Friday, October 19, 2007

Malaysia Government extends IDR incentives for qualifying activities

Govt extends IDR incentives for qualifying activities

PUTRAJAYA: The government yesterday announced qualifying activities that will enjoy additional incentives accorded by the Iskandar Region Development Authority (IRDA) that were earlier provided for investments in six targeted service sectors.

Under the incentive and support package (ISP) unveiled by Prime Minister Datuk Seri Abdullah Ahmad Badawi yesterday, several fiscal and non-fiscal incentives packaged by IRDA were extended to include approved developers and approved development managers, on top of those granted to IDR-status companies and foreign knowledge workers originally last March.

Initially, the six areas in the services sector comprising creative, education, financial advisory and consulting, healthcare, logistics and tourism were identified as the key economic drivers in the IDR when the corridor was first launched but the scope of activities has been widened.

The ISP is now extended to qualifying activities including film and television production, online and mobile content generation and advertising, creative research and development under the creative services; universities, colleges and skills training centres under educational services; and hotels, theme parks and conference centres for tourism services.

Qualifying activities in the financial advisory and consulting services include Islamic financial services, business process outsourcing, and corporate consultancy and advisory services; hospitals, healthcare research and development, and integrated laboratory services under healthcare while activities like integrated supply chain services and solutions in logistics would also enjoy the ISP.

IRDA officials said the list was not exhaustive and would be reviewed periodically.

The latest ISP also includes a 10-year income tax exemption for certain qualifying activities.

Speaking to reporters yesterday, Abdullah said the government also wanted greater local investor participation in the activities at the IDR as the corridor was not exclusive to foreign investors.

“We welcome local investors. There is a question that’s being asked that we are not keen on welcoming local investors for IDR. This is not true.

“We raised this matter at our meeting as there was a report that local investors were questioning whether they were exclusively targeting foreign investors.

“The answer is no. Local investors are also welcome,” he said.

Abdullah said local investors with activities in the six areas would qualify for and enjoy the benefits of the ISP, similar to foreign investors.

He said the government was targeting RM40 billion in total investments for Node 1 of the IDR, of which RM4 billion would come from the government.

Asked if the investments for IDR were on track as planned, Abdullah said: “We want to get as many as possible. Datuk Azman Mokhtar (of Khazanah Nasional Bhd) has already indicated to me the number of investors with whom he has already started discussions with on very specific investments that they would like to undertake.”

He said certain investors would receive customised incentive packages, adding that it was possible to address specific needs.

Abdullah, who is also chairman of the IRDA, said: “Since private investments will be the main catalyst of growth, there is a need to offer investors attractive fiscal and non-fiscal incentives like the ones being announced by the IRDA yesterday.”

He said the ISP had been designed to set in motion catalyst developments as well as encourage early investments in the region, and reinforced the government’s commitment to making the region a global success.

The IDR has started attracting investments, including a US$1.2 billion (RM4.08 billion) investment in land and infrastructure by three consortiums led by Mubadala Development Company, Kuwait Finance House and Millenium Development International Company.

General Electric Co has also entered into an arrangement with UEM Land Sdn Bhd to design a safety and security blueprint for the whole of Nusajaya, located in the IDR.

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