Forest cities attract family offices and benefit three related areas.

For industrial development companies, more vibrant forest cities are likely to bring positive spill-over benefits to nearby areas, including Bandar Sunway Iskandar (Sunway) and Nusajaya Gateway (UEM Sunlight) and other towns.

Kenanga Investment Bank research analysts believe that Green Prosperity can also benefit from it, mainly because its development projects are not far from the forest city financial district.

Although the government encourages more asset management to settle in, which is not the main business of local financial institutions, the overall inflow and outflow of funds will also be beneficial to banks in our country.

Family offices with assets under management (AUM) exceeding 30 million ringgit will benefit from government incentive measures, but this is higher than the level of wealth management in the Malaysian banking sector.

Nevertheless, analysts believe that banks can still benefit in the following ways: (i) provide or connect capital to private enterprises, (ii) store a portion of liquid assets, especially in local currency reserves; for example, family offices must open accounts with private banks in Singapore, and (iii) derive more extensive indirect benefits from more active economic activities.

Fenglong Investment Bank analysts stated that Forest City is mainly developed by Country Garden, one of China's largest industrial developers, and may attract family offices from China.

On the other hand, the Securities Commission Malaysia today also announced the complete Forest City Family Office Incentive Scheme criteria.

This tax incentive scheme duration is 20 years, including an initial 10-year phase and an additional 10-year extension.

The conditions for enjoying the first 10 years of reward measures include:

a) Must be a family office established in Malaysia, and apply to the Securities Commission for tax exemption measures.

b) The family office is located in the Forest City Special Economic Zone, and has at least one investment commissioner with a monthly salary exceeding 0.01 million Malaysian Ringgit.

c) Holding AUM of 30 million Malaysian Ringgit; among which at least 10% of AUM, or 10 million Ringgit invested locally, whichever is lower.

d) Annual operating expenses of at least 0.5 million Malaysian Ringgit.

e) Employ at least 2 full-time staff, including at least one investment commissioner with a monthly salary exceeding 0.01 million Malaysian Ringgit.

The conditions for enjoying additional 10 years of reward measures include:

a) Holding AUM of 50 million Malaysian Ringgit; among which at least 10% of AUM, or 10 million Ringgit invested locally, whichever is higher.

b) Annual operating expenses of at least 0.65 million ringgit.

c) Employ at least 4 full-time employees.

In addition, according to the announcement, management companies that only serve family offices may be exempt from certain specific licenses obtained under the Capital Markets and Services Act 2007 (CMSA), such as fund management licenses.

Datuk Mohd Faziz, Chairman of the Securities Commission, stated that this move is in line with the growing global trend of family offices, providing comprehensive wealth management solutions and also helping to create a strong regulatory environment in Malaysia.

He mentioned that the measures are expected to generate economic multiplier effects, estimated to be between 3.9 billion and 10.7 billion ringgit, including the creation of skilled employment and other support service needs, bringing positive impacts.

He stated that any eligible SPOV can apply for certification from the Securities Commission to obtain tax incentives, but must prove compliance with the relevant conditions.

Currently, the authorities are cooperating with relevant stakeholders to strive for the implementation of the plan before the first quarter of next year.