Consistent with the government’s strong commitment to entrench Malaysia’s position as an international investment management centre, several broad-ranging incentives to enhance the overall landscape of investment management industry, with a focus on Islamic fund management, were unveiled in Budget 2008:
- Liberalised shareholding structureForeign ownership of fund management companies and Real Estate Investment Trust (REIT) management companies is allowed up to 70%; and Islamic fund management companies are allowed 100% foreign ownership;
- Facilitative cross-border investment policyWith effect from 1 October 2007, Islamic funds are permitted to invest 100% of assets abroad;
- Greater access to institutional fundsApproximately US$2 billion in start-up funding will be channelled by EPF to Islamic fund management companies;
- More competitive operating environment- Income tax exemption on all Islamic fund management activity fees until 2016;
– Income tax exemption for non-resident Islamic finance experts; and
– One stop-centre at the SC for all fund management related queries.
Collective Investment Schemes
- Tax Incentives
- For unit trust funds, interest income received by the fund from investments in fixed income securities / instruments are tax exempt;
- For real estate investment trusts (REITs) –
- Stamp duty exemption for sale of real estates to a REIT;
- Tax exemption at REIT level (tax transperancy) provided that 90% of its income is distributed; and
- Lower income tax on income received from a REIT (i.e. 10% for individuals and institutions).
 Institutions refer to pension funds, collective investment schemes etc. Tax exemption applies to both local and foreign investors.