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The Malaysian government has unveiled a series of incentive packages aimed at attracting international capital to the newly established Forest City Special Financial Zone (SFZ). Among the highlights is the introduction of zero tax on family wealth offices, making Forest City the first location in Malaysia to offer such a benefit. The Single-Family Office Scheme, coordinated by the Securities Commission Malaysia, aims to attract regional and Malaysian families to manage their wealth from within the country.
Key Incentives to Attract Investors
The incentive packages include:
- Concessionary corporate tax rates ranging from zero to five percent.
- A special individual income tax rate of 15 per cent for knowledge workers and Malaysians who choose to work in the SFZ.
- Special deductions for relocation costs, enhanced industrial building allowances, and withholding tax exemptions for financial sector entities.
These measures are designed to position Forest City as a preferred investment destination for businesses, financial institutions, and high-net-worth individuals. “Supported by good infrastructure, a competitive talent pool, and effective governance, opportunities abound for Family Offices,” said Finance Minister II Datuk Seri Amir Hamzah Azizan at the launch of the SFZ.
Growth of Family Offices and Asset Management
Globally, the number of single-family offices is estimated at 8,030, with projections indicating a 75 per cent growth to over 10,720 by 2030. The total estimated assets under management for these offices are expected to rise from US$3.1 trillion to US$5.4 trillion by 2030. Amir Hamzah noted that the establishment of Family Offices in Malaysia would help channel private capital into high-growth, high-value sectors, supporting the government’s GEAR-uP initiative, which aims to leverage the strength of government-linked investment companies (GLICs).
As Malaysia welcomes these Family Offices, they will have the opportunity to collaborate with GLICs and other institutional funds, participating in venture capital and private equity investments that drive economic growth.
Banking and Financial Sector Incentives
Malaysia’s banking institutions, insurance companies, capital market intermediaries, and other financial entities will benefit from a variety of incentives. These include:
- Special deductions for relocation costs.
- Regulatory flexibilities allowing locally incorporated foreign banks to open additional branches within the SFZ.
- Foreign exchange flexibilities for offshore borrowing and investments in foreign currency assets.
The SFZ is expected to attract global business services, fintech companies, and foreign payment system operators with a special five per cent tax rate. The government aims to establish Forest City as a hub for financial technology (fintech), with a focus on areas such as RegTech and insurtech.
Supporting Malaysia’s Digital and Payment Ecosystem
The SFZ aligns with Malaysia’s broader national goals of transforming into a hub for cutting-edge financial services. Efforts are underway to position Malaysia as a regional payment hub, leveraging the double-digit growth in e-payment adoption. This focus on digital payments is expected to drive further innovation and support the government’s Malaysia Digital Economy Blueprint.
A Hub for Growth in ASEAN
Forest City has the potential to be a gateway for ASEAN regional growth, positioning Malaysia as a strategic hub for global players looking to expand their operations. With a young and dynamic workforce and a growing middle class, ASEAN is a hotbed of payment innovation and a key driver of growth in the financial services sector.
Amir Hamzah emphasized that with robust participation from both local and international stakeholders, Forest City could evolve into a globally recognized financial hub, comparable to Shenzhen in China or the Dubai International Financial Centre in the UAE. The initiative is poised to drive growth not only in Johor but across the ASEAN region, positioning Malaysia as a leader in greenfield investment and financial services.
