Forest City’s Special Financial Zone: A Rising Investment Magnet in Southeast Asia

On September 20, 2024, Crown Prince Tunku Ismail of Johor officially announced the inclusion of Forest City into Malaysia’s newly designated Special Financial Zone (SFZ)—a pivotal milestone that marks the transformation of this integrated township into a strategic node connecting Malaysia to the global economy. Strategically located just across a single bridge from Singapore, Forest City is rapidly emerging as a powerful conduit for capital and talent flow in Southeast Asia, powered by policy innovation and robust infrastructure.

Targeted Incentives: Lower Business Costs, Greater Talent Appeal

Unlike traditional special economic zones with broad-stroke policies, the Forest City SFZ is designed with surgical precision to address specific business and talent pain points:

Direct Tax Relief for Key Industries: Corporate income tax is slashed to just 5% (compared to Malaysia’s standard 24%) for companies in sectors like fintech and cross-border payments. Family offices enjoy a 0% tax rate—positioning Forest City as a direct competitor to Singapore’s wealth management ecosystem.

Enhanced Talent Magnet: Foreign professionals pay a capped 15% personal income tax (lower than Singapore’s approximate 22%). Plus, capital gains taxes are waived for property owners holding their assets for at least five years—providing dual security in earnings and property value.

Cost-Efficient Setup: Incentives like a 50% reduction in stamp duties for property transactions and zero import duties on digital equipment significantly reduce the capital cost of entering the market.

From Policy to Practice: Turning Plans into Tangible Gains

What distinguishes Forest City’s SFZ isn’t just its policy richness, but the efficiency and practicality of its implementation:

"Single Window" Governance Model: The establishment of Malaysia’s first fully operational Investment Management and Facilitation Centre (IMFC) within Forest City has streamlined business setup procedures. Tasks like company registration, visa processing, and licensing are now consolidated—what once took two weeks can now be completed in just 72 hours.

Integrated Industry Ecosystem: The Phase One Financial Center is now operational, offering smart office spaces and international convention facilities. These are complemented by nearby international schools, a top-tier hospital, and leisure offerings—solving a common challenge for Southeast Asia-based businesses: retaining talent.

Accelerated Cross-Border Operations: A fully digitized customs clearance system has significantly reduced border processing times, enabling companies to leverage Malaysia’s lower operating costs while tapping into Singapore’s sophisticated capital markets.

Strategic Synergy: Duty-Free Island + MM2H Fuels Living and Lifestyle Demand

Forest City had already received approval as a duty-free zone. With the launch of the Special Financial Zone, it has been officially upgraded to a duty-free island, with expanded exemptions across a broader range of goods and industries. Additional applications for exemptions from import, sales, and service taxes are also in motion.

To further attract international investors and professionals, Forest City SFZ has introduced a special version of Malaysia’s Malaysia My Second Home (MM2H) program. With lower entry thresholds for deposits and property purchases, the program now offers a more accessible and cost-effective pathway for those seeking a second home in Malaysia.

The launch of the Forest City Special Financial Zone represents a bold step in Malaysia’s broader strategy for economic transformation and modernization. As more policy benefits are rolled out and institutional support deepens, Forest City is poised to become a regional powerhouse—offering unmatched opportunities to global investors and skilled professionals alike.

Here, they’ll find not just incentives on paper, but a living model of a new kind of smart, sustainable city—where economic potential and quality of life intersect.