Kuala Lumpur, Open For Business (Series 1)

Without a doubt, Covid-19 has wreaked havoc on all countries and economies. Like other nations, we are also faced with the arduous task of rejuvenating and rebuilding our economy, starting with initiatives introduced through our nation’s short-term economic recovery plan (PENJANA) announced in June 2020 and Budget 2021 in Nov 2020. Through it all, the Government is committed to making Malaysia a preferred destination for high value investment as well as high-value added service activities, continuing our pursuit of making this a hub for innovation, high-technology, and future-ready industries.

Having said that, despite the COVID situation last year, we are pleased to share some of these global rankings that have also validated Malaysia’s position on numerous metrics, and are testimonial to our sound policies and measures:

1. 2nd in terms of ease of doing business in ASEAN (12th globally), as well as 2nd for protecting investors according to the World Bank Doing Business Report 2020.
2. 2nd in terms of trade and connectivity in Southeast Asia (12th globally) according to DHL Global Interconnectedness Index 2019
3. 2nd in terms of ease of protecting minority investors according to the Global Innovation Index 2020, by the World Intellectual Property Organisation, WIPO
4. 3rd in terms of global offshoring destination according to the A.T. Kearney Global Services Location Index, GSLI 2019
5. 4th among 17 economies in a recent study by KPMG and the Manufacturing Institute in the USA entitled “Cost of Manufacturing Operations around the Globe”, which assesses the economy’s competitiveness as a manufacturing hub. The study validates Malaysia’s aspirations to become a global supply chain hub in the region. 
6. 5th amongst emerging economies as a key destination for investment and businesses, on the back of potential rapid economic recovery, stable fiscal and financial position, and the ability to contain and alleviate the COVID-19 pandemic according to a recent report by Bloomberg.

On the topic of economic growth as mentioned earlier, our government had introduced PENJANA (Malaysia Stimulus Recovery Plan) for tax and investment incentives such as:

1. 100% Investment Tax Allowance for 5 years for existing company in Malaysia relocating overseas facilities/segments into Malaysia (extended to 31 December 2022 under Budget 2021).
2. 0% tax rate for 10 to 15 years for new investment in manufacturing sectors with capital investment between RM300 million or above. 
3. Special Reinvestment Allowance for manufacturing and selected agriculture activity for year of assessment 2020 until 2022. 
4. Enhancement of the Domestic Investment Strategic Fund; and
5. Expedited Manufacturing License approval for non-sensitive industry within 2 working days.

In addition, during our recent Budget 2021 announcement, there were several initiatives to be implemented throughout 2021, which include:

1. Relaxation of tax incentive conditions for Principal Hub and the incentive will be extended until 31 December 2022.
2. New tax incentive for the establishment of Global Trading Centre at a concessionary rate of 10% for a period of 5 years and can be renewed for a further 5 years.
3. Limit on the value-added and additional activities to be carried out in the Free Industrial Zone and Licensed Manufacturing Warehouse be increased from 10% to exceeding 40% from the total annual sales value; and
4. Individual income tax rate of 15% for a period of 5 consecutive years to a maximum of 5 non-resident individuals holding key positions for strategic new investment by companies relocating their operations to Malaysia under the PENJANA incentive package.
5. Tax incentives for non-resource-based R&D findings commercialization activities to be reintroduced this year and tax incentives for commercialization of R&D findings by public research institutions will be extended to private higher education institutions.
6. Incentives including preferential tax rate of up to 10% for a period of up to 20 years for manufacturers of pharmaceutical products including vaccines.
7. Existing tax incentives for the East Coast Economic Region Development Corridor, Iskandar Malaysia and Sabah Development Corridor be extended until 2022.

To better support our MNCs and potential investors, InvestKL is in the process of establishing new initiatives such as GKL Live Lab and Fit4Work. Greater Kuala Lumpur Live Lab is an initiative under the 12th Malaysia Plan to strengthen Greater KL as an Innovation and Ideation Hub by bringing together MNCs, local companies and universities to develop and innovate new game changing ideas and solutions. The InvestKL Fit4Work Programme is a talent training programme under the Government’s PENJANA initiative catered to enhance the essential skillsets of young Malaysian graduates required for the global services industry. It is a bespoke programme that lines up top industry leaders and trainers in equipping young Malaysian talents for the global corporates.

In efforts to balance public health, livelihoods and economic sustainability, a One Stop Centre (OSC) has also been set up by the Malaysian Government to ease the movement of business travellers by expediting the approval of their entry to do business in Malaysia. The One Stop Centre is represented by the Ministry of International Trade and Industry (MITI), Malaysian Investment Development Authority (MIDA), Ministry of Health (MOH) and the Immigration Department of Malaysia (IMI) to ensure the legitimacy and health status of business travellers before they enter Malaysia.

InvestKL values all our stakeholders, including our partners and foreign investors. Despite hurdles presented by the Covid-19 situation, between March and December 2020, we had directly engaged with over 100 embassies, business-based associations, interest groups, chambers of commerce (both local and foreign) as well as potential investors regularly to understand the sentiment on the ground. At the same time, our teams have directly supported MNCs and their eco-system partners in manoeuvring through this climate, from obtaining permits to operate to facilitate expatriate’s entry back to Malaysia for work, on top of assisting in new investments setting up in GKL and Malaysia. We assure you that InvestKL remains committed to working hand in hand with investors to accelerate the transformation of Kuala Lumpur as an advanced city with inclusive growth and development.

Please feel free to reach out should you have any enquiries, InvestKL is Ready for Business and we are glad to assist.