MM2H

unfinished blogs – no. 7 – The utilities blog – water, electricity, and gas…in Penang

I’ve been writing this blog for three years this month, and have accumulated many partially written blogs that remain unpublished. I may as well just publish them as is, and if I ever feel inspired to finish any, do so later.

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November 16th, 2012

In the UK, we paid about GBP40 per month for electricity, about GBP40 per month for gas, and GBP89 for water. Electricity and gas were metered, but water was a fixed charge, and not metered.

Here we pay about RM170 per month for electricity. Expats report bills ranging for less than RM100 up to RM800, depending on their homes, and usage, of course. Our bill is very similar to that of the UK, but in the UK we lived in a two bedroom flat, with gas central heating, but, importantly, we were out of the flat working five days a week, which would have kept the bill much lower. Thus, electricity is costing us less here, even though it cannot be said to be cheap. But electricity heats the water for showers and baths, and runs the aircons, so we use it for more functions, here.

These are the tariffs, becoming more expensive as you use more:

Electricity: Tenaga Nasional:

First 200 KW/hour: 0.218 RM 43.60

Next 100 0.334 RM 33.40

Next 100 .400 RM 40

Next 100 .402 RM 40.20

There is no town gas, so you have gas delivered in canisters, costing RM27 or so for a litre cannister. This has lasted us from about three months to about six months, depending on how much we ate in. If three months, then about GBP2 per month.

As for water, it costs RM6 minimum per two months, and usually we only use the minimum, so it is less than GBP1 per month. Usually we pay Indah Water several months in one go to save the trouble of paying every two months, and then every bill we receive shows a negative debt to them.

How to pay? With electricity, one can pay online with most banks. With gas, you telephone and it is delivered, so one pays the bike delivery person. It is more difficult with water – you can pay at the post office.

Yesterday’s news

Well, if the title didn’t put you off, then here we go…

I was reading a couple of the local newspapers yesterday, The Star & The Straits Times, and they actually had a few interesting articles.

Penang is currently being photographed for Google Street view, and this should all be done by the end of the year.  How long before we can actually access Street View for Penang the article didn’t say.

The Immigration Department says it’s going to be stricter with people who do visa runs – leaving the country for a very short time, only to return.  The article says they will target “unsavoury characters”.  Tourist visas for people from Australia, Canada, EU, UK, & US  are for up to 3 months, allegedly, by the way.

From January 1st there will be a new parking payment system in Penang for MPPP spaces.  This I blogged about a while ago.  What was new was that the rate will be set at 40 sen per half hour.  Currently it is mostly 30 sen, but some places charge 40 sen.

The Sun, a local free daily, had an article about capital gains tax (RPGT = Real Property Gains Tax.)   This is the clearest article I have read on this topic.  For non-citizens, a tax of 30% will be imposed on gains if a property is sold within the first five years, and at 5% from the sixth year on.  This we already knew.  They also write that they want the tax forms submitted within 60 days of the property being disposed of – which they define as the date of the written agreement of the sale – what they call here the S & P = Sales and Purchase agreement.  From experience, months can pass after the S & P has been signed until completion of the sale.  The lawyer who wrote this article suggests this knowledge can help you plan – to which I say, “Rubbish”. I had a plan based on the old regime, which the new tax destroys.  They are constantly moving the goalposts – usually in the wrong direction.

Is the MM2H visa worth considering after all the new taxes?

In the latest budget the government is apparently only allowing foreigners to buy properties in excess of RM1m, or houses in excess of RM2m.  So if you just want to rent, then it doesn’t affect you.  From memory,  Japanese and English people are the two nationalities who have taken up more MM2H visas than others.  Japanese mostly rent, so it is no problem for them. But many of us (English) prefer to buy so we can renovate the property to suit our own taste and convenience, and at these prices, many other countries’ property prices are more attractive.

In addition the Penang government wishes to impose a surcharge of 3% on foreigners’ property purchases.

Then the federal government wishes to impose draconian capital gains taxes, making it uneconomic to move, as if your property has increased in value, then so have others, but you lose a large chunk in CGT, so need extra money to cover the increase on the new property you wish to purchase. The most economic place to move is out of the country.

So, they prefer foreigners not to buy property now? Before they wanted us to buy property.

Certainly, we spent a lot of money and employed a lot of people renovating our property.   That was a big contribution to the local economy.  Had we continued to rent, then they wouldn’t have had this input.  And living here we contribute to the local economy, by patronising the local businesses.

Thus, if you already own a property and do not wish to move, or are happy to rent, then MM2H will work for you still. Otherwise… Germany, Malta, Turkey, Thailand, Panama, Ecuador, Uruguay are a few countries you could investigate where you can buy cheaper property and have a nice environment.

But the government changes requirements for the MM2H visa every three months or so, so they may decide these new impositions do not apply to MM2H holders.  We shall wait and see.

And then the awful GST is coming soon…

A little more information here.

All this is a pity, because Penang has greatly improved since we first moved here six years ago, and looks like a lot more improvements are coming.

If you want an MM2H retirement visa for Malaysia, consider applying soon

We’ve been here over five years.  I preferred to get an MM2H visa before we moved here. I think I have explained why in earlier blogs. http://migratemalaysia.com/ is all about MM2H visa, although not the agent I used.

