Malaysia Unveils 7 Key Incentives for Forest City Special Financial Zone (FCSFZ)

The Malaysian government has announced a comprehensive package of incentives aimed at transforming the Forest City Special Financial Zone (FCSFZ) into a leading financial hub in the ASEAN region. The announcement was made today by YB Senator Datuk Seri Amir Hamzah Azizan, Malaysia’s Second Minister of Finance, during a special event attended by Duli Yang Amat Mulia Tunku Mahkota Ismail, the Regent of Johor.

The FCSFZ offers an attractive opportunity for both local and international businesses to thrive in a rapidly evolving financial ecosystem. Here are the key highlights of the incentives package:

7 Key Highlights of the Forest City Special Financial Zone (FCSFZ) Incentives Package

1. Preferential Corporate Tax Rates

0% to 5% Corporate Tax: Businesses operating within the FCSFZ will benefit from a significantly reduced corporate tax rate, ranging from 0% to 5%, positioning it as one of the most favorable tax environments in the region.

2. Reduced Personal Income Tax for Knowledge Workers

15% Personal Income Tax: To attract top talent, both locally and internationally, knowledge workers in the FCSFZ will enjoy a special 15% personal income tax rate. This includes professionals from finance, technology, and other high-value sectors, ensuring the zone remains an attractive destination for global talent.

3. Zero Tax for Family Offices

First in Malaysia: Forest City is set to become the first location in the country to offer a 0% tax rate for the establishment and operation of Single Family Offices.

Launch Timeline: The Single Family Office Scheme, coordinated by the Securities Commission Malaysia, is expected to be operational by the first quarter of 2025.

4. Incentives for Fintech and Foreign Payment Services

5% Tax Rate: Fintech companies and foreign payment system operators setting up in the zone will benefit from a reduced tax rate of 5%, fostering innovation and growth in the financial technology sector.

5. Support for Shared Services and Global Business Services

Industry Incentives: Companies in the shared services sector, including insurance and other financial services, will receive incentives to establish their operations in Forest City.

6. Benefits for Banking and Insurance Sectors

Relocation and Operational Incentives: Banking institutions, insurance companies, and capital market intermediaries will enjoy special deductions on relocation costs, enhanced industrial building allowances, and exemptions from withholding tax.

Regulatory Flexibilities: Simplified procedures for opening additional branches and foreign exchange flexibilities for offshore borrowing and investment in foreign currency assets.

7. Positioning as a Digital Payment Hub

Strategic Development: Forest City is poised to become a regional hub for digital payment solutions, aligning with the Malaysia Digital Economy Blueprint and tapping into the growing e-payment adoption in the region.

Driving Economic Growth and Talent Development

The government envisions Forest City as a catalyst for economic growth in southern Malaysia. The FCSFZ is expected to create high-value jobs, enhance investment, and contribute to sustainable development across various sectors.

Family Offices as a New Frontier

• With over 8,000 Single Family Offices globally managing assets worth approximately USD 3.1 trillion, Malaysia aims to tap into this lucrative market.
• The establishment of Family Offices in Forest City is expected to channel private capital into high-growth, high-value sectors, broadening the investor base.

Emphasis on Talent

• Recognizing the importance of skilled talent, the government plans to invest in education and training programs to equip the workforce with the necessary skills to meet the demands of a rapidly evolving financial sector.
• A structured approach to talent development will focus on creating high-skilled, high-value jobs for Malaysians and attracting global talent.

A Bold Vision for Malaysia's Future

The establishment of the FCSFZ is a significant step towards realizing the aspirations of the MADANI Economic Framework, which aims to position Malaysia as a leading Asian economy.

Strategic Location:

• Forest City's proximity to Singapore and its status as a duty-free island within a special financial zone offer unique advantages.
• The development is expected to spur growth not only in Johor but also throughout the ASEAN region.

Government Commitment:

• The array of incentives reflects the government's dedication to creating a vibrant financial ecosystem that caters to both domestic and international needs.
• By fostering innovation, collaboration, and investment, Forest City is set to become a globally recognized financial hub, comparable to Shenzhen in China and the Dubai International Financial Centre in the UAE.

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