By Yasmin Ramlan
SHAH ALAM, March 14 — The Strategic Investor Pass (SIP) is a promising initiative to attract foreign investment to Malaysia by streamlining immigration processes and reducing bureaucratic hurdles.
This is expected to enhance the ease of doing business, especially for small and micro businesses, by eliminating the need for third-party agents.
Economists envision the SIP will boost foreign investment, especially in high-growth sectors including the digital economy, artificial intelligence, and semiconductors.
Speaking to the Selangor Journal, Malaysia University of Science and Technology’s Prof Emeritus Barjoyai Bardai said that in today’s world, Malaysia is expected to attract experts in the digital economy and artificial intelligence, pointing out to the recent partnership with a major player in semiconductor design, which will further facilitate the influx of such expertise.
He said the focus should be on attracting specialised knowledge and soft skills, rather than moving large amounts of capital.
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Prof Emeritus Barjoyai Bardai of the Malaysia University of Science and Technology.[/caption]
“This is meant to facilitate businessmen in actively running their businesses and investing in Malaysia. It is seen as an incentive to improve our standing, and this practice is also adopted by other countries worldwide. In fact, this is not something new.
“Of course, it will enhance our image, as we are already known as a country that is very welcoming to foreign investors, and this will further strengthen our status in the long term,” Barjoyai said.
Introducing the SIP will project a positive image to the country, showing that Malaysia welcomes investors. However, there are concerns about the potential for the system to be abused.
He emphasised that without proper safeguards, individuals might use the scheme to stay in Malaysia for extended periods, even if their business activities are not genuine.
“I think we have to be positive about this. We know that every system has its merits and demerits. We just need to make sure that, particularly, the implementation and monitoring are stricter.
“If it is abused, then we could see many people using this as a loophole to take advantage of the immigration rules,” Barjoyai said.
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A worker pushes a car frame along a Perodua assembly line at its factory in Rawang, on June 24, 2008. — Picture by REUTERS[/caption]
Stringent regulation
The Asia-Europe Institute’s Prof Datuk Rajah Rasiah shared similar concerns while questioning why the government is only considering this approach now to attract investors.
“The SIP will make it convenient for those holding it to face fewer bureaucratic problems when travelling to Malaysia.
“Since most countries prioritise strategic investors as a boon to attract, I am surprised that the government is only now looking to introduce it.
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Prof Datuk Rajah Rasiah of the Asia-Europe Institute. — Picture by BERNAMA[/caption]
“Yet, it is important to see that the SIP does not become a front for money laundering and other unhealthy practices,” he told the Selangor Journal recently.
On March 6, Home Minister Datuk Seri Saifuddin Nasution Ismail said the Immigration Department will begin issuing the pass on April 1.
However, the government announced issuing the SIP in July 2023, when Prime Minister Datuk Seri Anwar Ibrahim said the pass enables investors to stay in the country for a minimum of five years with a view towards a further five-year extension.
Several countries employ programmes similar to Malaysia’s SIP, aiming to attract foreign investment through residency or citizenship incentives. These initiatives, often called ‘golden visas,’ can be categorised as either Residency by Investment (RBI) or Citizenship by Investment.
RBI initiatives, found in countries like Portugal, Malta, and Greece, offer residency in exchange for financial contributions including real estate purchases or investments in local businesses. These programmes generally seek to boost economic growth and global competitiveness by attracting high-value investors.
Beyond Europe, countries such as Turkiye and the United Arab Emirates also offer similar schemes.
Rajah added that some investors have selected their destination countries based on this factor when other elements, such as incentives, labour, and security, are comparable.
He said it is obvious that the private sector can benefit from the SIP, which has the potential to support all sectors that attract foreign investment, particularly small businesses within these sectors.
“I believe the government has strong supportive instruments to attract large and medium businesses.
“The only additional regulatory instrument needed is to ensure that the screening process used to qualify for the SIP is made stringent,” Rajah said.
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Factory workers processing loaves of bread at the Gardenia Bakeries (KL) Sdn Bhd factory in Shah Alam, on July 23, 2021. — Picture by BERNAMA[/caption]
Supporting the initiative
Both Rajah and Barjoyai agree that the SIP will help attract foreign investment, particularly for small and micro businesses.
Rajah believes that while the SIP will not significantly disrupt the balance between foreign and local interests, it should be supported as it improves business practices and makes Malaysia more appealing to investors.
“While the government’s efforts to protect local interests should still be upheld from a broader perspective, this should not prevent us from supporting the introduction of the SIP, which can enhance the environment for attracting foreign investment, particularly in small and micro businesses,” he said.
Meanwhile, Barjoyai said the SIP boosts investors’ confidence by making the process more convenient and welcoming than in other countries in the region.
