Best for Singapore residents and those seeking a lower-cost residence visa.
ABOUT THE SPECIAL FINANCE ZONE (FOREST CITY)
The Special Finance Zone MM2H visa is the lowest-cost visa for foreigners wishing to live here and not seeking employment. There is currently only one Special Finance Zone and it is the Forest City development close to the second crossing (Tuas) between Malaysia and Singapore. Forest City has not been a success story but things may be about to change. This massive development planned on reclaimed land next to Singapore was developed by Country Garden, a major Chinese property developer. It is only partially constructed. The original plan was for four islands to be built into a self-contained community but so far only one has been built with approximately 28,000 units. Only a small number of these have been sold but we are told sales are once again on the rise.
Initial sales efforts were directed at mainland Chinese. However, in 2018, concerns were expressed by the Malaysian Prime Minister about a large development exclusively targeting Chinese nationals which combined with restrictions on Chinese sending money out of China caused sales to collapse. This led to various media articles describing the development as a ghost town with many empty units. The development is partially Malaysian owned and recent initiatives have been aimed at resuscitating sales and further developing the community. Initial results are proving positive.
Forest City was declared a Special Finance Zone which entitles residents and businesses located here to certain tax advantages. The Special Finance Zone is part of the Special Economic Zone (SEZ) which covers an area larger than Singapore and is being developed to attract high-end businesses. Malaysia and Singapore are signing a joint agreement to develop this zone, with Singapore focusing on making the transfer of goods and people easier between the two countries, which will be critical to the SEZ’s success.
Forest City has also been declared a duty-free zone reducing the cost of alcoholic beverages and fragrances. The SFZ MM2H visa was another effort to help Forest City property sales as successful applicants have to buy a property in that zone. The Fixed Deposit is much less than the lowest tier national MM2H visas, at just US$65,000 versus US$150,000 for the lowest cost national one. For applicants over 50 the deposit requirement is even lower at just US$32,000.
The prices in Forest City are higher than elsewhere in Johor but still much lower than Singapore and there is the potential for prices to rise in the future if the current efforts continue to attract new buyers.
Various size properties are available from stand-alone houses to small 500-square-foot apartments. Starting at around RM600,000 applicants could buy one and then live elsewhere in Malaysia since there is no obligation to live in Forest City. This means it is possible to acquire the MM2H visa and live in West Malaysia at a significantly lower cost than the national visas. Applicants approved for the visa have one year after their visa is approved to buy a property in Forest City.
COMPARISON OF SFZ VISA TO NATIONAL VISA
All MM2H visas in West Malaysia require the purchase of residential property and visa holders are required to hold onto the property for ten years. The SFZ MM2H has more attractive terms than the national MM2H visas. There are three tiers of the national visa – Silver, Gold and Platinum. The Silver and Gold are similar except for the length of the visa and the required fixed deposit. The Silver tier requires a fixed deposit of US$150,000 and includes a five-year renewable visa and the Gold tier offers a ten-year visa and requires a fixed deposit of US$500,000. Both visas are renewable but the Silver tier is proving more popular. Neither visa permits the holder to work in Malaysia. Approved applicants for the Silver tier are required to buy a property priced over RM600,000 and can use 50% of their deposit towards the cost. It should be noted that if the state sets a higher minimum price for properties purchased by a foreigner, then the higher limit prevails.
The Platinum visa is for people wishing to work in Malaysia or invest here and requires a deposit of US$1 million for a twenty-year employment visa.
Applicants wanting to apply for the Special Finance Zone (SFZ) MM2H visa have to place a fixed deposit of US$65,000 which is less than half the cost of the lowest tier national visa and applicants over 50 only have to deposit US$32,000. Half this amount can be withdrawn when the applicant buys property in Forest City which is required under the visa. This means a person over 50 can obtain the visa with an investment of around US$200,000 (Small unit for around $150,000, a fixed deposit of US$16,000; plus the MM2H agents fee for the visa, and various other costs for the property purchase). That is less than S$300,000.
In our opinion the SFZ MM2H visa is a good option for Singaporeans and expat residents in Singapore who wish to reduce their living costs by moving to Malaysia. The visa is best suited for those who do not work normal office hours and can avoid congestion at the border crossing during peak hours. Both Malaysian and Singaporean immigration departments are constantly seeking ways to reduce the crossing time but peak hours are still slow going. A comparison of the SFZ visa with the national Silver tier visa clarifies why it may be more attractive for some applicants.
| MALAYSIA MY SECOND HOME VISA – WEST MALAYSIA | ||
| A – SILVER TIER MM2H | B- SFZ MM2H | |
| MINIMUM AGE | 25 | 21 |
| INCOME REQUIRED | N/A | N/A |
| AGENT FEES | RM 40,000 | RM 40,000 |
| HOUSE PURCHASE (MIN) | RM600,000 (ANY STATE) | RM600,000 (FOREST CITY ONLY) |
| FIXED DEPOSIT (FD) | US$150,000 | US$65,000 (OVER 50 – $32,000) |
| WITHDRAW FD | 50% FOR SELECTED EXPENSES | 50% FOR SELECTED EXPENSES |
| PRESENCE IN MALAYSIA | 90 DAYS A YEAR, IF UNDER 50 | 90 DAYS A YEAR, IF UNDER 50 |
| WORK PERMITTED | NOT PERMITTED | NOT PERMITTED |
| DEPENDENTS | SPOUSE, PARENTS, CHILDREN | SPOUSE, PARENTS, CHILDREN |
| LENGTH OF VISA | 5 YEARS (RENEWABLE) | 10 YEARS (RENEWABLE) |
NOTES:
A&B – Must purchase property and hold for 10 years.
