45 Pros and Cons of Retiring in Malaysia (2020)

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Thinking of retiring in a tropical paradise? Malaysia is a top contender with American and European retirees. You, too, can settle in this country, but it’s better to do due diligence before making a decision, and you could start by knowing the pros and cons of living here.

Pros of retiring in Malaysia include safety, affordable high living standards and medical care, cheap goods, rent, regional travel; tropical climate; modern infrastructure; and a vibrant social scene. Cons are extensive litter, road rage, and a lax attitude to rules.

Read on for details on taxation, residency, and visa rules, plus tips from expatriates on where to live and how to retire comfortably here. We also present some solutions to potential roadblocks one may encounter when retiring in Malaysia.

Advantages

Malaysia is a safe place to live in. Crime is limited to petty misdemeanors and domestic violence.
It’s a haven for exotic food aficionados. Indian/Malay cuisine is available nationwide. Vegetarians, rejoice, as you have a wide range of options. Eating out is cheaper than home cooking.
It’s easy to get visas. Citizens of certain countries get their visas on arrival. The tourist visa duration is three months.
Varied terrain includes islands like Langkawi, rainforests (Cameron Highlands), and bustling cities like Kuala Lumpur (KL; the capital).
Super cheap public transport, including the light rail transit system. Kuala Lumpur to Malacca by coach costs around $3. Buses to Singapore are cheap too. Flights out of Kuala Lumpur are at rock-bottom prices because it’s centrally located. The massive price cuts are also an offshoot of the Covid crisis.
Since Malaysia is centrally located in Southeast Asia, its international airports offer direct flights to 30-plus countries.
Their currency, the Malaysian Ringgit, is easy to manage. Coins are easy to distinguish from each other.
Freedom of religion is truly implemented. Predominantly Muslim residents outwardly celebrate festivities that everyone is welcome to join.
It’s easy to make friends, thanks to friendly locals and a dynamic expat community.
A vibrant social scene exists in many areas.
English is widely spoken as the country was under British rule. Signs are printed in English and Malay. This spawns a con: foreigners aren’t inclined to learn Bahasa Malaysia (the local language), thereby preventing deep immersion into the culture.
The country boasts abundant natural resources, numerous islands, a robust economy, and a stable government.
Malaysia is a multiracial nation with a rich culture. Despite rapid modernization, it manages to hold on to its proud heritage. Each ethnic group (Malay, Chinese, Indian, and European) is tolerant of each other’s traditions and religions.
It combines Western living convenience with local flair.
Its infrastructure is constantly improving. Roads and bridges are in excellent condition.
Residential choices are extensive. These include condos, townhouses, bungalows, hilly suburbs, lively townships, or gated communities.
Residents enjoy a low cost of living. Travel vlogger Ronin Blue reports that rent and consumer prices are 40-50% cheaper than in the U.S. A meal for two at a mid-range restaurant costs $12. Street food costs $2-3.50 per meal per person. The monthly food expense for a home-cooking couple is $400. Basic utilities for a mid-size apartment is approximately $49 a month. Cell phone plans average $15 per month.
Foreigners can own land. Neighboring countries Vietnam, the Philippines, Thailand, and Cambodia don’t allow this.
Major cities offer lots of entertainment venues like malls, parks, restaurants, and theaters showing the latest Hollywood movies.
The beach culture affords various water sports: swimming, windsurfing, jet-skiing, fishing, sea kayaking, parasailing, and boating. Don’t have a boat? Join clubs like the five-star Penang Swimming Club, which allows members to use theirs for free.
Outdoor pursuits abound, like adventure off-roading, horseback-riding, island-hopping, zip-lining, golfing, trekking, camping, nature hikes, birdwatching, and viewing wildlife (eagles, otters, dolphins, monitor lizards, monkeys, indigenous species) in their natural habitat.
Many international grocery chains like Tesco sell European and North American merchandise.
Malaysia has a high rate of literacy.

