KL could extend tax breaks for key foreign investment: Mahathir

(From left) China's Ambassador to Malaysia Bai Tian, Alibaba founder Jack Ma, Malaysian Finance Minister Lim Guan Eng and Malaysian Communications and Multimedia Minister Gobind Singh Deo at the opening of Alibaba Group's office in Kuala Lumpur on Mo
(From left) China's Ambassador to Malaysia Bai Tian, Alibaba founder Jack Ma, Malaysian Finance Minister Lim Guan Eng and Malaysian Communications and Multimedia Minister Gobind Singh Deo at the opening of Alibaba Group's office in Kuala Lumpur on Monday. The Chinese e-commerce giant is in the process of setting up a logistics hub in Malaysia.PHOTO: EPA-EFE

KUALA LUMPUR • Malaysia could extend new tax incentives for foreign investment in areas such as technology if companies promise to create better-paying jobs for Malaysians, Prime Minister Mahathir Mohamad has said.

Tun Dr Mahathir's comments on Tuesday could reassure investors in Malaysia after he started a review of major projects sanctioned by former prime minister Najib Razak, especially the ones involving Chinese companies, following an unexpected election victory last month.

Dr Mahathir told Reuters in an interview that his government would welcome investment "from China or any other country" if companies were willing to commit to projects that would create jobs for skilled workers in areas such as technology, and research and development.

"Before, we needed jobs, so people who had huge assembly lines employing manual labour, they were welcome. But now, we want intellectual workers," Dr Mahathir said.

To attract investments, he said that in some cases, the government could extend tax breaks beyond 10 years, the outer limit of the tax incentives currently on offer.

Up until now, the Malaysian Investment Development Authority has allowed companies investing in the country to claim income tax breaks for between five and 10 years.

"Already, we are willing to forego tax for 10 years and maybe more than that," Dr Mahathir said. "We can give them whatever incentive we can afford. Our main aim is to create jobs for our people."

As an example of the kind of investment the new government wanted to see, he cited Alibaba Group's opening of an office in Malaysia this week.

China's e-commerce giant is in the process of setting up a logistics hub in Malaysia.

Alibaba founder Jack Ma, who was in Kuala Lumpur for the opening on Monday, met Dr Mahathir and discussed the potential to use Malaysia as a manufacturing hub for export back to China, said the Malaysian leader.

"He has good ideas about how to help Malaysia produce goods for export to China," Dr Mahathir said.

Since winning the election six weeks ago, he has called for the review of several projects signed by the Najib administration.

He has said that Malaysia will renegotiate a US$14 billion (S$19 billion) deal for a domestic rail project that is being developed by Chinese companies, saying the terms are damaging for Malaysia. He has also cancelled a high-speed rail link with Singapore for now.

Dr Mahathir told Reuters that Malaysia has had to review Chinese investments as Malaysian contractors did not get a fair share and Malaysians were not employed.

He said he was confident that Japan, which he visited earlier this month, would invest more in Malaysia.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 21, 2018, with the headline 'KL could extend tax breaks for key foreign investment: Mahathir'. Print Edition | Subscribe