Malaysia MDEC to introduce new Malaysia Digital incentives

Malaysia Digital Economy Corporation () under the newly established Ministry of Digital in Malaysia said it will introduce new Malaysia Digital (MD) tax in May to boost the country's digital leadership.

MDEC said in a statement on Thursday that the tax is offering a wider range of incentives for both MD Status companies and existing MSC companies, including non-intellectual property (IP) tax allowance, IP tax allowance, and investment tax allowance.

These incentives will be jointly announced with the Ministry of Digital, Ministry of International Trade and Industry (MITI) and the Ministry of Finance (MOF), said MDEC.

MDEC said it will also enhance and faster MD approvals by expediting the approval process for both MD status and foreign knowledge worker (FKW) applications.

The agency will also provide PeMangkinMD national e-invoicing initiative which is jointly led by MDEC and Lembaga Hasil Dalam Negeri (LHDN) to empower businesses of all sizes to embrace digitalization and streamline financial processes.

MDEC also aligns with the upcoming National MSMEs Digitalization Roadmap (NMD2030), designed to accelerate sustainable growth for Micro, Small and Medium Enterprises (MSMEs).

Apart from that, MDEC will also organize Malaysia Digital Expo (MDX 2024) on October 24-25.

This key event will be organized by MDEC, showcasing cutting-edge digital initiatives, programs, and opportunities.

MDEC will also provide global exposure and smart city initiatives. It will participate in the Smart City World Expo World Congress in Barcelona and host its satellite event Smart City Kuala Lumpur 2025 as part of the events happening while Malaysia assumes the ASEAN Chairmanship in 2025.

The agency also focuses on artificial intelligence (AI) adoption. Aligning with the New Industrial Master Plan (NIMP 2030), it will spearhead efforts to promote AI adoption in the country.

MDEC is also undergoing internal transformation by enhancing governance and streamlining processes while prioritizing industry environmental, social, and governance (ESG) standards.

Looking ahead, MDEC said it is committed to advancing Malaysia towards becoming a global digital powerhouse, driving innovation, and fostering inclusive growth for all stakeholders, positioning the country as the preferred digital hub of ASEAN.

According to the statement, digital investment in Malaysia skyrocketed to a total MYR 46.22 billion ($9.77 billion), exceeding 2023 targets by a staggering 154 percent.

This impressive growth is fuelled by the presence of 256 companies, including industry giants like Amazon Web Services (AWS), Siemens Energy, American Express, AIA Group Limited, VOX, Deloitte, and Grab.

Info tech cluster recorded the highest digital investment at 53 percent, followed by global business service (GBS) at 26 percent, data center and cloud at 13 percent and creative content and tech at 8 percent.

These companies are establishing significant footholds in Malaysia's digital services sector, amplifying the nation's digital capabilities, according to MDEC.

This achievement is part of 2023 investment announcements by the Ministry of International Trade and Industry (MITI) under the Digital Investment Office (DIO) initiative.

The growth in investment is also creating exciting job opportunities. Over 22,000 high-value jobs were created in 2023, marking a significant 36 percent increase compared to 2021.

GBS cluster recorded the highest number of jobs created at 51 percent, followed by info tech at 38 percent, creative content and technologies at 6 percent and data center and cloud at 5 percent.

MDEC said this highlights its commitment to empowering talent and fostering a robust digital workforce.

Meanwhile, MD status companies are not only thriving domestically but also making waves on the global stage.

Digital exports from these companies reached MYR 3.18 billion ($670 million) in 2023, with a presence in 17 countries. The top three destinations include Indonesia, Philippines, and Thailand.

Additionally, revenue generated by the MD status companies reached MYR 8.87 billion ($1.88 billion), exceeding targets by 118 percent.

This robust growth is a testament to a healthy and thriving Malaysia's digital ecosystem, said MDEC.

“MD succeeds the Multimedia Super Corridor (MSC) by offering a more inclusive, flexible, and efficient framework,

“MD decouples its MD Status from incentives, allowing companies to choose the specific facilitations they require,” said Ts. Mahadhir Aziz, Chief Executive Officer of MDEC.

According to him, this flexibility empowers businesses to tailor their digital transformation journey for optimal success.

Additionally, he said MD has no location requirement, allowing companies to operate and thrive across Malaysia.

He said the firm is also streamlining approvals and continuously refreshing the bill of guarantees (BoG) to ensure it remains competitive and addresses current industry needs.

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