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Petronas can fast track corridorPetronas can fast track corridorBy ELAINE ANG NATIONAL oil company Petroliam Nasional Bhd's (Petronas) task of spearheading the development of the eastern corridor – which is rich in oil and gas (O&G) resources – is seen as a good fit by the investment fraternity. The eastern corridor encompasses Kelantan, northern Terengganu and western Pahang. The development of the eastern corridor, together with the northern and southern corridors are part of the Ninth Malaysia Plan (9MP), which has the objective of spreading economic development throughout the country instead of only in populated city centres. Under the 9MP, eastern region states will be given an allocation of RM22.3bil. RAM Consultancy Services Sdn Bhd managing director and chief economist Dr Yeah Kim Leng said it would be a natural fit for Petronas to turn the eastern corridor into an investment and industrial zone for O&G processing activities and the development of downstream petrochemical industries given its mission to fully develop and maximise the socio-economic benefits of the country's O&G resources. “As one of the world's most successful and well-managed national oil companies, Petronas has the ability and most importantly, the internal financing capacity to fund the corridor's goals given its accumulated reserves, successful overseas investments and strong revenue flows from the high oil prices over the last several years,” he said. Depending on the development strategy, Yeah reckoned part of the capital could be in the form of private domestic and foreign capital attracted to set up industries and businesses in the corridor. “This 'crowding in' strategy, I believe, is crucial given the development gap between the eastern corridor states and the other corridors. Foreign investors would be lured to the corridor if it possesses a conducive investment climate and first class supporting infrastructure, facilities, incentives and resources,” he said. Yeah felt activities to be promoted could include the setting up of research and development facilities, training and supporting services focused on supplying and exporting world class technology, managerial expertise and project management services for upstream exploration, downstream manufacturing and alternative energy research and conservation. “The O&G processing and petrochemical industries are already thriving in Gebeng and Kertih. Additional refining capacities and other downstream activities, logistics and ancillary services could be expanded to cover the three states,” he said. OSK Investment Research senior manager Chris Eng concurred. He noted that Petronas should focus on getting more foreign direct investments in terms of partnerships to build further petrochemical plants in the Kertih and Gebeng centres. “That should have the greatest multiplier effect. Building up the Kemaman supply base would be good too in addition to enhancing the infrastructure of the area. “For example, I believe there is a shopping complex coming up in Kertih so that the local populace can benefit from the commercial angle,” he said. He noted that the ports at the corridor could also be beefed up. Citing an example, Eng said O&G players were using Kuantan port to bring in their raw materials and to export their products. There are also a number of steel mills around Kuantan. Aside from the steel mills, development at the corridor is concentrated around the petrochemical plants in Kertih and Gebeng and also the O&G facilities supporting the industry, offshore Terengganu. Eng believes one of the major challenges for Petronas includes getting people to set up shop at the eastern corridor, which at the moment, is still viewed as largely ‘sleepy.’ He suggested providing competing lease rates and utilities to challenge Jurong Island in Singapore. “Reminding investors that Malaysia is not a hotbed of terrorism is also very important as most of the global petrochemical players are US-based and this is an issue they think deeply about. “More incentives can be given for O&G players to set up facilities in the eastern corridor through the improvement of infrastructure, roads and port facilities. “I believe land is quite plentiful. More commercial facilities will need to be set up to support these industries,” Eng said. An industry observer commented that Petronas had laid the foundation in developing the eastern corridor and it was up to the O&G related companies to take advantage of what was available. “The building block has been put in place, namely the RM70bil Petronas Petroleum Industry Complex (PPIC),” he said. The PPIC, covering 4,000ha, is a world-class integrated complex housing more than 40 petroleum-based installations and supporting plants. Facilities in the complex include an oil refinery with condensate splitter, six gas processing plants, 11 gas-based petrochemical plants and five ancillary facilities. “Besides Petronas, other companies, especially those in the O&G industry and manufacturing business, can also set up shop there. “I believe Petronas’ main role going forward would be to come up with recommendations or input to attract more businesses to the corridor,” the observer said Source : The Star (Business) - 22nd May 06 |
