Malaysia to Boost Incentives for Foreign Companies to Relocate
BY :MANIRAJAN RAMASAMY
FEBRUARY 26, 2015
Malaysia will increase incentives for companies to relocate operations to the country as it seeks more foreign investments to bolster growth.
Approved direct investments rose to a record 235.9 billion ringgit ($65.5 billion) last year from 219.4 billion in 2013, International Trade and Industry Minister Mustapa Mohamed said in Kuala Lumpur on Thursday. Domestic investments accounted for about 73 percent of the total, he said.
Prime Minister Najib Razak is dismantling decades of subsidies and increasing his focus on luring foreign investment, boosting education standards and adding high-quality jobs to propel the economy into developed status by the end of this decade. The government is depending on the private sector to drive capital spending as it cuts operating expenditure to narrow a budget deficit.
“We are planning to introduce tax and location incentives for principal hub companies and the details are still being worked” out, Mustapa told reporters. “These also include customized incentives.”
Najib unveiled a plan known as the Economic Transformation Program in 2010 to attract $444 billion of local and foreign private sector-led investment in Malaysia by 2020, ranging from oil storage to a subway in Kuala Lumpur.
Approved investments last year are projected to create more than 178,000 new jobs, Mustapa said. So far, there are projects worth more than 65 billion ringgit in manufacturing and services that are waiting to be approved in 2015, he said.
The services industry accounted for about 63.4 percent of approved investments in 2014, compared with about 30.5 percent for manufacturing and 6.1 percent for the primary sector. Malaysia is forecasting a budget shortfall of 3.2 percent of gross domestic product in 2015, bigger than an October target of 3 percent after a decline in crude prices curbed the oil producer’s revenue.
The country has reduced its dependence on oil for revenue to 29.7 percent in 2014 from 35.4 percent in 2010, Minister Idris Jala said in a separate statement.