Disadvantages

Shopping, especially for cosmetics and Western-style clothes, is subpar compared to Hong Kong, Manila, and Bangkok.
They drive on the left side of the road. The steering wheel is on the right—con for Americans; pro for Brits and Commonwealth nationals (except Canadians).
Very low food prices but not much variety. Western food, pork, and beef are rarely sold in markets. Chinese-dominated communities are the exception.
In many areas like Langkawi, signs in English are rare.
Due to the predominantly Muslim population, the drinking culture is absent, though there are bars in Malacca, Kuala Lumpur, and Penang. Drinking buddies have to actively seek out stores that sell alcohol, which is highly taxed compared to other Southeast Asian nations.
Lightning thunderstorms are common, which explains the proliferation of huge storm drains. Beware of falling into one.
Alyshia Ford, the author of Travel to Trauma: One Woman’s Journey to Completely Losing Herself, says it’s difficult to find quality ground coffee. Locals would argue, however, that they have an established coffee culture.
Though the train and bus systems in cities are decent, you need a car if you want to live elsewhere.
Aggressive real estate and infrastructure development means an increase in noise and environmental pollution levels.
Frank locals don’t mince words. Many express opinions freely without meaning to offend. Fragile souls, keep this in stride or develop a thicker skin.
Most locals are traditional and are very sensitive when it comes to their religious and social beliefs. Some easily get offended by insensitive or clueless foreigners.
Foreigners cannot buy property less than $240,964. Properties on Malay-reserved land are off-limits to outsiders.
Malaysia has two wet and dry seasons. January is the coldest month; March, the hottest. It’s a scorcher most of the year (walking isn’t advisable 11 am to 4 pm), with up to 75% humidity levels during the wet seasons. Expect seasonal haze and poor air quality. Monsoon season is quite challenging, with constant showers and heavy rainfall. Average year-round temperatures consist of 89°F (32°C) highs and 74°F (23°C) lows daily.
Malaysia is far from the usual countries where expats come from, preventing loved ones from visiting.
Kirsten Raccuia, an Italian-American expat from Chicago who relocated to Penang in 2013 with husband Mark, finds public washrooms repulsive. It doesn’t matter if the toilet is a flushable water-closet or the traditional squat-on type. This is true whether it is a small town or a cosmopolitan city.
They lack environmental responsibility. Their roads and waterways are littered with garbage. Raccuia finds Penang beaches dirty. However, retirees have lots of other options like Langkawi Island, the Perhentian Islands, or Terengganu.
Drivers commandeer their vehicles like crazy. Motorbikes go on sidewalks. Pedestrians reluctantly defer to them.
A lackadaisical approach to regulations—especially traffic and safety rules—is pervasive, making road conditions dangerous. Children without helmets and belts are perched on moving scooters, each one carrying an entire family. Motorists ignore road markings, rarely use turn signals, and beat red lights. Two-wheelers zoom into people from various directions. Look multiple times before crossing roads.
Street vendors and brick-and-mortar merchants deliberately charge foreigners off-label, exorbitant prices. Solution: let a local haggle for you when shopping in non-mall areas.
Imports are expensive.
Entertainment and activities are limited compared to adjacent countries.
The US dollar stretches further in neighboring nations. Compare October’s exchange rates. USD 1 is equivalent to:
- Malaysian Ringgit: 4.15
- Thai Baht: 31
- Philippine Peso: 48
- Cambodian Riel: 4,077
- Lao Kip: 9,269
- Vietnamese Dong: 23,168

Despite the difference in opinion, the majority of expatriates feel the positive aspects outweigh the negative. Keith Hockton, International Living’s correspondent in Malaysia who has retired to Penang for the last 11 years, says that not once did he regret moving to Malaysia from his native Australia. If ever he was rueful about anything, it was that he had not done so sooner.

Medical Care in Malaysia

There’s no national health service, but the medical system has a subsidized rating governed by the Ministry of Health and funded by the state. Public health care is cheaper but often congested and only available to nationals.

