Forest City, the $100 billion project located in Southern region of Malaysia which is backed by Chinese developer Country Garden Holdings, will be the first location in Malaysia to offer a 0 percent tax rate for Family Offices, Malaysia’s Finance Minister II Amir Hamzah Azizan said on last Friday.
“The single-family office scheme, coordinated by the Securities Commission Malaysia, aims to attract regional and Malaysian families to manage their family wealth from Malaysia,” he said in his speech during the launch of the incentive package for Forest City Special Financial Zone (SFZ).
Supported by good infrastructure, a competitive talent pool, robust common law practices and effective governance, he noted that opportunities abound for family offices.
This scheme is aimed at being operational by the first quarter of 2025, he said.
According to him, there are an estimated 8,030 single family offices globally today.
This number is projected to grow by 75 percent to more than 10,720 by 2030, he said.
He also noted that total estimated assets under management of family offices are expected to rise to $5.4 trillion by 2030, from $3.1 trillion currently.
“The establishment of family offices therefore, will surely broaden the investor base to channel private capital into high-growth, high-value sectors,” he added.
According to him, this is highly complementary of the Malaysian government’s GEAR-uP initiative where the collective strength of government linked-investment companies is harnessed to catalyze economic growth through
domestic investments.
“Hence, as we open our doors to welcome family offices, we are also inviting them into the good company of potential partners in the form of our GLICs and other institutional
funds, and to partake in high-growth, high-value investments through venture capital and private equity opportunities,” he said.
Beyond family offices, Forest City is also envisioned to become a hub for financial global business services, financial technology or fintech, and foreign payment system operators, with the provision of a special 5 percent tax rate.
With the growth of shared services in Malaysia, Amir Hamzah said Forest City presents untapped potential as an ideal business support location.
“Malaysia’s shared services industry has chartered impressive growth – reflected by over 800 global business service centers registered under Malaysia Digital (MD),
“Global business service centers established in the financial zone will drive cost reductions and improve productivity for the financial sector through process standardization and digital adoption,” he noted.
According to him, Fintech also holds significant importance for Malaysia’s future economic development.
He said Forest City aims to create an environment conducive to the growth of fintech, focusing on areas such as regulatory technology (RegTech) and insurtech.
“By fostering collaboration, innovation, and investment, the zone supports the broader national objective of transforming Malaysia into a hub for cutting-edge financial services,” he added.
To further drive the digitalization of Malaysia in line with the Malaysia Digital Economy Blueprint, he said efforts are ongoing to position Malaysia as a regional payment hub.
The persistent double-digit growth in e-payment adoption in Malaysia, that stood at 11.5 billion transactions in 2023, suggests continued growth potential in digital payments, he said.
“Importantly, ASEAN as a region is not only a hotbed of payment innovation, but is also a revving engine of future growth in this sector, with its winning combination of leading emerging markets driven by a young and dynamic workforce, and a growing middle-class,
“Within this context of ASEAN as a powerhouse of growth, Malaysia offers a compelling strategic location for global players to expand their operations,” he said.
He noted that in 2023, Malaysia’s banking sector assets grew by 5.1 percent year-on-year to MYR 3.5 trillion ($830 billion), demonstrating resilience and adaptability to global economic changes.
“The Special Financial Zone will further enhance this growth by fostering innovative banking solutions and facilitating seamless cross-border transactions,
“To this end, we are pleased to announce that banking institutions, insurance, capital market intermediaries and other eligible financial sector entities will also enjoy incentives that include special deductions on relocation costs, enhanced industrial building allowances and withholding tax exemptions,” he said.
With the support of Bank Negara Malaysia, he said locally incorporated foreign banks will enjoy regulatory flexibilities to open additional branches within the Special Financial Zone, and also benefit from foreign exchange flexibilities for offshore borrowing in foreign currency and investment in foreign currency assets.
“This is a testament to the Government’s commitment to foster a vibrant financial ecosystem, that can cater to both domestic and international financial requirements,” he said.
Malaysian government has on last Friday launch the Forest City Special Financial Zone to boost investment in the country.
According to Amir Hamzah, Forest City with its combination of a duty-free island within a special financial zone, presents a unique proposition as a catalyst for economic development in the southern region of Malaysia, anchored on innovative financial services.
Through robust participation by local and international stakeholders, he opined that Forest City has the potential to drive growth from Johor into the rest of the ASEAN
region.
It also has the potential to mature into a globally recognized financial hub, the likes of Shenzhen in China and Dubai International Financial Center in the United Arab Emirates (UAE), he added.