Malaysia is rapidly solidifying its position as a destination for Family Offices, driven by its growing economy and emphasis on Islamic finance. During the Securities Commission Malaysia (SC)-IFN Business Forum, the keynote address by Mr Dato’ Mohammad Faiz Azmi, Chairman, Securities Commission Malaysia revealed Malaysia’s plan for the future, and the outlook in its capital markets in the years to come, pointing towards a critical opportunity for investors.

ASEAN’s Rising Economic Role

ASEAN has emerged as one of the fastest-growing regions in the world, offering credible options for clients to invest in and diversify their portfolios.  Today, ASEAN has a total population of 650 million people, with a combined GDP exceeding 4 trillion USD. For global investors, ASEAN represents growth, resilience, and diversification at a time when geopolitical tensions and market disruptions are reshaping the global economy.

Economy in Malaysia

Within ASEAN, Malaysia has also been a market leader, having established one of the most developed Islamic capital markets in the world. This is substantiated by the fact that today, 60% of Malaysia’s 1 trillion USD capital market is based on Islamic principles, and its sukuk market also represents about a third of global outstanding sukuk. Additionally, Malaysia’s Islamic fund management industry manages 60 billion USD, offering diverse products from Islamic ETFs to REITs and wholesale funds.

Beyond size, Malaysia’s Islamic capital markets are distinguished by impact. In recent years, sukuk issuances have financed renewable energy, sustainable transport, healthcare, and education projects showing that capital is being directed towards tangible economic outcomes. With 80% of companies listed on Bursa Malaysia deemed Shariah-compliant, investors have access to a broad and diverse universe of opportunities.

Islamic Finance with Purpose

Malaysia has deeply ingrained Islamic principles in its capital markets, and Islamic finance has made its mark among the global market. In a globalised world plagued by geopolitics shifts, climate changes, technology developments and demographic tilts, global Islamic finance assets are nevertheless projected to rise to 7.5 trillion USD by just 2028, after expanding close to 5 trillion USD in 2023.

This growth is underpinned by a focus on fairness, stewardship, and transparency. In other words, Islamic finance is gaining traction because it is concerned not only with how much profit is made, but also how that profit is generated closely aligning investment processes with three key drivers: climate action, digital inclusion, and true Islamic innovation.

For family offices, Malaysia’s leadership in Islamic finance offers a distinct advantage. Unlike larger institutions, family offices are often values-driven, with intergenerational wealth being stewarded not only for financial gain but also for legacy and impact. By leveraging Malaysia’s Islamic finance ecosystem spanning sukuk for renewable energy, Shariah-compliant equities, and sustainable investment frameworks family offices can access opportunities that are both profitable and principled

Key Drivers Shaping the Market

Malaysia has identified three strategic drivers for the growth of Islamic finance:

• Climate Action – developing adaptation projects through initiatives such as the Mitigation Co-Benefit and Adaptation for Resilience (mARs) framework.
• Digital Inclusion – leveraging Islamic fintech, valued at USD 13 billion in 2024 and projected to almost double by 2028, to widen access and reduce costs.
• True Islamic Innovation – moving beyond “mirrors” of conventional finance towards original solutions, such as impact-linked sukuk and tokenised Islamic social funds.

Forest City Wealth Hub

Complementing Malaysia’s Islamic finance leadership is the development of the Forest City Special Financial Zone (SFVZ) in Johor. Designed to attract global wealth, Forest City offers:

• A 0% tax rate on eligible family office investments
• Duty-free advantages, lowering operating costs
• Strategic proximity to Singapore, one of the world’s top financial centres

With Asia projected to host over 3,200 family offices by 2030 overseeing an estimated USD 5.8 trillion in intergenerational wealth Forest City is uniquely positioned to become a base for investors seeking tax efficiency, regulatory readiness, and access to Southeast Asia’s rapidly expanding markets. For early movers, the advantages include first access to partnerships, greater structuring flexibility, and enhanced visibility as pioneers in the region’s wealth corridor.

Conclusion

The Forest City, which is a growing financial hub within Malaysia and ASEAN, seeks to benefit investors who believe in the vision of Islamic finance. By combining Malaysia’s Islamic finance leadership with the incentives of Forest City, family offices gain a unique advantage. Here, investors benefit not only from tax efficiency and regional connectivity, but also from an ecosystem that embeds sustainability, Shariah compliance, and values-driven wealth management. Setting up a family office in Forest City means positioning your family’s wealth at the heart of Southeast Asia’s future growth story. For clients interested in establishing family offices, Forest City sets itself out as an option that offers zero tax, regulatory readiness, and a close proximity to ASEAN financial centres that are able to cater to a wide variety of investors.

For clients considering basing their family office structures or navigating the Malaysian regulatory framework, do contact our Malaysian Team lead (Nathan Maharajah) at enquiry@familyofficeforestcity.my or WhatsApp at +65 9810 1685 for further details.  The InterAsia Law Alliance has a team of Malaysian-qualified lawyers and any Malaysian-law advice required for the setting up of the SFOVs and related services will be handled by Malaysian qualified attorneys.