Chuping Valley Development Plan
                   There is no common understanding of the definition of “Green”
                   around the globe. The list of criteria proposed for Lembah
                   Chuping is the result of an analysis of the various definitions of
                   “Green”, “Green jobs” and “Green, sustainable economy” as
                   used by the United Nations Environment Programme (2008)4
                   and in the European Commission’s report ‘Exploiting the
                   employment potential of green growth’ (2012)5. In addition, the
                   indicators as presented in environmental and sustainability
                   reports published by various companies are taken into
                   consideration when compiling the criteria.6
                   To be classified as a “green manufacturer” in Lembah
                   Chuping, we propose a list of five (5) criteria:
                        Reducing energy consumption and/or potentially
                        making use of clean energy sources (such as solar
                        energy) as alternative sources of power
                        Potential investors in Lembah Chuping should be focused
                        on using clean, renewable and environmental friendly
                        energy sources to power their production process. The
                        company should have policies in place to reduce the
                        energy consumption in their offices and to make the
                        employees aware of the benefits thereof for the
                        environment (and the cost-savings aspect) of reducing the
                        energy consumption in their daily life and in the office.
                        Reducing the amount of materials used and/or making
                        use of environmental-friendly commodities and
                        recycled materials
                        Reducing the amount of materials and commodities used in
                        the production process impacts the whole supply chain.
                        Not only has it a positive effect on the exhaustion of
                        resources, but it also lowers carbon emissions due to less
                        transportation, etc. In addition, potential investors in
                        Lembah Chuping should encourage their employees to
                        make use of environmental-friendly materials and recycled
                        materials to decrease their impact on the environment.
                        Reducing water consumption
                        Clean water is a scare resource. Potential investors in
                        Lembah Chuping should be aware of this and actively
                        reduce their water consumption in their production process.
                        Companies can also be water-conscious by, for example,
                        using rain water in the production process, conserve and
                        protect water resources through efficiency, reuse water,
                        etc.
4 UNEP, Green Jobs: Towards decent work in a sustainable, low-carbon world (2008)
  http://www.unep.org/PDF/UNEPGreenjobs_report08.pdf
5 European Commission, Exploiting the employment potential of green growth (2012),
  http://ec.europa.eu/social/BlobServlet?docId=7621&langId=en
6 Refer, for example, to the Environmental Reporting Guidelines as published by the Department for
  Environment, Food & Rural Affairs of the UK Government (2013),
  https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/206392/pb13944-env-
  reporting-guidance.pdf
                                                                                                                 June 2015
                                                                                                                   Page 7-3
Chuping Valley Development Plan
Minimising or altogether avoiding the generation of all
forms of waste and pollution and/or have waste
recycling policies in place
Production companies produce waste during their
operations. Potential investors in Lembah Chuping should
avoid the generation of waste or have policies in place to
reduce the generation of waste during the production
process. Moreover, the potential investors should have
policies in place to reduce pollution in order to protect the
environment.
Helping to protect biodiversity and supporting natural
ecosystems by e.g. considering the environment in the
decision-making  process  (environmental
sustainability)
Potential investors should balance the economic and
environmental impact of their decisions. In addition, they
should present themselves as having “green” as one of
their core values, as main focus point or as part of their
mission, vision and/or strategy. Being green and care for
the biodiversity should be at the heart of the organisation
and in the mind of the employees.
    The more the company meets these criteria listed, the
    more likely it can be considered a potential, green investor
    for Lembah Chuping.
Screening Potential Investors & Maintenance of the Green
Theme
Companies not only need to be Green, i.e. have
environmentally friendly operations, when they enter Lembah
Chuping to set up their businesses, they are expected, as a
minimum, to continuously maintain these Green practices
throughout their operations. To maintain this Green theme,
Lembah Chuping will need to have a set of criteria for selecting
the appropriate types of investors in accordance with the said
criteria while also implementing procedures and policies to
ensure that these Green practices are maintained; periodically
monitored consistently and upgraded when necessary. A
further elaboration of the underlying principles for investor
screening and maintenance procedures for each of the key
Green criteria are outlined below:
i) Water Consumption and Discharge
         a) Screening Criteria
                   Due to the location of Lembah Chuping as a
                   water catchment area, the primary concern is
                   for all businesses not discharge waste water
                   especially those with toxic substances in a
                   manner which will have the potential to
                          June 2015
                            Page 7-4
Chuping Valley Development Plan
         contaminate the water quality of the nearby
         Timah Tasoh dam. The standards issued by the
         United States Environment Protection Agency
         (“US EPA”) on Pollution Prevention & Control
         and the European Environment Agency (“EEA”)
         on Water Pollution are relevant guidelines for
         reference by the park’s management and
         businesses for managing this important need.
