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MunichParis

Stockholm

AmsterdamLondon

FrankfurtVienna

Zurich

Milan

RomeIstanbul

Cairo

Cape Town

New Delhi

YangonVientiane

Hong Kong

Guangzhou Taipei

ManilaPhnomPenh

H.C. Minh City

B.S. BegawanKualaLumpur

Singapore

MALAYSIA

Jakarta

Sydney

Shanghai

SeoulBeijing

TokyoOsaka

Auckland

Mumbai

DubaiKarachi

BostonNew YorkChicago

Houston

Buenos Aires

Los Angeles

San Jose

Vancouver

TOTAL AREA330,000 square kilometres (127,000 square miles)

POLITICAL STRUCTUREA federation of 13 states

SYSTEM OF GOVERNMENTParliamentary democracy with a constitutional monarch

FEDERAL CAPITALKuala Lumpur

ADMINISTRATIVE CENTREPutrajaya

POPULATION28.6 million

MAJOR ETHNIC GROUPSMalays, Chinese, Indians, Kadazans, Ibans

MAJOR LANGUAGESBahasa Malaysia (official language), English, Mandarin, Tamil

MAJOR RELIGIONSIslam, Buddhism, Christianity, Hinduism

TIME GMT +8 hours US Eastern Standard Time +13 hours

CLIMATETropical - warm and sunny throughout the year.Daily temperatures range from 33˚C (90˚F) in the afternoon to 22˚C (70˚F) during the night.

CURRENCYRinggit Malaysia (RM) which is divided into 100 sen

EXCHANGE RATEThe Ringgit exchange rate operates on a managed-float regime against a trade-weighted basket of currencies.

For latest updates, please visit MIDA’s website http://www.mida.gov.my

CopyrightNo part of this book may be reproduced, stored in a retrieval system in any form by any means, including electronic, photocopying, recording or otherwise, without the prior written permission of the Malaysian Investment Development Authority (MIDA).

DisclaimerMIDA has made every effort to ensure that all information is up-to-date and correct at the time of printing. We cannot take any responsibility for any incorrect information or omission, published in this guidebook.

© MIDA - All right reserved

FACTS ON MALAYSIA

MunichParis

Stockholm

AmsterdamLondon

FrankfurtVienna

Zurich

Milan

RomeIstanbul

Cairo

Cape Town

New Delhi

YangonVientiane

Hong Kong

Guangzhou Taipei

ManilaPhnomPenh

H.C. Minh City

B.S. BegawanKualaLumpur

Singapore

MALAYSIA

Jakarta

Sydney

Shanghai

SeoulBeijing

TokyoOsaka

Auckland

Mumbai

DubaiKarachi

BostonNew YorkChicago

Houston

Buenos Aires

Los Angeles

San Jose

Vancouver

Kuala Lumpur

Perlis

Kedah

Penang

Perak

Selangor

Melaka

Johor

Kelantan

Pahang

Terengganu Sabah

Sarawak

NegeriSembilan

M A L A Y S I A

THE LOCATION

Malaysia lies just above the equator, right in the heart of South-East Asia. Peninsular Malaysia, with 11 states, is at the southernmost tip of the Asian Continent, while the states of Sabah and Sarawak are located on the northern and western coasts of the island of Borneo.

Location of MIDA’s offices

The Ministry of International Trade & Industry (MITI) spearheads the development of industrial activities to further enhance Malaysia’s economic growth. As an agency under MITI, the Malaysian Investment Development Authority (MIDA) is in charge of the promotion and coordination of industrial development in the country.

MIDA is the first point of contact for investors who intend to set up projects in the manufacturing and services sectors in Malaysia. With its headquarters in Malaysia’s capital city of Kuala Lumpur, MIDA has established a global network of 23 overseas offices covering North America, Europe, Asia Pacific and Africa to assist investors interested in establishing manufacturing projects and services activities in Malaysia. Within Malaysia, MIDA has 12 branch offices in the various states to facilitate investors in the implementation and operation of their projects.

If you wish to investigate investment opportunities in Malaysia, please contact MIDA for more information as well as assistance in your decision-making (please see the last page for contact details of MIDA’s headquarters, state and overseas offices.)

GETTING STARTED..........................................................................

INCENTIVES FOR INVESTMENT......................................................

TAXATION.....................................................................................

IMMIGRATION PROCEDURES.........................................................

MANPOWER FOR INDUSTRY..........................................................

BANKING, FINANCE AND EXCHANGE ADMINISTRATION............

INTELLECTUAL PROPERTY PROTECTION.......................................

ENVIRONMENTAL MANAGEMENT..................................................

INFRASTRUCTURE SUPPORT...........................................................

USEFUL ADDRESSES

Chapter 1GettinG StarteD

1. APPROVAL OF MANUFACTURING PROJECTS 3 1.1 The Industrial Co-ordination Act 1975 3 1.2 Guidelines for Approval of Industrial Projects 4

2. INCORPORATING A COMPANY 4 2.1 Methods of Conducting Business in Malaysia 4 2.2 Procedure for Incorporation 5 2.3 Registration of Foreign Companies 7 2.4 LLP Structure 9 2.5 E-Services 11

3. GUIDELINES ON EqUITY POLICY 12 3.1 Equity Policy in the Manufacturing Sector 12 3.2 Protection of Foreign Investments 12

Chapter 2inCentiVeS FOr neW inVeStMentS

1. INCENTIVES FOR THE MANUFACTURING SECTOR 192. INCENTIVES FOR THE AGRICULTURAL SECTOR 30 3. INCENTIVES FOR THE BIOTECHNOLOGY INDUSTRY 384. INCENTIVES FOR THE TOURISM INDUSTRY 40 5. INCENTIVES FOR ENVIRONMENTAL 44 MANAGEMENT6. INCENTIVES FOR RESEARCH AND DEVELOPMENT 487. INCENTIVES FOR TRAINING 52 8. INCENTIVES FOR APPROVED SERVICE PROJECTS 559. INCENTIVES FOR THE SHIPPING AND 56 THE TRANSPORTATION INDUSTRY10. INCENTIVES FOR MSC MALAYSIA 5711. INCENTIVES FOR INFORMATION AND 58 COMMUNICATION TECHNOLOGY (ICT) 12. INTEGRATED LOGISTICS SERVICES (ILS) 5813. INTERNATIONAL INTEGRATED LOGISTICS 60 SERVICES (IILS)14. COLD CHAIN FACILITIES AND SERVICES 61 FOR FOOD PRODUCTS 15. REPRESENTATIVE OFFICE (RE)/REGIONAL 62 OFFICES (RO)16. TREASURY MANAGEMENT CENTRE (TMC) 6417. INCENTIVES FOR PROVIDERS OF INDUSTRIAL 67 DESIGN SERVICES IN MALAYSIA18. INCENTIVES FOR PRIVATE AND 67 INTERNATIONAL SCHOOLS19. INCENTIVES FOR EARLY YEARS EDUCATIONS 6820. INCENTIVES FOR PRIVATE HEALTHCARE FACILITIES 69 FOR THE PROMOTION OF HEALTHCARE TRAVEL21. DOMESTIC INVESTMENT STRATEGIC FUND 7022. ENCOURAGE SMALL MALAYSIAN SERVICE 72 PROVIDERS TO MERGE INTO LARGER ENTITIES23. GUIDELINES FOR INCENTIVE FOR ACqUIRING 73 A FOREIGN COMPANY FOR HIGH TECHNOLOGY24. INCENTIVES UNDER THE 2015 BUDGET 7525. OTHER INCENTIVES 81

Chapter 3taXatiOn

1. TAXATION IN MALAYSIA 91

2. CLASSES OF INCOME ON WHICH TAX IS 91 CHARGEABLE

3. COMPANY TAX 91

4. PERSONAL INCOME TAX 92 4.1 Resident Individual 92 4.2 Non-Resident Individual 95

5. WITHHOLDING TAX 95

6. REAL PROPERTY GAINS TAX 96

7. GOODS AND SERVICES TAX 97

8. IMPORT DUTY 98

9. EXCISE DUTY 98

10. CUSTOMS APPEAL TRIBUNAL AND CUSTOMS 98 RULING

11. DOUBLE TAXATION AGREEMENT 99

Chapter 4iMMiGratiOn PrOCeDUreS

1. ENTRY REqUIREMENTS INTO MALAYSIA 103 1.1 Passport or Travel Document 103 1.2 Visa Requirement 103 1.3 Passes Requirements 105

2. EMPLOYMENT OF EXPATRIATE PERSONNEL 107 2.1 Types of Expatriate Posts 108 2.2 Guidelines on the Employment of 108 Expatriate Personnel

3. APPLYING FOR EXPATRIATE POSTS 110

4. EMPLOYMENT OF FOREIGN WORKERS 110

Chapter 5ManPOWer FOr inDUStrY

1. MALAYSIA’S LABOUR FORCE 115

2. MANPOWER DEVELOPMENT 115 2.1 Facilities for Training in Industrial Skill 115 2.2 Human Resource Development Fund 116 2.3 Management Personnel 117

3. LABOUR COSTS 117

4. FACILITIES FOR RECRUITMENT 118

5. LABOUR STANDARDS 118 5.1 Employment Act 1955 118 5.2 The Labour Ordinance, Sabah and the 119 Labour Ordinance, Sarawak 5.3 Employees Provident Fund Act 1991 120 5.4 Employees’ Social Security Act 1969 121 5.5 Workmen’s Compensation Act 1952 122 5.6 Occupational Safety and Health Act 1994 122

6. INDUSTRIAL RELATION 125 6.1 Trade Unions 125 6.2 Industrial Relations Act 1967 125 6.3 Relations in Non-Unionised Establishments 126

Contents

Chapter 6BanKinG, FinanCe anD eXCHanGe aDMiniStratiOn

1. THE FINANCIAL SYSTEM IN MALAYSIA 129 1.1 The Central Bank 129 1.2 Financial Institutions 130 1.3 Malaysia International Islamic 132 Financial Centre

2. EXPORT CREDIT REFINANCING 132 2.1 Method of Financing 133 2.2 Period and Margin of Financing 133 2.3 Repayment 133

3. THE SECURITIES MARKET IN MALAYSIA 134 3.1 Securities Commission Malaysia 134 3.2 Bursa Malaysia 134

4. LABUAN FINANCIAL SERVICES 136 4.1 Labuan Financial Services Authority 136 (Labuan FSA) 4.2 Doing Business in the Labuan IBFC 136 4.3 Business Activities of Labuan IBFC 137

5. FOREIGN EXCHANGE ADMINISTRATION RULES 137 5.1 Rules applicable to Non-Residents 137 5.2 Rules applicable to Residents 139

Chapter 7intelleCtUal PrOPertY PrOteCtiOn

1. INTELLECTUAL PROPERTY PROTECTION 143 1.1 Patents 143 1.2 Trade Marks 144 1.3 Industrial Designs 144 1.4 Copyright 145 1.5 Layout Design of Integrated Circuit 145 1.6 Geographical Indications 146

Chapter 8enVirOnMental ManaGeMent

1. POLICY 149

2. ENVIRONMENTAL REqUIREMENTS 150 2.1 Environmental Impact Assessment for 150 Prescribed Activities 2.2 Who Can Conduct EIA Study 154 2.3 Site Suitability Evaluation 154 2.4 Written Notification or Permission to Construct 155 2.5 Written Approval for Installation of Incinerator, 155 Fuel Burning Equipment and Chimney 2.6 Licence to Occupy Prescribed Premises 156 and Prescribed Conveyances 2.7 Gaseous Emission and Effluent Standards 156 2.8 Control-on Ozone Depleting Substances 156 2.9 Scheduled Wastes Management 156

3. INCENTIVES FOR ENVIRONMENTAL 158 MANAGEMENT

Chapter 9inFraStrUCtUre SUPPOrt

1. INDUSTRIAL LAND 161 1.1 Industrial Estates 161 1.2 Free Zones 161 1.3 Licenced Manufacturing Warehouses 162

2. ELECTRICITY SUPPLY 162

3. WATER SUPPLY 163

4. TELECOMUNICATION SERVICES 163

5. AIR CARGO FACILITIES 163

6. SEA PORTS 165

7. CARGO TRANSPORTATION 165 7.1 Container Haulage 165 7.2 Freight Forwarding 166

8. HIGHWAYS 166

9. RAILWAY SERVICES 166

10. MSC MALAYSIA 166

USeFUl aDDreSSeS

MINISTRIES 171 RELEVANT ORGANISATIONS 172 MITI OVERSEAS OFFICES 173 MATRADE OVERSEAS OFFICES 174 MATRADE STATE OFFICES 177 MIDA STATE OFFICES 178 MIDA OVERSEAS OFFICES 179

BaCK POCKet

Appendix I • ListofPromotedActivitiesandProducts - General

Appendix II • ListofPromotedActivitiesandProducts - High Technology Companies

Appendix III • ListofPromotedActivitiesandProducts - Small Scale Companies

Appendix IV • ListofPromotedActivitiesandProducts - Selected Industries Appendix V • ListofPromotedActivitiesandProducts - Reinvestment

Chapter 1

GETTING STARTED1. APPROVAL OF MANUFACTURING PROJECTS 1.1 The Industrial Co-ordination Act 1975 1.2 Guidelines for Approval of Industrial Projects 2 INCORPORATING A COMPANY 2.1 Methods of Conducting Business in Malaysia 2.1.1 Company Structure 2.1.2 Company Limited by Shares 2.2 Procedure for Incorporation 2.2.1 Requirements of a Locally Incorporated Company

2.3 Registration of Foreign Companies 2.3.1 Registration Procedures

2.4 LLP Structure 2.4.1 Features of an LLP 2.4.2 Who may form an LLP? 2.4.3 Procedure for Registration 2.4.4 Conversion to an LLP 2.4.5 Requirements of an LLP

2.5 E-Services

3. GUIDELINES ON EqUITY POLICY

3.1 Equity Policy in the Manufacturing Sector 3.2 Protection of Foreign Investment

GETTING STARTED 2

1

3

Chapter 1

GETTING STARTED1. aPPrOVal OF ManUFaCtUrinG PrOJeCtS

1.1 the industrial Co-ordination act 1975

The Industrial Co-ordination Act 1975 (ICA) was introduced with the aim to maintain an orderly development and growth in the country’s manufacturing sector.

The ICA requires manufacturing companies with shareholders’ funds of RM2.5 million and above or engaging 75 or more full-time paid employees to apply for a manufacturing licence for approval by the Ministry of International Trade and Industry (MITI).

Applications for manufacturing licences are to be submitted to the Malaysian Investment Development Authority (MIDA), an agency under MITI in charge of the promotion and coordination of industrial development in Malaysia.

the iCa defines:

• “Manufacturing activity” as the making, altering, blending, ornamenting,finishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal; and includes the assembly of parts and ship repairing but shall not include any activity normally associated with retail or wholesale trade.

• “Shareholders’ funds” as the aggregate amount of a company’s paid-upcapital, reserves, balance of share premium account and balance of profit and loss appropriation account, where:

- Paid-up capital shall be in respect of preference shares and ordinary shares and not including any amount in respect of bonus shares to the extent they were issued out of capital reserve created by revaluation of fixed assets.

- Reserves shall be reserves other than any capital reserve created by revaluation of fixed assets and provisions for depreciation, renewals or replacements and diminution in value of assets.

- Balance of share premium account shall not include any amount credited therein at the instance of issuing bonus shares at premium out of capital reserve by revaluation of fixed assets.

• “Full-time paid employees” as all persons normally working in theestablishment for at least six hours a day and at least 20 days a month for 12 months during the year and who receive a salary.

This includes traveling sales, engineering, maintenance and repair personnel who are paid by and are under the control of the establishment.

It also includes directors of incorporated enterprises except those paid solely for their attendance at board of directors meetings. The definition encompasses family workers who receive regular salaries or allowances and who contribute to the Employees Provident Fund (EPF) or other superannuation funds.

GETTING STARTED 4

1.2 Guidelines for approval of industrial Projects

The government’s guidelines for approval of industrial projects in Malaysia are based on the Capital Investment per Employee (C/E) Ratio. Projects with a C/E Ratio of less than RM55,000 are categorized as labour-intensive and thus will not qualify for a manufacturing licence or for tax incentives. Nevertheless, a project will be exempted from the above guidelines if it fulfils one of the following criteria:

• Thevalue-addedis30%ormore

• TheManagerial,TechnicalandSupervisory(MTS)Indexis15%ormore

• Theprojectundertakepromotedactivitiesormanufactureproductsaslistedinthe List of Promoted Activities and Products for High Technology Companies

• Existingcompanies(formerlyexempted)applyingforamanufacturinglicence.

expansion of Production Capacity and Product Diversification A licenced company which desires to expand its production capacity or diversify its product range by manufacturing additional products will need to apply to MIDA.

2. inCOrPOratinG a COMPanY

2.1 Methods of Conducting Business in Malaysia

In Malaysia, a business may be conducted:

i. By an individual operating as a sole proprietor, or

ii. By two or more (but not more than 20) persons in partnership, or

iii. By a limited liability partnership (LLP), or

iv. By a locally incorporated company or by a foreign company registered under the provisions of the Companies Act (CA) 1965.

All sole proprietorships and partnerships in Malaysia must be registered with the Companies Commission of Malaysia (SSM) under the Registration of Businesses Act 1956. In the case of partnerships, partners are both jointly and severally liable for the debts and obligations of the partnership should its assets be insufficient. Formal partnership deeds may be drawn up governing the rights and obligations of each partner but this is not obligatory.

2.1.1 Company Structure

The CA 1965 governs all companies in Malaysia. The Act stipulates that a company must be registered with the SSM in order to engage in any business activity.

There are three (3) types of companies that can be incorporated under the CA 1965:

i. A company limited by shares is a company formed on the principle that the members’ liability is limited by the memorandum of association to the amount, if any, unpaid on the shares taken up by them.

5

ii. In a company limited by guarantee, the liability of the members is limited by the Memorandum and Articles of Association to the amount which the members have undertaken to contribute to the assets of the company in the event the company is wound up.

iii. An unlimited company, is a company formed on the principle of having no limit placed on the liability of its members.

2.1.2 Company limited by Shares

The most common company structure in Malaysia is a company limited by shares. Such limited companies may be incorporated either as a Private Limited Company (identified through the words “Sendirian Berhad” or “Sdn Bhd” as part of thecompany’s name) or a Public Limited Company (identified through the words “Berhad”or“Bhd”aspartofthecompany’sname).

A company having a share capital may be incorporated as a private company if its Memorandum and Articles of Association:

i. Restricts the right to transfer its shares

ii. Limits the number of its members to 50, excluding employees in the employment of the company or its subsidiary and some former employees of the company or its subsidiary

iii. Prohibits any invitation to the public to subscribe for its shares and debentures

iv. Prohibits any invitation to the public to deposit money with the company for fixed periods of payable at call, whether interest-bearing or interest-free.

A public company can be formed or, alternatively, a private company can be converted into a public company subject to Section 26 of the Companies Act 1965. Such a company can offer shares to the public provided:

i. It has registered a prospectus with the Securities Commission

ii. It has lodged a copy of the prospectus with the SSM on or before the date of its issue.

A public company can apply to have its shares quoted on the Bursa Malaysia subject to compliance with the requirements laid down by the exchange. Any subsequent issue of securities (e.g. issue by way of rights or bonus, or issue arising from an acquisition, etc.) requires the approval of the Securities Commission.

2.2 Procedure for incorporation

To incorporate a company, an application must be made to the SSM using Form 13A together with a payment of RM30 (for each name applied) in order to determine if the proposed name of the intended company is available. The application will be approved if name is available and the proposed name will be reserved for the applicant for three months.

The following incorporation documents are to be submitted to the SSM within the three months from the date of the approval of the company’s name:

i. Memorandum and Articles of Association

ii. Declaration of Compliance (Form 6)

GETTING STARTED 6

iii. Statutory Declaration by a person before appointment as a director, or by a promoter before incorporation of a company (Form 48A).

iv. Additional documents which would include:

• TheoriginalForm13A

• AcopyoftheletterfromSSMapprovingthenameofthecompany

• Acopyoftheidentitycardofeachdirectorandcompanysecretaryoracopy of the passport where a foreign director is appointed.

The Memorandum of Association documents the company’s name, the objectives, the amount of its authorized capital (if any) proposed for registration and its division into shares of a fixed amount.

The Articles of Association describes the regulations governing the internal management of the affairs of the company and the conduct of its business.

Once the Certificate of Incorporation is issued, the company shall be a body corporate, capable of exercising the functions of an incorporated company and of suing and being sued. It has a perpetual succession under common seal with power to hold land, but with such liability on the part of the members to contribute to its assets in the event of it being wound up, as provided for in the CA 1965.

At present, the incorporation of local companies can be completed within one (1) day through the introduction of the single interaction counter which was introduced since 1 April 2010.

incorporation of Companies – Client’s Charter

SSM undertakes to process, approve and register a complete application in a speedy and efficient manner within the time period stated as follows:

activity time

COMPanY reGiStratiOn

Incorporation of a company 1 day

Conversion of status 1 day

Change of company name 1 day

Commencement of business for public companies 1 day

Registration of charge 2 days

Approval of a trust deed 5 days

Registration of prospectus 3 days

Uncertified copy of company documents 30 mins

Certified copy of company documents 1 hour

* Application for the approval of company name only, may be made without incorporating the company.

** Time taken begins from the moment payment is received until the certificate is issued.

7

2.2.1 requirements of a locally incorporated Company

A company must maintain a registered office in Malaysia where all books and documents required under the provisions of the Act are kept. The name of the company shall appear in legible Romanized letters, together with the company number, on its seal and documents.

A company cannot deal with its own shares or hold shares in its holding company. Each equity share of a public company carries only one vote at a poll at any general meeting of the company. A private company may, however, provide for varying voting rights for its shareholders.

The secretary of a company must be a natural person of full age who has his principal or only place of residence in Malaysia. He must be a member of a prescribed body or is licenced by the Registrar of Companies. The company must also appoint an approved company auditor to be the company auditor in Malaysia.

In addition, the company shall have at least two directors who each has his principal or only place of residence within Malaysia. Directors of public companies or subsidiaries of public companies normally must not exceed 70 years of age. A director of the company need not necessarily be a shareholder of the company.

2.3 registration of Foreign Companies

A foreign company may carry on business in Malaysia by either:

i. incorporating a local company; or

ii. registering a branch in Malaysia.

Foreign company is defined under the CA 1965 as:

i. a company, corporation, society, association or other body incorporated outside Malaysia; or

ii. an unincorporated society, association, or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia.

2.3.1 registration Procedures

i. An applicant must first conduct a name search in order to determine if the proposed name for the intended company is available. The name to be used to register the foreign company should be the same as registered in its country of origin.

Applications should be submitted to the SSM using Form 13A with a payment of RM30 for each name applied. When the proposed company’s name is approved by SSM, it shall be valid for three months from the date of approval.

GETTING STARTED 8

ii. Upon approval, applicants must submit the following registration documents to the SSM within three months from the date of approval:

a. A certified copy of the certificate of incorporation or registration of the foreign company;

b. A certified copy of the foreign company’s charter, statute or Memorandum and Articles of Association or other instrument defining its constitution;

c. Form 79 (Return by Foreign Company Giving Particulars of Directors and Change of Particulars)

If the list includes directors residing in Malaysia who are members of the local board of directors of the foreign company, a memorandum stating their powers that are executed by or on behalf of the foreign company, should be submitted to SSM.

d. A memorandum of appointment or power of attorney authorizing the person(s) residing in Malaysia, to accept on behalf of the foreign company, any notices required to be served on such foreign company;

e. Form 80 (Statutory Declaration by Agent of Foreign Company); and additional documents consisting of the original Form 13A as well as a copy of the letter from SSM approving the name of the foreign company.

Note: If any of the described registration documents are in languages other than Bahasa Malaysia or English, a certified translation of such documents in Bahasa Malaysia or English shall be required.

iii. Registration fees shall be made to the SSM as per the following schedule:

authorized Share Capital (rM) Fees Payable (rM)

Up to 400,000 1,000

400,001 - 500,000 3,000

500,001 - 1,000,000 5,000

1,000,001 - 5,000,000 8,000

5,000,001 - 10,000,000 10,000

10,000,001 - 25,000,000 20,000

25,000,001 - 50, 000,000 40,000

50,000,001 - 100,000,000 50,000

100,000,001 and above 70,000 In determining the amount of registration fees, the nominal share capital of

the foreign company should first be converted to the Malaysian currency (Ringgit Malaysia) at the prevailing exchange rate.

In the event a foreign company does not prescribe any share capital and does not engage in trade, commerce or industry including transportation, a flat rate of RM1,000 shall be paid to SSM.

9

iv. A Certificate of Registration will be issued by SSM upon compliance with the registration procedures and submission of duly completed registration documents.

v. Upon approval, the company or its agent is responsible for ensuring compliance of the Companies Act 1965. Any change in the particulars of the company or in the company’s name or authorized capital must be filed with SSM within one month from the date of change together with the appropriate fees. Every company is required to keep proper accounting records. Annual return must be lodged with SSM once in every calendar year.

Note: Foreigners are advised to seek the services of an advocate and solicitor, an accountant or a practicing company secretary for further assistance.

2.4 limited liability Partnership (llP) Structure

2.4.1 Features of an llP

An LLP is a body corporate and has legal personality separate from its partners. Like any other body corporate, LLP has perpetual succession. Any changes in the partners will not affect the existence, rights or liabilities of the LLP. LLP has unlimited capacity and capable of suing and being sued, acquiring, owning, holding and developing or disposing of property. LLP may do and suffer such other acts and things as bodies corporate may lawfully do and suffer. An LLP is a business vehicle which would offer simple and flexible procedures in terms of its formation, maintenance and termination.

The registration fee for a new LLP and conversion is RM500. The fee for the application of name is RM30.

2.4.2 Who may form an llP

An LLP may be formed by a minimum of two persons (wholly or partly individuals or bodies corporate) for any lawful business with a view of profit and in accordance with the terms of the LLP agreement. Any individual or body corporate can be a partner.

However, an LLP formed for professional practice must consist of natural persons of the same profession and have in force professional indemnity insurance as approved by the Registrar.

Thus, LLPs may be set up by the following:

i. Start Ups; or

ii. Small & Medium Sized Businesses; or

iii. Professionals; or

iv. Joint Ventures; or

v. Venture Capitals.

GETTING STARTED 10

2.4.3 Procedure for registration

To register an LLP, an applicant must provide the following information:

i. proposed name of LLP;

ii. nature of business;

iii. address of the registered office;

iv. name and details of the partners;

v. name and details of the compliance officer;

vi. the approval letter (in cases of professional practice).

The application for registration must be accompanied by a payment of RM500. Upon satisfaction of application to register LLP, the Registrar shall register the LLP and issue a notice of registration together with a registration number to the LLP. Notice of registration serves as conclusive evidence that the LLP has been registered. Registration does not mean that requirements of other written law relating to the business of the LLP have been fulfilled. The name of the LLP shall endwith“PerkongsianLiabilitiTerhad”orabbreviationof“PLT”.

2.4.4 Conversion to an llP

Apart from new registration, existing entities may also convert into an LLP. The entities which are allowed to convert are:

i. Conventional partnerships which have been registered under the Registration of Businesses Act 1956 or any partnership established by two or more persons for the carrying on any professional practice; or

ii. Private companies incorporated under the Companies Act 1965.

The eligibility criteria for a conventional partnership to convert into an LLP are as follows:

i. Same partners and no one else;

ii. At the date of application, the conventional partnership appears to be able to pay its debts;

iii. In cases of professional practice, the approval letter from the governing body.

The eligibility criteria for a private company for conversion are:

i. Same shareholders and no one else;

ii. There is no subsisting security interests in its assets;

iii. At the date of application, the private company is solvent;

11

iv. All outstanding statutory fees to government agencies has been settled;

v. Advertisement has been placed in a widely circulated newspaper and the Gazette;

vi. All creditors agreed to the conversion.

The effects of conversion are as follows:

i. Vesting of assets, rights, privileges, obligations and liabilities of the conventional partnership or the private company into the LLP;

ii. Pending proceedings may be continued, completed and enforced against or by the LLP;

iii. Existing agreements, contracts shall have effect as though the LLP were a party;

iv. In the case of the conversion of a conventional partnership, the partners shall continue to be personally liable (jointly and severally with the LLP) for liabilities and obligations incurred prior to the conversion.

v. In the case of the conversion of a private company, the LLP will continue to be liable for the liabilities and obligations incurred prior to the conversion

2.4.5 requirements of an llP

An LLP must appoint at least one compliance officer who may be either one of the partners or persons qualified to act as a secretary under the Companies Act 1965. The compliance officer must be either a citizen or permanent resident of Malaysia and ordinarily resides in Malaysia. A person is disqualified to act as a compliance officer if he is an undercharged bankrupt or is disqualified to act as a director or secretary under the CA 1965.

An LLP must maintain a registered office in Malaysia where communications and notices may be addressed. The LLP has the obligation to keep at the registered office, a notice of registration issued under this Act, a copy of the LLP agreement, the register of name and address of each partners and compliance officer, a copy of the latest annual declaration and if any, a copy of any instrument creating a charge.

An LLP is required to keep accounting records as to show the true and fair view of the state of affairs of the LLP. There is no requirement for the appointment of auditor unless specifically provided for in the LLP agreement.

2.5 e-Services

E-Services were introduced as an alternative to the traditional method of conducting business with SSM i.e. via counter services. It allows for the lodgement of documents (e-Lodgement or MyCoID Services) and the procurement of corporate and business information (e-Info Service). Payments can be made via credit card, direct debit or prepaid accounts.

GETTING STARTED 12

E-lodgement or also known as e-filing would enable companies, business or their authorized personnel to lodge selected statutory required documents over the Internet through the myGovernment portal/ Public Service Portal (PSP). MyCoID on the other hand enables simultaneous registration with the Employees Provident Fund (EPF), the Inland Revenue Board of Malaysia (IRBM), the Social Security Organisation (SOCSO), Small and Medium Enterprise Corporation (SME Corp) and the Human Resources Development Fund (HRDF) once a company is incorporated at SSM via a single submission. Whereas e-Info service enables for the online purchase of corporate and business information.

For further information please visit the SSM website at www.ssm.com.my or www.ssm-einfo.com.my

3. GUiDelineS On eQUitY POliCY

3.1 equity Policy in the Manufacturing Sector

Malaysia has always welcomed investments in its manufacturing sector. Desirous of increasing local participation in this activity, the government encourages joint-ventures between Malaysian and foreign investors.

equity Policy for new, expansion or Diversification Projects

SinceJune2003,foreigninvestorscouldhold100%oftheequityinallinvestmentsin new projects, as well as investments in expansion/diversification projects by existing companies, irrespective of the level of exports and without excluding any product or activity.

The equity policy also applies to:

i. 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 licenced.

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

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 conditions to be removed and approval will be given based on the merit of each case.

3.2 Protection of Foreign investment

Malaysia’s commitment in creating a safe investment environment has attracted more than 8,000 international companies from over 40 countries to make Malaysia their offshore base.

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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 retain the original features of the project.

investment Guarantee agreements

Malaysia’s readiness to conclude Investment Guarantee Agreements (IGAs) is a testimony of the government’s desire to increase foreign investor confidence in Malaysia.

IGAs will:

• Protectagainstnationalizationandexpropriation

• Ensurepromptandadequatecompensationintheeventofnationalizationorexpropriation

• Providefreetransferofprofits,capitalandotherfees

• Ensure settlement of investment disputes under the Convention on theSettlement of Investment Disputes of which Malaysia has been a member since 1966.

Malaysia has concluded Investment Guarantee Agreements (IGAs) with the following groupings and countries (in alphabetical order):

Groupings

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

Countries

AlbaniaAlgeriaArgentinaAustriaBahrainBangladeshBelgo-LuxembourgBosnia HerzegovinaBotswanaBurkina FasoCambodiaCanadaChile, Republic ofChina, People’s Republic ofCroatiaCuba Czech RepublicDenmarkDjibouti, Republic ofEgyptEthiopia, Republic ofFinlandFrance

GermanyGhanaGuineaHungaryIndiaIndonesiaIranItalyJordanKazakhstanKorea, NorthKorea, SouthKuwaitKyrgyz, Republic ofLaosLebanonMacedoniaMalawiMongoliaMoroccoNamibiaNetherlandsNorwayPakistan

Papua New GuineaPeruPolandRomaniaSaudi ArabiaSenegalSlovak, Republic ofSpainSri LankaSudan, Republic ofSwedenSwitzerlandSyrian Arab RepublicTaiwanTurkeyTurkmenistanUnited Arab EmiratesUnited States of AmericaUnited KingdomUruguayUzbekistanVietnamYemenZimbabwe

GETTING STARTED 14

Convention on the Settlement of investment Disputes

In the interest of promoting and protecting foreign investment, the Malaysian government ratified the provisions of the Convention on the Settlement of Investment Disputes in 1966. 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.

Kuala lumpur regional Centre for arbitration

The Kuala Lumpur Regional Centre for Arbitration was established in 1978 under the auspices of the Asian-African Legal Consultative Organization (AALCO) - an inter-governmental organization cooperating with and assisted by the Malaysian government.

A non-profit organization, the Centre serves the Asia Pacific region. It aims 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 invalidity shall be decided by arbitration in accordance with the Rules for Arbitration of the Kuala Lumpur Regional Centre for Arbitration.

Chapter 2

INCENTIVES FOR NEW INVESTMENTS1. INCENTIVES FOR THE MANUFACTURING SECTOR 2. INCENTIVES FOR THE AGRICULTURAL SECTOR3. INCENTIVES FOR THE BIOTECHNOLOGY INDUSTRY 4. INCENTIVES FOR THE TOURISM INDUSTRY5. INCENTIVES FOR ENVIRONMENTAL MANAGEMENT6. INCENTIVES FOR RESEARCH AND DEVELOPMENT7. INCENTIVES FOR TRAINING 8. INCENTIVES FOR APPROVED SERVICE PROJECTS9. INCENTIVES FOR THE SHIPPING AND THE TRANSPORTATION INDUSTRY10. INCENTIVES FOR MSC MALAYSIA11. INCENTIVES FOR INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) 12. INTEGRATED LOGISTICS SERVICES (ILS) 13. INTERNATIONAL INTEGRATED LOGISTICS SERVICES (IILS)14. COLD CHAIN FACILITIES AND SERVICES FOR FOOD PRODUCTS 15. REPRESENTATIVE OFFICE (RE)/REGIONAL OFFICES (RO) 16. TREASURY MANAGEMENT CENTRE (TMC) 17. INCENTIVES FOR PROVIDERS OF INDUSTRIAL DESIGN SERVICES IN MALAYSIA18. INCENTIVES FOR PRIVATE AND INTERNATIONAL SCHOOLS19. INCENTIVES FOR EARLY YEARS EDUCATIONS20. INCENTIVES FOR PRIVATE HEALTHCARE FACILITIES FOR THE PROMOTION OF HEALTHCARE TRAVEL21. DOMESTIC INVESTMENT STRATEGIC FUND22. ENCOURAGE SMALL MALAYSIAN SERVICE PROVIDERS TO MERGE INTO LARGER ENTITIES23. GUIDELINES FOR INCENTIVE FOR ACqUIRING A FOREIGN COMPANY FOR HIGH TECHNOLOGY24. INCENTIVES UNDER THE 2015 BUDGET25. OTHER INCENTIVES

2

17

inCentiVeS FOr neW inVeStMentS

1. inCentiVeS FOr tHe 19 ManUFaCtUrinG SeCtOr 1.1 Main Incentives for Manufacturing Companies 19 (i) Pioneer Status 19 (ii) Investment Tax Allowance 20 1.2 Incentives for High Technology Companies 20 1.3 Incentives for Strategic Projects 20 1.4 Incentives for Small and Medium Enterprises 21 1.5 Incentives for Investments in Selected Industries 23 1.5.1 Machinery and Equipment 23 1.5.2 Specialised Machinery and Equipment 23 1.6 Incentives for the Automotive Industry 23 (i) Better Incentives for Critical and High 23 Value-added Parts and Components and Production (ii) Promotion Hybrid and Electric Vehicles and 23 Development of Related Infrastructure 1.7 Incentives for the Utilisation of Oil Palm Biomass 24 (i) New Companies 24 (ii) Incentive for Existing Companies that Reinvest 25 1.8 Definition of Desirous for the Granting of Tax Incentives under the Promotion of Investments Act, 1986 for Malaysian-Owned Companies 25 (i) Definition of production 25 (ii) Companies in Production 25 (iii) Incentives 25 (iv) Eligibility Criteria 25 1.9 Additional Incentives for the Manufacturing Sector 26 (i) Reinvestment Allowance 26 (ii) Accelerated Capital Allowance 26 (iii) Incentive for Industrial Building System 29 (iv) Group Relief 29

2. inCentiVeS FOr tHe aGriCUltUral 30 SeCtOr 2.1 Main Incentives for the Agricultural Sector 30 (i) Pioneer Status 30 (ii) Investment Tax Allowance 30 (iii) Incentives for Food Production 31 2.2. Incentives for Halal Products 32 (i) Incentives for Production of Halal Food 32 (ii) Incentives for Other Halal Activities 32 2.3 Additional Incentives for the Agricultural Sector 35 (i) Reinvestment Allowance 35 (ii) Incentives for Reinvestment in 35 Resource-Based Industries (iii) Incentives for Reinvestment in Food 36 Processing Activities (iv) Accelerated Capital Allowance 36 (v) Agricultural Allowance 36 (vi) 100%AllowanceonCapitalExpenditure 37 for Approved Agricultural Projects

3. inCentiVeS FOr tHe 38 BiOteCHnOlOGY inDUStrY 3.1 Main Incentives for the Biotechnology Industry 38 3.2 Biotechnology Funding for BioNexus Status Companies 39 3.3 R&D Incentives announced in National Budget 2014 39

4. inCentiVeS FOr tHe tOUriSM 40 inDUStrY 4.1 Incentives for the Hotel and Tourism Projects 40 (i) Incentives for Reinvestments in Hotels and 40 Tourism Projects (ii) Incentive for Healthcare Travel 41 (iii) Additional Incentives for Healthcare Travel 41 (iv) Incentives for the Luxury Yacht Industry 41 4.2 Additional Incentives for the Tourism Industry 42 (i) Double Deduction on Overseas Promotion 42 (ii) Double Deduction on Approved Trade Fairs 42 (iii) Tax Exemption for Tour Operators 42 (iv) Tax Exemption for Promoting International 43 Conference and Trade Exhibitions (v) Deduction on Cultural Performances 43 (vi) Incentive for Car Rental Operators 43

5. inCentiVeS FOr enVirOnMental 44 ManaGeMent 5.1 Incentives for Forest Plantation Projects 45 5.2 Incentives for Waste Recycling Activities 44 5.3 Incentives for Energy Conservation 44 (i) Companies Providing Energy Conservation Services 44 (ii) Companies Undertaking Conservation of 45 Energy for Own Consumption 5.4 Incentives for Energy Generation Activities Using 45 Renewable Energy Resources 5.5 Incentives for Generation of Renewable Energy for 45 Own Consumption 5.6 Tax Incentives for Building Obtaining Green 46 Building Index Certificate 5.7 Accelerated Capital Allowance 47 6. inCentiVeS FOr reSearCH anD 48 DeVelOPMent 6.1 Main Incentives for Research and Development 48 (i) Contract R&D Company 48 (ii) R&D Company 49 (iii) In-house Research 49 (iv) Incentives for Reinvestment in R&D Activities 49 (v) Incentives for Commercialisation of Public 50 Sector R&D (vi) R&D for Bio-economy 51 6.2 Additional Incentives for Research and Development 51 (i) Double Deduction for Research and Development 51 (ii) Incentives for Researchers to Commercialise 52 Research Findings

7. inCentiVeS FOr traininG 52 7.1 Main Incentives for Training 52 (i) Biotechnology 52 (ii) Medical and Health Sciences 52 (iii) Molecular Biology 53 (iv) Material sciences and technology 53 (v) Food science and technology 53 7.2 Additional Incentives for Training 53 (i) Deduction for Cost of Recruitment of Workers 53 (ii) Deduction for Pre-Employment Training 53 (iii) Deduction for Non-Employee Training 53 (iv) Deduction for Cash Contributions 53 (v) Special Industrial Building Allowance 53 (vi) Tax Exemption on Educational Equipment 54 (vii) Tax Exemption on Royalty Payments 54 (viii) Double Deduction for Approved Training 54 (ix) Human Resource Development Fund (HRDF) 54 (x) Tax Incentive for Structured Internship Programme 55 (xi) Incentive For Awarding Scholarships 55

8. inCentiVeS FOr aPPrOVeD SerViCe 55 PrOJeCtS 8.1 Main Incentives for ASPs 55 (i) Exemption under Section 127 of the 55 Income Tax 1967 (ii) Investment Allowance under Schedule 56 7B of the Income Tax Act 1967 8.2 Additional Incentives for ASPs 56

9. inCentiVeS FOr tHe SHiPPinG anD 56 tHe tranSPOrtatiOn inDUStrY 9.1 Tax Incentive for Malaysian Ships 56 9.2 Sales Tax Exemption on Prime Movers and Trailers 57

10. inCentiVeS FOr MSC MalaYSia 57 10.1 Main Incentives for MSC Malaysia Status Company 57

11. inCentiVeS FOr inFOrMatiOn anD 58 COMMUniCatiOn teCHnOlOGY (iCt) 11.1 Incentives for the Purchase of Information and 58 Communication Technology (ICT) Equipment (i) Accelerated Capital Allowance 58

INCENTIVES FOR INVESTMENT 18

12. inteGrateD lOGiStiCS SerViCeS (ilS) 58 12.1 Tax incentives 58 12.2 Eligibility criteria 59 12.3 Specific Immigration Procedures 59

13. internatiOnal inteGrateD 60 lOGiStiCS SerViCeS (iilS) 13.1 Eligible Applicants 60 14.2 qualifying Criteria 60

14. COlD CHain FaCilitieS anD 61 SerViCeS FOr FOOD PrODUCtS 14.1 Licensing and Registration 61 14.2 Tax Incentives 61 14.3 Eligibility Criteria 61 14.4 Eligible Activities 62 14.5 qualifying Income 62 14.6 Specific Immigration Procedures 62

15. rePreSentatiVe OFFiCe (re) 62 /reGiOnal OFFiCeS (rO) 15.1 Representative Office 62 15.2 Regional Office 62 15.3 Activities Allowed 63 15.4 Activities Not Allowed 63 15.5 Eligibility Criteria 63 15.6 Duration of Approvals Establishment 63 15.7 Specific Immigration Procedures 64 16. treaSUrY ManaGeMent 64 Centre (tMC) 16.1 Eligibility Criteria 64 16.2 Treasury Services / qualifying Activities 64 (i) Cash, Financing and Debt Management 64 (ii) Investment services 65 (iii) Financial risk management 65 16.3 Incentives and Benefits 65 16.4 Specific Immigration Procedures 66 17. inCentiVeS FOr PrOViDerS OF 67 inDUStrial DeSiGn SerViCeS in MalaYSia

18. inCentiVeS FOr PriVate anD 67 internatiOnal SCHOOlS

19. inCentiVeS FOr earlY YearS 68 eDUCatiOnS 19.1 Tax Incentive for Children Centres 68 19.2 Tax Incentive for Pre-School Education 69

20. inCentiVeS FOr PriVate 69 HealtHCare FaCilitieS FOr tHe PrOMOtiOn OF HealtHCare traVel

21. DOMeStiC inVeStMent 70 StrateGiC FUnD 21.1 Introduction 70 21.2 Eligible Applicants 71

22. enCOUraGe SMall MalaYSian 72 SerViCe PrOViDerS tO MerGe intO larGer entitieS 22.1 Incentives 72 22.2 Eligibility Criteria 72

23. GUiDelineS FOr inCentiVe FOr 73 aCQUirinG a FOreiGn COMPanY FOr HiGH teCHnOlOGY 23.1 Incentives 73 23.2 Eligibility Criteria 73

24. inCentiVeS UnDer tHe 2015 BUDGet 75 24.1 Incentive for Less Developed Areas 75 24.2 Incentive for Industrial Area Management 76 24.3 Capital Allowance to Increase Automation in 76 Labour Intensive Industries 24.4 Principal Hub 78 24.4.1 Definition Of Principal Hub 78 24.4.2 Eligibility Criteria For Principal Hub Incentive 78 24.4.3 Facilities Accorded to Principal Hub 80

25. OtHer inCentiVeS 81 25.1 Industrial Building Allowance 81 25.2 Industrial Building Allowance for Buildings in 81 MSC Malaysia 25.3 Deduction of Audit Fees 81 25.4 Tax Incentive for Angle Investor 81 25.5 Tax Incentive on Costs of Dismantling and 82 Removing Assets 25.6 Incentive for Acquiring Proprietary Rights 83 25.7 Tax Incentives for Small and Medium Enterprises 83 to Register Patents and Trademarks 25.8 Tariff Related Incentives 83 (i) Exemption from Import Duty on Raw Materials 83 /Components (ii) Self-Declaration Mechanism for Import Duty 84 and/or Sales Tax Exemption on Machinery, Equipment, Spare Parts, Consumables through the Customs Duties (Exemption) Order 2013 and Sales Tax (Exemption) Order 2013 (iii) Exemption from Import Duty and Sales Tax for 85 Outsourcing Manufacturing Activities (iv) Exemption from Import Duty and Sales Tax for 85 Maintenance, Repair and Overhaul (MRO) Activities (v) Exemption from Import Duty and Excise Duty on 85 Hybrid and Electric Cars (vi) Sales Tax Exemption 86 (vii) Double Deduction on Freight Charges 87 (viii) Double Deduction for the Promotion of 87 Malaysian Brand Names (ix) Incentive for the Implementation of RosettaNet 87 25.9 Donations for Environmental Protection 87 25.10 Incentive for Employees’ Accommodation 88

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Chapter 2

INCENTIVES FOR NEW INVESTMENTSIn Malaysia, tax incentives, both direct and indirect, are provided for in the Promotion of Investments Act 1986, Income Tax Act 1967, Customs Act 1967, Sales Tax Act 1972, Excise Act 1976 and Free Zones Act 1990. These Acts cover investments in the manufacturing, agriculture, tourism (including hotel) and approved services sectors as well as R&D, training and environmental protection activities.

