Could promoting MM2H in Hong Kong cause diplomatic friction with China?

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Promoting the Malaysia My Second Home (MM2H) programme in Hong Kong could lead to diplomatic friction with China.

The suggestion by Malaysia's Housing and Local Government Minister Zuraida Kamaruddin to actively promote the MM2H programme in Hong Kong carries the potential for diplomatic complications with China. Observers note that China might view efforts to attract residents from its special administrative region, particularly amidst ongoing pro-democracy protests, unfavourably. The current political climate in Hong Kong could lead China to disapprove of granting MM2H status to buyers from the region, as Beijing would prefer its residents to remain confident and stay put.
Potential Diplomatic Sensitivity

China is unlikely to be receptive to initiatives that encourage residents of Hong Kong, its special administrative region, to seek residency elsewhere. This is especially pertinent given the current atmosphere of pro-democracy protests within Hong Kong. The granting of MM2H status to individuals from Hong Kong may be perceived negatively by China under these circumstances, as the country would prefer its citizens to remain in Hong Kong and maintain confidence in its future.
Addressing Property Market Glut

Minister Zuraida Kamaruddin's intention to propose promoting MM2H in Hong Kong to the Cabinet is aimed at addressing a significant surplus of high-end properties within Malaysia. The rationale behind this is the stark contrast in real estate prices, with Hong Kong's property market described as astronomical, making Malaysian properties appear as a considerable bargain by comparison. This strategy seeks to attract foreign investment to absorb the unsold luxury units in the Malaysian market.
Underlying Property Market Issues

Beyond the immediate proposal, deeper issues contribute to Malaysia's excess of high-end unsold properties. A mismatch exists between supply and demand, with a substantial number of high-end units remaining vacant while middle-to-low income earners struggle to afford housing. Furthermore, stricter foreign exchange controls implemented by China have made it challenging for many Chinese buyers to transfer payments, impacting their ability to purchase property in Malaysia.
Criticism of Policy Repackaging

The proposal has also faced criticism for lacking originality, with some suggesting it amounts to a repackaging of policies previously implemented by the Barisan Nasional (BN) administration. Critics argue that this indicates a struggle by the current government to devise fresh economic strategies, particularly in the property sector, and that it mirrors past policies that were once criticised for potentially selling national assets to foreigners.

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Could promoting MM2H in Hong Kong cause diplomatic friction with China?

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