Epic failures in the investment migration sector do happen from time to time. The recent reconfiguration of Malaysia’s MM2H program is a prominent example. Failures provide lessons, learning, and – ideally – prevents the future making of the same mistakes.
The completely botched “relaunch” of the Malaysia-My-Second-Home (MM2H) program, announced just a few days ago, may provide the most important lessons yet in 2021. I’m not going to cover all of the elements of the MM2H relaunch, as those are already covered extensively on IMI. However, I will provide some observations and takeaway lessons of MM2H that can be instructive, particularly to government officials.
Before we begin, let’s be real; the MM2H has always been nothing more than a glorified 10-year tourist visa. While it did provide participants with a sense of medium-term stability, it lacked any pathway to permanent residency, citizenship, or any kind of recognition beyond having a long-term (but not life-long) visa.
Policymakers in Malaysia have always seemed to have a perpetual fear of establishing a real residency-by-investment program. While Malaysia has taken steps over the last few decades to become more “pro-business”, the country is infamous for its poor immigration management policy. Singapore, its neighbor, is much more global in its view towards how global migration can boost the economic success of its own citizens.
Even with those systemic policy issues, the MM2H program attracted over 50,000 participants over the last two decades. The program’s success helped Malaysia position itself as a country that values international connectivity and foreign direct investment. It further solidified Malaysia’s positive position with the international migration media.
However, all the positive brand equity MM2H spent decades building has now been completely obliterated, in just one week. The ghoulish MM2H relaunch has produced three cardinal lessons that for migration-focused public policy officials:
Lesson #1: Governments must build and maintain long-term trust
When governments launch investment migration programs, they must do so with the idea that the program(s) will be a permanent component of the national social and economic profile moving forward. This is especially important for emerging countries, such as Malaysia.
International trust in a residency program indirectly affects general business trust and faith in government stability, and can significantly impact foreign investment decisions for a country. It would not surprise me to see the MM2H debacle referenced by foreign investors considering Malaysia for possible investments entirely unrelated to migration.
Drastic changes in program requirements, or plainly draconian new requirements, will lead to the destruction of global trust. Other countries in the world will happily take the new investment from displeased MM2H participants that are now looking for a new home. Even if a new government in Malaysia were to revert to the “old” MM2H rules, the general faith in the program’s stability has already been harmed beyond repair.
Lesson #2: Rapid social media reactions can ravage a program’s reputation
In less than a week, numerous articles and YouTube videos have emerged to comment on the ghastly MM2H “revamp”. One of these YouTube video commentaries already had nearly 45,000 views in the first 72 hours after the MM2H announcement. Take a look at this one, for example, which caters to a Japan-focused audience (subtitles available).
As global mobility (and digital nomadism) increasingly becomes a mainstream topic, the coverage from social media on migration program changes will happen immediately. The reputational damage that can occur can be rapid, seismic, and devastating.
Government officials running investment migration programs must be aware that their words, actions, and policies (even draft policies) will have immediate reactions in the ever-growing global social media landscape.
Lesson #3: Creating program stability requires laws, not regulations
If governments want to create long-term investment migration program stability, they need to embed their programs in the country’s laws, not just in regulations. Constitutions are more powerful than laws, and laws are more powerful than regulations. When investment migration programs are only created using regulatory authority, the program is subject to rapid changes once the next political party holds that regulatory power.
If countries want to have a successful and trusted long-term investment migration sector, they must ensure that their programs are embedded in the constitution of the country (ideally), or at least in the law. Leaving a program subject to the whims of whatever government comes into power leaves it susceptible to rapid shifts and changes, as can be seen by the MM2H case study.
To neighboring programs go the spoils
Other countries in Asia will observe the new business opportunity that has opened up now that Malaysia has ceded its position. Real estate developers, banks, and other interested parties in other countries (such as Thailand and Vietnam) are almost certainly lobbying their government officials to capture the vacancy left by the de facto withdrawal of the MM2H program.
These lessons are instructive and demonstrate the careful public policy approach that must be taken by investment migration programs. Government leaders of migration programs must ensure the long-term trustworthiness of their programs.