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EASTERN CORRIDOR INCENTIVE
PIONEER STATUS 85% tax exemption for statutory income INVESTMENT TAX ALLOWANCE (ITA) 80% allowance on capital expenditure EXPENDITURE ON INFRASTRUCTURE 100% infrastructure allowance 5 YEARS EXEMPTION ON IMPORT DUTY 100% exemption on import of raw material/component parts for local market ELIGIBLE FOR 2ND. ROUND PIONEER STATUS / ITA |
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http://www.townplan.gov.my/englis...0Corridor%20Economic%20Region.pdf
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http://www.koko.gov.my/lkm/loader.cfm?page=Industry/Incentive.cfm
Incentives for Manufacturing Sector 1. Pioneer Status 1.1 A company granted Pioneer Status enjoys a 5-year partial exemption from the payment of income tax. It pays tax on 30% of its statutory income*, with the exemption period commencing from its Production Day (defined as the day its production level reaches 30% of its capacity). 1.2 To encourage investment in the promoted areas i.e. the States of Sabah and Sarawak and the designated "Eastern Corridor"+ of Peninsular Malaysia, applications received from 13 September 2003 from companies located in these areas will enjoy a 100% tax exemption on their statutory income during their 5-year exemption period. Companies which have been granted approval for this incentive but have not commenced commercial production, or applications under mconsideration, are also eligible. All project applications received by 31 December 2005 will be eligible for this enhanced incentive. 1.3 Applications for Pioneer Status should be submitted to the Malaysian Industrial Development Authority (MIDA). * Statutory Income is derived after deducting revenue expenditure and capital allowances from the gross income. + The "Eastern Corridor" of Peninsular Malaysia covers the States of Kelantan, Terengganu and Pahang, and the district of Mersing in the State of Johor. 2. Investment Tax Allowance 2.1 As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA). A company granted ITA gets an allowance of 60% on its qualifying capital expenditure (such as factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date on which the first qualifying capital expenditure is incurred. 2.2 The company can offset this allowance against 70% of its statutory income for each year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised. The remaining 30% of its statutory income will be taxed at the prevailing company tax rate. 2.3 To encourage investment in the promoted areas i.e. the States of Sabah and Sarawak and the designated "Eastern Corridor" of Peninsular Malaysia, applications received from 13 September 2003 from companies located in these areas will enjoy an allowance of 100% on the qualifying capital expenditure incurred within a period of five years. The allowance can be utilised to offset against 100% of the statutory income for each year of assessment. Companies which have been granted approval for this incentive but have not commenced commercial production, or applications under consideration, are also eligible. All project applications received by 31 December 2005 will be eligible for this enhanced incentive. 2.4 Applications should be submitted to MIDA 3. Reinvestment Allowance 3.1 A manufacturing company that has been in operation for at least 12 months and incurs qualifying capital expenditure to expand, modernize or automate its existing business or diversify its existing business into any related products within the same industry can apply for Reinvestment Allowance (RA). 3.2 The RA is given at the rate of 60% on the qualifying capital expenditure incurred by the company, and can be offset against 70% of its statutory income for the year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised. 3.3 A company can offset the RA against 100% of its statutory income for the year of assessment if: (i) The company undertakes reinvestment projects in the promoted areas i.e. the States of Sabah,Sarawak and the designated "Eastern Corridor" of Peninsular Malaysia; or (ii) The company attains a productivity level exceeding the level determined by the Ministry of Finance. For further details on the prescribed productivity level for each sub-sector, please contact the Inland Revenue Board (see Useful Addresses - Relevant Organisations). 