Malaysia Dual Financial Centres

Digital Districts is pleased to introduce our first Catalytic Project - Malaysia Dual Financial Centres (MDFC), which aims to advance Malaysia as Asia's next global financial hub. MDFC leverages (1) a unique model of two financial jurisdictions (onshore and midshore) in one country, and (2) six key offerings for regional funds, companies, and investors.

𝟭. 𝗗𝘂𝗮𝗹-𝗦𝗵𝗼𝗿𝗲 𝗦𝘆𝘀𝘁𝗲𝗺

MDFC utilises the comparative advantages of Kuala Lumpur's developed physical infrastructure and Labuan's mid-shore financial system to offer a unique ecosystem for managing regional operations and assets.

Companies and investors can base their operations in KL to benefit from the multicultural talent pool, advanced infrastructure, and robust business ecosystem, while parking their capital in Labuan to enjoy a competitive tax rate (3%) with no capital controls.

KL is fully integrated into Malaysian economy and offers world-class infrastructure as an operational hub for foreign funds and companies. Meanwhile, Labuan IBFC boasts a free market economy, and a regulatory system that is firmly grounded in international practice. 

The complementary nature of both centres offers a unique value proposition to foreign funds and support the further development of the country’s financial infrastructure.

KL Golden Triangle (Onshore)

• Strategically positioned as a regional hub for business operations

• World-class infrastructure and amenities for companies and foreign talents

• Standard corporate tax rate (24%)

• Possible capital controls by BNM

• Network of Double Tax Agreements

Labuan IBFC (Midshore)

• Well positioned as the regional hub for foreign capital and digital assets

• 3% corporate tax rate

• No capital/exchange controls on non-RM transactions by LFSA

• 100% foreign ownership

• No withholding tax on payments to non-residents

• May not have access to Malaysia’s tax treaties

• Ideal for private wealth management (no estate, inheritance tax, structures)

𝟮. 𝗞𝗲𝘆 𝗢𝗳𝗳𝗲𝗿𝗶𝗻𝗴𝘀

• Family Office

  In an increasingly multi-polar world, Family Offices often find themselves expanding across multiple locations. Labuan IBFC offers a range of wealth management vehicles, including private trust companies, foundations, and Protected Cell Companies.

• Regional Operations Hub

  With a gross development value of RM40 bil (USD9 bil), the Tun Razak Exchange is Kuala Lumpur's international financial district, offering advanced physical infrastructure for the development of the regional financial and fintech ecosystem.

• International Arbitration

  An independent legal and arbitration system is a key component of a favourable business and investment environment. The Asian International Arbitration Centre provides alternative dispute resolution offerings for foreign investors, including arbitration, mediation, and adjudication.

• Dual Listings

  With a target of 42 IPOs in 2024, Bursa Malaysia has achieved 39 IPOs so far this year, raising a total of RM20.8 billion (US$4.8 billion) and making the country the best performing IPO market in Southeast Asia. A dual listing in Kuala Lumpur is an option for listed companies that desire better valuation, higher trading liquidity and more interest from foreign funds.

• Digital Financial Services

  Labuan IBFC facilitates digital financial-related business, including Robo-advisors, digital asset exchanges, crypto trading platforms, blockchain tokens and e-payment systems. Labuan currently has 67 licensed Digital Financial Service Providers.

• Digital Infrastructure Financing

  Malaysia's data centre market size is estimated to reach 1.36 thousand MW by 2029, with a CAGR of 13.73%. This presents exciting opportunities for a variety of funding/financing options for data centres, renewable energy, and related sectors, be it via debt or equity funding structures.

Find out more at malaysiadfc.com