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Single Family Office (SFO) Incentive Scheme

Single Family Office (SFO) Incentive Scheme

The SFO Incentive Scheme, spearheaded by the Securities Commission Malaysia (SC) for the Ministry of Finance (MOF), aims to position Malaysia as a premier wealth management hub for family offices.

To complement the SFO Incentive Scheme, targeted foreign exchange policy (FEP) flexibilities are available to facilitate offshore foreign currency borrowing and investment in foreign currency assets undertaken by the SFOs established in the Forest City-Special Financial Zone (FC-SFZ), which support efficient capital flows mobility within a clear regulatory framework.

Details of FEP flexibilities for SFOs under FC-SFZ

Entities approved by Securities Commission Malaysia (SC) to undertake qualifying activities in FC-SFZ are eligible for FEP flexibilities on offshore foreign currency borrowing and investment in foreign currency assets as specified below:

  1. Offshore foreign currency borrowing*
    • No restriction to obtain foreign currency borrowing from non-resident financial institutions (NRFIs) and other non-related non-residents, including through issuance of foreign currency-denominated securities or Islamic securities.
    • Proceeds obtained from the borrowing shall be utilised for business activities carried out by entities in the FC-SFZ only or offshore. On-lending to related resident entities outside of the FC-SFZ is subject to FEP limit.
  2. Investment in foreign currency assets**
    • No restriction to invest any amount in foreign currency assets onshore and offshore using funds sourced from non-residents, offshore or incomes generated by entities in the FC-SFZ. Borrowing from related resident entities outside of the FC-SFZ is subject to FEP limit.
    • Examples of eligible sources of funds include but not limited to:
      1. Offshore borrowing obtained from non-residents
      2. Funds managed on behalf of non-residents originating from offshore
      3. Funds repatriated from offshore by residents
      4. Capital injection received from non-residents
      5. Income generated from onshore investments in ringgit or foreign currency assets by the entities in the FC-SFZ

*The offshore foreign currency borrowing shall not be collateralised or secured by ringgit assets and the repayment for the borrowing must not be funded using conversion of ringgit into foreign currency.
**Investment in foreign currency assets undertaken by resident individuals or entities outside of the FC-SFZ through the SFOs is subject to FEP limit.

Below is the illustration of FEP flexibilities for SFOs under FC-SFZ:

 

Application Submission

Application to obtain the FEP flexibilities for SFOs under FC-SFZ may be submitted via SC.
Further details of the SFO Incentive Scheme, including the application process, can be found at the following link in the Securities Commission Malaysia (SC) website