Unveiling a New Economic Milestone
We are thrilled to discuss the establishment of the Forest City Special Financial Zone (FCSFZ) in Malaysia. This significant milestone is more than just a new chapter in Malaysia’s financial story; it represents a major leap forward in positioning Malaysia as a prominent player on the global stage.
For over six decades, Malaysia has adapted to global trends and demonstrated a robust growth trajectory. The economy has showcased resilience with an impressive average real GDP growth of 4.3% from 2011 to 2023. In 2024, Malaysia’s GDP growth accelerated to 5.9% in the second quarter, reflecting a strong upward momentum. The Malaysian ringgit has notably outperformed regional currencies, strengthening by 12.5% since February of the same year, and the domestic equity market has reached new heights with a market capitalization surpassing 2 trillion ringgits.
Strategic Economic Vision
The launch of FCSFZ is a pivotal element of the MADANI Economic Framework, aimed at propelling Malaysia to become a leading economy in Asia. Forest City, uniquely positioned as a duty-free island within a special financial zone, is set to drive economic development in Malaysia’s southern region and potentially throughout ASEAN.
Incentives to Attract Global Investments in Forest City
To support its development goals, the Government has introduced an attractive suite of incentives aimed at positioning Forest City as a premier destination for international investments. Key benefits include a reduced corporate tax rate between zero and five percent, as well as a favorable 15 percent personal income tax rate for both knowledge workers and Malaysian citizens who opt to work within this region. These incentives are strategically crafted to appeal to businesses, financial institutions, and high-net-worth individuals, solidifying Forest City’s reputation as a leading investment hub.
Additionally, Forest City will set a precedent in Malaysia by offering a 0% tax rate specifically for Family Offices. This initiative is part of the Securities Commission Malaysia’s Single-Family Office Scheme, which encourages both regional and Malaysian families to manage their wealth locally. With strong infrastructure, a skilled talent pool, and a governance framework based on common law practices, Forest City provides an ideal environment for Family Offices. This scheme is expected to be fully operational by the first quarter of 2025, presenting a unique opportunity for wealth management within Malaysia.
A Hub of Innovation and Opportunity
With an estimated 8,030 single-family offices globally, projected to grow by 75% to over 10,720 by 2030, the potential for private capital investment in high-growth sectors is significant. The MOF’s GEAR-Up initiative complements this by leveraging Government Linked-Investment Companies to catalyze economic growth through domestic investments.
Forest City is envisioned to become a global hub for financial services, fintech, and foreign payment system operators, further supported by incentives like a special 5% tax rate for financial institutions. The zone is also expected to boost Malaysia’s shared services industry, which has already seen over 800 global business service centres registered under Malaysia Digital (MD).
Driving Digital and Financial Innovation
The zone’s strategic focus includes fostering fintech sectors like regulatory technology (RegTech) and insurance technology (insurtech). Collaborative efforts in these areas will support Malaysia’s broader goal of transforming it into a regional leader in cutting-edge financial services.
The growth of digital payments in Malaysia, which saw 11.5 billion transactions in 2023, underscores the region’s potential as a dynamic hub for payment innovation. The Special Financial Zone aims to enhance Malaysia’s banking sector assets, which grew by 5.1% year-on-year to 3.5 trillion ringgits in 2023, by fostering innovative banking solutions and facilitating seamless cross-border transactions.
A Vision for Talent and Sustainable Growth
Recognizing the critical role of talent in sustaining economic growth, deliberate steps are being taken to address skills gaps and enhance workforce capabilities within Johor, particularly to support Forest City. The goal is to create high-skilled, high-value jobs, attract top talent globally, and ensure sustainable growth for both Forest City and the Malaysian economy.
Catalyzing High-Value Economic Opportunities
The incentives introduced are expected to yield extensive benefits for the Rakyat, by creating high-value employment opportunities across various sectors. These jobs, expected to span from financial services to high-tech industries, will not only provide substantial income but also foster skill development and technological advancement among the Malaysian workforce. This strategic initiative is set to stimulate robust economic growth, enhancing the livelihoods of countless citizens and contributing to the overall prosperity of the nation.
Enhancing Malaysia's Position on the Global Stage
By creating an environment conducive to business and investment, Forest City is set to elevate Malaysia’s standing in the international community. The zone’s strategic location, combined with its favorable business conditions and state-of-the-art infrastructure, positions Malaysia as an attractive destination for global capital. This is likely to draw attention not only from investors and corporations but also from policymakers and economic strategists worldwide, keen on understanding and possibly replicating Malaysia’s model of economic development.
Conclusion
Today, we celebrate a significant enhancement to the Forest City Special Financial Zone, fortified by a meticulously designed suite of incentives that are poised to transform this region into a vibrant new economic hub. These measures are tailored not only to attract substantial investment but also to nurture a thriving ecosystem that can sustain high-value economic activities over the long term.
In conclusion, the launch of the Forest City Special Financial Zone marks a pivotal moment in Malaysia’s economic narrative. With a clear vision and strategic incentives, we are set to usher in a new era of prosperity and growth, reinforcing our commitment to the welfare of the Rakyat and the enduring success of Malaysia as a key player in the global economy. Together, we are committed to building a more prosperous future for all Malaysians, ensuring that the benefits of today’s efforts are felt by generations to come.