The direct tax incentives grant partial or total relief from income tax payment for a specified period, while indirect tax incentives are in the form of exemptions from import duty, sales tax and excise duty.

1. inCentiVeS FOr tHe ManUFaCtUrinG SeCtOr

1.1 Main incentives for Manufacturing Companies

The major tax incentives for companies investing in the manufacturing sector are the Pioneer Status and the Investment Tax Allowance.

Eligibility for Pioneer Status and Investment Tax Allowance is based on certain priorities, including the level of value-added, technology used and industrial linkages. Eligibleactivitiesandproductsare termedas “promotedactivities”or“promotedproducts”.(SeeAppendixI:ListofPromotedActivitiesandProducts–General)

The company must submit its application to MIDA before commencing operation/production.

(i) Pioneer Status

A company granted Pioneer Status (PS) enjoys a five year partial exemption from thepaymentofincometax.Itpaystaxon30%ofitsstatutoryincome*,withtheexemption period commencing from its Production Day (defined as the day its productionlevelreaches30%ofitscapacity).

Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company.

Applications for Pioneer Status should be submitted to the Malaysian Investment Development Authority (MIDA).

* Statutory Income is derived after deducting revenue expenditure and capital allowances from the gross income.


(ii) investment tax allowance

As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance(ITA).AcompanygrantedITAisentitledtoanallowanceof60%onits qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date the first qualifying capital expenditure is incurred.

Thecompanycanoffsetthisallowanceagainst70%ofitsstatutoryincomeforeachyear of assessment. Any unutilised allowance can be carried forward to subsequent yearsuntilfullyutilised.Theremaining30%ofitsstatutoryincomewillbetaxedatthe prevailing company tax rate.

1.2 incentives for High technology Companies

A high technology company is a company engaged in promoted activities or in the production of promoted products in areas of new and emerging technologies (SeeAppendix II: List of PromotedActivities and Products – HighTechnologyCompanies). A high technology company qualifies for:

i. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomefora period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii. Investment Tax Allowance of 60% on the qualifying capital expenditureincurred within five years from the date the first qualifying capital expenditure is incurred. The allowance can be utilised to offset against 100% of thestatutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

The high technology company must fulfil the following criteria:

i. ThepercentageoflocalR&Dexpendituretogrosssalesshouldbeatleast1%on an annual basis. The company has three years from its date of operation or commencement of business to comply with this requirement.

ii. Scientific and technical staff having degrees or diplomas with a minimum of5yearsexperience inrelatedfieldsshouldcompriseat least15%of thecompany’s total workforce.

iii. Value-addedmustbeatleast40%.

Applications should be submitted to MIDA.

1.3 incentives for Strategic Projects

Strategic projects involve products or activities of national importance. They generally involve heavy capital investments with long gestation periods, have high levels of technology, are integrated, generate extensive linkages, and have significant impact on the economy. Such projects qualify for:

i. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomefora period of 10 years; Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

21

ii. InvestmentTax Allowance of 100% on the qualifying capital expenditureincurred within five years from the date the first qualifying capital expenditure isincurred.Thisallowancecanbeoffsetagainst100%ofthestatutoryincomefor each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.


1.4 incentives for Small and Medium enterprises

Small and Medium enterprise (SMes)

Effective from the Year Assessment 2009, for the purpose of imposition of income tax and tax incentives, the definition of SMEs is reviewed as a company resident in Malaysia with a paid up capital of ordinary shares of RM2.5 million or less at the beginning of the basis period of a year of assessment whereby such company cannot be controlled by another company with a paid up capital exceeding RM2.5 million.

SMEsareeligibleforareducedcorporatetaxof20%onchargeableincomesofupto RM500,000. The tax rate on the remaining chargeable income is maintained at 25%.

Small Scale Companies

Currently, small scale companies incorporated in Malaysia with shareholders’ fund notexceedingRM500,000andhavingatleast60%Malaysianequityareeligiblefor tax incentives for small scale companies under the Promotion of Investments Act (PIA), 1986. Effective from 3 July 2012, small scale companies are redefined as companies incorporated in Malaysia with shareholders’ fund not exceeding RM2.5 millionandhaving60%to100%Malaysianequity.

The small scale company must fulfil the following criteria:-

(i) Incorporated under the Companies Act, 1965.

(ii) Shareholders’ funds not exceeding RM2.5 million with the following Malaysian equity ownership:

• Companieswithshareholders’ fundofup toRM500,000withat least60%Malaysianequity

• Companies with shareholders’ fund of above RM500,000 and notexceedingRM2.5millionwith100%Malaysianequity.

A small scale company are eligible for the following incentives:

i. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomefora period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii. Investment Tax Allowance of 60% on the qualifying capital expenditureincurredwithinfiveyears.Thisallowancecanbeoffsetagainst100%ofthestatutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.


A sole proprietorship or partnership is eligible to apply for this incentive provided a new private limited/limited company is formed to take over the existing production/activities.

A. For small scale companies with shareholders’ fund of RM500,000 and less and engaged in promoted activities or producing promoted products in the small company promoted list (See Appendix III: Small Scale Companies) or in theGeneralList(SeeAppendixI:ListofPromotedActivitiesandProducts–General) must fulfil the following condition:

• Thecompanyshallachieveat least25%valueaddedinitsactivityorproduct;

• Thecompanyshallemployatleast20%oftheirworkersatthemanagerial,technical and supervisory staff level (MTS Index); and

• Notmorethan20%ofthepaid-upcapitalinrespectofordinarysharesof the company is directly or indirectly owned by a related company having shareholders’ funds of more than RM500,000.

B. For small scale companies with shareholders’ fund of above RM500,000 and not exceeding RM2.5 million and engaged in promoted activities or producing promoted products in the small company promoted list (See Appendix III: Small Scale Companies):

• Thecompanyshallachieveat least25%valueaddedinitsactivityorproduct;

• Thecompanyshallemployatleast20%oftheirworkersatthemanagerial,technical and supervisory staff level (MTS Index); and

• Notmorethan20%ofthepaid-upcapitalinrespectofordinarysharesof the company is directly or indirectly owned by a related company having shareholders’ funds of more than RM2.5 million.

C. For small scale companies with shareholders’ fund of above RM500,000 and not exceeding RM2.5 million and engaged in promoted activities or producing promoted products in the general promoted list (See Appendix I: ListofPromotedActivitiesandProducts–General):

• TheprevailingratesonValueAddedindexunderthegeneralpromotedlist will be applicable;

• The prevailing rates on Managerial, Technical and Supervisory Staffindex (MTS Index) under the general promoted list will be applicable; and

• Notmorethan20%ofthepaid-upcapitalinrespectofordinarysharesof the company is directly or indirectly owned by a related company having shareholders’ funds of more than RM2.5 million.


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1.5 incentives for investments in Selected industries

1.5.1 Machinery and equipment

Machine tools, material handling equipment, robotic and factory automation equipment and modules and components for machine tools, material handling equipment and robotic and factory automation equipment.

1.5.2 Specialised Machinery and equipment

Specialised process machinery or equipment for specific industries, packaging machinery and modules and components for specialised process machinery or equipment for specific industry and packaging machinery.

Companies undertaking activities in the production of selected machinery and equipment are eligible for:

i. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomefora period of 10 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii. InvestmentTax Allowance of 100% on the qualifying capital expenditureincurred within five years from the date the first qualifying capital expenditure isincurred.Thisallowancecanbeoffsetagainst100%ofthestatutoryincomefor each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

To qualify for the above incentive, company has to comply with the following criteria:

a) Valueaddedmustbeatleast40%;and

b) Percentage of Managerial, Technical and Supervisory staff (MTS Index) to total workforcemustbeatleast25%.

Applications should be submitted to MIDA. (See Appendix IV: List of Promoted Activities and Products for Selected Industries)

1.6 incentives for the automotive industry

(i) Better incentives for Critical and High Value-added Parts and Components and Production

Promoting the production of critical and high value-added parts and components is a crucial scheme to increase the country’s human and technological capital and contribute to long-term development goals. Companies manufacturing transmission systems, brake systems, airbag systems and steering systems are eligible for better fiscal incentives i.e Pioneer Status (PS) of 100 per cent fiscal deduction for 10 years or Investment Tax Allowance (ITA) of 100 per cent for five years.

(ii) Promotion Hybrid and electric Vehicles and Development of related infrastructure

Investing in the development of hybrid and electric vehicles bears the benefits of the acquisition of new, high end technology and the promotion of a more


sustainable energy policy. A comprehensive mix of fiscal incentives, duty exemptions and customised training and R&D grants was included in the NAP Review to maximise returns on investment.

Investments in the assembly or manufacture of hybrid and electric vehicles will be granted:

• 100percentITAorPSforaperiodof10years;

• customisedtrainingandR&Dgrantsinadditiontotheexistinggrants;

• 50percentexemptiononexcisedutyforlocallyassembled/manufacturedvehicles or provision of grant under the Industrial Adjustment Fund (IAF);

• PSof100percent for10yearsor ITAof100percent for5years forthe manufacture of selected critical components supporting hybrid and electric vehicles, such as:

- electric motors;

- electric batteries;

- Battery Management System;

- inverters;

- electric air conditioning;

- air compressors;

• additionalattractive,customisedincentiveswillbeconsideredbasedonproposed activities.

• TheMinistry of Energy,GreenTechnology andWaterwill draw up aroadmap to develop the infrastructure for electric vehicles.

1.7 incentives for the Utilisation of Oil Palm Biomass

Companies that utilise oil palm biomass to produce value-added products such as particleboard, medium density fibreboard; plywood; and pulp and paper are eligible for the following incentives:

(i) new Companies

a. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomefora period of 10 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

b. InvestmentTax Allowance of 100% on the qualifying capital expenditureincurred within a period of five years. The allowance can be offset against 100%of the statutory income for each year of assessment.Anyunutilisedallowances can be carried forward to subsequent years until fully utilised.

(See Appendix IV: List of Promoted Activities and Products for Selected Industries)

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(ii) incentive for existing Companies that reinvest

a. PioneerStatuswithincometaxexemptionof100%oftheincreasedstatutoryincome arising from the reinvestment for a period of 10 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

b. Investment Tax Allowance of 100% on the additional qualifying capitalexpenditure incurred within a period of five years. The allowance can be offsetagainst100%ofthestatutoryincomeforeachyearofassessment.Anyunutilised allowances can be carried forward to subsequent years until fully utilised.

(See Appendix V: List of Promoted Activities and Products – Reinvestment)

To qualify for the above incentive, company has to comply with the following criteria:

i. Thevalue-addedmustbeatleast60%;and

ii. Themanagerial,technicalandsupervisory(MTS)ratiomustbeatleast25%.


1.8 Definition of Desirous for the Granting of tax incentives under the Promotion of investments act, 1986 for Malaysian-Owned Companies

Under the Promotion of Investments Act (PIA), 1986, the main criterion for a company to enjoy tax incentives is that the company must be ‘desirous’ in establishing or participating in a promoted activity or producing a promoted product which has not started production.

(i) Definition of production:

a. Manufacturing Company - Company has started to produce products (including trial production).

b. Services Company - Company has issued first invoice for the services rendered.

(ii) Companies in Production

Malaysian-owned manufacturing and services companies that are already in production which do not comply with the ‘desirous’ clause under the PIA, 1986 are now eligible to be considered for tax incentives.

(iii) incentives

Tax exemptions equivalent to Pioneer Status or Investment Tax Allowance based on the prevailing rates under the PIA, 1986.

(iv) eligibility Criteria

a. Malaysianequityownershipofatleast60%.

b. Malaysian-owned companies that are already in production not more than one year from the date of application received.


c. Participating in a promoted activity or producing a promoted product.

d. The type of tax incentives and criteria such as Value added (VA), Managerial, Technical and Supervisory (MTS), R&D Expenditure and Science and Technology (S&T) indexes will remain at the prevailing rates.

Applications received by Malaysian Investment Development Authority (MIDA) from 3 July 2012 are eligible to be considered for this incentive.

1.9 additional incentives for the Manufacturing Sector

(i) reinvestment allowance

Reinvestment Allowance (RA) is given to existing companies engaged in manufacturing and selected agricultural activities that reinvest for the purposes of expansion, automation, modernisation or diversification of its existing business into any related products within the same industry on condition that such companies have been in operation for at least 36 months effective from the Year of Assessment 2009.

TheRAisgivenattherateof60%onthequalifyingcapitalexpenditureincurredbythecompany,andcanbeoffsetagainst70%ofitsstatutoryincomefortheyearof assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised.

• AcompanycanoffsettheRAagainst100%ofitsstatutoryincomefortheyearof assessment if the company attains a productivity level exceeding the level determined by the Ministry of Finance. For further details on the prescribed productivity level for each sub-sector, please contact the Inland Revenue Board(seeUsefulAddresses–RelevantOrganisations)

The RA will be given for a period of 15 consecutive years beginning from the year the first reinvestment is made. Companies can only claim the RA upon the completion of the qualifying project, i.e. after the building is completed or when the plant/machinery is put to operational use. With effect from the Year of Assessment 2009, company purchasing an asset from a related company within the same group where RA has been claimed on that asset is not allowed to claim RA on the same asset.

Assets acquired for the reinvestment cannot be disposed off within a period of five years from the time of the reinvestment effective from the Year of Assessment 2009.Companies that intend to reinvest before the expiry of its tax relief period, can surrender their Pioneer Status or Pioneer Certificate for the purpose of cancellation and be eligible for RA.

Applications for RA should be submitted to the Inland Revenue Board (IRB), while applications for the surrender of Pioneer Status or Pioneer Certificate for RA should be submitted to MIDA.

(ii) accelerated Capital allowance

a. reinvestment for promoted activities or products

After the 15-year period of eligibility for RA, companies that reinvest in the manufacture of promoted products are eligible to apply for Accelerated Capital Allowance (ACA). The ACA provides a special allowance, where the capital expenditureiswrittenoffwithinthreeyears,i.e.aninitialallowanceof40%andanannualallowanceof20%.

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Applications should be submitted to the IRB accompanied by a letter from MIDA certifying that the companies are manufacturing promoted activities or products. Applications for ACA should be submitted to the IRB.

b. Waste recycling

Effective from the Year of Assessment 2001, a manufacturing company which has incurred on qualifying Expenditure for the purpose of its business may claim ACA on the plant and machinery which are:-

• Usedexclusivelyorotherwisefortherecyclingofwastes,or

• Usedforthefurtherprocessingofthewastesintoafinishedproducts.

AcompanythatfulfilstheabovecriteriaiseligibletoclaimACAof20%fortheinitialallowance(IA)and40%fortheannualallowance(AA).

A company is not eligible for ACA under the above mentioned Rules for the period during which the company:-

• Has been given incentives except for deduction for promotion of exportsunder the PIA Act, 1986, or

• HasclaimedRAunderSchedule7A,ITA,1967.

Applications should be submitted to IRB.

c. Conservation of energy

Effective from the Year of Assessment 2003, ACA is given to a company which has incurred capital expenditure in the basis period for a year of assessment on the -

• ProvisionofplantormachineryascertifiedbytheMinistryofEnergy,GreenTechnology and Water, or

• Machineryusedexclusivelyfortheconservationofenergyofitsbusiness.

ACAisfullygivenwithinoneyearwithIAof40%andAAof60%.

If the company has been granted an AA under the Income Tax (Accelerated Capital Allowance) (Conservation of Energy) Rules 2001 [P.U.(A) 82/2001], the AA for the Year of Assessment 2003 is the amount of qualifying plant expenditure less the amount of the allowance that has been permitted under P.U.(A) 82/2001.


d. equipment to Maintain Quality of Power Supply

In order to reduce the costs of doing business, effective from year of assessment 2005, companies which incur capital expenditure on equipment to ensure the quality of power supply, are eligible for a period of two years which allows the companies to write off the capital expenditure within two years, i.e. an initial allowanceof20%andanannualallowanceof40%.


Only equipment determined by the Ministry of Energy, Green Technology and Water is eligible for the ACA.

These Rules do not apply to a company which -

• Hasbeengrantedanyincentiveexceptfordeductionforpromotionofexportsunder the PIA 1986, or

• HasmadeaclaimforRAunderSchedule7AoftheITA,1967.

Applications should be submitted to the IRB.

e. equipment for information and Communications technology

Effective from the Year of Assessment 2009 to Year of Assessment 2015, capital expenditure incurred in the basis period for a year of assessment in relation to the purchase of any information and communications technology equipment used for the purpose of a business are eligible for ACA.

ACAisgivenat20%forIAand80%forAA.Thismeansthequalifyingexpenditureis written off in one year.


f. equipment for Security Control

ACA is given on security control equipment installed in the factory premises of companies licenced under the Industrial Coordination Act 1975. This allowance is eligible to be claimed within one year. Effective from the Year of Assessment 2009, this allowance is extended to all business premises. Security control equipment which is eligible for the allowance is:

• anti-theftalarmsystem;

• infra-redmotiondetectionsystem;

• siren;

• accesscontrolsystem;closedcircuittelevision;

• videosurveillancesystem;

• securitycamera;

• wirelesscameratransmitter;and

• timelapserecordingandvideomotiondetectionequipment. Applications submitted to the IRB from the Year of Assessment 2009 to 2015 are eligible for this allowance.

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(iii) incentive for industrial Building System

Industrial Building System (IBS) will enhance the quality of construction, create a safer and cleaner working environment as well as reduce the dependence on foreign workers. Companies which incur expenses on the purchase of moulds used in the production of IBS components are eligible for Accelerated Capital Allowances(ACA)foraperiodofthreeyearswithaninitialallowanceof20%andanannualallowanceof40%. Applications should be submitted to IRB.

(iv) Group relief

Group relief is provided under the Income Tax Act 1967 to all locally incorporated resident companies. Effective from the Year of Assessment 2009, group relief is increasedfrom50%to70%ofthecurrentyear’sunabsorbedlossestobeoffsetagainst the income of another company within the same group (including new companies undertaking activities in approved food production, forest plantation, biotechnology, nanotechnology, optics and photonics) subject to the following conditions:

a) The claimant and the surrendering companies each have a paid-up capital of ordinary shares exceeding RM2.5 million;

b) Both the claimant and the surrendering companies must have the same accounting period;

c) The shareholding, whether direct or indirect, of the claimant and the surrenderingcompaniesinthegroupmustnotbelessthan70%;

d) The70%shareholdingmustbeonacontinuousbasisduringtheprecedingyear and the relevant year;

e) Losses resulting from the acquisition of proprietary rights or a foreign-owned company should be disregarded for the purpose of group relief; and

f) Companies currently enjoying the following incentives are not eligible for group relief:

- Pioneer Status

- Investment Tax Allowance/Investment Allowance

- Reinvestment Allowance

- Exemption of Shipping Profits

- Exemption of Income Tax under section 127 of the Income Tax Act 1967; and

- Incentive Investment Company


With the introduction of the above incentive, the existing group relief incentive for approved food production, forest plantation, biotechnology, nanotechnology, optics and photonics will be discontinued. However, companies granted group relief incentive for the above activities shall continue to offset their income against 100%ofthelossesincurredbytheirsubsidiaries.

Claims should be submitted to IRB.

Note: Please refer to Section 25 for other incentives related to the manufacturing sector.

2. inCentiVeS FOr tHe aGriCUltUral SeCtOr

ThePromotionofInvestmentsAct1986statesthattheterm“company”inrelationto agriculture includes:

• Agro-basedcooperativesocietiesandassociations;and

• Soleproprietorshipsandpartnershipsengagedinagriculture.

Companies producing promoted products or engaged in promoted activities (See AppendixI:ListofPromotedActivitiesandProducts–General)intheagriculturalsector qualify for the following incentives:

2.1 Main incentives for the agricultural Sector

(i) Pioneer Status

As in the manufacturing sector, companies producing promoted products or engaged in promoted activities are eligible for Pioneer Status.

A Pioneer Status company enjoys a partial exemption from income tax. It pays tax on30%ofitsstatutoryincomeforfiveyears,commencingfromitsProductionDay(defined as the day of first sale of the agriculture produce).

Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company.


(ii) investment tax allowance

As an alternative to Pioneer Status, companies producing promoted products or engaged in promoted activities can apply for Investment Tax Allowance (ITA). A companygrantedITAiseligibleforanallowanceof60%onitsqualifyingcapitalexpenditure incurred within five years from the date the first qualifying capital expenditure is incurred.

Companies can offset this allowance against 70%of their statutory income foreach year of assessment. Any unutilised allowances can be carried forward to subsequentyearsuntilfullyutilised.Theremaining30%ofthestatutoryincomeistaxed at the prevailing company tax rate.


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To increase the benefits to agricultural projects, qualifying capital expenditure is defined to include expenditure incurred on:

• Clearingandpreparationofland

• Plantingofcrops

• ProvisionofplantandmachineryusedinMalaysia for thepurposeofcropcultivation; and

• Construction of access roads including bridges, construction or purchaseof buildings (including those provided for the welfare of people or as living accommodation), and structural improvements on land or other structures which are used for crop cultivation. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation.

In view of the time lag between start-up and processing of the produce, integrated agricultural projects qualify for ITA for an additional five years for expenditure incurred for processing or manufacturing operations.


(iii) incentives for Food Production (a) incentives for new Projects

Specific incentives are introduced to attract investment into food projects both at the farm level as well as at the production/processing level. These will enhance the supply of the raw material for the food processing sector and thus reducing reliance on imports of such raw material.

Tax incentives are given to both company which invests in a subsidiary company engaged in an approved food production project and its subsidiary company undertaking the food production activities. The tax incentives given are as follows:

i) A company which invests in its subsidiary company engaged in food production activities can be considered for tax deduction equivalent to the amount of investment made in that subsidiary; and

ii) The subsidiary company undertaking food production activities can be considered for a full tax exemption on its statutory income for 10 years of assessment for new project or five years of assessment for expansion project. The exemption period commences from the first year the company derived statutory income, in which;

• lossesincurredbeforetheexemptionperiodareallowedtobebroughtforward after the exemption period;

• losses incurred during the exemption period are also allowed to bebrought forward after the exemption period.

The incentives can be granted on the following conditions:

i) theequityconditionforacompanywhichinvestsatleast70%inthesubsidiarycompany that undertakes food production activities;


ii) the approved food production activities by the Minister of Finance are cultivation of kenaf; vegetables; fruits; herbs and spices; aquaculture; rearing of cattle, goats, sheep; and deep sea fishing; and

iii) the food production project should commence within a period of one year from the date the incentive is approved.

(b) incentives for existing Companies which reinvest

An existing company that reinvests in the production of the above food products qualifies for the same incentives for a period of five years.

The food production project for both new (a) and existing companies (b) should commence within a year from the date the incentive is approved.

Applications received by 31 December 2015 are eligible for these incentives.

Applications should be submitted to the Ministry of Agriculture and Agro-based Industry.

2.2 incentives for Halal Products

(i) incentives for Production of Halal Food

To encourage new investments in halal food production and to increase the use of modern and state-of-the-art machinery and equipment in producing high quality halal food that comply with the international standards, companies which invest in halal food production and have already obtained halal certification from JAKIM in compliance with MS 1500:2004, are eligible for the Investment Tax Allowance (ITA)of100%ofqualifyingcapitalexpenditure incurredwithinaperiodoffiveyears.

The allowance can be set-off against 100% of statutory income in the year ofassessment. Any unutilized allowance can be carried forward to subsequent years until the whole amount has been fully utilized.

For further information on obtaining halal certification from JAKIM, please visit www.halal.gov.my

Applications should be submitted to MIDA

(ii) incentives for Other Halal activities (a) incentives for Halal Park Operators

In an effort to promote the attractiveness of the Halal Parks, halal park operators are eligible for the following incentives:

i) Pioneer Status with income tax exemption of 100% of the statutoryincome for a period of 10 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

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ii) InvestmentTaxAllowanceof100%onthequalifyingcapitalexpenditureincurredwithinfiveyears.Theallowancecanbeoffsetagainst100%of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until they are fully utilised.

(b) incentives for Halal industry Players Companies proposing to undertake projects in the designated Halal Parks are

eligible for:

• InvestmentTaxAllowanceof100%onthequalifyingcapitalexpenditureincurred within a period of 10 years. This allowance can be offset against 100%ofthestatutoryincomeforeachyearofassessment.Anyunutilisedallowances can be carried forward to subsequent years until they are fully utilised;

• Exemptionfromimportdutyandsalestaxonrawmaterialsusedforthedevelopment and production of halal promoted products.

• Double deduction on expenses incurred in obtaining internationalquality standards such as HACCP, GMP, Codex Alimentarius (food standard guidelines of FAO & WHO), Sanitation Standard Operating Procedure and regulations for compliance for export markets such as Food Tracebility from farm pork.

The qualifying criteria for halal industry players are:-

1. The activities must be in following four industry sectors:-

• Specialtyprocessedfood;

• Pharmaceuticals,cosmeticsandpersonalcareproducts;

• Livestockandmeatproducts;and

• Halal ingredients

2. The employment of high valued knowledge workers with minimum of 15%ofthetotalworkforceincludingatleastthree(3)Halal Compliance Officers;

3. Located in HDC Designated Halal Parks and logistic Cold Hubs approved by HDC;

4. Must not be involved in any distribution and consultancy activities;

5. Must always comply with prescribed quality, hygiene and environmental guidelines;

6. Must always comply with all laws, regulations and licensing requirements where applicable;


7. Must always comply with HDC’s halal integrity criteria with tests from accredited laboratories in determining the credibility of the promoted halal products; and

8. Must be involved in new business activities related to Halal and must incorporate a new legal entity in Malaysia.

(c) incentives for Halal logistics Operators

In an effort to promote halal industry and halal supply chain in Malaysia, the following incentives are granted to halal logistics operators:

(i) Incometaxexemptionof100%ofthestatutoryincomeforaperiodoffive years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

(ii) InvestmentTaxAllowanceof100%onthequalifyingcapitalexpenditureincurredwithinfiveyears.Theallowancecanbeoffsetagainst100%of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until they are fully utilised.

Services provided by halal logistics operators must be integrated which comprises three principal activities:

• Forwarding

• Warehousing • Transportation

And at least one of the following activities:-

• Distribution

• Other related and value-added services/activities (e.g.: palletising, productassembly/installation, bulk breaking, consolidation, packaging/re-packaging, procurement, quality control, labelling /re-labelling, testing, etc.)

• Supplychainmanagement

The Halal Logistics Operator must own minimum infrastructure as follows:-

• Commercialvehicle–20units

• Warehousefacilities–5,000sq.metres

Applications should be submitted to Halal Industry Development Corporation (HDC).

For further information, please visit www.hdcglobal.com

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2.3 additional incentives for the agricultural Sector

(i) reinvestment allowance

Companies engaged for at least 36 months in the production of essential food such as rice, maize, vegetables, tubers, livestock, aquatic products and any other activities approved by the Minister of Finance are eligible for Reinvestment Allowance (RA).

TheRAisintheformofanallowanceof60%ofthequalifyingcapitalexpenditureincurred within a period of 15 years beginning from the year the first reinvestment ismade.Theallowancecanbeoffsetagainst70%ofthestatutoryincomeintheyear of assessment. Unutilised allowances can be carried forward to the following years until fully utilised. The qualifying capital expenditure includes expenditure incurred on:


• Plantingofcrops

• Breederstockforaquaculture

• Breederstockforanimalfarming

• ProvisionofplantandmachineryusedinMalaysia for thepurposeofcropcultivation, animal farming, aquaculture, inland fishing or deep-sea fishing and other agricultural or pastoral pursuits; and

• Construction of access roads including bridges, construction or purchaseof buildings (including those provided for the welfare of people or as living accommodation) and structural improvements on land or other structures which are used for crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits.


(ii) incentives for reinvestment in resource-Based industries

Theseincentivesareofferedtocompaniesthatareatleast51%Malaysian-ownedand are in the rubber, oil palm and wood-based industries producing products which have export potential. Companies in these industries reinvesting for expansion purposes are eligible for:

a. PioneerStatuswithincometaxexemptionof70%ofstatutoryincomeforaperiod of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or





(iii) incentives for reinvestment in Food Processing activities Alocally-ownedmanufacturingcompanywithMalaysianequityofatleast60%that reinvests in promoted food processing activities is eligible for:

a. PioneerStatuswithincometaxexemptionof70%ofstatutoryincomeforaperiod of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or



(iv) accelerated Capital allowance

Upon the expiry of the Reinvestment Allowance (RA), companies that reinvest in promoted agricultural activities and food products are eligible to apply for the Accelerated Capital Allowance (ACA). These activities include the cultivation of rice, maize, vegetables, tubers, livestock, aquatic products and any other activities approved by the Minister of Finance.

The ACA provides a special allowance to write off the capital expenditure within twoyears,i.e.aninitialallowanceof20%inthefirstyearandanannualallowanceof40%.

Claims should be submitted to the IRB, accompanied by a letter from MIDA certifying that the companies are undertaking promoted agricultural activities or producing promoted food products. (v) agricultural allowance

A person or a company carrying on an agricultural activity can claim Capital Allowances and special Industrial Building Allowances under the Income Tax Act 1967 for certain capital expenditure. Capital expenditure which qualifies includes expenditure incurred on:

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• Plantingofcrops

• ProvisionofplantandmachineryusedinMalaysia for thepurposeofcropcultivation, animal farming, aquaculture, inland fishing or deep-sea fishing and other agricultural or pastoral pursuits

• Construction of access roads including bridges, construction or purchaseof buildings (including those provided for the welfare of people or as living accommodation)and structural improvements on land or other structures which are used for crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits.

A company continues to get the allowance for as long as it incurs the expenditure, regardless of whether it already enjoys Pioneer Status or ITA.


(vi) 100% allowance on Capital expenditure for approved agricultural Projects

Schedule 4A of the IncomeTaxAct 1967 provides for a 100% allowance oncapital expenditure for Approved Agricultural Projects as approved by the Minister of Finance. This covers qualifying capital expenditure incurred within a specific time frame for a farm that cultivates and utilises a specified minimum acreage as stipulated by the Minister of Finance.

Approved agricultural projects are those for the cultivation of vegetables, fruits (papaya, banana, passion fruit, star fruit, guava and mangosteen), tubers, roots, herbs, spices, crops for animal feed and hydroponic-based products; ornamental fish culture; fish and prawn rearing (pond culture, tank culture, marine cage culture, and off-shore marine cage culture); cockles, oysters, mussels, and seaweed culture; shrimp, prawn and fish hatchery; and certain species of forest plantations.

The incentive enables a person carrying on such a project to elect to deduct the qualifying capital expenditure incurred in respect of that project from his aggregate income, including income from other sources. Where there is insufficient aggregate income, the unabsorbed expenditure can be carried forward to subsequent years of assessment. Where he so elects, he will not be entitled to any capital allowance or agricultural allowance on the same capital expenditure.

The qualifying capital expenditure includes expenditure incurred on:


• Plantingofcrops




• ProvisionofplantandmachineryusedinMalaysia for thepurposeofcropcultivation, animal farming, aquaculture, inland fishing or deep-sea fishing and other agricultural or pastoral pursuits ; and

• Construction of access roads including bridges, construction or purchaseof buildings (including those provided for the welfare of people or as living accommodation) and structural improvements on land or other structures which are used for crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits.

This incentive is not available to companies that have been granted incentives under the Promotion of Investments Act 1986 and whose tax relief periods have not started or have not expired.


Note: Please refer to Section 25 for other incentives related to the agricultural sector.

3. inCentiVeS FOr tHe BiOteCHnOlOGY inDUStrY

3.1 Main incentives for the Biotechnology industry

A company undertaking biotechnology activity and has been approved with BioNexus Status* by the Malaysian Biotechnology Corporation Sdn. Bhd. (BiotechCorp) may be eligible for the following incentives:

i. Anexemptionfromtaxon100%statutoryincome:

• foraperiodof10consecutiveyearsofassessmentfromthefirstyearthecompany derives statutory income from the new business; or

• foraperiodoffiveconsecutiveyearsofassessment fromthefirstyearthe company derives statutory income from the existing business and expansion project; or

ii. An exemption from tax on statutory income derived from a new business or anexpansionprojectthatisequivalenttoanallowanceof100%ofqualifyingcapital expenditure incurred within a period of five years.

iii. ABioNexusStatuscompanyisentitledtoaconcessionarytaxrateof20%onstatutory income from qualifying activities for 10 years upon the expiry of the tax exemption period.

iv. Tax exemption on dividends distributed by a BioNexus Status company.

v. Double deduction on expenditure incurred for R&D.

vi. Double deduction on expenditure incurred for the promotion of exports.

vii. With effect from 2 September 2006, buildings used solely for the purpose of biotechnology activities will be eligible for Industrial Building Allowance to be claimed over a period of 10 years.

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viii. A company or an individual (that carry on business) investing in a BioNexus Status company is eligible for a tax deduction equivalent to the total investment made in financing the initial commercialization stage.

*Applications for BioNexus Status should be submitted to BiotechCorp.

3.2 Biotechnology Funding for Bionexus Status Companies

BiotechCorp provides funding to BioNexus Status companies under its Biotechnology Commercialisation Fund (BCF) Facility Programme. The objectives of the BCF Facility are to facilitate on-going commercialisation of biotechnology products and services as well as provide assistance in expanding the applicant’s existing biotechnology business.

Amaximum of 90% funding assistance of up to RM3million per company isprovided under the funding initiative to cover the following expenditures:

a. Commercialisation expansion project;

b. Commercialisation or Expansion of existing biotechnology products or services;

c. Commercialisation or Expansion of new biotechnology products or services; and

d. Activities for commercialisation or expansion into new markets (geographical or segmental).

Eligibility criteria for the BCF facility includes the following:

a. applicant must be a BioNexus Status company;

b. majority Malaysian owned i.e. at least 51% of the equity is owned byMalaysians; and

c. minimum paid-up capital of RM250,000.

3.3 r&D incentives announced in national Budget 2014

Recognising the importance of research and development (R&D), the Government will provide the following R&D incentives for viable projects which will be assessed by BiotechCorp:

1. Tax deduction for companies that invest to acquire technology platform in bio-based industry;

2. Import duty exemption on R&D equipment for companies investing in pilot plants for the purpose of pre-commercialisation activities in Malaysia;

3. Special incentive for companies to partially cover the operational expenses for human capital development for Centre of Excellence for R&D.

For further information, please visit www.biotechcorp.com.my.


4. inCentiVeS FOr tHe tOUriSM inDUStrY

Tourism projects, including eco-tourism and agro-tourism projects, are eligible for tax incentives. These include hotel businesses, tourist projects including in-door and out-door theme parks, construction of holiday camps, recreational projects including recreational camps, and construction of convention centres with a capacity to accommodate at least 3,000 participants.

Hotel businesses refer to the following:

• Constructionofnewhotels.

• Expansion/modernisationofexistinghotels.

4.1 incentives for the Hotel and tourism Projects

Companies undertaking new investments in 1 to 5-star hotels are eligible for the following incentives: Peninsular Malaysia:

• PSwithtaxexemptionof70%ofstatutoryincomefor5years;or

• ITAof60%onqualifyingcapitalexpenditureincurredwithinaperiodof5years.Theallowancecanbeoffsetagainst70%ofstatutoryincomeineachyear of assessment. Unutilised allowances can be carried forward until fully utilised

Sabah and Sarawak:

• PSwithtaxexemptionof100%ofstatutoryincomefor5years;or

• ITAof100%onqualifyingcapitalexpenditureincurredwithinaperiodof5years.Theallowancecanbeoffsetagainst100%ofstatutoryincomeineachyear of assessment. Unutilised allowances can be carried forward until fully utilised.


(i) incentives for reinvestments in Hotels and tourism Projects

Companies that reinvest in the expansion, and modernisation, of hotels and tourism projects are eligible for additional rounds of Investment Tax Allowance as follows:

• InvestmentTaxAllowanceof60%ofqualifyingcapitalexpenditureincurredwithinaperiodoffiveyears.Theallowancecanbeoffsetagainst70%ofthestatutory income for each year of assessment. Any unutilised allowances can be carried forward until fully utilised.

• TheapplicantcompanyisqualifiedforITAonlyfor3roundsofinvestment(expansion, modernization and renovation).

• Agroupofcompaniesundertakingreinvestment(expansion,modernizationand renovation) eligible for tax allowance (ITA) is limited to 3 companies including the parent company.


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(ii) incentive for Healthcare travel

Companies that establish new private healthcare facilities or existing private healthcare facilities undertaking expansion/modernisation/refurbishment for purposes of promoting healthcare travel, are eligible for:

• InvestmentTaxAllowanceof100%ofqualifyingcapitalexpenditureincurredwithinaperiodoffiveyears.Theallowancecanbeoffsetagainst100%ofstatutory income in each year of assessment. Any unutilised allowances can be carried forward until fully utilised.

These hospitals must be registered with the Ministry of Health to qualify for the incentive.

Applications received by 31 December 2014 are eligible for the incentive.


(iii) additional incentives for Healthcare travel

(a) Double Deduction for expenses incurred in Obtaining recognised accreditation

Private hospitals which incur expenses in obtaining domestic or international recognised accreditation such as from the Malaysian Society for quality in Health (MSqH) or Joint Commission International (JCI) qualify for double deduction for the purpose of income tax computation.


