| Johor Bahru seafront
Iskandar Development Region (IDR) is seen as “Shenzhen for China” to many businessmen. It’s in a way a special region for development with special incentives unavailable in other Malaysian economic centres. Some businessmen has described the IDR as “one nation,two systems”. Because only investors in IDR enjoys the exemption of the usual 30% bumi quota.
Following the disclosure of some special incentives schemes by the prime minister, one of the advisors of IDR Tun Musa Hitam openly proposed to do away with the usual 30% racial quota. It was reported in the press that the PM has decided to accept the proposal but it was said that the exemption was meant for foreign investments. Another report said that the exemption was only meant for six selected sectors, i.e. creative industries, logistics, education, tourism, financial advisory and consulting and health care. It was not for all industries. The IRD Authority has not explained why only six selected industries were given the special exemption and why these six were selected.
It was also not clear at this point whether the exemption also covers domestic investments. We hope it does cover local investors for all fairness; if the answer is otherwise, the local investors may have to set up companies in Singapore and use them as their investment arms for the IDR. That will be the biggest joke of the day!
IDR, as a concept, should work for the southern region. It will certainly attract some if not many investors from Singapore and Indonesia. Those who believe the IDR is flood-proned would not come. Likewise with those who dislike the racial quota(Remembered? Only six industries were exempted according to Najib)
But how about the northen region of Peninsular Malaysia? Umno has been complaining day and night about Penang being left out as an economic centre and how the Malays were being marginalised in Penang. Why don’t we set our eyes on Balik Pulau, which is said to be backward with no development?
Why don’t Abdullah Ahmad Badawi kick start a similar plan for Balik Pulau? Call it Badawi Development Region and provide similar incentive schemes and exemption of racial quota like what they did with IDR. Such “Shenzhen-like” special development region should be attractive to investors from Thailand and India. after all, Penang is a natural port with a great potential nothing less than South Johore.No?
A businessman I know asked me a question which even AAB and Najib would not dare to answer – why don’t we do away with the 30% bumi quota to promote economic development throughout Malaysia? It’s a question only opposition leaders like Anwar Ibrahim and Lim Kit Siang can answer.
Roundup: Malaysia announces incentives for Iskandar Development Region
|Malaysian Prime Minister Abdullah Ahmad Badawi on Thursday announced a package of policy incentives to spur the development of the South Johor Economic Region, also known as “Iskandar Development Region”.These incentives apply to qualifying companies in six targeted sectors, namely, creative industry, educational services, financial advisory and consulting, healthcare, logistics and tourism related services.Badawi unveiled the incentives, the first package announced for the Iskandar Development Region (IDR), at the Investment Malaysia Conference 2007 here.Firstly, those qualifying companies will be exempted from corporate income tax for activities within these zones and outside Malaysia for 10 years upon commencement of operations.Secondly, qualifying companies will be exempted from withholding tax on certain payments for 10 years upon commencement of operations.The condition for the above-mentioned two incentives is that those companies should commence their operation before the end of year 2015.Thirdly, qualifying companies in the six sectors will enjoy exemption from Foreign Investment Committee rules, have freedom to source capital globally and can employ foreign employees within the approved zones without employment restrictions.”Further details of the incentives and support package will be announced in due course by the one-stop-center Iskandar Regional Development Authority,” the prime minister said.He added the Malaysian government will continue to review those incentives to ensure the competitiveness of the IDR.Meanwhile, Iskandar Regional Development Authority (IRDA) released a media statement after Badawi’s speech to clarify those incentives.
IRDA said to qualify for those incentives, companies must be approved by IRDA and carry out the qualifying activities in designated zones, for customers within the zones and outside Malaysia. These companies will be known as IRDA-status companies.
In lieu of exemption from the Foreign Investment Committee rules, IRDA-status companies will be required to make a contribution to the Social Projects Fund. The fund will be administered by IRDA for social welfare development in IDR.
While qualifying companies will be free to employ foreign employees in these zones, IRDA said it expects Malaysians to make up the large majority of the workforce.
Located in the southernmost Johor state, the IDR encompasses 2, 217 square kilometers of land, covering the logistic triangle of Senai Airport to the north, Port of Tanjung Pelepas to the southwest, and Johor Port in Pasir Gudang to the southeast. The state capital city of Johor Bahru and Nusajaya, the planned state new administrative center, are located within this region.
Envisioned to be the leading new growth engine in the country, the economic region was officially launched by Badawi on Nov. 4, 2006.
Malaysian government targets a total investment of 50 billion ringgit (14.29 billion U.S. dollars) in the first five years for IDR. Badawi on Thursday said the first batch of investment worth approximately 4 billion ringgit (1.14 billion U.S. dollars) is currently being finalized.