         Preserving the quality of and reducing the
         demand stress on the Timah Tasoh dam’s
         water is important because it is a significant
         source of water to residents and businesses
         near and far. Therefore, it is important for
         investors to provide the park’s management
         with a report on the nature of the waste water
         that would be generated by their operations and
         how this would be treated so as to not pollute
         the dam’s water, and substantiated track
         records of their efforts to conserve water usage
         during the past 3-5 years. The park
         management will have to assess, with the
         assistance of an independent environmental
         auditor if needed, the nature of waste water
         produced and the matter of water efficiency of
         the investors’ operations.
b) Maintenance Procedures
         The park’s management will continuously
         monitor the water consumption and waste water
         discharge of potential investors on a regular
         basis. The process needs to be transparent and
         be undertaken in an objective manner. In
         addition, the park management will retain the
         right to control the pricing of water supplied to
         the consumers within the part as pricing is a
         way to control water consumption in a manner
         to prevent wastage. However, pricing will also
         be subject to the availability of water supply and
         the level demand at various points in time. The
         standards for the reduction of water
         consumption will also be reviewed and
         tightened periodically by the park management.
         Furthermore, park management will
         continuously monitor the amount and type of
         water discharged, in addition to the types of
         water treatment standards/procedures
         implemented by the respective businesses.
         Periodic monitoring of the abovementioned
         factors will help to ensure more efficient
         consumption and reduce the likelihood of toxic
         discharge.
                                                                            June 2015
                                                                               Page 7-5
Chuping Valley Development Plan
ii) Waste Generation and Management
         a) Screening Criteria
                   The park management is recommended to
                   adopt prevailing good practices in regard to
                   ‘Waste Generation and Management’ to focus
                   on the opportunities for recycling, and effective
                   waste management. Potential investors should
                   have a track record of recycling efforts reflected
                   in their manufacturing / production processes,
                   and also a track record of clear and definitive
                   means of waste management. With regards to
                   waste generation and storage, businesses
                   should not be allowed to store, for more than 7
                   days, hazardous wastes in Lembah Chuping
                   which have the potential to contaminate the
                   nearby dam. In the event that such wastes are
                   generated, investors will be required to present
                   and discuss before the start of operations with
                   the park’s management robust and sustainable
                   solutions to temporarily store, and effectively
                   handle and treat this waste.
         b) Maintenance Procedures
                   The park’s management will perform consistent
                   and periodic (e.g. weekly or monthly where
                   necessary) checks to assess investor
                   adherence to established waste generation,
                   storage and disposal guidelines. In the event
                   that these guidelines have been violated,
                   immediate action to help facilitate investor
                   compliance is important as a precaution to
                   contaminating the dam.
iii) Ecological Protection
         a) Screening Criteria
                   ‘Ecological Protection’ concerns controlling the
                   overall effects of industrialization with a view to
                   protecting the environment in and immediately
                   surrounding Lembah Chuping. Therefore, to
                   minimize the negative impact of the proposed
                   future industries on these areas, investors will
                   be subject to restrictions on the manner of
                   construction of their facilities/premises so as to
                   make sure that their activities will not impact the
                   soil condition in a manner that will lead to water
                   contamination. Such activities should also not
                   cause damage to the condition of the
                   surrounding vegetation and/or cause soil
                   erosion to the area. Furthermore, investors
                   should not make use of toxic/ radioactive
                                                                                        June 2015
                                                                                           Page 7-6
Chuping Valley Development Plan
                   materials that could have negative impacts on
                   the surrounding environment in terms of both
                   harmful emissions and/or waste generation.
         b) Maintenance Procedures
                   Similar to the procedures mentioned above, the
                   park’s management will perform regular and
                   periodic (i.e. weekly or monthly depending on
                   necessity) checks to assess investor adherence
                   to the established safeguards against soil
                   contamination and erosion, deforestation, and
                   also reducing the heat island effect. The raw
                   materials, especially those which are toxic, used
                   in investors’ manufacturing processes will also
                   be assessed to determine if there are adequate
                   facilities for their storage and to prevent them
                   from contaminating the environment. In the
                   event that these guidelines have been violated,
                   action will be taken by park management to
                   immediately stop the effects of the impact on
                   the environment and help facilitate investor
                   compliance to prevent reoccurrence.
iv) Energy Generation and Consumption
         a) Screening Criteria
                   Potential investors interested in establishing a
                   presence in Lembah Chuping should preferably
                   be those with substantiated 3-5 year track
                   records of having energy efficiency practices in
                   their operations. For those without a track
                   record, they should be able to produce
                   conclusive and firm evidence of the efficient
                   energy consumption practices of the operations
                   that they would like to set up in the park. It is
                   also important for these investors to have a plan
                   on continuous improvement, i.e. increasing the
                   efficiency of their energy consumption, for a
                   period of 5 years. In its assessments, the park
                   management could refer to standards such as
                   the ISO 50001 (Energy Management) and ISO
                   23045 (Energy Efficiency Assessment of
                   Buildings) for guidance. Furthermore, emissions
                   released from investor owned power generators
                   must meet the US EPA and the EEA’s
                   emissions standards by being treated, if
                   necessary, prior to their release into
                   surrounding environment.
         b) Maintenance Procedures
                   The park’s management will undertake periodic
                   (e.g. weekly or monthly depending on
                   necessity) checks to assess investor adherence
                   to established emission control standards for
                                                                                        June 2015
                                                                                           Page 7-7
Chuping Valley Development Plan
           investor owned power generators located in
           Lembah Chuping. In the event that these
           standards have been violated, action will need
           to be taken so that the adverse effects on the
           environment can be immediately stopped and
           prevented from occurring again through
           ensuring compliance by the investors.
