Reforms spur rapid economic growth as Sarawak offers incentives for foreign investors

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Since the middle of the previous decade, Sarawak has experienced a period of sustained economic growth, riding out the global credit crisis and charting a course that it hopes will result in high-income status by 2020.

In 2010, Sarawak experienced solid economic growth despite the global credit crisis. Its Gross Domestic Product reportedly increased by 5.4 per cent and is set to hit 6.8 per cent in 2011 in line with federal government targets. Public investment rose 18.9 per cent.

According to the Sarawak government, the state’s economic fundamentals are strong. Growth remained steady from 2005 through 2008 at between 5.0 and 5.8 per cent before slowing in 2009, despite Sarawak receiving the largest share of Foreign Direct Investment of all 13 Malaysian states that year.

The impressive growth record in recent years is credited to the comprehensive economic reform policies enacted by the government in 2006, which factored in the 2008 launch of (SCORE) Sarawak Corridor of Renewable Energy.

In addition to its key economic development plans, the economy is set to grow further in the coming years as foreign investors eye potentially lucrative projects in heavy industries, energy, halal food and services and traditional Sarawak sectors such as timber, palm oil, natural gas and agriculture.

Improvements to infrastructure, road network, upgrades to major ports, and greater penetration of internet and technological advancements means Sarawak offers a host of investment opportunities for foreign entities eager to take advantage of this bustling part of the world.

And because of its vast reserves of natural resources, Sarawak offers strong potential for investment in petroleum, petrochemicals, agro, bio-technology and forestry. The government has identified priority areas for investment, which for resource-based clusters include: timber, agro & food processing, petrochemicals & gas, palm oil and ceramics. Non-resource- based clusters focus on shipbuilding while policy-driven clusters revolve around electronics and biotechnology.

Malaysia and Sarawak offer foreign investors some of the most attractive incentive packages in the region, with various inducements based on the sectors involved.

The Sarawak government offers extra incentives, including competitive pricing and generous rebate on the price of industrial land.

Companies eligible for Pioneer Status in Sarawak will be granted a tax exemption of 100% (normally 70%) of their statutory income. For companies eligible for the Investment Tax Allowance, the rate of allowance will be increased to a maximum of 100% (normally 75%) of the statutory income. Selected industries can also receive an infrastructure allowance of 100% of qualifying expenditures.

Manufacturing projects in Sarawak catering to the domestic market are also entitled to full import duty exemption on any raw material, components or parts which are not available in Sarawak as well as eligibility for double deduction on freight charges incurred in the export of rattan and wood-based products (except plywood, sawn timber and veneer).

High-tech industries receive Pioneer Status with a full tax exemption for statutory income for five years or an Investment Tax Allowance of 60% on qualifying capital expenditures.

Strategic industries, involving heavy capital investments with long gestation periods, can receive Pioneer Status with full tax exemption of statutory income for 10 years or an Investment Tax Allowance of 100% on qualifying capital expenditure incurred within five years.

There are also incentives for Research & Development companies, those involved in the wood-based, textile, machinery and engineering sectors, small-scale companies and companies dealing with storage, treatment and disposal of toxic and hazardous wastes.

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Reading Time: 2 minutes

Since the middle of the previous decade, Sarawak has experienced a period of sustained economic growth, riding out the global credit crisis and charting a course that it hopes will result in high-income status by 2020.

Reading Time: 2 minutes

Since the middle of the previous decade, Sarawak has experienced a period of sustained economic growth, riding out the global credit crisis and charting a course that it hopes will result in high-income status by 2020.

In 2010, Sarawak experienced solid economic growth despite the global credit crisis. Its Gross Domestic Product reportedly increased by 5.4 per cent and is set to hit 6.8 per cent in 2011 in line with federal government targets. Public investment rose 18.9 per cent.

According to the Sarawak government, the state’s economic fundamentals are strong. Growth remained steady from 2005 through 2008 at between 5.0 and 5.8 per cent before slowing in 2009, despite Sarawak receiving the largest share of Foreign Direct Investment of all 13 Malaysian states that year.

The impressive growth record in recent years is credited to the comprehensive economic reform policies enacted by the government in 2006, which factored in the 2008 launch of (SCORE) Sarawak Corridor of Renewable Energy.

In addition to its key economic development plans, the economy is set to grow further in the coming years as foreign investors eye potentially lucrative projects in heavy industries, energy, halal food and services and traditional Sarawak sectors such as timber, palm oil, natural gas and agriculture.

Improvements to infrastructure, road network, upgrades to major ports, and greater penetration of internet and technological advancements means Sarawak offers a host of investment opportunities for foreign entities eager to take advantage of this bustling part of the world.

And because of its vast reserves of natural resources, Sarawak offers strong potential for investment in petroleum, petrochemicals, agro, bio-technology and forestry. The government has identified priority areas for investment, which for resource-based clusters include: timber, agro & food processing, petrochemicals & gas, palm oil and ceramics. Non-resource- based clusters focus on shipbuilding while policy-driven clusters revolve around electronics and biotechnology.

Malaysia and Sarawak offer foreign investors some of the most attractive incentive packages in the region, with various inducements based on the sectors involved.

The Sarawak government offers extra incentives, including competitive pricing and generous rebate on the price of industrial land.

Companies eligible for Pioneer Status in Sarawak will be granted a tax exemption of 100% (normally 70%) of their statutory income. For companies eligible for the Investment Tax Allowance, the rate of allowance will be increased to a maximum of 100% (normally 75%) of the statutory income. Selected industries can also receive an infrastructure allowance of 100% of qualifying expenditures.

Manufacturing projects in Sarawak catering to the domestic market are also entitled to full import duty exemption on any raw material, components or parts which are not available in Sarawak as well as eligibility for double deduction on freight charges incurred in the export of rattan and wood-based products (except plywood, sawn timber and veneer).

High-tech industries receive Pioneer Status with a full tax exemption for statutory income for five years or an Investment Tax Allowance of 60% on qualifying capital expenditures.

Strategic industries, involving heavy capital investments with long gestation periods, can receive Pioneer Status with full tax exemption of statutory income for 10 years or an Investment Tax Allowance of 100% on qualifying capital expenditure incurred within five years.

There are also incentives for Research & Development companies, those involved in the wood-based, textile, machinery and engineering sectors, small-scale companies and companies dealing with storage, treatment and disposal of toxic and hazardous wastes.

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