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Enhanced Investment Incentives To Drive Malaysia’s Automotive Industry Into The Future

Enhanced Investment Incentives To Drive Malaysia’s Automotive Industry Into The Future

KUALA LUMPUR, 27 April 2021 – The Government has announced the extension and enhancement of the automotive industry incentive in its effort to heighten the new generation of automotive technology and products.

For the period of 2014 to date, the Government through the Malaysian Investment Development Authority (MIDA) has evaluated and approved tax incentives for 13 automotive projects with investments of RM4.6 billion.

The Government reaffirmed the need to add and redefine the list of promoted products and services related to the automotive industry as well as to review the stringent requirements and stipulated conditions for projects approved with the incentive.

While the new extended incentive’s main objective is to promote investments in Energy Efficient Vehicles, an additional scope of activities is now qualified for the automotive industry incentive. These encompass a range ofhigh-tech and high-value products including Next Generation Vehicle (NxGV), electric vehicles and related component as well as core and critical components such as engines, powertrains, light detection and ranging (LIDAR), radio detection and ranging (RADAR) and advanced driver-assistance systems (ADAS).

Due to the complexities of the automotive industry structure across its value chain, the Government has reviewed the value-added criteria requirement as part of this enhanced incentive scheme.

During the drafting and launch of the National Automotive Policy in 2020, in recognising the need for a strategic review and incentive packages to spur new quality investments in the automotive industry, the Government looks beyond attracting new investment into the country, where opportunities should also focus to grow the local automotive industry players and vendors.

This includes nurturing local companies in technologies capabilities, certification and human capital development; utilising and developing local expertise and service providers; as well as supporting local engineering and manufacturing companies such as special processing providers, jigs and tooling manufacturers, components and part manufacturers as well as engineering designs.

It is anticipated that the relaxation of criteria or conditions under this enhanced incentive will attract more homegrown companies to explore expansion opportunities by venturing into new high-tech and high value-added products while expanding their supply chain in the region.

The new incentive is timely as the automotive industry in ASEAN region has been rapidly evolving, with countries continuously innovating policies and strategies to attract investments, particularly for electric vehicles. Malaysia is expectant for its positive spill over effects such as high value jobs, increase in R&D activities as well as transfer of technology and knowledge to the local industry ecosystems. Additionally, this will solidify Malaysia’s position as an attractive investment destination for automotive industry players worldwide and a hub for energy-efficient vehicles.

Eligible companies are encouraged to submit their applications to MIDA with immediate effect. The application for incentive is available until 1 December 2025. More information can also be obtained at www.mida.gov.my and the Transportation Technology Division at MIDA.

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About MIDA

MIDA is the government’s principal investment promotion and development agency under the Ministry of International Trade and Industry (MITI) to oversee and drive investments into the manufacturing and services sectors in Malaysia. Headquartered in Kuala Lumpur Sentral, MIDA has 12 regional and 20 overseas offices. MIDA continues to be the strategic partner to businesses in seizing the opportunities arising from the technology revolution of this era. For more information, please visit www.mida.gov.my and follow us on Twitter, Instagram, Facebook, LinkedIn and YouTube channel.

Media Contacts: 

Manjit Kaur Balkar Singh (Ms)
Email: [email protected] | DL: +603-2267 3509

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