(b) automatic employment/Professional Pass approval for Medical Specialists

Employment/professional pass will be offered automatically to the following qualified medical specialist who return or come from abroad to serve in Malaysian hospitals:

• Malaysianornon-Malaysianmedicalspecialists;and

• Non-MalaysianspouseswhoqualifyasaprofessionalasperstipulatedintheMalaysian Classification of Occupation (MASCO).

However, this is subject to registration with the relevant professional bodies.

(iv) incentives for the luxury Yacht industry

The luxury yacht industry is promoted as part of tourism products and is eligible for the following incentives:

• Companies that construct luxury yachts are eligible for the Pioneer Statusincentive.


• Companiesthatcarryoutrepairandmaintenanceactivitiesforluxuryyachtsin the island of Langkawi, Malaysia are eligible for an income tax exemption of100%forfiveyears.


Applications should be submitted to the Ministry of Finance.

• Companiesthatprovidecharteringservicesofluxuryyachtsinthecountryareeligibleforincometaxexemptionof100%foraperiodoffiveyears.


4.2 additional incentives for the tourism industry

(i) Double Deduction on Overseas Promotion

Hotels and tour operators qualify for a double deduction on the expenditure incurred for promotional activities overseas. The qualifying expenditure are:

• expenditure on publicity and advertisements in any mass media outsideMalaysia;

• expenditure on publication of brochures, magazines and guide books,including delivery costs that are not charged to the overseas customers;

• expenditure onmarket research into newmarkets overseas, subject to theprior approval of the Minister of Tourism;

• expenditurethatincludesfarestoanycountryoutsideMalaysiatonegotiateor secure a contract for advertising or participating in trade fairs, conferences or forums approved by the Minister of Tourism. Such expenses are subject to a maximum of RM300 per day for lodging and RM150 per day for food for the duration of the stay overseas;

• expenditureinorganisingtradefairs,conferencesorforumsapprovedbytheMinister of Tourism; and

• expenditure on the maintenance of sales offices overseas for purposes ofpromoting tourism in Malaysia.


(ii) Double Deduction on approved trade Fairs

Companies are also eligible for a double deduction on expenditure incurred in participating in an approved international trade fair in Malaysia.


(iii) tax exemption for tour Operators

a. Foreign tourists

Tour operators, who bring in at least 750 foreign tourists in groups in a year inclusive of tours that enter and exit the country by air, sea or land transportation, will be exempted from tax in respect of income derived from the business of operating such tours. This incentive is only applicable to tour operators licenced by the Ministry of Tourism.

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b. local tourists

Companies that organise domestic tour packages for at least 1,500 local tourists per year qualify for tax exemption on the income earned. A domestic tour means any tour package within Malaysia participated by local tourists (excluding inbound tourists) by air, land or sea transportation involving at least one night’s accommodation.

The incentive is available until the Year of Assessment 2015.


(iv) tax exemption for Promoting international Conference and trade exhibitions

a. Local companies which promote international conferences in Malaysia qualify for tax exemption on the income earned from bringing at least 500 foreign participants into the country.

b. Income earned from organising international trade exhibitions in Malaysia qualifies for tax exemption as long as the exhibitions are approved by Matrade and the organisers bring in at least 500 foreign visitors per year.


(v) Deduction on Cultural Performances

Expenditure incurred by companies promoting and managing musical or cultural groups and sponsoring local and/or foreign cultural performances as approved by the Ministry of Tourism, qualifies for a single deduction.

To further encourage the private sector to sponsor local arts, cultural and heritage performances and shows, expenditure incurred in sponsoring such performances and shows has been increased from RM300,000 to RM500,000. However, the ceiling for deductions allowed on foreign performances and shows remains at RM200,000 per year.


(vi) incentive for Car rental Operators

Operators of car rental services for tourists are eligible for full excise duty exemption on the purchase of national cars and to enable tourists to explore challenging destinations,touroperatorsarealsoeligiblefora50%excisedutyexemptiononlocally assembled 4WD vehicles.


Note: Please refer to Section 25 for other incentives related to the tourism sector.


5. inCentiVeS FOr enVirOnMental ManaGeMent

5.1 incentives for Forest Plantation Projects

i. Companies that undertake forest plantation projects are eligible for the following incentives under the Promotion of Investments Acts, 1986:

a. Pioneer Status with income tax exemption of 100% of the statutoryincome for 10 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

b. Investment Tax Allowance (ITA) of 100% on the qualifying capitalexpenditure incurred within five years. The allowance can be offset against100%ofthestatutoryincomeforeachyearofassessment.Anyunutilised allowances can be carried forward to subsequent years until fully utilised.

5.2 incentives for Waste recycling activities

Companies undertaking waste recycling activities that are high value-added and use high technology are eligible for Pioneer Status or ITA. These activities which include the recycling of agricultural wastes or agricultural by-products, recycling of chemicals and the production of reconstituted wood-based panel boards or products are eligible for:

i. PioneerStatus,withincometaxexemptionof70%ofthestatutoryincomefora period of five years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii. Investment Tax Allowance of 60% on the qualifying capital expenditureincurredwithinaperiodoffiveyears.Theallowancecanbeoffsetagainst70%of the statutory income in each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

Companies are only allowed to recycle wastes/scraps obtained within Malaysia including Free Industrial Zones/Licenced Manufacturing Warehouse (FIZs/LMWs). Companies are not allowed to import scraps/wastes from overseas.


5.3 incentives for energy Conservation

(i) Companies Providing energy Conservation Services

In order to reduce operation costs as well as to promote environmental preservation, companies providing energy conservation services are eligible for the following incentives:

a. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomeforaperiodof10years.b.Investment Tax Allowance (ITA) of 100% ofqualifying capital expenditure incurred (on building, plant and machinery used for the purpose of energy conservation/energy efficiency activities) withinaperiodoffiveyears.Theallowancecanbeoffsetagainst100%ofthestatutory income for each year of assessment. Any unutilised allowances can be carried forward until fully utilised.

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The companies must implement their projects within one year from the date of approval.

Applications received by 31 December 2015 are eligible for this incentive.

(ii) Companies Undertaking Conservation of energy for Own Consumption

Companies which undertake conservation of energy for own consumption is eligible for ITAof100%of thequalifyingcapitalexpenditure incurredwithinaperiodoffiveyears.Theallowancecanbeoffset against100%of the statutoryincome for each year of assessment. Any unutilised allowances can be carried forward until fully absorbed.



5.4 incentives for energy Generation activities Using renewable energy resources

Companies undertaking generation of energy using biomass, hydropower (not exceeding 10 megawatts) and solar power that are renewable and environmentally friendly are eligible for the following incentives:

i. PioneerStatuswithincometaxexemptionof100%ofstatutoryincomefor10years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii. InvestmentTax Allowance of 100% on the qualifying capital expenditureincurred within a period of five years. This allowance can be offset against 100%of the statutory income for each year of assessment.Any unutilisedallowances can be carried forward to subsequent years until fully utilised.

Companies must implement their projects within one year from the date of approval.

With effect from 8 September 2007, other companies in the same group are eligible for the same incentives as above even though one company in the same group has been granted the incentive. Applications received by 31 December 2015 are eligible for this incentive.

For the purpose of this incentive, ‘biomass sources’ refer to palm oil mill/estate waste, rice mill waste, sugar cane mill waste, timber/sawmill waste, paper recycling mill waste, municipal waste and biogas (from landfill, palm oil mill effluent (POME), animal waste and others), while energy forms refer to electricity, steam, chilled water, and heat.


5.5 incentives for Generation of renewable energy for Own Consumption

Companies which generate energy from renewable resources for its own consumptionareeligiblefortheInvestmentTaxAllowanceof100%onqualifyingcapital expenditure incurred within a period of five years. This allowance can beoffsetagainst100%ofthestatutoryincomeforeachyearofassessment.Anyunutilised allowances can be carried forward to subsequent years until fully utilised.




5.6 tax incentives for Building Obtaining Green Building index Certificate

In order to widen the usage of green technology, the Government has launched the green building index (GBI) on 21 May 2009. GBI is a green rating index on environment-friendly buildings. The index is based on certain criteria amongst which are:

• energyandwaterefficiency;

• indoorenvironmentalquality;

• sustainablemanagementandplanningofbuildingsitesinrespectofpollutioncontrol and facilities for workers;

• usageofrecyclableandenvironmentfriendlymaterialsandresources;and

• adoptionofnewtechnology.

As a measure to encourage the construction of buildings using green technology:

i. Owners of buildings awarded the GBI certificate, are eligible for tax exemption equivalentto100%oftheadditionalcapitalexpenditureincurredtoobtaintheGBIcertificate.Theexemptionisallowedtoset-offagainst100%ofthestatutory income for each year of assessment. The incentive is applicable for new buildings and upgrading of existing buildings.

The incentive is given only for the first GBI certificate issued in respect of the building.

This incentive is effective for buildings awarded with GBI certificates from 24 October 2009 until 31 December 2014.

Application for GBI certification should be submitted to Green Building Index Sdn. Bhd.

ii. Buyers of buildings and residential properties awarded GBI certificate bought from real property developers are eligible for stamp duty exemption on instruments of transfer of ownership of such buildings. The amount of stamp duty exemption is on the additional cost incurred to obtain the GBI certificate. The incentive is given only once to the first transfer of ownership of the building.

This incentive is effective for sales and purchase agreement executed from 24 October 2009 until 31 December 2014.

Application for incentive should be submitted to IRB.

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5.7 accelerated Capital allowance

a. Waste recycling activities

Effective from the Year of Assessment 2001, a manufacturing company which has incurred qualifying Expenditure for the purpose of its business may claim ACA on the plant and machinery which are:-

• Usedexclusivelyorotherwisefortherecyclingofwastes,or

• Usedforfurtherprocessingofthewastesintofinishedproducts.

Acompanythat fulfils theabovecriteria iseligibletoclaimACAof20%foraninitialallowance(IA)and40%foranannualallowance(AA).

A company is not eligible for ACA under the above mentioned Rules for the period during which the company:-

• Has been given incentives except for deduction for promotion of exportsunder the PIA Act 1986, or

• HasclaimedRAunderSchedule7A,ITA,1967.


b. Conservation of energy

Effective from The Year of Assessment 2003, ACA is given to a company which has incurred capital expenditure in the basis period for a year of assessment on the -

• ProvisionofplantormachineryascertifiedbytheMinistryofEnergy,GreenTechnology and Water, or

• Machineryusedexclusivelyfortheconservationofenergyofitsbusiness.

ACAisfullygivenwithinoneyearwithIAof40%andAAof60%.

If the company has been granted an AA under the Income Tax (Accelerated Capital Allowance) (Conservation of Energy) Rules 2001 [P.U.(A) 82/2001], AA for the Year of Assessment 2003 is the amount of qualifying plant expenditure less the amount of the allowance that has been permitted under P.U.(A) 82/2001.


c. equipment to Maintain Quality of Power Supply

In order to reduce the costs of doing business effective from the Year of Assessment 2005, companies which incur capital expenditure on equipment to ensure the quality of power supply, are eligible for an ACA for a period of two years which allows the companies to write off the capital expenditure within two years, i.e. an initialallowanceof20%andanannualallowanceof40%.

Only equipment determined by the Ministry of Energy, Green Technology and Water is eligible for the ACA.

These Rules do not apply to a company which -


• Hasbeengrantedanyincentiveexceptfordeductionforpromotionofexportsunder the PIA, 1986, or

• HasmadeaclaimforRAunderSchedule7AoftheITA,1967.

Applications should be submitted to the IRB

Note: Please refer to Section 25 for other incentives related to environmental management.

6. inCentiVeS FOr reSearCH anD DeVelOPMent

The Promotion of Investments Act 1986 defines research and development (R&D)as“anysystematicorintensivestudycarriedoutinthefieldofscienceortechnology with the objective of using the results of the study for the production orimprovementofmaterials,devices,products,produceorprocesses”butdoesnot include:

• qualitycontrolofproductsorroutinetestingofmaterials,devices,productsorproduce;

• researchinthesocialsciencesorhumanities;

• routinedatacollection;

• efficiencysurveys;and

• marketresearchorsalespromotion.

To further strengthen Malaysia’s foundation for more integrated R&D, companies which carry out design, development and prototyping as independent activities are also eligible for incentives.

6.1 Main incentives for research and Development

(i) Contract r&D Company

A contract R&D companyis a company which provides R&D services in Malaysia to companies other than its related companies. Under the PIA 1986, a related companyisdefinedasacompanywhereatleast20%ofitsissuedsharecapitalisowned (directly or indirectly) by another company. The Contract R&D company is eligible for:

• PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomefor five years;or

• InvestmentTaxAllowance (ITA) of 100%of qualifying capital expenditureincurredwithin10years.TheITAcanbeoffsetagainst70%ofthestatutoryincome in each year of assessment. Any unutilised capital allowances can be carried forward until fully utilised.


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(ii) r&D Company

A R&D company, a company which provides R&D services in Malaysia to its relatedcompanyortoanyothercompany,iseligibleforanITAof100%onthequalifying capital expenditure incurred within 10 years. The allowance can be offset against70%ofthestatutoryincomeforeachyearofassessment.Anyunutilisedallowances can be carried forward to subsequent years until fully utilised. The PIA 1986definesarelatedcompanyasacompanywhereat least20%of its issuedshare capital is owned (directly or indirectly) by another company.Should the R&D company opt not to avail itself of the allowance, its related companies can enjoy double deduction for payments made to the R&D company for services rendered.


eligibility:

Contract R&D and R&D companies that fulfil the following criteria can apply for the various incentives:

a. The R&D activities undertaken must comply with the definition of R&D under the Promotion of Investments Act (PIA), 1986;

b. The R&D activities undertaken must be in accordance with the needs of the country and bring benefits to the Malaysian economy;

c. At least 70%of the incomeof the company shouldbederived fromR&Dactivities; and

d. Atleast50%oftheworkforceofmanufacturing-basedcompanyor5%oftheworkforce of agricultural-based company must be personnel with degree and diploma in technical fields.

(iii) in-house research

A company that carries out R&D within the company in Malaysia for the purpose of itsownbusinesscanapplyforanITAof50%ofthequalifyingcapitalexpenditureincurredwithin10years.TheITAcanbeoffsetagainst70%ofthestatutoryincomefor each year of assessment. Any unutilised allowances can be carried forward until fully absorbed.


(iv) incentives for reinvestment in r&D activities

Existing R&D companies undertaking reinvestments are eligible for Pioneer Status or Investment Tax Allowance as follows:

a. Contract R&D companies:

i. PSwithfulltaxexemption(100%)ofstatutoryincomeforaperiodof5years; or

ii. ITAof100%ofadditionalqualifyingcapitalexpenditureincurredwithina period of 10 years from the date the first qualifying capital expenditure is incurred.The allowance canbeoffset against 70%of the statutoryincome for each year of assessment. Unutilised allowances can be carried forward until fully utilised.


b. R&D Companies:

ITAof100%ofadditionalqualifyingcapitalexpenditure incurredwithinaperiod of 10 years from the date the first qualifying capital expenditure is incurred.Theallowancecanbeoffsetagainst70%of statutory income foreach year of assessment. Unutilised allowances can be carried forward until fully utilised.

c. In-house R&D:

ITA of 50% of additional qualifying capital expenditure incurredwithin aperiod of 10 years from the date the first qualifying capital expenditure is incurred.Theallowancecanbeoffsetagainst70%ofthestatutoryincomeforeach year of assessment. Unutilised allowances can be carried forward until fully utilised.

(See Appendix V: List of Promoted Activities and Products for Reinvestment)


(v) incentives for Commercialisation of Public Sector r&D

To encourage commercialisation of resource-based and non-resource-based R&D findings of public research institutes, the following incentives are given:

a. A company that invests in its subsidiary company engaged in the commercialisation of the R&D findings is eligible for a tax deduction equivalent to the amount of investment made in the subsidiary company; and

b. The subsidiary company that undertakes the commercialisation of the R&D findings is eligible for Pioneer Status with income tax exemption of 100% of statutory income for 10 years. Unabsorbed capital allowancesand accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company. The commercialisation of non-resource-based findings is subject to the list of promoted activities/products under the Promotion Investment Act, 1986.

The incentive for the commercialisation of non-resource-based findings is effective for applications received by MIDA from 29 September 2012 until 31 December 2017.

The incentive is provided on the following conditions:

a. An investing company (holding company) is a locally owned company with atleast70%Malaysianequityownershipandownsatleast70%oftheequityof the company that undertakes the commercialization of the R&D findings;

b. A company undertaking the commercialization project is alocally-owned companywithatleast70%Malaysianequityownership;

c. The commercialisation of the R&D findings should be implemented within one year from the date of approval of the incentive.

d. The eligibility for tax deduction by an investing company shall cease in the year of assessment the tax relief period for the subsidiary company commences.

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e. The company which undertakes the commercialisation of on R&D project must submit a copy of the relevant agreement signed with the approved public research institution or public institution of higher learning on collaboration or licensing.

(vi) r&D for Bio-economy

a. Tax deduction for companies that invest to acquire technology platforms in the bio-based industry. Eligible expenditure is in the acquisition of technology platform acquired by:-

- Licensing of technology

- Outright purchase of technology; and

- Acquisition of a company or shares of a company.

The incentive is available for companies incorporated in Malaysia under the Company Act, 1965 and the acquired technology platforms must be bio-based related.

b. Exemption of import duty on R&D equipment for companies that invests in a pilot plant for the purpose of pre-commercialisation in Malaysia, subject to:-

• R&Dequipmentaredirectlyusedinthepilotplant;and

• ImportedR&Dequipmentarenotproducedlocally

Applications received by Malaysian Biotechnology Corporation Sdn. Bhd. starting from 1 January 2014 until 31 December 2018 is eligible for the incentives.

For further information, please visit http://www.biotechcorp.com.my

6.2 additional incentives for research and Development

(i) Double Deduction for research and Development

• A company can enjoy a double deduction on its non-capital expenditureincurred on research and development approved by the Minister of Finance.

• Paymentforuseofservicesofapprovedresearchinstitutions,approvedR&Dcompanies or contract R&D companies.

• ApprovedR&Dexpenditureincurredduringthetaxreliefperiodforcompaniesgranted Pioneer Status can be accumulated and deducted after the tax relief period.

• ExpenditureonR&Dactivitiesundertakenoverseas,includingthetrainingofMalaysian staff, will be considered for double deduction on a case-by-case basis.



(ii) incentives for researchers to Commercialise research Findings

Researchers who undertake research focused on value creation will be given a 50% tax exemption for five years on the income that they receive from thecommercialisation of their research findings. The undertaking has to be verified by the Ministry of Science, Technology and Innovation.


7. inCentiVeS FOr traininG

7.1 Main incentives for training

To encourage human resource development, the following incentives are available:

investment tax allowance

New private higher institution (PHEIs) in the field of science and companies that establish technical or vocational training institution are eligible for an Investment TaxAllowance(ITA)of100%forqualifyingcapitalexpenditureincurredwithinaperiodof10years.Thisallowancecanbeoffsetagainst70%ofstatutoryincomefor each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

• TheaboveincentivealsoappliestoexistingPHEIsinthefieldofscienceandexisting companies providing technical or vocational training that undertake additional investments to upgrade their training equipment or expand their training capacity.

The qualifying science courses for PHEIs are as follows:

(i) Biotechnology

• Medicalandhealthbiotechnology

• Plantbiotechnology

• Foodbiotechnology

• Industrialandenvironmentbiotechnology

• Pharmaceuticalbiotechnology

• Bioinformaticsbiotechnology

(ii) Medical and Health Sciences

• Medicalscienceingerontology

• Medicalscienceinclinicalresearch

• Medicalbiosciences

• Biochemicalgenetics

• Environmentalhealth

• Communityhealth

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(iii) Molecular Biology

• Immunology

• Immunogenetics

• Immunobiology

(iv) Material sciences and technology

(v) Food science and technology


7.2 additional incentives for training

(i) Deduction for Cost of recruitment of Workers

Cost of recruitment of workers is allowed as a deduction for the purpose of tax computation.

Cost includes expenses incurred in participation in job fairs, payment to employment agencies and head-hunters.


(ii) Deduction for Pre-employment training

Training expenses incurred before the commencement of business qualify for a single deduction. Nevertheless, companies must prove that they will employ the trainees.


(iii) Deduction for non-employee training

Expenses incurred in providing practical training to residents who are not employees of the company can be considered for single deduction.


(iv) Deduction for Cash Contributions

Contributions in cash to technical or vocational training institutions that are not operating primarily for profit and those established and maintained by a statutory body qualify for single deduction.


(v) Special industrial Building allowance

Companies that incur expenditure on buildings used for approved industrial, technical or vocational training can claim a special annual Industrial Building Allowance (IBA) of 10% for 10 years on qualifying capital expenditure for theconstruction or purchase of a building.



(vi) tax exemption on educational equipment

Approved training institutes, in-house training projects and all private institutions of higher learning are eligible for import duty, sales tax and excise duty exemptions on all educational equipment including laboratory equipment for workshops, studios and language laboratories.


(vii) tax exemption on royalty Payments

Royalty payments made by educational institutions to non-residents (franchisors) for franchised education programmes that are approved by the Ministry of Education are eligible for tax exemption.


(viii) Double Deduction for approved training

Manufacturing and non-manufacturing companies that do not contribute to the Human Resource Development Fund (HRDF) qualify for double deduction on expenses incurred for approved training.

For the manufacturing sector, the training could be undertaken in-house or at approved training institutions. However, for the non-manufacturing sector, the training should be held only at approved training institutions. Approval is automatic when the training is at approved institutions.

For the hotel and tour operation business, training programmes, in-house or at approved training institutions, to upgrade the level of skills and professionalism in the tourism industry, should be approved by the Ministry of Tourism.

Effective from the year of assessment 2009 to year of assessment 2012, employers who incur expenses for training their employees in the following skills are eligible for double deduction:

• Postgraduatecourses ininformationandcommunicationtechnology(ICT),electronics and life sciences;

• Postbasiccoursesinnursingandalliedhealthcare;and

• Aircraftmaintenanceengineeringcourses.


(ix) Human resource Development Fund (HrDF)

Please refer to Chapter 5 on Manpower for Industry.


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(x) tax incentive for Structured internship Programme

Double deduction is given on expenses incurred by companies that implement the structured internship programme. The qualifying criteria for this programme among others are as follows:

a. The internship programme is for full time undergraduate students from the Public/Private Higher Educational Institutions; and

b. Internship programme is for a minimum period of 10 weeks with a monthly allowance of not less than RM 500.


The incentive applicable for Year of Assessment 2012 until 2016.

(xi) incentive For awarding Scholarships

Scholarships awarded by private companies to Malaysian students pursuing study at diploma and bachelor’s degree in local institutions of higher learning registered with the Ministry of Higher Education will be given double deduction.

Scholarships awarded are for students that fulfil the following criteria:

a. Full time student;

b. Have no sources of income; and

c. Total monthly income of parents or guardian of the student does not exceed RM 5,000.


The incentive applicable for year assessment 2012 until 2016.

8. inCentiVeS FOr aPPrOVeD SerViCe PrOJeCtS

Approved Service Projects (ASPs) or projects in the transportation, communications and utilities sub-sectors approved by the Minister of Finance qualify for the following tax incentives:

8.1 Main incentives for aSPs

(i) exemption under Section 127 of the income tax 1967

Under Section 127 of the Income Tax 1967, companies undertaking ASPs can applyforincometaxexemptionof70%oftheirstatutoryincomeforfiveyears.Companies undertaking ASPs of national and strategic importance are eligible for a100%incometaxexemptionoftheirstatutoryincomefor10years.



(ii) investment allowance under Schedule 7B of the income tax act 1967

The Investment Allowance (IA) under Schedule 7B of the Income Tax Act 1967 is an alternative to the incentive offered under Section 127. Under IA, companies undertakingASPsareeligibleforanallowanceamountingto60%onthequalifyingcapital expenditure incurred within five years from the date the first capital expenditureisincurred.Theallowancecanbeoffsetagainst70%ofthestatutoryincome and any unutilised allowances can be carried forward to subsequent years until fully utilised.

Companies undertaking ASPs of national and strategic importance are eligible for anallowanceof100%onthequalifyingcapitalexpenditureincurredwithinfiveyears.Thisallowancecanbeoffsetagainst100%ofthestatutoryincome.


8.2 additional incentives for aSPs

Exemption from Import Duty, Sales Tax and Excise Duty on Raw Materials, Components, Machinery, Equipment, Spares and Consumables.

Imports of raw materials and components not available locally and used directly to implement ASPs are eligible for exemption from import duty and sales tax, while locally purchased machinery or equipment are eligible for exemption from sales tax and excise duty.

Companies providing services in the transportation and telecommunications sectors, power plants and port operators can apply for import duty and sales tax exemption on spares and consumables that are not produced locally.

The above applications should be submitted to the Ministry of Finance.

Note: Please refer to Section 25 for other incentives related to ASPs.

9. inCentiVeS FOr tHe SHiPPinG anD tHe tranSPOrtatiOn inDUStrY

9.1 tax incentive for Malaysian Ships

• TheincomeofashippingcompanyderivedfromtheoperationofMalaysianshipsis70%exemptedfromtaxfromYearofAssessment2012.Thisincentiveonlyappliestoresidents.A“MalaysianShip”isdefinedasasea-goingshipregistered as such under the Merchant Shipping Ordinance 1952 (Amended), other than a ferry, barge, tugboat, supply vessel, crew boat, lighter, dredger, fishing boat or other similar vessels.

• TheIncomeofanypersonderivedfromexercisinganemploymentonboarda“MalaysianShip”isexemptedfromtax.

• Income received by non-residents from the rental of ISO containers toMalaysian shipping companies is also exempted from income tax.


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9.2 Sales tax exemption on Prime Movers and trailers

Container hauliers qualify for sales tax exemption on new prime movers and trailers that are produced locally. Haulage operators can benefit from these facilities by claiming the exemption of sales tax prime movers and container trailers under these Orders through a self-declaration process.

Applications should be submitted to the Royal Customs Department with a confirmation letter issued by MIDA.

10. inCentiVeS FOr MSC MalaYSia

The MSC Malaysia is modelled to be a world-class hub for the development and nurturing of the nation’s information and communications technology (ICT) industry. It provides a perfect environment for companies wanting to create, distribute and employ multimedia products and services.

MSC Malaysia Status is the recognition granted by the Government of Malaysia through the Multimedia Development Corporation (MDeC) to companies that participate and undertake ICT activities in the MSC Malaysia. Companies with MSC Malaysia status enjoy a set of incentives and benefits that is backed by the Government of Malaysia’s Bill of Guarantees.

10.1 Main incentives for MSC Malaysia Status Company

MSC Malaysia status multimedia companies operating in MSC Malaysia Cybercities or Cybercentres are eligible for the following incentives and facilities:

i. PioneerStatuswithincometaxexemptionof100%ofthestatutoryincomeforaperiodof10years;orInvestmentTaxAllowanceof100%onthequalifyingcapital expenditure incurred within a period of five years to be offset against 100%ofstatutoryincomeforeachyearofassessment.

ii. Eligibility for R&D grants (for majority Malaysian-owned MSC Malaysia Status companies).

Applications for MSC Malaysia Status should be submitted to MDeC.

Other Benefits

i. Duty-free import of multimedia equipment

ii. Intellectual property protection and a comprehensive framework of cyberlaws

iii. No censorship of the Internet

iv. World-class physical and IT infrastructure

v. Globally competitive telecommunication tariffs and services

vi. Consultancy and assistance by the Multimedia Development Corporation to companies within the MSC Malaysia

vii. High quality, planned urban development

viii. Excellent R&D facilities


ix. Green and protected environment

x. Import duty, excise duty and sales tax exemption on machinery, equipment and materials.

For further information, please visit www.mscmalaysia.my

11. inCentiVeS FOr inFOrMatiOn anD COMMUniCatiOn teCHnOlOGY (iCt)

11.1 incentives for the Purchase of information and Communication technology (iCt) equipment.

(i) accelerated Capital allowance

From the Year of Assessment 2009 to the Year of Assessment 2015, a person residing in Malaysia is eligible for ACA in respect of capital expenditure incurred in the basis period for a year of assessment in relation to the purchase of any information and communications technology equipment used for the purpose of a business.

ACAisgivenat20%fortheinitialallowanceand80%fortheannualallowance.This means the qualifying expenditure is written off in one year.


Note: Please refer to Section 25 for other incentives related to the ICT sector.

12. inteGrateD lOGiStiCS SerViCeS (ilS)

The main activities in the Integrated Logistics Services (ILS) cover freight forwarding, warehousing, transportation and other related value-added services such as distribution, procurement and supply chain management on an integrated basis.

Companies intending to undertake ILS activities are required to obtain the respective operating licences from the various licensing agencies.

Companies undertaking ILS are eligible for Pioneer Status (PS) or Investment Tax Allowances (ITA). The objective of granting the incentive is to create an efficient and competitive logistics industry to encourage the integration and consolidation of the various transport intermediaries along the logistics supply chain in Malaysia. In this regard, Malaysian companies are encouraged to expand and venture into higher value-added services to enable them to compete globally.

12.1 tax incentives

New and existing companies providing the above services are eligible to apply for incentives under the Promotion of Investment Act, 1986.

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The tax incentives are as follows:

• PioneerStatus

- PioneerStatuswithataxexemptionof70%ofthestatutoryincomefora period of five (5) years; or

• InvestmentTaxAllowance(ITA)

- ITA of 60% on the qualifying capital expenditure incurred within aperiodoffive(5)years.Theallowancecanbeoffsetagainst70%ofthestatutory income for each year of assessment. Unutilised allowances can be carried forward to subsequent years until fully utilised.

12.2 eligibility Criteria

Companies that meet the following criteria can apply for the ILS incentives:-

• IncorporatedundertheCompaniesAct,1965

• New entrants or existing logistics services providers intending to expand/diversify into integrated operations

• Atleast60%ofitsequityisheldbyMalaysians

• ILSprovidersshouldundertakethefollowingthree(3)principalactivities:

- Warehousing

- Transportation

- Freight forwarding

In addition to the above activities, the company should undertake at least one (1) of the following activities:

• Distribution

• Other related and value-added services activities (e.g. palletising, productassembly/ installation, bulk breaking, consolidation, packaging/re-packaging, procurement, quality control, labelling/re-labelling, testing, etc);


Companies should have the following minimum infrastructure

• CommercialVehicles:20units

• Warehousingfacilities:5,000m2

12.3 Specific immigration Procedures

Companies that have been approved for incentives to provide ILS can apply for expatriate posts, namely Key Posts and Time Posts. Upon approval, companies should forward their applications for Employment Passes to the Immigration Department for endorsement.

Applications for incentives and expatriate posts should be submitted to MIDA.


13. internatiOnal inteGrateD lOGiStiCS SerViCeS (iilS)

An International Integrated Logistics Services (IILS) provider is a 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.

Eligible companies can apply for the IILS status and upon approval be issued the Freight Forwarding Agent/Customs Agent licence by the Royal Malaysian Customs Department. However, this status is not a guarantee for the consideration of tax incentives under the Promotion of Investments Act, 1986.

13.1 eligible applicants

New entrants or existing logistics service providers may apply.

13.2 Qualifying Criteria

i. Local incorporation under the Companies Act, 1965.

ii. Must undertake the following three (3) principal activities:

• Warehousing

• Transportation

• Freightforwarding,includingcustomsclearance

And at least one of the following activities:

• Distribution

• Otherrelatedandvalue-addedlogisticsservices/activities


iii. Manage at least:

• 20unitsofcommercialvehicles;and

• 5,000m2 of warehouse space

iv. Employ majority Malaysians and preference must be given to local professionals.

v. Use Malaysia as a hub for logistics supply chain services in the region.

vi. Have good networks with logistics service providers abroad in order to provide seamless integrated logistics services for the regional market.

vii. Substantial usage of ICT infrastructure throughout the logistics chain and value-added activities.

viii. Compulsory attendance of the Customs Agent course conducted by the Royal Malaysian Customs Department.

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14. COlD CHain FaCilitieS anD SerViCeS FOr FOOD PrODUCtS Companies undertaking cold chain facilities provide a wide range of services including cold room, refrigerated truck and other related services such as the collection, storage and distribution of locally produced perishable food products and locally processed food products.

14.1 licensing and registration

Investors intending to provide cold room and refrigerated truck facilities and related services that involving warehousing and transportation services are required to:-

• IncorporateacompanyundertheCompaniesAct,1965

• Obtainoperatinglicencesfor:

- Public/Private Bonded Warehouse

- Licences for Commercial Vehicles and Haulage (Class A Licence)

14.2 tax incentives

Companies providing cold chain facilities and services for perishable agricultural produce such as fruits, vegetables, flowers, ferns, meat and aquatic and locally processed food products are eligible for consideration for Pioneer Status (PS) or Investment Tax Allowance (ITA).

The tax incentives are as follows:-

(a) New Company

• PSwithtaxexemptionof70%ofstatutoryincomeforfive(5)years;or

• ITA of 60% of qualifying capital expenditure incurredwithin five (5)years.Theallowancecanbeoffsetagainst70%ofthestatutoryincomefor each year of assessment. Unutilised allowances can be carried forward until fully absorbed.

(b) Existing Company

• PSwithtaxexemptionof70%ontheincreasedstatutoryincomearisingfrom reinvestment for a period of five (5) years; or

• ITA of 60% of the additional qualifying capital expenditure incurredwithin a period of five (5) years. The allowance can be offset against 70% of the statutory income in each year of assessment. Unutilisedallowances can be carried forward until fully absorbed


• IncorporateacompanyundertheCompaniesAct,1965

• Theapplicantmustbeanindependentserviceprovider.


14.4 eligible activities

• Theprovisionofcold roomfacilitiesor refrigerated transportation for localagriculture produce with or without other post-harvest activities including cleaning, washing, grading, freezing/chilling and packing

• Theprovisionofcold roomfacilitiesor refrigerated transportation for localprocessed food products.

14.5 Qualifying income

• Atleast60%ofthecompany’srevenuemustbederivedfromtheprovisionofcold room facilities, refrigerated transportation and other related services for local agricultural produce.


Companies applying for incentives to provide cold chain facilities can also apply for expatriate posts namely Key Posts and Time Posts. Upon approval, companies should forward their applications for Employment Passes to the Immigration Department for endorsement.

All applications for incentives, duty exemptions and expatriate posts should be submitted to MIDA.

15. rePreSentatiVe OFFiCe (re) /reGiOnal OFFiCeS (rO)

A Representative Office/Regional Office of a foreign company/organisation in the manufacturing and services sectors is an office which is established in Malaysia to perform permissible activities for its head office/principal. The Representative Office/ Regional Office should not undertake any commercial activities and only represents its head office/principal to undertake designated functions. The operation of such office is completely funded from sources outside Malaysia. The Representative Office/ Regional Office is not required to be incorporated under the Companies Act 1965. The setting up of a Representative/Regional Office requires the approval by the Government of Malaysia.

15.1 representative Office

A Representative Office is an office of a foreign company/ organisation approved to collect relevant information on investment opportunities in the country especially in the manufacturing and services sectors, enhance bilateral trade relations, promote the export of Malaysian goods and services and carry out research and development (R&D).

15.2 regional Office

A Regional Office is an office of a foreign company/organisation that serves as the coordination centre for the company’s/ organisation’s affiliates, subsidiaries and agents in South-East Asia and the Asia Pacific. The Regional Office established is responsible for the designated activities of the company/ organisation within the region it operates.

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15.3 activities allowed

An approved Representative/Regional office is established to perform the following permissible activities for its head office or principal:

• Gathering and analysis of important information or undertaking feasibilitystudies on investment and business opportunities in Malaysia and the region;

• Planningofbusinessactivities;

• Identifyingsourcesofrawmaterials,componentsorotherindustrialproducts;

• Undertakeresearch&productdevelopment;

• Actasacoordinationcentreforthecorporation’saffiliates,subsidiariesandagents in the region; and

• Otheractivitieswhichwillnotresultdirectlyinactualcommercialtransactions

15.4 activities not allowed

The approved representative office/regional office is not allowed to carry out any business transaction nor derive income from its operations including the following activities:

- Be engaged in any trading (including import and export), business or any form of commercial activity

- Lease warehousing facilities; any shipment / transhipment or storage of goods shall be handled by a local agent or distributor

- Sign business contracts on behalf of the foreign corporation or provide services for a fee

- Participate in the daily management of any of its subsidiaries, affiliates or branches in Malaysia


- The proposed operational expenditure of the Representative office/Regional office must be at least RM150,000 per annum.

- The Representative office/Regional office must be financed by funds emanating from sources outside Malaysia.

15.6 Duration of approvals establishment

• CompanyandOthers(includingnon–profitorganizationsnotrelatingtotrade)

Minimum of two (2) years depending on the merits of each case.

• GovernmentandTradeAssociation

Duration is based on the requirement of the applicant.



A Representative office/Regional office can apply for expatriate posts and the number of posts allowed depends on the functions and activities of the Regional Office/Representative Office. Expatriates will only be considered for managerial and technical posts.

The proposed expatriate should be currently employed by the applicant company or its subsidiary or within the group. An expatriate working in a Representative Office is subject to the normal income tax. However, expatriates working in a Regional Office are taxed only on the portion of their chargeable income attributed to the number of days that they are in the country.

Can be considered based on a minimum operating expenditure of at least RM300,000 per annum.

Applications for the establishment of Representative Office/Regional office and expatriate posts should be submitted to MIDA.

16. treaSUrY ManaGeMent Centre (tMC)

An approved treasury management centre (TMC) refers to a locally incorporated company that provides centralised treasury management services for its group of related companies within or outside the country.

16.1. eligibility Criteria

To qualify as an approved TMC, the company must fulfil the following criteria:

• AcompanyincorporatedundertheCompaniesAct1965;

• Aminimumpaid-upcapitalofRM0.5million;

• A minimum total operating expenditure (excluding interest expenditurerelated to funding activities of the TMC and depreciation) of RM1.5 million incurred domestically per year of assessment;

• Appointatleastthree(3)seniorprofessionalstoworkundertheTMC;

• Provide qualifying treasury services to at least three (3) related companiesoutside Malaysia;

16.2 treasury Services / Qualifying activities

(i) Cash, Financing and Debt Management

a) Cash pooling arrangement through a centralised account with a licenced onshore bank

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b) Providing financing sourced from surplus funds within the group or financial institutions in Malaysia to:

– arelatedcompanyinMalaysiainringgitorforeigncurrency;

– a related company overseas;

– in foreign currency for any purpose; and

– in ringgit for use in Malaysia

c) Arranging for competitive financing sourced from-

– surplus funds from within the group; – financial institutions in Malaysia; or – the issuance of bonds/sukuk (an Islamic financial certificate, similar

to a bond) in ringgit of foreign currency

d) Providing or arranging for financial and non-financial guarantee for its group of companies.

e) Current account management

– Managing account payables and receivables;

– Maintaining inter-company offsetting arrangement.

(ii) investment services

Investing funds within the group in domestic money market and in foreign currency assets onshore and offshore

(iii) Financial risk management

Hedgingof– – Exchange rate risk

– Interest rate risk/benchmark rate risk

– Market risk

– Credit/counterparty risk

– Liquidity risk

– Commodity price risk

16.3 incentives and Benefits

An approved TMC can be considered for the following incentives and benefits:

i. 70% exemption of the following statutory income arising from treasuryservices rendered by treasury centres to its related companies for a period of five (5) years:-


a. All fees / management income from providing qualifying services to related companies in Malaysia and overseas;

b. Interest income / finance income received from lending / financing to related companies in Malaysia and overseas;

c. Interest income / finance income / gains received from placement of funds with onshore banks or short term investment (onshore and offshore) as part of managing surplus funds within the group;

d. Realised foreign exchange revenue/gains/profits from managing risks for the group i.e. exchange rate risk, interest rate risk, benchmark rate risk, market risk, credit/counterparty risk, liquidity risk and commodity price risk;

e. Premium/income.discount/gains pursuant to subscription of bonds/sukuk (an Islamic financial certificate, similar to a bond) issued by related companies and financial institutions; and

f. Guarantee fees

ii. Exemption from withholding tax on interest payments / profits on borrowings by the TMC from financial institutions and related companies provided the funds raised are used for the conduct of qualifying TMC activities;

iii. Full exemption from stamp duty on all loan / financing agreements and service agreements executed by treasury centres in Malaysia, used for the conduct of qualifying TMC activities;

iv. Expatriates working in a TMC are taxed only on the portion of their chargeable income attributable to the number of days that they are in Malaysia; and

v. Foreign Exchange Administration (FEA) flexibilities.

Income from qualifying services provided directly by a TMC to its related companies in Malaysia during its tax exempt period is exempted from tax provided such incomedoesnotexceed20%oftheTMCincomederivedfromqualifyingservices.

16.4 Specific immigration Procedures There are two (2) stages in the employment of expatriates i.e. application for an expatriate post and an endorsement of Employment Pass.

Companies applying for TMC incentives can apply for expatriate posts, including key posts. The approval will be granted according to the company’s requirement subject to the condition that the company has a minimum paid-up capital of RM500,000.

Upon approval of the expatriate posts by MIDA, the company must submit an application to the Immigration Department for endorsement of the Employment Pass. The expatriate can be hired once the Employment Pass has been endorsed.

Applications for TMC incentives and expatriate posts should be submitted to MIDA.

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17. inCentiVeS FOr PrOViDerS OF inDUStrial DeSiGn SerViCeS in MalaYSia

To promote creativity and innovation that results in higher value add, providers of industrial design services are eligible for Pioneer Status with income tax exemption of70%ofthestatutoryincomeforaperiodoffive(5)years.Unabsorbedcapitalallowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company.

