KUALA LUMPUR: The government has announced incentive packages to attract international capital to Forest City Special Financial Zone (SFZ), including zero tax on family wealth offices, the first such location in Malaysia.
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.
Among other incentives include a concessionary corporate tax rate between zero and five percent, and a special individual income tax rate of 15 percent for knowledge workers, and Malaysians, who choose to work there.
"These incentives are expected to attract businesses, financial institutions, and high-net-worth individuals, further augmenting Forest City's position as a preferred investment destination," said Finance Minister II Datuk Seri Amir Hamzah Azizan in his speech at the launch of the SFZ today.
"Supported by good infrastructure, a competitive talent pool, robust common law practices and effective governance, opportunities abound for Family Offices.
"This scheme is aimed at being operational by the first quarter of 2025," he added.
Amir Hamzah said there are an estimated 8,030 single Family Offices globally today and it is projected to grow by 75 per cent to more than 10,720 by 2030.
Total estimated assets under management of Family Offices are expected to rise to US$5.4 trillion by 2030, from US$3.1 trillion currently.
He said the establishment of Family Offices will broaden the investor base to channel private capital into high-growth, high-value sectors.
"This is highly complementary of the ministry's GEAR-uP initiative where the collective strength of government linked investment companies (GLICs) is harnessed to catalyse 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.
Amir Hamzah added that Malaysia's 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.
"Not least, with the support of Bank Negara Malaysia, 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," he added.
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 five per cent tax rate.
The minister added that 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 centresregistered under Malaysia Digital (MD). Global business service centres established in the financial zone will drive cost reductions and improve productivity for the financial sector through process standardisation and digital adoption," he noted.
Meanwhile, Forest City aims to create an environment conducive for fintech, focusing on areas such as regulatory technology (RegTech) and insurtech.
The zone is poised to support thebroader national objective of transforming Malaysia into a hub forcutting-edge financial services.
To further drive the digitalisation of Malaysia in line with the Malaysia Digital Economy Blueprint, he said efforts are ongoing to position Malaysia as a regional payment hub.
The double-digit growth in e-payment adoption in Malaysia, reflects continued growth potential in digital payments.
"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 globalplayers to expand their operations," he said.
He added through robust participation by local and international stakeholders, 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 recognised financial hub, the likes of Shenzhen in China and Dubai International Financial Centre in the UAE," said the minister.