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Enhanced auto industry incentives to spur homegrown firms to explore expansion, says MIDA

Enhanced auto industry incentives to spur homegrown firms to explore expansion, says MIDA

27 Apr 2021

KUALA LUMPUR (April 27): The extension and enhancement of the automotive industry incentive by the government 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.

In a statement today, the Malaysian Investment Development Authority (MIDA) said the new incentive was timely, as the automotive industry in ASEAN had been rapidly evolving, with countries continuously innovating policies and strategies to attract investments, particularly for electric vehicles.

“Malaysia is expectant of its positive spillover effects such as high-value jobs, increase in research and development activities as well as the transfer of technology and knowledge to the local industry ecosystems,” it said.

Additionally, MIDA said, this would solidify Malaysia’s position as an attractive investment destination for automotive industry players worldwide and a hub for energy-efficient vehicles.

According to the agency, while the new extended incentive’s main objective is to promote investments in energy-efficient vehicles, an additional scope of activities now qualifies for the automotive industry incentive.

“These encompass a range of high-tech and high-value products including next-generation vehicles, electric vehicles and related components as well as core and critical components,” it said.

MIDA said that due to the complexities of the automotive industry structure across its value chain, the government had reviewed the value-added criteria requirement as part of the enhanced incentive scheme.

Application for the incentive is open until Dec 1, 2025, and eligible companies are encouraged to submit applications to MIDA with immediate effect.

“Since 2014 to date, the government through MIDA has evaluated and approved tax incentives for 13 automotive projects with investments of RM4.6 billion,” the agency said.

Source: Bernama