The industrial design services provided are meant for the purpose of mass production.


Application should be submitted to MIDA.

18. inCentiVeS FOr PriVate anD internatiOnal SCHOOlS

To further encourage the involvement of private sector in educational service and to complement the Government’s effort in providing the educational infrastructure, tax incentives are given to private schools and international schools registered and fulfilled the requirement stipulated by Ministry of Education as follows:

a. Private Schools

i) Income tax exemption of 70% for a period of five (5) years. Unabsorbedcapital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii) IncometaxexemptionequivalenttoInvestmentTaxAllowanceof100%onthe qualifying capital expenditure incurred within a period of five (5) years. Theallowancetobeoffsetagainst70%ofthestatutoryincomeforeachyearofassessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

b. international Schools

i) Income tax exemption of 70% for a period of five (5) years. Unabsorbedcapital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or

ii) IncometaxexemptionequivalenttoInvestmentTaxAllowanceof100%onthe qualifying capital expenditure incurred within a period of five years. The allowancetobeoffsetagainst70%ofthestatutoryincomeforeachyearofassessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

The schools must be registered and approved by the ministry of education.


For (a) and (b), applications received from 8 October 2011 until 31 December 2015 are eligible for these incentives.


c. additional incentives For Private Schools and international Schools

i. Import duty and sales tax exemption for educational equipment; and

ii. Double deduction for overseas promotional expenses.

Effective dates for (c):

i. For item (i), the incentive is effective for the applications received by MIDA from 8 October 2011

ii. For item (ii) applications are eligible for the incentive with effect from the Year of Assessment 2012. Claims should be submitted to IRB.

19. inCentiVeS FOr earlY YearS eDUCatiOnS

19.1 tax incentive for Children Centres

quality childcare service is important to ensure that children are well nurtured during their early years while their parents are at work. To encourage more employers and the private sector to provides childcare centres, the incentives provided are as follows:-

(i) Tax incentives for employers:-

• Double deduction on expenditure incurred for the provision andmaintenance of childcare centres; and

• Doubledeductiononchildrenallowancegiventoemployees.

(ii) Tax incentives for operators of new and existing private childcare centres:-

• Taxexemptionatthestatutorylevelonallincomeforaperiodof5years;and

• Industrial Building allowance at an annual rate of 10% for buildingsused as childcare centres.

New and existing private children centres must be registered with the Social Welfare Department.

These incentives are applicable from year of assessment 2013.

Claim should be submitted to IRB

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19.2 tax incentive for Pre-School education

Private pre-school education is the main thrust in the initial stage of mental preparation and development of a child prior to entering the realm of schooling. To reduce the operational cost of maintenance and to enhance the quality of new and existing private pre-schools, the following tax incentives are given:-

i. Tax exemption at the statutory level on all income for period of five years; and

ii. IndustrialBuildingallowanceatanannualrateof10%onpre-schoolbuildings.

New and existing private pre-school must be registered with the State Education Department.

These incentives are applicable from year of assessment 2013.

Claim should be submitted to IRB

20. inCentiVeS FOr PriVate HealtHCare FaCilitieS FOr tHe PrOMOtiOn OF HealtHCare traVel

(i) incentive for Healthcare travel

Companies that establish new private healthcare facilities or existing private healthcare facilities undertaking expansion/modernisation/refurbishment for purposes of promoting healthcare travel, are eligible for:

• IncomeTaxExemptionequivalenttoInvestmentTaxAllowance(ITA)of100%on the qualifying capital expenditure incurred within a period of 5 years. The allowance can be used to offset against 100%of the statutory income foreach year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

For purposes of this incentive, private healthcare facilities means private hospitals or ambulatory care centres.

These private healthcare facilities must be approved and licenced by the Ministry of Health (MOH) and registered with the Malaysia Healthcare Travel Council (MHTC).

Applications received by 31 December 2014 are eligible for the incentive.


(ii) additional incentives for Healthcare travel

a. Double Deduction for expenses incurred in Obtaining recognised accreditation

Private hospitals which incur expenses in obtaining domestic or international recognised accreditation such as from the Malaysian Society for quality in Health (MSqH) or Joint Commission International (JCI) qualify for double deduction for the purpose of income tax computation.



b. automatic employment/Professional Pass approval for Medical Specialists

Employment/professional pass will be offered automatically to the following qualified medical specialist who return or come from abroad to serve in Malaysian hospitals:

• Malaysianornon-Malaysianmedicalspecialists;and

• Non-Malaysian spouses who qualify as a professional as perstipulated in the Malaysian Classification of Occupation (MASCO).

However, this is subject to registration with the relevant professional bodies.

21. DOMeStiC inVeStMent StrateGiC FUnD

21.1 introduction

i. The Domestic Investment Strategic Fund of RM1 billion was established to accelerate the shift of Malaysian-owned companies in targeted industries to high value-added, high technology, knowledge-intensive and innovation-based industries.

ii. The package of assistance is granted under the Customised Incentive Scheme, based on the request of the companies and the merits of each case.

iii. This fund was created to achieve the Government’s goal to improve domestic investments to complement foreign direct investments (FDI) in ensuring sustainable economic growth in the future.

iv. Under the Economic Transformation Plan (ETP), the Government has set a target of RM1.4 trillion worth of investments by 2020, of which 92 per cent are in private investments. Of the total private investment, the contribution of domestic investments is set at 73 per cent.

v. The objectives of the fund are to upgrade the company’s technological capabilities to be more competitive internationally, move-up the company’s value chain and enable the company to be active participants in the global ecosystem by:

• StrengtheningtrainingandR&Dactivitiestoencouragecompaniestobecome more innovative;

• Leveragingand intensifyingoutsourcing1 opportunities created by the multinational companies and Malaysian conglomerates.

• Promotingtheacquisitionofnew/hightechnologytoupgradeexistingtechnologies.

• Enable local companies to penetrate international / global marketthrough obtaining standard / international certifications.

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vi. The fund does not offer an outright grant and is contingent upon investments in strategic industries in the following priority sectors:

• Aerospace;

• MedicalDevices;

• Pharmaceuticals;

• AdvancedElectronics;

• MachineryandEquipment;

• RenewableEnergy

• Servicesincludingdesign,R&D,testing,qualityandstandardcertification,engineering services, technical and skills training and logistics service providers (3PL); and

• Otherindustries,onacasebycasebasis.

vii. Among the scope of the Fund is to provide matching grants (1:1) for the purpose of :

• R&DActivities

• TrainingActivities

• Modernisation/Upgradefacilitiesandequipment

• LicensingandPurchaseofNewTechnology

• ObtainingInternationalStandard/Certification

viii. The fund is eligible for Malaysian companies with Malaysian equity ownership ofatleast60%:

21.2 eligible applicants

i. A company should be incorporated under the Companies Act,1965;

ii. Effectiveequityofthecompanymustbeatleast60%ownedbyMalaysians;

iii. For a new company:

• Asubsidiary,associateorsistercompany(relatedcompany)ofanexistingcompany operating in the relevant / related industry with proven track record;

• Theprojectmustinvolvenewinvestmentstoundertakethemanufacturing/services activities;

• Theproventrackrecordmustbereflectedfromtherelatedcompanies’activities; and

• Relatedcompaniesaredefinedasatleast20%ofthesharesareownedby the parent company or the same shareholder.


iv. For an existing company:

• Acompanywhichundertakes reinvestments in the formofexpansion(which involves upgrading or enhancement of technology) or diversification;

• The project must involve additional investments to undertake themanufacturing/services activities; and

• Thecompanymusthavethecapabilityandproventrackrecordintherelevant/related industry.

Applications received by Malaysian Investment Development Authority (MIDA) from 3 July 2012 are eligible to be considered for this incentive.

22. enCOUraGe SMall MalaYSian SerViCe PrOViDerS tO MerGe intO larGer entitieS

The services sector is currently fragmented and dominated by small firms. These firms need to build up capacity in view of the liberalisation of the sector in order to avoid hollowing out of companies and to be globally competitive. As such, there is a need to encourage small Malaysian service providers to merge into larger entities to build up the competitiveness of the smaller entities.

22.1 incentives

(i) Flattaxrateof20%onalltaxableincomeforaperiodof5years(effectivefrom the date of the merger); and

(ii) Stamp duty exemption on the merger document.


(i) Enterprises that intend to merge must be:

• 100%Malaysianowned;and

• Have annual sales turnover of less than RM5 million or full-timeemployees of less than 50.

(ii) Sectors eligible for this incentive include:

• Professional services (accounting and taxation services, specialisedmedical & dental practices, architectural services and engineering services);

• Courierservices;

1 Outsourcing is a subcontracting process that involves manufacturing, manufacturing related services, business services and delegation of some/all operations to an external entity, usually specialised in that operation.

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

• Skillstrainingservices

(iii) Mergers to take place within 3 years from the announcement of the incentive.

(iv) Mechanism

• ApplicationsubmittedtoInlandRevenueBoard(IRB)andincentivestobe provide through Exemption Order under Income Tax Act 1967 and Stamp Act 1949.

23. GUiDelineS FOr inCentiVe FOr aCQUirinG a FOreiGn COMPanY FOr HiGH teCHnOlOGY

23.1 incentives

(i) A locally-owned company in the manufacturing or services sector that acquires a foreign-owned company abroad will be eligible for an incentive in theformofanannualdeductionof20%oftheacquisitioncostfor5yearsforthe following purpose:

• Establishmentofamanufacturingfacility/companyorservicescompanywithin Malaysia; or

• UtilisationoftheacquiredtechnologyintheirexistingoperationswithinMalaysia.

(ii) The incentive is in the form of an annual deduction to ascertain the adjusted income of the locally-owned company, and any unutilised deduction can be carried forward until fully utilised.


(i) The acquirer must be a locally-owned company that is incorporated under the CompaniesAct,1965withatleast60%Malaysianequityownershipinvolvedin manufacturing or services activities.

(ii) Malaysianequityownershipofatleast60%mustbeheldforaperiodof5years from the date of application.

(iii) For a public listed company:

• Atleast60%ofitsequityisdirectlyownedbyMalaysiansonthefirstdayof listing on the stock exchange; and

• Atleast50%ofitsequityisdirectlyownedbyMalaysians.

(iv) An acquisition by a holding company having interests in manufacturing or services activities will be considered on a case by case basis.

(v) Theacquireemustbeaforeigncompanywith100%foreignequityownershipthat is located abroad and uses the high technology in the activity of manufacturing or services.


(vi) Theacquisitionshouldbeadirectacquisitionofatleast51%oftheequityofthe foreign company abroad.

(vii) The acquisition must be in the form of a cash transaction. Acquisitions through share-swapping will not be eligible for this incentive.

(viii) The acquisition must be completed within three (3) years.

(ix) Acquisition costs eligible for the deduction comprise:

• ValueofsharespurchasedbytheMalaysiancompany(acquirer);and

• 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.

• The acquisition of the foreign technology company must result inincrease of performance or enhancement of technology and processes of the company’s operation in Malaysia.

(x) Definition of High Technology: • Newandemergingtechnologies;or

• Relativelynewtechnologyfortheindustry/sectorconcerned.

(xi) Other Considerations

• Applicationsfortheincentivecanbemadepriorto,duringthecourseofnegotiations, or within six months after the completion of the acquisition.

• A company currently enjoying incentives under the Promotion ofInvestments Act (PIA), 1986 or Income Tax Act, 1967, is not eligible for this incentive.

• Theacquisitionmustbeheldforatleastfiveyears.Wheretheacquiredforeign-owned company is disposed of within five years from the date of the completion of the acquisition, any annual deduction granted will be withdrawn in the year of assessment such ordinary shares are disposed of.

• Theannualdeductionwillbegrantedfromthedateofthecompletionofthe acquisition and all the costs of acquisition are deemed to be incurred on that completion date.

• For an acquisition undertaken with the objective of acquiring hightechnology for production within the country, the applicant company is also eligible to be considered for incentives granted to high technology companies. However, they will be limited to the manufacture of new products using the acquired technology.

• For an acquisition undertaken with the objective of acquiring hightechnology to provide services within the country, the applicant company is also eligible to be considered for incentives granted to services activities. However, they will be limited to the new services using the acquired technology.

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• Anysubsequentapplicationbytheacquireroritsrelatedcompanieswillnot be eligible for the incentive

(xii) Mechanism

• IncentivestobeprovidedundertheIncomeTaxAct,1967andapprovedthrough the National Committee on Investment (NCI).

24. inCentiVeS UnDer tHe 2015 BUDGet

Four (4) new incentives were announced by YAB Prime Minister in the 2015 Budget on 10th October 2014 namely as follows:

1. Incentive for Less Developed Areas

2. Incentive for Industrial Area Management

3. Capital Allowance to Increase Automation in Labour-Intensive Industries

4. Incentive for the Establishment of Principal Hub

24.1 incentive for less Developed areas

Existing manufacturing/services company expanding its operation into the less developed areas or newly established manufacturing/services company is eligible for:

i. Income Tax Exemption of 100% up to 15 years of assessment (5+5+5)commencing from the first year of assessment the company derives statutory income;

OR

IncomeTaxExemptionequivalentto100%ofqualifyingcapitalexpenditure(Investment Tax Allowance) incurred within a period of 10 years. The allowancecanbeoffsetagainst100%ofstatutoryincomeforeachassessmentyear. Unutilised allowances can be carried forward until fully absorbed;

ii. Stamp duty exemption on transfer or lease of land or building used for development in relation to manufacturing and services activities;

iii. Withholding tax exemption on fees for technical advice, assistance or services or royalty in relation to manufacturing and services activities up to 31st December 2020;

iv. Import duty exemption on raw materials and components that are not produced locally and used directly in the manufacture of finished products subject to the prevailing policy, guidelines and procedures; and

v. Import duty exemption on machinery and equipment that are not produced locally and used directly in the activity for selected services sector subject to the prevailing policy, guidelines and procedures.


The eligible company must fulfil the following criteria:

a) The company is to undertake its manufacturing or services activities in the less developed areas that will lead to substantial creation of employment and rural development; and

b) The company must comply with other conditions specified by the Minister of Finance including value added, local employment and Managerial, Technical and Supervisory staff index (MTS Index).


24.2 incentive for industrial area Management

A newly established or existing company appointed by a Local Authority (PBT) is eligiblefor100%taxexemptiononstatutoryincomefor5yearsstartingfromthedate the company commences its activities. The eligible company must fulfil the following criteria:

a) The Industrial Estate must be gazetted by the State Authority as an industrial land;

b) A newly established company or existing company appointed by a Local Authority (PBT) must have an agreement on the management of IEs;

c) The company undertakes the management of an existing IE specified by the PBT;

d) A company incorporated under the Companies Act, 1965;

e) The company must be approved/licenced by a PBT;

f) The company must be self-funded;

g) The company must undertake all of the compulsory activities as stated in the guidelines;

h) Atleast70%oftheannualincomeoftheindustrialareamanagementmustbe derived from the compulsory activities as specified in paragraph (g) in the guidelines; and

i) The company must have commenced its operation not later than one (1) year from the date of application received by MIDA.


24.3 Capital allowance to increase automation in labour intensive industries

Manufacturing company (labour and non-labour intensive industry) operating at least 36 months in Malaysia is eligible for:

Category 1: High labour intensive industries (rubber products, plastics, wood, furniture and textiles)

i. AutomationCapitalAllowanceof200%onthefirstRM4millionexpenditureincurred within three (3) year of assessment from 2015 to 2017; and

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Category 2: Other industries

ii. AutomationCapitalAllowanceof200%willbeprovidedon thefirstRM2million expenditure incurred within five (5) year of assessment from 2015 to 2020.

The eligible company must fulfil the following criteria:

a) Manufacturing company incorporated under the Companies Act 1965 and resident in Malaysia;

b) Possesses a valid business licence from local authority and manufacturing licence from MITI (if applicable);

c) Company has been in operation for at least 36 months;

d) The automation equipment is used directly in the manufacturing activities;

e) The automation equipment should enhance the productivity such as reducing man hours, reducing workers and increasing volume of output and to be verified by SIRIM;

f) The automation equipment adopts technology that is more advanced than the technology currently used by the company and to be verified by SIRIM;

g) Companies currently claiming Reinvestment Allowance (RA) under Schedule 7A, Income Tax Act 1967 can opt to claim this incentive provided that either one of these two incentives is claimed in the same year of assessment. The period of RA will continue even though the company has opted for this incentive. However, the company must utilize the full amount of RM4 million for Category 1 or RM2 million for Category 2 before it continues to claim RA; and

h) If a company that has been in operation for 36 months decides to claim this incentive first before claiming RA, the incentive period under category 1(year of assessment 2015 to 2017) and 2 (year of assessment 2015 to 2020) will form part of the 15 years period of RA.

Submission process:

a) Company to submit ML-Automation CA form to the respective division in MIDA for non-technical eligibility;

b) Company to submit application to SIRIM for each machine’s verification of productivity level (technical eligibility);

c) MIDA to evaluate the application;

d) MIDA to provide approval letter to the company and carbon copies sent to Ministry of Finance (MOF) and Inland Revenue Board (IRB); and

e) The company needs to keep the letter for audit purpose by IRB.


24.4 Principal Hub

24.4.1 Definition Of Principal Hub

A locally incorporated company that uses Malaysia as a base for conducting its regional and global businesses and operations to manage, control, and support its key functions including management of risks, decision making, strategic business activities, trading, finance, management and human resource.

An approved Principal Hub company is eligible for a 3-tiered corporate taxation rate as follows:

3-tier incentive tier 3 tier 2 tier 1

Blocks (years) 5 + 5 5 + 5 5 + 5

tax rate 10% 5% 0% 24.4.2 eligibility Criteria For Principal Hub incentive

a) Local incorporation under the Companies Act 1965 b) Paid-up capital of more than RM2.5 million.

c) Minimum annual sales of RM 300 million (Additional requirement for goods-based applicant company).

d) Serves and control network companies in at least 3 countries outside Malaysia

Network companies “related companies or any entity within the groupincluding subsidiaries, branches, joint ventures, franchises or any other company related to applicants’ supply chain and business with contractual agreements”.

e) Carry out at least three qualifying services, of which one of the qualifying services must be from the strategic services cluster as follows:

(i) Strategic Services

• RegionalP&L/BusinessUnitManagement

• P&LManagementfocusesonthegrowthofthecompanywithdirectinfluence on how company resources are allocated - determining the regional/ global direction, monitoring budget expenditure and net income, and ensuring every program generates a positive ROI

• StrategicBusinessPlanningandCorporateDevelopment

• CorporateFinanceAdvisoryServices

• BrandManagement

• IPManagement

• Senior-levelTalentAcquisitionandManagement

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(ii) Business Services

• BidandTenderManagement

• TreasuryandFundManagement

• Research,Development&Innovation

• ProjectManagement

• SalesandMarketing

• BusinessDevelopment

• TechnicalSupportandConsultancy

• InformationManagementandProcessing

• Economic/InvestmentResearchAnalysis

• StrategicSourcing,ProcurementandDistribution

• LogisticsServices

(iii) Shared Services

• CorporateTrainingandHumanResourceManagement

• Finance&Accounting(Transactions,InternalAudit)

• GeneralAdministration

• ITServices

f) Employment Requirement

i. Tier 3: 15 high value jobs, including 3 key strategic/management positions

ii. Tier 2: 30 high value jobs, including 4 key strategic/management positions

iii. Tier 1: 50 high value jobs, including 5 key strategic/management positions

• MinimummonthlysalaryforhighvaluejobsisatleastRM5,000.00.

• Minimummonthlysalaryofkeystrategic/managementpositionsisat least RM25,000.00.

Definition of High Value Jobs

Jobs that require higher and more diverse set of managerial/ technical/ professional skills such as management, analytics, communication, problem-solving, and proficiency in information technology

iv.Atleast50%ofthehighvaluejobsmustbeMalaysianbyendofyear3.


g) Annual Business Spending

i. Tier 3: RM 3 Million

ii. Tier 2: RM 5 Million

iii. Tier 1: RM10 Million

h) Must have HR training and development plan for Malaysians.

i) The applicant should be the planning, control and reporting centre for the qualifying services.

j) Malaysian-owned and incorporated businesses are encouraged to provide headquarters-related services and expertise to their overseas companies.

k) Significant use of Malaysia’s banking and financial services and other ancillary services and facilities (e.g trade and logistics services, legal and arbitration services, finance and treasury services).

l) Income tax exemption threshold received from services/goods-based company inside and outside of Malaysia is based on the ratio of 30 : 70 (inside:outside).

Note:Eachtier(Tier1–Tier3)canbeconsideredforanextensionupto5years within the tiers subject to fulfilling the above criteria and:

i. Jobs:20%incrementalofthebasecommitment;and

ii.Businessspending:30%incrementalofthebasecommitment

24.4.3 Facilities accorded to Principal Hub

An approved Principal Hub company will enjoy the following facilities:

a. Bring in raw materials, components or finished products with customs duty exemption into free industrial zones, LMW, free commercial zones and bonded warehouses for production or re-packaging, cargo consolidation and integration before distribution to its final consumers for goods-based companies.

b. No local equity / ownership condition.

c. Expatriate posts based on requirements of applicant’s business plan subject to current policy on expatriates.

d. Use foreign professional services only when locally-owned services are not available.

e. A foreign-owned company is allowed to acquire fixed assets so long as it is for the purpose of carrying out the operations of its business plan.

f. Foreign Exchange Administration flexibilities will be accorded in support of business efficiency and competitiveness of companies under the Principal Hub.

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Specific immigration Procedures

Companies applying for Principal Hub incentive can apply for expatriate posts, including key posts. The approval will be granted according to the company’s requirement subject to the condition that the company has a paid up capital of more than RM2.5 million.

Upon approval of the expatriate posts by MIDA, the company must submit an application to the Immigration Department for endorsement of the employment Pass. The expatriate can be hired once the Employment Pass has been endorsed.

25. OtHer inCentiVeS

This section covers other incentives not mentioned elsewhere and may be applicable to the following sectors: manufacturing, agriculture, aerospace, tourism, environmental management, research and development, training, information and communication technology, Approved Service Projects and manufacturing related services.

25.1 industrial Building allowance

An Industrial Building Allowance (IBA) is granted to companies incurring capital expenditure on the construction or purchase of a building that is used for specific purposes, including manufacturing, agriculture, mining, infrastructure facilities, research, Approved Service Projects and hotels that are registered with the Ministry ofTourism.Suchcompaniesareeligibleforaninitialallowanceof10%andanannualallowanceof3%.Assuch,theexpenditurecanbewrittenoffin30years.


25.2 industrial Building allowance for Buildings in MSC Malaysia

To encourage the construction of more buildings in Cyberjaya for use by MSC Malaysia status companies, IBA for a period of 10 years will be given to owners of new buildings occupied by MSC Malaysia status companies in Cyberjaya. Such new buildings include completed buildings but are yet to be occupied by MSC Malaysia status companies.


25.3 Deduction of audit Fees

To reduce the cost of doing business and enhance corporate compliance, expenses incurred on audit fees by companies are deemed as allowable expenses for deduction in the computation of income tax.


25.4 tax incentive for angle investor An angle investor who invests in a venture company at seed capital financing, start-up financing and early stage financing is eligible to claim deduction on the total value of investment. To attract more angle investor to provide funding to venture companies, effective from 1 January 2013 the total investment by angle investor in a venture company is allowed as a deduction against all income.


Among the qualifying criteria for the incentive are as follows:-

I. Angle investor

a. An individual is not associated to the venture company prior to investing;

b. A tax resident with an annual income not less than RM180,000;

c. Holdsatleast30%ofthesharesintheventurecompanyforperiodofatleast 2 years; and

d. All his shares in the venture company must be paid in cash.

II. Venture Company

a. 51%sharesinthecompanyisownedbyMalaysian;

b. qualifying activities of venture company are approved by Minister of Finance; and

c. Accumulated profit is not more than RM5 million and has a track record of less than three years (based on the latest financial report at the time of application).

Effective for applications received from 1 January 2013 until 31 December 2017 by Ministry of Finance.

25.5 tax incentive on Costs of Dismantling and removing assets

Costs of dismantling and removing assets including plant and machinery as well as restoring the site where the asset was located do not qualify for allowance under the Schedule 3, Income Tax Act 1967 since this expenditure is not deemed as cost of the asset. However, Financial Reporting Standards 116 (FRS 116) stipulates that the cost of an asset includes the estimated cost required to be incurred relating to the obligation to dismantle and remove the asset and to restore the site on which the asset was located.

Therefore, to streamline the tax treatment under the Income Tax Act 1967 and FRS 116, a special provision is introduced in Schedule 3, Income Tax Act 1967 to provide for balancing allowance* on the cost of dismantling and removing asset including plant and machinery as well as restoring the site where the asset was located, subject to the following conditions:

• Theeligibilityof such treatmentonlyapplieswhere theobligation tocarryout works on dismantling and removing the plant and machinery as well as restoring the site is provided under the written law or agreement; and

• Suchplantandmachineryisnotallowedtobeusedbythatpersoninanotherbusiness or the business of another person.

* The total balancing allowance is determined by adding the cost of dismantling and removing the plant and machinery as well as restoring the site to the balance of expenditure on plant and machinery at the time of the disposable of the asset.

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Applications are eligible for the incentive with effect from the Year of Assessment 2009.


25.6 incentive for acquiring Proprietary rights

Capital expenditure incurred in acquiring patents, designs, models, plans, trademarks or brands and other similar rights from foreigners qualify as a deduction in the computation of income tax. This deduction is given in the form of an annual deductionof20%overaperiodoffiveyears.


25.7 tax incentives for Small and Medium enterprises to register Patents and trademarks

In line with the Government’s objective to promote innovation and intellectual property development among small and medium enterprises (SME), expenses incurred in the registration of patents and trademarks in the country will be allowed as a deduction for the purpose of income tax computation.

Such registration expenses include fees or payment made to patent and trademark agents registered under the Patents Act 1983 and the Trade Marks Act 1976.

The definitions for the purpose of this tax incentive are as follows:

i. Companies as defined under paragraph 2A and 2B, Schedule 1, Income Tax Act 1967

ii. Manufacturing industries, manufacturing related services industries and agro- based industries

• Enterprisewithfull-timeemployeesnotexceeding150persons;orwithannual sales turnover not exceeding RM25 million

iii. Services industries, primary agriculture and Information & Communication Technology (ICT)

• Enterprisewithfull-timeemployeesnotexceeding50persons;orwithannual sales turnover not exceeding RM5 million

This is effective from the year of assessment 2010 until the Year of Assessment 2014.

25.8 tariff related incentives

(i) exemption from import Duty on raw Materials/Components

Full exemption from import duty can be considered for raw materials/ components, regardless of whether the finished products are meant for the export or domestic market.

Where the finished products are for the export market, full exemption from import duty on raw materials/components is normally granted, provided the raw materials/components are not produced locally or, where they are produced locally, are not of acceptable quality and price.


Where the finished products are for the domestic market, full exemption from import duty on raw materials/components that are not produced locally can be considered. Full exemption can also be considered if the finished products made from dutiable raw materials/ components are not subject to any import duty.

Hotel and tourism projects qualify for full exemption of import duty and sales tax on identified imported materials.


(ii) Self-Declaration Mechanism for import Duty and/or Sales tax exemption on Machinery, equipment, Spare Parts, Consumables through the Customs Duties (exemption) Order 2013 and Sales tax (exemption) Order 2013

Manufacturers in the Principal Customs Area (PCA) can benefit from these facilities by claiming the exemption on import duty and/or sales tax on machinery, equipment, spare parts, and consumables under these Orders through a self-declaration process.

Under this new self-declaration mechanism, a company is required to submit a confirmation letter issued by MIDA together with the list of machinery, equipment, spare parts and consumables, to be imported or purchased to Customs for permission to claim the exemption. Companies would be able to obtain the permission within a period of two (2) weeks from the date of complete submission received by Customs.

Prior to the introduction of this new mechanism, an application to MIDA for import duty and/or sales tax exemption on machinery, equipment, spare parts and consumables under the provisions of Section 14(2), Custom Act, 1967 and/or Section 10, Sales Tax Act, 1972 would require a processing period of four (4) weeks from the date of complete information received.

The implementation of the Customs Duties (Exemption) Order 2013 and Sales Tax (Exemption) Order 2013 took effect on 2nd May 2014.

The key areas of the exemptions are for Manufacturers in the PCA:

(a) Import duty exemption on machinery and equipment excluding spare parts and consumables imported or purchased from a Licenced Manufacturing Warehouse, Bonded Warehouse or Free Zone under item 115 Customs Duties (Exemption) Order 2013;

(b) Sales tax exemption on machinery, equipment, spare parts and consumables imported or purchased from a Licenced Manufacturing Warehouse, Bonded Warehouse or Free Zone under item 106 Sales Tax (Exemption) Order 2013; and

(c) Sales tax exemption on machinery, equipment, spare parts and consumables purchased from a manufacturer (licenced under the Sales Tax Act, 1972) under item 106 Sales Tax (Exemption) Order 2013

The application must be submitted prior to the importation or purchase of the machinery, equipment, spare parts and consumables. As such, companies are advised to take into consideration the duration needed for the whole process to claim the exemption. This new mechanism with a self-declaration and self-regulatory environment; and time saving measures would be able to reduce the costs of doing business without the necessity of obtaining bank guarantee facilities for the clearance of goods.

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MIDA provides online applications facilities for the application of the Self Declaration Mechanism for Tax Exemption. With this facility, users will be able to use the e-filing digital certificate (from LHDN) or download the digital certificate from MIDA to digitally sign the application form prior to the submission to MIDA.

(iii) exemption from import Duty and Sales tax for Outsourcing Manufacturing activities

To reduce the cost of doing business and enhance competitiveness, owners of Malaysianbrandswithatleast60%Malaysianequityownershipwhooutsourcemanufacturing activities are eligible for:

a. Import duty and sales tax exemptions on raw materials and components used in the manufacturing of finished products by their contract manufacturers locally or abroad

b. Import duty and sales tax exemptions on semi-finished goods from their contract manufacturers abroad, to be used by their local contract manufacturers to manufacture the finished products.


(iv) exemption from import Duty and Sales tax for Maintenance, repair and Overhaul (MrO) activities

Aerospace companies undertaking maintenance, repair and overhaul activities, qualify for import duty and sales tax exemption on raw materials, components, machinery and equipment, spares and consumables. These are subject to each importation to be accompanied by certificates of parts and components issued by one of the following original equipment manufacturers (OEM):

a. FAA Form 8130-3 from the United States of America

b. EASA Form 1 from the European Union

c. Certificate of Compliance

d. Certificate of Conformance

e. Certificate from vendors

f. Distributor certificate


(v) exemption from import Duty and excise Duty on Hybrid and electric Cars

Generally, the importation of completely built-up (CBU) cars including hybrid and electric cars below 2000cc is subject to import duty, excise duty and sales tax that rangesfrom10%to80%.


However, to promote Malaysia as a regional hub for hybrid and electric cars and as an incentive for local car manufacturers and assemblers to prepare for assembly of such cars domestically, franchise holders of hybrid and electric cars are given 100%exemptiononimportdutyandexcisedutyonnewCBUhybridandelectriccars subject to the following criteria and conditions:

Hybrid Car:

a. Comply with the United Nations’ definition as follows:

“A vehiclewith at least two different energy convertors and two differentenergy storage systems (gasoline and electric) on-board the vehicle for the purposeofvehiclepropulsion”;

b. Limited to new CBU hybrid passenger cars with engine capacity below 2000cc;

c. Engine specification of at least Euro 3 Technology;

d. Certified by the Road Transport Department as hybrid car by obtaining Vehicle TypeApprovalandcertifiedtohaveachievednotlessthana50%increaseinthecity-fueleconomyornotlessthana25%increaseincombinedcity-highway fuel economy relative to a comparable vehicle that is an internal combustion gasoline fuel; and

e. Emission of carbon monoxide of less than 2.3 gram per kilometre.

electric Car:

a. Comply with the United Nations’ definition follows:

“A vehiclewith bodywork intended for road use, powered exclusively byan electric motor whose traction energy supplied exclusively by a traction battery installed in the vehicle.

b. Limited to new CBU electric car with electric motor power below 100kW;and

c. Certified by the Road Transport Department as electric car by obtaining of Vehicle Type Approval.

Applications submitted to the Ministry of Finance by 31 December 2013 are eligible for these incentives.

(vi) Sales tax exemption

Manufacturers licenced under the Sales Tax Act 1972 qualify for sales tax exemption on the inputs for their manufacturing operations. Manufacturers with an annual sales turnover of less than RM100,000 are exempted from licensing and are thus exempted from paying sales tax on their output. However, these manufacturers can opt to be licenced and obtain sales tax exemption on their inputs instead.

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Certain categories of goods are exempted from sales tax at both the input and output stages. These include all goods (inclusive of packaging materials) used in the manufacture of controlled articles, pharmaceutical products, milk products, batik fabrics, perfumes, beauty or make-up preparations, photographic cameras, wrist- watches, pens, computers and computer peripherals, parts and accessories, carton boxes/cases, products in the printing industry, agricultural or horticultural sprayers, plywood, re-treaded tyres, uninterruptible power systems, machinery, and manufactured goods for export.

Applications can be made to the Royal Malaysian Customs Department

(vii) Double Deduction on Freight Charges

Manufacturers who ship their goods from Sabah or Sarawak to any port in Peninsular Malaysia qualify for double deduction on freight charges.

(viii) Double Deduction for the Promotion of Malaysian Brand names

To promote Malaysian brand names, a company who is a registered proprietor of a Malaysian brand, or a company within the same group is eligible for double deduction on expenditure incurred in advertising the brand, subject to the following conditions:

a. thecompanymustbeownedmorethan50%bytheregisteredproprietorofthe Malaysian brand name;

b. the deduction can only be claimed by one company in a year of assessment; and

c. the products meet export quality standard.


(ix) incentive for the implementation of rosettanet

RosettaNet is an open Internet-based common business messaging standard for supply chain management link-ups with global suppliers.

To encourage local small and medium-scale companies to adopt RosettaNet in order to become more competitive in the global market, the expenditure and contributions incurred by companies in the management and operation of RosettaNet Malaysia and in assisting local small and medium-scale companies to adopt RosettaNet are eligible for income tax deduction.

The eligible expenditure and contributions are those on equipment (computers and servers) and salaries for full-time employees seconded to RosettaNet Malaysia; contribution of software, sharing of software and programming, as well as the training of the staff of local small and medium-scale companies to use RosettaNet.


25.9 Donations for environmental Protection

Donations to an approved organisation exclusively for the protection and conservation of the environment qualify for single deduction.



25.10 incentive for employees’ accommodation

Buildings used for employees for the purpose of living accommodation in a manufacturing operation, an Approved Service Project, hotel or tourism business, areeligible forspecial IndustrialBuildingAllowanceof10%of theexpenditureincurred on the construction/purchase of the building for 10 years.


Chapter 3

TAXATION1. TAXATION IN MALAYSIA

2. CLASSES OF INCOME ON WHICH TAX IS CHARGEABLE

3. COMPANY TAX

4. PERSONAL INCOME TAX

4.1 Resident Individual 4.1.1 Personal Relief 4.1.2 Tax Rebate 4.2 Non-Resident Individual

5. WITHHOLDING TAX

6. REAL PROPERTY GAINS TAX

7. GOODS AND SERVICES TAX

8. IMPORT DUTY

9. EXCISE DUTY

10. CUSTOMS APPEAL TRIBUNAL AND CUSTOMS RULING

11. DOUBLE TAXATION AGREEMENT

3

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Chapter 3

TAXATION1. taXatiOn in MalaYSia Income of any person including a company, accruing in or derived from Malaysia or received in Malaysia from outside Malaysia is subject to income tax.

However, income received in Malaysia by any person other than a resident company carrying on business of banking, insurance or sea or air transport for a year of assessment derived from sources outside Malaysia is exempted from tax.

To modernise and streamline the tax administration system, the self-assessment system was implemented for companies, sole proprietors, partnerships, cooperatives and salaried groups and the assessment of income tax is based on a current year basis.

2. ClaSSeS OF inCOMe On WHiCH taX iS CHarGeaBle

The income which tax is chargeable is income in respect of: gains or profits from a business, for whatever period of time carried on;

• gainsorprofitsfromanemployment(salaries,remunerations,etc.);

• dividends,interestsordiscounts;

• rents,royaltiesorpremiums;

• pensions,annuitiesorotherperiodicalpayments;

• othergainsorprofitsofanincomenature.

Chargeable income is arrived at after adjusting for allowable expenses incurred in the production of the income, capital allowances and incentives where applicable. Section 34 of the Income Tax Act 1967 allows specific provisions for bad or doubtful debts. However, no deduction for book depreciation is allowed although capital allowances are granted. Unabsorbed business losses may be carried forward indefinitely to offset against business income including companies with pioneer status, provided that the cessation of the period falls on or after 30 September 2005.

3. COMPanY taX

A company, whether resident or not, is assessable on income accrued in or derived from Malaysia. Income derived from sources outside Malaysia and remitted by a resident company is exempted from tax, except in the case of the banking and insurance business, and sea and air transport undertakings. A company is considered a resident in Malaysia if the control and management of its affairs are exercised in Malaysia.

TAXATION 92

Effectivefromtheyearofassessment2009,thecorporatetaxrateisat25%.Thisrate is also applicable to the following entities:

i. a trust body;

ii. an executor of an estate of an individual who was domiciled outside Malaysia at the time of his death; and

iii. a receiver appointed by the court.

A person carrying on petroleum upstream operations is subject to a Petroleum IncomeTaxof38%.Witheffectfromtheyearofassessment2010,theassessmentsystem on income derived from upstream petroleum companies under the Petroleum (Income Tax) Act 1967 is changed to the current year assessment system; and self-assessment system. Income tax for the year of assessment 2010 based on income received in 2009 shall be allowed to be paid by instalments for five years.

The deduction for payment of zakat made by a company, cooperative society or trustbodyshallnotexceed2.5%ofitsaggregateincomeintherelevantyearofassessment.

Deductions are allowed for contributions made to:

i. the Government, State Government, local authorities; or

ii. institutions or organisations approved by the Director General of Inland Revenue Board Malaysia; or

iii. sports activities approved by the Minister of Finance or Commissioner of Sports; or

iv. project of national interest approved by the Minister of Finance.

Thecontributionsinrespectofii,iii,andivshallnotexceed10%oftheaggregateincome of the company in the relevant year of assessment with effect from the year of assessment 2009.

4. PerSOnal inCOMe taX

All individuals are liable to tax on income accrued in and derived from Malaysia. The rate of tax depends on the individual’s resident status, which is determined by the duration of his stay in the country as stipulated under Section 7 of the Income Tax Act 1967. Generally, an individual who is in Malaysia for at least 182 days in a calendar year is regarded as a tax resident.

4.1 resident individual

A resident individual is taxed on his chargeable income after deducting personal reliefsatagraduatedratefrom0%to26%witheffectfromtheyearofassessment2010.

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4.1.1 Personal relief

The chargeable income of resident individuals is computed by deducting the personal reliefs from the total income. The types of relief available are as follows:

no. individual relief types amount (rM)

1 Self and Dependent 9,000

2 Medical expenses for parents 5,000 (Limited)

3 Basic supporting equipment 5,000 (Limited)

4 Disabled Individual 6,000

5 Education Fees (Individual) 5,000 (Limited)

6 Medical expenses for serious diseases 5,000 (Limited)

7 Complete medical examination 500 (Limited)

8 Purchase of books, journals, magazines and publications 1,000 (Limited)

9 Purchase of personal computer 3,000 (Limited)

10 Net saving in SSPN’s scheme 6,000 (Limited)

11 Purchase of sport equipment for sport activities 300 (Limited)

12 Subscription fees for broadband registered in the 500 (Limited) name of the individual

13 Interest expended to finance purchase of residential 10,000 (Limited) property. Relief of up to RM10,000 a year for three consecutive years from the first year the interest is paid.

Subject to the following conditions:

(i) the taxpayer is a Malaysian citizen and a resident;

(ii) limited to one residential unit;

(iii) the sale and purchase agreement is signed between 10th March 2009 and 31st December 2010; and

(iv) the residential property is not rented out.

Where:

(a) 2 or more individuals are eligible to claim relief for the same property ; and

TAXATION 94

(b) total interest expended by those individuals exceeds the allowable amount for that year. Each individual is allowed an amount of relief for each year based on the following formula:

AxB C where;

A = total interest allowable in the relevant year;

B = total interest expended by the relevant individual in the relevant year;

C = total interest expended by all the individuals.

14 Husband/Wife/Alimony Payments 3,000 (Limited)

15 Disable Wife/Husband 3,500

16 Ordinary Child relief 1,000

17 Each unmarried child of 18 years old and above who is 1,000 receivingfull-timeeducation(“A-Level,certificate, matriculation or preparatory courses).

18 Each unmarried child of 18 years old and above that: 6,000 (i) receiving further education in Malaysia in respect of an award

of diploma or higher (excluding matriculation/preparatory courses).

(ii) receiving further education outside Malaysia in respect of an award of degree or its equivalent (including Master or Doctorate).

(iii) the instruction and educational establishment shall be approved by the relevant government authority.

