Federal government tax incentive poised to galvanise investment momentum in Sabah

KOTA KINABALU: The recent decision by the Federal Government in approving a special Investment Incentive Package for the Sabah Development Corridor (SDC) is poised to further intensify the investment momentum in the state.

Describing the announcement of the incentive as timely, Sabah Chief Minister Datuk Seri Musa Aman said the package would cover activities in, among others, the tourism, manufacturing and agriculture sectors and major industries.

These incentives are available for investment in designated Strategic Development areas, clusters and flagship projects including the Kinabalu Gold Coast Enclave, Sabah Agro-Industrial Precinct (SAIP), Sandakan Education Hub, Sabah Oil and Gas Industrial Park (SOGIP), Interior Livestock Valley, Marine Integrated Cluster and the Lahad Datu Palm Oil Industrial Cluster (POIC), he said.
“The incentives will vary based on the focus areas, offering incentives such as full tax exemption on statutory income for up to 10 years, investment tax allowance of 100 per cent on qualifying capital expenditure for five years, and full exemption on import duty and sales tax exemption, subject to current policy.
“The period for tax incentives is for applications received by the Sabah Economic Development & Investment Authority (SEDIA) up until Dec 31, 2020,” he said in his speech at the 12th meeting of members of SEDIA at Wisma SEDIA near here today.
His speech was read by Sabah Deputy Chief Minister Tan Sri Joseph Pairin Kitingan.
Musa, who is also chairman of SEDIA, said the state and national budgets for 2013 would further intensify the development momentum in Sabah.
He said the state government had provided a higher allocation for the year 2013 as compared to the 2012 budget. “The 2013 Budget Strategy has been planned and formulated with emphasis on efforts that will ensure continuous prosperity and the people’s well-being in line with the 2013 Budget theme, ‘Consolidated Efforts Towards Continuous Prosperity Of The People’.
“The Supply Expenditure for the year 2013 is the biggest in the State’s budget financial history totalling RM4.088 billion,” he said.
Musa said Sabah is a blessed state located along the maritime silk route linking the vibrant East Asian economies to the rest of the world.
Sabah has the potential to leverage on its strategic position to link the rapidly growing BIMP-EAGA sub-region to the dynamic North East Asian economies, he added.
“Its economy recorded an average growth of 5.3 per cent between 2007 and 2010, which is 1.1 per cent higher than the national growth rate over the same period.
“We are expecting the State’s economic growth to be resilient in the face of global economic uncertainties, expanding at about five to six per cent.
“I believe the measures introduced in aligning the SDC with the Economic Transformation Programme (ETP), Government Transformation Programme (GTP) and the 10th Malaysia Plan coupled with the progress made in the implementation of SDC projects, especially the SDC Flagship Projects such as the POICs in Sandakan and Lahad Datu, Sandakan Education Hub, Oil and Gas Clusters, Keningau Integrated Livestock Centre, Kinabalu Gold Coast Enclave, Sabah Agro-Industrial Precinct and Agropolitan Projects, have succeeded in boosting business confidence in Sabah,” he said.
He said these developments had encouraged more private investors to consider participating in new investment projects, Entry Point Projects (EPPs) and Public-Private Partnerships (PPPs) in Sabah.
Musa noted with satisfaction that Sabah had also emerged as one of the top investment destinations in Malaysia, which itself had emerged as one of the world’s top 10 Foreign Direct Investment destinations.
“It is however important to recognise that our ability to continue attracting investments is dependent on our ability to provide the right quality of human capital, more so as we move to become more knowledge-intensive. Human capital development, apart from being a crucial factor in driving our economy and achieving the target to become a high-income and developed nation, is clearly one of the key determinants to attract private investment as this will be one of the major considerations of investors.
“As SDC has attracted an impressive amount of private investment, at about RM114 billion since its launch in 2008, it is therefore important to ensure that there is a sufficient pool of human resources with the required skills to meet the manpower requirements of the investors,” he said. – BERNAMA