TAX INCENTIVE POISED TO BOOST INVESTMENT

KOTA KINABALU: The recent decision by the federal government in approving a special Investment Incentive Package for the Sabah Development Corridor (SDC) is poised to further intensify the investment momentum in the state.

Describing the announcement of the incentive as timely, Chief Minister Datuk Seri Musa Haji Aman said the package would cover activities in, among others, the tourism, manufacturing and agriculture sectors and major industries.

These incentives are available for investment in designated Strategic Development areas, clusters and flagship projects including the Kinabalu Gold Coast Enclave, Sabah Agro-Industrial Precinct (SAIP), Sandakan Education Hub, Sabah Oil and Gas Industrial Park (SOGIP), Interior Livestock Valley, Marine Integrated Cluster and the Lahad Datu Palm Oil Industrial Cluster (POIC).

“The incentives will vary based on the focus areas, offering incentives such as full tax exemption on statutory income for up to 10 years, investment tax allowance of 100 per cent on qualifying capital expenditure for five years, and full exemption on import duty and sales tax exemption, subject to current policy.

“The period for tax incentives is for applications received by the Sabah Economic Development & Investment Authority (SEDIA) up until Dec 31, 2020,” he said in his speech at the 12th meeting of members of SEDIA at Wisma SEDIA here yesterday.

His speech was read by Deputy Chief Minister Tan Sri Joseph Pairin Kitingan.

Musa, who is also SEDIA chairman, added that the state and national budgets for 2013 would further intensify the development momentum in Sabah .

He said the state government had provided a higher allocation for the year 2013 as compared to the 2012 budget.

“The 2013 Budget Strategy has been planned and formulated with emphasis on efforts that will ensure continuous prosperity and the people’s well-being in line with the 2013 Budget theme, ‘Consolidated Efforts Towards Continuous Prosperity Of The People’.

“The Supply Expenditure for the year 2013 is the biggest in the state’s budget financial history totalling RM4.088 billion,” he said.

Musa also said Sabah is a blessed state located along the maritime silk route linking the vibrant East Asian economies to the rest of the world.

Sabah has the potential to leverage on its strategic position to link the rapidly growing BIMP-EAGA sub-region to the dynamic North East Asian economies, he added.

“Its economy recorded an average growth of 5.3 per cent between 2007 and 2010, which is 1.1 per cent higher than the national growth rate over the same period.

“We are expecting the State’s economic growth to be resilient in the face of global economic uncertainties, expanding at about five to six per cent.

“I believe the measures introduced in aligning the SDC with the Economic Transformation Programme (ETP), Government Transformation Programme (GTP) and the 10th Malaysia Plan coupled with the progress made in the implementation of SDC projects, especially the SDC Flagship Projects such as the POICs in Sandakan and Lahad Datu, Sandakan Education Hub, Oil and Gas Clusters, Keningau Integrated Livestock Centre, Kinabalu Gold Coast Enclave, Sabah Agro-Industrial Precinct and Agropolitan Projects, have succeeded in boosting business confidence in Sabah,” he said.

He said these developments had encouraged more private investors to consider participating in new investment projects, Entry Point Projects (EPPs) and Public-Private Partnerships (PPPs) in Sabah.

The Chief Minister also noted with satisfaction that Sabah had also emerged as one of the top investment destinations in Malaysia, which itself had emerged as one of the world’s top 10 Foreign Direct Investment destinations.

Sabah, he added, has passed the development stage where it is now attracting investments due to the availability of cheap labour.

“We need to recognise that our ability to transform into a high income economy will depend on our ability to generate adequate human capital and adaptable labour force with higher skills, talents, expertise and knowledge.

“Sabah indeed can no longer be a haven for cheap labour. In this regard, I am happy to note that SEDIA has been taking aggressive measures to assist in addressing the human capital requirement of investors in SDC,” he said.

And, according to Musa, one of the programmes introduced was the National Talent Enhancement Programme (NTEP) which aimed to provide job emplacement for degree and diploma holders in engineering has been well received.

To date, there are already more than 10 hosting companies participating in this programme.

Job seekers are encouraged to register with SEDIA for emplacement in various private sector led SDC projects.

“I was also informed that SEDIA is in the midst of negotiating with local and foreign institutions of higher learning to participate in human capital development programme in Sabah, especially in Sandakan Education Hub and also Interior Education Hub.

Human capital development, apart from being a crucial factor in driving the economy and achieving the target to become a high-income and developed nation, Musa pointed out was clearly one of the key determinants to attract private investment as this would be one of the major considerations of investors.

“As SDC has attracted an impressive amount of private investment, at about RM114 billion since its launch in 2008, it is therefore important to ensure that there is a sufficient pool of human resources with the required skills to meet the manpower requirements of the investors,” he said.

Meanwhile, Musa highlighted that during the 2013-2014 Third Rolling Plan, SEDIA would accord much more emphasis on the following areas such as prioritising operating expenditure to accord greater focus on programme and activities which can contribute directly towards achieving SDC Key Performance Indicators in terms of GNI, employment and investment and enhancing SEDIA administrative and management system to comply with the MS ISO 9001:2008 standard.

SEDIA, he said, would also be maintaining the One-Stop SDC Service Centre to provide information and investment advisory services as well as facilitate stakeholders engagement, facilitating access to investment incentives and develop non-fiscal packages to attract investments, developing R&D network, clearing house and database to exchange and share information and fast-track access to expertise including through Sabah Bio-Xchange Network, among others.