19 Disabled child 5,000

Additional exemption of RM 6,000 for each disabled child aged 18 years old and above, not married and pursuing diplomas or higher qualification in Malaysia or a bachelor degree or higher outside Malaysia in Higher Education Institute that is accredited by related Government authorities

20 Life insurance and EPF 6,000 (Limited)

21 Contribution for Private Retirement Scheme approved 3,000 (Limited) by Securities Commission and deferred annuity

22 Insurance premium for education or medical benefit 3,000 (Limited)

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4.1.2 tax rebate

The tax charged on a resident individual is reduced by way of the following rebates:

i. Income Tax Rebates For Resident Individual With Chargeable Income Less Than RM35,000

An individual with a chargeable income not exceeding RM35,000 enjoys a rebate of RM400 effective from year of assessment 2009. Where the wife is not working or the wife’s income is jointly assessed, she also enjoys a further rebate of RM400. Similarly, a wife who is assessed separately will also enjoy a RM400 rebate, provided her chargeable income does not exceed RM35,000.

no. tax rebate Year of assessment 2009 Onwards(rM)

a Separate AssessmentWifeHusband

400400

b Combined AssessmentWifeHusband

400400

Total 800

c Assessment Where Husband Or Wife Does Not Have Any Total Income WifeHusband

400400

Total 800

ii. Other Tax Rebates

no. tax rebate (rM)

a Zakat/Fitrah Subject to the maximum of tax charged

4.2 non-resident individual

Effective from year of assessment 2010, a non-resident individual is liable to tax at therateof26%withoutanypersonalrelief.

5. WitHHOlDinG taX

Non-resident individuals are subject to a final withholding tax of:

10%onspecialclassesofincomesuchas:

a. in consideration of services rendered by the person or his employee in connection with the use of property or rights, installation of or operation of any plant, machinery or other apparatus;

b. in consideration of technical advice, assistance or services rendered in

TAXATION 96

connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme;

c. rent or other payments made under any agreement or arrangement for the use of any moveable property

Withholding tax will not be applicable for income received in respect of the services (a) and (b) rendered or performed outside Malaysia.

Effective from 30 August 2008 until 31 December 2012, withholding tax exemption is given to non-residents experts on income received by providing technical training services in the following fields:

a. Post graduate courses in information and communication technology (ICT), electronics and life sciences;

b. Post basic courses in nursing and allied health care; and

c. Aircraft maintenance engineering courses.

Effective from 1 January 2009, to reduce the cost of technical services provided by non-residents, reimbursements or disbursement relating to hotel accommodation in Malaysia will not be included in the computation of gross technical fees for the purpose of withholding tax.

Inrespectofwithholdingtaxnotpaid,apenaltyof10%isimposedonlyontheamount of unpaid tax and not on the total payment made to a non-resident.

6. real PrOPertY GainS taX

Capital gains are generally not subject to income tax in Malaysia. However, real property gains tax is charged on chargeable gains arising from the disposal of real property situated in Malaysia or of interest, options or other rights in or over such land as well as the disposal of shares in real property companies.

Effective from 1 January 2014, gains from the disposal of residential and commercial propertiesaretaxedbetween0%and30%dependingontheholdingperiodofrealproperties as follows:

Holding PeriodRPGT Rates

Companies Individual(Citizen & PR)

Individual(Non-Citizen)

Within 3 years from date of acquisition

30% 30% 30%

In the 4th year 20% 20% 30%

In the 5th year 15% 15% 30%

In the 6th and subsequent years

5% 0% 5%

The RPGT rates will not burden genuine property owners as they are given

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exemption and the payment of RPGT is based on net gains as follows:

i. RPGT exemption on gains from the disposal of one unit of residential property once in a lifetime by an individual who is a citizen or a permanent resident of Malaysia;

ii. RPGT exemption on gains from disposal of property between parents and children, husband and wife, grandparents and grandchildren;

iii. RPGT is charged only on net gains after deducting all related costs such as purchase price, renovation costs and incidental costs e.g. legal fees and stamp duty; and

iv. Exemptionup toRM10,000or10%of thenetgains,whichever ishigher, isgiven to an individual.

For further information on company and individual tax, visit www.hasil.gov.my.

7. GOODS anD SerViCeS taX

During the 2014 Budget Announcement, the Prime Minister of Malaysia has announcedtheimplementationofagoodsandservicestax(GST)of6%commencingon 1 April 2015. The introduction of GST is part of the overall Government tax reform programme towards making the taxation system more efficient, effective, transparent, business friendly and capable of generating a stable source of revenue. GST is to replace the current consumption tax comprising of Sales and Services Tax (SST) to eliminate its inherent weaknesses such as cascading and compounding effects, transfer pricing and value shifting, no complete relief on goods exported, discourage vertical integration, administrative bureaucratic red tape, classification issues and etc. GST, also known as value added tax (VAT) in many countries is a multi-stage consumption tax on goods and services. GST is levied on the supply of goods and services at each stage of the supply chain from the supplier up to the retail stage of the distribution. Even though GST is imposed at each level of the supply chain, the tax element does not become part of the cost of the product because GST paid on the business inputs is claimable. Hence, it does not matter how many stages where a particular good and service goes through the supply chain because the input tax incurred at the previous stage is always deducted by the businesses at the next step in the supply chain. With GST, businesses can benefit from recovering input tax, thus reducing cost of doing business. 22 General Policies, Facilities and Guidelines GST is a broad based consumption tax covering all sectors of the economy i.e all goods and services made in Malaysia including imports except specific goods and services which are categorised under zero-rated supply and exempt supply orders as determined by the Minister of Finance and published in the Gazette. GST can only be levied and charged if the business is registered under GST. A business is not liable to be registered if its annual turnover of taxable supplies does not reach the prescribed threshold. Therefore, such businesses cannot charge and collect GST on the supply of goods and services made to their customers. Nevertheless, businesses can apply to be registered voluntarily. For further information on GST, visit http://gst.customs.gov.my

8. iMPOrt DUtY

TAXATION 98

In Malaysia, import duty is mostly imposed ad valorem although specific duties are also imposed on a number of items. Nevertheless, in line with trade liberalisation, import duties on a wide range of goods have been reduced or abolished.

Furthermore, Malaysia is committed to the ASEAN Trade in Goods Agreement (ATIGA) underwhichimportdutiesonmorethan99%ofgoodstradedwithinASEANhavebeen effectively eliminated on 1 January 2010.

Malaysia continues to participate in negotiations of free trade arrangements in areas of trade in goods, rules of origin, and investments. To date, Malaysia has concluded bilateral free trade agreements with Japan, Pakistan, New Zealand and India, Chile and Australia, and also regional agreements under ASEAN with China, Japan, Korea, Australia/New Zealand and India. Under these agreements, import duties will be reduced or eliminated according to the agreed schedules.

9. eXCiSe DUtY

Excise duties are levied on selected products manufactured in Malaysia, namely cigarettes, tobacco products, alcoholic beverages, playing cards, mahjong tiles and motor vehicles. While excise duties are charged at ad valorem rates for motor vehicles, playing cards and mahjong tiles, they are imposed at a combination of specific and ad valorem rates for cigarettes ,tobacco products and alcoholic beverages.

10. CUStOMS aPPeal triBUnal anD CUStOMS rUlinG

Customs Appeal Tribunal (CAT) is an independent body, establish to decide on appeals against the decision of the Director General of Customs pertaining to matters under the Customs Act 1967, Sales Tax Act 1972, Service Tax Act 1975 and Excise Act 1976.

In addition, Customs Ruling is introduced under the Customs Act 1967, Sales Tax Act 1972, Service Tax Act 1975 and Excise Act 1976 to provide business sectors with the elements of certainty and predictability in planning their business activities.

The ruling issued by the Customs and agreed by the applicant shall be legally binding the applicant for a specific period time. The main features of Customs Ruling are:

i. applications for Customs Ruling can be made with respect to classification of goods, determination of taxable services and the principles of determination of value of goods and services;

ii. application should be made in writing together with sufficient facts and prescribed fee;

iii. applications may be made before the goods are imported or the services are provided upon which Customs will issue an customs ruling.

11. DOUBle taXatiOn aGreeMent

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Double Taxation Agreement (DTA) is an agreement between two countries seeking to avoid double taxation by defining the taxing rights of each country with regard to cross-border flows of income and providing for tax credits or exemptions to eliminate double taxation.

The objectives of Malaysian DTA are as follows:

i. to create a favourable climate for both inbound and outbound investments;

ii. to make Malaysia’s special tax incentives fully effective for taxpayers of capital exporting countries;

iii. to obtain a more effective relief from double taxation compared to relief gained under unilateral measures; and

iv. to prevent evasion and avoidance of tax.

Like many other countries in the developed as well as the developing world, Malaysia too cannot absolve herself from the need to facilitate her trade and investments with the outside world through international tax treaty network with other countries. The increased pace of industrialisation coupled with increased foreign direct investment in the country necessitated tax treaty arrangements with other countries to provide investors with certainty and guarantees in the area of taxation. The effective DTAs are as follows:

AlbaniaArgentina*AustraliaAustriaBahrainBangladeshBelgiumBruneiCanadaChinaChileCroatiaCzech RepublicDenmarkEgyptFijiFinlandFranceGermanyHong KongHungaryIndiaIndonesiaIran

IrelandItalyJapanJordanKazakhstanKoreaKuwaitKyrgyz, Republic LaosLebanonLuxembourgMaltaMauritiusMongoliaMoroccoMyanmarNamibia NetherlandsNew ZealandNorwayPakistanPapua New GuineaPhilippinesPoland

qatarRomaniaRussiaSan MarinoSaudi ArabiaSeychellesSingaporeSouth AfricaSpainSri LankaSudanSwedenSwitzerlandSyriaThailandTurkeyTurkmenistanUnited Arab EmiratesUnited KingdomUnited States of America*UzbekistanVietnamVenezuelaZimbabwe

* Limited Agreement

In the case of Taiwan [represented by Taipei Economic and Cultural Office in

TAXATION 100

Malaysia (TECO)] double taxation relief is given by way of the following Income Tax Exemption Order:

i. P.U.(A) 201 (1998)

ii. P.U.(A) 202 (1998)

The withholding tax for Interest, Royalties and Fees for Technical Services are reducedto10%,10%and7.5%respectively.

For more information, please visit www.hasil.gov.my or email [email protected]

IMMIGRATION PROCEDURES1. ENTRY REqUIREMENTS INTO MALAYSIA

1.1 Passport or Travel Document 1.2 Visa Requirement 1.3 Passes Requirements

2. EMPLOYMENT OF EXPATRIATE PERSONNEL

2.1 Types of Expatriate Posts 2.2 Guidelines on the Employment of Expatriate Personnel

3. APPLYING FOR EXPATRIATE POSTS

4. EMPLOYMENT OF FOREIGN WORKERS

4

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Chapter 4

IMMIGRATION PROCEDURES1. entrY reQUireMentS intO MalaYSia

1.1 Passport or travel Document

All persons entering Malaysia must possess valid national passports or other internationally recognised Travel Documents valid for travelling to Malaysia. These documents must be valid for at least six months from the date of entry into Malaysia.

Those with passports not recognised by Malaysia must apply for a document in lieu of Passport as well as visa issued by the Malaysian Representative Office abroad. Applications for visas can be made at the nearest Malaysian Representative Office in the respective countries.

In countries where Malaysian Representative Office has not been established, applications can be made to the nearest High Commission or Embassy.

1.2 Visa requirement

A visa is an endorsement in a passport or other recognised travel document of a foreigner indicating that the holder has applied for permission to enter Malaysia and that permission has been granted.

Foreign nationals who require a visa to enter Malaysia must apply and obtain a visa in advance at any Malaysian Representative Office abroad before entering the country.

Visa requirement by countries are as follows:

Countries that require visa

•Afghanistan*•Angola•Bhutan•BurkinaFaso•Burundi•CentralAfrican

Republic•China•Colombia•Comoros•CongoDemocratic

Republic•CongoRepublic•CoteD’Ivoire•Djibouti•EquatorialGuinea•Eritrea•Ethiopia•Guinea-Bissau

•HongKong(Certificateof Identity or Document of Identity)

•India•Liberia•Mali•Myanmar(normal

passport)•Nepal•Niger•Rwanda•RepublicofSerbia

& Republic of Montenegro

•Taiwan•UnitedNations(Laissez Passer) •WesternSahara

IMMIGRATION PROCEDURES 104

Commonwealth countries that require visa

•Bangladesh•Cameroon•Ghana•Mozambique

•Nigeria•Pakistan•SriLanka

Countries that require visa for stay exceeding 3 months

•Albania•Algeria•Argentina•Australia•Austria(Vienna)•Bahrain•Belgium•Bosnia-Herzegovina•Brazil•Croatia•Cuba•CzechRepublic•Denmark•Egypt•Finland•France•Germany•Hungary•Iceland•Ireland•Italy•Japan•Jordan•Kirgystan•Kuwait•KyrgyzRepublic

•Lebanon•Liechtenstein•Luxembourg•Morocco•Netherland•Norway•Oman•Peru•Poland•Qatar•Romania•St.Marino•SaudiArabia•Slovakia•SouthKorea•Spain•Sweden•Switzerland•Tunisia•Turkey•Turkmenistan•UnitedArabEmirates•UnitedKingdom•Uruguay•Yemen

Countries that require visa for stay exceeding 1 months

•Armenia•Azerbaijan•Barbados•Belarus•Benin•Bolivia•Bulgaria•Cambodia•CapeVerde•Chad•Chile•CostaRica•Equador•ElSavador•Estonia•Gabon•Georgia•Greece•Guatemala•GuineaRepublic•Haiti•Honduras

•HongKongSAR•Kazakhstan•Latvia•Lithuania•MacaoSAR•Macedonia•Madagascar•Moldova•Mauritania•Mexico•Monaco•Mongolia•Nicaragua•NorthKorea•NorthYemen•Panama•Paraguay•Portugal•Russia•SaoTomeandPrincipe•Senegal•Slovenia

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For nationals of United States of America, no visa is required for social, business or academic purposes visits (except for employment).

For nationals of Israel, visas are required and prior permission must be obtained from Malaysia’s Ministry of Home Affairs. However for nationals of Republic of Serbia and Republic of Montenegro, visas without permissions are required.

For nationals of ASEAN countries (except Myanmar), no visa is required for a stay less than one month. For a stay exceeding one month, a visa will be required (except from nationals of Brunei and Singapore).

Nationals from other countries other than those stated above (except Israel), are allowed to enter Malaysia without visa for social visits not exceeding one month.

Note: * Visa with reference i.e. with the approval of Malaysia’s Immigration Department

is required.

1.3 Passes requirements

Other than application for entry for the purpose of social or business visits, application for visit passes must be made before the arrival in the country.

A pass is an endorsement in the passport constituting permission to stay for an approved duration. Foreigners who visit Malaysia must obtain the pass at the point of entry besides visa (where required) which allows him to stay temporarily in Malaysia.

All such applications must have sponsorship in Malaysia whereby the sponsors agree to be responsible for the maintenance and repatriation of the visitors from Malaysia if necessary.

Passes given to foreign visitors upon arrival are as follows:

(i) Visit Pass (Social) Short term

A Visit Pass is issued to foreigners for the purpose of a social or/and business visit, such as:

• OwnersandcompanyrepresentativesenteringMalaysiatoattendacompanymeeting, conference or seminar, inspect the company’s accounts or to ensure the smooth running of the company

•Sudan•Surinam•Tajikistan•Togo•Ukraine•UpperVolta

•Uzbekistan•VaticanCity•Venezuela•Zaire•Zimbabwe

Countries that require visa for stay exceeding 14 days

•Iran•Iraq•Libya•Macao(TravelPermit/

Portugal Certificate of Identity)

•Palestine•SierraLeone•Somalia•SouthYemen•Syria


• Investors or businessmen entering to explore business and investmentopportunities or setting up manufacturing plant

• Foreign representatives of companies entering to introduce goods formanufacture in Malaysia, but not to engage in direct selling or distribution

• Propertyownersenteringtonegotiate,sellorleaseproperties

• Foreign journalistor reporters frommassmediaagenciesentering tocoverany event in Malaysia

• Participantsinsportingevents

• Studentssittingforexaminationsinlocaluniversityorongoodwillmission

• Visitorenteringonotheractivities thanaboveasapprovedby theDirectorGeneral of Immigration

These passes cannot be used for employment or for supervising the installation of new machinery or the construction of a factory.

(ii) Visit Pass (Social) long term

Long term social visit pass may be issued to a foreigner for temporary stay in Malaysia for a period of not less than six months. Extension may be given based on visitors’ eligibility and upon fulfilling certain conditions.

Foreign spouses to Malaysians, holding a long term social visit pass are allowed to be engaged on any form of paid employment or in any business or professional occupation without converting their Social Visit Pass status to Employment Pass or Visit Pass (Temporary Employment) (iii) Visit Pass (temporary employment)

This is issued to foreigners who enter the country to take up employment for less than 24 months.

(iv) employment Pass

This is issued to foreigners who enter the country to take up employment for a minimum period of two years. Employment pass is issued after the applicant has obtained the approval for expatriate post from the relevant authorised agencies.

(v) Visit Pass (Professional)

This is issued to foreigners for the purpose of engaging on short-term contract with any agency.

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The categories of foreigners who are eligible are:

Professionals/Volunteers

•researchersrecognisedbytheGovernmentofMalaysia;

•membersofaninternationalorganisations;•invitedlecturers/speakers;•expertsintheinstallationormaintenanceof

machines; •thosewhoprovidetechnicaltrainings;etc

Artistes •thoseenteringforfilmingorperformance;•thoseenteringforpromotionofalbumsornew

products; etc.

Missionaries (Islam or other religions)

•thoseenteringforreligiouspurposes

The validity of the pass varies but it does not exceed twelve months at any one time.

Applications should be made by the agency concerned.

(vi) Dependant Pass

This facility is accorded to families of expatriates officials. Dependant Pass is issued to spouse and children of the Employment Pass holders. This pass may be applied together with the application for an employment pass or after the employment pass is issued.

(vii) Student’s Pass

This is issued to foreigners who wish to study in Malaysia in any educational institutions which courses have been approved by Malaysia’s Ministry of Higher Education and the intake of the foreign student has the approval from Malaysia’s Ministry of Home Affairs

2. eMPlOYMent OF eXPatriate PerSOnnel

The Malaysian government is desirous that Malaysians are eventually trained and employed at all levels of employment. Thus, companies are encouraged to train more Malaysians so that the employment pattern at all levels of the organisation reflects the multi-racial composition of the country.

Notwithstanding this, where there is a shortage of trained Malaysians, companies are allowed to bring in expatriate personnel i.e. ‘key post’ or ‘time post’. Key posts are posts that are permanently filled by foreigners whereby time post are position filled on specified time.


2.1 types of expatriate Posts

Expatriates are foreigners who are qualified to fulfil the following positions:

a. Key Post

These are high level managerial posts in foreign-owned private companies and firms operating in Malaysia. Key posts are posts essential for companies to safeguard their interest and investments. The expatriates are responsible in determining the company’s policies in achieving its goal and objectives.

b. time Post

i. executive Post

These are intermediate level of managerial and professional posts. The post requires professional qualifications, practical experience, skills and expertise related to the respective jobs. The expatriate are responsible in implementing the company’s policies and supervision of staff.

ii. non-executive Post

These are posts for the performance of technical jobs that require specific technical or practical skills and experience.

2.2 Guidelines on the employment of expatriate Personnel

There are two stages in the employment of expatriates:

a. Application for an expatriate post from relevant authorised bodies determined by the nature of the business.

b. Upon approval of the expatriate posts by the approving bodies, the company must submit an application to the Immigration Department for endorsement of the employment pass.

Companies undertaking Manufacturing activities, r&D activities, Hotel and tourism Projects and applying tax incentives under MiDa’s Purview.

Companies undertaking manufacturing activities, R&D activities, hotels with 4-star rating or higher; and tourism projects and other services and applying the tax incentives under MIDA’s purview are eligible to be considered for expatriate posts with the minimum paid-up capital as follows:

a) 100%Malaysian-ownedcompany:RM250,000

b) Jointly-owned by foreign and Malaysian:RM350,000

c) 100%foreign-ownedcompany:RM500,000

The approval for the term posts will be imposed the following conditions:

a) Minimum basics alary of at least RM500,000;

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b) Minimum academic qualification and minimum experience;

• Formanufacturingcompany:-

- Degree with at least 3 years’ experience in the relevant field; and/or

- Diploma with at least 5 years’ experience in the relevant field; and/or

- High School Certification with at least 10 years ‘experience in the relevant field; or Academic qualifications/experience proposed by companies, whichever is higher.

• ContractR&DCompany,R&DCompanyandin-houseR&Dcompany:-

- Degree with at least 3 years’ experience in the relevant field; and/or

- Diploma with at least 5 years’ experience in the relevant field; or academic qualifications/experience proposed by companies, whichever is higher.

• For4-starhotelandaboveandtourismprojects:-

- Minimum academic qualification is Degree with at least 5 years’ working experience in the hotel/tourism industry.

The number of expatriate posts will be considered based on the merits of the case. However, a wholly and majority foreign-owned contract R&D Company, R&D Companyandin-houseR&DCompanywillbesubjectedtothemaximumof50%oftotal R&D personnel i.e. in the ratio of 1 expatriate to 1 Malaysian R&D personnel. The duration of term post can be considered for a maximum of 5 years.

Application should be submitted to MIDA

Operational Headquarters (OHQs), regional Development Corporations (rDCs) & international Procurement Centres (iPCs)

The applications for expatriate posts for OHqs, RDCs, & IPCs can be considered based on the criterion of a minimum paid-up capital of RM500,000. The number of expatriate posts will be considered based on the company’s requirement and will be granted posts and the availability of expertise among Malaysians and efforts have been made to appoint Malaysian to fill the post. The duration of term posts is for a maximum of 5 years.

The approval of expatriate posts for RDCs, IPCs, and OHqs will be imposed the following conditions:

a) Minimum basic salary of at least RM5,000 for expatriate posts

b) Degree with at least 5 years’ experience in the relevant field; or academic qualifications/experience proposed by companies, whichever is higher.



regional establishments (re)/ regional Office(rO)

The applications for expatriate posts (term posts) for REs/ROs can be considered based on the following criteria:

a) Minimum operating expenditure of at least RM150,000 per annum

b) Minimum basic salary of at least RM5,000 for expatriate posts.

The number of term posts to be considered and the duration for the term post approval will be in line with the duration of the RE/RO status, subject to the merits of each case will be based on the merits of each case. The approval for expatriate will be granted by both posts and individuals.

Application should be submitted to MIDA

technical & Vocational training institutions & Other Services

All applications for expatriate posts relating to education should be submitted to the Ministry of Education / Ministry of Human Resource for approval prior to the final approval on the work permit by the Immigration Department.

Other services without tax incentives and unregulated services

3. aPPlYinG FOr eXPatriate POStS

All applications for expatriate posts from new and existing companies (including those not involving expansion or diversification) in the manufacturing and related service sectors should be submitted to MIDA. This includes companies required to obtain manufacturing licence as well as companies exempted from the manufacturing licence.

For further information on immigration procedures, please visit www.imi.gov.my.

4. eMPlOYMent OF FOreiGn WOrKerS

In Malaysia, foreign workers can be employed in the manufacturing, construction, plantation, agricultural, services and domestic help sector.

Services sector consists of eleven sub sectors: (restaurant, cleaning services, cargo handling, launderette, caddy in golf club, barber, wholesale/retail, textile, metal/scraps/recycle activities, welfare homes and hotel/resort island.

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Only nationals from the specified countries below are allowed to work in the selected sectors:

approved Sectors nationals of:

•Manufacturing•Plantation•Agriculture•Construction•Servicessector

IndonesiaCambodiaNepalMyanmarLaosVietnamPhilippines (male only)PakistanSri LankaThailandTurkmenistanUzbekistanKazakhstan

•Services(cooks,wholesale/retail, barber, metal/scraps/recycle,

textile)•Construction(fixingofhigh

voltage cable only)•Agriculture•Plantation

India

Approval is based on the merits of each case and subject to conditions that will be determined from time to time. Applications to employ foreign workers will only be considered when efforts to find qualified local citizens and permanent residents have failed.

An annual levy on foreign workers is imposed as follows:

approved Sectors annual levy

Manufacturing RM1,250

Construction RM1,250

Plantation RM 590

Agricultural RM 410

Domestic Help RM 410

Services•Welfarehomes•Islandresorts•Others

RM 600RM1,200RM1,850

All applications for foreign workers should be submitted to the One Stop Centre, Ministry of Home Affairs except for applications for foreign domestic helpers which should be submitted to Malaysia’s Immigration Department.

For further information on employment of foreign workers, please visit the Ministry of Home Affairs website at www.moha.gov.my.

Chapter 5

MANPOWER FOR INDUSTRY

1. MALAYSIA’S LABOUR FORCE

2. MANPOWER DEVELOPMENT

2.1 Facilities for Training in Industrial Skill 2.2 Human Resources Development Fund 2.3 Management Personnel

3. LABOUR COSTS

4. FACILITIES FOR RECRUITMENT

5. LABOUR STANDARDS

5.1 Employment Act 1955 5.2 The Labour Ordinance, Sabah and the Labour Ordinance, Sarawak 5.3 Employees Provident Fund Act 1991 5.4 Employees’ Social Security Act 1969 5.5 Workmen’s Compensation Act 1952 5.6 Occupational Safety and Health Act 1994

6. INDUSTRIAL RELATION

6.1 Trade Unions 6.2 Industrial Relations Act 1967 6.3 Relations in Non-Unionised Establishments

5

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Chapter 5

MANPOWER FOR INDUSTRY1. MalaYSia’S laBOUr FOrCe

Malaysia offers the investor a diligent, disciplined, educated and trainable labour force. Malaysian youths who enter the labour market would have undergone at least 11 years of school education i.e. up to secondary school level, and are therefore easy to be trained in new skills.

To cater to the manufacturing sector’s expanding demand for technically trained workers, the Malaysian government has taken measures to increase the number of engineers, technicians and other skilled personnel graduating each year from local as well as foreign universities, colleges, and technical and industrial training institutions.

In addition, Malaysia enjoys a free and competitive labour market where employer-employee relationship is cordial and harmonious. Labour costs in Malaysia are relatively low while productivity levels remain high in comparison with industrialised countries.

2. ManPOWer DeVelOPMent

The Department of Skills Development (DSD), under the Ministry of Human Resources, is responsible for promoting and coordinating strategies and skills training proram in line with efforts to reinforce skills. The DSD’s focuses on the accreditation of public and private training institutions, evaluation of the demand for existing and prospective skills, identification of future vocational and industrial training needs and the development of the National Occupational Skills standards (NOSS). To-date, there are 1,458 NOSSs which cover certificate, diploma and advanced diploma-level programs in 29 industrial sectors and provide the main foundation for the implementation of over 7,000 skills training programs in about 1,131 training institutions already accredited by DSD under the Malaysian Skills Certification System.

2.1 Facilities for training in industrial Skill

In Malaysia, vocational and technical schools, polytechnics and industrial training institutions prepare youths for employment in various industrial trades. While they are mostly run by government agencies, several private initiatives complement the government’s efforts in producing the skilled workers needed by industry.

The main government agencies involved in training are:

• Curently, the Manpower Departmet Ministry of Human resources currently runs 23 industrial training institutes (ITIs). The ITIs offer industrial skills training programmes at basic, intermediate and advanced levels for pre-employment or

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job entry level. These include apprenticeship programmes in the mechanical, electrical, building and printing trades as well as programmes to upgrade skills and train instructors. The Ministry also operates the Centre for Instructors and Advanced Skills Training (CIAST), the Japan-Malaysia Technical Institute (JMTI) and eight advanced technology training centres (ADTECs).

• Ministry of Human resources currently runs 21 industrial training institutes (ITIs). The ITIs offer industrial skills training programmes at basic, intermediate and advanced levels for pre-employment or job entry level. These include apprenticeship programmes in the mechanical, electrical, building and printing trades as well as programmes to upgrade skills and train instructors. The Ministry also operates the Centre for Instructors and Advanced Skills Training (CIAST), the Japan-Malaysia Technical Institute (JMTI) and four advanced technology training centres (ADTECs).

• Ministry of Higher education, established in March 2004, supervises public and private universities, 27 polytechnics and 72 community colleges to prepare skilled manpower for industries. At the post-secondary level, the formal training conducted in polytechnics and community colleges aims to produce trained manpower at the semi-professional level in engineering, commerce and services sectors.

• Ministry of education runs more than 90 technical schools offering technical and vocational courses. School leavers from the technical schools can either seek employment at entry level or pursue their post-secondary education at diploma level in Polytechnics or certificate level in Community Colleges or other training institutions under the supervision of other ministries.

• Ministry of Youth and Sports, which provides basic, intermediate and advanced levels of industrial skills training through its 16 National Youth Skills Training Centres and Higher National Youth Skills Training Centre. Short-term courses and skills upgrading programmes are also being conducted.

• Majlis amanah rakyat (Mara), or the Council of Trust for the Indigenous People under the purview of the Ministry of Rural and Regional Development. MARA operates more than 20 skills training institutes in different parts of the country which offer programmes at basic, intermediate, advanced and professional levels.

2.2 Human resources Development Fund

The Human Resources Development Fund (HRDF) is administered by Pembangunan Sumber Manusia Berhad (PSMB), an agency under the Ministry of Human Resources, via the Pembangunan Sumber Manusia Berhad Act, 2001.

The HRDF was established in 1993 with the aim of developing quality human capital and a world-class workforce in achieving a high income economy based on knowledge and innovation in the nation’s quest to attain the status of a developed country by the year 2020.

The HRDF spearheads the up-skilling of Malaysian workforce

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The functions of HRDF are:

• Toassessanddeterminethetypesandextentofemployees’,apprentices’andtrainees’ training and retraining in keeping pace with the human resources needs of industries

• Topromoteandstimulatemanpowertraining

• Todeterminethetermsandconditionsunderwhichanyfinancialassistanceor other benefits are to be given

COVeraGe OF tHe PeMBanGUnan SUMBer ManUSia BerHaD aCt, 2001 (aCt 612)

Manufacturing Sector

no. number of employees Paid-Up Capital(rM Million)

Mandatory / Optional

(Payment of levy)

1. Employers with 50 Malaysian Employees & Above

- Mandatory(1%)

2. Employerswith10–49Malaysian Employees

2.5 & above Mandatory(1%)

3. Employerswith10–49Malaysian Employees

Below 2.5 Optional(0.5%)

For more information on HRDF please visit www.hrdf.com.my.

2.3 Management Personnel As at 2013, 103,546 degree and 95,762 diploma holders graduated from Malaysia’s public higher education institutions (IPTA) and other private higher education institutions (IPTS). These graduates are from various disciplines ranging from business management, information technology, engineering, medicine, biotechnology, science and mathematics to art and design.

Besides universities and colleges, agencies like the Malaysia Productivity Corporation, the Malaysian Institute of Management and the Malaysian Institute of Personnel Management also provide training for management personnel. In addition many of Malaysia’s management-level personnel have been educated overseas.

3. laBOUr COStS

Salary and fringe benefits for employees in the manufacturing sector vary according to industry, location and employment size. The common types of leave provided by companies include annual leave, public holiday, sick leave, maternity leave and compassionate leave. Companies also provide free medical treatment and hospitalisation to their employees. In some companies, additional benefits include provision of uniforms, transport, incentives payments, shift allowance and insurance coverage. Bonus payments are given by companies based on the companies’ performance and individual performance.


The Minimum Wages Order 2012 came into effect on 1 January 2013 for employer which employs more than 5 employees. The Order shall also apply with effect from 1 January 2013 to an employer who carries out professional activity classified under the Malaysia Standard Classification of Occupations (MASCO) irrespective of the number of employees employed. For employers having five employees or less, the Order shall take effect from 1 July 2013.

The minimum wages rates are as follows:-

regional areas Minimum Wages rates

Monthly Hourly

Peninsular Malaysia RM900 RM4.33

Sabah, Sarawak and the Federal Territory of Labuan

RM800 RM3.85

For more information on salaries and fringe benefits in the manufacturing sector, please visit Malaysia Employers Federation (MEF) at www.mef.org.my

4. FaCilitieS FOr reCrUitMent

Besides registered private employment agencies, employers and job seekers can seek assistance from government employment offices located throughout the country. Employers seeking to recruit workers can obtain detailed information on job seekers registered with these employment offices whose functions include:

• Undertakingpublicitycampaignstoaidemployers’recruitmentdrive

• Arrangingpreparatoryworkrelatingtoholdinginterviewsandaptitudetests

The polytechnics and the community colleges also provide facilities for prospective employers to conduct interviews for graduating students in their institutions.

5. laBOUr StanDarDS

The Department of Labour is responsible for the administration of labour laws in order to maintain industrial harmony. The labour laws stipulate the minimum requirements that apply to all types of employment. Flexibility in the operation of businesses is facilitated by application for exemption to the Director of Labour, Department of Labour. 5.1 employment act 1955

The main legislation, the Employment Act 1955 applies to all employees in Peninsular Malaysia and the Federal Territory of Labuan whose monthly wages do not exceed RM2,000 and all manual labourers irrespective of their wages. Employers may draw up the contract of service but it should not contravene the minimum benefits stipulated under the law. Employees who earn between RM2,000 and RM5,000 a month can seek redress at the Labour Court on terms and conditions in their individual contracts of service.

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Some of the obligations of an employer under the Employment Act 1955 are as follows:

i. Every employee must be given a written contract of service containing the terms and conditions of the employment, including provisions relating to the termination of contract.

ii. Maintaining of labour register pertaining to personal particulars of employees, payment of wages and deduction of wages.

iii. Special provisions for the protection of female employees pertaining to night work and maternity benefits.

iv. Normal hours of work and other provisions relating to numbers of working hours.

v. Entitlement of paid annual leave, sick leave and public holidays.

vi. Rate of payment for overtime and extra work.

vii. Procedure and responsibility of the employer in employment of foreign employees.

viii. Special provision on the conduct of sexual harassment (male and female) at workplace.

5.2 the labour Ordinance, Sabah and the labour Ordinance, Sarawak

The Labour Ordinance (Sabah Cap. 67) and the Labour Ordinance (Sarawak Cap. 76) regulate the administration of Labour Laws in their respective states. The provisions of the Labour Ordinance, Sabah and the Labour Ordinance, Sarawak are similar to the provisions of the Employment Act 1955. However, there are some provisions which are different and pertinent to note:

These provisions are:-

Coverage Employment Act 1955 covers employees whose wage does not exceed RM2,000.00 per month whereas for Labour Ordinance Sabah and Sarawak the coverage is extended up to RM2,500.00 per month.

Special Provisions relating to the employment of Children and Young Persons

TheOrdinanceprescribestheconditionsunderwhicha“child”and“youngperson”maybeemployed.A“child”isapersonundertheageof15yearsanda“youngperson”isapersonwhohasattained15yearsofagebutbelow18yearsold.

employment of non-resident employees

Itismandatoryforanyemployerwishingtoemployany“non-residentemployee”mustfirstobtainalicencetoemploy“non-residentemployee”fromtheDirectorofLabourSabah/Sarawak. A“non-residentemployee” isdefinedasanypersonwho does not belong Sabah/Sarawak as provided for under Section 71 of the Immigration Act, 1959/1963.


information relating to Supply of employees

The Employment Act 1955 requires a contractor of labour who intends to supply or undertakes to supply any employee to register with the Director General in the prescribed form within fourteen days before supplying the employee.

5.3 employees Provident Fund act 1991

The Employees Provident Fund Act 1991 stipulates a compulsory contribution for employees. Under the Act, all employers and employees (except those who are listed under the First Schedule of the Employees Provident Fund Act 1991) must contribute to the Employees Provident Fund (EPF). The rate of contributions shall be as follows:

age Group 60 Years and Belows

Employer’s share - (a) Monthly Wages rM5,000 and below Minimumof13%oftheemployees’ monthly wages.

- (b) Monthly Wages exceed rM5,000 Minimumof12%oftheemployees’ monthly wages.

Employee’s share - Minimumof11%oftheemployees’ monthly wages

[Refer To Third Schedule (Part A) of the EPF Act 1991]

age Group 60-75 years

Employer’s share - (a) Monthly Wages rM5,000 and below Minimumof6.5%oftheemployees’ monthly wages.

- (b) Monthly Wages exceed rM5,000 Minimumof6%oftheemployees’ monthly wages.

Employee’s share - Minimumof5.5%oftheemployees’ monthly wages

[Refer To Third Schedule (Part C) of the EPF Act 1991]

All foreign workers and expatriates and their employers are exempted from compulsory contributions. They can, however choose to contribute and the applicable rates are as follows:

age Group 60 Years and Below

Employer’s share - RM5.00 per employee per months

Employee’s share - 11%oftheemployees’monthlywages

[Refer To Third Schedule (Part B) of the EPF Act 1991]

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age Group 60-75 years

Employer’s share - RM5.00 per employees per month

Employee’sshare - 5.5%oftheemployees’monthlywages

[Refer To Third Schedule (Part D) of the EPF Act 1991]

All employers must register their employees with EPF immediately upon employment except for those who are exempted under the Act.

5.4 employees’ Social Security act 1969

The Social Security Organisation (SOCSO) provides two social security schemes to protect the welfare of employees and their dependents under the Employees’ Social Security Act 1969. The two social security schemes are:

• EmploymentInjuryInsuranceScheme

• InvalidityScheme

employment injury insurance Scheme

Employment Injury Insurance Scheme provides protection to employees who suffer from work related accidents or occupational diseases arising out of and in the course of employment in an industry. The benefits provided under the Employment Injury Insurance Scheme consists of Medical Benefit, Temporary Disablement Benefit, Permanent Disablement Benefit, Constant-attendance Allowance, Dependants’ Benefit, Funeral Benefit, Rehabilitation Benefit and Education Benefit.

invalidity Scheme

The Invalidity Scheme provides 24-hour coverage to employees against invalidity or death due to any cause not connected with his employment. However, the employee must fulfill the condition to be eligible for invalidity pension. Benefits provided under the Invalidity Scheme are Invalidity Pension, Invalidity Grant, Constant-attendance Allowance, Survivors’ Pension, Funeral Benefit, Rehabilitation Benefit and Education Benefit.

employer eligibility

Any employer who hires one or more employees as defined under the Act is required to register and make contributions to SOCSO. Contributions to SOCSO are compulsory under the Act for eligible employers and employees. Present contribution rates for employer are 1.75% of the insured person (employees)salariesand0.5%foremployees.

employee eligibility

Employees receiving a monthly salary of three thousand ringgit (RM3,000) or less are required to contribute to SOCSO. Employees with a monthly salary of more than RM3,000, who have not registered and contributed to SOCSO, have the option of registering and contributing as long as both employer and employee agree to contribute. However, when an employee is already contributing under the said Act, he will still be eligible to contribute and be covered regardless of his monthly salary thereafter. The principal ‘Once In Always In’ is applicable.


5.5 Workmen’s Compensation act 1952

The Act provides for the payment of compensation for injuries sustained in accidents during employment and imposes an obligation on the employers to insure workers. The Foreign Workers’ Compensation Scheme (Insurance) Order 2005 issued under this Act requires every employer employing foreign workers to insure with the panel of insurance companies appointed under this order and to effect payment of compensation for injuries sustained from accidents during and outside working hours. 5.6 Occupational Safety and Health act 1994

The Department of Occupational Safety and Health (DOSH), under the Ministry of Human Resources, is responsible for administrating and enforcing legislation related to occupational safety and health. DOSH ensures that the safety, health and welfare of people at work as well as others are protected from hazards resulting from occupational activities in the various sectors such as:

• manufacturing;

• miningandquarrying;

• construction;

• agriculture,forestryandfishing;

• utilities(gas,electricity,waterandsanitaryservices);

• transport,storageandcommunication;

• wholesaleandretailtrades;

• hotelsandrestaurants;

• finance,insurance,realestateandbusinessservices;and

• publicservicesandstatutoryauthorities.

This enforcement activity is governed by three legislations which are:

• OccupationalSafetyandHealthAct(OSHA)1994;

• FactoriesandMachineryAct1967;and

• PetroleumAct(SafetyMeasure)1984.

The Occupational Safety and Health Act (OSHA) 1994 provides the legislative framework to promote, stimulate and encourage high standards of health and safe working culture among all Malaysian employers and employees through self-regulation schemes designed to suit the particular industry or organisation.

OSHA 1994 defines the responsibilities of employers, employees, the self-employed, designers, manufacturers, importers and suppliers of plant or substances. Under OSHA 1994, employers must safeguard so far as is practicable, the health, safety and welfare of the people who work for them. This applies in particular to the provision and maintenance of a safe plant and system of work.

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Arrangements must be made to ensure safety and health in the use, handling, storage and transport of plant and substances. ‘Plant’ includes any machinery, equipment, appliance, tool and component, whilst ‘substance’ means any natural or artificial substance whether in solid, liquid, gas, vapour or combination thereof, form.

Risks to health from the use, storage or transportation of substances must be minimised. Employers must provide necessary information, instruction, training and supervision in safe practices, including information on the legal requirements with particular reference to processes with special hazards.

An employer employing 40 or more persons must establish a safety and health committee at the workplace. The main function of the committee is ensuring the safety and health measures are regularly reviewed as well as investigating any related matters arising.

An employer must notify the nearest occupational safety and health office of any accident, dangerous occurrence, occupational poisoning or disease which has occurred or is likely to occur at the workplace.

Processes that use hazardous chemicals require competent persons to conduct the air quality, personal monitoring and safety while health officer and an occupational health doctor are required to ensure the proper surveillance of the workplace.

There are seven regulations under OSHA 1994 enforced by DOSH which are:

1. Employers’ Safety and Health General Policy Statements (Exception) Regulations, 1995

2. Control of Industrial Major Accident Hazards Regulations, 1996

3. Safety and Health Committee Regulations, 1996

4. Classification, Packaging and Labelling of Hazardous Chemicals Regulations, 1997

5. Safety and Health Officer Regulations, 1997

6. Use and Standards of Exposure of Chemicals Hazardous to Health Regulations, 2000

7. Notification of Accident, Dangerous Occurrence, Occupational Poisoning and Occupational Disease Regulations, 2004

8. Classification, Labelling and Safety Datasheet of Hazardous Chemicals Regulations, 2013

Contravention of some of the requirements can lead to prosecution in court.

