Commercial How to attract more overseas capital

Press, 18 April 1979, Page 22

Commercial How to attract more overseas capital

The Malaykian Government has swept aside bureaucratic barriers that hinder foreign industrialists seeking to engage in joint ventures. A Federal Industrial Development Authority has been set up to deal with all details of such ventures, by-passing several departments and enabling agreement to be reached within four weeks. In addition, substantial tax benefits are open to overseas investors in joint ventures, depending on the scale of their involvement and the employment created. The details are reported in the Malaysian Rubber Producers’ Research Association quarterly journal.

Companies intending to manufacture products not currently made on an adequate scale in Malaysia, or which are 100 per cent export-orientated, can seek “pioneer” status, giving them tax relief from two to five years, depending on the size of the investment. This “tax holiday” can be further extended if the “pioneer”!' factory is in a development' area, if the product is a

priority one, of or if the Malaysian content of the product exceeds 50 per cent. There is a basket of other incentives. The number of employees, for example, provides yet another access to a tax holiday. All this adds, up to the fact that if a planned joint venture in-: volves a capital expenditure of more than SNZ4OO,Ot)O. employs no fewer than 351 people and involves a priority product with high Malaysian content, up to 10 years; of tax holiday is available. In the lower ranges, a five-year tax holiday is open, to joint ventures involving: less than BNZIOO.OOO fixed capital expenditure and employing under 101; six years where there is not less than SNZIOO,OOO and no fewer than 101 employees; seven years for not less than SNZ2OO,OOO and no fewer than 351 employees. In each category another 1 tax holiday year is available! for priority products and an-1 other for high Malaysian! content in the products. This! makes for a possible total of I 10 years’ tax holiday in the! highest range (SNZ4OO,OOO

• plus — 351 employees plus). ! : The Malaysian Deputy Prime Minister (Dr Maha-1 ■ thir) has emphasised that no ' rigid rules apply to the ex-i • tent of Malay capital partici-, > pation and the norm of 30[ :.per cent represents an aver-! cage rather than a fixed re-! ■quirement. Mr C. Langaard. managing, . director of Viking-Askim of[ i Norway, which recently! established a natural rubber, footwear factory in Ma-, ; laysia. employing 900 j people, told an investment: i;seminar in Copenhagen that! i[his firm had met with noi ; : bureaucracy and agreement I was reached on "pioneer” I status in 22 days. Goodyear (Malaysia) ; recently announced a > SNZISM expansion of its : production of tyres and re- > lated products. The proi gramme is expected to be [completed by 1980 and will •i make the company the largJest single American in- ! vestment in Malaysia. Dunllop Holdings, another comipany which has successfully [invested in Malaysia, has 'just opened a SNZ4.3M plant extension.