Malaysia isn’t the first destination that comes to mind when one thinks of retirement, but this enchanting tropical country is slowly being discovered by savvy retirees.
Presentation of the country:
Malaysia is a predominantly Muslim country in Southeast Asia, consisting of Peninsular (West) Malaysia and East Malaysia, which together make up the island of Malaysia.
Stunning beaches are located along the west and east coasts of Malaysia and on its numerous islands, with world class surfing on the northeast coast, and tropical forests in the south. The bustling city centres of Kuala Lumpur, Penang, and Ipoh are filled with charming markets and a mouth-watering cuisine which combines traditional Chinese, Indian, Singaporean, and local flavours. The local culture is just as diverse and colourful as the food, and around every corner you can hear Malay, Chinese, Hindi, and other languages being spoken.
Under the “Malaysia My Second Home” (MM2H) program, expats and foreign retirees can purchase property and take advantage of tax breaks.
HDI ranking: 57/189 countries
HDI 0.802 = medium
The human development index is based on 3 criteria health, education and longevity
Average journey times:
Paris – Kuala Lumpur: 13 hours 29 mins
London – Kuala Lumpur: 13 hours 42 mins
New York – Kuala Lumpur: 21 hours
Los Angeles – Kuala Lumpur: 19 hours 25 mins
Sydney- Kuala Lumpur: 8 hours 41 mins
Currency and cost of living:
1 Malaysian Ringgit (RM) = USD 0.24 / EUR 0.21
Big Mac Index: USD 2.20
Restaurant Meal for 2 People, Mid-range Restaurant, Three-course: RM 75.00
Market – Milk (regular, 1 liter): RM 7,12
Basic Utilities (Electricity, Heating, Cooling, Water, Garbage) for an 85m2 apartment in Kuala Lumpur: RM 209,85
Monthly Rent for Apartment (1 bedroom) in City Centre of Kuala Lumpur: RM 2356,80
Price per Square Meter to Buy Apartment in City Centre of Kuala Lumpur: RM 11 689,00
How can you live in Malaysia – residency requirements:
“Malaysia My Second Home” (MM2H) is a permanent residence program set up by the Malaysian government to promote Malaysia, and attract global talent to support and grow local industries. All citizens of countries recognized by Malaysia, regardless of race, religion, gender or age, are eligible provided they meet certain conditions.
This multi-entry visa is valid for 10 years and is renewable, and allows expats to own real estate. There is no minimum compulsory number of days one needs to reside in Malaysia.
Spouses and dependent children up to the age of 21 also receive a visa, and can study in Malaysia. One can also import a foreign car to Malaysia with a tax exemption.
Under MM2H, expats can also create a company in Malaysia, provided that they work only part-time, or concurrently keep a job abroad. Applicants under 50 years of age will be required to make a deposit of 300,000 Malaysian Ringgits (RM) into a Malaysian bank and need proof that they are receiving a foreign income of RM 10,000 per month. Applicants over 50 years of age will be required to make a deposit of RM 100,000 and need proof that they are receiving a minimum pension of RM 10,000 per month.
The application process takes about 2 months, and will require a medical examination as well as a criminal record examination.
Accommodation:
There are several types of housing in Malaysia: apartments, condominiums, detached houses, semi-detached houses, bungalows and private residences. Prices can vary greatly depending on the neighbourhood and the quality of accommodation. The rent is likely to be lower if the unit is rented for a longer lease – the minimum is usually 2 years.
In the city center, the price of rent can vary between RM 2300 and 4200 depending on the number of rooms. On the other hand, outside the city, prices are halved. They vary, still according to the same criteria, between RM 1000 and 2000.
Buying real estate: Under the MM2H program described above, foreigners are able to purchase real estate in Malaysia, though some restrictions apply to protect low to middle income Malaysians from property inflation. MM2H expats can obtain a mortgage up to 70% of the transaction amount, instead of the usual 60%.
Taxation: There is local tax, real estate tax, consumption tax, and income tax to be paid.
In Malaysia, anyone residing in Malaysian territory for a period of 182 days in a calendar year is considered a tax resident. Income tax is classified in eight taxable groups ranging between 0 to 26% depending on earnings.
The corporate tax rate is 25%. For SMEs whose capitalization does not exceed 2.5 million ringgits, the first 500,000 ringgits of income are taxable at 20% and the rest at 25%.
There is no VAT in Malaysia. However, two types of consumption tax exist: a tax on services and a tax on non-essential products (cigarettes, alcohol, etc.). The former tax rate is 6% and applies to charges in restaurants and hotels. The latter tax rate is 5, 10, or 15% depending on the product.
Expats who go to Malaysia under the MM2H program are required to pay tax on any income earned in Malaysia. They are not required to pay tax on any income or pension earned abroad. Any remittance of offshore pension funds and other foreign funds transferred to Malaysia are exempt from taxation.
Safety:
Malaysia is a relatively safe country. It is labeled as a secular state with Islam as the official religion. Despite being a predominantly Muslim country, Islamic terrorists are not a large threat here, and Muslims live in peace with local Buddhists, Christians, Hindus, and the diversity of other religions in Malaysia. There have been rare incidents of terrorist attacks and kidnappings (mostly in the east coast of Sabah) of foreigners in tourist-heavy areas, however the biggest threat to foreigners is pickpocketing and purse snatching.
In addition, there is generally good quality healthcare in well-maintained hospitals and readily available medications. Mosquitoes are very present, especially chikungunya, so take the appropriate measures to avoid bites.
