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 ©The Sun (Used
by permission)
by Husna Yusop
KUALA LUMPUR (March 22, 2007): Foreign investors in selected zones and
sectors within Johor’s Iskandar Development Region will be exempted from the
Foreign Investment Committee rules, which include the 30% bumiputra equity
participation requirement.
In an announcement that drew immediate approval from various quarters, Prime
Minister Datuk Seri Abdullah Ahmad Badawi said qualified companies were also
free to source capital globally and to employ foreigners within the approved
zones.
This is the first incentive and support package (ISP) offered by the government
to woo investors to the IDR, a 20-year South Johor development plan that would
need some RM383 billion to realise.
Acknowledging the intense competition for global investment, Abdullah told the
Invest Malaysia Conference 2007, which drew foreign investors, fund managers and
analysts, that the package of incentives would be continuously reviewed.
The incentives will start with certain zones within the IDR – creative
industries, educational services, financial advisory and consulting, healthcare,
logistics and tourism-related services.
The companies would also be eligible for tax holidays if they started operations
before end of 2015:
» 10-year exemption from corporate income tax; and
» 10-year exemption from withholding tax on certain payments.
Both exemptions were for 10 years upon commencement of operations and provided
that they started before end of 2015.
Abdullah, who is also finance minister, said more details would be announced by
the Iskandar Regional Development Authority (IRDA).
However, the authority that oversees the IDR later issued a statement saying
that in lieu of exemption from the FIC rules, qualified companies would have to
contribute to the Social Projects Fund for, among others, bumiputra development.
The location of the zones where the incentives applied and other details will be
announced in the third quarter of this year, it said.
To be eligible for the ISP, companies must be approved by IRDA and carry out
qualifying activities in designated zones, for customers within the zone and
outside Malaysia. These companies will be known as IRDA-status companies.
The IRDA said it would release a detailed list of examples of qualifying
activities later this year.
Yesterday, theSun front paged a report that
former deputy prime minister Tun Musa Hitam, who sits on the IRDA advisory
council, wanted the government to exempt IDR from policies that favour
bumiputras to help attract foreign investors. Contract awards, he said, would
have to be on merit and the Malays had to face competition.
Abdullah was also in the mood to announce other goodies. These were:
» The abolition of real property gains tax from April 1.
“This is long awaited news for developers and investors alike
and I hope it will inject more excitement and dynamism into both the property
and financial sectors,” he said.
» For the long-term, Abdullah said he would make a major
announcement on April 13 on public services delivery improvements as they relate
to local government authorities.
Johor Mentri Besar Datuk Abdul Ghani Othman, who co-chairs the IRDA, said he
agreed with Musa, saying his suggestion fell under the announcement by Abdullah
on the exemption of FIC rules.
He believed there would not be any political difficulties in dealing with the
exemption. “It should be looked at in the broader context such as in terms of
the multiplier effect which includes the benefit to the country later.”
Abdul Ghani could not immediately say how much the exemptions would cost the
government in revenue foregone.
He added the same provision has been enjoyed by investors in the manufacturing
industry and the ICT-related companies in Cyberjaya.
The Institute of Strategic Analysis and Policy Research (Insap) said the new
incentives would have a positive spinoff for the nation.
Its director Fui K. Soong said the decision was a liberal one, as the FIC
relaxation and the lifting of capital controls were long-standing issues among
investors, both local and foreign.
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