opportunities, facilities and government assistance · 6 potential market of 2.7 billion tariff...

Opportunities, Facilities and Government Assistance

By: Dato’ Azman Mahmud Deputy CEO I, MIDA

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Malaysia

Land Area 320,252km²

Capital Kuala Lumpur

Population 29.7million

GDP US$278.67billion

GDP Per capita US$10,526

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6% GDP growth p.a.

> 60% services

contribution to GDP by

2015 (7.2%

growth p.a)

12.8% private

investment growth

p.a

37% highly skilled

workers by 2015

10th Malaysia Plan

Malaysia: Key Economic Data

Malaysia: Your Profit Centre in Asia

The Journey Continues

2010 and beyond High Impact, Strategic Cluster–Based Industries in Manufacturing and Services

High impact projects - Economic Transformation Programme Economic growth through NKEAs , non-NKEAs sectors and services sectors Target US$15,000 per capita by 2020

3 Malaysia: Your Profit Centre in Asia

The Malaysia’s Economic Development Journey

Foreign Direct Investment Domestic Investment Business matching through E-Connect Manufacturing and Services

Manufacturing licenses Tax incentives Expatriate posts Duty exemption OHQ, RDC, IPC and R&D status

Planning for industrial development Recommend policies and strategies on

industrial promotion and development Formulation of strategies, programmes and

initiatives for international economic cooperation

Assist companies in the implementation and

operation of their projects Facilitate exchange & co-ordination among

institutions engaged in or connected with industrial development

Advisory Services

Promotion

Evaluation

Planning

Follow-up &

Monitoring

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Functions of MIDA


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Clean Tech. & Environment

Mgmt.

IT & Comm. Services

Healthcare, Education & Hospitality

R&D

and Design

Regional Establishment

Logistics & Supply Chain

Oil & Gas

Others

(i.e. Skills)

Services Divisions in MIDA

Business & Professional

Services

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Potential market of 2.7 billion

Tariff reduction and elimination mostly by 2016

Potential market of 600 million

Combined GDP of USD1.8 trillion, as of 2010

Already zero tariffs for 99% of products

ASEAN Economic Community and Single market by 2015

ASEAN

ON-GOING FTA NEGOTIATIONS

Leverage on Malaysia’s regional market to grow exports

Gateway to ASEAN and Asian Economies

Foreign companies based in Malaysia can enjoy preferential

market access via Free Trade Agreements concluded by

Malaysia:

TPP EU Turkey

Potential market of 1.08 billion

REGIONAL / BILATERAL FTAS

Chile Korea India Australia New Zealand China Japan

Opportunities


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Opportunities Malaysia’s Free Trade Agreements- Create Market Access in Sectors of Interests

Japan NZ Pakistan India

Business Services Y Y Y Y

Communication Services Y Y Y Y

Construction Services y Y Y Y

Distribution Services N N Y Y

Education Services Y Y Y Y

Environmental Services N Y N Y

Financial Services Y Y Y N

Health Services Y Y Y Y

Tourism Services Y Y Y Y

Recreational & Cultural and Sporting Services

Y Y Y Y

Transport Services Y Y Y Y

Other Services Y Y Y Y Malaysia: Your Profit Centre in Asia

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Healthcare travel 1. Private hospital 2. Ambulatory care

centers

Education 1. Technical, Vocational &

Science Training Institution

2. International / Private School

Environmental Management 1. Renewable energy 2. Energy

conservation/efficiency 3. Storage, treatment and

disposal of hazardous waste

4. Recycling of agricultural waste and agricultural by products

Tourism 1. Hotel 2. Tourist project 3. Recreational

camp 4. Convention

centre

Business & Other Support Services 1. R&D 2. Irradiation & Gas

Sterilisation 3. Testing for Industrial

Devices 4. Central Utility Facilities

5. Industrial Design

Regional Establishment 1. Operational Headquarters (OHQ) 2. International Procurement Centre (IPC) 3. Regional Distribution Centre (RDC) 4. Treasury Management Centre (TMC)

