Forest City SFZ has potential to attract affluent to ultra-high-net-worth individuals

Aerial View of Johor Bahru

KUALA LUMPUR: The Forest City Special Financial Zone (SFZ) is seen as a major step toward establishing itself as a regional financial hub, leveraging its strategic location in Southeast Asia.

TA Securities said its proximity to Singapore, a leading financial hub both regionally and globally, positions the SFZ as a natural complement to Singapore's well-established financial sector.

"This could drive a spillover in demand for investments and financial services. Additionally, its location within the Johor-Singapore Special Economic Zone (JS-SEZ) strengthens its potential for economic integration and allows it to capitalise on the JS-SEZ's potential growth," it said.

The firm highlighted foreign exchange flexibility as a key feature, enabling unrestricted offshore borrowing and investments in foreign currency assets.

Additionally, it offers strong incentives for sustainability-focused initiatives and attractive tax benefits, fostering a conducive environment for various financial services, including fintech companies and family offices.

"We believe these measures could help attract high- to ultra-high-net-worth individuals. Preferential tax rates for returning experts and knowledge workers could help deepen the local talent pool and mitigate brain drain, thus further strengthening the SFZ's financial ecosystem," it adds.

However, TA Securities said competition among local banks in Johor will likely intensify as locally incorporated foreign banks, such as UOB and OCBC, each already having around seven branches in Johor, will enjoy regulatory flexibility to open additional branches within the SFZ.

"Nevertheless, we believe all banks are poised to benefit from the overall increase in business activities.

"With the JS-SEZ's ambitious plan to attract 50 projects within five years and 100 projects within the decade, banks could tap into emerging high-value industries such as data centres, renewables, semiconductors, and advanced manufacturing," it added.

This also includes new priority sectors such as aerospace, electrical and electronics, chemicals, medical devices, and pharmaceuticals setting up operations in Johor.

TA Securities noted that banks with a strong presence in Singapore and Johor—such as Malayan Banking Bhd (Maybank), CIMB Group Holdings Bhd, Hong Leong Bank Bhd, and RHB Bank Bhd—are well-positioned to benefit from the state's growth opportunities.

"We believe the ability to facilitate smoother cross-border financial services will be a key advantage, making them a one-stop solution for investors and businesses in both Johor and Singapore," it adds.

Credits: New Straits Times, New Straits Times Press (M) Bhd - Published 11th February 2025 - Faiqah Kamaruddin