Malaysia targets family offices managing more than RM500 million amid regional wealth boom
The move aims to spark up to RM110 million in high-growth sector investments
Published Tue, Nov 5, 2024 · 05:12 PM — Updated Tue, Nov 5, 2024 · 05:57 PM
[KUALA LUMPUR] Malaysia is seeking to attract wealthy locals and foreigners with assets under management (AUM) of RM500 million (S$151.3 million) to RM1.2 billion to establish family offices in the country over the next five years, said Finance Minister II Amir Hamzah Azizan.
During a parliamentary session on Tuesday (Nov 5), he expressed optimism that this initiative could generate RM40 million to RM110 million in local investments into high-growth, high-value sectors.
The number of single-family offices worldwide, currently estimated at 8,030, is expected to grow by 75 per cent to mpore than 10,720 by 2030, with AUM rising from US$3.1 trillion to US$5.4 trillion, according to a report by Deloitte.
“(Malaysia’s) Securities Commission also anticipates a potential economic multiplier effect of three to five times the local investment within the first five years,” Amir added.
The announcement follows a single-family office programme unveiled by the government in September, aimed at attracting wealthy individuals to set up operations in Forest City, Johor, starting from the first quarter of 2025.
The programme is part of the government’s broader efforts to revitalise the struggling Forest City – a multibillion dollar mixed-use development – and turn it into a special financial zone.
A family office is a private wealth management advisory that caters to ultra-high-net-worth individuals or families, typically managing substantial investable assets.
To qualify for these incentives, family offices must meet specific investment and expenditure requirements annually. These include paying investment executives a minimum monthly salary of RM10,000, maintaining a physical office, incurring annual local expenses of at least RM500,000, and committing a minimum of 10 per cent of AUM to local investments.
“These requirements are designed to create economic opportunities in the local professional services sector, contributing to Malaysia’s broader economic growth,” said Amir.
While Malaysia welcomes wealthy individuals to establish family offices, the minister emphasised that their business activities will be monitored to ensure compliance with regulations and prevent involvement in illegal activities such as money laundering and terrorism financing.
He noted that this scheme aims to boost and double the country’s economy by attracting foreign investment.
“This initiative is designed to enhance and grow the country’s economy. The funds brought in by these offices will be directed towards domestic investments,” he said.
Stiff competition
The move also indicates Malaysia’s entry into the competitive landscape of family offices, joining Singapore and Hong Kong, which lead in the Asia-Pacific region.
Loong Kok Wen, deputy director at RHB Investment Bank, noted that Malaysia’s geographical advantage – particularly that of Forest City – positions the country favourably to attract affluent individuals considering other locations.
Neoh Jia Man, portfolio manager at Tradeview Capital, emphasised the need for the Malaysian government to establish a dedicated regulatory framework specifically for family offices.
“Unlike traditional back offices that focus on large staff numbers and operational cost reductions, family offices prioritise favourable tax structures, minimal compliance burdens, and local investment opportunities – factors that are currently lacking in the country,” he said.
