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B21 MSC Malaysia

MSC Malaysia was launched in 1998 to promote innovation and partnerships in information technology. It encompasses areas designated as Cybercities or Cybercentres that provide business incentives and guarantees. The Malaysian Digital Economy Corporation oversees MSC Malaysia's development and implementation. Eligible companies, higher learning institutions, and incubators housing tech startups can receive tax incentives such as pioneer status and investment allowances when locating in designated areas.

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85 views4 pages

B21 MSC Malaysia

MSC Malaysia was launched in 1998 to promote innovation and partnerships in information technology. It encompasses areas designated as Cybercities or Cybercentres that provide business incentives and guarantees. The Malaysian Digital Economy Corporation oversees MSC Malaysia's development and implementation. Eligible companies, higher learning institutions, and incubators housing tech startups can receive tax incentives such as pioneer status and investment allowances when locating in designated areas.

Uploaded by

Khay Saad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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B21 MSC MALAYSIA

MSC MALAYSIA
Introduction
MSC Malaysia (formerly Multimedia Super Corridor) was launched on 27 June 1998 and it encompasses an
integrated environment that encourages innovation to reach new technology frontiers, promotes partnership
with global IT players and provides opportunities for mutual enrichment and success.

Key economic focus areas


The status of MSC Malaysia designated area has been divided into two distinct categories, namely MSC
Malaysia Cybercity and MSC Malaysia Cybercentre.
MSC Malaysia Cybercity MSC Malaysia Cybercentre
Self-contained intelligent city with world-class A building or complex with basic enabling
business and living environment offering the environment offering partial BoGs.
10-point MSC Malaysia Bill of Guarantees (BoGs)
Includes (not exhaustive): Includes (not exhaustive):
Cyberjaya, Technology Park Malaysia, Universiti Kuala Lumpur Sentral, Melaka International
Putra Malaysia-Malaysia Technology Trade Centre, Menara MSC Cyberport in Johor,
Development Corporation (UPM-MTDC), Kuala Mid Valley City, G Tower, Bangsar South City, TM
Lumpur City Centre, Kuala Lumpur Tower, Penang Cybercentre in Kuala Lumpur, Bandar Utama,
Cybercity 1, and Kulim High Tech Park i-City Shah Alam in Selangor, Meru Raya in Ipoh,
and Spansion in Penang.

The 10-point MSC Malaysia BoGs are:


World class physical and information infrastructure
Unrestricted employment of knowledge workers
Freedom of ownership
Freedom of sourcing capital globally for MSC Malaysia infrastructure and borrowing funds
Competitive financial incentives
Regional leader in Intellectual Property protection and cyber laws
No censoring of Internet
Globally competitive telecommunication tariffs
Tender key MSC Malaysia infrastructure contracts to leading companies willing to use MSC as their
regional hub
High powered implementation agency to act as an effective one-stop super shop.
Institutions of Higher Learning (IHLs) or faculties of IHLs, and incubators are not required to locate in an MSC
Malaysia Cybercity or Cybercentre, but will be eligible for benefits conferred by some parts of the BoGs.

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Malaysian Digital Economy Corporation
The Malaysian Digital Economy Corporation [formerly Multimedia Development Corporation] (MDeC) was
established to take charge of the development and implementation of MSC. It is a one-stop client centre that
will expedite applications for visas and other licences and permits.

Incentives
Financial incentives
MSC Malaysia status Pioneer status with full income tax exemption for 5 years extendable to 10
company (New years, or 100% investment tax allowance (ITA) on qualifying capital
companies) whose expenditure for 5 years to be utilised against statutory income for new
activities or products companies engaged in highly capital-intensive activities or whose multimedia
are of national and activities are treated as cost centres.
strategic importance No duties on importation of multimedia equipment.
Funding facilitation services are available by MDEC.
Effective 1 October 2002, non-resident companies are exempted from
payment of Malaysian income tax on the following types of income received
from an approved MSC Malaysia company (located in specified areas):
(a) payment for technical advice or technical services;
(b) licensing fees in relation to technology development; and
(c) interest on loans for technology development.
MSC Malaysia companies located in Cyberjaya, Technology Park Malaysia
Phase 1, Universiti Putra Malaysia-Malaysia Technology Development
Corporation Incubator 1, or Petronas Twin Towers are exempted from deducting
the withholding tax under S. 109 and S. 109B of the Income Tax Act 1967
[Income Tax (Exemption) (No. 13) Order 2005].
ICT companies Effective from 8 September 2007, ICT activities including computer software
relocating into development relocating to Cybercities/Cybercentres are given:
Cybercities and Pioneer status with full income tax exemption for a period of 10 years; or
Cybercentres
ITA of 100% on qualifying capital expenditure incurred for a period of 5 years
to offset against 100% of statutory income.
Existing companies MSC Malaysia tax incentives will apply to the value-added income (i.e. the
operating in Malaysia additional statutory income above the average income for the past 3 years), or
to the value of new investment made in MSC Malaysia.
Owners of new From Y/A 2006, Industrial Building Allowance of 10% for owners of new
buildings in buildings occupied by MSC Malaysia-status companies in Cyberjaya (including
Cyberjaya completed buildings yet to be occupied) for 10 years.
Companies granted Effective from Y/A 2015, the following incentives are given:
MSC status 70% exemption of statutory income for a period of 5 years on qualifying
activities carried out outside MSC designated areas;
100% exemption of statutory income for an extended exemption period
(another 5 years) but the company must be located within MSC designated
areas.
The company must have made the application for MSC status on or after
1 January 2015 and has not carried out qualifying activities.

