City of the future: Forest City, which started in 2015, is a mega mixed development project on four reclaimed islands in Johor waters. — THOMAS YONG/The Star
ISKANDAR PUTERI: Forest City is poised to become a magnet for international capital by introducing incentives that include a 0% tax rate for single-family offices, plus a host of other goodies for corporations and knowledge workers.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the Forest City Special Financial Zone (SFZ) would be the first location in Malaysia to offer such a tax break, the government’s way of propelling the family office sector.
“Globally, many are engaging family offices to manage their family wealth and it is a growing sector.
“Such offices are usually located in financial zones all over the world and we are trying to attract them to Malaysia,” he told the media after announcing the incentive package for the Forest City SFZ here yesterday.
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The ceremony was officiated by the Regent of Johor, Tunku Ismail Sultan Ibrahim, and attended by local and international dignitaries.
Family offices play a myriad of roles such as legacy planning and management, and investment portfolio management, aimed at growing and safeguarding family wealth to ensure it remains in the family for generations.
Amir Hamzah said the new single-family office (SFO) scheme, coordinated by the Securities Commission, aims to attract regional and local families to manage their family wealth from Malaysia.
Supported by good infrastructure, a competitive talent pool, robust common law practices and effective governance, opportunities abound for family offices here, he said.
“This scheme is aimed at being operational by the first quarter of 2025,” he said, adding that there is an estimated 8,030 SFOs globally currently and the number is projected to grow to more than 10,720 by 2030.
He added that the total estimated assets under the management of family offices globally are also expected to rise to US$5.4 trillion (RM22.6 trillion) by 2030 from the current US$3.1 trillion (RM12.9 trillion).
To enjoy the scheme, Amir Hamzah said investors must have an asset size of more than RM30mil and part of their assets must also be invested in Malaysia.
“It is fine if some of it lies overseas as long as a portion is invested in Malaysia.
“The 0% tax rate on profits made is given for a period of 10 years and there is an obligation for the companies to scale up their operations – whether by adding employees, investments or assets in the country – in order to (continue enjoying) the scheme,” he said.
This is to prevent shell companies and to create a win-win situation for investors and the local economy and people, he added.
Amir Hamzah said Forest City, with its combination of a duty-free island within the SFZ, presents a unique proposition as a catalyst for economic development in the southern region of Malaysia.
He said it also has the potential to mature into a globally recognised financial hub such as the likes of Shenzhen in China and Dubai International Financial Centre in the United Arab Emirates.“To pave the road towards these aspirations, the government has also introduced a concessionary corporate tax rate between 0% and 5%, and a special income tax rate of 15% for knowledge workers and Malaysians who choose to work in the SFZ,” he said.
Beyond the family offices sector, the area is also envisioned to become a hub for financial global business services, financial technology (fintech) and foreign payment system operators with the provision of a special 5% tax rate, added the minister.
Meanwhile, Johor Mentri Besar Datuk Onn Hafiz Ghazi said the incentives offered are attractive and will attract more investors into the state, especially to Forest City.
“The Johor government will also continue to make the SFZ the pride of not only the state but of Malaysia in general,” he added.
On Aug 25 last year, Prime Minister Datuk Seri Anwar Ibrahim announced the formation of SFZ in Forest City and incentives to boost Johor’s economic activities and in its surrounding areas.
Forest City, which started in 2015, is a mega mixed development project on four reclaimed islands.
To date, it has two hotels, two international standard golf courses, the largest Industrial Building System prefabricated factory in Malaysia, the Shattuck St Mary Forest City International School (which offers an American curriculum), and a water theme park.
