Continuation (Part II) of Why Choose the Philippines — comparison with Malaysia
Why Choose the Philippines — vs. Malaysia — Part I
- 1 Why Choose the Philippines — vs. Malaysia — Part I
- 1.1 Why Choose the Philippines — vs. Malaysia — Retirees/Pensioners
If you missed the beginning of the series on Philippines retirement comparisons, just click.
The reason I really got started on this series, though, is the large number of folks who are retired or thinking hard about retirement.
Retiring overseas is certainly not for everyone. But for those who “fit” in the profile of those who will be happy retiring overseas, there can be some tremendous advantages.
Most of you know I’m a senior citizen myself, I’m even slightly older than the older official baby Boomers … and there are 100,000 new bay Boomers in the US alone, every single months. That means a lot of people every month thinking about where they might want to retire.
Why Choose the Philippines — vs. Malaysia — Retirees/Pensioners
This information will be applicable to all folks seeking to live full-time in the Philippines or Malaysia, regardless of any martial connections. Both country’s programs differ significantly based on the applicant’s age.
Malaysia — My Second Home Program:
This program is heavily advertised and even mentioned to me by Filipinos, as well as other foreigners, as being superior to the Philippines SRRV (Special residents Retirement Visa) program. Let’s look at the facts and figures and see what we can find out:
CONDITIONS – The Malaysia My Second Home Program. The aim of these financial conditions are to ensure that the applicant and his family will have sufficient capabilities to live comfortably in Malaysia under the Malaysia My Second Home program.
1) AT THE TIME OF APPLICATION (Pre – Conditions)
An applicant must show the following financial capabilities:
APPLICANT ABOVE 50 YEARS OLD
To show proof of liquid assets of at least RM 350,000 (about $116,500 USD at today’s rate) in savings account, current account, fixed-deposits, time-deposits etc. and proof of monthly overseas income of at least RM 10,000 (About $3330 USD) from any source. eg. salary from a company, rental from properties, interest from investments etc.
APPLICANT BELOW 50 YEARS OLD
To show proof of liquid assets of at least RM 500,000 (about $166477 USD) in savings account, current account, fixed-deposits, time-deposits etc. and proof of monthly overseas income of at least RM 10,000 (~ $3330 USD) from any source. eg. salary from a company, rental from properties, interest from investments etc.
Also, this can’t be a one-time “money show”, these minimum balances must be shown to be available for a minimum of three consecutive months.
For certified copy(s) of Current Account, applicants must provide the latest 3 months’ statement with each month’s credit balance of:
a. not less than RM 350,000 per month for 50 years and above category; or
b. not less than RM 500,000 per month for below 50 years old category
I don’t know about your finances, but that sounds a bit rich for my blood. However, all that money isn’t necessarily needed long-term. To finalize acceptance into the Malaysian My Second Home Program:
2) AFTER APPROVAL
The applicant must fulfill the following conditions upon being approved for the MM2H Program. i.e.. you will have to do the following after acquiring conditional approval, but before the Immigration Department puts the actual MM2H Visa onto your passport.
a) Financial Requirement
APPLICANT ABOVE 50 YEARS OLD
To place a Fixed Deposit of RM 150,000 (~ $50,000 USD) with any bank incorporated in Malaysia. Can withdraw up to RM 50,000 (~ $16,700 USD) after 1 year for the purpose of paying for properties, medical bills or children’s education
Exemption: Those that have a pension of above RM 10,000 (~ $3330 USD) per month from a pension scheme managed by your home government can avoid placing the above Fixed Deposit (These proofs will have to be submitted at the time of application).
APPLICANT BELOW 50 YEARS OLD
To place a Fixed Deposit of RM 300,000 ( a few hundred dollars less than $100,000 USD) with any bank incorporated in Malaysia. Can withdraw up to RM 150,000 (~ 50,000 USD) after 1 year for the purpose of paying for properties, medical bills or children’s education
In addition to the financial requirements, to finalize the application process an applicant must also have:
b) Medical Checkup
The applicant must go through a compulsory medical check-up in a Malaysian clinic/hospital. The applicant must be minimally healthy i.e. without any contagious diseases. The medical report will be submitted to the Government.
c) Medical Insurance
The applicant must also possess or buy a medical insurance valid in Malaysia. A foreign medical insurance can be used for this purpose if the policy specifically mentions coverage in Malaysia. (ed. note: My emphasis here. This may be very hard to do with certain US government programs e.g. TRICARE, who don’t issue individual polices, riders, etc. You will be covered, but getting proof of specific Malaysian coverage? Well that may not be so easy.)
So there’s a synopsis of the basic requirements to get into the Malaysia MM2H Program. In return, an MM2H visa holder can expect the following rights and privileges.
Any foreigner may purchase any number of residential property in Malaysia, subject to the minimum rates established for foreigners by the different states.
They start from RM500,000 ( About $166,500 USD) per unit for most states, from 1st January 2010. Land is a state matter and it is important to check state laws before making any commitment, as the minimum purchase price is not standardized between states. (my emphasis)
Profit made on the sale of property is subject to 5% (Real Property Gains Tax)
As you will see when we cover the benefits under the Philippine SRRV program, this is a significant difference. The Philippines does not allow foreigners to own any land, period. This a condo is ok, a free-standing house and lot is not.
