The Johor Singapore special zone could a game changer not just for Singapore and Malaysia but the wider ASEAN region. Johor’s Forest City has been in the media and on the radar screen of investors again after Singapore Prime minister Mr. Lawrence Wong and Malaysia’s Prime Minister Anwar Ibrahim signed the Johor-Singapore Special Economic Zone. JS-SEZ on January 7, 2025.
Malaysia Special Economic Zones increasingly offer Exclusive Tax Incentives to Establish Family Offices in the State of Johor in Malaysia’s Forest City.
The JS-SEZ is part of broader efforts to enhance economic cooperation between Malaysia and Singapore. By integrating their economies, both nations aim to attract global investments and remain competitive amid global trade uncertainties. This partnership is seen as a model for regional growth, combining Singapore’s capital and technology with Johor’s land, labor, and energy advantages.
The current and acting king of Malaysia is the sultan of Johor. As of January 2025, Malaysia’s King, known as the Yang di-Pertuan Agong, is Sultan Ibrahim Iskandar.
Sultan Ibrahim has been a strong advocate for economic growth and modernization in Johor.
He has supported major projects like the Forest City development and the establishment of the Johor-Singapore Special Economic Zone (JS-SEZ), emphasizing Johor’s strategic location near Singapore.
While the united kingdom has altered and changed the rules for family offices and non-dom wealthy individuals, Johor and in particular Forest City wants to attract wealthy families and SFO (Single family offices) to the State of Johor and Forest City.
ONCE considered a ghost town, Forest City Johor is set to see renewed interest because of Malaysia government incentives to jump-start the special economic zone (SEZ), particularly the zero tax rate for family offices.
Forest City in Johor, Malaysia, has been at the centre of several Malaysia domestic political controversies.
Former Malaysian Prime Minister Najib Razak played a significant role in the development and promotion of the Forest City project in Johor. Mr. Najib officiated the grand opening of Forest City in March 2016, highlighting its potential to boost the Johor economy, create jobs, and attract investments. He emphasized that the project would contribute to various sectors, including manufacturing, high-tech industries, services, and finance.
In response to criticisms, particularly from former Prime Minister Dr Mahathir Mohamad, who alleged that the project compromised Malaysia’s sovereignty by allowing an influx of foreign nationals, Mr. Najib refuted these claims. He clarified that foreign property ownership in Forest City did not equate to granting Malaysian citizenship and that the nation’s sovereignty remained intact.
In 2018, Prime Minister Mahathir Mohamad, who had previously criticized Chinese investments, announced a ban on foreigners purchasing property in Forest City. This move was seen as an effort to curb foreign influence and address concerns over national sovereignty. The ban was later modified to changes in long-term visa programs to mitigate objections and potential legal challenges from the developer.
Marketed primarily to Chinese buyers, Forest City faced challenges when Malaysia suspended the Malaysia My Second Home long-term visa scheme, leading some Chinese nationals to sell their units at steep losses. Additionally, the project’s pricing was aligned with China’s booming housing market, making it unaffordable for many local Malaysians. The development’s workforce composition, with a significant number of foreign workers, also sparked debates about local employment opportunities.
On 20 September 2024, YB Senator Datuk Seri Amir Hamzah Azizan, Finance Minister II, delivered a keynote address at the Forest City Special Financial Zone (FCSFZ) Tax Incentive Announcement Ceremony. The address highlighted the Government’s commitment to fostering investment and positioning Forest City as a competitive financial hub through attractive tax incentives. This initiative is aimed at attracting global Single-Family Offices (SFOs) to establish their presence in the region, promoting economic growth and generating high-value employment opportunities.
Following this, on 23 September 2024, the Securities Commission (SC) of Malaysia outlined the Family Office Incentive Scheme, detailing the benefits available to SFOs, particularly those involved in managing substantial family assets. The SC also issued a Frequently Asked Questions (FAQ) document to clarify the mechanics of the Single-Family Office Scheme, focusing on eligibility, tax incentives, and operational requirements for family offices seeking to establish themselves in Malaysia. The scheme is designed to attract high net worth families to manage their wealth locally, while supporting the nation’s investment landscape. These initiatives mark a strategic effort to position Malaysia as a leading destination for family offices, leveraging the FCSFZ as a global financial zone.
Johor Forest City eligible Single Family Office Vehicles (SFOVs) can benefit from a 0% concessional tax rate on income generated from eligible investments for an initial period of 10 years. This tax incentive may be extended for an additional 10 years, provided the SFOV meets the necessary requirements during the initial period.