- This space intentionally left blank -
                                                                              June 2015
                                                                                 Page 7-8
Targets set by government institutio
Institution  Reduce energy/ clean            Reduce materials used/                  Redu
                 energy sources                 recycled materials                   cons
EU           - Reduce greenhouse gas         Among the targets set for the           No measure
             emissions by 20% (or even       reduction of materials recycled and     (yet). The W
             30%, if the conditions are      reduced are:                            proposes tha
             right) lower than 1990;         - Recycling and preparing for re-use authorities s
             - 20% of energy from            of municipal waste to be increased to water efficie
             renewables;                     70 % by 2030;
             - 20% increase in energy        - Recycling and preparing for re-use
             efficiency.7                    of packaging waste to be increased to
                                             80 % by 2030, with material-specific
                                             targets set to gradually increase
                                             between 2020 and 2030;
                                             - Phasing out landfilling by 2025 for
                                             recyclable (including plastics, paper,
                                             metals, glass and bio-waste) waste in
                                             non hazardous waste landfills
                                             corresponding to a maximum
                                             landfilling rate of 25%.8
State of     - increasing the percentage of  - goal of 75 percent recycling,         - goal of red
California   renewable energy in the         composting or source reduction of       capita water
(US)         state's electricity mix to 33   solid waste by 202013                   202015
             percent by 202012
                                             - CalRecycle has now reached a
                                             recycling rate of 82% for ten
                                             materials. 14
7 The European Union set environmental targets as part of “Europe 2020”. Europe 2020 is the European U
8 Review of EU’s Review of Waste Policy and Legislation (2014) http://ec.europa.eu/environment/waste/ta
9 “A Water Blueprint for Europe” (2013). The EU’s “Water Blueprint” outlines actions that concentrate on b
 and filling the gaps in particular as regards water quantity and efficiency. The objective is to ensure that
 environment throughout the EU.
10 Review of EU’s Review of Waste Policy and Legislation (2014) http://ec.europa.eu/environment/waste/t
11 “EU Biodiversity Strategy to 2020 – towards implementation” http://ec.europa.eu/environment/nature/bio
12 California Energy Commission, 2013. http://www.energy.ca.gov/renewables/.
13 CalRecyle, 2013, http://www.calrecycle.ca.gov/75percent/.
14 The Climate Group, http://www.theclimategroup.org/who-we-are/our-members/the-state-of-california.
15 California Water Plan Update 2013, http://www.water.ca.gov/calendar/materials/vol3_urbanwue_apr_re
Chuping Valley Development Plan
ons and initiatives around the globe
uce water           Reduce waste or              Protect biodiversity/ support natural
sumption                 pollution                                ecosystems
 eable targets set  - Measures aimed at          2020 headline target:
Water Blueprint     reducing food waste
                    generation by 30 % by        Halting the loss of biodiversity and the degradation
  at river basin    2025;                        of ecosystem services in the EU by 2020, and
 should develop     - Introducing an early       restoring them in so far as feasible, while stepping
ency target.9       warning system;              up the EU contribution to averting global
                    - Improving traceability of  biodiversity loss.
ducing urban per    hazardous waste. Waste
 r use by 20% by    Policy and Legislation.10    The six targets cover:
                    Thanks to the California     1. Full implementation of EU nature legislation to
                    Integrated Waste             protect biodiversity
                    Management Board
                    (CIWMB) over 58% of          2. Better protection for ecosystems, and more use
                    waste was diverted from      of green infrastructure
                    landfill to recycling and
                    reuse in 2009, up from       3. More sustainable agriculture and forestry
                    10% in 1990.16
                                                 4. Better management of fish stocks
                                                 5. Tighter controls on invasive alien species
                                                 6. A bigger EU contribution to averting global
                                                 biodiversity loss.11
                                                 n/a
Union’s ten-year growth strategy. http://ec.europa.eu/europe2020/index_en.htm.
arget_review.htm
better implementation of current water legislation, integration of water policy objectives into other policies,
 a sufficient quantity of good quality water is available for people's needs, the economy and the
target_review.htm
odiversity/comm2006/2020.htm.
elease_16033.pdf.
                                                 June 2015
                                                  Page 7-9
Australia  The Australian Climate            n/a  - goal of red
           Authority recommends to the            by 15% by 2
           Australian Government:
           - A minimum target for 2020
           of 15 per cent below 2000
           levels, plus 4 percentage
           points from Australia’s
           carryover under the Kyoto
           Protocol. This target,
           combined with a national
           emissions budget of
           4,193 Mt CO2-e for 2013–
           2020, provides a clear course
           for short-term action.