However, there are no minimum purchase requirements at all. A $166,500 USD (well over P 7,000,000 Pesos) house in the Philippines can be a very nice home indeed).
Each participant is allowed to bring in his/her own personal car OR to purchase a locally assembled car without the need to pay import duty, excise duty and sales tax.
Application to IMPORT a motorcar from the participant’s country of citizenship/last domicile must be forwarded to the Ministry of Finance within a period of six months from the endorsement date of Malaysia My Second Home (MM2H) social visit pass. The condition for such importation is that the MM2H participant should be the owner of the motorcar prior to obtaining the MM2H visa, as evidenced in the motorcar registration document.
Locally Assembled Car
An Application to PURCHASE a new motorcar made or assembled in Malaysia must be must be forwarded to the Ministry of Finance within a period of one year from the endorsement date of Malaysia My Second Home (MM2H) social visit pass.
1 – Completed application forms with relevant documents which are submitted to Ministry of Finance will be processed within 10 working days.
2 – Do not make an outright purchase of the motorcar before obtaining approval for tax/duty exemption from the Ministry of Finance. However, a booking for a motorcar may be made prior to obtaining approval from the Treasury.
3 – Importation or purchase of motorcar must be for personal use only and not for commercial use.
4 – ‘Personal Car’ is referred to a car which was purchased by participant before joining the MM2H program.
5 – Participants are only allowed to sell their imported/locally purchased car after 2 years’ stay on the program.
Again a significant difference. No one can import a car into the Philippines without paying customs duties and excise taxes which will normally be 100% of the price of the car. A hefty tax indeed.
However, there is no restriction at all on a foreigner purchasing any number of cars in the Philippines, for personal or commercial use, and no restrictions on how long they must be held, government approvals, etc.
Applicants are allowed to bring their children who under 21 years old and not married as their dependents under this program.
Children who intend to continue their schooling in Malaysia are required to apply for a Student Pass and should be insured throughout their stay under this program.
I believe the Philippines’ handling of children in the SRRV program with their parents is a bit more liberal. Unfortunately, from the time I started researching for this report until now, the Philippine Retirement Authority (PRA) has taken a ton of information off their website as part of an update. So stay turned until some future date for a comparison on this issue, it’s currently outside my control.
Participants are bound by the policies, systems and regulations of taxes of this country and they do not have exemption qualifications as granted to Diplomatic Missions in Malaysia.
However, tax exemption is given to pension remitted into Malaysia. Participants are required to obtain the endorsement from the Authorities in their country of origin as to the total amount of yearly pension received. A copy of this letter has to be submitted in their application.
Essentially the same benefits as the Philippines affords SRRV holders with one very important difference. In the Philippines, foreign earned income … such as payments from online endeavors, does not have to be declared … the character of the foreign income, such as pensions, real estate rentals, earning from off-shore business, etc. does not have to be approved by the Philippine government.
If I read this Malaysian government requirement correctly, a MM2H program participant would even have to pay Malaysian income on real estate investment proceeds in the earned in the USA, since that clearly would not be a “pension”. Also, a number of other common government incomes earned by retirees in the US … example, US military retirement, is NOT a pension. By law, it is an annuity, and annuities don’t seem to be exempt under Malaysian rules. Hmm.
Working. This is way too complicated to go into here, I am already severely out of space and time … this Malaysian program may be popular, but it ain’t easy to put into comprehensible form, believe me. me. See full details here … if you are over 50. otherwise you can’t work under the umbrella of the MM2H program.
Work rules for the Philippines are similarly complicated, but certain SRRV holders are permitted to work in the Philippines. pay attention when we get to the SRRV coverage.
One last item that’s important to many folks out there considering a move half ay around the globe:
This procedure is comparable to the procedures for importing you family pet into the Philippines. A great deal more complex in Malaysia than the Philippines, however, in my view. Malaysia ahs a short (one or two week) quarantine requirement, the Philippines has none.
Any info I haven’t covered adequately for your needs should be available on the Official website for the MM2H program. Also, there is contact information there so you can speak to authoritative sources directly.
Why Choose the Philippines — vs. Malaysia —Job Seekers or Entrepreneurs
Sorry, but in the interests of time and simplicity, I have decided to forgo this section. The laws for starting your own business in Malaysia seem workable, but like the Philippines, foreigners must have host country nationals included in the management of the business, and the requirements, compared to the easy requirements of starting a business in the USA, are mind-boggling to me. Not interesting enough to give myself a further headache.
If there are any of you out there who were anxiously waiting for me to get to this section, give me a shout and I’ll work on it further.
Why Choose the Philippines — Conclusions
I’ll reserve my main editorial comments until I complete the survey of opportunities and programs for foreigners in Thailand and in the Philippines.
My general assessment so far is, programs in Malaysia, which are being heavily advertised, all ‘round the ‘Net these days, are significantly more expensive and less flexible that the similar programs in the Philippines.
That about winds up this session. feel free to let us know your own thoughts on Why Choose the Philippines, particularly if you think I’ve missed reasons that Malaysia would be a better choice.