“Why did you retire to Malaysia?”
That’s a question I’m often asked, particularly by Malaysians who think it strange that I should prefer to live here rather than in my own country, UK, which they regard as preferable in many ways. Well, the grass always looks greener from the other side of the fence.
For the benefit of readers who might be considering retirement in Malaysia here are some reasons why you should consider moving to Malaysia and, to give a balanced view, some reasons why not.
1. Because You Can
Not every country welcomes foreign retirees. Malaysia is one of only a handful of countries that have special schemes aimed at attracting long term foreign retirees. Under the Malaysia My Second Home Programme (MM2H for short) foreigners can obtain a 10 year, renewable, multiple-entry social visit pass (i.e. residence visa). Applicants have to prove that they can support themselves financially (without working) by meeting certain minimum liquid assets and monthly income criteria and by maintaining a fixed deposit with a bank in Malaysia throughout their stay in Malaysia.
There is quite a bit of paperwork involved in applying for MM2H but it is relatively straightforward. You can appoint an agent to assist in the application (for a fee) but this is no longer compulsory.
Once you have the 10 year stamp in your passport you are blissfully free of bureaucracy and can leave and re-enter Malaysia freely, using priority MM2H counters at the airport (when they are manned!) and there is no need to return to Immigration Department again for 10 years, unlike the Thai and Philippines retirement visa schemes where retirees have to report to immigration annually.
But ... MM2H Has Its Limitations
Since I moved here, Malaysia has tightened up the MM2H financial requirements so it is not so affordable for everybody.
The Malaysian Government sensibly does not want foreigners taking jobs from Malaysians so MM2H participants are generally not permitted to work. Part time work is permitted in certain circumstances but the bureaucracy involved increases exponentially. You can find details on the official MM2H website.
It is no longer permitted to start a business under the MM2H visa.
2. Good Riddance to Taxation
All funds remitted into Malaysia are tax free, including pensions and investment income from overseas. Provided you do not generate any income in Malaysia (e.g. from part-time employment, capital gains on Malaysian property or local stock market investments) and you have escaped the tax net of your home country, you can legally enjoy a tax-free existence. This factor alone can make Malaysia an attractive option, depending on your circumstances.
But ... New Taxes Have Been Introduced
When I first moved here, I enjoyed no consumption tax but the Government introduced a 6% GST (similar to VAT) from 1st April 2015. Still it is only 6%, which is far lower than the VAT rate of 20% or so in many EU countries and also many basic food, education and healthcare items are exempted.
3. Motoring Costs Are Low
Again, when I first moved to Malaysia, foreign retirees enjoyed the same low, government-subsidised petrol prices as Malaysians. From 1st December 2014, in order to save money, the Government scrapped fuel subsidies and petrol is now adjusted monthly based on market prices. Fortunately this change has coincided with the global crash in crude oil prices so consumers are not feeling the removal of subsidies too much. As at November 2016 the price of RON 95 petrol is RM1.95 per litre.
Currently, car insurance premiums are largely controlled by Bank Negara and give little consideration to risk factors. So if, like me, you have two sons under the age of 25 you can add them to your policy as named drivers for the miniscule sum of RM10 per year each. Compare this to UK where insurance premiums for young drivers can exceed the value of the car!
The motor insurance market is set to be further deregulated from 2017 onwards so the young driver benefit mentioned above is likely to disappear.
No ...Motoring Costs Are High
New cars are very expensive here. A basic Toyota Camry costs RM150,000 in Malaysia, compared to about RM96,000 in UAE. Imported cars are subject to higher taxes in order to protect the domestic car manufacturers, Proton and Perodua from competition. But that is only part of the reason. Because local cars are relatively expensive to produce this sets a base for foreign brands like Toyota who set their pricing higher in order to differentiate themselves from Protons and Peroduas.
4. Low Cost of Living
The cost of living in Malaysia is 43% lower than in USA, excluding rent. Residents of Malaysia (irrespective of income or nationality) have been enjoying subsidies on rice, sugar, cooking oil, flour, diesel and cooking gas, though these subsidies are likely to be phased out. Most other goods and services are cheap by European standards so your pension will definitely stretch further than back home.
But ... Getting More Expensive
The perception is that prices are rising fast in Malaysia although officially inflation is in the low single digits. High alcohol duties mean that beer and wine is more expensive than in most European countries.
5. Malaysia’s Climate is Great
When you retire to Malaysia you never have to shovel snow or scrape ice off your car and there are no home heating bills to pay. Nearly every day is sunny for at least part of the day. Temperatures range between mid 20s to low 30s celsius and if you want to experience cooler climes there is always the hill resorts like Cameron Highlands. Malaysia’s thunderstorms are spectacular.
No ... Malaysia’s Climate Sucks
It's monotonous. There are no proper seasons. It rains on more days than not. It is constantly humid and sweaty. Malaysia’s lightning storms are scary, causing 125 fatalities per year. Expensive air-conditioning bills.
Original Publication https://www.malaysia-traveller.com/retire-to-malaysia.html
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