In 2016, the textiles and textile products industry was the tenth largest export earner with RM13.9 billion, contributing approximately 1.8 per cent to Malaysia’s total exports of manufactured goods. The USA, Japan, and Turkey were Malaysia’s top three export destinations. The USA remained as the leading export market for Malaysian textiles products, with 16 per cent of the industry’s total exports.
To encourage investments in the textiles and textile products industry, several textile products/activities have been gazetted as promoted products/activities under the Promotion of Investment Act, 1986 and could be considered for tax incentives in the form of Pioneer Status or Investment Tax Allowance. They are:
a) Natural or man-made fibres
b) Yarn of natural or man-made fibres
c) Woven fabrics
d) Knitted fabrics
e) Finishing of fabrics such as bleaching, dyeing and printing
f) Non-woven fabrics
g) Specialised apparel
h) Technical or functional textiles and textile products
Moving forward, textiles industry will continue to be relevant in future years as more emphasis is now given to serve the needs of niche market and upstream activities. To accelerate the shift of manufacturing and services sectors, from labour-intensive into high value added, knowledge-intensive and innovation-based industries, the Government has introduced a new tax incentive i.e. Automation Capital Allowance (ACA) under the Malaysian 2015 Budget.
High labour-intensive industries such as rubber products, plastics, wood, furniture and textiles will be entitled to a 200 per cent capital allowance to undertake automation on the first RM4 million in terms of expenditure incurred as early as in the Year of Assessment 2015 up to 2017.