Andrew Hallam
13.02.23

Retire In Malaysia: Tropical Living, Low Cost, Safe, and No Capital Gains Taxes for Your Investments
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“If I ever disappear and go completely off the grid, you would find me on Pulau Tioman.” I told my wife that shortly after we met. Tioman is an idyllic island in the South China Sea. Jagged mountain peaks rise from the sand of the gorgeous tropical beaches.

Time magazine once rated Tioman one of the ten most beautiful islands in the world. But it’s still a largely undiscovered gem with almost no road network. Most of the small villages are only accessible by boat or a hilly jungle path that circles the island.

Not everyone, however, wants to live like Robinson Crusoe. Those preferring a city vibe might prefer Malaysia’s capital, Kuala Lumpur. You’ll find world-class medical centers, spectacular spas, gyms and enough fine dining to keep your taste buds dancing daily.

Almost everyone speaks English, which helps make Malaysia one of the most popular places to retire in Southeast Asia. What’s more, as a resident of Malaysia, you wouldn’t have to pay capital gains taxes on your stock and bond market portfolios. That’s a massive perk.

Sixty-six year old Peter Bendheim and his 53-year old wife, Adele, moved to Penang to retire in 2019. Known as the “Pearl Of The Orient,” it’s popular among expats. The South African couple lives in Batu Ferringhi, about 12 kilometers from Georgetown. “Penang is an island with a rich and diverse culture,” says Peter. “It’s relatively laid back, compared to the busy city of Kuala Lumpur.”

Peter and Adele are among more than 57,000 retired expats that acquired residency from the Malaysia My Second Home Program. It offers a 10-year renewable visa. When the program was first launched in 2002, it attracted plenty of budget-conscious expats drawn to the country’s low cost of living. But the Malaysian government temporarily froze the program in 2020. Now reinstated, it has different financial requirements, depending on where you choose to live. There’s a national program that became more financially selective, and a Sarawak regional visa that’s more attractive to lower income retirees.

For example, the national program now requires new members to make a fixed deposit into a local bank of about $235,000 USD (1 million RM). Approximately $11,780 USD (50,000 RM) is required for each additional household member. Members can deposit this money in a Malaysian bank and receive interest. After the first year, they can withdraw up to half this amount if they choose to spend it on a home, car or education.

Expat retirees also require proof that they have about $354,000 USD (1.5 million RM) that could be converted to cash. This could be a portfolio of index funds or ETFs, for example.

Finally, applicants must now earn a minimum $9,500 USD (40,000 RM) of monthly income. That could come from a salary, pension, dividends or property investments.

Ironically, anyone spending this kind of money in Malaysia could live like a king or queen.

Peter and Adele’s seaside condominium cost about $160,000 USD. The 1,100 square foot condo has three bedrooms, two bathrooms, a balcony and an ocean view. It includes a swimming pool, a gym and undercover parking. Peter says they pay about $1,066 USD in annual maintenance fees and about $237 USD in annual property taxes.

When doing an online search for rental properties in Penang, I found 3-bedroom, 2-bathroom condominiums renting for about $950 USD per month with an ocean view. Of course, there’s no limit to what you could pay if you’re living like a sultan. But luxury living rarely comes at a cheaper price.

Peter and Adele’s annual living costs, for example, are about $28,000 USD. The couple’s total health insurance costs are about $1,800 USD per year.

Below, I’ve listed cost of living comparisons for several major cities, compared to Kuala Lumpur. For example, someone who spends $100,000 a year in Dubai could enjoy the same standard of living in Kuala Lumpur for about $48,000 USD, according to Numbeo.com. Kuala Lumpur is even cheaper than Bangkok, Thailand.

Equivalent Standard of Living Cost Comparisons

_{Source: numbeo.com}

Those choosing to live in western Malaysia could apply for Sarawak’s Malaysia My Second Home resident visa. Its financial requirements are less strict compared to the country’s national program. Applicants over 50 years of age require a fixed deposit of about $35,000 USD (150,000 RM) in a local bank or $70,000 USD (300,000 RM) per couple. After two years, 40 percent of this could be withdrawn to buy a house, car, pay for medical expenses or pay for education. The rest must remain until the retiree chooses to leave Malaysia.

Applicants also require minimum income of about $1,700 USD (7000 RM) per month from a salary, pension, dividends or property investments. As with the national program, residents need to spend a minimum of 90 consecutive days per year in Malaysia to maintain their residency status.

If you would like to retire in Malaysia, visit the country several times first. Other than the mountainous regions of the Cameron Highlands, the lower slopes of Mt. Kinabalu, or the Genting Highlands, temperatures tend to be hot and humid. They won’t suit everyone.

But if you’re looking for a piece of paradise, Malaysia gets my vote as one of the world’s best countries. It’s sunny. It’s safe. It’s cheap. It’s beautiful and it’s varied. You can drink water from the taps. And with no capital gains taxes levied on investment portfolios, it might be one of the world’s best-kept secrets.

Andrew Hallam is a Digital Nomad. He’s the bestselling author Balance: How to Invest and Spend for Happiness, Health and Wealth. He also wrote Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas

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