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
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
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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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
TARGETED SERVICES SECTORS
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Education
Technical, Vocational & Science Training
Healthcare Travel (Medical Tourism)
Private hospitals
TARGETED SERVICES SECTORS
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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 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
20 Domestic Investment Strategic Fund
Domestic Investment Strategic Fund
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
Domestic Investment Strategic Fund
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
21 Domestic Investment Strategic Fund
Domestic Investment Strategic Fund
New and existing companies in the manufacturing and services sectors with Malaysian equity ownership of at least 60%
Eligibility Criteria
22 Domestic Investment Strategic Fund
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
Domestic Investment Strategic Fund
Effective Date of Application
Applications received on or after 3 July 2012 are eligible to be considered for this incentive
23 Domestic Investment Strategic Fund
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
Incentive for Acquiring a Foreign Companyfor High Technology
Eligibility Criteria
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
Incentive for Acquiring a Foreign Companyfor High Technology
Eligibility Criteria
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
Incentive for Acquiring a Foreign Company for High Technology
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Incentive for Acquiring a Foreign Companyfor High Technology
Eligibility Criteria
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
Incentive for Acquiring a Foreign Company for High Technology
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Mechanism
Incentives to be provided under the Income Tax Act, 1967 and approved through the NCI
Incentive for Acquiring a Foreign Company for High Technology
Incentive for Acquiring a Foreign Company for High Technology
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
Eligibility Criteria
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Incentive for Acquiring a Foreign Company for High Technology
Effective Date of Application
Applications received by MIDA from 3 July 2012 until 31 December 2016 are eligible to be considered for this incentive
Incentive for Acquiring a Foreign Company for High Technology
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.
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
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
Eligibility Criteria
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Eligibility Criteria
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
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
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Incentive to be provided under the PIA, 1986 and to be considered by the NCI
Mechanism
Effective Date of Application
Applications received by MIDA from 3 July 2012 are eligible to be considered for this incentive
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
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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
Effective Date of Application
Applications received by MIDA from 3 July 2012 are eligible to be considered for this incentive
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives
Definition of Small Scale Company under the PIA, 1986 and Criteria for the Granting of Tax Incentives