           - A trajectory range tracking to
           between 40 and 60 per cent
           below 2000 levels by 2030,
           and a national emissions
           budget for 2013–2050 of
           10,100 Mt CO2-e.17
16 The Climate Group, http://www.theclimategroup.org/who-we-are/our-members/the-state-of-california.
17 Austrialia’s Emmissions Reduction Goals, 2014, http://www.climatechangeauthority.gov.au/files/files/Ta
18 Australia’s Water Corporation, http://www.watercorporation.com.au/water-supply-and-services/solutions
19 Australia’s National Waste Policy, http://www.environment.gov.au/protection/national-waste-policy/abou
20 Australia’s Biodiversity Conservation Strategy http://www.environment.gov.au/biodiversity/publications/a
Chuping Valley Development Plan
ducing water use  Australia has a National    Australia has a Biodiversity Conservation Strategy
2030.18           Waste Policy in place, but  2010-2030 in place. The vision of the Strategy is
                  did not include measurable  that Australia’s biodiversity is healthy and resilient
                  KPI’s.19                    to threats, and valued both in its own right and for
                                              its essential contribution to our existence.20
arget-Progress-Review/Targets%20and%20Progress%20Review%20Final%20Report_Part%20C.pdf.
s-to-perths-water-supply/reducing-water-use
ut.
australias-biodiversity-conservation-strategy-summary
                                                                                                               June 2015
                                                                                                                Page 7-10
Chuping Valley Development Plan
7.1.2  Research Method
       The research for potential investors has been conducted using
       qualitative information obtained from primary sources (e.g.
       desktop research using information from corporate websites,
       annual and environmental reports) and secondary sources
       (e.g. desktop research using information as published in
       journal articles, encyclopedias, and magazines). The
       companies are analysed on four factors: industry, degree of
       greenness, financial viability, and location.
       First, the companies are selected because they are active in
       (one of the) proposed industry sectors for Lembah Chuping.
       Secondly, it has been analysed whether the companies’
       activities and production process are a match with the vision
       for Lembah Chuping and to the extent they meet the proposed
       five criteria for “green”.
       The next factor taken into consideration is the financial
       capability of the company. To determine this we have looked at
       the revenue, net income and total assets of the potential
       company. A company should be ‘financially healthy’ and in the
       possession of financial resources to make an investment.
       Lastly, the current location of the potential investor is looked at.
       A company that is not present in Malaysia at the moment could
       face some barriers to enter (e.g. lack of knowledge of the local
       market, culture and laws and regulations). On the other hand,
       investing in Lembah Chuping it could be an opportunity to
       enter the Malaysian (or Asian) market. Companies which are
       already present in Malaysia or nearby the State of Perlis have
       the advantage of being familiar with the country, but currently
       do not have expansion plans at the moment.
7.1.3  Limitations
       Please note that the analysis is done based on information
       which is publicly available. This could limit the analysis since
       there is no insight in the company’s investment and growth
       strategy which is kept internally and is only known to the board
       of management.
       In addition, not all potential companies have made it publicly
       available whether their production process is green or whether
       they share the green vision. Since we do not want to exclude
       these potential companies from the analysis, they are left in
       the report. A more through assessment to short-list these
       companies will be given in the Final Report, together with a list
       of halal F&B companies.
       Evaluation of Investors
       For each company, the match with each of the five proposed
       criteria for green is presented in the tables below. The last
       column of each table presents a conclusion based on the
       company’s overall match with the proposed criteria for green,
       their match with the proposed industries, financial viability and
       location.
       June 2015
       Page 7-11
Chuping Valley Development Plan
                    When a company matches two out of the four factors for
                    analysis, (i.e. match with the proposed industries, financial
                    viability and/or willing/able to relocate), it is concluded that the
                    company could be a potential investor in Lembah Chuping.
                    Refer to Appendix 7 for the full analysis.
7.2 Proposed Industries
          7.2.1 Green Energy Generation
                   Within the area of renewable energy, there are indications that
                   the solar industry is perhaps the most attractive industry in
                   Malaysia. Therefore, the majority of the potential investors as
                   listed on the following pages are active in the solar industry.
                   However, the Malaysian solar industry can be considered to be
                   in the infancy stage currently and supporting industries are not
                   in place yet. In addition to solar energy firms, companies active
                   in the other field of green energy generation are also included
                   in the list.
             7.2.2  Solar Energy Firms
                    Based on desktop research, there are six companies currently
                    active in the domestic market. The six solar firms which are
                    active in the domestic market are Q-Cells Solar, AUO
                    SunPower, Panasonic, EQ Solar, Solexel. In addition to the
                    above mentioned six companies, other potential investors for
                    Green Energy Generation in Lembah Chuping focusing on
                    solar energy are stated in the table below.
                Table 7.1: Summary of Potential Solar Energy Generation Investors
                                     Solar Energy Companies
                            Reduce    Reduce                                Protect     Conclusion
                            energy/  materials                           biodiversity/
Company             Origin   clean              Reduce water  Reduce
                            energy     used/    consumption   waste or      support
                            sources  recycled                 pollution     natural
                                     materials                           ecosystems
Honda               JP
SolarWorld          DE
First Solar         US
Panasonic           JP
Tek Seng            MY
AUO                 US
SunPower
Solar Frontier      JP
Cypark              MY
Resources
Tokoyuma            JP
Red Solar           MY/US
Canadian Solar      CA
Conergy             DE
DelSolar            TW
                                                                                        June 2015
                                                                                        Page 7-12
Chuping Valley Development Plan
Evergreen             CN
Solar
GT Advanced           US
Technologies
JinkoSolar            US
JA Solar              CN
Solarwatt             DE
Allterra Solar        US
Tenaga                MY
Nasional
OCK Group             MY
Q-Cells Solar         DE
EQ Solar              CN
Solexel               US
Legend
Criteria for “green”                          Conclusion (refer to Appendix 7)
Company matches at least two of the proposed  Company matches at least two of our of the four factors analysed
criteria.                                     (green, industry, finance, location)
Indecisive                                    Not enough information available/ Indecisive
             7.2.3      Other Green Energy Generating Companies
                        Besides solar energy, other forms of green energy generation
                        exits today. The ta
                        ble below presents on overview of potential investors in
                        Lembah Chuping active in other fields of green energy
                        generation.
