The Federal Government has announced incentive packages to attract international capital to the Forest City Special Financial Zone, or FCSFZ in Gelang Patah, Johor.
Being the first of such locations in Malaysia, here are the things to know from the briefing:
- Zero tax on family wealth offices
The first of its kind in Malaysia, the Securities Commission Malaysia has coordinated the Single-Family Office Scheme, which aims to attract regional and Malaysian families to manage their family wealth in Malaysia.
Datuk Seri Amir Hamzah Azizan, Minister Finance II said the single-family office scheme, coordinated by the Securities Commission Malaysia, was aimed at attracting regional and Malaysian families to manage their family wealth from the country.
He stated that there are currently an estimated 8,030 single-family offices worldwide, which is expected to increase by 75% to more than 10,720 by 2030.
“Total estimated assets under management of family offices are expected to rise to US$5.4 trillion (RM22.6 trillion) from US$3.1 trillion by 2030,” he said.
This scheme is aimed at being operational by the first quarter of 2025.
“This is highly complementary to the MOF’s GEAR-uP initiative, where the collective strength of Government Linked-Investment Companies (GLIC) 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 added.
According to another local news report, Hamzah said the 0% tax rate will be offered to family offices for 10 years, and requires minimum assets under management of RM30 million (S$9.2 million).
- Concessionary corporate tax in between zero and 5%
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% tax rate.
With the growth of shared services in Malaysia, 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 centres registered 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.
- Special individual income tax
There would be a 15% rate for knowledge workers and Malaysians who opt to work at the Financial Zone.
“The journey towards realising the full potential of Forest City will require more than just incentives to attract initial interest.”
“We must not overlook the need to invest seriously in talent. To this end, it is imperative that deliberate steps are taken to address skills gaps and ensure that our workforce is equipped to meet the demands of a rapidly transforming financial sector,” he elaborated.
“A structured approach to institutionalise talent development within Johor, particularly geared towards supporting Forest City, is important. The goal is to create high-skilled, high-value jobs for Malaysians and to attract top talent from around the world. This is critical to ensuring sustainable growth of Forest City and the Malaysian economy as a whole,” he added.
“The economy, marked by a long-term real GDP growth average of 4.3% from 2011 to 2023, has proven resilient even with external headwinds. This year, we are witnessing impressive growth, with GDP expanding by 5.9% in the second quarter of 2024,” he said.
The ringgit has outperformed regional currencies, recovering by 12.5% since February this year. The domestic equity market rallied strongly, hitting an all-time high in market capitalisation of over 2 trillion ringgit in June.
Trade value surged by 8.4% in the first half of 2024. All these indicate that Malaysia is clearly on a strong upward trajectory. This growth is further underpinned by the services sector, which now contributes almost 60% to the GDP.
His Royal Highness Tunku Ismail, the Regent of Johor attended the Special Financial Zone (SFZ) Tax Incentive Package Announcement Ceremony and Ministry of Finance Briefing Session in Forest City, Johor. Also accompanying His Royal Highness were Johor Menteri Besar Dato Onn Hafiz Ghazi, Minister of Finance II, Senator Datuk Seri Amir Hamzah Azizan, Johor State Secretary, Tan Sri Dato’ Dr. Haji Azmi Rohani, and the Johor State Executive Council members.
