The quantum of the hike of the income threshold is ‘too high’, says Glomac CEO, whereas an increase of between 20% and 30% is acceptable
by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL
THE government is urged to relook at the new stringent requirements of the Malaysia My Second Home (MM2H) programme, particularly on raising the condition of offshore income from RM10,000 a month to RM40,000.
Glomac Bhd group MD and CEO Datuk Seri Fateh Iskandar Mohamed Mansor said the quantum of the hike of the income threshold is “too high”, even though there has not been an increase in the past 17 years.
Fateh Iskandar, who was a member of the task force that initiated MM2H in 2002, said an increase of between 20% and 30% would be deemed acceptable.
He said Malaysia is at risk of losing its competitiveness to attract expatriates setting their home base here if they could not afford the MM2H programme anymore.
“If the government were to increase the threshold ‘too high’ and wanting quality applicants, we have to look at other incentives in terms of taxes and family offices. Singapore has a lot of incentives for family offices that we shall be competing with.
“We have to have gradual increases in tandem with the inflationary index rather than a huge jump, which doesn’t make Malaysia competitive at all,” he told The Malaysian Reserve (TMR).
The new MM2H programme is expected to be re-introduced in October after it was temporarily frozen in August 2020 for a review.
The government has introduced nine new conditions, including participants must be in the country for at least 90 cumulative days in a year to ensure they truly contribute to the Malaysian economy.
Participants are also required to have a fixed deposit account with a minimum of RM1 million, where a 50% maximum withdrawal from a principal amount is allowed for buying property, health purposes and children’s education.
With the new proposed income threshold, Fateh Iskandar said potential buyers would rather spend RM10,000 to R0M20,000 in Bangkok, Thailand, or Bali, Indonesia, instead of choosing to invest in the Klang Valley, Penang or Johor.
“It’s such a waste. The reason MM2H started was not only for them to look at the property but for the spillover effects on the economy,” he said.
Fateh Iskandar also suggested the government make a distinction between existing MM2H participants and future applicants, and apply the new conditions to the latter.
He said MM2H’s participants spend an average of RM10,000 a month on food and beverage, services and retail, besides property, rental and car.
“If the government continues with these conditions that are deemed deterrent rather than being helpful, I am worried that we will lose competitiveness to other countries that come later than us and target the same people we are trying to get.
“That doesn’t help the economy, property industry or anybody. I hope the government will formulate more benefits and favourable terms. We shouldn’t have a flip-flop policy.”
He added that people who might be interested in buying property in Malaysia will be turned off by the new rules and choose another country instead.
“Of course, we should protect the country in terms of security and health. At the same time, we have to be reasonable,” Fateh Iskandar added.
The government on Aug 11 announced new applications for the MM2H programme will be processed and managed by the Immigration Department beginning October after all legal processes are completed.
There are currently 57,478 holders of the MM2H passes, as well as their dependents.
TMR reported on Monday that the number of applications for the new MM2H programme might drop dramatically to a few hundred per year due to tougher entry requirements.
“We think only 5% of our clients over the last 19 years earned over RM40,000 a month. Some people who qualify will be put off by investing RM1 million in a declining asset,” TEG Media CEO Andy Davison told TMR.
TEG Media, formerly known as The Expat Group, is an approved agent for the MM2H programme.
Fateh Iskandar said Glomac saw foreign buyers accounting for 3% to 4% in 2015, but it has been declining in the last two years as the company has been focussing on affordable homes.
Going forward, he said the property market is likely to remain challenging amid the pandemic, although the mass vaccinations, low interest-rate environment and the extension of the Home Ownership Campaign provide a boost in the medium term.
He said buying a property is not a focus for the people during the pandemic unless they really need it, as they are still very concerned about employment.