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For further details on ITA incentives, please refer to Promotion of Investments (Determination of Assets under
S. 29B in respect of MSC status companies) Order 2001.

Eligibility for MSC Malaysia status


MSC Malaysia status A provider or a heavy user of multimedia products and services.
company Employ substantial number of knowledge workers.
Contribute to the development of MSC Malaysia.
Should not be engaged in non-qualifying activities such as manufacturing
and trading.
The qualifying activities are:
Infotech
Global business services
Creative content and technology
Once granted MSC Malaysia status, additional conditions to be complied:
Establish a separate legal business entity for MSC Malaysia qualifying
businesses and activities (either locally incorporated company or a
branch of a foreign company).
Locate MSC Malaysia operations designated areas within six months
from the date of approval.
Ensure that at least 15% of the total number of employees of MSC
Malaysia company are knowledge workers.
Comply with MSC Malaysia environmental guidelines.
Institutions of higher IHLs with faculties offering internationally recognised standard of higher
learning (IHLs) education in multimedia, information technology, engineering (selected),
sciences (selected) and other related fields that will contribute to the
development of human resources for MSC Malaysia are also eligible. The
following criteria must be satisfied:
Provide or be a heavy user of multimedia products and services.
Grant either diploma or degree courses in multimedia, information
technology and related fields for a training period of two years and above.
Establish a multimedia or a qualified faculty conducting multimedia
courses,programmes and related activities.
Employ a substantial number of knowledge workers.
Conduct and support R&D activities.
Be registered as a separate legal entity.
Comply with Lembaga Akreditasi Negara guidelines.

Incubators Incubators housing early stage growth companies are also eligible. The
following criteria must be satisfied:
House early stage growth companies (i.e. seed-level/start-up
companies) involved in the ICT/Multimedia (e.g. software, e-commerce,
telecom), biotechnology and/or bio-informatics.
Physical incubators are to provide basic facilities such as water and
electricity, internet access (minimum bandwidth of 128kbps), share
facilities (e.g. meeting room, reception, audio-visual systems), business
advisory services (in-house or outsourced) and minimum 2,000 sq ft floor
space. Virtual incubators are to provide small office, and mentoring and
business advisory services.

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Dedicated management team to provide business support services in
nurturing incubatees besides managing the physical infrastructure. All
newly formed incubators must register with the Companies Commission
of Malaysia within 1 month of obtaining MSC Malaysia status.
Definition of early stage growth companies:
Seed level-companies incorporated within the past one year and
have ideas or concepts that require funds for proof of concept and/or
prototyping;
Start up-companies in the process of setting up or have been in
business for no more than two years and require first round funding
capital for commercialisation of their products/solutions. These
companies may not be generating profits yet.
Global business GBS is a maturity evolution model from the Shared Services &
services (GBS) Outsourcing industry. GBS integrates business services and has a wider
scope to deliver higher value services that goes beyond transactional
activities.
Companies performing GBS activities must satisfy the following criteria:

Criteria Sector Foreign MSC Local MSC


companies companies
Headcount GBS 50 knowledge 30 knowledge
workers in 5 years workers in 5 years
or 20 knowledge or 20 knowledge
workers with workers with
average salary of average salary of
RM10,000 RM8,000
Exports GBS + 70% exports by fifth 20% or RM0.5
Data year of MSC status million exports by
centres fifth year of MSC
status (whichever
is lower)
Location GBS + 70% of investment 30% of investment
Data located within located within
centres designated areas designated areas

Investment Data RM10 million capital RM5 million capital


centres expenditure in expenditure in
5 years 5 years

Knowledge worker individual with tertiary qualification (in any field) or


diploma in multimedia/ICT with 2 years relevant experience, or foreign
individual with knowledge-based skills not prevalent in Malaysia.
Services provided by local GBS companies to MNCs in Malaysia are
referred to as exports.
Investment in designated areas is computed based on combination of
capital and operating expenditure investment value of approved
activities.
MSC Malaysia status application is available online via: http://wizard.mscmalaysia.my/wizard

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