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PETALING JAYA: The Forest City special financial zone (SFZ) in Johor will not directly compete with Singapore, says finance minister II Amir Hamzah Azizan.
Amir said, instead, the SFZ aims to attract a different market segment by offering lower threshold requirements for family offices.
“We want to welcome family offices but we are not competing directly with Singapore, as there are some groups that are not serviced by the republic.
“So we (will) set clear requirements to attract those groups to set up within Malaysia,” he was quoted as saying by The Straits Times in an interview.
The SFZ, launched on Sept 20, offers companies a reduced corporate income tax rate of between 0% and 5%.
Family wealth offices set up in the zone will also enjoy a 0% tax rate, a first in Malaysia. The scheme, expected to be operational by the first quarter of 2025, is aimed at attracting regional and local families to manage their wealth from Malaysia.
Amir said feedback from wealth management firms has been “very strong”, with early indications from the Johor government that these firms are planning to establish a presence in the SFZ.
“I will not speculate on the numbers now, but all I can say is the feedback (we have received) of such firms wanting to come into our market is ‘very strong’. Also there is intent from people who want to come down (to the SFZ) to house their family offices,” he added.
According to The Straits Times, Singapore hosts about 60% of Asia’s family offices.
It has become the region’s preferred destination for establishing family offices due to several factors, including its stable political and economic climate, robust business and regulatory environment, and favourable tax regime.
Based on a McKinsey study, Singapore and Hong Kong together host 15% of the world’s single family offices with each managing about US$1.3 trillion in offshore assets.
Johor faces stiff competition from its southern neighbour in attracting skilled workers, largely due to the stronger Singapore dollar and currency conversion rates.
Amir, however, pointed out that family office managers could earn at least RM10,000 per month, and added that setting up a wealth management hub in the state could help boost wages.
“We don’t have to match (wages) dollar to dollar, but what we need to do is match the quality of life that a person has in Johor, while providing them with opportunities for growth and a steady pipeline of jobs,” he said.