KUALA LUMPUR: Malaysia’s vision to become the region’s hub for wealth management and family office services looks bright, thanks to significantly lower professional fees compared to Singapore and effective guidelines, said Malaysian Institute of Estate Planners (MIEP) president See Kok Loong.
With the guidelines published by the government in September, he said, Malaysia is heading in the right direction towards that goal as the nation aims to compete with regional powerhouses such as Singapore and Hong Kong.
“It’s a good starting point. Thanks to the government for that. I believe the future is very bright for Malaysia because professional fees here are much lower compared to Singapore, and the effective guidelines published are key factors. With these developments, we’re optimistic that our professionals will reach another level. Instead of losing talent to Singapore, Hong Kong, and China, these professionals can now stay in Malaysia and contribute to this industry,” See told SunBiz on the sidelines of MIEP’s annual general meeting on Saturday.
However, he pointed out that the biggest challenge is that the entire ecosystem is not yet in place, as other markets in the region have been ahead of Malaysia for years. “In Hong Kong and Singapore, there are already more than 1,000 family offices. We are just at the starting point.”
Additionally, See said, the government chose to focus on Iskandar in Johor, partly to develop Forest City and because of its proximity to Singapore.
“But our biggest problem is that most professionals, and their headquarters, are based in Kuala Lumpur. If the government could also open up in Kuala Lumpur, that would be beneficial. But that seems unlikely,” he added.
According to the Securities Commission Malaysia (SC), the incentive offers a zero per cent tax rate on income generated by eligible investments from the Single Family Office Vehicle (SFOV).
Forest City will be the first place in Malaysia to offer this zero per cent tax rate incentive for family offices.
The incentive comes with certain conditions, including that the registered office must be in Pulau 1, Forest City Special Financial Zone. The incentive lasts for 20 years, divided into an initial 10 years, and an additional 10 years.
To qualify for the initial 10-year period, the SFOV must be a new investment holding company set up in Malaysia, and it must seek preregistration with the SC for tax incentives.
Additionally, a management company or related company must be established in Forest City with at least one investment professional earning a monthly salary of RM10,000.
The SFOV must have assets of at least RM30 million, with a minimum of 10% or RM10 million (whichever is lower) invested locally in eligible assets. It must spend at least RM500,000 on operating expenses locally each year. In addition, it must employ at least two full-time staff, including one investment professional, with a monthly salary of RM10,000 or more.
To qualify for the additional 10-year period, the SFOV must have assets of at least RM50 million, with a minimum of 10% or RM10 million (whichever is higher) invested locally. It must spend at least RM650,000 on operating expenses annually and must have at least four full-time employees.
