This article first appeared in The Edge Malaysia Weekly on September 12, 2022 - September 18, 2022
THE race for highly skilled professionals and high-net-worth individuals in Asia-Pacific is heating up against a backdrop of growing labour and skill shortages, increased global competition and an ageing population.
Within a two-week span, a talent war has developed among countries like Malaysia, Singapore, Thailand, Australia and Taiwan, each with a new or modified visa scheme launched to draw wealthy or highly skilled foreigners to their shores.
Australia — a long-time favourite of migrants — recently eased its immigration rules to address a shortfall of skilled workers, exacerbated by the Covid-19 pandemic. The government announced on Sept 2 that the country would increase the permanent migration cap by 35,000 to 195,000 this fiscal year.
Thailand aims to attract one million foreigners over the next five years through its 10-year Long Term Residency (LTR) visa, in a bid to stimulate economic growth. Holders of this visa benefit from the opportunity to obtain a digital work permit and are eligible to sponsor up to four dependents, which can include spouses and children who are 20 years old or younger.
Singapore’s Overseas Networks and Expertise (ONE) pass is looking to lure the best talent in the fields of engineering, maths, science and technology along with arts, culture, finance and sports — it refers to them as rainmakers — amid a tight labour market. The personalised pass is valid for five years and can be renewed by five-year extensions.
After a Covid-19 lockdown-driven lull last year, Taiwan has rejoined the global competition for talent, recently relaxing qualifications for its Employment Gold Card resident-work visa scheme that was launched in 2018. With one of the world’s lowest birth rates and an ageing population, Taiwan reportedly will not be able to fill these openings by itself, and so a significant portion must instead come from migrating overseas talent.
Taiwan is seeking talent in the fields of economy, arts and culture, finance, science and technology, law, architecture, sports, education and national defence. Its Gold Card visa is valid for up to three years and offers a fast-track path to permanent residency in as little as three years, as opposed to five years previously.
Last week, Malaysia entered the ring to attract affluent individuals with its Premium Visa Programme (PVIP), which allows successful applicants to stay for up to 20 years in the country. Unlike the existing Malaysia My Second Home (MM2H) programme, PVIP participants are allowed to work and carry out business activities. They can also bring their spouses, children under 21 years of age, parents, in-laws and domestic workers as dependents.
Better late than never
How does the PVIP stack up? Is Malaysia too late in the game? It certainly faces stiff competition from traditional favourites Singapore, Thailand and Australia that have long had in place measures to lure wealthy foreigners and professionals. The new PVIP — which will kick off on Oct 1 — also comes after the MM2H fiasco that saw the government going back and forth with the scheme.
For Dr Yeah Kim Leng, professor of economics at Sunway University Business School, it is better late to the party than never.
“At least we are now on a par [with other countries] in terms of offering similar [visa] advantages [to attract wealthy foreigners to live or work in the country]. We could still attract some of them to relocate here or those who have not established a presence overseas to look at Malaysia as a possible long-term place to do business. But more important is to ensure that the implementation of the new policy is done well and that these rich investors are able to benefit from the incentives offered when compared with other countries,” he tells The Edge.
“With globalisation, these rich investors can conduct business from anywhere in the world. Thus, factors such as ease of doing business, connectivity, ability to travel easily with a special visa, as well as a place that provides a conducive living environment for themselves and their family would appeal to them. Malaysia can be an attractive base for investors who want to grow in Asia, which remains the fastest-growing region in the world.
“We should also target the Malaysian diaspora, especially those who have established their businesses overseas, to relocate to Malaysia. Unlike MM2H, the new PVIP will allow participants to operate businesses here.”
Independent economist Dr Nungsari A Radhi concurs, noting that Malaysia is losing talent and high-net-worth individuals to other countries in droves for a number of reasons.
“If I were 25 years old and a recent graduate, I too would go elsewhere first. [That’s because] we have to overcome the low wage regime as well as the lack of demand for technical and scientifically qualified graduates. But that depends on the firms that are located here, as well as how existing firms grow,” he says.
“Firms complain about a lack of talent, which is difficult for them to bring from outside ... Malaysia can look to better facilitate this so that these firms may grow and create more demand for the same type of talent. Beyond that, Malaysia must also be a fun and safe place [to work and live], a place they can relax, and also a place that is safe to raise a family.”
Requirements for the PVIP include proof of an offshore income of at least RM40,000 a month or RM480,000 a year. Applicants must also have at least RM1 million in their bank account and are only allowed to withdraw half of that amount after a year for the purchase of property or to pay for medical and educational expenses.
Malaysia is targeting to attract 1,000 participants in the first year of the programme, and they are projected to generate RM200 million for the economy and fixed deposits of RM1 billion.
Yeah opines that the financial requirements would not be too onerous for applicants — especially the super-rich — given the weak ringgit, which has declined about 8% against the greenback over the past year. “Rather, they are more likely to look at what benefits they are able to derive from accessing or applying for the new programme versus the cost.”
He believes the PVIP will also appeal to a new generation of wealthy technopreneurs or founders of unicorn start-ups.