The objective of the Factories and Machinery Act (FMA) 1967, on the other hand, is to provide for the control of factories on matters relating to the safety, health and welfare of persons, and the registration and inspection of machinery. All certificated machinery such as boilers, unfired pressure vessels, passenger lifts


and other lifting equipment such as mobile cranes, tower cranes, passenger hoists, overhead traveling cranes and gondolas, must be approved in term of design requirements, technical specifications, testing, and inspection. The manufacturer can submit the drawing, technical calculation, manufacturer certificate, and other supporting documents on-line through SKUD system (www.dosh.gov.my) for the purpose of acquire design approval from DOSH.

All factories and general machinery must be registered with DOSH before they can be installed and operated in Malaysia. Some operation, installation, maintenance and dismantling of equipment and process need competent persons. Thus, during the installation of machinery and equipment such as cranes, lifts and local exhaust ventilation systems, competent persons are compulsory to ensure safe erection, whilst a boilerman and a steam engineer are required to operate high risk equipment such as boilers.

DOSH enforces 13 regulations under FMA 1967. They are:

1. Electric Passenger and Goods Lift Regulations, 1970

2. Fencing of Machinery and Safety Regulations, 1970

3. Notification, Certificate of Fitness and Inspection Regulations, 1970

4. Persons-In-Charge Regulations, 1970

5. Safety, Health and Welfare Regulations, 1970

6. Steam Boilers and Unfired Pressure Vessel Regulations, 1970

7. Certificates of Competency-Examinations Regulations, 1970

8. Administration Regulations, 1970

9. Lead Regulations, 1984

10. Asbestos Regulations, 1986

11. Building Operations and Works of Engineering Construction (Safety) Regulations, 1986

12. Mineral Dust Regulations, 1989

13. Noise Exposure Regulations, 1989

Petroleum (Safety Measures) Act was enforced in the year 1984 and its enforcement is carried out by a few government agencies lead by DOSH. The objective of this Act is to regulate the safety in the transportation, storage and utilization of petroleum. The scope of this Act cover the transportation of petroleum by road and railway, water, pipelines and the storage and handling of petroleum.

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For the purpose of increasing awareness and understanding on safety aspects in handling petroleum, Petroleum (Safety Measures) Act was authorized with two regulations thereunder. The regulations under this Act are:

1. Petroleum (Safety Measures) (Transportation of Petroleum by Pipelines) Regulations, 1985

2. Petroleum (Safety Measures) (Transportation of Petroleum by Water) regulations, 1985

6. inDUStrial relatiOn

6.1 trade Unions

The Department of Trade Union Affairs generally features guidelines for the formations, functions and activities of trade unions. Trade Union Affairs is governed by Trade Union Act 1959 and Trade Unions Regulations 1959. Functions of the department are as follows:

(a) To enforce the Trade Unions Act 1959 and Trade Union Regulations 1959.

(b) To supervise, direct and control generally all matters relating to trade unions in the country.

(c) To consider applications for registration of trade unions established by either employees or employers.

(d) To ensure that registered trade unions function in accordance with the trade union legislation and their respective rules and constitution.

(e) To advise officers and members of trade unions on administrative, financial and constitutional aspects of trade unions.

(f) To advise the Minister of Human Resources on matters relating to trade unions legislation and policies an particular and other labour issues in general.

6.2 industrial relations act 1967

The Industrial Relations system in Malaysia operates within the legal framework of the Industrial Relations Act 1967. The Act is administered by the Department of Industrial Relations, Malaysia and it regulates the relations between employers and their workmen’ and their trade unions in the country. The Act, among others, outlines the following:

i. Provisions outlining the process relating to claims for recognition and scope of representation of trade unions;

ii. Provisions relating to the facilitation of effective collective bargaining between the trade union and the employer and subsequent conclusion of a collective agreement;

iii. Provisions relating to prevention and settlement of trade disputes including referral to the Minister of Human Resources and Industrial Court for a decision;


iv. Provisions relating to industrial action such as pickets, strikes and lockouts;

v. Provisions relating to the representations for claims for reinstatement by workmen;

vi. Provisions relating to the operation of the Industrial Court; and

vii. Provisions relating to the investigative powers of the officers of the Department of Industrial Relations, Malaysia

In addition, the Department also provides advisory services on all issues and questions relating to employment relations vide its branch offices located throughout the country.

6.3 relations in non-Unionised establishments

In a non-unionised establishment, the normal practice for settling disputes is for the employee to try to obtain redress from his supervisor, foreman or employer directly. An employee can also lodge a complaint with the Ministry of Human Resources which will then conduct an investigation.

Chapter 6

BANKING, FINANCE AND EXCHANGE ADMINISTRATION1. THE FINANCIAL SYSTEM IN MALAYSIA

1.1 The Central Bank 1.2 Financial Institutions 1.2.1 Islamic Financial Industry 1.2.2 Development Financial Institutions 1.3 Malaysia International Islamic Financial Centre 2. EXPORT CREDIT REFINANCING

2.1 Method of Financing 2.2 Period and Margin of Financing 2.3 Repayment

3. THE SECURITIES MARKET IN MALAYSIA

3.1 Securities Commission Malaysia 3.2 Bursa Malaysia

4. LABUAN FINANCIAL SERVICES

4.1 Labuan Financial Services Authority (Labuan FSA) 4.2 Doing Business in the Labuan IBFC 4.3 Business Activities of Labuan IBFC

5. FOREIGN EXCHANGE ADMINISTRATION RULES

5.1 Rules applicable to Non-Residents 5.1.1 Investments in Malaysia 5.1.2 Accessibility to domestic financing 5.1.3 Settlement for trade in goods and services 5.1.4 Hedging 5.1.5 Ringgit and foreign currency accounts 5.2 Rules applicable to Residents 5.2.1 Investment in foreign currency assets 5.2.2 Borrowing onshore and offshore 5.2.3 Import and export of goods and services 5.2.4 Hedging 5.2.5 Foreign currency accounts

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Chapter 6

BANKING, FINANCE AND EXCHANGE ADMINISTRATION1. tHe FinanCial SYSteM in MalaYSia

The Malaysian financial system comprises of a diversified range of institutions to serve the increasingly more varied and complex needs of the domestic economy. The financial system consists of the conventional financial system and the Islamic financial system which co-exists and operates in parallel.

1.1 the Central Bank

The principal objective of Bank Negara Malaysia (the Bank), the Central Bank of Malaysia, is to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy. Its primary functions as set out in the newly enacted Central Bank of Malaysia Act 2009 are to:

• formulateandconductmonetarypolicyinMalaysia;

• issuecurrencyinMalaysia;

• regulate and supervise financial institutionswhich are subject to the lawsenforced by the Bank;

• provideoversightovermoneyandforeignexchangemarkets;

• exerciseoversightoverpaymentsystems;

• promoteasound,progressiveandinclusivefinancialsystem;

• holdandmanagetheforeignreservesofMalaysia;

• promote an exchange rate regime consistentwith the fundamentals of theeconomy; and

• actasfinancialadviser,bankerandfinancialagentoftheGovernment.

To achieve its mandates, the Bank is vested with powers under various laws to regulate and supervise the banking institutions and other non-bank financial intermediaries. The Bank also administers the country’s foreign exchange regulations.

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1.2 Financial institutions

The following table provides an overview of the number of financial institutions under the purview of Bank Negara Malaysia as at end December 2013:

total Malaysian-Controlled institution

Foreign- Controlled institution

Commercial Banks 27 8 19

Islamic Banks 16 10 6

International Islamic Banks 5 0 5

Investment Banks 12 12 0

Insurers 32 16 16

Takaful Operators (Islamic Insurers) 12 9 3

Reinsurers 7 3 4

Retakaful Operators (Islamic Reinsurers) 4 1 3

Development Financial Institutions 6 6 0

The banking system, comprising commercial banks, investment banks, and Islamic banks, is the primary mobiliser of funds and the main source of financing which supports economic activities in Malaysia. Banking institutions operate through a network of more than 2,500 branches across the country. There are also 16 representative offices of foreign banks in Malaysia which do not conduct banking business but undertake research, liaison services and exchange of information. Six Malaysian banking groups have presence in 22 countries through branches, representative offices, subsidiaries, equity participation and joint ventures worldwide, including in all ASEAN countries.

The non-bank financial institutions, namely development financial institutions, insurance companies and takaful operators, complement the banking institutions in mobilising savings and meeting the financial needs of the economy. The insurance and reinsurance companies conduct life and general insurance business and similarly takaful and retakaful operators engage in the general and family takaful business. The insurance companies and takaful operators which operate through a network of more than 900 offices and 120,000 registered agents nationwide provide avenues for risk management and financial planning solutions for businesses and individuals. 1.2.1 islamic Financial industry

Islamic finance in Malaysia continues to demonstrate dynamic growth with a comprehensive Islamic financial system that is supported by robust regulatory, legal and Shariah governance frameworks, the many players as well as the requisite talent and expertise.

The Islamic financial system comprises four main components, namely Islamic banking, takaful and retakaful, Islamic interbank money market and Islamic capital market. The expansion of Islamic finance is rigorously driven by the current 53 institutions offering Islamic financial services. As at December2013, Malaysia’s

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total Islamic banking assets has reached RM556.5 billion with a market share of 25.0%andrecordedanaverageannualgrowthrateof19.7%for theperiodof2002 to 2013. For the takaful industry, total assets has reached RM24.6 billion in 2013withamarketshareof10.2%andanaverageannualgrowthrateof10.7%forthe period of 2008 to 2013. The Malaysian capital market has also recorded total outstanding sukuk amounting to RM512.1 billion as at end of 2013, surpassing the outstandingconventionalbondwith49.7%ofmarketshare.

To date, there are more than 100 Islamic banking products and services available in the industry. Innovative products and financial instruments that are aligned with the global Shariah principles have been issued in the global market. An example is the multi-currency sukuk, with issuances denominated in the US Dollar, Singapore Dollar and Renminbi that have attracted international investors. Malaysia has evolved to become a multi-currency sukuk market, where there is an increasing demand for multicurrency sukuk issuance in Malaysia. In 2013, Malaysia maintaineditsleadingpositionasthemainsukukissuerwitha69%shareoftotalglobal issuances in 2013 amounting to USD82.6 billion.

1.2.2 Development Financial institutions

The Development Financial Institutions (DFIs) in Malaysia are specialised financial institutions established by the Government with a specific mandate to develop and promote key sectors that are considered of strategic importance to the overall socio-economic development objectives of the country. These strategic sectors include the agricultural, SMEs, infrastructure, maritime and export-oriented sectors, as well as capital-intensive and high-technology industries.

As specialised institutions, DFIs provide a range of specialised financial products and services to suit the specific needs of the targeted strategic sectors. Ancillary services in the form of consultation and advisory services are also provided by DFIs to nurture and develop the identified sectors. DFIs therefore complement the banking institutions and act as a strategic conduit to bridge the gaps in the supply of financial products and services to the identified strategic areas for the purpose of long-term economic development.

In 2002 the Development Financial Institutions Act 2002 (the DFIA) was enacted to promote the financial and operational soundness of the DFIs through sustainable practices and the requisite regulatory and supervisory framework, and that the institutions perform their mandated roles prudently, efficiently and effectively. With the enactment of the DFIA, the Bank was appointed as the central regulatory and supervisory body for DFIs. As part of the regulatory and supervisory framework, the Bank monitors the activities and financial performance of the DFIs to ensure that they perform their mandated roles in a prudent manner and are supported by strong corporate governance and best practices.

Six DFIs are prescribed under the DFIA: Small Medium Enterprise Development Bank Malaysia Berhad or SME Bank, which provides financing and advisory services to small and medium sized enterprises involved in manufacturing, services and construction sectors; Bank Pembangunan Malaysia Berhad, which provides medium- and long-term financing for infrastructure projects, maritime, capital-intensive and high-technology industries in the manufacturing sector and other selected sectors in line with the national development policy; Bank Kerjasama Rakyat Malaysia Berhad, a cooperative bank that encourages savings and provides financial services to members and non-members; the Export-Import Bank of Malaysia Berhad or EXIM Bank, which provides credit facilities to finance and support the exports and imports of goods and overseas projects as well as to


provide export credit insurance services and guarantee facilities; Bank Simpanan Nasional focuses on retail banking and personal finance especially for small savers, and supports the financial inclusion agenda by providing microfinance and agent banking services; and Bank Pertanian Malaysia Berhad or Agrobank, which accepts savings deposits and provides financing and advisory services to support the development of the agricultural sector and communities.

1.3 Malaysia international islamic Financial Centre

In August 2006, the Malaysia International Islamic Financial Centre (MIFC) initiative was launched to position Malaysia as the international hub of Islamic Finance and to strengthen the country’s role as an intellectual epicentre for Islamic finance.

The MIFC initiative comprises a community network of financial and market regulatory bodies, Government ministries and agencies, financial institutions, human capital development institutions and professional services companies that participate in the field of Islamic finance.

The MIFC initiative is supported by international legal, regulatory and Shariah best practices that enable industry practitioners to conduct international business in Islamic finance throughout Malaysia, while enjoying attractive incentives in a business friendly environment.

In evolving Malaysia as an Islamic finance market place, Malaysia aims to be an open marketplace that is linked to a network of other financial hubs. As a destination for financial investment, Malaysia offers a platform and a gateway for global Shariah-compliant investment opportunities via the MIFC initiative. Malaysia offers a business connection to each segment of our Shariah-compliant financial industry with attractive value-propositions and opportunities for global institutions, talents, investors and issuers.

Malaysia is well positioned to act as a gateway to facilitate and enhance greater international linkages and market integration in Islamic finance between the Asian region and the rest of the world. Situated centrally in the Asian time zone, Malaysia presents itself as a meeting platform for those with surplus funds and those who seek to raise funds from any part of the world.

Malaysia invites global experts, leading players, investors and issuers alike to shape the future of Islamic finance together through the MIFC initiative, leveraging on and benefiting from Malaysia’s more than 30 years of experience in Islamic finance, in an environment of innovation and thought leadership.

For more information on the MIFC initiative, please visit www.mifc.com.

2. eXPOrt CreDit reFinanCinG

The Export Credit Refinancing (ECR) Scheme provides short-term Pre and Post-shipment financing to Direct or Indirect exporters. It is available to a Manufacturer or Trading Company which incorporated in Malaysia involved directly or indirectly in export activity and international trade with ECR credit line duly established with participating financial institution (ECR Bank) via two types of facilities:-

(i) Pre-shipment ECR; and

(ii) Post-shipment ECR.

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The Pre-shipment ECR facility is advanced by EXIM Bank to facilitate the export of Malaysian products and trade prior to shipment and to encourage the backward linkages between the exporters and local suppliers in export oriented industries. The Post-shipment ECR facility is an advanced to exporters to finance the export or trade after shipment.

2.1 Method of Financing

Under Pre-shipment ECR facility, there are two (2) methods of financing extended to direct/ indirect exporter:-

(i) Order-based method:-For a direct exporter the Pre-shipment ECR financing is advanced against evidence of an export order whilst for indirect exporter is advanced against an ECR DLC, ECR DPO or LPO issued in his favour.

(ii) Certificate of Performance (CP) method:-For direct/ indirect exporter the Pre-shipment is made against CP issued by EXIM Bank. The limit of financing is based on CP limit for a validity period of one year.

Under Post-shipment ECR facility, method of financing used is Bill Discounting, whereby financing is extended against presentation of export documents to ECR Bank.

2.2 Period and Margin of Financing

The maximum period of financing under Pre-shipment and Post-Shipment is 4 months (120 days) and 6 months (183 days) respectively.

For Pre-shipment Order-based method, the eligible amount of financing for Direct Exporter is up to ninety five (95) percent of the value of the export order or ECR DLC, ECR DPO or LPO and rounded downward to the nearest thousand.

For Pre-shipment CP-based method, the CP limit would be the amount eligible for financing. The CP limit is segregated into three periods where each period comprises of 4 months. UnderPost-shipment,theamountoffinancingisonehundredpercent(100%)ofthe export invoice value and rounded downward to the nearest thousand.

2.3. repayment

For direct exporter repayment of Pre-shipment loan shall be from export proceeds received from the overseas buyers/ post-shipment proceeds received from the ECR banks. Indirect exporter, repayment of Pre-shipment loan should be made from local sales proceeds received from the ECR users, FTZ/ LMW companies.

The Post-shipment financing, repayment shall be liquidated upon receipt of export proceeds or on maturity of the Post-shipment bill whichever is earlier.

For more information on Export Credit Refinancing (ECR), please visit www.exim.com.my


3. tHe SeCUritieS MarKet in MalaYSia

3.1 Securities Commission Malaysia

Established in 1993, the Securities Commission Malaysia (SC) is a self-funding statutory body set up by the Ministry of Finance with a dual mandate to facilitate the orderly development of the capital market, as well as to regulate to uphold investor protection and maintain the integrity of the market.

The SC has been tasked to develop an innovative, competitive and vibrant capital market. Since the SC’s establishment two decades ago, Malaysia now has a capital market size of RM2.7 trillion (as of December 2013), the world’s largest sukuk market, 3rd largest bond market in Asia relative to gross domestic product, and largest unit trust industry in ASEAN with widespread levels of participation from confident and informed investors.

The SC’s many regulatory functions include:

a. Supervising exchanges, clearing houses and central depositories;

b. Registering authority for prospectuses of corporation other than unlisted recreational clubs;

c. Approving authority for corporate bond issues;

d. Regulating all matters relating to securities and derivatives contracts;

e. Regulating the take-over and mergers of companies;

f. Regulating all matters relating to unit trust schemes;

g. Licensing and supervising all licenced persons;

h. Encouraging self-regulation; and

i. Ensuring proper conduct of market institutions and licenced persons.

The organisation supervises market operators, market intermediaries and all matters relating to securities, derivatives contracts and unit trust schemes. We also register prospectuses of corporations and funds, approve corporate bond issues and regulate corporate mergers and acquisitions. Underpinning all these functions is the SC’s ultimate responsibility of protecting investors.

For more information on the SC, please visit www.sc.com.my.

3.2 Bursa Malaysia

Bursa Malaysia Berhad (Bursa Malaysia), the country’s sole exchange, is an approved exchange holding company under Section 15 of the Capital Markets and Services Act 2007. A public company limited by shares under the Companies Act 1965, Bursa Malaysia operates a fully-integrated exchange, offering equities, derivatives, offshore, bonds as well as Islamic products, and provides a diverse range of investment choices globally Bursa Malaysia also functions as a regulator.

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Currently, there are more than 900 companies across 60 economic activities. Listed entities are separated into different segments on the Main Market for large-cap established companies or on the ACE Market for emerging companies of all sizes. The Exchange adopts the FTSE Bursa Malaysia KLCI values as its main index. Bursa Malaysia has a derivatives segment, Bursa Malaysia Derivatives (BMD) which provides, operates and maintains a futures and options exchange. In 2009, ChicagoMercantile Exchange (CME) Group acquired a 25% equity interest inBMD. Derivatives products are migrated onto the CME Globex® electronic trading platform to provide greater product visibility and accessibility to international traders.

To leverage on its strengths in Islamic capital markets, Bursa Malaysia’s long term objective is to elevate its Islamic offerings to mainstream status effectively cementing Malaysia as the world’s leading sukuk marketplace. Bursa Malaysia is the first exchange to establish Bursa Suq Al-Sila’, the first end-to-end Shari’ah compliant commodities trading platform.

Bursa Malaysia is committed to making the Malaysian capital market attractive to investors worldwide and choice listing destination.

i) Market Participants

a) Stockbroking Companies As at 31 December 2012, there are 33 stock broking companies which 12 are

categorised as Investment Banks. These banks offer services in the dealing of securities listed on Bursa Malaysia Securities. Investment banks hold merchant banking licence issued by Bank Negara Malaysia under the Banking and Financial Institutions Act 1989 (BAFIA) as well as Capital Markets Services licence issued by the Securities Commission under the Capital Markets & Services Act 2007. As such, investment banks are able to offer a full scope of integrated capital market and financial services which include corporate finance, debt securities trading and dealing in securities. One stock broking company still holds the universal broker status. A universal broker is able to offer integrated capital market services.

b) trading Participants

A Trading Participant is a company which owns at least one Preference Share of Bursa Malaysia Derivatives. They conduct business as a futures broker licenced by the Securities Commission under the Capital Markets & Services Act 2007.

(ii) investor Protection

Bursa Malaysia places importance on investors’ protection and market integrity through continuously improving corporate disclosures and regulatory framework. The Exchange’s ranking in terms of corporate governance has improved to 4th placing in 2012 up 2 notches from 2010 under a survey undertaken by the Asia Corporate Governance Association out of 11 countries in the region.

In this regard, reliable, informative and timely disclosures are key towards building a corporate community that is disclosure based and transparent. Given the ever-changing capital market environment, there is greater demand by investors for timely, adequate and relevant information to make informed decisions


(iii) risk Management

Bursa Malaysia’s enterprise risk management framework, through the supervision of the Risk Management Committee (RMC), is aimed at managing and controlling risks appropriately for the Group. Key risks are identified and ranked for likelihood of occurrence and magnitude of impact while the appropriate action plans are developed to manage significant residual risks.

4. laBUan FinanCial SerViCeS

4.1 labuan Financial Services authority (labuan FSa)

Labuan Financial Services Authority (Labuan FSA) is the statutory body responsible for the development and administration of the Labuan International Business and Financial Centre (Labuan IBFC). The key role of Labuan FSA is to licence and regulate the licenced entities operating within Labuan IBFC and to ensure all such entities remain in compliance with internal and international best standards adopted by the jurisdiction. This is to safeguard investors’ interests as well as to maintain the soundness of the regulatory environment in Labuan IBFC.

As the regulatory authority for the Labuan IBFC, Labuan FSA is committed to maintain the position of Labuan IBFC as a well regulated and reputable international financial centre in Asia Pacific while the promotion of the IBFC is undertaken by the marketing arm of Labuan FSA, the Labuan IBFC Incorporated Sdn. Bhd. (Labuan IBFC Inc). Labuan IBFC Inc. has a team of resources and specialists to assist investors regarding the jurisdiction and its vast range of financial services solutions, both conventional and Islamic.

4.2 Doing Business in the labuan iBFC

Labuan IBFC is strategically located in the centre of Asia Pacific and positioned as the gateway for investments into and out of the region, presents investors an ideal balance of fiscal neutrality and certainly in a mid-shore jurisdiction. Well supported by a robust and comprehensive legal framework, Labuan IBFC provides clear legal provisions and complemented by a wide range of business and investment structures for cross border transactions, business dealings and wealth management needs.

The various Labuan company structures as well as comprehensive conventional and Islamic products and services catering to the diverse needs of investors contributed in making Labuan an attractive international business centre and a platform for residents and non-residents to invest abroad. The efficient delivery system as well as its customer oriented client charter further facilitates business needs of the investors.

Entities incorporated / registered in Labuan IBFC enjoy many advantages, from low operational costs to facilitative tax incentives and access to extensive double tax treaty agreements through the Malaysian double tax treaty network. Under the Labuan taxation system, a Labuan entity carrying on Labuan trading activity may: i. electtopaytaxeachyearattherateof3%ofitsauditednetprofitsorpaya

fixed tax of RM20,000. There is currently no tax imposed on a Labuan entity conducting non-trading activities;

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ii. a Labuan entity carrying on a Labuan business activity could also make an irrevocable election to pay tax under the Income Tax Act 1967. This would give Labuan entity more flexibility to structure their business transactions effectively, and create a more favourable tax conditions for the investors operating in or through the Labuan IBFC; and

iii. A Labuan entity could also pay Business Zakat in lieu of tax. The Government

has also granted various tax exemptions to further entice investors and professional services to establish their presence in Labuan IBFC.

4.3 Business activities of labuan iBFC

Labuan IBFC offers a comprehensive financial solution in both conventional and Shariah-based principles products and services including banking, insurance and insurance-related products, trust company business and capital market activities.

In addition, the IBFC has continued to offer other niche products covering the wealth management (foundations), reinsurance / retakaful, leasing and trading. A wide range of cost-effective business structures such as the Labuan Holding Company, Labuan Protected Cell Companies, Labuan Limited Liability Partnership and Special Trust are also available.

The Labuan International Commodity Trading Company (LITC) introduced in 2011 under the Global Incentive for Trading Programme provides incentives to international trading companies to set up LITC in Labuan and to trade on physical and related derivative instruments such as petroleum / petroleum related products, refined natural gas, agriculture products, refined raw materials, chemicals and base minerals.

The Labuan International Financial Exchange (LFX) complements the traditional banking facilities through its offer of full-fledge capital raising services with unlimited access to international markets through the activities of listing, trading and settlement of financial instruments or facilities.

For more information on Labuan IBFC, please visit www.labuanfsa.gov.my or www.libfc.com.

5. FOreiGn eXCHanGe aDMiniStratiOn rUleS

Malaysia continues to maintain liberal foreign exchange administration (FEA) rules which are mainly prudential measures to support the overall macroeconomic objective of maintaining monetary and financial stability while safeguarding the balance of payments position. The FEA rules have been progressively liberalised to enhance competitiveness of the economy and to achieve greater efficiency in the conduct of trade and investments.

5.1 rules applicable to non-residents

5.1.1 investments in Malaysia

There are no FEA restrictions and the Malaysian markets are easily accessible by global investors. There is free mobility of inflow and outflow of capital for investments in Malaysia.

• Non-residentsarefreetoinvestinanyformofringgitassetseitherasdirectorportfolio investments; and


• Non-residentsarefreetoremitoutdivestmentproceeds,profits,dividendsorany income arising from these investments in Malaysia as long as the funds are repatriated in foreign currency.

There are no restrictions for the non-residents to convert foreign currency into ringgit or vice versa, with licenced onshore banks1, for the purchase of ringgit assets or for repatriation in foreign currency of funds arising from these ringgit investments. Non-residents are also allowed to undertake the settlement of ringgit investments through appointed offices of the licenced onshore banks.

5.1.2 accessibility to domestic financing

i. Borrowing in foreign currency

• Non-residentarefreetoborrowanyamountofforeigncurrencyfromlicencedonshore banks. Proceeds of the borrowing can be utilised offshore or onshore; and

• Non-residents are also free to issue foreign-currency denominated sukuk/bonds in Malaysia for use onshore or abroad.

ii. Borrowing in ringgit

• Non-residentsotherthanfinancialinstitutionsarefreetoborrowanyamountin ringgit from licenced onshore banks, resident companies and individuals to finance activities in the real sector in Malaysia;

• Non-residents are also free to borrow any amount in ringgit for marginfinancing from resident entities with licence issued under the Capital Market and Services Act 2007: and

• Non-residentsmayalsoraiseringgitfinancingthroughtheissuanceofsukuk/bonds in Malaysia. The proceeds can be used onshore or offshore.

5.1.3 Settlement for trade in goods and services

Non-residents may undertake the settlement for trade in goods and services in foreign currency or ringgit with residents.

5.1.4 Hedging

Non-residents are free to hedge with licenced onshore banks and licenced International Islamic Banks for their capital account and current account transactions based on firm underlying commitment. Hedging involving ringgit, however, must be undertaken only with the licenced onshore banks.

1 Licenced onshore banks means a licenced bank and a licenced investment bank under the Financial Services Act 2013 and a licenced Islamic bank and a licenced International Islamic bank (IIB) under the Islamic Financial Services Act 2013. IIBs are only allowed to deal in foreign currency.

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5.1.5 ringgit and foreign currency accounts

There are no restrictions for non-residents to open-

• Foreign currency accounts with any licenced onshore banks to facilitateinvestments and business operations in Malaysia. Funds in these accounts are free to be remitted abroad; and

• Ringgitaccountswiththelicencedonshorebanks.Theaccountscanbefundedwith ringgit from the sale of foreign currency or any income earned from their investments in Malaysia including interest, rental, profits, dividend or proceeds from divestments of their ringgit assets. Funds in these accounts can be remitted abroad once converted into foreign currency with the licenced onshore banks.

5.2 rules applicable to residents

5.2.1 investment in foreign currency assets

Residents without domestic ringgit borrowing are free to undertake investment abroad of any amount.

Resident entities with domestic ringgit borrowing are free to undertake investment abroad as follows:

• UptoaprudentiallimitofRM50millionequivalentinaggregatepercalendaryear on a corporate group2 basis using foreign currency funds sourced onshore;

• AnyamountsourcedfromproceedsofIPOlistedonthemainmarketofBursaMalaysia;

• Anyamountofforeigncurrencyborrowingobtainedfromlicencedonshorebanks for direct investment abroad; and

• UptotheaggregateamountofRM1millionequivalentspercalendaryear.

5.2.2 Borrowing onshore and offshore

i. Borrowing in foreign currency

• Residententitiesarefreetoborrowanyamountofforeigncurrencyborrowingfrom:

– Licencedonshorebanks;

– Residentandnon-residentcompanieswithinitscorporategroup;

2 Corporate group refers to group of resident entities with parent-subsidiary relationship.


– Residentandnon-residentdirectshareholders;and

– Anotherresidentthroughtheissuanceofforeigncurrencydebtsecurities.

• Foreigncurrencyborrowingbyresidententitiesfromnon-residentfinancialinstitutions and non- resident entities which are not part of their corporate group is subject to a prudential limit of RM100 million equivalent in aggregate on a corporate group basis. Foreign currency borrowing by resident individuals from licenced onshore banks and any non-residents is subject to an aggregate limit of RM10 million equivalent.

ii. Borrowing in ringgit

Resident entities are free to obtain ringgit borrowing of:

• Any amount from non-resident companies within its corporate group ofcompanies and non-resident direct shareholder to finance activities in the real sector in Malaysia; or

• UptoRM1millioninaggregatefromanynon-residentotherthannon-residentfinancial institutions for use in Malaysia.

Resident individuals are free to obtain ringgit borrowing of any amount from non-resident immediate family members and up to RM1 million in aggregate from any non-resident other than non-resident financial institutions for use in Malaysia.

5.2.3 import and export of goods and services

All proceeds from the export of goods must be received and repatriated to Malaysia in full as per the sales contract which must not exceed six months from the date of export. Settlement with the non-residents can be undertaken in ringgit or foreign currency.

5.2.4 Hedging

Residents are free to hedge their foreign currency exposures for financial and current account transactions with firm underlying commitment or on anticipatory basis with the licenced onshore banks.

5.2.5 Foreign currency accounts

Residents are free to open foreign currency accounts with licenced onshore banks and offshore banks for any purpose.

• Inthecaseofaresidentindividual,theaccountisallowedtobemaintainedindividually or jointly with any other resident individual and with a non-resident immediate family member; and

• Forforeigncurrencyaccountsmaintainedbyresidententitieswithlicencedinternational Islamic banks and offshore banks, the account can be funded with any foreign currency receipt except proceeds from the export of goods. There are no restrictions on the source of foreign currency funds to be credited in foreign currency accounts maintained with the licenced onshore banks.

For more information on the foreign exchange administration rules of Malaysia, please visit http://www.bnm.gov.my/fxadmin.

Chapter 7

INTELLECTUAL PROPERTY PROTECTION 1. 1. INTELLECTUAL PROPERTY PROTECTION

1.1 Patents 1.2 Trade Marks 1.3 Industrial Designs 1.4 Copyright 1.5 Layout Design of Integrated Circuit 1.6 Geographical Indications

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Chapter 7

INTELLECTUAL PROPERTY PROTECTION1. intelleCtUal PrOPertY PrOteCtiOn

Intellectual property system in Malaysia is administered by the Intellectual Property Corporation of Malaysia (MyIPO), an agency under the Ministry of Domestic Trade, Co-operatives and Consumerism. Intellectual property protection in Malaysia comprises of patents, trade marks, industrial designs, copyright, geographical indications and layout designs of integrated circuits. Malaysia is a member of the World Intellectual Property Organisation (WIPO) and a signatory to the Paris Convention and Berne Convention which govern these intellectual property rights.

In addition, Malaysia is also a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) signed under the auspices of the World Trade Organisation (WTO). Malaysia provides adequate protection to both local and foreign investors. Malaysia’s intellectual property laws are in conformance with international standards and have been reviewed by the TRIPs Council periodically.

1.1 Patents

The Patents Act 1983 and the Patents Regulations 1986 govern patent protection in Malaysia. An applicant may file a patent application directly if he is domicile or resident in Malaysia. A foreign application can only be filed through a registered patent agent in Malaysia acting on behalf of the applicant.

Similar to legislations in other countries, an invention is patentable if it is new, involves an inventive step and is industrially applicable. In accordance with TRIPS, the Patents Act stipulates a protection period of 20 years from the date of filing of an application. Under the Act, the utility innovation certificate provides for an initial duration of ten years protection from the date of filing of the application and renewable for further two consecutive terms of five years each subject to use. The owner of a patent has the right to exploit the patented invention, to assign or transmit the patent, and to conclude a licenced contract. However, exception to patent such as compulsory licence and parallel import are also included.

The Government can prohibit commercial exploitation of patents for reasons of public order or morality. The Act was amended to include provision for Patent Cooperation Treaty (PCT) and to allow importation under the scope of compulsory licence.

Malaysia has acceded to the PCT in the year 2006 and effective from 16 August 2006, the PCT International Application can be made at the Intellectual Property Corporation of Malaysia (MyIPO).

MyIPO has introduced the Expedited Examination procedures for patents by amending the Patent Regulations which come into force in February 2011. The pendency period through the Expedited Examination procedures is 20 months from the date of filing the application. The pendency period is only applicable for clear cut case basis and application which complies with the provisions of the Patents Act 1983. This procedure provides an option to the applicants to obtain a faster service to protect their intellectual property.

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1.2 trade Marks

Trade mark protection is governed by the Trade Marks Act 1976 and the Trade Marks Regulations 1997.

The Act provides protection for registered trade marks and service marks in Malaysia. Once registered, no person or enterprise other than its proprietor or authorised users may use them. Infringement action can be initiated against abusers. The period of protection is ten years, renewable for a period of every ten years thereafter. The proprietor of the trade mark or service mark has the right to deal or assign as well as to licence its use.

In accordance with TRIPS, Malaysia prohibits the registration of well-known trade marks by unauthorised persons and provides for border measures to prohibit counterfeit trade marks from being imported into Malaysia.

Malaysia accedes to the Nice and Vienna Agreement on 28 June 2007 which was enforced on 28 September 2007. Nice Agreement is concerning the International Classification of Goods and Services for the purpose of the registration of marks whereas the Vienna Agreement establishes a classification marks which consist of or contain figurative elements. Both agreements are significant to facilitate trade mark registration.

As with patents, while local applicant may file applications on their own, foreign applicants will have to do so through registered trade mark agents.

MyIPO has introduced the Expedited Examination procedures for trade marks by amending the Trade Marks Regulations which come into force in February 2011. The pendency period through the Expedited Examination procedure is 6 months and 3 weeks from the date of filing the application. The pendency period is only applicable for clear cut case basis and application which complies with the provisions of the Trade Marks Act 1976. This procedure provides an option to the applicants to obtain a faster service to protect their intellectual property.

1.3 industrial Designs

Industrial design protection in Malaysia is governed by the Industrial Designs Act 1996 and Industrial Designs Regulations 1999. The Act provides the rights of registered industrial designs as that of a personal property capable of assignment and transmission by operation of the law.

To be eligible for registration, industrial designs must be new and do not include a method of construction or design that is dictated solely by function. In addition, the design of the article must not be dependent upon the appearance of another article of which it forms an integral part.

Local applicants can file registrations individually or through a registered industrial designs agent. However, foreign applicants will need to seek the services of a registered industrial designs agent. Registered industrial designs are protected for an initial period of five years which may be extended for another four 5-years terms, providing a total protection period of 25 years.

Malaysia has amended the Industrial Designs Act 1996 which entered into force on 1 July 2013. The amendments include worldwide novelty, increase term of protection, introduce IP Journal System and provision on monetization and securitization of industrial designs.

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1.4 Copyright

The Copyright Act 1987 provides comprehensive protection for copyright works. The Act outlines the nature of works eligible for copyright (which includes computer programs), the scope of protection, and the manner in which the protection is accorded. Copyright subsists in every work eligible for copyright protection of which the author is a qualified person.

Copyright protection for literary, musical or artistic works is for the duration of the life of the author and 50 years after his death. In sound recordings, broadcasts and films, copyright protection is for 50 years after the works are first published or made.

The Act also provides protection for the performer’s rights in a live performance which shall continue to subsist for 50 years from the beginning of the calendar year following the year in which the live performance was given or was fixed in a sound recording.

A unique feature of the Act is the inclusion of provisions for its enforcement. The amendment of the Copyright Act 1987, which was enforced on 1 October 2003, confers power of arrest (including arrest without warrant) to enforcement officers of the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) (formerly known as Ministry of Domestic Trade and Consumer Affairs). This special team of officer of the MDTCC is appointed to enforce the Act and is empowered to enter premises suspected of having infringing copies and to search and seize infringing copies and contrivances.

The Copyright (Amendment) Act 2012 entered into force on 1 March 2012. The Act was amended to be in line with technological development and to adhere to the international IP conventions/treaties relating to copyright and related rights. Among the major amendments are the introduction of copyright voluntary notification system, regulating the collective management organisation (CMO) and expansion of the Copyright Tribunal’s function. Begining from 1 June 2012, copyright owner may apply for voluntary notification at the Intellectual Property Corporation of Malaysia (MyIPO) and CMO can be registered at MyIPO.

Malaysia accedes to the WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT) on 27 September 2012 which was enforced on 27 December 2012. 1.5 layout Design of integrated Circuit

The Layout Design of Integrated Circuits Act 2000 provides for the protection of layout designs of integrated circuits based on originality, creator’s own invention and the fact that the creation is freely created. There is no registration for the layout design of an integrated Circuit.

The duration of protection is 10 years from the date of its commercial exploitation or 15 years from the date of creation if not commercially exploited. The Act also allows for action to be taken by the owner if such rights recognised under the Act have been infringed. The right can also be transferred either partly or wholly by way of assignment, licence, wills or through the enforcement of law.

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The Ac is implemented in compliance with the TRIPS Agreement to provide a guarantee to investors in Malaysia’s electronic industry and to ensure the growth of technology in the country.

1.6 Geographical indications

Geographical Indications Act 2000 provides protection to goods following the name of the place where the goods are produced, where a given quality, reputation or other characteristic of the goods is essentially attributable to their geographical origin. This protection is applicable to goods such as natural or agricultural products or any product of handicraft or industry. Geographical indications which are contrary to public order or morality shall not be protected under the Act.

Local applicants can file registrations individually or through a registered geographical indication agent. However, foreign applicants will need to seek the services of a registered geographical indication agent. The period of protection is ten years and renewable for a period of every ten years thereafter.

MyIPO also provides online search and filing services for patents, trademarks, industrial designs and geographical indications; and online search for notification of copyright works. For further information on intellectual property protection, please visit www.myipo.gov.my

Chapter 8

ENVIRONMENTAL MANAGEMENT1. POLICY

2. ENVIRONMENTAL REqUIREMENTS

2.1 Environmental Impact Assessment for Prescribed Activities 2.2 Who Can Conduct EIA Study 2.3 Site Suitability Evaluation 2.4 Written Notification or Permission to Construct 2.5 Written Approval for Installation of Incinerator, Fuel Burning Equipment and Chimney 2.6 Licence to Occupy Prescribed Premises and Prescribed Conveyances 2.7 Gaseous Emission and Effluent Standards 2.8 Control-on Ozone Depleting Substances 2.9 Scheduled Wastes Management 2.9.1 A Summary of Environmental Requirements on Scheduled Wastes

3. INCENTIVES FOR ENVIRONMENTAL MANAGEMENT

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Chapter 8

ENVIRONMENTAL MANAGEMENTTo promote environmentally sound and sustainable development, the Malaysian government has established the legal and institutional framework for environmental protection. Investors are encouraged to consider the environmental factors during the early stages of their project planning. Aspects of pollution control include possible modifications in the process line to minimise waste generation, seeing pollution prevention as part of the production process, and focusing on recycling options.

1. POliCY

The National Policy on the Environment aims at continued economic, social, and cultural progress of Malaysia and enhancement of the quality of life of its people, through environmentally sound and sustainable development.

The Policy aims at achieving:

• Aclean,safe,healthyandproductiveenvironmentforpresentandfuturegenerations

• The conservation of the country’s unique and diverse cultural and naturalheritage with effective participation by all sectors of society

• Asustainablelifestyleandpatternofconsumptionandproduction

Malaysia’s national environmental policy emphasises:

• Exercising respect and care for the environment in accordance with thehighest moral and ethical standards

• Conservingthenaturalecosystemstoensuretheintegrityofbiodiversityandlife support systems

• Ensuringcontinuousimprovementintheproductivityandqualityoftheenvironmentwhile pursuing economic growth and human development objectives

• Managingnaturalresourceutilisationtosustaintheresourcebaseandpreventdegradation of the environment

• Integratingenvironmentaldimensionsintheplanningandimplementationofthe policies, objectives and mandates of all sectors to protect the environment

• Strengtheningtheroleoftheprivatesectorinenvironmentalprotectionandmanagement

• Ensuring the highest commitment to environmental protection andaccountability by all decision-makers in the public and private sectors, resource users, non-governmental organisations and the general public in formulating, planning and implementing their activities

• Participating actively and effectively in regional and global efforts towardsenvironmental conservation and enhancement

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2. enVirOnMental reQUireMentS

The Environmental quality Act 1974, and its accompanying regulations call for environmental impact assessment, project siting evaluation, pollution control assessment, monitoring and self-enforcement. Industrial activities are required to obtain the following approvals from the Director-General of Environmental quality prior to project implementation:

i. Environmental impact assessment for Prescribed Activities

ii. Site suitability evaluation

iii. Written notification or permission to construct

iv. Written approval for installation of incinerator, fuel burning equipment and chimney

v. Licence to occupy and operate prescribed premises and prescribed conveyances.

