Indepth study on tax plan for Iskandar knowledge workers

30 November 2009 , By The Star

The Federal Government is currently conducting an indepth study on the implementation of the 15% income tax rate for knowledge workers in Iskandar Malaysia.
Iskandar Regional Development Authority (Irda) chief executive officer Harun Johari said the decision makers included the Finance Ministry, Economic Planning Unit and Inland Revenue Board.
“Once they have completed the study, it will be presented to the Cabinet which would table it in Parliament at the next sitting, probably in the first quarter of 2010,’’ he said in an interview with StarBizWeek.
Harun said a new Bill needed to be passed before the 15% income tax rate proposed by Prime Minister Datuk Seri Najib Tun Razak when presenting Budget 2010 could be implemented.
Under the proposal, Malaysian and foreign knowledge workers residing and working in qualifying activities in Iskandar would enjoy the tax regime of 15%.
Those eligible for the cut must be engaged in qualifying activities – green technology, biotechnology, educational services, healthcare, creative industry, financial advisory, consultancy services, logistic services and tourism.
The incentive will be available for knowledge workers who apply for and commence employment in Iskandar between Oct 24, 2009 and Dec 31, 2015.
Harun said the scope of study included the definition of knowledge workers, income bracket and how it would be implemented once the Bill was passed.

He said many were wondering whether those already engaged in these activities in Iskandar qualified for the tax cut.

“We, the stakeholders of Iskandar are not involved in the study and we are not the decision makers but we do give our views when asked,’’ said Harun.

He said the tax cut regime reflected the seriousness of the Federal Government to further facilitate the achievement of Iskandar’s vision of a strong and sustainable metropolis of international standing.

Launched on Nov 4, 2006, Iskandar Malaysia spans over 2,217 sq km on the southernmost part of Johor with five flagship development zones – JB City Centre, Nusajaya, Western Gate Development, Eastern Gate Development and Senai-Skudai.

Irda is the regulatory authority involves in planning, promoting and facilitating the development of Iskandar; other stakeholders include Johor government, Iskandar Investment Bhd, UEM Land Holdings Bhd and Iskandar Waterfront Development Sdn Bhd.
Meanwhile, Port of Tanjung Pelepas (PTP) chairman and Senai Airport Terminal Services Sdn Bhd chief executive officer Datuk Mohd Sidik Shaik Osman said the Government was making a right move with the tax cut.

He said the incentive would attract the best brains and talents not only from Malaysia, but also from all over the world.

Sidik praised the Government’s foresight and generosity to include logistics services as one of the qualifying activities.

“One way or another it will help transform Johor into a major regional logistics hub,’’ he said in a telephone interview from Kuala Lumpur.

Sidik said an efficient logistics infrastructure in Johor, particularly in Iskandar, would make the economic growth corridor more attractive to potential investors.

PTP, together with Johor Port and Senai Airport, have been identified as the axis for the development of logistics services within south Johor.

Sidik said with the world becoming borderless, Malaysia needed not only local talents but also experts and the best brains from all over the world in nation building.

He recalled that when PTP was set up in 2000, the port had to hire most of its executives and senior managers from Kuala Lumpur as Johor did not have enough suitable workforce.

However, Sidik said the 15% income tax cut rate was not “fully adequate” to attract knowledge workers as talented and highly qualified people had high expectations that must be met before they would start packing and come to Iskandar.

These included good safety and security, good educational facilities for their children, medical facilities, up-market retail outlets, good transport network, arts and culture, fast broadband services, uninterrupted utilities such as power supply, water and telecommunications.

“The stakeholders of Iskandar need to look into all these and must improve on the delivery system and the execution process or else we will lose out to others in the region,’’ he said.

UEM Land Holdings Bhd is delighted that the Federal Government included the biotechnology among the sectors to qualify for the income tax incentive.

Strategic marketing and corporate communications director Zulkifli Tahmali said the timing was right in view of the company’s venture into the biotechnology sector.

UEM Land and Malaysian Biotechnology Corp Bhd (BiotechCorp) had formed a joint-venture company this year to undertake the development of a biotech park project. Known as BioXCell, the project occupies a 32.37ha site in the 526.1ha Southern Industrial and Logistics Clusters in Nusajaya that UEM Land is developing as a clean and green and managed industrial park.

Zulkifli said UEM Land, as master developer of the 9,600ha Nusajaya, would focus only on its developmental expertise and the management project and facilities.

BiotechCorp, on the other hand, would bring in the biotech expertise, marketing, regulating and offer incentives to local and foreign biotech companies.

“The tax cut adds value (to the efforts) to attract the best biotech talents – consultants, researchers and scientists – from all over theworld to reside and work in Iskandar,’’ Zulkifli said.

He said the economic spillover for the local economy would be tremendous as these highly skilled workers with their high income would spend on properties, consumer goods, vehicles and services.