Yeah adds that programmes like MM2H and PVIP provide a multiplier effect for the economy in terms of job opportunities, value creation and also reduce the outflow of capital to other markets.
He observes that Malaysia enjoys a number of competitive advantages, including a strategic location, climate resilience — the country lies outside the Pacific Ring of Fire and is largely protected from major natural disasters such as earthquakes and volcanic eruptions — and strong economic fundamentals. “Recent geopolitical risks such as growing tensions between the US and China, and the potential decoupling of their economies, could benefit countries like Malaysia as they can give rich investors a neutral ground to live and operate their business,” he adds.
However, Nungsari points out that the PVIP’s minimum monthly income of RM40,000 or RM480,000 per year is not exactly a tycoon’s salary. “I don’t think highly skilled people would come to live and work here on their own accord. It has to be driven by the requirements of firms already here or wanting to come here. Once we have a certain critical mass of these people, then perhaps some would want to stay for other reasons such as to start a business. [We can] facilitate those,” he tells The Edge.
“If we can just make processing business requirements easy, that alone would be a good start. And accommodate this foreign talent to move beyond employment with the original employer.”
Nungsari says Malaysia needs to make it easy for high-end talent to come in at the request of firms already here or coming here. “If they are paid above a certain amount, which is a reflection of the market value of their skills, just let them in and make it easy for them to bring their family members here as well.”
Malaysia My Second Home Consultants Association (MM2HCA) president Anthony Liew says the country has to be clear on its definition of tycoon.
“If the PVIP is targeting entrepreneurs with small and mid-sized businesses, then I don’t think they would want to use that much money to apply for the programme. For entrepreneurs, the requirement to hold a minimum of RM1 million at a local bank may be too much as they would normally need funds to roll on,” he adds.
“If you have a business and intend to set up a factory in the country, the Ministry of International Trade and Industry offers many incentives and other advantages under foreign direct investment.”
Liew is of the view that MM2H has an advantage over PVIP when it comes to foreign investors bringing their family with them. “Under MM2H, children of [the] main applicant who are below 35 years of age can be made dependents of the visa, while children of PVIP participants over the age of 21 are not considered dependents and must apply for a separate visa to remain in the country,” he points out.
KGV International Property Consultants (M) Sdn Bhd executive director Samuel Tan says Malaysia must do a better job at selling its strengths. “There is no harm in coming up with a new programme to attract the high-net-worth participants, though we must highlight a few points. First, Malaysia will be up against many competitors such as Australia, Thailand and some European countries in enticing this premium target group. So, we have to ask ourselves what our strengths are. What makes us special so we can attract these tycoons?” he says in an email response to questions from The Edge.
“Is this new PVIP aligned with other policies? We cannot craft policies without judiciously thinking through the impacts, and especially unintended consequences that might arise as a result of hasty implementation.
“Second, ultra-high-net-worth participants may not necessarily equate to high spin-offs for the economy, as they are usually super mobile and their capital can be very liquid and mobile.
“Third, we are not so sure whether the letter of good conduct will guarantee a credible and good character background. The due diligence on the background check should by right be very thorough to sift out undesirable individuals with questionable backgrounds from capitalising on Malaysia as a paradise to evade tax or worse, other undesirable criminal/illegal activities. Would we be too eager to achieve results in bringing in such participants [and their dependents] and not do a thorough screening process?
“We are not against bringing in the super-rich, but we must be impartial and meticulous in our background screening for all participants. It is a fallacy to assume bringing in wealthy foreign tycoons will definitely be good for the country.”
No more policy flip-flops and arbitrary decisions, please
Nungsari believes that policy flip-flops, such as the last-minute U-turn on the implementation of new conditions for existing MM2H participants late last year as well as “all these rather fun-busting stuff in recent news” will impact the overall image of the country.
“Some people want everybody else to do and not do what they can and cannot do. It takes away the cosmopolitan nature of Malaysia, which is potentially a major attraction apart from our natural beauty,” he says.
For one, Malaysia’s Film Censorship Board banned Lightyear and Thor: Love and Thunder from premiering at local theatres this year as they had LGBT content.
Sunway University’s Yeah echoes that sentiment, saying, “In terms of policy certainty, we should not be changing policies too frequently. If we flip-flop, it sends out the wrong signals.”
But with the general election approaching, a change in government could see a change in policies. “What we hope for with any change in government is that they can fine-tune and enhance the policy but not scrap it. The country will lose out if we abolish this programme. Sometimes the intangible losses, like loss of confidence and impact on the country’s credibility, are much greater,” he says.
“Please think through all the consequences before implementing any policy. Policy flip-flop is bad for Malaysia, let us reiterate again. Malaysia should focus on business incentives that offer favourable packages for foreign businessmen, who will then opt for the MM2H programme upon their retirement,” stresses KGV’s Tan.
Last month, Home Minister Datuk Seri Hamzah Zainudin was reported as saying that the Immigration Department had received 267 new applications for MM2H since it resumed in October last year. He also said 1,461 people had applied to withdraw from the programme from September 2021 until June this year.