Logistic 1. Integrated

Logistic Services 2. Cold Chain

Facilities

Promoted Services Activities


Government Assistance

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Domestic Direct Investment (DDI) Initiatives


General Fiscal & Non Fiscal Incentives

Investment Tax Allowance (ITA) of 60% or 100% on qualifying capital expenditure for a period of 5 or 10 years

Pioneer Status with income tax exemption of 70% or 100% of the Statutory Income for 5 years

Expatriate Posts

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Incentives for Local and Foreign Companies


Exemption from import duty and sales tax on imported machinery, equipment, materials, components, spare parts/replacement parts and

consumables

Double deduction for promotion of export of services

• An office of foreign company/organization established in Malaysia to perform permissible activities for its head office/principle.

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Feasibility Studies

Planning of Business Activities

Research & Development

Coordination Centre

Representative Office (RE) / Regional Office (RO)


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Representative Office (RE) / Regional Office (RO)

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Benefit Expatriates are taxed

based on the number of days they are in Malaysia

Duration (Renewable) Companies & NGOs (including NGOs not relating to trade)

minimum 2 years Government and Trade Association

based on the requirement

Eligibility Criteria OPEX:RM150,000 per

annum


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A locally incorporated company that carries on a business in

Malaysia to provide at least 3 QUALIFYING SERVICES to its

offices or related companies in and outside Malaysia:

R&D

Corporate Financial Advisory

Business Planning & Coordination

Treasury Fund Management

General Management & Administration

Operational Headquarters (OHQ)

Marketing Control & Sales Promotion

Planning

Technical Support & Maintenance

Data/Information Management &

Processing

Training for its offices & related companies


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Eligibility Criteria Locally incorporated OPEX : RM 1.5

million annual Paid up capital RM

0.5 million Employ at least 3

senior professional Serve at least 3

related companies outside Malaysia

Provide at least 3 qualifying services

Incentives Tax exemption for 10 years on:

• Business income • Interest • Royalties

Expatriates are taxed based on the number of days they are in Malaysia

Facilities 100% foreign equity holding Approval of expatriate posts based

on requirement

Operational Headquarters (OHQ)


As at July 2013, number of OHQ approved is 235

• Local 11 • Foreign 224

International Procurement Center (IPC)

• Undertakes procurement and sale of raw materials, components and finished products to its group of related companies and to unrelated companies in Malaysia and abroad.

Regional Distribution Center (RDC)

• Acts as a collection and consolidation centre for finished goods, components and spare parts produced by its own group of companies for its own brand to be distributed to dealers, importers or its subsidiaries or other unrelated companies within or outside the country

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International Procurement Center (IPC) & Regional Distribution Center (RDC)


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Eligibility Criteria Locally incorporated OPEX: RM 1.5 million

annually Paid up capital RM 0.5

million Minimum annual sales

turnover of RM 50 million

20% maximum domestic sales

80% Export Sales 30% maximum sales via

Drop shipment Located in either

FZ,LMW or Bonded Warehouse

Incentives Full tax exemption on its statutory

income for 10 years Dividends paid from the exempt

income are exempted from tax in the hands of its shareholder.

Facilities 100% foreign equity holding Approval of expatriate posts based on

requirement Custom duty exemption for raw

materials, components or finished products

International Procurement Center (IPC) & Regional Distribution Center (RDC)


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Tax incentive is given to companies that

provide centralized treasury management

services for its group of related companies

within or outside Malaysia.

Gazetted in June 2012 under Section 127 (3)(b), Income Tax Act 1967

Treasury Management Center (TMC)


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Eligibility Criteria Locally incorporated OPEX: RM 1.5 million

annually Paid up capital RM 0.5 million Employ at least 3

senior professional Serve at least 3

related companies outside Malaysia

Incentives 70% exemption on

statutory income for 5 years

Exemption on witholding tax

Exemption from stamp duty

Expatriates are taxed based on the number of days they are in Malaysia

Customised Foreign Exchange Administration (FEA) flexibilities

Treasury Management Center (TMC)

Qualifying Services Financial Services – cash pooling arrangement,

financing from surplus within the group, current account management

Investment Advisory Services Hedging – exchange rate, interest rate, liquidity

risk, commodity price risk Malaysia: Your Profit Centre in Asia

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Integrated Logistics Services (ILS)

• A locally incorporated services provider that undertakes integrated logistics services (i.e. freight forwarding, warehousing & transportation.)

