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Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani


Business Times



BUDGET 2004: Biomass & R&D
KUALA LUMPUR, Sept 12: The introduction of the Supply Bill (2004)containing the Government's budget for next year as delivered by PrimeMinister Datuk Seri Dr Mahathir Mohamad at the Dewan Rakyattoday.................

80. To further strengthen the role of private sector, the Governmentproposes the following measures:

i. providing existing locally owned companies, which reinvest in theproduction of machinery and equipment, including heavy machinery andmachine tools, with the following incentives:

a. Pioneer Status with tax exemption of 70% on the increased income fromreinvestment for a period of 5 years; and

b. Investment Tax Allowance of 60% on the additional investment for aperiod of 5 years;

ii. enhancing incentives for companies producing goods using oil palmbiomass as follows:

a. increasing the rate of income tax exemption under Pioneer Status from70% for 5 years to 100% for 10 years; and

b. increasing the rate of Investment Tax Allowance from 60% to 100% for 5years;

iii. providing existing companies using oil palm biomass with thefollowing incentives:

a. Pioneer Status with tax exemption of 100% for 10 years on the increasedincome from reinvestment; and

b. Investment Tax Allowance of 100% for 5 years on additional investment;

iv. improving tax incentives for companies in Sabah, Sarawak and theeastern corridor of Peninsular Malaysia as follows:

a. increasing the rate of income tax exemption under the Pioneer Statusfrom 85% to 100%; and

b. increasing the rate of Investment Tax Allowance from 80% to 100%. Thisallowance can be fully deducted and not limited to 85% of the statutoryincome; and

v. exempting tax on income remitted from abroad by individuals, aspresently enjoyed by companies. It is hoped that this measure wouldencourage individuals to remit their income from their investments orsavings abroad for domestic investment...............

121. The Second National Science and Technology Policy was formulated toachieve R&D expenditure of at least 1.5% of GDP by 2010. Towards this end,the Government has provided substantial allocation to develop expertiseand expand R&D facilities. To continue with these efforts, a sum ofRM183.6 million is allocated for the Intensification of Research inPriority Areas (IRPA) programme, specifically for public researchinstitutions in collaboration with the private sector. In addition, threenew research institutions will be established in the BioValley, Cyberjaya,specifically in biotechnology. The Government will encourage largecompanies to locate in the BioValley to undertake contract research aspart of the efforts to further develop the services industry.

122. Our R&D efforts have contributed significantly to increases in yieldof commodities, especially oil palm and rubber. The yield of commoditiesper hectare has doubled and their maturity period shortened. Apart fromincreasing output, research institutions have also undertaken downstreamresearch, such as biodiesel from oil palm and rubber thermoplastic.

123. In the light of declining contribution of commodities to the economy,it is timely that R&D institutions refocus their efforts towards greaterdemand and market-driven R&D that emphasise value-added or value creation,with the view of commercialising their research findings. For example, theglobal market for healthcare and life sciences products and services isexpected to reach 4 trillion euros while pharmaceuticals 30 billion eurosby 2006. In Malaysia, biotechnology is still an infant industry. Althoughcurrently there are about 60 biotechnology companies, they are still smalland have yet to reach world-class status.

124. The Government will restructure SIRIM to become the focal point tomatch R&D with market demand. SIRIM will identify the requirements for newproducts and technology for both the domestic and global markets. It willalso study the whole R&D value chain to create value, including nicheactivities to be developed, such as logistics, packaging and marketing.

125. The Government through SIRIM will also identify R&D requirementsbased on market demand and match them with R&D capacity in universitiesand research institutions. As this represents a long-term investment indeveloping our local technology to produce high quality Malaysian brands,the Government will provide adequate funds for this purpose. The nationhas the expertise and capacity to undertake R&D to meet market demand. Forexample, we have more than one thousand doctorates, apart from adequatefacilities and funding for R&D.

126. To promote the commercialisation of research findings, the Governmentproposes that income received by researchers from such activity be giventax exemption of 50% for 5 years. At the same time, the Government willnot impose charges on patents registered by local researchers...................