technopreneurship & innovation symposium & exhibition (tise) 22 october 2012 incentives...

TECHNOPRENEURSHIP & INNOVATION SYMPOSIUM & EXHIBITION (TISE)

22 OCTOBER 2012

INCENTIVES & SUPPORT FOR LOCAL INVESTORS & TECHNOPRENEURS

PRESENTATION BY :

MR. NIK NASRI NIK AHMAD DOMESTIC INVESTMENT PROMOTION DIVISION

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CONTENT Functions of MIDA

EconomicTransformation Programme Investment Opportunities and Policies

Incentives for Domestic Direct Investment

(DDI)

Performance of the Manufacturing &

Services Sector

FUNCTIONS OF MIDA

Foreign Direct Investment Domestic Investment Manufacturing ServicesPromotionPromotion

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

EvaluationEvaluation

Follow-up /Follow-up /MonitoringMonitoring

PlanningPlanning

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

FUNCTIONS OF MIDAFUNCTIONS OF MIDA

EconomicTransformation Programme

EconomicTransformation Programme - 10 Years Economic Road Map

INVESTMENT OPPORTUNITIES AND POLICIES IN THE MANUFACTURING & SERVICES SECTORS

Electronics & Electrical Industries :

Machinery & Equipment:

• High-technology based products using wireless and convergence technology

• Mobile application

• Solar wafer / cells / modules

• Semiconductors • Automated equipment for semiconductor, solar, medical & automotive industries• Process machinery for food & beverages and oil & gas

• Packaging machinery

INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR

Petrochemical Industry : • Alpha-olefins & fatty alcohols, propylene oxide & caprolactam

• Renewable & biodegradable materials

Aerospace Industry :• Maintenance, Repair and Overhaul (MRO) •Aerospace Manufacturing

Food Processsing Industry :• Processed meat & seafood• Beverages, food ingredients, dairy

products & confectionary

Resourced-based industries :

• Food & Agro based• Value-added products from natural resources

Palm Oil Industry :• Oleochemicals• Palm-based nutraceuticals,

constituents of palm oil/palm kernel oil & palm biomass

• Palm-based food products – specialty animal fat replacer, mayonnaise & salad dressing

INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR

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MAJOR COMPANIES IN MALAYSIA

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Logistics

Integrated Logistics Services Cold Chain Facilities

Tourism

HotelTourist projectRecreational campConvention centre

TARGETED SERVICES SECTORS

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Environmental Management Energy conservation/efficiency Energy generation, using renewable energy sources Storage, treatment and disposal of hazardous waste Recycling of agricultural waste and agricultural by-

products

Business Services Shared services outsourcing Research & Development (R&D) ICT Services Market Support Services Film & Video Production & Post Production


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Education

Technical, Vocational & Science Training

Healthcare Travel (Medical Tourism)

Private hospitals


INCENTIVES FOR DDI

MAJOR INCENTIVES PROVIDED

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APPROVAL ON INCENTIVES FOR R&D AND TRAINING FOR 2009 –

2012 (June)2009

(RM mil)2010

(RM mil)2011

(RM mil)2012

(RM mil)

R & D 25.6 12.4 7.6 11.5

Training 31.1 148.0 171.9 -

Total 56.7 160.4 179.5 11.5

Year

Incentive

NEW DOMESTIC DIRECT INVESTMENT (DDI) INITIATIVES

Incentives Announced:•Domestic Investment Strategic Fund•Incentives for Acquiring a Foreign Company for High Technology•Incentives for Small Scale Companies

Domestic InvestmentStrategic Fund1

Domestic Investment Strategic Fund of RM1 billion

Domestic Investment Strategic Fund

To accelerate the shift of Malaysian-owned companies in targeted industries to high value-added, high technology, knowledge-intensive and innovation-based industries

Objectives

19 Domestic Investment Strategic Fund

The fund aims to:

• Harness and leverage on outsourcing opportunities created by MNCs operating in Malaysia

• Intensify technology acquisition by Malaysian-owned companies• Enable Malaysian-owned companies to obtain international standards/

certifications in strategic industries



The fund does not offer an outright grant and is contingent on the investments of the applicants

Mechanism

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

Provided under the Customised Incentive Scheme, Section 127, Income Tax Act 1967

Matching grants (1:1) on reimbursable basis


The fund will provide matching grants to cater for expenditures incurred for the following activities:

• Training of Malaysians

• R&D activities carried out in Malaysia

• Obtaining international standards/certification

• Licensing or purchase of new/high technology

• Modernisation and upgrading of facilities and tools to undertake manufacturing or services activities for Multinational Corporations (MNCs) and Malaysian conglomerates (outsourcing activities)