MM2HCA’s Liew says it will take time for MM2H to attract interest again, but believes that the scheme remains appealing despite more demanding criteria for foreign retirees. “Malaysia is a country of diverse cultures and religions. People coexist in harmony.
“We also offer a variety of halal eateries and products for Muslims. Take Thailand. We have an advantage over them in that our people speak several languages. However, Thailand is more aggressive in attracting wealthy foreigners to settle down there. Thus, we have to know what our advantages are [and sell them].”
(See also “Make Malaysia an attractive place for all and not just the super-rich” on Page 57)
MM2H: Old but still attractive?
Malaysia has been home to James Hay for 29 years. The 59-year-old Briton, who came to Malaysia on a work visa in 1993, decided to call the country his second home by joining the Malaysia My Second Home (MM2H) programme in 2004.
Last year, Hay was one of the 60,000-odd MM2H participants who found themselves in limbo, entangled by policy changes.
Foreign participants were up in arms over the sudden and huge increase in the programme’s financial requirements, which they say applied tremendous pressure on them as they are mostly retirees. The reduction in the validity period by half — to five years from 10 previously — was another shock.
“Fortunately, the Malaysian government then decided that existing MM2H participants are not subject to the new rules (except the new pass renewal period, processing fee and RM500 renewal fee). Otherwise everyone, including myself, would have had to leave the country,” he says in a phone interview with The Edge.
Still, he concedes that there was a need to overhaul MM2H given the allegations of abuse in the administration of the programme.
“What was happening was that many people were applying for MM2H but had no intention of actually living here. So I think the government had to do something about it.
“However, what was probably too cheap (in terms of its financial requirements) is probably now too expensive. For example, the minimum monthly offshore income requirement of RM40,000, from RM10,000 previously, is a lot of money if you are retired,” he notes.
Hay points out that Portugal’s residency by investment scheme has gained traction among Asians and Europeans as it allows them and their family members to freely travel, work, live and study in all 26 Schengen countries (an area comprising 26 European nations). After five years, they can also apply for citizenship. “I’ve got a friend who is living there now. He had moved to Portugal (from Malaysia) in the last couple of months because the Golden Visa programme offers the same benefits (as MM2H), with far less likelihood of the government changing the rules. It is a very competitive place out there. I wish Malaysia luck with its latest Premium Visa Programme (PVIP).”
Hay sees no reason to switch from MM2H to PVIP. “I was living and working here already and I continue to love living in Malaysia. The people are great. It is affordable. It is an interesting country to live in. There is a lot going on. The communications are great. The airport is easy. We can watch English football on TV. I can go to a restaurant and eat a meal from almost any country in the world, and of a high quality. My kids grew up here and they are very happy here. I think it is Asia’s best kept secret frankly as a place to live.”
However, he notes that MM2H loses out to other similar programmes when it comes to barring its participants from working or setting up a business here. “I founded Pangolin Investment Management in Singapore in 2004 because I wasn’t allowed to do so in Malaysia then,” says Hay, who is the director and founder of the fund management company.
KGV International Property Consultants (M) Sdn Bhd executive director Samuel Tan agrees with Hay.
“The revised criteria were just overly onerous, unattractive and out of touch with reality. We must understand that the original intent of MM2H was mainly to attract retirees. In terms of positioning, we were trying to target those mid- to middle-high end overseas retirees to settle down comfortably in Malaysia. It was hoped that these MM2H initiatives would create economic spin-offs in other sectors such as real estate, medical, education for those with children, hospitality and a slew of other services,” he tells The Edge.
“Thus, the revised requirements are overly stringent. These requirements appear to have deviated from the initial intent by changing the goal posts halfway and positioning to a totally different target group. In short, not only does it fail to attract high-net-worth foreigners, it fails to even attract the original targeted group,” he says.
Tan believes the low number of 267 new applications for MM2H since it resumed in October last year reflects the revised programme’s failure to attract foreigners. “The old MM2H used to attract about 800 to 6,000 new participants per year from 2002 to 2018. The number of participants speaks for itself.”
Tan says anecdotal evidence shows that hardly anyone is keen to participate in the revised MM2H for several reasons.
“As mentioned, the revised requirements are not friendly to most foreigners. It is even more so towards the retirees in view of the unrealistic passive income requirement.
“Second, Chinese from China, being one of the main MM2H participants, are still not able to travel freely as a result of the strict Covid-19 lockdown measures,” he adds.
For participants who can afford to have a minimum of RM1 million placed in a Malaysian fixed deposit account, an offshore income of at least RM40,000 a month and show proof of RM1.5 million in liquid assets, they are also spoilt for choice when it comes to residency and second-home programmes, he notes.
“MM2H is another classic example of policy flip-flop that foreign investors hate — whether it is about house purchase, investment policy or immigration policy. The authorities should not just change and craft new policies within four walls without understanding the reality in the world. This just would not work,” reiterates Tan.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's App Store and Android's Google Play.