3.4 The RA will be given for a period of 15 consecutive years beginning from the year the first reinvestment is made. Companies can only claim the RA upon the completion of the qualifying project, i.e. after the building is completed or when the plant/machinery is put to operational use. Assets acquired for the reinvestment cannot be disposed of within a period of two years from the time of the reinvestment. 3.5 Effective from 21 September 2002, a company that intends to reinvest before the expiry of its Pioneer Status can surrender its Pioneer Status for cancellation and be eligible for RA. 3.6 Applications for RA should be submitted to the Inland Revenue Board (IRB), while applications for the surrender of Pioneer Status for RA should be submitted to MIDA. 4. Incentives for Small- and Medium- Scale Companies 4.1 Effective from the year of assessment 2003, small- and medium-scale companies with a paid-up capital of RM2.5 million and below are eligible for a reduced corporate tax of 20% on the chargeable income of up to RM100,000. The tax rate on the remaining chargeable income is maintained at 28%. Dividends distributed will be given a tax credit of 20% in the hands of the shareholders. 4.2 The threshold for chargeable income eligible for the reduced corporate tax rate of 20% is increased from RM100,000 to RM500,000 effective from the year of assessment 2004. Small-scale manufacturing companies incorporated in Malaysia with shareholders' funds not exceeding RM500,000 and having at least 60% Malaysian equity are eligible for the following incentives: (i) Pioneer Status with an income tax exemption of 100% of the statutory income for a period of five years; or (ii) Investment Tax Allowance of 60% on the qualifying capital expenditure incurred within five years. This allowance can be offset against 100% of the statutory income for each year of assessment. A sole proprietorship or partnership is eligible to apply for this incentive provided a new private limited/limited company is formed to take over the existing production/activities. 4.3 To qualify for the incentive, a small-scale company has to comply with any one of the following criteria: (i) The value added must be at least 15%; or (ii) The project contributes towards the socio-economic development of the rural population. The company shall carry out the manufacturing of products or participate in activities listed as promoted products and activities for small-scale companies |
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Incentives for Agricultural Sector
1. Pioneer Status 1.1 As in the manufacturing sector, companies producing promoted products or engaged in promoted activities are eligible for Pioneer Status. 1.2 A Pioneer Status company enjoys a partial exemption from income tax. It pays tax on 30% of its statutory income for five years, commencing from its Production Day (defined as the day of first sale of the agriculture produce). 1.3 Applications received from 13 September 2003 from companies located in the promoted areas i.e. the States of Sabah and Sarawak and the designated "Eastern Corridor" of Peninsular Malaysia, will enjoy a 100% tax exemption on their statutory income during their 5-year exemption period. Companies which have been granted approval for this incentive but have not commenced commercial production, or applications under consideration, are also eligible. All project applications received by 31 December 2005 will be eligible for this enhanced incentive. 1.4 Applications should be submitted to MIDA. 2. Investment Tax Allowance 2.1 As an alternative to Pioneer Status, companies producing promoted products or engaged in promoted activities can apply for Investment Tax Allowance (ITA). A company granted ITA is eligible for an allowance of 60% on its qualifying capital expenditure incurred within five years from the date on which the first qualifying capital expenditure is incurred. 2.2 Companies can offset this allowance against 70% of their statutory income in the year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised. The remaining 30% of the statutory income is taxed at the prevailing company tax rate. 2.3 Applications received from 13 September 2003 from companies located in the promoted areas i.e. the States of Sabah and Sarawak, and the designated "Eastern Corridor" of Peninsular Malaysia, will enjoy an allowance of 100% on the qualifying capital expenditure incurred within a period of five years. The allowance can be utilised to offset against 100% of the statutory income for each year of assessment. Companies which have been granted approval for this incentive but have not commenced commercial production, or applications under consideration, are also eligible. All project applications received by 31 December 2005 will be eligible for this enhanced incentive. 