Scope of the Fund



New and existing companies in the manufacturing and services sectors with Malaysian equity ownership of at least 60%

Eligibility Criteria


Incorporated under the Companies Act, 1965

Companies producing promoted products/engaged in promoted activities in the following priority sectors:

• Services including design, R&D, testing, quality and standard certification, engineering services, technical and skills training and logistics service providers (3PL)

• Other industries, on a case by case basis


Effective Date of Application

Applications received on or after 3 July 2012 are eligible to be considered for this incentive


2 Incentive for Acquiring a Foreign Company for High Technology

Malaysian-owned company acquiring a foreign-owned company abroad will be eligible for an annual deduction of 20% of the acquisition cost for5 years

Purpose of acquisition:

• Establishment of a manufacturing facility/company or services company within Malaysia

• Utilisation of the acquired technology in their existing operations within Malaysia

Incentive for Acquiring a Foreign Companyfor High Technology

Reintroduction of the incentive for acquisition of foreign companies

25 Incentive for Acquiring a Foreign Company for High Technology

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Acquirer must be a locally owned company with at least 60% Malaysian equity ownership involved in manufacturing and services activities



For a public listed company:

Malaysian equity ownership of at least 60% must be held for a period of 5 years from date of application

Acquisition by a holding company having interests in manufacturing or services activities will be considered on a case by case basis

Incentive for Acquiring a Foreign Company for High Technology

• At least 60% of its equity is directly owned by Malaysians on the first day of listing on the stock exchange; and

• At least 50% of its equity is directly owned by Malaysians

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Acquiree must be a foreign company with 100% foreign equity ownership that is located abroad and uses the high technology in the activity of manufacturing or services



Acquisition should be a direct acquisition of at least 51% of the equity of the foreign company abroad

Acquisition must be in the form of a cash transaction

Acquisition must be completed within three years


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Acquisition of the foreign technology company must result in increase of performance or enhancement of technology and processes of the company’s operation in Malaysia

Acquisition costs eligible for the deduction comprise:

• Value of shares purchased by the Malaysian company (acquirer)

• Incidental costs, including professional fees paid to bankers, valuers, auditors, accountants, tax agents, consultants, or legal advisers; cost of transfers including stamp duties; related travelling and accommodation expenses incurred for the purpose of the acquisition


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Mechanism

Incentives to be provided under the Income Tax Act, 1967 and approved through the NCI



Definition of High Technology means new and emerging technologies acquired by a locally owned company in Malaysia with the object of using the high technology for:

• The production or improvement of material, devices, products, produce or processes; or

• The improvement of processes or quality of the selected services


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Applications received by MIDA from 3 July 2012 until 31 December 2016 are eligible to be considered for this incentive


Definition of Small Scale Company under the Promotion of Investments Act (PIA), 1986 and Criteria for the Granting of Tax Incentives

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Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives

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Redefinition:Companies incorporated in Malaysia with shareholders’ fund not exceeding RM2.5 million and having 60% to 100% Malaysian equity

Previous Definition:Small scale companies incorporated in Malaysia with shareholders’ fund not exceeding RM500,000 and having at least 60% Malaysian equity

Incentives:

• PS with income tax exemption of 100% of statutory income for 5 years; or

• Investment Tax Allowance (ITA) of 60% of qualifying capital expenditure incurred within a period of 5 years. The allowance can be offset against 100% of statutory income in that year of assessment.



33 Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives

Shareholders’ funds not exceeding RM2.5 million

Incorporated under Companies Act, 1965

Malaysian equity ownership:

• Companies with shareholders’ fund of up to RM500,000 with at least 60% Malaysian equity

• Companies with shareholders’ fund of above RM500,000 and less than RM2.5 million with 100% Malaysian equity


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Applicant must fulfill the following conditions:

• Value Added (VA) – 25%• Managerial, Technical and Supervisory Staff (MTS) index - 20%• Not more than 20% of the equity of the applicant company is owned, whether

directly or indirectly controlled, by a holding company having shareholders’ funds of more than RM2.5 million

Producing products/engaged in activities listed in the list of promoted products/activities for small companies or general promoted list

For companies with shareholders’ fund of above RM500,000 and less than RM2.5 million and producing products/engaged in activities listed in the general promoted list, the prevailing rates on VA and MTS index under the general promoted list will be applicable



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Incentive to be provided under the PIA, 1986 and to be considered by the NCI

Mechanism


Applications received by MIDA from 3 July 2012 are eligible to be considered for this incentive



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Incentives to be provided under Section 127 (3)(b) of the Income Tax Act, 1967 and to be considered by the NCI

Mechanism


Applications received by MIDA from 3 July 2012 are eligible to be considered for this incentive



technopreneurship & innovation symposium & exhibition (tise) 22 october 2012 incentives...

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