SMALL & MEDIUM INDUSTRIES DEVELOPMENT CORPORATION (SMIDEC)

Small and Medium Industries Development Corporation (SMIDEC) is the lead Government agency responsible for coordinating the development of SMIs. It offers the following financial assistance:

1. Grant for Business Planning and Development (ITAF 1)
2. Grant for Product and Process Improvement (ITAF 2)
3. Grant for Productivity and Quality Improvement and Certification (ITAF 3)
4. Grant for RossettaNet
5. Factory Auditing Scheme
6. Special Assistance for Women Entrepreneurs Special Assistance for Women Entrepreneurs
7. Soft Loan Scheme for Factory Relocation
8. Soft Loan for SMEs
9. Soft Loan for SMEs Soft Loan for ICT Adoption

MALAYSIA EXTERNAL TRADE DEVELOPMENT CORPORATION (MATRADE)

MATRADE, Malaysia External Trade Development Corporation, is Malaysia's national trade promotion agency. MATRADE's primary role is to assist Malaysian exporters to develop and expand their export markets. Assisted by a network of 34 overseas offices located in major commercial cities around the world, MATRADE provides a wide range of services and assistance to both Malaysian exporters and foreign importers who are sourcing for trade related information. The financial assistance scheme available in relation to Export Support Services including the followings:

1. Services Export Fund (SEF)
2. Market Development Grant (MDG)
3. Brand Promotion Grant (BPG)
4. Industry Excellence Awards
5. Tax Incentive

MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY (MIDA)

The Malaysian Industrial Development Authority (MIDA) is the government’s principal agency for the promotion and coordination of industrial development in Malaysia. MIDA assists companies which intend to invest in the manufacturing and its related services sectors as well as facilitates the implementation and operation of their projects. The wide range of services provided by MIDA includes providing information on the opportunities for investment and facilitating companies which are looking for joint venture partners.

MIDA also evaluates the following applications for projects in the manufacturing and its related services sectors:

1. Manufacturing licenses
2. Tax incentives
3. Expatriate posts
4. Duty exemptions on raw materials, components, machinery and equipment

The key tax incentives for companies investing in the manufacturing sector are the Pioneer Status or the Investment Tax Allowance. Eligibility for the Pioneer Status or the Investment Tax Allowance are based on certain priorities, including the levels of value-added, technology used and industrial linkages. Such eligible projects are termed as "promoted activities" or "promoted products".

PIONEER STATUS

A company granted Pioneer Status enjoys a 5-year partial exemption from the payment of income tax. It will only have to pay tax on 30% of its statutory income*, with the exemption period commencing from its Production Day (defined as the day its production level reaches 30% of its capacity).

As an additional incentive, companies located in the states of Sabah and Sarawak and the designated "Eastern Corridor"+ of Peninsular Malaysia, will only have to pay tax on 15% of their statutory income during the 5-year exemption period. All project applications received until 31 December 2005 are eligible for this additional incentive.

Applications for Pioneer Status should be submitted to the Malaysian Industrial Development Authority (MIDA)

1. Statutory Income is derived after deducting revenue expenditure and capital allowances from the gross income.
2. The "Eastern Corridor" of Peninsular Malaysia covers the states of Kelantan, Terengganu, Pahang and the district of Mersing in the State of Johor.

INVESTMENT TAX ALLOWANCE (ITA)

As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA). A company granted ITA gets an allowance of 60% of qualifying capital expenditure (such as factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date on which the first qualifying capital expenditure is incurred.

Companies can offset this allowance against 70% of their statutory income in the year of assessment. Any unutilized allowance can be carried forward to subsequent years until fully utilized. There remaining 30% of statutory income will be taxed at the prevailing company tax rate.

In the case of Pioneer Status companies, an additional incentive is enjoyed by companies located in the states of Sabah and Sarawak, and the designated "Eastern Corridor" of Peninsular Malaysia. These companies can obtain an allowance of 80% of the qualifying capital expenditure incurred. The allowance can be utilised to offset 85% of their statutory income in the year of assessment. All applications received until 31 December 2005 are eligible for this additional incentive.

GO TO TOP