A&B – Can withdraw FD immediately for property purchase.
A&B – Agents’ fee include various government fees/charges.
A&B – Unmarried children, not working can be dependent up to age 34.
A – Some states have a higher minimum price for property purchased by foreigners.
B – Forest City property must be purchased from the developer.
It should be noted there is currently no requirement to live in the Forest City development as long as you buy a property there. Approved SFZ MM2H applicants can purchase a small, 500 square feet unit for around RM600,000 (around S$180,000). They can then live in another part of west Malaysia and rent or buy another property there. They must hold onto the Forest City unit.
The SFZ allows applicants from Singapore to secure the visa with an outgoing of under S$300,000 which includes the cost of the visa, fixed deposit and the qualifying property.
Example: Applicant aged 60 with wife
Agent’s fee including immigration fees RM40,000 (S$12,000)
Small unit (500sq ft) in Forest City – say RM650,000 (S$200,000)
Fixed Deposit (after withdrawal for property) US$16,000 (S$22,000)
Total cost under S$250,000
There will no doubt also be other costs in completing the relocation hence the estimated S$300,000. Of course, the total cost will depend on the applicant’s age and the type of property purchased. There are larger apartments and stand-alone homes available in Forest City if the applicants wish to live there.
For younger applicants with sufficient incomes, it is possible to secure a partial bank loan for the property which further reduces the cash outlay.
IS FOREST CITY A GOOD INVESTMENT?
If you are considering investing in property then Forest City would most likely not be your first choice. The prices are higher than other areas of Johor and it has a fairly low occupancy rate which deters some people. However, given that it represents a low-cost opportunity to acquire a residency visa in Malaysia then the economics look different. The various incentives offered to purchasers in this development mean there is now renewed interest in purchasing units and the whole development may well take off, which would drive up prices in the long run.
Of course, when compared with prices in Singapore it is a lot more attractive. The approximate price per square foot is around RM1,100 or around S$330 which is significantly lower than any comparable Singapore apartment or house.
If you wish to live in Forest City then you can buy a two or three bedroom cluster house for less than a small HDB flat. The cost of living is much lower in Johor whether you are talking about daily groceries, fuel costs or eating out. The fact that Forest City is duty-free adds another level of savings for those who enjoy alcoholic beverages, chocolates, or fragrances.
MORE ABOUT THE MM2H VISA?
The visa originally targeted older people wishing to live in Malaysia but not work here. It started in the late 1990s as the Silver Haired Programme and was reinvented as the Malaysia My Second Home visa in 2002, again targeting retirees. It gradually grew in popularity attracting primarily retirees from around the world. Malaysia was frequently ranked as the best retirement destination in Asia by different organisations. Other groups who were attracted by the visa included parents wanting to accompany their children to be educated here, people working overseas who liked the idea of having a base here and people from less stable countries who wanted a place they could escape to if they felt it necessary.
A sizeable group made Malaysia their primary home, selling their existing residences to relocate here. In 2018 the government started to re-evaluate the visa and made a number of decisions that resulted in the visa losing a lot of its popularity as well as Malaysia’s high ranking as an attractive place to retire. The problem was exacerbated by the COVID-19 pandemic and the restrictions on movements. The number of participants grew to around 50,000 by 2018 but in recent years the number has leveled off.
The various changes to the terms and conditions for new visa applicants caused concern among existing applicants and some left but so far the government has not made renewals difficult and people have managed to continue living and renew their visa based on the original terms under which they qualified. The only material change has been an increase in the annual visa fee from RM90 a year to RM500 and reducing the visa validity from ten years to five.
In terms of new applicants, the government is now saying they are rebranding the visa as an economic contributor rather than a retiree visa. While that certainly does not exclude retirees from applying for the current visa it has meant the country is looking or a more immediate economic contribution. This is seen by the requirement to buy a property that was not a requirement before.
Although the fixed deposit is lower than the last version of the visa it is still a lot higher than the amount required when the visa was first launched. The requirement to hold onto property purchased for ten years has caused many retirees to look elsewhere for a place to live.
However, the true cost of applying is not as high as people may think. The fact that applicants can withdraw 50% of their fixed deposit immediately when they buy property reduces the purchase cost
There is strong interest from China as there are sizeable groups of people who wish to live in other countries and these are not necessarily retirees. The low entry age of 25 (21 for the SFZ visa) is attractive to them.
It remains to be seen how many people apply for the current MM2H visa compared to other versions but after a one-year suspension, there is certainly a backlog of interest.