International Integrated Logistics Services (IILS)

• A locally incorporated company that provides integrated and seamless logistics services (door-to-door) along the logistics supply chain as a single entity on a regional or global scale.

Integrated Logistics Services (ILS) & International Integrated Logistics Services (IILS)


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Eligibility Criteria Locally incorporated Undertakes the following 3

principle activities: a) Freight forwarding b) Warehousing c) Transportation And at least one of the following: a) Distribution b) Supply chain management

Must Own at least a) 20 commercial vehicles b) 5,000 sqm of warehousing

facilities

Incentives

Pioneer status or Investment tax allowance

Equity Condition

At least 60% Malaysian

Integrated Logistics Services (ILS)


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Incentives

Status Only

Equity Condition

100% foreign equity is allowed

International Integrated Logistics Services (IILS) Eligibility Criteria

Locally incorporated Undertakes the following 3 principle

activities: a) Freight forwarding b) Warehousing c) Transportation And at least one of the following: a) Distribution b) Supply chain management

Must own at least a) 20 commercial vehicles b) 5,000 sq.m of warehousing

facilities Employ majority Malaysians Use Malaysia as a logistics hub for

the region Substantial usage of ICT throughout

the logistics supply chain


Domestic Direct Investment (DDI) Initiatives

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• Encourage small Malaysian service providers to merge into larger entities

• Incentive under the purview of SME Corp

• Incentives:

• Flat tax rate of 20% on all taxable income for a period of 5 years

(effective from the date of the merger)

• Stamp duty exemption on the merger document

Eligibility Criteria

Enterprises that intend to merge must be:

• 100% Malaysian owned; and

• Have annual sales turnover of less than RM5 million or full-time employees of

less than 50

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Incentives For Merger Among Malaysian Service Providers


Sectors eligible for the incentive:

• Professional services (accounting and taxation services, specialised medical & dental

practices, architectural services and engineering services)

• Courier services

• Technical and vocational secondary education services (generic & special needs)

• Skills training services

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Incentives For Merger Among Malaysian Service Providers

Applications received within 3 years from 3 July 2012 are eligible to be considered for this incentive

Application submitted to Inland Revenue Board (IRB) and incentives to be provided through Exemption Order under Income Tax Act 1967 and Stamp Act 1949


Harness & Leverage on Outsourcing opportunities

Intensify Technology Acquisition by Malaysian-owned companies

Accelerate the shift of Malaysian-owned companies in targeted industries

High value-added

High technology

Knowledge-Intensive

Innovation-based

Training of Malaysians

Modernisation of facilities for

Outsourcing activities

Licensing & Purchase of New Technology

R&D

International Standards

& Certification

SCOPE OF FUND

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Domestic Investment Strategic Fund (DISF)


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Assistance in the form of matching grants (1:1) on reimbursable basis

To be granted on a negotiable basis based on the request of the companies and the merits of each case

MECHANISM



New and existing companies with Malaysian equity ownership of at least 60%.

Priority sectors:

• Aerospace

• Medical Devices

• Pharmaceuticals

• Advanced Electronics

• Machinery and Equipment

• Renewable Energy

• Services including design, R&D, testing,

quality and standard certification,

engineering services and logistics service

providers (3PL)

• Other industries, on a case by case basis

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Approval Status As at 19 July 2013, a total of 36 projects with investments valued at RM2.1 billion have been approved grants amounting to RM220.5 million


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Soft Loan

Malaysian Industrial Development Finance Bhd. Soft Loan Scheme For Services Capacity Development (SLSCD) Financial assistance to local services providers to build up their capacities to withstand competition due to liberalisation and the opening up of the domestic market as well as to strengthen their international competitiveness.


Thank you

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opportunities, facilities and government assistance · 6 potential market of 2.7 billion tariff...

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