According to Lee Ting Han, Johor state EXCO member for investment, trade, consumer affairs & human resources, 11 companies have expressed interested in setting up operations in Forest City's Special Financial Zone (SFZ) as of November. Of which, eight have expressed their interest to set up family offices — four of whom hail from Malaysia, while the others are from Singapore, Indonesia and Taiwan, says Lee at a media doorstop on Dec 11.
Under the newly announced SFZ, several incentives have been announced. These include a 0% corporate tax rate for family offices, a 0% to 5% corporate tax rate and a 15% flat income tax rate for knowledge workers. Lee says that as at December, the Malaysian ministry of finance is working on making the incentive packages legally binding, which is scheduled to be in place by 1Q2025.
Forest City isn’t the only area that is attracting investments. In July, The Edge Singapore reported that data centres with capacity of 1GW are being built in Johor. DC Byte reports that capacity is now at 1.5GW.
Bernama says 10 data centres had begun operations as of October this year, while seven were in the process of development in Johor.
Gregory Seow, Singapore head of global banking, and global head of financial institutions group, group global banking, Maybank, says: “We’ve spoken to many clients and they have discussed some pain points.”
Infrastructure, security, ease of clearing customers, ease of payment and free movement of capital were some of the pain points discussed by Seow with his clients. "Forest City is supposed to be the administrative headquarters, and the authorities are proposing a financial hub. But connectivity is required," Seow observes.
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Some projects require just Johor state's approval, some may need federal approval. “That complicates the issue. I hope they have navigated those issues back in April. Prime Minister Anwar also demonstrated his support. Banks like ourselves want to be the go-to bank,” Seow says.
One of the projects that requires federal approval is Johor’s Autonomous Rapid Transit (ART) system which is required to link commuters from the Johor-Singapore Rapid Transit System (RTS) that is operational from end-2026.
“More importantly, our Singapore-based clients have signalled interest. Last month, I had a chairman-level lunch with a very established conglomerate in Hong Kong. They signalled their interest in obtaining a piece of land [in Johor] and getting contracts. The Chinese companies are debating whether they should go to the Eastern Economic Corridor (EEC) in Thailand, or here,” Seow says.
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In October, Asean and China successfully concluded the negotiations for the Asean-China Free Trade Area (ACFTA) 3.0 upgrade. The upgraded agreement aims to modernise and enhance the existing trade framework by deepening commitments in traditional areas while introducing new domains of collaboration, including the digital economy, green economy, supply chain connectivity, competition and consumer protection, and support for micro, small, and medium enterprises (MSMEs).
OCBC Global Market Research says investment flows from Hong Kong and China into Malaysia are likely to continue in 2025. Investment commitments from China and Hong Kong into Malaysia’s manufacturing sector have been broadly stable over the past few years it indicates. “The initiation of the [JS-SEZ] can catalyse further diversification out of China into the SEZ,” OCBC Global Market Research says.
PM Anwar visited China from Nov 4 to 7 while Malaysian Agong Ibrahim Sultan Iskandar also visited China from Sept 19 to 22. “With US-China trade tensions rising, the risk is that Malaysia is caught between the rock and the hard place. This was implied when Deputy Trade Minister Liew Chin Tong, suggested that Chinese companies avoid using Malaysia as a base to 'rebadge' products between the rock and the hard place,” OCBC cautioned.
