The allocation of RM1 billion for high technology and high value-added investment incentive packages in Budget 2021 will ensure that Malaysia remains competitive in the global supply chain by maintaining the supply chain ecosystem and protecting high-skilled jobs, said Knight Frank Malaysia. 

In a statement, the independent global property consultancy said the fund would also support research and development (R&D) in aerospace, as well as electronic clusters. 

Additionally, Bank Negara Malaysia will provide an additional RM500 million for the High Technology Fund to support high-tech and innovative companies. 

"The extension of the Principal Hub incentive with relaxed conditions, coupled with the expansion and extension of existing tax incentives to cover more selected services under the Short-Term Economic Recovery Plan will continue to attract companies and manufacturers to relocate and invest in Malaysia," said its executive director of capital markets, Allan Sim. 

Aside from the government’s concerted efforts to shift the country’s manufacturing base towards higher value chain services, he said the industry should appreciate what the government is trying to do on a larger scale - which is to position Malaysia as a global supply chain hub.

Interesting proposals and measures in Budget 2021 that give a glean on this bigger perspective are the introduction of new tax incentive for the establishment of a global trading centre and increase the limit for value-added and additional activities carried out in Free Industrial Zone and Licensed Manufacturing Warehouse to 40% of the total annual sales value, from the original 10% threshold.

The measures also include the expansion of the Authorised Economic Operator platform to logistics service providers and approved warehouse operators and improvement of industrial park infrastructure and Internet connectivity.

“Moving forward, we expect to see more focus on high-tech industrial parks, with the potential for the government to spearhead the development of infrastructure and platform for this new breed of industrial parks.

“This will act as a stepping stone for Malaysia to achieve its objective in creating a high-tech and Internet-centric environment to cater for the targeted industry players,” Sim added.