlikely to boost the housing market as intended and may leave many units unsold or unrented, as highlighted by an economic research house, he added.

“The MM2H scheme needs to strike a balance between attracting high net worth individuals and providing flexibility to make Malaysia a desirable retirement destination.

“Reassessing the 10-year (property) holding requirement could be a crucial step in revitalising interest and ensuring the scheme’s success,” Lim added.

The Star reported today that MM2H agents are seeing growing interest in the programme, most of it from China and Taiwan, after the new guidelines were announced.

They said Malaysia remained attractive to retirees because of its lower living costs and diverse and welcoming culture. The ability to own property was another plus, but the agents warned that making that and a 10-year holding period mandatory could be a deterrent.

Kuala Lumpur, Penang and Johor were said to be the most popular destinations for the applicants. – June 30, 2024.