BEIJING, April 2 — The Malaysian Investment Development Authority (MIDA) office in China is striving to lure Chinese companies to set up their bases in Malaysia through the ‘Principal Hub’ incentive.
MIDA Consul (investment) Simon Lee Yew Weng said China’s outward foreign direct investment was on the rise globally while in ASEAN, its presence was increasingly felt.
He said Chinese investments into Malaysia had been increasing in recent years, including in the manufacturing and services sectors.
“This new incentive will meet the needs of Chinese companies going global, especially those with supply chain connectivity in the region and those involved in offshore trading and merchandising activities,” he told Bernama today.
Lee said Malaysia enjoyed very close economic, political, cultural and social links with China, and hence, MIDA believed Chinese companies would be keen to set up Malaysian bases by capitalising on the incentive to expand their business in Malaysia and the region.
He said Chinese businesses abroad would increasingly diversify into business unit management, strategic business planning, corporate finance advisory services, brand and intellectual property management, and talent management.
They would also go into corporate training and human resource management, finance and accounting, general administration, providing information technology services, bid and tender management, research and development, treasury and fund management, project management, business development, technical and supervisory support, and logistics services.
“Companies face mounting challenges to manage, coordinate and ensure that these vast activities are running effectively and efficiently from their home country.
The idea of the Principal Hub is somewhat like a control tower located in strategic overseas locations that would help alleviate these challenges, he added.
Lee said neighbouring countries like Singapore and Thailand were also trying to attract operations headquarters.
He said the Principal Hub incentive was intended not only to attract companies to make Malaysia a business hub to serve their extended operations in the region, but also to achieve its economic development objectives.
These include creating high-value jobs at the managerial, technical and professional levels, as well as encouraging the use of local ancillary services, he said, adding that, “This is a win-win situation for business and government.”
Besides offering a generous income tax exemption of between five and 10 years under the Principal Hub incentive, Malaysia fared well on lower costs and ease of doing business, and global competitiveness ranking.
This is due to the country’s excellent connectivity in terms of well-developed infrastructure and telecommunication facilities, rich and diverse population mix, good quality living accorded by affordable and excellent amenities, and a pro-business government.