Table 7.2: Summary of Other Potential Green Energy Generating Investors
                                     Other Green Energy Generating Companies
                          Reduce          Reduce                                  Protect     Conclusion
                          energy/    materials used/                           biodiversity/
  Company       Origin                                Reduce water  Reduce
                  MY       clean         recycled     consumption   waste or      support
IRIS                      energy         materials                  pollution     natural
Corporation               sources                                              ecosystems
ReEnergy
Holdings        US
Vyncke
Abengoa         BE
Wah Seong       ES
Amersco         MY
                US
Legend
Criteria for “green”                 Conclusion (refer to Appendix 7)
Company matches at least two of the  Company matches at least two out of the four factors analysed (green, industry,
proposed criteria.                   finance, location)
Indecisive                           Not enough information available/ Indecisive
                                                                                              June 2015
                                                                                              Page 7-13
Chuping Valley Development Plan
7.2.4             Green Manufacturing
                  The term ‘Green Manufacturing’ can encompass a wide variety
                  of industries. Based on analysis applying the Porter Diamond
                  Model as summarized in section 7.2, the two potential
                  industries for Lembah Chuping are:
                  • Regarding green building materials, there are indications
                      for a presence of a domestic and regional market for green
                      building materials, in addition to upstream service support
                      and favourable government policies. Green building
                      materials are composed of renewable, rather than non-
                      renewable resources. Green materials are environmentally
                      responsible because impacts are considered over the life
                      of the product.
                  • Within manufacturing, Electronics & Electrical (E&E) is a
                      high growth sector and especially LED lighting trends
                      further point to the presence of a regional market for
                      energy-efficient products.
                  The potential investors are analysed against the criteria for
                  green as proposed for Lembah Chuping and other factors
                  (industry, financial, location). Competition for investors may be
                  intense given the presence of an E&E hub in Penang.
                  However, the E&E hub in Penang could also provide value
                  chain support for Lembah Chuping.
                  The table below gives an overview of potential investors in
                  Lembah Chuping within green manufacturing.
              Table 7.3: Summary of Potential Investors in the Green Manufacturing
                                                           Sector
                                Green Manufacturing
                                Reduce    Reduce     Reduce water  Reduce        Protect      Con-
                                energy/  materials   consumption/  waste or   biodiversity/  clusion
                                                                   pollution
   Company    Origin  Industry     use      used/          water                 support
                                 clean   recycled    conservation                natural
PaperFoam                       energy   materials/                           ecosystems
GS Yuasa                        sources  recycling
Corporation
Sanyo /       NL Packaging
Pansonics
VS Lightning  AT Batteries
Solutions
              JP E&E
                         E&E
              DE
Ball          US Packaging
Corporation
              JP Various
Philips       JP Batteries
Primearth EV  MY E&E
Energy
                      Water,
Globetronics
Technology
Ecolab
              JP      hygiene,
                      energy
                      services
                                                                              June 2015
                                                                              Page 7-14
Sharp          JP Various              Chuping Valley Development Plan
Corporation
                                                                           June 2015
Sumitomo       JP Various                                                   Page 7-15
Corporation
APP Timber     MY  Raw
                   materials
NEC            CA IT
Corporation
Osram          DE E&E
LG             KR E&E
Electronics
Johnson                   Batteries
Controls       US and
                          electronics
Hitachi        JP Various
Sony           JP E&E
Corporation
Khärs          SE  Building
                   materials
Mitsubishi     JP Various
Group
Electrovaya    JP Batteries
Triodonic      AT E&E
Epistar        TW E&E
Phocos         DE E&E
AFM Safecoat   US  Building
                   materials
Ecotimber      US  Building
                   materials
Nature’s       CA  Building
Carpet             materials
Wageningen     NL University
University
Radiant Trade  US LED sales
MBN            DE E&E
VerySol        DE E&E
OMS            HR E&E
AEG            DE E&E
Cree           US E&E
Luminus        US E&E
Devices
LED Engin      US E&E
Optogan        RU E&E
Nichia         JP E&E
Corporation
Carclo Optics  UK E&E
Seoul          KR  E&E
Semiconductor
Chuping Valley Development Plan
 Legend                              Conclusion (refer to Appendix 7)
Criteria for “green”                 Company matches at least two out of the four factors analysed
                                     (green, industry, finance, location)
Company matches at least two of the
proposed criteria.                   Not enough information available/ Indecisive
Indecisive
       The companies included in the table are active in a specific
       industry. The Felda Investment Corporation (FIC) is an
       investment arm of Federal Land Development Authority
       (Felda). Being an investment company, this could be of
       potential interest for Lembah Chuping. One of FIC’s primary
       targeted sectors is property investment. FIC focuses on
       property acquisition, development, construction, property
       management and facilities management. This could be of
       interest for the potential investors listed above. FIC could
       support them in finding and developing property for their
       operations.
