Oh, sorry, I just read this thread for the first time - I'm getting lazy! Anyway, here's some information about the MM2H and living long-term in Malaysia on a tourist visa that hasn't been discussed in this thread. I'll also try to address some misinformation.

First of all, regardless of technicalities, many people have lived for many years by just getting what is called a "Social Visit Pass," which is what you get when you go through customs (by air or land) and is good for 90 days for UK and US nationals. This is not the same as a visa. You just get your passport stamped when passing through customs - no application or costs required. I lived for over 2 years in Malaysia this way, leaving for the most part for only a few hours before returning. Never had a problem. As long as you look relatively clean-cut, I've never heard of anyone having a problem this way.

The MM2H is a "Social Visit Pass" and a "Visa." It is good, initially, for a few months short of your passport expiration date and up to ten years (which is NOT the same as a ten year visa!). However, it's called a "perpetual visa" as it is renewable - again, for a period of UP TO ten years. There have been several changes made to the MM2H since February, 2009. First of all, unfortunately, the deposit requirements have increased. If you are under the age of 50, you need to show proof of having liquid assets of at least 500,000 RM and must open a fixed deposit account of at least 300,000 RM. Half of that can be withdrawn after one year for a home purchase, education or medical expenses. The remainder must be held in a Malaysian bank for the duration of your stay under the MM2H program. You also need to show proof that you have a monthly income of at least 10,000 RM.

If you are over the age of 50, you need to show proof of having liquid assets of at least 350,000 and make a fixed deposit of at least 150,000 RM. After one year, you can withdraw 50,000 RM of that for home purchase, education or medical expenses. The remainder must be held in a fixed deposit account in a Malaysian bank. Alternately, you can show proof of receiving a pension of 10,000 RM per month. This bypasses the requirement for a fixed deposit. But you must be over 50 to qualify for this.

You do earn interest on the fixed deposit and it is exempt from Malaysian taxes.

It is possible to work or own a business under the MM2H. However, if you want to own a business, you must have two directors and a secretary (the secretary can also serve as a director). BOTH directors must be ordinary Malaysian citizens! If working, you can work up to 20 hours a week in a critical field (there are many fields that fall in this category, which is basically anything where it would be difficult or impossible to find a Malaysian to fill the position.) I have not found any information from the government that says that part of the fixed deposit can be withdrawn to open a business in Malaysia. With either working under the MM2H or opening a business, there's a lot of red tape to go through - if you want to do this, be sure to read up on what is required.

You can buy a home in Malaysia with or without the MM2H. However, the property (which must be residential, not commercial) must cost at least 250,000 RM (300,000 RM if it's in Kuching, Miri or Sibu in the state of Sarawak.) If you're there under the MM2H, you can get financing for up to 80% of the purchase price. If you are not under the MM2H, you can get up to 60% of the purchase price financed. You can own more than one residential property and you can rent them out. If you eventually sell the house, there are no capital gains taxes to pay. However, there are annual property taxes assessed which you have to pay - same as any Malaysian homeowner.

No income that you earn offshore is taxable under the MM2H program. Pensions, dividends, interest, etc. is tax-free. Interest from fixed deposits in Malaysian banks (up to a certain amount - I forget, but it's quite high) is also tax-free. You can also purchase a Malaysian-made vehicle under the MM2H with no duty or sales taxes (that's a one-time deal) or you can import your vehicle duty and tax-free (also a one-time deal).

An agent is not required, but there is enough red tape in getting the MM2H where I'd recommend having an agent. Fees range from around 1500 RM up to 10,000 RM and more.

The government website is Malaysia My Second Home and it's got all the details and more.

OK, I'm monitoring this thread now! Tumbleweeds :-)