2.1 environmental impact assessment for Prescribed activities

An investor should first of all check whether an environmental impact assessment (EIA) is required for his proposed industrial activities. The following are activities prescribed under the Environmental quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987, which require an EIA before project approval:

(i) agriculture

a. Land development schemes covering an area of 500 hectares or more to bring forest land into agricultural production.

b. Agricultural programmes necessitating the resettlement of 100 families or more.

c. Development of agricultural estates covering an area of 500 hectares or more involving changes in types of agricultural use.

(ii) airport

a. Construction of airports (having an airstrip of 2,500 metres or longer).

b. Airstrip development in state and national parks.

(iii) Drainage and irrigation

a. Construction of dams and man-made lakes and artificial enlargement of lakes with surface areas of 200 hectares or more.

b. Drainage of wetland, wild-life habitat or of virgin forest covering an area of 100 hectares or more.

c. Irrigation schemes covering an area of 5,000 hectares or more.

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(iv) land reclamation

Coastal reclamation involving an area of 50 hectares or more.

(v) Fisheries

a. Construction of fishing harbours.

b. Harbour expansion involving an increase of 50 per cent or more in fish landing capacity per annum.

c. Land-based aquaculture projects accompanied by clearing of mangrove swamp forests covering an area of 50 hectares or more.

(vi) Forestry

a. Conversion of hill forest land to other land use covering an area of 50 hectares or more.

b. Logging or conversion of forest land to other land use within the catchment area of reservoirs used for municipal water supply, irrigation or hydro-power generation or in areas adjacent to state and national parks and national marine parks.

c. Logging covering an area of 500 hectares or more.

d. Conversion of mangrove swamps for industrial, housing or agricultural use covering an area of 50 hectares or more.

e. Clearing of mangrove swamps on islands adjacent to national marine parks.

(vii) Housing

Housing development covering an area of 50 hectares or more.

(viii) industry a. Chemicals Where production capacity of each product or of combined products is greater than 100 tonnes per day

b. Petrochemicals All sizes.

c. Non-ferrous Primary smelting: Aluminium - all sizes Copper - all sizes Others - producing 50 tonnes per day and above of product

d. Non-metallic Cement - for clinker throughput of 30 tonnes per hour and above

Lime - 100 tonnes per day and above burnt lime rotary kiln or - 50 tonnes per day and above vertical kiln


e. Iron and Steel Require iron ore as raw materials for production greater than 100 tonnes per day; or

Using scrap iron as raw materials for production greater than 200 tonnes per day

f. Shipyards Dead Weight Tonnage greater than 5,000 tonnes

g. Pulp and Paper Production capacity greater than 50 tonnes per Industry day

(ix) infrastructure

a. Construction of hospitals with outfall into beachfronts used for recreational purposes.

b. Industrial estate development for medium and heavy industries covering an area of 50 hectares or more.

c. Construction of expressways.

d. Construction of national highways.

e. Construction of new townships.

(x) Ports

a. Construction of ports.

b. Port expansion involving an increase of 50 per cent or more in handling capacity per annum.

(xi) Mining

a. Mining of minerals in new areas where the mining lease covers a total area in excess of 250 hectares.

b. Ore processing, including concentrating for aluminium, copper, gold or tantalum.

c. Sand dredging involving an area of 50 hectares or more.

(xii) Petroleum

a. Oil and gas fields development.

b. Construction of off-shore and on-shore pipelines in excess of 50 kilometres in length.

c. Construction of oil and gas separation, processing, handling, and storage facilities.

d. Construction of oil refineries.

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e. Construction of product depots for the storage of petrol, gas or diesel (excluding service stations) which are located within three kilometres of any commercial, industrial or residential areas and which have a combined storage capacity of 60,000 barrels or more.

(xiii) Power Generation and transmission

a. Construction of steam generated power stations burning fossil fuels and having a capacity of more than 10 megawatts.

b. Dams and hydro-electric power schemes with either or both of the following:

• damsover15metreshighandancillarystructurescoveringatotalareain excess of 40 hectares;

• reservoirswithasurfaceareainexcessof400hectares

c. Construction of combined cycle power stations.

d. Construction of nuclear-fuelled power stations.

(xiv) Quarries

Proposed quarrying of aggregate, limestone, silica, quartzite, sandstone, marble and decorative building stone within 3 kilometres of any existing residential, commercial or industrial areas, or any area for which a licence, permit or approval has been granted for residential, commercial or industrial development.

(xv) railways

a. Construction of new routes.

b. Construction of branch lines.

(xvi) transportation

Construction of Mass Rapid Transport projects.

(xvii) resort and recreational Development

a. Construction of coastal resort facilities or hotels with more than 80 rooms.

b. Hill station resort or hotel development covering an area of 50 hectares or more.

c. Development of tourist or recreational facilities in national parks.

d. Development of tourist or recreational facilities on islands in surrounding waters which are gazetted as national marine parks.


(xviii) Waste treatment and Disposal

a. Toxic and Hazardous Waste

• Constructionofincinerationplant

• Constructionofrecoveryplant(off-site)

• Constructionofwastewatertreatmentplant(off-site)

• Constructionofsecurelandfillfacility

• Constructionofstoragefacility(off-site)

b. Municipal Solid Waste

• Constructionofincinerationplant

• Constructionofcompostingplant

• Constructionofrecovery/recyclingplant

• Constructionofmunicipalsolidwastelandfillfacility

c. Municipal Sewage

• Constructionofwastewatertreatmentplant

• Constructionofmarineoutfall

(xix) Water Supply

a. Construction of dams or impounding reservoirs with a surface area of 200 hectares or more

b. Groundwater development for industrial, agricultural or urban water supply of greater than 4,500 cubic metres per day

2.2 Who Can Conduct eia Study

An EIA study has to be conducted by competent individuals who are registered with the Department of Environment (DOE) under the EIA Consultant Registration Scheme. The list of registered EIA consultants and details on the registration scheme are available at the DOE website, www.doe.gov.my

2.3 Site Suitability evaluation

One of the most important factors in obtaining environmental approval is the site suitability of the proposed project. Site suitability is evaluated based on the compatibility of the project with respect to the gazetted structure or local plans, surrounding land-use, provision of set-backs or buffer zones, the capacity of the area to receive additional pollution load, and waste disposal requirements.

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Site suitability evaluation (SSE) has become the main process in ensuring site suitability for all development projects that are referred to DOE. As such, SSE has to be undertaken first for both prescribed and non-prescribed activities. For prescribed activities, SSE must be done before the EIA is conducted to ensure the site selected is suitable for the proposed activity and compatible with its surrounding land-use. This also helps the project proponent to save costs conducting EIA if the site is deemed unsuitable.

2.4 Written notification or Permission to Construct

Any person intending to carry out activities as listed below must provide prior written notification to the Director-General of Environmental quality:

i. Carry out any work on any premises or construct any building that may discharge or release industrial effluent or mixed effluent, or make or cause or permit a material change in the quantity or quality of discharge from an existing source, onto or into any soil, or into inland waters or Malaysian waters, other than premises as specified in the First Schedule under Environmental quality (Industrial Effluent) Regulations, 2009;

ii. Discharge or release or permit the discharge of sewage onto or into any soil, or into any inland waters or Malaysian waters, other than any housing or commercial development or both having a population equivalent of less than one hundred and fifty (150) as specified under Environmental quality (Sewage) Regulations, 2009;

iii. Carry out on any land any facility or building that may result in a new source of leachate discharge or release as specified under Environmental quality (Control of Pollution from Solid Waste Transfer Station and Landfill) Regulations, 2009.

Any person intending to construct on any land or any building; or carrying out work that would cause the land or building to become prescribed premises (crude palm oil mills, raw natural rubber processing mills, and treatment and disposal facilities of scheduled wastes), as stipulated under Section 19 of the Environmental quality Act, 1974 must obtain prior written permission from the Director-General of Environmental quality.

Such application has to be accompanied by a prescribed fee.

2.5 Written approval for installation of incinerator, Fuel Burning equipment and Chimney

Applicants intending to carry out activities as listed below shall obtain prior written approval from the Director-General of Environmental quality:

i. New installation near dwelling area as detailed out in Regulation 4 and First Schedule of the Environmental quality (Clean Air) Regulations 1978.

ii. Any erection (including incinerators), installation, resitting or alteration of fuel burning equipment that is rated to consume pulverised fuel or solid fuel at 30 kg or more per hour, or liquid or gaseous fuel at 15 kg or more per hour as stipulated in Regulations 36 and 38 of the Environmental quality (Clean Air) Regulations 1978.


iii. Any erection, installation, resitting, or alteration of any chimney from or through which air impurities may be emitted or discharged, respectively.

* No fee is imposed on the application for written approval.

2.6 licence to Occupy Prescribed Premises and Prescribed Conveyances

A licence is required to occupy and operate prescribed premises, namely as below:

i. crude palm oil mills,

ii. raw natural rubber processing mills, and

iii. treatment and disposal facilities of scheduled wastes.

A licence is required to use prescribed conveyances as stipulated in the Environmental quality (Prescribed Conveyance) (Scheduled Wastes) Order 2005. Conveyance which is categorised as prescribed conveyance namely, any vehicle or ship of any description which is:

i. propelled by a mechanism contained within itself;

ii. constructed or adapted to be used on land or water; and

iii. used for the movement, transfer, placement or deposit of scheduled wastes.

Applications for the licence shall be made after obtaining written permission and/or written approval (as mentioned in 2.3 and 2.4). Licensing fees apply for every licence issued for palm oil and raw natural rubber processing mills and facilities for the treatment and disposal of scheduled wastes, and prescribed conveyances.

2.7 Gaseous emission and effluent Standards

Industries are required to comply with air emission, industrial effluent, sewage and leachate discharge standards which are regarded as acceptable conditions allowed in Malaysia, as stipulated in the Environmental quality (Clean Air) Regulations 1978, Environmental quality (Industrial Effluents) Regulations 2009, Environmental quality (Sewage) Regulations 2009, and Environmental quality (Control of Pollution from Solid Waste Transfer Station and Landfill) Regulations 2009.

2.8 Control-on Ozone Depleting Substances

Ozone depleting substances (ODS) are categorised as environmentally hazardous substances under the Environmental quality (Refrigerant Management) Regulations 1999 and the Environmental quality (Halon Management) Regulations 1999. New investments relating to the use of these substances are prohibited.

2.9 Scheduled Wastes Management

Malaysia has developed a comprehensive set of legal provisions related to the management of toxic and hazardous wastes. The regulation is based on the cradle to grave principle. A facility which generates, stores, transports, treats or disposes scheduled wastes is subject to the following main regulations:

i. Environmental quality (Scheduled Wastes) Regulations 2005 (Amendment) 2007;

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ii. Environmental quality (Prescribed Conveyance) (Scheduled Wastes) Order 2005;

iii. Environmental quality (Prescribed Premises) (Scheduled Wastes Treatment and Disposal Facilities) (Amendment) Order 2006;

iv. Environmental quality (Prescribed Premises) (Scheduled Waste Treatment and Disposal Facilities) (Amendment) Regulations 2006;

v. Customs (Prohibition of Exports) Order 2008; and

vi. Customs (Prohibition of Imports) Order 2008.

2.9.1 a Summary of environmental requirements on Scheduled Wastes

Environmental quality (Scheduled Wastes) Regulations 2005 replaced the Environmental quality (Scheduled Wastes) Regulations 1989. Under these regulations, 77 types of scheduled wastes listed in the First Schedule are divided into 5 categories, namely:

i. SW 1 Metal and metal-bearing wastes (10 types of scheduled wastes);

ii. SW 2 Wastes containing principally inorganic constituents which may contain metals and organic materials (7 types of scheduled wastes);

iii. SW 3 Wastes containing principally organic constituents which may contain metals and inorganic materials (27 types of scheduled wastes);

iv. SW 4 Wastes which may contain either inorganic or organic constituents (32 types of scheduled wastes)

v. SW 5 Other wastes (1 type of scheduled waste)

Scheduled wastes can be stored, recovered or treated within the premises of the waste generators. Such activities do not require licensing by the Department of Environment. A waste generator may store scheduled wastes generated by him for 180 days or less after its generation provided that the quantity of scheduled wastes accumulated on site shall not exceed 20 metric tonnes. However, waste generators may apply to the Director General in writing to store more than 20 metric tonnes of scheduled wastes. The containers that are used to store scheduled wastes shall be clearly labeled with the date when the scheduled wastes are first generated as well as the name, address and telephone number of the waste generator.

Land farming, incineration, disposal and off-site facilities for recovery, storage and treatment can only be carried out at prescribed premises licenced by the Department of Environment. However, with the signing of the concession agreement between the Government of Malaysia and Kualiti Alam Sdn. Bhd on 18 December 1995 (15 years concession period), all off-site treatment and disposal (incineration, wastewater treatment, storage and secure landfill) of scheduled wastes is not allowed.


On-site incineration of scheduled wastes is not encouraged. If it is deemed necessary, application for the installation of such incinerator must strictly adhere to the Guidelines On the Installation of On-site Incinerator for the Disposal of ScheduledWastes inMalaysia” (publishedby theDepartmentof Environment),including carrying out a detailed environmental impact assessment and display of the EIA report for public comments.

Waste generators may apply for special management of scheduled wastes to have the scheduled wastes generated from their particular facility or process excluded from being treated, disposed of or recovered in premises or facilities other than at the prescribed premises or on-site treatment or recovery facilities, as stipulated under Regulation 7(1), Environmental quality (Scheduled Wastes) Regulations 2005.

3. inCentiVeS FOr enVirOnMental ManaGeMent

PleaserefertoChapter2for“IncentivesforEnvironmentalManagement”.Furtherdetails and updates on environmental management requirements can be obtained from the Department of Environment or visit www.doe.gov.my.

Chapter 9

INFRASTRUCTURE SUPPORT1. INDUSTRIAL LAND

1.1 Industrial Estates 1.2 Free Zones 1.2.1 Free Commercial Zones (FCZs) 1.2.2 Free Industrial Zones (FIZs) 1.3 Licenced Manufacturing Warehouses

2. ELECTRICITY SUPPLY

3. WATER SUPPLY

4. TELECOMMUNICATION SERVICES 5. AIR CARGO FACILITIES

6. SEA PORTS

7. CARGO TRANSPORTATION

7.1 Container Haulage 7.2 Freight Forwarding

8. HIGHWAYS

9. RAILWAY SERVICES

10. MSC MALAYSIA

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Chapter 9

INFRASTRUCTURE SUPPORT1. inDUStrial lanD

1.1 industrial estates

Malaysia has over 200 industrial estates or parks developed by government agencies, namely, the State Economic Development Corporations (SEDCs), Regional Development Authorities (RDAs), port authorities and municipalities. In addition to these, new ones are continuously being planned to meet the increasing demand for industrial land. Besides the government agencies, private developers have also developed industrial estates in certain states.

Prices and lease arrangements vary according to location.

1.2 Free Zones

A Free Zone is an area in any part of Malaysia declared by the Minister of Finance under the provision of Section 3(1) of the Free Zones Act 1990 to be a Free Commercial Zone or Free Industrial Zone. It is mainly designed to promote entreport trade and specially established for manufacturing companies that produce or assemble products mainly for export.

The activities and industries therein are subject to minimal customs formalities as it is deemed under Section 2 (1A) of the customs Act 1967 to be a place outside the Principal Custom Area except in respect of Prohibition of Imports and Exports under Section 31 of the Customs Act 1967.

1.2.1 Free Commercial Zones (FCZs)

A Free Zone allocated for carrying out of commercial activities which include trading (except retail trading), breaking bulk, grading, repacking, relabeling, transhipment and transit.

To-date there are 17 FCZs located at North, South and West Port of Port Klang, Port Klang Free Zone, Pulau Indah MILS Logistic Hub, Butterworth, Bayan Lepas, KLIA, Rantau Panjang, Pengkalan Kubor, Stulang Laut, Johor Port and Port of Tanjung Pelepas.

1.2.2 Zones industrielles franches (FiZ)

Other than minimal customs formalities, FIZs enable export-oriented manufacturing companies to enjoy duty free import of raw materials, component parts, machinery and equipment required directly in the manufacturing process, as well as minimal formalities in exporting their finished products.

To-date there are 20 FIZs located at Pasir Gudang, Tanjung Pelepas, Batu Berendam I, Batu Berendam II, Tanjung Kling, Telok Panglima Garang, Pulau Indah (PKFZ), Sungai Way I, Sungai Way II, Ulu Kelang, Jelapang II, Kinta, Bayan Lepas I,II, III, IV, Seberang Perai and Sama Jaya.

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eligibility

Companies can be located within FIZs when:

• theirentireproductionornotlessthan80%oftheirproductsaremeantforexport

• their raw materials/components are mainly imported. Nevertheless, thegovernment encourages FIZ companies to use local raw materials/components

1.3 licenced Manufacturing Warehouses

To enable companies to enjoy FIZ facilities in areas where it is neither practical nor desirable to establish FIZs, companies can set up Licenced Manufacturing Warehouses (LMWs). Facilities accorded to LMWs are similar to factories operating in the FIZs.

eligibility

Companies normally approved for LMWs are those:

•whoseentireproductionornotlessthan80%aremeantforexport

•whoserawmaterials/componentsaremainlyimported

Payment of Duty

Effective 1 January 2011, FIZ and LMW companies are eligible to enjoy import duty exemptions equivalent to ATIGA (ASEAN Trade in Goods Agreement) rates if they comply with the following conditions;

i) achieve40%ofvaluefromlocalcontent,and

ii) ifthelocalcontentvaluedoesnotreach40%,considerationcanbegivenifthe FIZ/LMW companies can prove that the non-originating raw material to the end products produced had undergone substantive transformation process through a mechanism which has been set.

2. eleCtriCitY SUPPlY

Malaysia enjoys ample electricity supply. The national utility company, Tenaga Nasional Berhad (TNB), supplies power to Peninsular Malaysia, while in East Malaysia, the Sabah Electricity Sdn Bhd (SESB) and the Sarawak Electricity Supply Corporation (SESCO) provide power to the States of Sabah and Sarawak respectively.Transmission voltages are at 500 kV, 275 kV and 132 kV while distribution voltages are 33 kV, 22 kV, 11 kV and 415/240 volts.

TNB also offers electricity packaged under the thermal generation assets and hydro-generated schemes for the benefit of certain industries that require multiple forms of energy for their processes.

At Kulim High Technology Park (KHTP), a ring formation electrical system, the most advanced of its kind in the region, ensures continuous uninterruptible power supply. This guaranteed, stable power supply meets the strict tolerances required by high technology operations, reflecting the government’s thrust to promote such industries.

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3. Water SUPPlY

Water supply and services in Malaysia is under the concurrent jurisdiction of the Federal Government and State Governments. In order to increase the country’s water services quality particularly protecting consumers’ rights, two Federal legislative framework, namely the National Water Services Industry Act 2006 (Act 655) and the Suruhanjaya Perkhidmatan Air Negara 2006 Act (Act 654) have been enforced since 1 January 2008. With a well-regulated water services in place, this will help to promote efficiency and long term sustainability of the water industry to benefit the consumers, investors as well as the operators. Consumers in Malaysia enjoy a 24-hour water supply and water is reliable and safe in terms of quantity and quality. It is treated according to international standards for drinking water set out by the World Health Organisation (WHO). All domestic, commercial and industrial users are metered. Water tariff are vary from state to state.

4. teleCOMMUniCatiOn SerViCeS

Malaysia’s fixed line, mobile and satellite communications infrastructure provided by its mobile and other network facilities providers support a full range of domestic and international services encompassing voice, video, data and other advanced communications services.

Currently, cellular telecommunications services cover 96% of populated areas,with more than 43 million subscribers. Fixed line and mobile telecommunications are augmented by VSAT and satellite-based land and maritime services.

There are more than 28 internet service providers (ISPs) with more than 6.4 million subscriptions. The major ISPs are Axiata (celcom), followed by TM and Maxis withamarketshareof41%,23%and21%respectively.Thetelecommunicationsinfrastructure provides the full range of audio, data and video services with modern and fully digitalized networks deploying both wired and other extended wireless bandwidth to provide high capacity and speed for voice and data transmission. At the domestic level, the country is currently being served by an infrastructure up to 40Gbps. In MSC Malaysia, bandwidths capacity of up to 10 GB capacity is provided. In addition, the high speed broadband access beyond 10Mbps is currently being implemented in Malaysia under HSBB project.

Malaysia is linked to the rest of the world through various fibre optics and satellite consortia such as FLAG, SEA-ME-WE, AAG, MCS, APCN, China-US, Japan-US, Measat and Intelsat. To support the increasing demand for bandwidth, medium and high-end technologies such as ADSL, VDSL2+, ETTH, FTTH, HSPA and WiMAX are being extensively deployed throughout the country. In addition, the LTE technology also will be deployed at the major town areas such as states capitals and Klang Valley areas by the identified operators.

Malaysia currently offers competitive tariffs for local, national and international connections as well as leased circuits, with the Internet dial-up and international tariffs being one of the lowest in the region.

5. air CarGO FaCilitieS

Malaysia’s central position at the crossroads of South-East Asia makes her particularly attractive as a trans-shipment centre. Air cargo facilities are well developed, especially in the six international airports in Malaysia.


The highly sophisticated Kuala Lumpur International Airport (KLIA) in Sepang, Selangor, has a current capacity of 40 million passengers and more than 1.2 million tonnes of cargo per year.

However, KLIA’s 10,000 hectares of land is planned to accommodate up to 60 million passengers and three million tonnes of cargo per year by the year 2020, and in the future, up to 100 million passengers and five to six million tonnes of cargo per year. The other international airports are the Penang International Airport, Langkawi International Airport, and Senai International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak.

MASkargo is the main cargo division of its parent company Malaysia Airlines (MAS) which operates scheduled, chartered air cargo services, ground handling services as well as airport to seaport cargo logistics via ground transportation.

In addition, MASkargo also offers belly space capacity on its holding company’s aircrafts, MAS and its other subsidiaries via the national carrier’s 100 international destinations across six continents.

MASkargo operates a state-of-the-art Advanced Cargo Centre (ACC) at the Kuala Lumpur International Airport within a Free Commercial Zone (FCZ). This centre features a secure and sophisticated security system with the latest technology including fully automated procedures, ensuring real-time data tracking and the smooth flow of communication. Among the facilities at the centre are the Animal Hotel, the one-stop Perishable Centre and the world’s first Priority Business Centre (PBC) for key forwarding agents.

Currently it provides scheduled freighter services from Kuala Lumpur, Penang and Kuching (Malaysia) to Sydney, Shanghai, Taipei, Bangkok, Hong Kong, Manila, Jakarta, Surabaya, Tokyo, Osaka, Frankfurt, Amsterdam, and Sharjah. Currently MASkargo operates its own freighter fleet, two Boeing B747-400F and two Airbus A330-200F.

Recently, the company has been certified with the IATA Secure Freight Programme, which aims to a secure supply chain program, strengthening cargo security. The company also has a product called I-Port, the world’s first airport within a seaport trans-shipment service. This service allows fast handling of sea and air cargo shipment through KLIA from Port Klang. In addition, MASkargo also provides airport-to-airport trucking services in the country.

Air cargo services in Malaysia are complemented by Transmile Air which serves six domestic destinations in Sabah, Sarawak and peninsular Malaysia and 2 scheduled and international destinations namely, Hong Kong and Singapore. The domestic flights to Labuan and Bintulu in East Malaysia cater mainly to the oil and gas industry which requires special handling facilities. In addition to scheduled services, Transmile Air also provides air charter services to the ASEAN and Asia Pacific region and it has the capability to fly to India, the Middle East and China.

For further information on MASkargo, please visit the company’s website at www.maskargo.com

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6. Sea POrtS

Ports in Malaysia can be classified as federal ports and state ports. All federal ports are under the jurisdiction of the Ministry of Transport. At present there are seven major federal ports, namely, Port Klang, Penang Port, Johor Port, Port of Tanjung Pelepas, Kuantan Port, Kemaman Port, and Bintulu Port. All these federal ports are equipped with modern facilities. Bintulu Port is the only port which handles liquefied natural gas.

In tandem with the expansion of the economy and trade, ports in the country registered impressive growth in recent years. Two of the ports; Port Klang and the Port of Tanjung Pelepas, are ranked among the top 20 container ports in the world.

The government’s policy on ports focuses on:

a. Being supply-driven, i.e., the provision of ample capacity in ports to ensure that there is zero waiting time for ships.

b. Enhancing the utilisation of ports through:

• improvingefficiencyandproductivityofportoperations;

• portprivatisation;

• developmentandimprovementofancillaryservices;and

• developmentandimprovementofland-sidetransportation.

c. Load centering, Port Klang has been made the national load centre and the transhipment centre. Whereas the Port of Tanjung Pelepas has been recognised as a regional transhipment hub.

7. CarGO tranSPOrtatiOn

Various companies provide comprehensive containerised cargo transportation services in Malaysia. These include container haulage, freight forwarding, warehousing, bunkering, distribution related services, port and customs clearance, container repair, leasing and maintenance.

Consignees and clients in Malaysia enjoy speedy, efficient and reliable cargo transportation through a network of local branches and offices. Most companies also offer a good international network of agents

7.1 Container Haulage

The Malaysian government regulates inland container haulage through the Land Public Transport Commission (SPAD).

Sixty two hauliers cater to varied cargo needs through a diversified fleet of trailers and prime movers which also include modified vehicles. Some equipped with modern tracking systems to enable contact with haulage vehicles on the road.


Numerous other medium and small-sized operators truck conventional cargoes to destinations in the country. Meanwhile, a block rail feeder service operates to specific destinations and a freight liner service takes care of container deliveries to outstation clients.

This multi-modal (road and rail) transportation system assures prompt delivery of cargo.

7.2 Freight Forwarding

Hundreds of freight forwarding agents stationed throughout Malaysia offer nationwide freight forwarding services, while cargo bound for international destinations can be forwarded through various international freight forwarders.

Freight forwarders can also provide assistance to manufacturers in the processing of applications for required permits, licences and duty/tax exemption for the clearance of goods from the Customs authorities.

8. HiGHWaYS

The Malaysian Highway Authority supervises and executes the design, construction, regulation, operation and maintenance of inter-urban highways in Malaysia. These comfortable expressways link all major townships and potential development areas, and have catalysed industrial growth by enabling efficient transportation.

The country’s successful privatisation programme coupled with its strong economic growth has also induced more highway development projects in the last few years.

Today, the North-South Expressway together with the Penang Bridge, the Kuala Lumpur-Karak Highway and East Coast Highway form the backbone of Malaysia’s road infrastructure, contributing to the country’s rapid socio-economic development.

9. railWaY SerViCeS

Keretapi Tanah Melayu Bhd (KTMB), which operates in Peninsular Malaysia, is a corporation wholly-owned by the Malaysian government. As the single largest transport organisation in the country, KTMB has the capacity to transport several classifications of goods, ranging from grains to machinery.

Its network runs the length and breadth of Peninsular Malaysia from the northern terminal in Padang Besar to Pasir Gudang, Johor in the south. The same northerly line serves wharves and port facilities in Penang.

10. MSC MalaYSia

MSC Malaysia is Asia’s most exciting investment location for information and communication technology (ICT). Conceptualised in 1996, the MSC Malaysia has grown into a thriving dynamic ICT hub, hosting more than 3000 multinationals, foreign-owned and home-grown Malaysian companies focused on multimedia and communications products, solutions, services and; research and development.

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Located at the heart of Asia’s fastest-growing markets, MSC Malaysia features state-of-the-art infrastructure and is governed by secure cyberlaws, policies and practices that enable operating companies to thrive and produce continuous innovation.

MSC Malaysia offers competitive business environment with unique value propositions for ICT investors and ICT-enabled business through designated areas called Cybercities and Cybercentres.

To date, these MSC Malaysia’s designated areas known as the MSC Malaysia Cybercity/Cybercentre include: 1. Cyberjaya

2. Technology Park Malaysia (TPM)

3. Kuala Lumpur City Centre (KLCC)

4. UPM-MTDC

5. KL Sentral

6. KL Tower

7. TM Cybercentre Complex

8. Mid Valley City

9. I-City

10. Bandar Utama

11. Bangsar South City

12. Penang Cybercity-1 (PCC1)

13. Kulim High Tech Park (KHTP)

14. Meru Raya

15. Menara MSC Cyberport

16. Putra Square

17. GTower

18. Spansion

19. Symphony House

20. quill 9

21. The Intermark


22. Wisma Hamzah Kwong Hing

23. Jaya 33

24. Puchong Financial & corporate Centre (PFCC)

25. Melaka International Trade Centre

26. Menara Worldwide

27. Menara Binjai

28. Persoft Tower

Further details and latest information on the MSC Malaysia Cybercities and Cybercentres can be obtained from the MSC Malaysia website, www.mscmalaysia.my

USEFULADDRESSES

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PriMe MiniSter’S OFFiCeBlock B8, Prime Minister’s Department Complex62502 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8888 3904Website: www.jpm.gov.myE-mail: [email protected]

MiniStrY OF aGriCUltUre anDaGrO-BaSeD inDUStrYBlock 4 G1, Wisma TaniNo. 28, Persiaran Perdana, Precinct 4Federal Government Administrative Centre62624 Putrajaya, MalaysiaTel: (603) 8870 1200/1400Fax: (603) 8888 6906Website: www.moa.gov.myE-mail: [email protected]

MiniStrY OF DeFenCeWisma PertahananJalan Padang Tembak50634 Kuala Lumpur, MalaysiaTel: (603) 2059 8400Fax: (603) 2691 4163Website: www.mod.gov.myE-mail: [email protected]

MiniStrY OF DOMeStiC traDe,CO-OPeratiVeS anD COnSUMeriSMNo. 13, Persiaran Perdana, Precinct 2Federal Government Administrative Centre62623 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8882 5983Website: www.kpdnkk.gov.myE-mail: [email protected]

MiniStrY OF eDUCatiOnBlock E8, Complex EFederal Government Administrative Centre62604 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8000 8001Website: www.moe.gov.myE-mail: [email protected]

MiniStrY OF enerGY, GreenteCHnOlOGY anD WaterBlock E4/5, Government Complex, Complex EFederal Government Administrative Centre62668 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8889 3712Website: www.kettha.gov.myE-mail: [email protected]

MiniStrY OF FeDeral territOrieSLevel 1-4, Block 2, Menara PJHPrecinct 2 Federal GovernmentAdministrative Centre62100 Putrajaya, MalaysiaTel: (603) 8889 7888Fax: (603) 8889 7922Website: www.kwp.gov.my

MiniStrY OF FinanCeMinistry of Finance ComplexNo.5 Persiaran Perdana, Precinct 2Federal Government Administrative Centre62592 Putrajaya, MalaysiaTel: (603) 8000 3000Fax: (603) 8882 3893 / 3894Website: www.treasury.gov.myE-mail: [email protected]

MINISTRIES

MiniStrY OF FOreiGn aFFairSWisma PutraNo. 1, Jalan Wisma Putra, Precinct 262602 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8889 1717 / 8889 2816Website: www.kln.gov.myE-mail: [email protected]

MiniStrY OF HealtHBlock E1, E3, E6, E7 & E10, Complex EFederal Government Administrative Centre62590 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8888 6187Website: www.moh.gov.myE-mail: [email protected]

MiniStrY OF HOMe aFFairSBlock D1 & D2, Complex DFederal Government Administrative Centre62546 Putrajaya, MalaysiaTel: (603) 8886 8000/3000Fax: (603) 8889 1613/1610Website: www.moha.gov.myE-mail: [email protected]

MiniStrY OF UrBan WellBeinG,HOUSinG anD lOCal GOVernMentLevel 2-38, No. 51, Persiaran PerdanaPrecinct 4Federal Government Administrative Centre62100 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8891 3182Website: www.kpkt.gov.my

MiniStrY OF HUMan reSOUrCeSLevel 6-9, Block D3, Complex DFederal Government Administrative Centre62530 Putrajaya, MalaysiaTel: (603) 8886 5000/ 5200Fax: (603) 8889 2381Website: www.mohr.gov.myE-mail: [email protected] [email protected]

MiniStrY OF COMMUniCatiOnS anDMUltiMeDiaLot 4G9, Persiaran Perdana, Precinct 4Federal Goverment Administrative Centre62100 Putrajaya MalaysiaTel: (603) 8000 8000Fax: (603) 2693 5114Website: www.kkmm.gov.myE-mail: [email protected]

MiniStrY OF natUral reSOUrCeS anDenVirOnMentWisma Sumber AsliNo. 25, Persiaran Perdana, Precinct 4Federal Government Administrative Centre62574 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8889 2672Website: www.nre.gov.myE-mail: [email protected]

MiniStrY OF PlantatiOn inDUStrieSanD COMMODitieSNo. 15, Level 6-13Persiaran PerdanaPrecinct 2Federal Government Administrative Centre62654 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8880 3441Website: www.kppk.gov.myE-mail: [email protected]

MiniStrY OF rUral anD reGiOnalDeVelOPMentNo. 47, Persiaran Perdana, Precinct 4Federal Government Administrative Centre62100 Putrajaya, MalaysiaTel: (603) 8000 8000Website: www.rurallink.gov.myE-mail: [email protected]

MiniStrY OF SCienCe, teCHnOlOGYanD innOVatiOnLevel 1-7, Block C4 & C5, Complex CFederal Government Administrative Centre62662 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8888 9070Website: www.mosti.gov.myE-mail: [email protected]

MiniStrY OF tOUriSM anD CUltUreNo. 2, Tower 1, Jalan P5/6, Precinct 562200 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8891 7100Website: www.motac.gov.myE-mail: [email protected]

MiniStrY OF tranSPOrtNo. 26, Jalan Tun Hussein, Precinct 4Federal Government Administrative Centre62100 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8888 0158Website: www.mot.gov.myE-mail: [email protected]

MiniStrY OF WOMen, FaMilY anDCOMMUnitY DeVelOPMentNo. 55, Persiaran Perdana, Precinct 462100 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8323 2000Website: www.kpwkm.gov.myE-mail: [email protected]

MiniStrY OF WOrKSBlock B, 6th Floor, Kompleks Kerja RayaJalan Sultan Salahuddin50580 Kuala Lumpur, MalaysiaTel: (603) 8000 8000Fax: (603) 2711 1101Website: www.kkr.gov.myE-mail: [email protected]

MiniStrY OF YOUtH anD SPOrtSMenara KBSNo.27, Persiaran Perdana, Precinct 4Federal Government Administrative Centre62570 Putrajaya, MalaysiaTel: (603) 8871 3333Fax: (603) 8888 8770Website: www.kbs.gov.myE-mail: [email protected]

USEFUL ADDRESSES 172

HUMan reSOUrCe DeVelOPMent FUnDWisma HRDFJalan Beringin, Damansara Heights50490 Kuala Lumpur, MalaysiaTel: 1800-88-4800Fax: (603) 2096 4999Website: www.hrdf.com.myE-mail: [email protected]

iMMiGratiOn DePartMentLevel1–7(Podium),No.15, Persiaran Perdana, Precinct 2Federal Government Administrative Centre62550 Putrajaya, MalaysiaTel: (603) 8000 8000Fax: (603) 8880 1200Website: www.imi.gov.myE-mail: [email protected]

inlanD reVenUe BOarDMenara HasilPersiaran Rimba Permai Cyber 863000 Cyberjaya, Selangor, MalaysiaTel: (603) 7713 6666Fax: (603) 8313 7801Website: www.hasil.gov.myEmail: [email protected]

intelleCtUal PrOPertY COrPOratiOnOF MalaYSiaUnit 1-7, Ground Floor, Tower BMenara UOA BangsarNo.5, Jalan Bangsar Utama 159000 Kuala Lumpur, MalaysiaTel: (603) 2299 8400Fax: (603) 2299 8989Website: www.myipo.gov.myEmail: [email protected]

laBUan FinanCial SerViCeSaUtHOritY (laBUan FSa)Level 17, Main Office TowerFinancial Park Complex, Jalan Merdeka87000 Federal Territory Labuan, MalaysiaTel: (6087) 591 200Fax: (6087) 453 442Website: www.labuanibfc.comE-mail: [email protected]

MalaYSian BiOteCHnOlOGYCOrPOratiOn SDn BHDLevel 16, Menara Atlan161B, Jalan Ampang50450 Kuala Lumpur, MalaysiaTel: (603) 2116 5588Fax: (603) 2116 5411Website: www.biotechcorp.com.myE-mail: [email protected]

MalaYSian inDUStrial DeVelOPMentFinanCe BHD (MiDF)Level 21, Menara MIDF82, Jalan Raja Chulan50200 Kuala Lumpur, MalaysiaTel: (603) 2173 8888Fax: (603) 2173 8877Website: www.midf.com.myE-mail: [email protected]

RELEVANT ORGANISATIONSSUStainaBle enerGY DeVelOPMentaUtHOritY MalaYSiaGaleria PjHAras 9 Jalan P4WPersiaran Perdana, Presint 462100 PutrajayaMalaysiaTel: (603) 8870 5800Fax: (603) 8870 5900Website: [email protected]: www.seda.gov.my

enerGY COMMiSSiOnNo.12, Jalan Tun Hussein, Precinct 262100 Putrajaya, MalaysiaTel: (603) 8870 8500Fax: (603) 8888 8637Website: www.st.gov.my

MalaYSian teCHnOlOGYDeVelOPMent COrPOratiOn SDn BHD(MtDC)Menara Yayasan Tun RazakLevel 8-9, Jalan Bukit Bintang55100 Kuala Lumpur, MalaysiaTel: (603) 2172 6000Fax: (603) 2163 7541Website: www.mtdc.com.myE-mail: [email protected]

MalaYSian inDUStrY-GOVernMentGrOUP FOr HiGH teCHnOlOGY (MiGHt)Blok 3517, Jalan Teknokrat 563000 CyberjayaSelangor Darul Ehsan, MalaysiaTel: (603) 8315 7888Fax: (603) 8312 0300Website: www.might.org.myE-mail: [email protected]

MalaYSia tOUriSM PrOMOtiOn BOarD9th Floor, No. 2, Tower 1Jalan P5/6, Precinct 562200 Putrajaya, MalaysiaTel: (603) 8891 8000Fax: (603) 8891 8889Website: www.tourism.gov.myE-mail: [email protected]

MUltiMeDia DeVelOPMentCOrPOratiOn SDn BHD (MDeC)2360, Persiaran APEC63000 Cyberjaya, Selangor Darul Ehsan,MalaysiaTel: (603) 8315 3000Fax: (603) 8315 3115Website: www.mdec.com.myE-mail: [email protected]

MalaYSia PrODUCtiVitY COrPOratiOn(MPC)Lorong Produktiviti, Off Jalan Sultan46200 Petaling Jaya, Selangor, MalaysiaTel: (603) 7955 7266Fax: (603) 7957 8068Website: www.mpc.gov.myE-mail: [email protected]

POrt KlanG aUtHOritYMail Bag Service 202, Jalan Pelabuhan Utara42005 Port Klang, Selangor, MalaysiaTel: (603) 3168 8211Fax: (603) 3168 7626Website: www.pka.gov.myE-mail: [email protected]

rOYal CUStOMS MalaYSiaMinistry of Finance Complex, Precinct 2No.3 Persiaran PerdanaFederal Government Administrative Centre62596 Putrajaya, MalaysiaTel: (603) 8882 2100Fax: (603) 8889 5901Website: www.customs.gov.myE-mail: [email protected]

SeCUritieS COMMiSSiOnNo. 3, Persiaran Bukit Kiara, Bukit Kiara50490 Kuala Lumpur, MalaysiaTel: (603) 6204 8777Fax: (603) 6201 5078Website: www.sc.com.myE-mail: [email protected]

SMe COrPOratiOn MalaYSiaLevel 6, SME 1, Block BPlatinum Sentral, Jalan Stesen Sentral 2Kuala Lumpur Sentral50470 Kuala Lumpur, MalaysiaTel: (603) 2775 6000Fax: (603) 2775 6001Website: www.smecorp.gov.myE-mail: [email protected]

SMe BanKMenara SME BankJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel: 1-800-88-3133Website: www.smebank.com.myE-mail: [email protected]

SOCial SeCUritY OrGaniSatiOn(SOCSO)Menara Perkeso, 281 Jalan Ampang50538 Kuala Lumpur, MalaysiaTel: (603) 4264 5000Fax: (603) 4256 7798Website: www.perkeso.gov.myE-mail: [email protected]

teleKOM MalaYSia BerHaDLevel 51, North Wing, Menara TMJalan Pantai Baru50672 Kuala Lumpur, MalaysiaTel: (603) 2240 1221Fax: (603) 2283 2415Website: www.tm.com.myE-mail: [email protected]

tenaGa naSiOnal BerHaD129, Jalan Bangsar,59200 Kuala Lumpur, MalaysiaTel: (603) 2296 5566Fax: (603) 2283 3686Website: www.tnb.com.myE-mail: [email protected]

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Ministry of International Trade & Industry (MITI)Block 10, Government Office Complex, Jalan Duta 50622 Kuala Lumpur, MalaysiaTel: (603) 6203 3022 Fax: (603) 6201 2337 / 6203 1303 Website: www.miti.gov.my E-mail: [email protected]

