KUALA LUMPUR, July 3 (Bernama) -- Prime Minister Datuk Seri Najib Tun Razak today announced the establishment of a RM1 billion Domestic Investment Strategic Fund.
The fund is intended to accelerate the participation of Malaysian-owned companies in the global supply chain of namely high-value added, high technology, knowledge-intensive and innovation-based industries.
He said the fund would be managed by the Malaysian Investment Development Authority (MIDA) and be granted on a negotiable basis, based on the request of the companies and the merits of each case with the objective to enhance technological capabilities of domestic investors.
The fund will function to harness and leverage on outsourcing opportunities created by multinational corporations operating in Malaysia; intensify technology acquisition by Malaysia-owned companies and enable these companies to secure international standards/certifications in strategic industries.
The premier said the government has also re-introduced tax incentives for acquiring foreign companies for high-technology to enable Malaysia-owned companies to acquire new state-of-the-art technologies through a leap frogging approach to move up the value chain or diversify into new areas.
"The initiative would facilitate innovation activities among Malaysian-owned companies," he said at the opening of MIDA's new corporate headquarters and launch of new logo.
Najib said Malaysia-owned manufacturing companies that are already in operation for a year or less and undertaking promotion of products or activities under the Promotion of Investment Act 1986 will be eligible to apply for the tax incentives.
The government is also enhancing tax incentives for small Malaysian-owned companies eligible to apply for tax incentives under the Act by increasing the shareholders' funds threshold for eligibility from RM500,000 to less than RM2.5 million.
"A special tax rate to encourage small Malaysian service providers to merge into larger entities to build up the competitiveness of the smaller entities is being introduced in light of the government's efforts to further liberalise the services sector.
"The initiatives will take immediate effect and it is in conjunction with MIDA's new corporate look and strategic direction" he added.
Najib, who is also Finance Minister, said it was one of the measures that would take effect today in aiming for direct domestic investment to account for 73 per cent of investment in the economy by 2020, with 27 per cent sourced from foreign direct investment.