Forest City special financial zone lands first family offices as Johor courts investors
Malaysia-based CMY Capital Family Office and Yow Kee Family Office have both received approvals from Malaysia's Securities Commission to operate within the SFZ, said Johor Investment, Trade, Consumer Affairs and Human Resources Committee chairman Lee Ting Han in a statement on Wednesday (Apr 23).
Another 30 companies, including firms from Malaysia, Singapore and Thailand, have expressed interest in setting up operations in the zone, he added.
The SFZ, which offers tax incentives including a zero to 5 per cent corporate tax rate and a 15 per cent flat income tax for knowledge-based workers, is a key component of the Johor-Singapore Special Economic Zone (JS-SEZ).
Family offices must manage a minimum of RM30 million (S$8.9 million) in assets to qualify for the zero per cent tax rate.
The incentives are still being formalised by Malaysia's Finance Ministry, but applications are currently being reviewed on a case-by-case basis to expedite approvals, Lee said, adding that customised incentive packages are also being offered to major investors.
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To facilitate investor entry, the Johor government has set up the Invest Malaysia Facilitation Centre - Johor, a one-stop service centre that has handled over 250 inquiries since January.
Each investor is assigned an account manager to coordinate with federal agencies, local authorities and utilities.
The newly launched SFZ is viewed by many as a potential turning point for Forest City. The project is a collaboration between China's Country Garden Group and Esplanade Danga 88, a private firm backed by the Johor government and the Sultan of Johor.
This US$100 billion project comprising four artificial islands in the Strait of Johor – conceived a decade ago with the aim of housing 700,000 residents by 2035 – has faced significant delays due to various factors including the master developer's financial challenges and the Covid-19 pandemic, have resulted in a current occupancy rate of only around 1 per cent.
The arrival of the first batch of investors in the Forest City SFZ has fuelled optimism among market observers. They believe that the SFZ, combined with the broader incentives offered within the JS-SEZ, will continue to attract significant investor interest.
This optimism follows the Malaysian Investment Development Authority's recent unveiling of a comprehensive tax incentive package for the JS-SEZ in February. Key among these incentives is a special corporate tax rate of 5 per cent for up to 15 years.
Rahman Hussin, senior partner at public policy consultancy Agyl & Partners, noted that the incentives, particularly the 5 per cent tax rate, rank among the most competitive in South-east Asia.
He noted that the JS-SEZ's tax benefits either match or exceed those offered by Thailand's Eastern Economic Corridor (EEC) and Indonesia's Batam Free Trade Zone.
'Johor's proximity to Singapore and ongoing infrastructure investments further bolster its regional appeal,' he added.
Julia Goh, senior economist at UOB Malaysia, noted that the income tax rates designed to attract talent are comparable to those in Singapore and Hong Kong.
'Overall, we anticipate that these initial incentives and policies will be expanded and refined to progressively support the JS-SEZ,' she added.
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