MITI OVERSEAS OFFICESBelGiUMMinister Counsellor (Economy) Mission ofMalaysia to the EU Embassy of Malaysia inBelgium Avenue de Tervuren 414A1150 BrusselsBelgiumTel: (322)776 0378/762 5939Fax: (322)771 2380E-mail: [email protected]

CHina, PeOPle’S rePUBliC OFMinister Counsellor (Economy)Embassy of Malaysia (Economic Section)No.2 Liang Ma qiau Bei JieChaoyang District, 100600 BeijingPeople’s Republic of ChinaTel: (8610) 6532 2533/7990Fax: (8610) 6532 3617E-mail: [email protected]

inDia, rePUBliC OFMinister Counsellor (Economy)High Commission of Malaysia in New Delhi50-M, Satya MargChanakyapuriNew Delhi 110021Republic of IndiaTel: (91-11) 2611 1297Fax: (91-11) 2688 2372E-mail: [email protected]

inDOneSiaCounsellor (Economics) Embassy of Malaysia(Commercial Section)Jalan H.R. Rasuna Said, Kav X6No.1-3, KuninganJakarta 12950IndonesiaTel: (6221) 522 4947/522 4962Fax: (6221) 522 4963E-mail: [email protected]

SinGaPOreCounsellor (Economics)Malaysian Trade Commission80 Robinson Road #01-02Singapore 068896Tel: (0265) 6222 1356Fax: (0265) 6221 5121E-mail: [email protected]

SWitZerlanDPermanent Representative of Malaysia tothe WTOInternational Centre Cointrin (ICC)3rd Floor, Block C20, Route de Pre-BoisCase Postale 1909CH 1215, Geneva 15SwitzerlandTel: (4122) 799 4042Fax: (4122) 799 4041E-mail: [email protected]

tHailanDCounsellor (Economics)Embassy of Malaysia (Trade Office)35, South Sathorn Road Tungmahamek,Sathorn Bangkok 10120ThailandTel: (662) 679 2190-9 Ext.2303/ 2304/ 2305Fax: (662) 679 2200E-mail: [email protected]

UniteD StateS OF aMeriCaMinister Counsellor (Economy)Embassy of Malaysia3516 International Court NWWashington DC 20008United States of AmericaTel: (1202) 572 9700/10/34Fax: (12020 572 9782/882E-mail: [email protected]


Malaysia External Trade Development Corporation (MATRADE)Menara MATRADE, Jalan Sultan Haji Ahmad Shah, Off Jalan Tuanku Abdul Halim, 50480 Kuala Lumpur, MalaysiaTel: (603) 6207 7077 Fax: (603) 6203 7037 Toll Free: 1800-88-7280 Website: www.matrade.gov.my E-mail: [email protected]

MATRADE OVERSEAS OFFICESaUStralia

eaSt aSia

Consulate General of MalaysiaTrade Section (MATRADE)Level 7, 432 St Kilda RoadMelbourne 3004Victoria, AustraliaTel: (613) 9832 8600Fax: (613) 9832 8610E-mail: [email protected]

CHina, PeOPle’S rePUBliC OF BeiJinGTrade CommissionerEmbassy of Malaysia (Trade Section)Unit E, 11th Floor, Tower B, GatewayPlaza No. 18, Xiaguangli, North RoadDongsanhuanChaoyang District, Beijing 100027People’s Republic of ChinaTel: (8610) 8451 5109/ 5110/ 5113Fax: (8610) 8451 5112E-mail: [email protected]

CHenGDUDirectorMalaysia External Trade DevelopmentCorporation(Chengdu Representative Office)Level14,Unit1402–1404The Office Tower, Shangri-La Centre9 Binjiang Road East, Chengdu 610021,Sichuan Province, People’s Republic of ChinaTel: (8628) 6687 7517Fax: (8628) 6687 7524E-mail: [email protected]

GUanGZHOUTrade CommissionerConsulate General of Malaysia (Trade Section)Unit 5305, Citic Plaza Office Tower233, Tianhe Bei Road, Guangzhou510610 GuangdongPeople’s Republic of ChinaTel: (8620) 3877 3865/ 3975Fax: (8620) 3877 3985E-mail: [email protected]

HOnG KOnGTrade Commissioner/ConsulConsulate General of Malaysia(TradeSection)19th Floor, Malaysia Building50 Gloucester Road, WanchaiHong Kong Special Administrative RegionRegion of the People’s Republic of ChinaTel: (852) 2527 8109Fax: (852) 2804 2866E-mail: [email protected]

SHanGHaiTrade ConsulConsulate General of Malaysia (TradeSection)Unit 807-809, 8th FloorShanghai Kerry Centre, 1515,Nanjing Road West, Shanghai, 200040People’s Republic of ChinaTel: (8621) 6289 4420/ 4467Fax: (8621) 6289 4381E-mail: [email protected]

taiWanDirectorMalaysian Friendship & Trade Centre(Trade Section)10F-D, Hung Kuo Building167 Dun Hwa North RoadTaipei 105, TaiwanTel: (8862) 2545 2260Fax: (8862) 2718 1877E-mail: [email protected]

JaPantOKYODirectorMalaysia External Trade DevelopmentCorporation6th FIoor, Ginza Showadori Building8-14-14, Ginza Chuo-kuTokyo 104-0061, JapanTel: (813) 3544 0712/0713Fax: (813) 3544 0714E-mail: [email protected]

OSaKaMarketing OfficerMalaysia External Trade DevelopmentCorporationMainichi Intecio 18F, 3-4-5, Umeda, Kita-kuOsaka 530-0001, JapanTel: (816) 6451 6520Fax: (816) 6451 6521E-mail: [email protected]

KOrea, rePUBliC OFTrade CommissionerEmbassy of Malaysia(Trade & Investment Section)17th Floor, SC First Bank Building 100Gongpyung-dong, Jongro-guSeoul 110-702, Republic of KoreaTel: (822) 739 6813/ 6814/ 6812Fax: (822) 739 6815E-mail: [email protected]

SOUtH aSia

inDia CHennaiTrade CommissionerConsulate General of Malaysia (Consul Trade)Capitale 2A, 2nd Floor, 554 & 555, Anna SalaiTeynampet, Chennai-600018, IndiaTel: (9144) 2431 3722/ 3723Fax: (9144) 2431 3725E-mail: [email protected]

MUMBaiConsulConsulate General of MalaysiaTrade Section (MATRADE)Suite 301, 3rd Floor, Naman CentreBlock G,Bandra Kurla Complex, Bandra (E)Mumbai 40005, IndiaTel: (9122) 2659 7272/3Fax: (9122) 2659 7274E-mail: [email protected]

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SOUtH eaSt aSia

WeSt aSia

CaMBODiaMarketing OfficerMalaysia External Trade DevelopmentCorporation (MATRADE)No. 220-222, Preah Norodom BoulevardSangkat Tonle BassacKhan Chamkarmorn, Phnom Penh,CambodiaTel: (855) 2372 1224Fax: (855) 2372 1225E-mail: [email protected]

inDOneSiaTrade CommissionerEmbassy of Malaysia (Trade Section)12th Floor, Plaza MutiaraJln. Lingkar KuninganKav E.1.2. No1 & 2, Kawasan Mega KuninganJakarta 12950, IndonesiaTel: (6221) 576 4297/ 4322Fax: (6221) 576 4321E-mail: [email protected]

SaUDi araBiaSAUDI ARABIATrade CommissionerConsulate General of Malaysia(Commercial Section)14th Floor, Saudi Business CentreMadina Road, P.O.Box 20802Jeddah 21465Saudi ArabiaTel: (96612) 653 2143/ 98Fax: (96612) 653 0274E-mail: [email protected]

PHiliPPineSEmbassy of MalaysiaTrade Office (MATRADE)Level 4/F, HanjinPhil Building1128, University ParkwayNorth Bonifacio, Global City1634 Taguig, PhilippinesTel: (632) 556 8645/ 8646/ 8647Fax: (632) 401 6387E-mail: [email protected]

tHailanDEmbassy of MalaysiaCommercial and Investment OfficeUnit 75 & 76AB, Level 27,q House Lumpini Building,South Sathorn Road Tungmahamek,Sathorn Bangkok 10120, ThailandTel: (662) 677 7392Fax: (662) 677 7390E-mail: [email protected]

VietnaMHO CHi MinH CitYTrade CommissionerConsulate General of Malaysia(Trade Section)1206-1207, 12th FIoor, Me Linh Point Tower2, Ngo Duc Ke Street, District 1Ho Chi Minh City, VietnamTel: (848) 3822 1468Fax: (848) 3823 1882E-mail: [email protected]

HanOiMarketing OfficerEmbassy of MalaysiaTrade Office (MATRADE)45-46 Dien Bien Phu StreetBa Dinh District, Hanoi, VietnamTel: (844) 3734 7521Fax: (844) 3734 7520E-mail: [email protected]

MYanMarEmbassy of MalaysiaTrade Office (MATRADE)No. 82, Pyidaungsu Yeiktha RoadDagon Township, 11191 YangonMyanmarTel: (951) 230 1951/1952Fax: (951) 230 1954E-mail: [email protected]

UniteD araB eMirateSConsul General / Trade CommissionerConsulate General of Malaysia MalaysiaTrade CentreLot 1-3 Ground Floor &6-10 Mezzanine FloorsAl-Safeena Building Near Lamcy PlazaZaabeel Road P.O.Box 4598, Dubai UnitedArab EmiratesTel: (9714) 335 5528/38Fax: (9714) 335 2220E-mail: [email protected]

QatarMarketing OfficerEmbassy of MalaysiaMalaysia Trade Centre DohaThe Gate Tower 2Level 2, Maysaloun Street,West Bay, DohaqatarTel: (9744) 407 7350Fax: (9744) 407 7351E-mail: [email protected]

eUrOPe

FranCeTrade CommissionerService Commercial De MalaisieDe L’ Ambassade De Malaisie90, Avenue Des Champs Elysees75008 ParisFranceTel: (331) 4076 0000/0034Fax: (331) 4076 0001E-mail: [email protected]

GerManYConsulate of Malaysia (Trade Section)Kastor-Hochhaus (Commerzbank)17th Floor, Platz der Einheit 160327 Frankfurt am MainGermanyTel: 49 (0) 69 247 5015 - 10Fax: 49 (0) 69 247 5015 - 20E-mail: [email protected]

HUnGarYEmbassy of MalaysiaTrade Office (MATRADE)Pasareti ut 291026 Budapest, HungaryTel: (361) 488 0810Fax: (361) 488 0290E-mail: [email protected]

italYConsul and Trade CommissionerConsulate of Malaysia (Commercial Service)Piazza Missori 3, 4th Floor20123 MilanItalyTel: (3902) 669 8183/9Fax: (3902) 670 2872E-mail: [email protected]

tHe netHerlanDSTrade CommissionerEmbassy of Malaysia (Commercial Section)Rustenburgweg 22517 KE The HagueThe NetherlandsTel: (3110) 462 7759Fax: (3110) 462 7349E-mail: [email protected]

rUSSiaEmbassy of Malaysia (Trade Section)2nd Floor, R01-209Dobrynya Business Centre#8, 4th Dobryninskiy per.119409 Moscow, Russian FederationTel: (7495) 933 5626/5636Fax: (7495) 933 5646E-mail: [email protected]

UKraineMarketing OfficerTrade Office (MATRADE) Embassy ofMalaysiaNo. 25 Bulivska StreetPerchersk, Kiev 01014UkraineTel: (38044) 286 7128Fax: (38044) 286 8942Email: [email protected]


eUrOPe

nOrtH aMeriCa

SOUtH aMeriCa - latin aMeriCa

tUrKeYMatrade IstanbulNo.76, 20th Floor, Buyukdere CaddesiMaya Akar Centre Plaza,34394 Esentepe IstanbulTurkeyTel: (90212) 217 8003Fax: (90212) 217 8005Email: [email protected]

CanaDaTrade CommissionerConsulate of Malaysia (Trade Office)Suite 5130 First Canadian PlaceSuite 3700, 100 King Street West Toronto,Ontario M5X 1E2, CanadaTel: (1416) 504 6111Fax: (1416) 504 8315E-mail: [email protected]

lOS anGeleS, tHe USaTrade Commissioner Consulate General ofMalaysia (Commercial Section)550 South Hope Street, Suite 400Los Angeles, CA 90071United States of AmericaTel: (1213) 892 9034Fax: (1213) 955 9142E-mail: [email protected]

arGentinaEmbassy of Malaysia Trade Office (MATRADE)Villanueva 1040C1426BMD Buenos AiresRepublic of ArgentinaTel: (54) 11 4776 0504 / 2533 (54) 11 4777 8420Fax: (54) 11 4776 0604E-mail: [email protected]

BraZilTrade CommissionerEmbassy of Malaysia (Commercial Section)771, Alameda Santos, Suite 727th Floor, 01419-001, Sao PauloBrazilTel: (5511) 3285 2966Fax: (5511) 3289 1595E-mail: [email protected]

POlanDEmbassy of MalaysiaTrade Office MATRADEul, zlota 59, 9th Floor, 00-120 WarsawPolandTel: (4822) 222 1765 / 1772Fax: (4822) 222 1764Email: [email protected]

MiaMi, tHe USaDirectorMalaysia Trade Centre703 Waterford Way, Suite 150Miami, Florida 33126United States of AmericaTel: (1305) 267 8779Fax: (1305) 267 8784E-mail: [email protected]

neW YOrK, tHe USaTrade CommissionerConsulate General of Malaysia(Commercial Section)3rd Floor, 313 East, 43rd StreetNew York, NY 10017United States of AmericaTel: (1212) 682 0232Fax: (1212) 983 1987E-mail: [email protected]

CHileTrade CommissionerOficina Commercial de MalasiaEmbajada De MalasiaAvda Tajamar 183Oficina 302, Las CondesSantiago, ChileTel: (562) 234 2647Fax: (562) 234 2652E-mail: [email protected]

MeXiCOTrade CommissionerEmbassy of Malaysia, Mexico CityPaseo de Las Palmas # 425Torre Optima 3, Office 1101 & 1102Col. Lomas de ChapultepecDel. Miguel Hidalgo, C.P.11000Mexico D.F.Tel: (5255) 5201 4540Fax: (5255) 5202 7338E-mail: [email protected]

UniteD KinGDOMTrade CommissionerMalaysian Trade Commission(Commercial Section)3rd & 4th Floor, 17 Curzon StreetLondon W1J 5HR United KingdomTel: (4420) 7499 5255/4644Fax: (4420) 7499 4597E-mail: [email protected]

aFriCa

CairO, eGYPtEmbassy of Malaysia Commercial Section(MATRADE)21, E1-Aanab StreetLavel 2, MohandessineGiza, EgyptTel: 376 10013Fax: 376 10216E-mail: [email protected]

KenYaTrade CommissionerHigh Commission of MalaysiaTrade Section (MATRADE)Block 91/404, Gigiri GroveGigiriP.O Box 4228602200, NairobiKenya.Tel: (25420) 712 0915Fax: (25420) 712 0916E-mail: [email protected]

SOUtH aFriCaHigh Commission of MalaysiaEconomic Office (MATRADE)Ground Floor, Building 5Commerce Square Office Park39, Rivonia Road, Sandhurst SandtonJohannesburg South AfricaTel: (2711) 268 2380/ 2381Fax: (2711) 268 2382E-mail: [email protected]

177

JOHOrDirectorMatrade Southern Regional OfficeSuite 6B, Tingkat 6Menara Ansar, 65 Jalan Trus80000 Johor Bahru, Johor, MalaysiaTel: (607) 222 9400Faks: (607) 222 9500E-mail: [email protected]

PenanGDirectorMatrade Northern Regional Office1st Floor, FMM Building2767, Mukim 1, Lebuh Tenggiri 2Bandar Seberang Jaya13700 Seberang Perai TengahPulau Pinang, MalaysiaTel: (604) 398 2020Fax: (604) 398 2288E-mail: [email protected]

terenGGanUDirectorMatrade Eastern Regional OfficeTingkat 5, Menara Yayasan Islam TerengganuJalan Sultan Omar20300 Kuala TerengganuTerengganu, MalaysiaTel: (609) 624 4778Faks: (609) 624 0778Email: [email protected]

SaraWaKDirectorMatrade Sarawak OfficeTingkat 10, Menara GrandLot 42, Section 46, Ban Hock Road93100 KuchingSarawak, MalaysiaTel: (6082) 246 780 /248 780Fax: (6082) 256 780E-mail: [email protected]

SaBaHDirectorMatrade Sabah OfficeLot C5.2A, Tingkat 5, Block CBangunan KWSPJalan Karamunsing88100 Kota KinabaluSabah, MalaysiaTel: (6088) 240 881/ 242 881Fax: (6088) 243 881E-mail: [email protected]

MATRADE STATE OFFICES


Malaysian Investment Development AuthorityMIDA Sentral, No 5, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur, MalaysiaTel: (603) 2267 3633 Fax: (603) 2274 7970 Website: www.mida.gov.my E-mail: [email protected]

MIDA STATE OFFICES KeDaH & PerliSDirectorMalaysian Investment Development AuthorityLevel 4, East WingNo. 88, Menara Bina Darulaman BerhadLebuhraya Darulaman05100 Alor SetarKedah, MalaysiaTel: (604) 731 3978Fax: (604) 731 2439E-mail: [email protected]

PUlaU PinanGDirectorMalaysian Investment Development Authority4.03 4th Floor, Menara Boustead Penang39 Jalan Sultan Ahmad Shah10050 Pulau Pinang, MalaysiaTel: (604) 228 0575Fax: (604) 228 0327E-mail: [email protected]

PeraKDirectorMalaysian Investment Development Authority4th Floor, Perak Techno Trade Centre (PTTC)Bandar Meru RayaOff Jalan JelapangP.O. Box 21030720 IpohPerak, MalaysiaTel: (605) 5269 962 / 961Fax: (605) 5279 960E-mail: [email protected]

MelaKaDirectorMalaysian Investment Development Authority3rd Floor, Menara MITC Kompleks MITCJalan Konvensyen75450 Ayer KerohMelaka, MalaysiaTel: (606) 232 2877Fax: (606) 232 2875E-mail: [email protected]

neGeri SeMBilanDirectorMalaysian Investment Development AuthoritySuite 13.01 & 13.0213th Floor Menara MAA70200 SerembanNegeri Sembilan, MalaysiaTel: (606) 762 7921Fax: (606) 762 7879E-mail: [email protected]

JOHOrDirectorMalaysian Investment Development AuthorityLot 13.05, Tingkat 13, Menara Tabung HajiJalan Ayer Molek80000 Johor BahruJohor, MalaysiaTel: (607) 224 2550/ 5500Fax: (607) 224 2360E-mail: [email protected]

PaHanGDirectorMalaysian Investment Development AuthoritySuite 3, 11th Floor Kompleks TeruntumP.O.Box 178,25720 KuantanPahang, MalaysiaTel: (609) 513 7334Fax: (609) 513 7333E-mail: [email protected]

KelantanDirectorMalaysian Investment Development AuthorityAras 5-C, Menara Pejabat Kelantan TradeCentre, Jalan Bayam15000 Kota BharuKelantan, MalaysiaTel: (609) 748 3151Fax: (609) 744 7294E-mail: [email protected]

SelanGOrDirectorMalaysian Investment Development Authority22nd Floor, Wisma MBSA PersiaranPerbandaran40000 Shah AlamSelangor, MalaysiaTel: (603) 5518 4260Fax: (603) 5513 5392E-mail: [email protected]

terenGGanUDirectorMalaysian Investment Development Authority5th Floor, Menara Yayasan Islam TerengganuJalan Sultan Omar20300 Kuala TerengganuTerengganu, MalaysiaTel: (609) 622 7200Fax: (609) 623 2260E-mail: [email protected]

SaBaHDirectorMalaysian Investment Development AuthorityLot D9.4 & D9.5, 9TH FloorBlock D, Bangunan KWSP Karamunsing88100 Kota KinabaluSabah, MalaysiaTel: (6088) 211 411Fax: (6088) 211 412E-mail: [email protected]

SaraWaKDirectorMalaysian Investment Development AuthorityRoom 404, 4th Floor, Bangunan Bank NegaraNo.147, Jalan Satok, P.O.Box 71693714 KuchingSarawak, MalaysiaTel: (6082) 254 251/237 484Fax: (6082) 252 375E-mail: [email protected]

179

MIDA OVERSEAS OFFICES

aSia-PaCiFiCSinGaPOreDirectorMalaysian Investment Development AuthorityNo.7, Temasek Boulevard26-01, Suntec Tower OneSingapore 038987Tel: (65) 6835 9326/ 9580/7069Fax: (65) 6835 7926E-mail: [email protected]

aUStraliaConsul InvestmentConsulate of MalaysiaMalaysian Investment Development AuthorityLevel 6, 16 Spring StreetSydney NSW 2000, AustraliaTel: (6102) 9251 1933Fax: (6102) 9251 4333E-mail: [email protected]

PeOPle’S rePUBliC OF CHinaSHanGHaiConsul (Investment)Consulate General of MalaysiaUnit 807-809, Level 8, Shanghai KerryCentre, No.1515, Nanjing Road (West)Shanghai 200040People’s Republic of ChinaTel: (8621) 6289 4547/ (8621) 5298 6335Fax: (8621) 6279 4009E-mail: [email protected]

GUanGZHOUDirectorMalaysian Investment Development AuthorityUnit 1804B-05Citix Plaza Office Tower233 Tianhe Be Road, Guangzhou510610, ChinaTel: (8620) 8752 0739Fax: (8620) 8752 0753E-mail: [email protected]

BeiJinGConsul (Investment)/DirectorMalaysian InvestmentDevelopment AuthorityEmbassy of Malaysia in Beijing2 Liangmaqiao Bei Jie2 Liangmaqiao BeijieChaoyang District100600 BeijingTel: (8610) 8440 0071/0072Fax: (8610) 8440 0076Email: [email protected]

JaPantOKYODirectorMalaysian Investment DevelopmentAuthority32F, Shiroyama Trust Tower4-3-1, Toranomon, Minato-KuTokyo 105-6032, JapanTel: (813) 5777 8808Fax: (813) 5777 8809E-mail: [email protected]: www.midajapan.or.jp

OSaKaDirectorMalaysian Investment Development AuthorityMainichi Intecio 18-F3-4-5, Umeda, Kita-kuOsaka 530-0001, JapanTel: (816) 6451 6661Fax: (816) 6451 6626E-mail: [email protected]

KOrea, rePUBliC OFCounselor (Investment)Embassy of Malaysia (Investment Section)17th Floor, SC First Bank Building 100,Gongpyung-dongJongro-guSeoul 110-702Republic of KoreaTel: (822) 733 6130 / 6131Fax: (822) 733 6132E-mail: [email protected]

taiWanDirector (Investment)Malaysian Friendship & Trade CentreMalaysian Investment Development Authority12F, Suite A, Hung Kuo Building167, Tun Hua North Road,Taipei105 TaiwanTel: (8862) 2713 5020 / 2718 6094Fax: (8862) 2514 7581E-mail: [email protected] InvestmentConsulate General of Malaysia(Investment Section)81 & 87, 8th Floor, 3rd North AvenueMaker MaxityBandra Kurla Complex, Bandra (E) Mumbai400051, IndiaTel: (9122) 2659 1155 / 1156Fax: (9122) 2659 1154E-mail: [email protected]

UniteD araB eMirateSDirector / Consul InvestmentConsulate General of Malaysia(Investment Section) Malaysia Trade CentreUnit 2205, 22nd Floor, Tower A,Business Central Tower, Dubai Media City(P.O. Box 502876) DubaiUnited Arab EmiratesTel: (9714) 4343 2632Fax: (9714) 4343 698E-mail: [email protected]

eUrOPe FranCeDirectorMalaysian Investment Development Authority42, Avenue Kleber75116 Paris, FranceTel: (331) 4727 3689 / 6696Fax: (331) 4755 6375E-mail: [email protected]

GerManYFranKFUrtConsul InvestmentConsulate General of Malaysia(Investment Section)17th Floor, Frankfurt KastorPlatz der Einheit 1 60327 Frankfurt am Main, GermanyTel: (4969) 7680 7080Fax: (4969) 7680 708-20E-mail: [email protected]

MUniCHDirectorMalaysian Investment Development Authority6th Floor, BürkleinhausBürkleinstrasse 1080538 Munich, GermanyTel: (4989) 2030 0430Fax: (4989) 2030 0431/5E-mail: [email protected]

italYConsul Investment Consulate of Malaysia(Investment Section)5th Floor, Piazza Missori 320123 Milan (MI), ItalyTel: (3902) 3046 521Fax: (3902) 3046 5242E-mail: [email protected]

SWeDenEconomic CounsellorEmbassy of Malaysia Karlavaegen 37P.O. Box 26053S-10041 Stockholm, SwedenTel: (468) 791 7942Fax: (468) 791 8761E-mail: [email protected]

UniteD KinGDOMDirectorMalaysian Investment Development Authority17 Curzon StreetLondon W1J 5HRUnited KingdomTel: (4420) 7493 0616Fax: (4420) 7493 8804E-mail: [email protected]

nOrtH aMeriCalOS anGeleSConsul (Investment)Consulate General of Malaysia(Investment Section)550, South Hope Street, Suite 400Los Angeles, California 90071United States of AmericaTel: (1213) 955 9183Fax: (1213) 955 9878E-mail: [email protected]

San JOSeDirectorMalaysian Investment Development Authority226, Airport Parkway, Suite 480San Jose, California 95110United States of AmericaTel: (1408) 392 0617/8Fax: (1408) 392 0619E-mail: [email protected]


CHiCaGODirectorMalaysian Investment Development AuthorityJohn Hancock Centre, Suite 1515875, North Michigan AvenueChicago, Illinois 60611United States of AmericaTel: (1312) 787 4532Fax: (1312) 787 4769E-mail: [email protected]

neW YOrKConsul (Investment)Consulate General of Malaysia(Investment Section)313 East, 43rd StreetNew York, New York 10017United States of AmericaTel: (1212) 687 2491Fax: (1212) 490 8450E-mail: [email protected]

BOStOnDirectorMalaysian Investment Development AuthorityOne International Place, Floor 8Boston, Massachusetts 02110United States of AmericaTel: (1617) 338 1128/ 338 1129Fax: (1617) 338 6667E-mail: [email protected]

HOUStOnDirectorMalaysian Investment Development Authority6th Floor, Suite 630Lakes On Post Oak3050 Post Oak BoulevardHouston, TX 77056United States of AmericaTel: (1713) 979 5170Fax: (1713) 979 5177/78Email: [email protected]

LIST OF PROMOTED ACTIVITIES AND PRODUCTS WHICH ARE ELIGIBLE FOR

CONSIDERATION OF PIONEER STATUS AND

INVESTMENT TAX ALLOWANCE UNDER THE

PROMOTION OF INVESTMENT ACT 1986

APPENDIX I List of Promoted Activities and Products – General

Published: August 2015. This list is valid at the time of printing. For updates, please visit www.mida.gov.my

I. AGRICULTURAL PRODUCTION

1. Floriculture

II. PROCESSING OF AGRICULTURAL PRODUCE

1. Chocolate and chocolate confectionery

2. Vegetables, tubers or roots & fruits3. Livestock products4. Agricultural waste or agricultural by-

products5. Aquatic products6. Aquaculture feed7. Plant extracts for pharmaceutical,

perfumery, cosmetic or food industries and essentials oils

8. Food Supplements9. Additives, flavours, colouring and

functional ingredients

III. MANUFACTURE OF RUbbER PRODUCTS

1. Tyres for earthmover, agricultural

vehicles, industries vehicles, commercial vehicles, motorcycle and aircraft.

2. Latex products:a) Safety or special function gloves

3. Dry rubber productsa) Beltingsb) Hoses, pipes and tubingsc) Rubber profilesd) Seals, gaskets, washers, packings,

rings and rubber liningse) Anti-vibration, damping and

sound insulation products

IV. MANUFACTURE OF PALM OIL PRODUCTS AND ThEIR DERIVATIVES

1. Oleochemicals or oleochemical derivatives or preparations

2. Palm based nutraceuticals, constituents of palm oil or palm kernel oil

3. Palm-based food products and ingredientsa. Specialty animal fat replacerb. Palm-based mayonnaise and salad

dressingc. Milk or coconut powder substituted. Red palm oil and related productse. Palm-based food ingredientf. Modified palm oil and palm

kernel oil products

g. Margarine, vanaspati, shortening or other manufactured fat products

h. Cocoa butter replacers, cocoa butter substitutes, cocoa butter equivalent, palm mid fraction or special olein

4. Processed products from:a. Palm kernel cakeb. Palm oil mill effluentc. Palm biomass

V. MANUFACTURE OF ChEMICALS AND PETROChEMICALS

1. Chemical derivatives or preparations

from organic or inorganic sources2. Petrochemical products

VI. MANUFACTURE OF PhARMACEUTICAL AND RELATED PRODUCTS

1. Pharmaceuticals or Biopharmaceuticals

2. Nutraceuticals3. Microbials and probiotics

VII. MANUFACTURE OF wOOD-bASED PRODUCTS

1. Design, development and production

of wooden furniture2. Engineered wood products excluding

plywood

VIII. MANUFACTURE OF PULP, PAPER AND PAPERbOARD

1. Corrugated medium paper, testliner

or kraftliner or kraft paper and paperboard

IX. MANUFACTURE OF kENAF-bASED PRODUCTS

1. Kenaf based products such as

animal, feed, kenaf particle or fibre, reconstituted panel board or products (such as particleboard, Medium Density Fibreboard) and moulded products

X. MANUFACTURE OF TEXTILES AND TEXTILE PRODUCTS

1. Natural or man-made fibres2. Yarn of natural or man-made fibres

3. Woven fabrics4. Knitted fabrics5. Non-woven fabrics6. Finishing of fabrics such as

bleaching, dyeing and printing7. Specialised Apparel8. Technical or functional textiles and

textile products

XI. MANUFACTURE OF CLAy-bASED, SAND-bASED AND OThER NON-METALLIC MINERAL PRODUCTS

1. High alumina or basic refractories2. Laboratory, chemical or industrial

wares3. Synthetic diamonds4. Crystallised or moulded glass such

as bricks, tiles, slabs, pellets, paving blocks and squares

5. Absorbent mineral clay6. Marble and granite products7. Panels, boards, tiles, blocks or similar

articles of natural and synthetic fiber agglomerated with cement, plaster or other mineral binding substance

XII. MANUFACTURE OF IRON AND STEEL

1. Blooms or slabs of steel2. Shapes or sections of steel of height

more than 200 mm3. Plates, sheets, coils, hoops or strips of

steel:a) Hot rolled b) Cold rolled or cold reduced

4. Seamless steel pipes5. Ferromanganese, silicon manganese

or ferrosilicon6. Electrolytic galvanised steel sheet in

coil

XIII. MANUFACTURE OF NON-FERROUS METAL AND ThEIR PRODUCTS

1. Primary ingots, billets or slabs of

non-ferrous metals other than tin metals

2. Bars, rods, shapes or sections of non-ferrous metals except EC copper rods

3. Plates, sheets, coils, hoops or strips of non-ferrous metals

4. Pipes or tubes of non-ferrous metals5. Aluminium composite panel

Appendix I

XIV. MANUFACTURE OF MAChINERy AND MAChINERy COMPONENTS

1. Specialised machinery or equipment

for specific industry2. Power generating machinery or

equipment3. General industrial machinery or

equipment4. Modules for machinery or equipment

and industrial parts or components5. Metalworking machinery or

equipment6. Upgrading or reconditioning of

machinery or equipment including heavy machinery

XV. SUPPORTING PRODUCTS OR SERVICES

1. Metal castings 2. Metal forgings3. Surface engineering 4. Machining, jigs and fixtures5. Moulds, tools and dies6. Heat treatment

XVI. MANUFACTURE OF ELECTRICAL AND ELECTRONICS PRODUCTS AND COMPONENT AND PARTS ThEREOF AND RELATED SERVICES

1. Semiconductor:

a) Wafer fabricationb) Semiconductor assemblyc) Semiconductor components and

parts:i) advanced substratesii) solder materialsiii) bond pads

d) Semiconductor toolsi) wafer carriers ii) integrated circuit (IC) carriersiii) photomask and mask blank

e) Semiconductor related servicesi) Dies or wafer level preparation ii) Integrated circuit (IC) testingiii) wafer probing or sortingiv) wafer bumping

2. Advanced display products and partsa) advanced display productsb) advanced display modulesc) backlighting systems

3. Information and Communication Technology (ICT) products, systems or devicesa) digital convergence products or

devices

b) data storage systems or devices4. Digital entertainment or

Infotainment productsa) Digital TVb) Digital home theatre system or

products thereofc) Digital audio or video or image

recorders or players5. Optoelectronic equipment, systems,

devices or componentsa) Photonics devices or componentsb) Optoelectronics equipment or

systems, devices or componentsc) Optical fibres or optical fibre

products6. Electronic tracking or security

systems or devicesa) Voice or pattern or vision

recognition or synthesis equipments or systems or devices

b) Electronic navigational and tracking equipment or systems or devices

c) Radio frequency identification (RFID) systems or devices

7. Electronic componentsa) Multilayer or flexible printed

circuit boards b) Advanced connectors

8. Alternative energy equipment, products, systems , devices or componentsa) Solar cells or panels or module or

systemsb) Rechargeable batteries or storage

systemsc) Fuel cells

9. Energy saving lighting10. Electrical products:

a) Uninterruptible power suppliesb) Inverters or converters

XVII. MANUFACTURE OF PROFESSIONAL, MEDICAL, SCIENTIFIC AND MEASURING DEVICES OR PARTS

1. Medical, surgical, dental or

veterinary devices or equipment and parts or components or accessories thereof

2. Testing, measuring or laboratory equipment or apparatus

XVIII.MANUFACTURE OF PLASTIC PRODUCTS

1. Specialised plastic films or sheets2. Geosystems products3. Engineering plastic products

4. Products moulded under clean room conditions

5. Biopolymers or products thereof

XIX. PROTECTIVE EqUIPMENT AND DEVICES

1. Coated or knitted safety gloves2. Advance ballistic protection glass3. Fall protection equipment

XX. MANUFACTURING RELATED SERVICES

1. Integrated logistics services2. Cold chain facilities and service for

food products3. Gas and radiation sterilisation

services4. Environmental management:

a) Recycling of waste such as:i) toxic and non- toxic wasteii) chemicalsiii) reclaimed rubber

5. Industrial design services

XXI. hOTEL bUSINESS AND TOURISM INDUSTRy

1. Establishment of medium and low-

cost hotels (up to a three-star hotel)2. Establishment of 4 and 5 stars hotel3. Expansion or modernisation of

existing hotels4. Establishment of tourism projects5. Expansion or modernisation of

tourism projects6. Establishment of recreational camps7. Establishment of convention centres

XXI. MISCELLANEOUS 1. Sports goods or equipment2. Jewellery of precious metal3. Costume jewellery4. Biodegradable disposable packaging

products and household wares

Appendix I

LIST OF PROMOTED ACTIVITIES AND PRODUCTS FOR HIGH TECHNOLOGY

COMPANIES WHICH ARE ELIGIBLE FOR CONSIDERATION

OF PIONEER STATUS AND INVESTMENT TAX ALLOWANCE UNDER THE PROMOTION OF

INVESTMENT ACT 1986

APPENDIX II List of Promoted Activities and Products – High Technology Companies


DEsIgN, DEvEloPmENt AND mANufActurE of ADvANcED ElEctroNIcs AND comPutINg

I. Design, development and manufacture of: a) High-density modules or systems b) Advanced display c) Advanced semiconductor devices d) Advanced connectors e) Data storage devices or systems f) Advanced substrates g) Information and telecommunication products, systems or devices h) Digital entertainment or infotainment products i) Optoelectronic equipment, systems or devices j) Electronic security and surveillance systems or devices k) Electronic machines and equipment system or devices l) Advanced electronic components

II. Professional, medical, scientific and measuring devices or parts 1. Design, development and manufacture of: a) Medical equipment, parts or components b) Medical implant, medical devices, parts or components c) Testing, measuring or laboratory equipment or apparatus

III. Biotechnology 1. Development, testing and manufacture of: a) pharmaceuticals b) fine chemicals c) biodiagnostics

IV. Advanced materials 1. Development and manufacture of: a) polymers or biopolymers b) fine ceramics or advanced ceramics c) high strength composites 2. Nano particles and their formulations

V. Alternative energy technology 1. Design, development and manufacture of products, equipments, systems , devices or components for use in alternative energy sectors

VI. Iron and Steel 1. Super fine wire of diameter 2.0 mm and below

Appendix II

LIST OF PROMOTED ACTIVITIES AND PRODUCTS

FOR SMALL SCALE COMPANIES WHICH ARE ELIGIBLE FOR

CONSIDERATION OF PIONEER STATUS AND



APPENDIX III List of Promoted Activities and Products – Small Scale Companies


Appendix III

I. AgrIculturAl ActIvItIEs

1. Aquaculture2. Apiculture

II. ProcEssINg of AgrIculturAl ProDucE

1. Coffee2. Tea3. Fruits4. Vegetables 5. Herbs or spices 6. Cocoa and cocoa products 7. Coconut products except copra and

crude coconut oil 8. Starch and starch products 9. Cereal products10. Sugar and confectionary products 11. Plant extracts 12. Apiculture products 13. Animal feed ingredients 14. Agricultural waste and by-products

III. forEstry ProDucts 1. Rattan products (excluding pole, peel

and split) 2. Bamboo products 3. Other forestry products

Iv. MANufActurE of rubbEr ProDucts

1. Moulded rubber products 2. Extruded rubber products 3. General rubber goods

v. MANufActurE of oIl PAlM ProDucts AND thEIr DErIvAtIvEs

1. Processed products from palm oil2. Processed products from palm

biomass/ waste/by-products

vI. MANufActurE of chEMIcAls AND PhArMAcEutIcAls

1. Pigment preparation, dispersions and

specialty coatings 2. Desiccant3. Bio-resin (biopolymer)4. Inkjet inks

vII. MANufActurE of wooD AND wooD ProDucts

1. Decorative panel boards (excluding plain plywood)

2. Timber mouldings3. Builders’ carpentry and joinery 4. Products derived from utilisation of

wood waste (e.g. activated charcoal, wooden briquettes, wood wool)

5. Wooden household and office articles

vIII. MANufActurE of PAPEr AND PAPErboArD ProDucts

1. Moulded paper products

IX. MANufActurE of tEXtIlEs AND tEXtIlE ProDucts

1. Batik or songket or pua2. Accessories for the textile industry

X. MANufActurE of clAy-bAsED AND sAND-bAsED ProDucts AND othEr NoN-MEtAllIc MINErAl ProDucts

1. Artware, ornaments and articles of ceramic or glass

2. Abrasive products for grinding, polishing and sharpening

XI. MANufActurE of IroN AND stEEl ProDucts, NoN-fErrous MEtAls AND thEIr ProDucts

1. Wire and wire products 2. Fabricated products

XII. suPPortINg ProDucts AND sErvIcEs

1. Metal Stamping 2. Industrial seals or seal materials

XIII. MANufActurE of trANsPort coMPoNENts PArts AND AccEssorIEs

1. Transport components, parts and accessories

XIv. MANufActurE of PArts AND coMPoNENts for MAchINEry AND EquIPMENt

1. Parts and components for machinery and equipment

Xv. MANufActurE of ElEctrIcAl AND ElEctroNIc ProDucts, coMPoNENts AND PArts thErEof

1. Consumer electrical products, parts and components

2. Consumer electronic products, parts and components

3. Industrial electrical products, parts and components

4. Industrial electronic products, parts and components

XvI. MANufActurE of furNIturE, PArts AND coMPoNENts

1. Furniture, parts and components

XvII. MANufActurE of gAMEs AND AccEssorIEs

1. Games and accessories

XvIII.MANufActurE of souvENIrs

1. Souvenirs, giftwares and decorative wares

XIv. MANufActurE of PlAstIc ProDucts

1. Decorative panels and ornaments2. Epoxy encapsulation moulding

compound

LIST OF PROMOTED ACTIVITIES AND PRODUCTS FOR SELECTED INDUSTRIES WHICH ARE ELIGIBLE

FOR CONSIDERATION OF PIONEER STATUS AND



APPENDIX IV List of Promoted Activities and Products – Selected Industries


Appendix IV

I. MAchINEry AND EquIPMENt

1. Machine tools2. Material handling equipment3. Robotic and factory automation

equipment4. Modules and components for

machine tools, material handling equipment and robotic and factory automation equipment

II. SPEcIAlISED MAchINEry AND EquIPMENt

1. Specialised process machinery or

equipment for specific industry2. Packaging machinery3. Modules and components for

specialised process machinery or equipment for specific industry and packaging machinery

III. OIl PAlM bIOMASS

1. Utilisation of oil palm biomass to produce value added products

IV. rENEwAblE ENErgy

1. Generation of renewable energy

V. cONSErVAtION Of ENErgy

1. Conservation of energy

LIST OF PROMOTED ACTIVITIES AND PRODUCTS

FOR REINVESTMENTSUNDER THE


APPENDIX V List of Promoted Activities and Products – Reinvestments


Appendix V

I. REsouRcE-bAsED 1. Rubber 2. Oil palm 3. Wood

II. FooD PRocEssINg

1. Food processing activity

III. REsEARch AND DEVEloPmENt

1. Research and development Activity

IV. hotEl busINEss AND touRIsm INDustRy

1. Hotel business and tourism activity

V. oIl PAlm bIomAss

1. Utilisation of oil palm biomass to produce value added products

VI. colD-chAIN FAcIlItIEs AND sERVIcEs

1. Provision of cold-chain facilities and

services for perishable agriculture produce (fruits, vegetables, flowers, ferns, meat and aquatic products)