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MIDA’s future automotive investment incentives to focus on EV supply chain, says deputy CEO

MIDA’s future automotive investment incentives to focus on EV supply chain, says deputy CEO

17 Jul 2023

Malaysian Investment Development Authority’s (Mida) future automotive sector incentives will focus on the electric vehicle (EV) supply chain as the adoption of these automobiles rise while countries in the region also compete for potential knowledge transfer to local talent arising from these investments.

“EV is the way forward for us. The government has put in place very generous tax incentives,” said Mida’s deputy chief executive officer Lim Bee Vian on Monday (July 17) at an investors and vendors convention organised by Proton Holdings Bhd to promote investment into the Automotive Hi-Tech Valley (AHTV) in Tanjung Malim on Monday (July 17).

In relation to the AHTV project, Lim said the government is prepared to offer extended tax incentives for companies that are planning to invest in AHTV with a maximum of 15 years from the conventional five- to 10-year duration.

“It depends on the value of investment. If you’re investing RM10 million to RM500 million, you can get a straight forward of up to 10 years. If [the investment] is anything more than RM500 million, you are getting up to 15 years,” Lim explained.

Subsequently, speaking on non-physical incentives, Lim said that Mida does not currently bestow any grant as no more allocation was made in Budget 2023. Lim said grants are activity-dependent with previous ones being focused on training and research and development (R&D) purposes.

Lim added that the group is in the midst of requesting for additional grants to be given to the private sector to undertake mainly training and R&D activities.

Other than manufacturing factories, Lim encouraged companies to look into setting up operational headquarters in Malaysia, supplementing that in bringing over the support services to Malaysia, as Mida also grants some incentives for supportive activities.

When asked on the possibility of tax incentives being extended to local vendors who intend to relocate into AHTV, Lim commented that it depends on the value creation arising from their activities.

“We will look at whether they are topping up investments or not, or are they just relocating. So, there are a lot of considerations where we look at valuation for tax incentives. We will use criteria like capital investments, job opportunities that they created,” she said.

Source: The Edge Malaysia