Thousands of Chinese nationals continue to settle in Malaysia

A large number of Chinese nationals continue to settle in Malaysia through the government's long-term visa programme, reigniting a debate on the influx of ethnic Chinese foreigners and concerns over its impact on the country's race relations and political fallout.

Singapore's The Straits Times, citing official Malaysian government figures, said a total of 26,162 mainland Chinese have settled in Malaysia after receiving long-term visas under the Malaysia My Second Home (MM2H) programme.

The report said as of December 2024, mainland Chinese account for 45% of the 57,686 MM2H participants, many of whom are settling for retirement, education and investment purposes.

It said Chinese nationals now make up the largest proportion of MM2H applicants from any country.

Within a four-month period between September last year and January 2025, 53% of the total 2,195 MM2H applicants were from China, followed by Taiwanese (8%) and Hong Kong nationals (6%).

They brought with them a total of RM675 million in cash held in local fixed deposit accounts and bought property worth RM681 million.

The paper said many Chinese nationals were attracted to Malaysia because of its affordable housing and to escape the rat race in their home country.

This comes amid criticism of the current government's aggressive campaign to attract millions of tourists from China on the back of the 30-day visa waiver for visitors from the mainland until the end of 2026.

Malaysia is one of the countries that receives the most Chinese tourists.

Last year, the Financial Times reported on the trend of Chinese flocking to Malaysia and estimated that the number of those settling in the country has doubled in the last three years - from 82,000 in 2022 to between 150,000 and 200,000.

MM2H, a government scheme to encourage foreigners to park their wealth here in exchange for long-term visa facilitation, has been riddled with controversy after Anwar Ibrahim administation's placed it under the Ministry of Tourism, Arts and Culture, headed by Tiong King Sing - whose focus not only on attracting Chinese but also on promoting China has been widely criticised.

Under MM2H, participants can enter the country with a fixed deposit of RM5 million and stay for up to 20 years, including an automatic work permit.

But experts have warned that the increasing number of Chinese nationals in the country poses many challenges, especially in terms of the impact on the property sector and home ownership as developers focus on building luxury properties instead of affordable housing for locals, as well as concerns over demographic changes and other domino effects.

Critics have also cautioned Putrajaya to learn lessons from neighbouring countries, particularly Singapore, Thailand and Vietnam, which have struggled with the influx of Chinese migrants and the cultural integration issues that come with it.

Among the critics is former prime minister Dr Mahathir Mohamad, who last year expressed concern over the sharp increase in the number of Chinese nationals settling in Malaysia.

He said that the presence of the local Chinese community made it difficult for authorities to track down migrants from mainland China and that the foreign nationals could "easily disappear".

He said this was not the case with the migration of other nationals who can be easily distinguished from Malaysian society.

"That is the reason why there are so many of them because we cannot distinguish the original citizens from the foreigners," he said in an interview with MalaysiaNow last year.

While Malaysia does not publish official statistics on new immigrants, The Financial Times, citing government statistics and community sources, estimated that the number of Chinese nationals living in the country rose from around 82,000 in 2022 to 200,000 last year.

The number of business owners, managers and employees of Chinese companies had quadrupled from 10,000 in 2021 to 45,000 in 2024.

The presence of Chinese nationals is more evident in the education sector, where in 2023 there was a 35% increase in Chinese student enrolment at universities compared to 2021, while the number of Chinese students at international schools tripled.

'Little China' in Penang

The Straits Times noted in its report yesterday that the impact of Chinese migration was most felt in Penang.

A property agent said that 80% of her clients this year are from China, compared to none when she started in 2013.

International schools in the island have also been forced to impose a 20% cap on China students in each class to maintain diversity.

"It would be difficult to nurture an English-speaking environment if more than half the students were from China," said one property agent who helped a Chinese national to resettle here.

In one neighbourhood close to Universiti Sains Malaysia, the number of mainland Chinese restaurants has risen from two to 10 in recent years, said a film maker.

Tang Siang Ching said that while there is more choice, she is concerned whether the trend will last.

"What will happen to these restaurants if Chinese students stop coming? What’s the plan going forward?” she told The Straits Times.