In private health care, medical costs are considerably higher for expats. A big gap exists between them and locals. Despite the absence of set plans for foreigners, health care is much more affordable compared to Europe and North America. Medical treatment is on par with developed countries and provides the best facilities and individual attention to patients.

The majority of doctors in city hospitals obtained their education and training in Britain, Australia, and/or the USA. They (and most medical support staff) speak English quite well.

Popular Expat Retirement Enclaves

Penang is home to Malaysia’s biggest expatriate population. Since 2011, retirement publications and sites have consistently voted it one of the top 10 places to retire. It is a mix of Malay, Chinese, and European influences. It’s a UNESCO world heritage site with a historical city center and secluded beaches. It has a mellow lifestyle and cheaper housing compared to Kuala Lumpur.

George Town, Penang, is a charming island on the Malaysian peninsula. It’s a three-hour drive north of Kuala Lumpur by car. It’s a popular spot for weekenders and retirees. Widely known for street art, it’s also Malaysia’s food capital.

Other regions suitable for retirement include Malacca (a southern state next to Singapore with a Malay, Indian, and European mix), Kuala Lumpur (predominantly Chinese and Malay), Ipoh (mostly Chinese), and Kota Kinabalu (a beach town). The first three showcase an eclectic collection of art galleries, museums, architecture, colonial hotels, fitness centers, restaurants, and cafés.

The last one is the site of Kinabalu National Park, another UNESCO site and the world’s 20th most prominent mountain park, and Mount Kinabalu, the country’s highest mountain. Nearby Tunku Abdul Rahman National Marine Park consists of five islands, perfect for snorkeling and diving. Together, they form a fabulous beach-mountain holiday combination.

Expat associations have spawned breakaway groups of golfers who regularly travel to nearby Thailand to discover new golf courses. The choice of a residential area depends on your lifestyle.

How to Enter Malaysia—Residence and Visa Requirements

Andrew Henderson, the author of Nomad Capitalist, outlines these methods for visiting or staying longer in Malaysia:

Citizens of the USA, Canada, Britain, Ireland, Norway, Sweden, Germany, Spain, France, Australia, New Zealand, Japan, the UAE, and South Africa can enter Malaysia with 90-day, single-entry visas available on arrival. Tourists who want to stay longer go to nearby countries after their visas run out, then return to Malaysia for another 90-day round. Bonus: Foreigners can buy freehold landed property on a tourist visa!
Get a business permit. Entrepreneurs choose Labuan—located in Borneo—because it’s a tax haven. It competes with other offshore jurisdictions like Hong Kong. Under this visa, the government requires $60,241 paid-up capital, a minimum monthly turnover of $2,410 proven with activity, and locally registered offices and personal addresses.
The multiple-entry visa is granted to foreign nationals going to Malaysia for business or bilateral government affairs. It is valid for three to 12 months from the date of issue. The validity depends on the reason for entry.
Launched in 2011, the Residence Pass-Talent (RP-T) grants foreigners with exceptional qualifications a 10-year renewable live-work visa. Benefits include the flexibility to switch employers several times throughout the duration of the RP-T. The pass also allows primary visa holders’ spouses to work without an employment pass.
Introduced in 2006, the MM2H Program is an extendable retirement visa that allows foreigners and their dependents to stay in Malaysia for 10 years. Those interested in this visa may consult agencies authorized to process MM2H, like Alter Domus. Program costs may increase when the nation reopens post-Covid. Thailand and the Philippines offer similar programs, but theirs are not as extensive as Malaysia’s.

The MM2H Program

Amounts quoted are in the US dollar equivalent of the Malaysian Ringgit as of October 30, 2020.

Malaysia’s retirement visa is one of the best on the planet. The acronym stands for “Malaysia, My Second Home.” It grants foreigners multiple entries for 10 years, renewed after the visa expiry. It is not just for retirees but also for anyone able to support themselves without working through savings, pension, or foreign income.

It may be costly, but you’re guaranteed a decade’s stay. The annual renewal may be challenging if the government changes the rules. So, if you simply want to try out living here, obtain a one-year visa instead.