2.4 Applications should be submitted to MIDA. 2.5 To increase the benefits to agricultural projects, the government has broadened the definition of qualifying capital expenditure to include expenditure incurred on: - Clearing and preparation of land - Planting of crops - Provision of plant and machinery used in Malaysia for the purpose of crop cultivation, animal farming, aquaculture, inland fishing or deep-sea fishing, and other agricultural or pastoral pursuits - Construction of access roads including bridges, construction or purchase of buildings (including those provided for the welfare of people or as living accommodation), and structura improvements on land or other structures which are used for crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits 2.6 In view of the time lag between start-up and processing of the produce, integrated agricultural projects qualify for ITA for an additional five years for expenditure incurred for processing or manufacturing operations. 2.7 Applications should be submitted to MIDA. 3. Incentives for Food Production 3.1 Incentives for New Projects 3.1.1 To encourage food production, a company which invests in a subsidiary company engaged in food production, together with the subsidiary company, qualifies for one of the following incentive packages: Incentive Package A: a) A company which takes up a 100% equity in a subsidiary company engaged in food production receives a tax deduction equivalent to the amount of investment made in that subsidiary; and b) The subsidiary company enjoys full income tax exemption on its statutory income for 10 years commencing from the first year the company enjoys profits, in which: - losses incurred before and during the exemption period can be brought forward after the exemption period of 10 years; - dividends paid from the exempt income are exempted in the hands of the shareholders. Incentive Package B: a) A company which takes up 100% equity in a subsidiary company engaged in food production will be given group relief for the losses incurred by the subsidiary company before it records any profit, and b) The subsidiary company enjoys full income tax exemption on its statutory income for 10 years. This commences from the first year the company enjoys profits, in which: - losses incurred during the tax exemption period can be brought forward after the exemption period of 10 years; and - dividends paid from the exempt income are exempted in the hands of the shareholders. 3.1.2 The eligible food products are as approved by the Minister of Finance. These include kenaf, vegetables, fruits, herbs, spices, aquaculture, and the rearing of cattle, goats and sheep. Effective from 21 September 2002, deep-sea fishing enjoys the same incentives under packages A and B. 4. Incentives for Existing Companies which Reinvest 4.1 An existing company that reinvests in the production of the above food products also qualifies for the same incentives for a period of five years. 4.2 The food production project for both new and existing companies should commence within a year from the date the incentive is approved. Applications should be submitted to the Ministry of Agriculture by 31 December 2005. 5. Incentives for Reinvestment in Food Processing Activities 5.1 A locally-owned manufacturing company with Malaysian equity of at least 60% that reinvests in promoted food processing activities is eligible for another round of the Pioneer Status or Investment Tax Allowance (ITA) incentive. Activities located in the promoted areas, i.e. the States of Sabah, Sarawak and the "Eastern Corridor" of Peninsular Malaysia, are eligible for the Pioneer Status and ITA incentives in accordance with that given to promoted areas. 5.2 This incentive is for applications received by MIDA from 21 September 2002. 6. Additional Incentives for the Agricultural Sector 6.1 Reinvestment Allowance 6.1.1 Persons or companies engaged for at least 12 months in the production of essential food such as rice, maize, vegetables, tubers, livestock, aquatic products, and any other activities approved by the Minister of Finance can enjoy the Reinvestment Allowance (RA). 6.1.2 The qualifying capital expenditure includes expenditure incurred on: - Clearing and preparation of land - Planting of crops - Provision of plant and machinery used in Malaysia for the purpose of crop cultivation, animal farming, aquaculture, inland fishing or deep-sea fishing, and other agricultural or pastoral pursuits - Construction of access roads including bridges, construction or purchase of buildings (including those provided for the welfare of people or as living accommodation), and structural improvements on land or other structures which are used for crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits 6.1.3 The RA is in the form of an allowance of 60% of the qualifying capital expenditure incurred within a period of 15 years beginning from the year the first reinvestment is made. The allowance can be offset against 70% of the statutory income in the year of assessment. Untilised allowances can be carried forward to the following years until fully utilised. Companies that undertake reinvestment projects in the promoted areas i.e. the States of Sabah, Sarawak and the designated "Eastern Corridor" of Peninsular Malaysia, can offset the allowance fully against their statutory income for that year of assessment. 