Forest City Johor is a large-scale, mixed-use urban development project located in Johor, Malaysia. Developed by the Chinese real estate company Country Garden in partnership with the Malaysian government, the project encompasses several man-made islands off the coast of Johor near the Singapore border. Here’s why it is important for the Johor-Singapore economic zone:
The introduction of a zero percent tax rate and other incentives for family offices in Forest City’s Special Financial Zone represents a strategic effort by Malaysia to attract high-net-worth individuals and stimulate economic growth in the Johor region.
Forest City in Johor, Malaysia, has been designated as a Special Financial Zone (SFZ) to attract foreign investment and stimulate economic growth. A key initiative within this framework is the introduction of a zero percent tax rate for family offices. private entities established to manage the wealth of high-net-worth families. This tax incentive is set to be operational by the first quarter of 2025.
Key Incentives for Family Offices in Forest City SFZ:
- Zero Percent Tax Rate: Family offices established in Forest City will benefit from a 0% tax rate on income generated by eligible investments. This incentive is designed to attract both Malaysian and regional families to manage their wealth from Malaysia and the state of Johor.
- Concessionary Corporate Tax Rates: Businesses operating within the SFZ may enjoy corporate tax rates ranging from 0% to 5%, making it a competitive location for financial operations.
- Special Individual Income Tax Rate: A preferential individual income tax rate of 15% is offered to knowledge workers and Malaysians who choose to work in the SFZ, aiming to attract skilled professionals to the area.
Key Features of Forest City Johor
Location:
- Strategically located in the Johor Strait, near the Tuas Second Link connecting Malaysia and Singapore.
- Positioned to attract investments and tourism from both Malaysia and Singapore.
Development Scale:
- Covers an area of approximately 20 square kilometres, consisting of four artificial islands.
- Designed as a futuristic “smart city” integrating advanced technologies, green infrastructure, and sustainable living concepts.
Components:
- Residential properties targeting international buyers, particularly from China, Singapore, and other parts of Asia.
- Commercial hubs, including offices, retail spaces, and business parks.
- Educational and healthcare facilities, aiming to attract expatriates and professionals.
Sustainability:
- Features environmentally friendly designs, such as vertical greenery, renewable energy solutions, and low-carbon footprints.
- Plans to be a car-free city with electric public transportation and walkable spaces.
Importance for the Johor-Singapore Economic Zone
Boosting Regional Connectivity:
- Its proximity to Singapore enhances cross-border economic collaboration.
- Aims to complement Singapore’s economic activities by offering more affordable business and residential options.
Investment Attraction:
- Targets international investors and businesses by leveraging Malaysia’s lower costs and Singapore’s advanced financial ecosystem.
- Seen as a catalyst for increased foreign direct investment (FDI) into the Iskandar Malaysia region, of which Forest City is a part.
Job Creation and Economic Growth:
- Generates employment opportunities in construction, hospitality, education, healthcare, and technology sectors.
- Enhances local economic activity through increased consumer spending and infrastructure development.
Tourism and Real Estate Development:
- Attracts tourists and expatriates looking for luxury living near Singapore.
- Aims to position Johor as a hub for high-end real estate and leisure activities.
Diversifying Johor’s Economy:
- Reduces dependence on traditional industries by focusing on knowledge-based and service-oriented sectors.
- Aligns with Johor’s goal to develop into a global economic player.
Challenges
Environmental Concerns:
- Reclamation of land has raised concerns about damage to marine ecosystems and coastal areas.
Market Overdependence:
- Heavy reliance on Chinese buyers, which creates risks amid shifting regulations or economic downturns.
Regulatory and Policy Issues:
- Strained relations between local stakeholders and the project’s foreign ownership have sparked political debates.
Forest City Johor is a bold initiative to redefine urban development in the Johor-Singapore region. Its success could significantly enhance the region’s global competitiveness, but its challenges must be carefully managed to realize its full potential.
The information provided in this article is for general informational purposes only and does not constitute legal, financial, tax, or professional advice. Establishing a family office in Forest City, Johor, requires careful consideration of various legal, regulatory, and operational factors
Partner & Portfolio Strategist — [email protected]
Rainer Michael Preiss is a German national and an investment advisor based in Singapore. He has over 25 years of experience in global private banking and multi-family office business across Europe, Middle East, Africa and Asia. Michael was previously the Chief Equity Strategist at Standard Chartered Bank (SCB) where he was one of seven voting members on the Global Investment Council which decided on SCB’s global investment policy. He is also a prolific and renowned contributor to the financial media world where he is a columnist for Forbes and is frequently featured on Bloomberg, CNA and CNBC.
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