       FIC is not targeting green manufacturing companies
       specifically, but has a focus on corporate social responsibility.
       The FIC is now embarking on Felda’s ongoing housing
       development projects consisting of Perumahan Generasi Baru
       Felda (PGBF), Perumahan Warga Felda (PWF) which strives
       to serve the agency’s corporate social responsibility for its
       settlers by elevating the living quality of Felda’s new
       generation.
       The FIC Hospitality Division is one of the core divisions within
       the FIC. In general, the division manages a chain of hotels
       locally and abroad. In the near future, FIC could be a potential
       investor through the provision of housing schemes with
       structured and high quality infrastructure for the employees
       working in Lembah Chuping. On the longer term, if Lembah
       Chuping attracts more visitors and potentially tourists who
       travel to the region, the hospitality division of the FIC could
       invest in hotels.
7.2.5  Halal Pharmaceutical Manufacturing
       Findings from the industry analysis indicate that firms in halal
       pharmaceutical manufacturing might require additional support
       with regards to halal requirements along the value chain.
       These need to need to be adhered to, in sourcing of raw
       materials and the use of logistics services compared to Green
       Energy Generation or Green Manufacturing.
       The table below gives on overview of potential investors in
       Lembah Chuping’s proposed halal pharmaceutical industry.
       However, none of the halal companies included in the table
       below stated on their website that they consider themselves
       green, nor that they have policies in place to e.g. reduce
       energy and water consumption and reduce waste.
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Chuping Valley Development Plan
Table 7.4: Summary of Potential Halal Pharmaceutical Investors
                     Halal Pharmaceutical Manufacturing
Company              Description                                         Match
                                                                          with
                                                                         green
                                                                        criteria?
CCM                  CCM Pharmaceuticals is principally engaged in      n/a
Pharmaceuticals      the manufacturing, distributing, importing and
Sdn. Bhd.            exporting of pharmaceutical products and
                     medicines. Apart from being a contract
                     manufacturer for multinational pharmaceuticals
                     companies, CCM Pharmaceuticals also exports
                     its own products throughout ASEAN, Asia Pacific
                     and other parts of the world.
Easy Plus            Easy Plus Pharmaceutical is herbal medicine and    n/a
Pharmaceutical (M)   health care product manufacturer, which was
Sdn. Bhd.            established in 2004. Easy Plus is located in
                     Mergong Industrial Area.
Healwell             The House of Healin is a market leader through     n/a
Pharmaceuticals      franchises in in biotechnology - based Health &
Sdn. Bhd. (House of  Beauty Gamodulin Base products. They work on
Healin)              product development and quality through
                     research. The company is located in Temasya
                     Industrial Park, Seksyen U1.
HOE                  HOE Pharmaceuticals is a dermatological            n/a
Pharmaceuticals      specialist company. Their activities encompass
Sdn. Bhd.            R&D, manufacturing and marketing a wide range
                     of innovative and effective preparations that are
                     exported to over 45 countries. Their areas of
                     operation now include Asia, Africa, the Middle
                     East as well as the European Union. Their
                     manufacturing facility is based in Port Klang.
Jin Bin (M)          Jin Bin Pharmaceutical is based in Alor Star,      n/a
Pharmaceutical       Kedah. Its main business is F&B manufacturing
Group Sdn. Bhd.      and its main products are honey, glucose and
                     vinegar.
Herbs Pharma Sdn.    HPSB is involved in all areas of the traditional   n/a
Bhd.                 herbal product industry. HPSB clients are
                     traditional retailers and wholesalers. Currently,
                     HPSB represents pharmaceutical manufacturers
                     from Taiwan, USA, China and India. They
                     maintain relationships with major manufacturers
                     and suppliers. Despite being a relatively new
                     player in the market, they are starting to export
                     products to Korea, Taiwan, Japan, Singapore,
                     Philippines and Indonesia.
Nutri-Home           Nutri-Home operates in conventional Chinese        n/a
Pharmaceutical       medicine.
Industries Sdn.Bhd.  Their product categories are:
                           Dietary supplements
                           Digestive healthcare
                           Floral tea
                           Granules
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Chuping Valley Development Plan
                     The company is located in Taman Industri
                     Subang, Subang Jaya.
Taisho               Taisho's mission is to create and offer superior          n/a
Pharmaceutical (M)   pharmaceuticals and health-related products as
Sdn. Bhd.            well as health-care-related information and
                     services that contribute to the enrichment of
                     people's lives by improving health in socially
                     responsible ways. Taisho's offerings consist of
                     pharmaceuticals and health-related products.
                     The company is located in Taman Perindustrian
                     Sri Plentong.
Upha                 Upha  Pharmaceutical     Manufacturing                    n/a
Pharmaceutical Mfg.
(M) Sdn. Bhd.        manufactures and sells pharmaceutical products.
