Malaysia will review technology incentives
International Herald Tribune
September 11, 2005
Stephanie Phang

KUALA LUMPUR Malaysia will review incentives offered to technology companies in its Multimedia Super Corridor, improve financing and train more workers to lift investment in the area, according to Prime Minister Abdullah Ahmad Badawi.
 
"In order to further enhance the competitiveness and attractiveness of the MSC, we will continue to strengthen the supporting environment for information and communication technology," Abdullah said in a speech posted on his Web site. The speech was delivered last week at the opening of a meeting of advisers for the technology area.
 
The government is trying to promote investment in technology, services, biotechnology and other areas to help Malaysia, which has Southeast Asia's third-largest economy, sustain growth amid rising competition for manufacturing investments from China and other low-cost countries.
 
Companies submitted plans last year to invest 29.3 billion ringgit, or $7.8 billion, in Malaysia's manufacturing industry, compared with a revised 25.6 billion ringgit a year earlier. China, the world's seventh-largest economy, attracted a record $60.6 billion from foreign investors last year, as companies tapped low labor costs and a market of 1.3 billion consumers in China.
 
The Multimedia Super Corridor, introduced in 1996 by Mahathir bin Mohamad, then the prime minister, is an attempt to create a high-technology area similar to Silicon Valley by using tax breaks and other incentives to encourage companies to set up research and development and other operations. It aims to attract overseas and local technology companies to develop new products and services.
 
Companies in the Super Corridor recorded sales of $1.6 billion in 2004, Abdullah said. Malaysia's information and communication technology industry grew 8.3 percent last year, faster than the economy, and spending by the industry is forecast to increase 10 percent by 2008 from $2.5 billion in 2003.
 
The original area stretched from the Petronas Twin Towers in Kuala Lumpur to the international airport, and included the administrative capital, Putrajaya, and a technology center in Cyberjaya. Abdullah, who replaced Mahathir as prime minister in 2003, expanded the corridor north to include an electronics manufacturing center in Bayan Lepas, Penang.
 
Malaysia will update the package of incentives that it offers to companies in the Super Corridor and set up a talent development institute to train workers needed by companies in the area, he said in the speech. The government will also improve financing, especially to start-up companies and to small- and medium-sized companies, he said.

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