Are the standard MM2H tiers with their high financial requirements out of reach for you? What if there were a more affordable, low-entry MM2H visa that made living and investing in Malaysia accessible?
This is where the Johor Special Economic Zone (SEZ) or Special Financial Zone (SFZ) Pass comes in. This is a cheaper, more flexible MM2H alternative designed to attract investors to Johor’s booming economic hub. In this post, we will explain exactly what this pass is, how it compares to the standard MM2H tiers, and all the crucial details you need to know, from property rules to taxes.
The Standard MM2H Tiers at a Glance
To put the SEZ Pass into perspective, let us first look at the standard MM2H tiers that most people know.
- Silver Tier: Requires a fixed deposit of $150,000 and a minimum property purchase of RM600,000.
- Gold Tier: Requires a fixed deposit of $500,000 and a minimum property purchase of RM1 million.
- Platinum Tier: Requires a fixed deposit of $1 million and a minimum property purchase of RM2 million.
These tiers also come with hefty participation fees and specific rules, making them a significant financial commitment.
The SEZ/SFZ Pass: A Cheaper Alternative
The SEZ/SFZ Pass is a much more affordable option, specifically tailored for those who want to invest in Johor’s Special Economic Zones.
- Age 21 to 49: Requires a fixed deposit of just $65,000.
- Age 50 and above: The fixed deposit drops to only $32,000.
The key condition is the property purchase. You must buy a property within the SEZ/SFZ zones for a minimum of RM500,000. This is significantly lower than the standard MM2H tiers and much more accessible for a wider range of people.
Important Questions and Clarifications
Navigating a new visa program can be confusing, so let us answer some of the most common questions about the SEZ/SFZ Pass.
- SEZ vs. SFZ: Both names refer to the exact same pass. The different government agencies simply use different terms, so there is no need to worry about choosing between them.
- Fixed Deposit Withdrawal: Similar to other MM2H tiers, you can withdraw up to 50% of your fixed deposit after the second year. This can be used for things like property, medical expenses, or education, but you must first spend the money and then submit a claim to the government.
- Property Lock-in: The property you purchase with this pass has a 10-year lock-in period. You cannot sell it during this time unless you are upgrading to a higher-value property.
- Working in Malaysia: The SEZ/SFZ Pass, like the Silver and Gold tiers, does not permit you to take up local employment. However, you can still work remotely for a foreign company, as this is not considered Malaysian-sourced income.
- Domestic Helpers: Domestic helpers are generally not permitted unless you are on the Platinum Pass, though medical exceptions can be granted for those with elderly or disabled dependents, upon government approval.
Taxes and Property Rules You Need to Know
- Non-Malaysian Income: A significant benefit of this pass is that foreign pensions and non-Malaysian income are not taxed in Malaysia.
- Rental Income: If you choose to rent out your property, the income is taxable. However, you are only taxed on the profit, after expenses are accounted for.
- Real Property Gains Tax (RPGT): The RPGT for expats is a significant consideration. If you sell your property within the first five years, you will pay a 30% tax on the profit. After the fifth year, it drops to 10%. This tax still applies even after the 10-year lock-in period.
My Take: Is the SEZ Pass Right for You?
The SEZ/SFZ Pass is a no-brainer for those who cannot or do not want to afford the higher costs of the standard MM2H tiers. It is an affordable way to secure a long-term visa and invest in an area with enormous growth potential.
With the influx of major investments from tech giants like Microsoft and Amazon, and the upcoming RTS link connecting Johor to Singapore, the value of properties in the SEZ is expected to rise. While this is not financial advice, the future of Johor looks promising, making the SEZ/SFZ Pass a very attractive option for forward-thinking investors and expats.
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