Malaysia Poised To Strengthen Capital Market With Family Offices - SC

KUALA LUMPUR, March 20 (Bernama) -- Malaysia is well-positioned to strengthen its capital market, local businesses, and global competitiveness, backed by a conducive environment for family offices and a robust regulatory framework that encourages reinvestment of wealth within the country, said the Securities Commission Malaysia (SC).

In its Annual Report 2024 released today, the SC said the continued development of family offices aligns with the nation’s vision for sustainable, inclusive growth, ensuring that financial and social capital is harnessed to drive a prosperous future for all Malaysians.

bootstrap slideshow

“The establishment and growth of family offices in Malaysia hold great potential for the broader economy.

“As wealth is reinvested domestically, it has the power to fuel the expansion of Malaysian companies and industries, fostering innovation and driving economic growth,” it said.

The SC said beyond financial investments, family offices could also play a pivotal role in supporting local communities through philanthropic initiatives, contributing to social development, and creating a lasting impact on society’s well-being.

bootstrap slideshow

The Finance Ministry and SC recognised the significant opportunity family offices presented for domestic capital markets and sought to capitalise on it. Hence, it introduced the Single Family Office Tax Incentive Scheme.

Meanwhile, the Forest City Special Financial Zone (FCSFZ) was established to lure foreign family offices to invest in Malaysia, and to leverage talent within Malaysia, attracting Malaysian families with investments abroad to repatriate foreign currency holdings to be managed here.

The incentive scheme offers a zero-rated concessionary tax rate on income generated from eligible investments by the Single Family Office Vehicle (SFOV) for an initial 10 years, with the subsequent 10 years subject to several conditions including holding assets under management (AUM) of at least RM30 million.

“The projected economic multiplier of this initiative (SFO Scheme) from the local substance requirements is estimated to range from RM3.9 billion to RM10.7 billion, which also includes the positive effects on the creation of skilled employment and the demand for other ancillary services,” it said.

Citing McKinsey, SC said between 2023 and 2030, Asia Pacific’s ultra-high- and high-net-worth families are set to experience an inter-generational wealth transfer estimated at US$5.8 trillion, the largest wealth transfer to the next generation capital markets globally.

-- BERNAMA