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Established in 1967 under Act of Parliament, 1965

Established in 1967 under Act of Parliament, 1965 The principal Malaysian Government agency responsible for the promotion and coordination of industrial development in the country

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Established in 1967 under Act of Parliament, 1965

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  1. Established in 1967 under Act of Parliament, 1965 • The principal Malaysian Government agency responsible for the promotion and coordination of industrial development in the country • First point of contact for investors who intend to set up projects in the manufacturing and its related services sectors in Malaysia • On 27 March 2004, the Government has also mandated MIDA to become the single window for services sector

  2. PLANNING • Planning for industrial development • Recommend policies and strategies • on industrial promotion and • development • PROMOTION • Foreign Direct Investment • Domestic Investment • Cross Border Investment • Manufacturing Related Services • FOLLOW-UP/MONITORING • Assist companies in the • implementation and operation of • their projects • Advisory Services • EVALUATION • Manufacturing licences • Tax incentives • Expatriate posts • Duty exemption • RDC, IPC and R&D status

  3. Functions • Advise and assist investors on matters relating to tax, labour, immigration, customs, utilities, occupational, safety, and health, and environment • Coordinate applications for approval and other matters under the purview of the relevant ministries and departments • Immigration Department • Royal Customs Department • Department of Occupational Health & Safety • Department of Environment • Ministry of Finance • Ministry of Human Resource • Telekom Malaysia Berhad • Tenaga Nasional Berhad

  4. Functions of MIDA Functions of MIDA STATUS OF INDUSTRIES

  5. Functions of MIDA Functions of MIDA • Aerospace sector in Malaysia is relatively new and undeveloped • Military’s requirement – supervised by the Defence Ministry • Civil aviation – regulated by the Department of Civil Aviation • The industry can be divided into 3 sectors: • Light Aircraft Assembly • Parts & Components Manufacturing • Repair/Overhaul/Maintenance Activities

  6. Functions of MIDA Functions of MIDA COMPANIES IN PRODUCTION : (Licenced/non-licenced companies) • Parts/Components Manufacturing - 7 • Repair/Overhaul/Maintenance Activities – 28

  7. Functions of MIDA Functions of MIDA

  8. Status of Shipbuilding & Shiprepairing Industry Functions of MIDA Functions of MIDA • The shipbuilding and shiprepairing industry includes the manufacture of ships, boats, patrol vessels, barges, leisure crafts, yachts, hydrofoils, hovercrafts and shiprepairing activities. • This industry is fragmented, with majority of the companies being small-sized shipyards • There are six large shipyards involved in shipbuilding & shiprepairing and metal fabrication activities. • The largest shipyard is capable of building vessels up to 30,000 DWT and repairing vessels of up to 450,000 DWT.

  9. Functions of MIDA Status (cont…) Functions of MIDA MAJORSHIPYARDS • MALAYSIA MARINE AND HEAVY ENGINEERING (MMHE) • BOUSTEAD NAVAL SHIPYARD • SABAH SHIPYARD • RAMUNIAN SHIPYARD • SASACOM SHIPYARD • MUHIBBAH MARINE ENGINEERING

  10. Manufacturing Licence Under the Industrial Coordination Act (ICA), 1975 manufacturing companies are required to apply for manufacturing licence if:i) shareholders fund is RM2.5 million or more; or ii) full-time employees is 75 or more

  11. Equity Ownership • 100% foreign equity ownership is allowed, irrespective of the level of exports • Repatriation of Profits • Liberal Exchange Control Policy. Companies are free to repatriate profits, dividends, commissions and royalties • Government’s Delivery System • Special project officers in MIDA to ‘hand-hold’ and assist investors in obtaining all necessary approvals until they are operational

  12. Policies (cont…) Expatriate posts Automatic approval to employ any number of expatriates required:

  13. INCENTIVES

  14. Functions of MIDA Incentives Functions of MIDA • The major incentives are provided under: • Promotion of Investments Act (PIA), 1986 • Income Tax Act, 1967 • Customs Act, 1967 / Sales Tax Act, 1972

  15. Functions of MIDA Incentives Functions of MIDA Promotion of Investments Act (PIA), 1986

  16. Functions of MIDA Incentives Functions of MIDA General Incentives

  17. Functions of MIDA Incentives Functions of MIDA • Pioneer Status • Partial/full relief from payment of income tax • Exemption of income tax on 70% / 100%* of statutory income for 5 years • Investment Tax Allowance (ITA) • 60% / 100%* of qualifying capital expenditure incurred within 5 years deducted from statutory income • Deduction of 70% / 100%* of statutory income in any one year • Location in Eastern Corridor/Sabah/Sarawak

  18. Functions of MIDA Functions of MIDA • Criteria For Granting Pioneer Status / ITA • Promoted product/activity • Value added – at least 25% • Managerial, Technical and Supervisory Index • At least 15%

