GOVT URGED TO OFFER BETTER TAX INCENTIVES
First-quarter results show majority of FDIs in Malaysia are from existing manufacturers
THE government has been urged to grant more attractive tax incentives to foreign investors looking at reinvesting in the country.
Penang Chief Minister Chow Kon Yeow said the first-quarter foreign direct investment (FDI) results showed majority of investment in the country was from existing manufacturing facilities reinvesting in their facilities.
“Reinvestment is important for our economy as it brings about the same impact in terms of job creation and the value chain enhancement as a new investment.
“In getting investments between states and countries in SouthEast Asia in this challenging economic environment, tax incentives are important for companies to evaluate where they want to go.
“Tax incentives should be considered for reinvestment so that we do not lose out to our Southeast Asian neighbours.
“The tax breaks will also make investors more comfortable to remain in the country,” he said at the opening of the AVX Manufacturing
(M) Sdn Bhd plant in at Bayan Lepas Free Industrial Zone, here, yesterday.
It was reported that approved manufacturing FDI into Penang had surged by 1,360 per cent to RM8.4 billion in the first quarter of this year, which surpassed the RM3.7 billion manufacturing FDI approved for last year.
Chow said many of the reinvestments did not materialise due to the lack of proper tax incentives.
He said AVX Manufacturing had two facilities in Vietnam and only one in Malaysia, which appeared to indicate that Vietnam offered better tax breaks.
“Developing countries offer more competitive tax incentives to bring in FDIs,” he said.
AVX Corp chief executive officer John Sarvis said tax incentives were part of the decisionmaking process when looking for places to invest or reinvest in.
However, he pointed out, that labour, technical support and transportation, were of equal importance.
“If all things are equal (in different countries) then tax is a big part of the reason a company may invest there,” he added.
Sarvis said the company expected to achieve US$200 million (RM827 million) in revenue by 2021.
“Right now we are taking in revenue of US$100 million and we expect this figure to double by the time this facility is in full production,” he said.