                     The company was incorporated in 1979 and is
                     based in Bandar Baru Bangi. Upha
                     Pharmaceutical Manufacturing operates as a
                     subsidiary of Chemical Co. of Malaysia Bhd
White Heron          White Heron Pharmaceutical (WHP) is an herbal             n/a
Pharmaceutical Sdn.  medicine, pharmaceutical and health care
Bhd.                 product manufacturer. WHP has two production
                     plants; one for traditional pharmaceuticals and
                     one for Over The Counter (OTC) products. WHP
                     is located at Kepong Industrial Park.
7.2.6           Halal F&B Manufacturing
                The second proposed halal industry for Lembah Chuping is
                F&B manufacturing. Potential investors in this industry are
                listed below.
                  Table 7.5: Summary of Potential Halal F&B Investors
                     Halal F&B Manufacturing
Company                    Description                                         Match
                                                                                 with
                                                                               green
                                                                               criteria
Nutrifres Food &    Nutrifres Food & Beverages (NFB) was established in        n/a
Beverages           year 2000. All products that we manufactured are halal
Industries Sdn.     with Certified by JAKIM. NFB manufactures nutritious
Bhd.                food, health drinks, food drink, and fruit drinks. NFB is
                    currently manufacturing, distributing and wholesaling
                    the brand both locally and more than 20 countries
                    internationally.
Soft Beverage       Soft Beverage Marketing Sdn. Bhd. is incorporated in       n/a
Marketing Sdn.      1998 and is one of the five largest manufacturers of
Bhd.                carbonated drinks in Malaysia. They are specialised in
                    manufacturing carbonated and non-carbonated flavour
                    drinks and health and energy drinks.
                    They are located in a 12,000 sq. meter plant with a
                    land area of 5 hectors. The company also provides in-
                    house R&D.
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Chuping Valley Development Plan
Purple Stars   Purple Stars Food & Beverages was established in        n/a
Food &         2011, with the vision of creating the highest quality
Beverages (M)  instant coffee, milk tea and chocolate beverages. They
Sdn. Bhd.      are located in Seremban and serve both domestic and
               international clients from all across the globe. They
               have a R&D team. Each of their beverages is
               manufactured according to regulated, legislative
               standards by the HACCP and Malaysia halal body, and
               adheres to food and health safety guidelines.
7.3 Recommended Next Steps for Approaching Potential Investors
         Once potential investors have been identified, they must be
         approached as a means of gauging interest. This process will entail
         the developing of a set of processes and procedures to create
         awareness of marketing. Next steps will comprise the following:
         i) Establish a Marketing/Investors Relationship Unit
                   The Marketing/Investors Relationship Unit will be a group
                   focused on initiating, developing, and managing relationships
                   with potential investors. Initially, only one (1) person will be
                   required to reach out to potential investors; given that the
                   preliminary stages of development and construction will last up
                   till 2020. Eventually, the goal is to have multiple officers
                   dedicated to 5 or 6 different regions.
         ii) Set KPIs for this Unit
                   Key performance indicators (KPIs) must be put in place to
                   ensure that this function performs effectively; Lembah Chuping
                   attracts investors that are in line with the criteria outlined.
                   Examples of suitable KPIs could be the amount of the region
                   covered and tracking the number of responses received.
         Once set up, this unit will have three (3) main functions:
         1. Information Distribution
                   This unit will be responsible for monitoring the physical
                   progress of parks (drainage, roads, lighting, utilities etc.) to
                   provide investors with updates on the Lembah Chuping’s
                   development, while also monitoring the number and types of
                   relevant incentives (by liaising with MIDA).
         2. Information Collection
                   Relevant data will be collected from investors as a means to
                   compare against established guidelines and safe guards, and
                   to gain an understanding of their requirements. Examples of
                   this data can be but are not limited to environmental statistics
                   (water consumption/usage, waste discharge, and emissions
                   generation), Green initiatives and industrial skill requirements.
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Chuping Valley Development Plan
  3. Raising International Profile
            Representatives from this unit will also attend key trade fair
            (based on industry and regional targets) to both promote
            Lembah Chuping, and to also collect relevant information from
            participants.
SUMMARY
    i) The state government needs to finalise a list of Green criteria to
         facilitate the initial selection of investors, and to enforce the Green
         concept within Lembah Chuping
    ii) The eventual Green criteria are important because they will provide
         an objective basis for targets and KPIs; which will help to measure
         progress and performance
    iii) Due to the lengthy process in woo-ing investors, preliminary
         discussions by the state government and park management with
         select investors will evaluate whether they meet the pre-established
         Green criteria, while also assessing the factors that could most
         attract them to relocate in Lembah Chuping
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Chuping Valley Development Plan
8.0 INCENTIVES AND
                   BENEFITS
Chuping Valley Development Plan
8.0 INCENTIVES AND BENEFITS
         Introduction to Proposed Incentives for the Development of
         Lembah Chuping
         The rapid growth in the mobility of international firms has resulted in
         governments around the world attempting attract investors through
         various types of incentives and benefits to spur investment in their
         countries. Generally, incentives and benefits offered are targeted at
         certain clusters of an economy in accordance to the country’s policy of
         promoting the said clusters. Nevertheless, there are occurrences
         where incentives and benefits are offered to a designated area or
         industrial estates for the development of a particular area.