Incentives

Spouses and dependent children under 21 can relocate with the visa holder.
Visa holders’ parents can join them on a renewable visa valid for six months.
Program participants can bring their pets with them. Before the pandemic, there was no mandatory quarantine for pets brought in from abroad, as long as they have completed the requirements in the country of origin.
Each visa holder can import personal items plus one vehicle valued at $35,000 or less, duty-free.
Money participants bring into the country, plus any interest earned from this amount is also tax-exempt.
Visa holders enjoy tax exemptions for offshore pensions or overseas income entering Malaysia.
Expats under MM2H aged 50-plus can work 20 hours per week, depending on the industry. Income derived from this type of employment is tax-free. MM2H agents can apply for this privilege on their behalf. Work permits are not assured, but legitimate reps will inform clients beforehand if their applications don’t have a chance of being approved.
The Electronic Visa Approval Letter (EVAL) allows MM2H participants to apply online through an immigration system anytime and anywhere. They may also appoint an MM2H agent to do so on their behalf.

Requirements

Applicants Younger Than 50

Liquid assets of $120,380 must generate a monthly offshore income of $2,410.
A local bank account should hold a fixed cash deposit of $72,216 minimum. Relocation experts recommend global banks like HSBC, Citibank, and Standard Chartered.
After one year, expats can withdraw 50% of this deposit for use inside the country. Valid purposes include children’s tuition in Malaysian schools, vehicles, furniture, home purchase, and medical expenses. Expats need to maintain a minimum of $36,110 from the second year and throughout the remaining years to maintain permit validity.

Applicants Over Age 50

Liquid assets of $84,264 must generate a monthly offshore income/pension of $2,410.
A local bank account should hold a fixed cash deposit of $36,113 minimum.
After one year, expats can withdraw half of the deposit amount for use within the country. The minimum balance required to maintain residence validity is $24,096.

Exceptions

Those on a monthly government pension of $2,410 or more are exempt from the fixed deposit requirement.
Visa holders who purchased a Malaysian property valued at $240,964 or more qualifies for a lower deposit requirement.

All applicants have to pass a health exam approved by a medical facility in the country where they bought their medical insurance. Passing won’t guarantee applicants permanent residency, however. Time spent under this program doesn’t count toward permanent residency or citizenship status. MM2H visa holders don’t have the same freedoms as permanent residency holders. They can, however, travel without restriction.

Taxation in Malaysia

Hockton assures would-be retirees that Malaysia is tax-friendly to outsiders. MM2H, the most in-demand expat visa, allows foreigners to bring in money without limit, tax-free.

Local workers enjoy low personal income taxes. At the highest level, the rate is 27%. The government doesn’t levy federal, estate, and wealth (or accumulated earning) taxes. Everyone staying in Malaysia for 182 days or more, regardless of country of origin, is considered a resident under Malaysian tax law. Those with a shorter stay are deemed non-residents and occupy a different tax bracket.

Holders of the MM2H visa, those older than 55, and recipients of pensions don’t have to pay tax on their income, regardless of origin, as long as it is remitted from abroad. This income includes interest earned from local accounts and those earned from working in the country less than 60 days a year.

Rules differ for those running companies under the MM2H visa. Business owners aren’t allowed to receive regular salaries as employees. They can, however, receive dividends and director’s fees. Entrepreneurs aren’t taxed for annual fees below $8,193.

Tips on Malaysian Customs

As Malaysia is predominantly Muslim, Islamic rules are imposed here. Tourists are not excused from following these, though the local reaction to foreign-generated faux pas depends on the people you meet. Some are more laid-back than others. Taking time to learn the cultural and religious dos and don’ts, especially when interacting with locals, makes a huge difference to a pleasant stay.

