Single family offices: A catalyst for Malaysia

Malaysia’s new Single Family Office (SFO) framework strengthens its position as a regional wealth hub, offering tax incentives and ESG-driven investment opportunities.

In brief

• Malaysia’s new SFO framework positions the country as a regional wealth hub, complementing the Johor-Singapore SEZ.
• SFOs enable high-net-worth families to manage succession, diversify investments, and align with ESG priorities.
• Tax incentives and Budget 2026 refinements aim to attract Malaysian and foreign families to establish SFOs locally. 

Malaysia introduced its single family office (SFO) framework in September 2024 as part of the Forest City Special Financial Zone (FCSFZ) offerings and incentive packages.

The FCSFZ is part of the wider Johor-Singapore Special Economic Zone (JS-SEZ).

The Malaysian government has clear aspirations to position the SFO as an alternative investment vehicle which is attractive to Malaysian and foreign high-net-worth families, and which will facilitate new investments into the country.

The SFO setup is aligned with Malaysia’s vision to be a regional wealth hub, competing with mature regional financial hubs in Singapore and Hong Kong.

The structured SFO framework can be used as a platform by Malaysian families to deploy capital into private equity, venture capital and listed companies, as well as focus on investing in startups and small and medium enterprises.

This would support the Malaysian government’s aspirations in growing existing public-private partnerships to drive infrastructure development initiatives and foster growth, by shifting financial investments to the private sector in a responsible manner.

The new economic zones and investment offerings in Malaysia have also attracted and impressed foreign families as they seek to seize opportunities in preserving and growing their assets by expanding their businesses and interests into South-East Asia’s diverse markets.

The evolving investment behaviour and risk appetites of foreign high-net-worth families is partly driven by the ongoing supply chain disruption and cost pressure arising from the US-China trade war as well as the impact of US tariffs, resulting in supply chains shifting to this region.

Malaysia provides a strong platform with a large talent pool and a reasonable cost of doing business, with competitive real estate prices and labour costs.

Foreign families that have established an SFO in Malaysia would naturally seek investment opportunities in the country, while foreign families which are already invested in Malaysia may find the SFO offering compelling.

Supporting the ESG agenda

The unprecedented Covid-19 pandemic has led to families placing even more emphasis on succession planning and risk management, in addition to preserving and growing their family assets.

SFOs provide a framework which check all the boxes – growing investments in a safe and sustainable manner which align with a family’s succession planning goals, against a backdrop of robust governance.

The new generation has innovative aspirations and pioneering ideas to bring their SFOs to the next level, with a focus on environment, social and governance (ESG), where they target inclusive, sustainable and impactful growth sectors that can contribute to positive social development, such as education, healthcare agriculture and food safety, healthcare, and climate preservation activities such as renewable energy and energy efficiency.

Aligning with the country’s plans

The SFO setup would align with the government’s fiscal policy of continuous long-term economic growth, building up the nation’s foreign reserves and diversifying the coverage of investment capital.

With the right entrepreneurial mindset led by the SFOs and supported by investment professionals, it is hoped that Malaysia will see SFOs investing in local niche sectors and underserved markets that are generally less attractive to financial institutions and corporate investors.

In formulating their investment strategy, SFOs will have the opportunity to leverage the JS-SEZ, which facilitates seamless trade and promotes high value employment while fostering stronger collaboration between Singapore’s financial powerhouses and Johor’s dynamic business environment.

In addition, SFOs appreciate the requirements of complying with global transparency and information exchange requirements mandated by governments and international agencies, which will make the international financial system more robust and reliable.

The Securities Commission has allowed SFOs to venture into foreign currency and international investments as part of their approved assets under management criteria.

This, combined with the unique skillsets required to manage an SFO, provides an opportunity to develop and retain local talent in asset management and financial services.

SFOs in the context of Budget 2026

One of the upcoming Budget 2026 objectives is to raise the national income and drive growth and reform, particularly in ESG. While the focus tends to be on SFO contributions to strengthening economic foundations and growth, the capacity for SFOs to drive the ESG agenda is also important.

This is because SFOs are increasingly targeting sustainable and responsible investments that promote environmentally friendly practices and contribute to long-term economic resilience, which will bring positive impact to talent, communities, customers, supply chains and stakeholders.

The SFO tax incentives are an important piece of the puzzle to enable Malaysia to position its SFO offering as an attractive platform for Malaysian and foreign families.

The proposed SFO tax incentive for a 10+10-year period is a welcome move, setting a landmark justification for families to locate their SFOs in Forest City. The incentive framework also covers newly introduced taxes such as a capital gains tax and tax on foreign sourced income, as well as certain stamp duty benefits.

Families looking to establish an SFO in Malaysia now look forward to Budget 2026, which is expected to complement the existing SFO framework by formalising and potentially refining the range of structured tax incentives which have been announced.

SFOs provide a resilient and future-proof structure that enables families to manage risk, implement succession planning and increase investment returns in a tax-efficient manner – ensuring that the families thrive across generations and manage the uncertainty.

We look forward to the success of the Malaysian SFO offering and are interested to see what else Budget 2026 may have to offer to make SFOs and the overall investment climate in Malaysia even more attractive.