Investment In Malaysia Malaysia

1. Companies eligible for Pioneer Status in Sarawak will be granted tax exemption of 100% (normally 70%) of their statutory income.
2. For companies eligible for Investment Tax Allowance, rate of allowance will be increased to a maximum 100% (normally 75%) of the statutory income.
3. Second round of pioneer status for existing and new companies.
4. Selected industries located in Sarawak can be granted incentives (i.e. Pioneer Status or Investment Tax Allowance, which are no longer given for products manufactured in other parts of Malaysia.
5. Infrastructure allowance of 100% of qualifying expenditure.
6. Manufacturing projects in Sarawak catering for domestic market are also entitled for full import duty exemption on raw material, components and parts, which are not available in Sarawak.
7. Eligibility for double deduction on freight charges incurred for the export of rattan and wood-based products (except plywood, sawn timber and veneer).
8. Cheap industrial land. Current price from RM2.50.^*
9. Low down payment for the purchase of industrial land.
10. Flexible terms of payment for the purchase of industrial and.^{* *}Subject to change

1. Pioneer Status with full tax exemption at statutory income level for a period of five years; or
2. Investment Tax Allowance of 60% on qualifying capital expenditure incurred within a period of five years. The allowance can be offset against the statutory income for each assessment year without 100% of

1. Local research and development (R&D) expenditure to gross sales should be at least 1% on an annual basis. However, companies are allowed a period of three years from the date of operation/commencement of business to comply with this requirement
2. The percentage of science and technical graduates to total workforce should be at least 7%

1. Pioneer Status with full tax exemption at statutory income level for a period of 10 years; or

1. Quality control of product or routine testing of materials, devices products or produce;
2. Research in the social science or humanities;
3. Routine data collection;
4. Efficiency surveys or management studies;
5. Market research or sales promotion."

1. Research undertaken should be in accordance with the needs of the country and bring benefit to the Malaysian economy
2. at least 70% of the income of the company should be derived from research and development activities;
3. for manufacturing-based R&D, at least 50% of the workforce of the company must be appropriately qualified personnel performing research and technical functions; and
4. for agricultural-based R&D, at least 5% of the workforce of the company must be appropriately qualified personnel performing research and technical functions

1. Industrial Building allowance in the form of an initial allowance of 10% and an annual allowance of 3% is available for buildings used for purposes of approved R&D.
2. Capital allowance on capital expenditure incurred in the provision of plant and machinery used for R & D.
3. Machinery/equipment, materials, raw materials/component parts and samples used for R&D purposes are eligible for exemption from import duties, sales tax and excise duties.

1. The industrial adjustment programme has to be approved by the Minister of International Trade and Industry and the Minister of Finance.
2. The IAA is given for qualifying capital expenditure incurred within five years from the date of approval of the incentive.
3. Companies enjoying Investment Tax Allowance (ITA) shall only be eligible to apply for IAA in respect of the capital expenditure on which ITA has not been granted.
4. Companies granted IAA would not be eligible for Reinvestment Allowance in respect of the same expenditure

1. Agriculture Sector
2. Software Development
3. Computers and Information Technology Assets
4. Acquiring Proprietary Rights
5. Training
6. Operational Headquarters (OHQs)
7. International Procurement Centres
8. Approved Service Projects
9. Shipping Industry
10. Tariff Related Incentives

PROTECTION OF FOREIGN INVESTMENT

1. EQUITY POLICY IN THE MANUFACTURING SECTOR

The Malaysian Government welcomes foreign investment in the manufacturing sector. In keeping with the objective of increasing Malaysian participation in manufacturing activities, it is the policy of the Government to encourage projects to be undertaken on a joint venture basis between Malaysia and foreign entrepreneurs.

2. EQUITY POLICY APPLICABLE TO NEW INVESTMENT, EXPANSION & DIVERSIFICATION

Foreign equity participation in manufacturing projects has been governed by the level of exports. Effective from 31 July 1998, the Malaysia government has liberalised the equity policy for the manufacturing sector in respect of new investment, expansion or diversification as follows:

 

Foreign investors can now hold 100% equity irrespective of the level of exports.