Don’t shake people’s hands unless they offer first. Reason: Malaysians are not allowed to shake hands with (or physically touch) the opposite gender.
Remove your shoes when entering a place of worship or someone’s home. This rule is also imposed in some offices. Wearing sandals helps because they’re easy to slip off.
No PDAs in public, even hugging. Signs abound, banning these.
Bring a compact umbrella whenever you go out. The weather constantly changes throughout the day. It often rains on and off, even on sunny days.
Know the difference between the terms Malay and Malaysian. The former is the ethnic group in Malaysia. The latter refers to the whole population. The terms also pertain to food. Malay food refers to the cuisine of the indigenous tribes. In contrast, Malaysian food reflects the country’s residents’ overall multicultural cuisine, many of whom had ancestors who migrated from elsewhere.
Don’t expect to get alcohol everywhere, especially where locals eat. It’s scarce unless you go to a specific store permitted to sell it. Public drunkenness is punishable with 10-day imprisonment or a fine.
Pork and beef are rarely sold in markets. Restaurant menus offer mostly fish, chicken, and vegetables. Exceptions are non-Muslim communities.
Do not point with your forefinger.
Durian is prohibited in public areas because of the smell. Signs on this are posted everywhere. This means the fruit is in high supply and, therefore, very cheap.

How to Make Friends in Malaysia Without Working

Most foreigners are interested in meeting others like them. Those who have stayed longer in the country are usually generous in helping newbies. Choose from the wide selection of expatriate groups and forums based in the area where you want to live.

Foreign resident Michele Cassebohm recommends joining expat groups on Facebook before relocation. She encourages newly arrived expats to attend the regular pot-luck dinners, coffee mornings, or quiz nights where expats meet up. Raccuia says some of the foremost Facebook sites include Expats in Penang, Penang Expat Women, Partners in Penang, the Penang Island Community, and the Penang Expat Residents Community.

So, join clubs of interest to you, like tennis (or your sport of choice), quilting, or gardening, then attend the related functions advertised on their social media channels. Also, sign up for the complimentary newsletters of the Penang Free Sheet and Spiral Synergy to keep abreast of the weekly socials. The latter holds local tours and advertises garage sales of departing expats.

Malaysia During the COVID-19 Pandemic

Here is Hockton’s update on travel restrictions, MM2H applications, and the pandemic-related environment in Malaysia this month. The government has handled the COVID crisis incredibly well. Penang and Kedah are COVID-free as of October. Malaysia has been on lockdown since March and will remain so until Dec 31, 2020.

International visitors aren’t allowed in yet, but residents are free to travel internally. People currently in Malaysia can leave anytime, but they may have problems getting back in. Check with immigration for details. Click here for a country-by-country update on COVID-related travel restrictions.

A positive aspect of the halt in tourism is the re-entry of wildlife and the replenishment of flora. Beachfront residents are privy to the re-emergence of sea otters and ocean monitor lizards on local shores.

MM2H Status

Avoid unnecessary international travel. MM2H visa holders who want to leave during lockdown have to obtain letters from these entities 24 hours before travel: the Ministry of Tourism, Arts, and Culture, Malaysian Immigration, and the Malaysian embassy or consulate in their country of origin.

Agencies processing MM2H applications have temporarily switched focus from tourism to immigration. After the lockdown, the government may revise the MM2H format but have yet to announce the changes. These may have to do with the rules on monetary aspects like deposit requirements.

Alter Domus officials claim foreigners can still apply as they normally would through agencies during the quarantine to get in under the old rules. As soon as immigration reopens, processing will resume.

Conclusion

Retiring overseas has become commonplace. One doesn’t have to be wealthy to relocate comfortably. If given the opportunity to retire elsewhere with a major lifestyle upgrade at a fraction of the cost, escape from wintry climes, lounge permanently on a beachfront paradise, and plunge into a phenomenal adventure, wouldn’t you take it?

No matter what your reasons are, Malaysia just might be the haven you’ve been dreaming of. Its permanent residents enjoy privileges, such as living in the country indefinitely, working, owning businesses, accumulating properties, and traveling without restriction. Surely you’d want these for your family? Think about it.

45 Pros and Cons of Retiring in Malaysia