Thumbs down for premium visa plan to lure wealthy foreigners

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The purpose seems to simply be a source of revenue from abroad for government coffers.

There’s no oomph in the newly announced Premium Visa Programme (PVIP) for long-term residency for foreigners, much less to draw foreign direct investment (FDI), say business leaders.

They say it lacks concrete measures to attract investors. Rather, the purpose seems to simply be a source of revenue from abroad for government coffers.

Bernama

Home minister Hamzah Zainudin yesterday announced the PVIP for affluent individuals from all countries, except for those without diplomatic ties with Malaysia, saying the ministry is confident the programme will draw “global tycoons” and boost FDI.

Donal Crotty, chairman of the Irish Chamber of Commerce Malaysia, said the PVIP did not specify any specific investment opportunities or criteria to invest in, such as property or government bonds, while Malaysian International Chamber of Commerce and Industry executive director Shaun Cheah questioned whether the programme would be attractive enough for “premium investors”.

“This is not about FDI and it’s not going to attract ‘FDI type’ people,” said Crotty.

“People who come in with FDI will question what the PVIP offers them in terms of investment potential.

“The purpose here is very simple – try to bring in some short-term income into the country from people who have money and are looking for a second home.”

Cheah said while the PVIP was a “good effort”, he questioned whether it would be attractive enough for premium investors.

“To attract investors, there must be an environment that will provide these investors returns, either financially or holistically,” he said.

“Our low exchange rates and our low local returns on investments will be prohibitive.”

He also noted that the “sudden unilateral revision” of the Malaysia My Second Home (MM2H) requirements did not bode well for the PVIP, whose applicants would be concerned whether they would face similar rule changes.

The MM2H programme, which promotes Malaysia as an international retirement destination, was frozen in 2020 and resumed in 2021 with conditions which stakeholders said would deter potential applicants.

Among them are the increase in an applicant’s compulsory fixed deposits (FD) in local banks from between RM150,000 and RM300,000 to RM1 million, and an increase in offshore monthly income from RM10,000 to RM40,000.

Applicants also need to have at least RM1.5 million in liquid assets, compared with between RM300,000 and RM500,000 previously.

Carmelo Ferlito, CEO of the Center for Market Education, said he hoped the PVIP’s introduction would serve to reform MM2H and make it less stringent, pointing out that the PVIP’s requirements were “already quite high”.

Ferlito said it was misleading to call these prospective new applicants “investors”, noting that the RM200,000 fee made the programme more similar to MM2H than a plan to attract investors.

He also stressed that it was crucial to distinguish between attracting rich individuals and incentivising businesses, as these were “two different things” which required different approaches.

“Therefore, I see confusion with regard to the aims of the package,” he said.

“The initial RM200,000 fee may be discouraging, and again, is in contrast with the idea of calling these individuals ‘investors’.

“Usually, you do not ask investors to pay a fee for entering your country. You offer them something so they can put their money in businesses that create positive spill-overs.”

Yesterday, Hamzah said the government was targeting 1,000 participants in the PVIP’s first year, adding that the ministry expected them to contribute RM200 million to the economy and fixed deposits of RM1 billion.

He also predicted that demand for the ringgit would increase, with its value also strengthening.

The PVIP, which kicks off on Oct 1, is open to individuals of all ages with an offshore income of at least RM40,000 a month or RM480,000 a year.

Applicants must have at least RM1 million in their bank account and are only allowed to withdraw 50% of that amount after a year to purchase property or to pay for medical and educational expenses.

They will have to pay a one-off RM200,000 participation fee, with a one-off RM100,000 fee also levied for each dependent. – FMT