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| SABAH
INVESTMENT INCENTIVES & POLICIES |
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Manufacturing |
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The
Industrial Co-ordination Act 1975 (ICA)
The objective of the Industrial Co-ordination
Act 1975 (ICA) is to ensure orderly development and growth in the
manufacturing sector. The ICA requires person(s) engaging in any manufacturing
activity to obtain a license from the Licensing Officer in respect
of such manufacturing activity. Only manufacturing companies with
shareholders’ funds of RM2.5 million and above or engaging 75 or more
full-time employees need to apply for a license under the ICA. All
applications for manufacturing licenses should be made in the prescribed
form to the Director-General of the Malaysian Industrial Development
Authority (MIDA) in Kuala Lumpur, Malaysia. MIDA, is the Government’s
principal agency for the promotion and coordination of industrial
development in Malaysia.
The relevant definitions in the ICA are as follows
The Licensing Officer is the Secretary-General
of the Ministry of International Trade and Industry (MITI).
Manufacturing activity means the making, altering, blending, ornamenting,
finishing or otherwise treating or adapting any article or substance
with a view to its use, sale, transport, delivery or disposal and
includes the assembly of parts and ship repairing but shall not include
any activity normally associated with retail or wholesale trade.
Shareholders’ funds means the aggregate amount of a company’s paid-up
capital (in respect to preference shares and ordinary shares and not
including any amount in respect of bonus shares to the extent they
were issued out of capital reserve created by revaluation of fixed
assets), reserves (other than any capital reserve which was created
by revaluation of fixed assets and provisions for depreciation, renewals
or replacements and diminution in value of assets), balance of share
premium account (not including any amount credited therein at the
instance of issuing bonus shares at premium out of capital reserve
by revaluation of fixed assets) and balance of profit and loss appropriation
account.
Full-time paid employees mean all persons normally working in the
establishment for at least six hours a day and at least 20 days a
month for 12 months during the year and who receive a salary. Persons
such as traveling sales, engineering, maintenance and repair personnel,
or who are paid by and are under the control of the establishment,
are also included. Full-time paid employees also include directors
of incorporated enterprises except those paid solely for the attendance
at Board of Directors meetings. Family workers who receive regular
salaries or allowances and who contribute to the Employees Provident
Fund (EPF) or other superannuation funds are also included in the
definition. |
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Guidelines
for Approval of Industrial Projects
Malaysia’s rapid industrial growth over the past
decade has created a high demand for labour in the manufacturing sector.
The last few years has seen a tightening in the labour market situation.
In view of this, the Government has set down guidelines for the consideration
of industrial projects based on the Capital Investment Per Employee
(C/E) Ratio. With effect from 26 August 1995, projects with a C/E
Ratio of less than RM55, 000 will be defined as labour-intensive and
will not be considered for a manufacturing license or for tax incentives
by MITI. However, projects which fulfill one of the following criteria
will be exempted from the above guideline.
Criteria
If value-added is more than 30%.
If the Managerial, Technical and Supervisory (MTS) Index is more than
15%.
If the project undertakes activities or products listed as promoted
activities and products of high technology.
If the project is located in the Eastern Corridor of Peninsular Malaysia,
Sabah and Sarawak.
The Eastern Corridor of Peninsular Malaysia covers Kelantan, Terengganu,
Pahang, excluding the districts of Lipis, Raub, Jerantut and Cameron
Highlands (except those approved industrial estates located in these
districts), and the district of Mersing in Johor.
Expansion of Production Capacity and Diversification
of Products
An existing licensed company which proposes to
undertake an expansion of production capacity for its approved products
or a diversification to manufacture additional products is required
to submit an application for the expansion or diversification in the
prescribed form to MIDA. |
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