Policy flip-flops destroying investor confidence

 

From Disappointed Expatriate

It is a mystery to no one that most expatriates and foreign investors in Malaysia are either packing up and leaving, or have already gone.

For almost two years now, expat businesspeople, multinational company executives and, more recently, Malaysia My Second Home (MM2H) visa holders have been facing more obstacles and barriers when renewing visas, setting up business or dealing with banks.

Programmes specifically set up to attract them are slowly being handicapped (such as MDEC and Mida-expedited immigration channels) or outright gutted (such as the returning expert programme from Talentcorp).

Expats and foreign companies do not mind a little bureaucracy, but they do mind what is slowly becoming evident – a systematic moving of goalposts that takes more and more from them and gives less and less in return.

The subject was first manifested in a stage of denial in 2018 and 2019. When presented to a top representative of Mida at a CEO forum last year, the representative preferred a quintessential “head in the sand” rebuke, claiming that there is no such thing happening and that foreign investors have no barriers whatsoever.

That, of course, was factually false: visa approvals were down and required three months of processing more complex paperwork with every renewal, instead of three weeks it used to take 10 years earlier.

Bank accounts for all foreigners (whether MM2H, expat key people, or investors) are tightly attached to an active visa, flagged as external and limited in transfer ability; financial lending from banks has been reduced to what is now practically zero for foreigner-owned businesses.

More activities are being restricted to licences issued to locally owned companies only, and a previously promised freedom to hire global talent in tech companies is now heavily regulated and decided on a case by case basis by immigration officers who can reject visa renewals of key people on a discretionary basis.

Today, the head-in-the-sand approach has become embarrassing and denial is working on no one. “There’s no war in Ba Sing Se” is no longer working.

The negative economic impact on Malaysia, however, is clearly not lost on those in the home ministry or the government. They know and understand that this will hurt the Malaysian economy more than help it.

The defence rhetoric seems to have devolved to the usual “prioritising local jobs” and “maintaining security”. That rhetoric is not tracking, however, and none of those officials have been able to demonstrate or show any evidence that any of these policies can help achieve such goals.

The HSR project cancellation, internet undersea cables being redirected, and MNCs moving out, all directly reporting tens of billions of dollars of losses in foreign investment and tax revenue, yet there is nothing shown to have generated any alternative opportunities or positive impact for any locals.

In fact, it has also cost tens of thousands of jobs for the said locals.

The increased requirements for MM2H involved no security measure upgrades whatsoever and merely demanded higher amounts of money per applicant, amounts that made it more expensive than not only all other regional retirement residence programmes, but even some residence programmes in the Gulf and European Union where there is a possible pathway for permanence and citizenship.

Expats and foreign investors do not just wire-transfer dumb cash when they invest in a country, they also commit to establishing local resources, presence and relationships. Expats and retirees even move here with their families.

Yo-yo policies are destructive to investor confidence and Malaysia’s level of unstable flip-flopping has reached the tipping point with expats and foreign investors.

As a foreign investor myself, I need those in authority to understand that they will be badly disappointed if they believe the problem is with current government ministers and that if someone else takes their place and makes a more investor-friendly incentivising initiative, then all will be well with the world.

Such a change is not going to reverse the damage that is happening.

Foreign investors are not flipping through countries on an annual basis looking for new countries to invest in. It takes considerable time, effort, and cost to relocate somewhere and invest there.

Once investors close their offices here, put their Kuala Lumpur or Penang condo units on the market, pull their children out of school, let go of their Malaysian employees and relocate their families to Thailand, Indonesia, Singapore, Turkey, Bahrain, Portugal or any of the other countries calling out for retiring expats and foreign investors with open arms, they are done.

Do not expect them to flip back to Malaysia because conditions are made better again. They are being driven away due to loss of trust, and that is very hard to earn back.

When government representatives go to attend international business gatherings overseas, they are already met with diplomatic smiles and raised glasses. But right afterwards. attendees turn back to each other and share their experiences and warnings.

Jeffrey Cheah, the Sunway Group chairman and Malaysian businessman extraordinaire, put it best when he cautioned about the recent government changes to MM2H. “I was trying to court a lot of fund managers to invest (in Malaysia), but many of them would complain that our government’s track record was very bad,” he said. “They would say not only does the government move the goalposts, they would also change the game!”

There’s a rapidly devolving deficit of trust and it needs to be resolved fast.

If Malaysia wants its business emissaries to come back with anything more than protocol photo-ops and “great meetings”, they must end the whimsical policy changes and discretionary decisions that rarely involve the parties they are affecting. - FMT

The writer is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.