  19. Functions of MIDA Functions of MIDA Promoted products/activities Aerospace, Shipbuilding and Shiprepairing Industries: i) Manufacture and assembly of aircraft; ii) Manufacture of aircraft equipment, components, accessories or parts thereof; iii) Manufacture of ground support equipment for the aerospace industry; iv) Maintenance, repair, overhaul or service (MRO) of aircraft, aircraft components or accessories or testing and repairing of avionics

  20. Promoted products (cont…) v) Hovercraft, leisure craft; vi) Shipbuilding* vii) Shiprepairing* viii) Steel fabricated products* ix) Engineering supporting products/activities such as metal castings, forgings, surface treatment, machining etc. * promoted in Eastern Corridor/Sabah/Sarawak only

  21. Functions of MIDA Incentives Functions of MIDA Incentives for High Technology Companies

  22. Functions of MIDA Functions of MIDA • Pioneer Status Exemption of income tax on 100% of statutory income for 5 years • Investment Tax Allowance (ITA) • 60% of qualifying capital expenditure incurred within 5 years deducted from statutory income. • 100% deduction against statutory income in any one year.

  23. Functions of MIDA Functions of MIDA • Criteria For The Grant Of High Tech Incentives • Local R&D expenditure to gross sale • At least 1% on annual basis • Science and technical graduates to total workforce • At least 7%

  24. Functions of MIDA Incentives Functions of MIDA • Hi-Tech Promoted Products/Activities • Design or development and production or assembly of: • Aircraft • Aircraft equipment, components, accessories or parts of aircraft • Modification and/or conversion of aircrafts • Refurbishment or re-manufacture of aircraft equipment, components or accessories or parts of aircrafts • Application or production of advanced materials (e.g. high strength composites) • Development and production of advanced electronics (e.g. communication equipment/avionics)

  25. Functions of MIDA Incentives Functions of MIDA Incentives for Strategic Projects

  26. Functions of MIDA Incentives Functions of MIDA • PS with tax exemption of 100% of statutory income for 10 years • ITA of 100% on qualifying capital expenditure incurred within 5 years Projects/activities eligible • Of national importance & heavy capital investment with long gestation period, involve high levels of technology and are integrated, generate extensive linkages, and have significant impact on the economy.

  27. Functions of MIDA Incentives Functions of MIDA Incentives to Strengthen Industrial Linkages

  28. Functions of MIDA Incentives Functions of MIDA • Vendors, including SMIs, can apply for: • PS with tax exemption of 100% of statutory income tax for 5 years • ITA of 60% or 100% for 5 years – to offset against 100% of statutory income

  29. Incentives Customised Incentives (Pre-Package)

  30. Incentives • Special package of incentives (pre-package/customised) which could cover both tax and non-tax incentives • The special package granted is negotiable, based on request of the company and the merits of each case

  31. Functions of MIDA Incentives Functions of MIDA Income Tax Act, 1967

  32. Functions of MIDA Incentives Functions of MIDA Reinvestment Allowance (RA)

  33. Functions of MIDA Functions of MIDA • 60% of qualifying capital expenditure of existing companies which incur capital expenditure for the purpose of approved expansion • Given for a period of 15 consecutive years from year reinvestment is first made • Offset against 70% / 100%* of statutory income • * Location in Eastern Corridor/Sabah/Sarawak

  34. Functions of MIDA Incentives Functions of MIDA Customs Act, 1967 & Sales Tax Act, 1972

  35. Functions of MIDA Incentives Functions of MIDA Import Duty and Sales Tax Exemptions

  36. Functions of MIDA Functions of MIDA • Aircraft & Aircraft Parts/ComponentsAssembler/Manufacturer/Shipbuilding & Shiprepairing • (i) Exemption from import duty and sales tax on machinery/equipment/spare parts (PC1) • (ii) Exemption from import duty & sales tax on raw materials/components (PC2)

  37. Functions of MIDA Incentives Functions of MIDA • (B)Maintenance, Repair & Overhaul (MRO) Activities • Blanket approval for import duty and sales tax exemption on raw materials, machinery, equipments, replacement parts and consumables for MRO companies • Subject to the condition that each import is attached with one of the ‘Certificated of parts and components issued by the original equipment manufacturer (OEM)’

  38. Functions of MIDA Functions of MIDA Industrial Master Plan 3

  39. Objective:To achieve long-term global industrial competitiveness through transformation and innovation of manufacturing and services sector • Encompasses a 15 year period (2006 – 2020) • Aims to improve & strengthen the country’s global competitiveness across 3 economic pillars; • Manufacturing • Agriculture and agro-based industries • Services

  40. StrategicThrusts: • Strengthening Malaysia’s position as major global trading nation • Generating investments in targeted growth areas • Integrating Malaysian companies into regional and global networks • Ensuring sustainable industrialisation, with consideration of environmental and regional balance • Sustaining manufacturing sector’s significant contribution to economic growth

  41. StrategicThrusts: • Positioning services sector as major source of growth • Facilitating development and application of technologies • Developing innovative and creative human capital • Strengthening role of private sector institutions • Creating competitive business operating environment

  42. THANK YOU

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