PETALING JAYA: The Securities Commission (SC) expects the country’s single family office (SFO) scheme to generate between RM3.4bil and RM9.4bil in net gains to the local economy over the next two decades as Malaysia positions itself as a hub for intergenerational wealth in Asia.
SC managing director Datin Paduka Azalina Adham told StarBiz the projection is based on the regulator’s target of achieving RM2bil in assets under management (AUM) by the end of this year, driven by rising interest from Malaysians and regional families.
“We’ve got six approvals in principle,” she said, adding that the families have an indicative AUM of close to RM400mil.
“We’ve got about 30 expressions of interest. These are initial documentation and submissions – they just needed the confirmation that the gazette was going to be taking place,” she said.
The SFO framework was introduced in September 2024, but the initiative has advanced into its implementation phase following the gazettement of the Income Tax Rules for the Single Family Office Incentive Scheme in the Forest City Special Financial Zone on Oct 3.
With the gazettement, the scheme is fully operational, according to Azalina.
The framework offers a 20-year incentive horizon, structured as 10 years plus an additional 10 years, with exemptions on income, capital gains, foreign-sourced income, stamp duty and dividend income for shareholders.
“The scheme was designed with a clear purpose – to position Malaysia as a home for generational wealth, committed to long-term value creation, and providing transformative spillovers for our economy,” said SC executive chairman Datuk Mohammad Faiz Azmi.
He said the SFO scheme has now moved into its next phase, from “commitment to execution,” following the gazettement of the tax order.
The executive chairman added that the pipeline includes Malaysian families repatriating wealth back home as well as foreign families establishing a regional base.
“We are confident that the scheme’s 20-year duration and the two-step certification process will provide the proper oversight, stability and predictability that multi-generational wealth requires,” he said.
Under the framework, a single family refers to individuals who are direct descendants of a common ancestor, including their close relatives.
The operating structure involves two key entities – the Single Family Office Vehicle (SFOV), where the family’s assets are placed and the Single Family Office Management Company which manages these assets.
Azalina explained that the SFOV must have a minimum AUM of RM30mil, with at least RM10mil or 10% of that amount invested locally.
Eligible local investments will be counted on a one-to-one basis, while “promoted investments” – such as sustainability funds, waqf-featured funds, equity crowdfunding and peer-to-peer financing campaigns recognised by SC, as well as shares of companies aligned with the Johor–Singapore Special Economic Zone (JS-SEZ) tax incentive package or the New Industrial Master Plan 2030 – will receive a 1.5 times multiplier for AUM calculations.
“Why is this important? These are important agendas of the country,” she explained.
Each SFO is also required to operate a physical office of at least 450 sq ft on the over 700-acre Pulau 1 within the Forest City Special Financial Zone, employ a minimum of two full-time employees – an investment professional and a director – earning at least RM10,000 a month each, and spend at least RM500,000 annually in local operating expenditure.
“That’s to create economic activity, because a programme like this has a multiplier effect actually. It’s not just a one-time investment,” Azalina said.
For families seeking to continue into the second 10-year period, the minimum AUM requirement increases to RM5mil, with at least RM10mil or 10% of total assets invested locally, whichever is higher.
The number of full-time employees must also rise to four, and the minimum annual local operating expenditure to RM650,000.
On tax incentives, the scheme offers a 0% concessionary tax rate for up to 20 years, covering capital gains and foreign-sourced income, according to Azalina.
It also includes a one-off exemption on stamp duty for asset transfers and capital gains tax for unlisted share transfers into the SFOV.
“This is to enable and ease the creation of the SFO with all the assets moving to one place,” she said.
Azalina added that the resident pass-talent will serve as the visa pathway for the scheme, covering both family members and foreign professionals employed by the family office.
“What’s unique is that not only is it 10 plus 10 years, but this visa grants rights to start a business, pursue studies and employment in Malaysia, with privileges extended for spouses and children under 18,” she said.
Dependents over 18 years old, parents and parents-in-law are eligible for a renewable one-year social visit pass for up to five years, she added.
Mohammad Faiz noted that the tax incentive is a crucial element for SFO, and the gazettement of the tax order marked an important milestone.
“We find that the interest for SFOs tends to be really driven by trying to preserve wealth – by not necessarily paying tax when it’s not necessary.”
Azalina said the decision to anchor the scheme in Johor was strategic, given the planned economic activity within the JS-SEZ.
“By having a dedicated area, it kind of generates its own thing.
“Strategically, for Malaysia, that makes sense – because we already are going to have economic activity there, so you focus it in a place where you are already creating.”
When asked if Kuala Lumpur might eventually be considered, the Mohammad Faiz said: “It’s not on the cards right now. But like all things, we’d like to hear the business case. You can never say never. But at this point in time, the answer is no.”
Azalina added that most of the 30 expressions of interest received so far are from Malaysian families, with one of the six conditional approvals given to a Singapore-based family.
“Many of the foreign-based ones that we spoke to were waiting for the gazettes,” she added.