6.1.4 Claims should be submitted to the IRB. 7. Reinvestment Incentives for Resource-Based Industries 7.1 This incentive is offered to companies that are at least 51% Malaysian-owned and are in the rubber, oil palm and wood-based industries producing products which have export potential.Companies in these industries reinvesting for expansion purposes are eligible for another round of Pioneer Status or Investment Tax Allowance (ITA). Activities located in the promoted areas i.e. the States of Sabah, Sarawak and the designated "Eastern Corridor" of Peninsular Malaysia are eligible for higher levels of exemption/ allowance under Pioneer Status or ITA in accordance with that given for promoted areas. 7.2 Applications should be submitted to MIDA. |
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Muhibbah, Favelle eye eastern corridor deals
By Sharen Kaur sharen@nstp.com.my July 10 2007 MUHIBBAH Engineering Bhd and its crane unit Favelle Favco Bhd will hold talks with Petroliam Nasional Bhd (Petronas) on the proposed RM44 billion Eastern Coastal Corridor mega project. Petronas has been given the task to spearhead the development of the corridor into an investment and industrial zone for oil- and gas-processing activities and the development of downstream petrochemical industries, as well as tourism, education and infrastructure, over 20 years. The eastern corridor encompasses Kelantan, northern Terengganu and western Pahang, and is part of the Ninth Malaysia Plan, together with the Iskandar Development Region and the Northern Corridor. "Favelle currently supplies cranes to Petronas on a large scale and we hope to ride on this to get more contracts from them," group finance director Shirleen Lee told Business Times recently. Favelle makes construction tower cranes, offshore pedestal cranes, crawler cranes and multipurpose wharf cranes for the oil and gas, infrastructure development and construction industry. According to Lee, the Muhibbah group has established a track record to be an integrated service provider to the oil and gas industry. It has built oil and gas jetties, oil terminals, bunkering facilities, storage tanks, and worked on gas pipe laying contracts, while Favelle supplies large cranes to oil and gas majors worldwide. "A petroleum hub will require all these expertise. We hope to build a good relationship with Petronas and get a bigger slice of the cake," Lee said. Muhibbah will also bid for contracts to construct storage facilities for the US$7 billion (RM24 billion) Trans-Peninsular Oil Pipeline project. OSK Investment Bank Bhd, which follows both the companies closely, has placed a "buy" call on Favelle but expects profit-taking for Muhibbah. "Some investment interest has divested from Muhibbah to Favco of late. We also see more foreign funds buying into Favco. The investments will be trickled when the company moves its listing to the mainboard soon," OSK analyst Arhnue Tan said. As for the eastern corridor, Tan said the bulk of contracts will go to Muhibbah, especially to build oil jetties, while Favelle will benefit from contracts to supply cranes. "Muhibbah and Favelle have the track record and expertise to perform and do qualify for the eastern corridor project," she said. |
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Malaysia's oil and gas sector kept 'overweight' on oil hub plan - Aseambankers
KUALA LUMPUR, Aug 03, 2007 (Thomson Financial via COMTEX) -- Aseambankers Research reiterated Friday its "overweight" rating on the Malaysian oil and gas sector after it was reported that the government will announce by year-end a development blueprint to create an oil and gas hub covering three states on the eastern corridor of Peninsula Malaysia. The New Straits Times quoted Prime Minister Abdullah Ahmad Badawi as saying the masterplan for the Eastern Corridor Development project will be announced before the end of the year. The project, which forms part of the 200 billion ringgit five-year Ninth Malaysia Plan, will cover three states, namely Kelantan, Terengganu and Pahang. The daily said state oil company Petronas has briefed the federal government about the masterplan and will soon make a presentation to the rulers of the three states for approval. "The unveiling of the Eastern Corridor Development program by year-end does not come as a surprise. We had earlier anticipated it to take place as early as in the third quarter," said Aseambankers in a note to clients. The research house, a unit of Maybank, the country's largest lender, said it foresees oil and gas companies that already have a presence in the three states to potentially benefit from the project. Among those, Aseambankers has a "buy" call on Petronas Gas, Dialog and Eastern Pacific Industrial Corp (EPIC). Apart from proposals to upgrade existing facilities in the three states, the blueprint is likely to include new infrastructure development as well, the brokerage said. At 10.00 am, Petronas Gas was up 10 sen or 0.9 percent at 11.10 ringgit, Dialog gained two sen or 1.1 percent to 1.90 ringgit and EPIC added three sen or 1.1 percent to 2.87 ringgit. (1 US dollar = 3.46 ringgit) |
