New tax incentives mulled
KUALA LUMPUR: Malaysia could extend new tax incentives for foreign investment in areas such as technology if companies promise to create better-paying jobs for Malaysians, Prime Minister Tun Dr Mahathir Mohamad said yesterday.
His comments could reassure foreign investors after Dr Mahathir started a review of projects sanctioned by former prime minister Datuk Seri Najib Razak, especially the ones involving Chinese firms, following an unexpected election victory last month.
Dr Mahathir said the government would welcome investment “from China or any other country” if companies were willing to commit to projects that would create jobs for skilled workers in areas like technology, and research and development.
To attract investments, Dr Mahathir said, in some cases, the government could extend tax breaks beyond 10 years, the outer limit of the tax incentives currently on offer.
Up until now, the Malaysian Investment Development Authority had allowed companies investing in the country to claim income tax breaks for between five and 10 years.
“We are willing to forgo tax for 10 years and maybe more than that. We can give them whatever incentive we can afford. Our main aim is to create jobs for our people,” said Dr Mahathir.
As an example of the kind of investment the new government wanted to see, Dr Mahathir cited Alibaba Group’s move to open an office in Malaysia this week. China’s e-commerce giant is in the process of setting up a logistics hub in Malaysia.
Alibaba founder Jack Ma, who was here for the opening, met Dr Mahathir on Monday and discussed the potential of using Malaysia as a manufacturing hub for export back to China.
“He has good ideas in helping Malaysia produce goods for export to China,” Dr Mahathir said.
Dr Mahathir said Malaysia would renegotiate a US$14 billion (RM56 billion) deal for a domestic rail project developed by Chinese companies, saying the terms were damaging for Malaysia. He cancelled a High-Speed Rail project with Singapore.
Dr Mahathir said Malaysia had to review Chinese investments as Malaysian contractors did not get a fair share and Malaysians were not employed.
He said he was confident that Japan, which he visited earlier this month in his first foreign trip as prime minister, would invest more in Malaysia.
“They will look into it. And they will invest more in Malaysia. We have spelt out to them what we want by way of investment.”
His trip to Japan was seen as a shift back to his “Look East” policy to strengthen ties with East Asia, especially Japan.
It was also seen as a sign of a possible move away from China, which pumped billions of dollars into Malaysia, buying assets in deals that helped the Najib administration cover some of the losses incurred by scandal-ridden state fund 1Malaysia Development Bhd.