This article first appeared in Wealth, The Edge Malaysia Weekly on July 28, 2025 - August 3, 2025

The cost of investing in the country may increase with the implementation of the sales and service tax (SST) on unit trusts, and the Securities Commission Malaysia’s (SC) proposed new fee structure for the fund management industry. However, discussions are still ongoing on both fronts and details have yet to be finalised.

Asked about this issue, Federation of Investment Managers Malaysia CEO Kaleon Leong tells Wealth that FIMM is still in talks with SC and the Royal Malaysian Customs Department on SST charges for the sale of unit trusts.

“We are trying to secure tax exemption for the industry and have made our submissions to Customs. Matters are still under discussion,” he says.

Without the exemption, unit trusts would be imposed an SST of 8% from September this year.

Assuming an investor invests RM1,000 in a fund and is subject to a sales charge of 5%, or RM50, he would need to pay an additional RM4 (8% of RM50). The additional RM4 is equivalent to 0.4% of the total invested amount.

Meanwhile, it was reported in February that SC has engaged industry players in regard to the adjustment of its fee structure, the first in 30 years. 

For fund management firms, the new fee structure proposes an annual regulated activity fee of 0.0125% on equity funds, based on assets under management (AUM). The rate for fixed income, mixed assets and other funds was 0.01%; for money market funds and private mandates, it was 0.005%.

The proposed fee structure also puts a floor to the fee imposed on each fund, which is RM50,000. Fund management firms will pay whichever amount is higher.  

An industry player says the updated version of the proposed fee structure has lowered the rate for money market funds and private mandates to 0.0025% of their AUM, while that of equity, fixed income, mixed assets and other funds remains the same. It has also lowered the floor amount to RM20,000.

Before the proposal, the regulated activity fee imposed on fund management firms was RM2,000 per year. The rather drastic hike in fees has caused rumblings of concern among those in the fund management industry.

Industry players say a higher regulated activity fee, among others, may increase business costs for asset management firms, which could be passed on to investors.

In an earlier interview with The Edge, SC executive chairman Datuk Mohammad Faiz Azmi said the proposal for the new fee structure would be submitted to the Ministry of Finance by end-March this year and is expected to be implemented in 2026. Industry players expect further announcements to be made later this year.

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