KUALA LUMPUR – MIDA (Malaysian Investment Development Authority) calls for entrepreneurs to take the chance and use the reinvestment allowance (RA) for assessment years 2020-2024, to reinvest in Malaysia.
Sivasuriyamoorthy Sundara Raja, deputy chief executive officer for Investment Promotion and Facilitation of MIDA explained that the RA was an initiative under the National Economic Recovery Plan (Penjana) and is an incentive meant for businesses to reinvest for further business expansion.
In order to qualify for the RA, the resident company must be in operation for no less than 36 months and incur capital expenditure to develop, modernise, automate or their diversify their existing manufacturing business or approved agricultural projects.
The allowance is offered for 15 years, beginning from the first year of claim. It will be based on 60% of the capital expenditure incurred for the eligible project.
Sivasuriyamoorthy stated that there has been a misconception among businesses that the government overemphasises and incentivises foreign investors rather than local firms.
During the ‘How to Revive Domestic Direct Investment?’ forum by the National Chamber of Commerce and Industry of Malaysia (NCCIM), he explained that local players get more investment incentives compared to foreign investors and stressed that domestic investments play a major role to approved investments in Malaysia’s economy.
Furthermore, for the years 2012 to 2021, Malaysia had recorded domestic investments worth a total of RM1.3 trillion or 64% of total approved investments.
During the period, he stated that domestic direct investments had dominated the services industry, contributing 84.2% or RM1.01 trillion whereas foreign direct investments account for 15.8% or RM190.4 billion.
Investments in this sector majorly goes to real estate and other service activities, he added.
In contrast, the manufacturing sector had been led by foreign direct investments with 64.5% or RM527.6 billion being contributed. The same industry recorded 35.5% or RM290.8 billion for domestic direct investments.
For that, he said that MIDA recognises that there is more to be done to enable more Malaysian companies to invest in the manufacturing sector.
Additionally, MIDA had also sought for more funding for the Smart Automation Grant, Automation Capital Allowance (Automation CA) and lndustry4WRD Intervention Fund, all which are allocated for local businesses.
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