Equity holdings in all manufacturing projects were fully liberalized effective from 17 June 2003 Foreign investors can now hold 100% of the equity in all investments in new priject, as well as investments in expansion/ diversification project by existing companies, irrespective of the level of exports and without any product/activity being excluded.

 

The new equity policy also applies to:

 

Companies previously exempted from obtaining a manufacturing licence but whose shareholders' funds have now reached RM2.5 million or have now engaged 75 or more full-time employees and are thus required to be licensed.

Existing licensed companies previously exempted from complying with equity conditions, but are now required to comply due to their shareholders' funds having reached RM2.5 million.

3. EQUITY POLICY APPLICABLE TO EXISTING COMPANIES

Equity and export conditions imposed on companies prior to 17 June 2003 will be maintained.

 

However, companies can request for these condition to be removed. The government will be flexible in considering such requests and approval will be given based on the merits of each case. Companies with export conditions can apply for approval from MIDA to sell in the domestic market based on the following guidelines:

 

Up to 100% of their output for those products with nil duty or those not produced locally.

Up to 80% of their output if the domestic supply is inadequate or there has been an increase in imports from ASEAN for products with Common Effective Preferential Tariff (CEPT) duties of 5% and below.
Protection of Foreign Investment

 

Malaysia's commitment in creating a safe investment environment has persuaded more than 4,000 international companies from over 50 countries to make Malaysia their offshore base.

4. EQUITY OWNERSHIP

A company whose equity participation has been approved will not be required to restructure its equity at any time as long as the company continues to comply with the original conditions of approval and retains the original features of the project.

5. INVESTMENT GUARANTEE AGREEMENTS

Malaysia's readiness to conclude Investment Guarantee Agreements (IGAs) is a testimony of the Government's desire to increase the confidence of foreign investors in Malaysia.

 

IGA's will:

 

Protection against nationalisation and expropriation.
Ensure prompt and adequate compensation in the event of nationalisation or expropriation.
Provide Free transfer of profits, capital and other fees.
Ensure settlement of investment disputes under the Convention on the Settlement of Investment Disputes of which Malaysia has been a member since 1996.
Malaysia has concluded Investment Guarantee Agreements with the following groupings and countries(in alphabetical order):

 

Groupings

 

Association of South-East Asian Nations (ASEAN)
Organisation of Islamic Countries (OIC)
Countries

 

Albania Algeria Argentina Austria Bahrain Bangladesh Belgo-Luxembourg Bosnia Herzegovina Botswana Burkina Faso Cambodia Canada Chile China, People's Republic of Croatia Cuba Czech Republic Denmark Djibouti, Republic of Egypt Ethiopia Finland France Germany Ghana Guinea, Republic of

Hungary India Indonesia Iran Italy Jordan Kazakhstan Korea, Republic of Kuwait Kyrgyz Republic Laos People's Democratic Republic Lebanon Macedonia Mongolia Morocco Malawi Namibia Netherlands North Korea Norway Pakistan Papua New Guinea Peru Poland Romania Saudi Arabia Senegal

Spain Sri Lanka Sudan, Republic of Sweden Switzerland Taiwan Turkey Turkmenistan United Arap Emirates United Kingdom United States of America Uruguay Uzbekistan Vietnam, Socialist Republic of Yemen Zimbabwe

6. CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES

In the interest of promoting and protecting foreign investment, the Malaysia government ratified the provisions of the Convention on the Settlement of Investment Disputes in 1996. The Convention, established under the auspices of the International Bank for Reconstruction and Development (IBRD), Provides international conciliation or arbitration through the International Centre for Settlement of Investment Disputes located at IBRD's principal office in Washington.

7. REGIONAL CENTRE FOR ARBITRATION

The Kuala Lumpur Regional Centre for Arbitration was established in 1978 under the auspices of the Asian-African Legal Consultative Committee (AALCC)- an inter-governmental organisation in cooperation with and assisted by the Malaysian Government.

 

A non-profit organisation, the Centre serves the Asia Pacific region. It airms to provide a system to settle disputes for the benefit of parties engaged in trade, commerce and investments with and within the region.

 

Any dispute, controversy or claim arising out of or relating to a contract, or the breach, termination or invalidaty shall be decided by arbitration in accordance with the Rules for Arbitration of the Kuala Lumpur regional Centre for Arbitration.