#30-Labuan Foundation

Why one must plan and protect his/her wealth as well as the succession planning:

1) Malaysian are becoming more and more affluent: Malaysia, being a relatively young nation, had started to see an increase of people with significant amount of wealth. In 2012, a study shown that there are 40000 millionaires in Malaysia and this is expected to double in 2015. It is crucial for these Malaysian to make sure that there is a structure in place. Whether the structure is onshore or offshore doesn’t really matter. Just think about how to manage the wealth. If the conventional method is used, there may be severe consequences not favourable to those Malaysians or their family in the long run.

2) Malaysian are also engaging in cross border activities/transactions: Since the Malaysians are getting more affluent, they are considering about going abroad to diversify and increase their income. Crossborder activities are not uncommon to Malaysian businessmen. SME industries, the backbone of this country, often expand abroad in order to sustain. Going abroad carries a risk. If there is no structure in place, the business will be exposed to a risk.

3) Increase in Family Run businesses – multiple parties/generation: In a family run business, perhaps the business owners are siblings or even their children and perhaps their own children will eventually join the business. If there is no structure in place to govern the differentials, there will be issues.

4) Patriach/Matriach want to be in control of family businesses – related to the previous note, the person who started the business will lose control of the business at some point. The reason is that the next generation will come in. If there is no structure in place, that allows for a seamless transfer of power or control, the business is bound to be doomed.

5) Increase in family feuds – without proper structure in place, there will be infighting, disputes between the sibling, family members and even among family members.

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1 Comment

  • Vincent Ng

    Reply Reply June 11, 2013

    Dear Sir,

    We understand the aim of the foundation is charity but we need to make it sustainable where some funds can be generated through these activities eg loan, business activities etc.

    Is it allowable for the foundation to invest in Building & to run a business so that there will be some revenue to sustain the foundation & not to always ask for donation.? Secondly, what about micro-credit to assist those in needs eg single parent to start a project or to help to expand project? Can the foundation charge some interest for loan given out to the needy ?

    Vincent Ng

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