However, some people did it differently. When we were here at first we knew many people who lived here on a tourist visa and simply left the country every three months,  and received another three-month tourist visa on their return. Some owned properties here.

For visa eligibility and length of stay, see http://www.klia.com.my/index.php?option=com_content&view=article&id=19

Their plan was simple.  They kept an eye on cheap flights six, nine or more months in advance, and booked so they had always left within their visa’s three-month validity.  They had a short holiday, and then returned. In this way they visited many countries, and did not have to tie up any money in getting an MM2H visa. It was very flexible.

Anecdotally, this doesn’t really work any more. The people we knew who did this no longer live here.

It seems the length of stay you will get on a tourist visa on arrival depends on the immigration officer.  If it’s only occasionally that you come to Malaysia, then you’ll probably get the full three months you get on UK passports, and many others.  But if the officer looks through and sees many Malaysian stamps, and can see you are more or less living here, then the length of stay granted can be far shorter.

Thailand Immigration seem to be similarly cracking down on what they possibly see as abuse of tourist visas.

So, if you do want to stay in Malaysia most of the time, now an MM2H visa seems the easiest way, even though at first you have to deal with the application process.

Apparently, though, the Malaysian Government is considering making the eligibility requirements for the MM2H visa much stricter.  See here for more details.

The Malaysian Government has always tinkered with this visa, sometimes making it stricter, and sometimes less so. But applying sooner rather than later might be advisable.

Choosing, buying and selling a tax-free car on MM2H visa in Malaysia. May 2013 update.

One of the biggest advantages of getting a retirement visa in Malaysia is being able to buy a car tax-free.  In our case we saved about MYR 40,000 (GBP 8,000). You can only buy one car tax-free.

If you want to part exchange for a new car in the future, though, or simply want to sell the car, it is not as easy as you might expect.

BUYING

We took the easy way, and used the services of our visa agent, who will do everything for you: explain the system, take you to car showrooms, and once you have selected a car, do all the paperwork for you.  Then you wait for up to several months for the car to be manufactured/assembled, and then be delivered to you.  The agent’s fee is only a small amount compared to the tax savings.

SELLING

The visa agent will probably also take care of arrangements to part exchange or sell your tax-free car.  However, the car dealer you are purchasing your next car from may also help you, in which case you can avoid the agent fee.  You may find it helpful to go with someone who speaks Malay, otherwise. It seems that even if your car is several years old, you cannot sell without this bureaucratic procedure and paying some of the tax that had been previously waived.  The following is the procedure if you live in Penang.

  1. Go to the Butterworth Customs office behind Sunway Carnival.  There you need to write a letter asking permission to sell the car, and you will be told the specific format you need for the letter.  Once you have completed the letter they send it to Putra Jaya. (PJ)
  2. The Butterworth Customs office telephones you and you return to the office to pick up the reply from the PJ office.  This letter tells you how much tax you must repay.
  3. You take the letter to an office above the post office in Beach Street (7F?) and pay them the tax by bank draft, and receive a chop and a receipt.
  4. You need to download a form from the road tax department, and then go to JPJ (Road Transport Department) at Bukit Jambul with this form, receipt, the passport you had at the time you bought the car, and the car registration form – and copies of all these, and a copy of your visa.  JPJ takes the registration form and gives you a receipt.  You are now done.  You can hand the car over to the dealer, or purchaser.

Tropical Expat

MAY 2013 UPDATE
CHOOSING

In all the countries I am familiar with, the major cost of car ownership is depreciation in the value of the car. Buying a good secondhand car, and thus bearing a lot less of the depreciation costs, was probably the cheapest path to car ownership.  A more expensive, but perhaps more attractive approach, was to buy a new car, but keep it for many years – you bear the depreciation, but over a good many years, so that per annum it works out quite low. A friend kept her Honda Accord for 27 years!! It was a bit shoddy, but still performed well, when she gave it away to a friend of hers.

Well, in Malaysia, almost everything, including cars, is perceived as keeping its value, and sold for little less than the new price. Thus it is generally better just to buy the item new.  But for cars this may be changing:

From The Star:

“…the import duty on cars from Japan and Australia would be gradually reduced from the current 30% to 0% by 2016.

He said the import duties would be reduced to 15% in 2013, 10% in 2014 and 5% in 2015.

There are three types of duties on cars: the import duty, the excise duty, which is between 60% and 105%, and the sales tax, which is 10%.”

It was possible to buy a car under an MM2H visa, use it for five years, and then part exchange it for a smaller new car for a very small extra payment, because some cars hold their value very well, particularly Japanese cars.  For example, buy a Honda Civic, use it for five years, and part exchange for a Honda Jazz. Or an Honda CRV, and then a City.

With the changes in the government’s various taxes on cars, it looks like a less viable plan of action, as second hand cars are unlikely to hold their value so well.  To date, Japanese cars have maintained their value best.  But the manufacturers are slower to build in new technology than the Korean and European manufacturers.

And the “luxury” European makes depreciate very fast here, so if you want one, buying second hand might be sensible. Of course, this would mean not taking advantage of the MM2H concession, so instead, if you owned one in your home country, it could be better to import it.

So, if you want a luxury European car, importing one you owned, or buying here second hand is probably best. For other cars that are assembled here, buying new under MM2H, and then keeping long term is probably the cheapest.