| The Inquisitor |
obmar,
Has your country studied the effects of establishing Bolivarian Circles in your nation? The results of the Anarchical factories in Argentina are also promising. |
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What are those, TI. any links? |
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August 26, 2007 23:07 PM
East Coast Economic Corridor For Post-Aidilfitri Launch KUALA TERENGGANU, Aug 26 (Bernama) -- Prime Minister Datuk Seri Abdullah Ahmad Badawi Sunday asked Kelantan, Terengganu and Pahang to be prepared for development under the East Coast Economic Corridor (ECEC) plan to be launched after the Hari Raya Aidilfitri in mid-October. In giving the reminder, he said the ECEC plan was ready and would be presented to the sultans of the three states for their consent after the festival. "The East Coast Economic Corridor will be launched after the Hari Raya (Aidilfitri). The development must proceed; it cannot be postponed. The plan is ready," he told reporters after closing the Terengganu Barisan Nasional (BN) convention in Pulau Duyong near here. Abdullah was accompanied by his wife, Datin Seri Jeanne Abdullah. Also present were Terengganu Menteri Besar Datuk Seri Idris Jusoh and his wife, Toh Puan Che Kamariah Zakaria. The prime minister had launched the Iskandar Development Region (IDR) in Johor early this year and the Northern Corridor Economic Region (NCER), covering Perlis, Kedah, Penang and Perak, last month. Earlier, in his speech, Abdullah said all quarters including the state administrations should be streamlined to ensure that the development projects under the corridor plan really benefited the people. He said the success of development programmes in the states depended greatly on the public sector services and, as such, the capability of the sector should be at its highest level. He also said that all procedures that could delay the implementation of the development programmes should be reduced so that they could be carried out well and effectively. Abdullah said he was convinced that the implementation of the corridor plan would intensify development in the three states and improve their economic status. On development in Terengganu, he said more development programmes would be implemented, even projects hitherto unseen by the people of the state. Abdullah said the development would bring about a social and economic transformation, adding that this reflected the determination and commitment of the government in developing the state as envisaged in the BN manifesto of the last general election. "I hope the people will be able to discern the determination and sincerity of the government in developing Terengganu. At the same time, the people should also play their role so that the projects could be implemented quickly and effectively," he said. He also said that all problems be resolved immediately so that the development projects would not get stalled. On another matter, Abdullah reminded all BN component parties to adhere to the consensus approach in their discussions to ensure that solidarity reigned supreme in the coalition. He said quarrelling among themselves and voicing their dissatisfaction through the media were not the way out of problems, and would only reflect a weakness on the part of the coalition. Abdullah said he was confident the BN would continue to receive the support of the people of Terengganu in the next general election because much development has been brought to the state since the BN regained power there in the last general election, in 2004. "I am not worried (about the BN position in Terengganu) because I believe the people will continue to support the BN as they are seeing the changes for the better," he said. He said Terengganu would eventually emerge as a BN stronghold. At the event, Abdullah received a list of the resolutions of the convention, which was presented to him by the Member of Parliament for Kuala Terengganu, Datuk Razali Ismail. After the function, Abdullah returned to the federal capital. He will return to Terengganu tomorrow morning to launch the national-level Farmers, Livestock Breeders and Fishermen's Day 2007 here. Meanwhile, Jeanne is scheduled to attend a dinner organised by the Terengganu Association of Wives of Elected Representatives (Serikandi) here. -- BERNAMA |