8.1 Existing Incentives and Benefits in Malaysia
         For the development of Lembah Chuping, three (3) core clusters
         have been identified to anchor the growth of the industrial park,
         namely green manufacturing, halal industry and green energy
         generation. In addition, supporting industries and key enablers are
         critical to ensure that the core clusters in the industrial park have an
         adequate business support and the right human capability for the
         functionality and sustainability of their businesses.
8.1.1 Current Incentives for the Proposed Core Clusters
Cluster        Incentives and Benefits
               Tax Incentives
               i. Pioneer Status (“PS”)
                         • Income tax exemption on 100% of statutory income
                               for 5 years – for the use and provision of Green
                               Technology (“GT”) services and systems
               ii. Investment Tax Allowance (“ITA”)
               • Green investment tax allowance (“GITA”) of 100% of
                    qualifying capital expenditure to be utilised against
                    100% of the statutory income incurred in relation to:
      Green              a. Project: Approved GT project; or
manufacturing            b. Non-Project: acquisition of qualifying green
                                 assets1
                          *Tax incentives for green manufacturing are proposed
                          incentives under Budget 2014
               Non-Tax Incentives
               i. Green Technology Financing Scheme (“GTFS”)
               • Financing scheme to support the development of
                    GT;
               • Interest subsidies of 2% from the total interest
                    charged;
               • Government guarantee of 60% on the total
                    approved loan; and
               • Training will be provided to applicants to enhance
                    knowledge on GT2
1 http://globalgreentag.com/sites/default/files/media/KeTTHA%20Budget%202014%20Tax%20Incentives
   _1.pdf
2 https://www.gtfs.my/faq#n24150
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Chuping Valley Development Plan
Halal industry  Tax Incentives for Operators of Halal Parks with HALMAS
                Status
                                • Income tax exemption on 100% of statutory
                                     income for 10 years; or
                                • 100% of qualifying capital expenditure incurred
                                     within a period of 5 years to be utilised against
                                     100% of the statutory income for each year of
                                     assessment; and
                ii. Import duty and sales tax*
                                • Exemption on equipment, components and
                                     machinery used directly in the cold room
                                     operations in accordance to prevailing policies
                          * All current sales tax facilities are only valid until 31
                          March 2015 as the sales tax regime will be replaced
                          by the Goods and Services Tax (GST) effective 1
                          April 2015.
                Tax Incentives for Halal Industry Players
                                • Income tax exemption on 100% of statutory
                                     income for 5 years on export sales; or
                                • 100% of qualifying capital expenditure incurred
                                     within a period of 10 years to be utilised against
                                     100% of the statutory income for each year of
                                     assessment; and
                i. Import duty and sales tax
                                • Exemption on equipment, components and
                                     machinery used for the development and
                                     production of Halal promoted products; and
                ii. Tax Allowance
                                • Double deduction on expenses incurred in
                                     obtaining international quality standards,
                                     Sanitation Standard Operating Procedures and
                                     regulations on compliance on export markets
                Tax Incentives for Halal Logistics Operators
                                • Income tax exemption on 100% of statutory
                                     income for 5 years; or
                                • 100% of qualifying capital expenditure incurred
                                     within a period of 5 years to be utilised against
                                     100% of the statutory income for each year of
                                     assessment; and
                i. Import duty and sales tax
                                • Exemption on equipment, components and
                                     machinery used directly in the cold room
                                     operations in accordance to prevailing policies3
3 http://www.hdcglobal.com/publisher/gi_invesment_incentives
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Chuping Valley Development Plan
Green energy  Tax Incentives
  generation  i. PS
                              • Income tax exemption on 100% of statutory
                                   income for 10 years; or
              ii. ITA
                              • 100% of qualifying capital expenditure incurred
                                   within a period of 5 years to be utilised against
                                   100% of the statutory income for each year of
                                   assessment4
              Non-Tax Incentives
              i. Green Technology Financing Scheme (“GTFS”)
                              • Financing scheme to support the development of
                                   green technology;
                              • Interest subsidies of 2% from the total interest
                                   charged;
                              • Government guarantee of 60% on the total
                                   approved loan; and
                              • Training will be provided to applicants to enhance
                                   knowledge on GT
              ii. Feed-in Tariff Scheme (“FiT”)
                              • Payment to renewable energy generator based on
                                   FiT ;
                              • FiT rate varies for different renewable resources
                                   and installed capacities;
                              • Bonus Fit rate applies when the criteria for bonus
                                   conditions are met; and
                              • Duration of the FiT contract is based on the types
                                   of the renewable resources
                              i) 16 years – biomass and biogas resources
                              ii) 21 years – Solar photovoltaic and small
                                   hydropower5
              - This space intentionally left blank -
4 http://www.mida.gov.my/home/incentives-in-services-sector/posts/
5 http://seda.gov.my/overview_of_fit_concept_in_malaysia.html
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Chuping Valley Development Plan
Summary of Existing Incentives for the Proposed Core Clusters in
Lembah Chuping
                Table 8.1: Summary of Existing Incentives for Proposed Industries in
                                                   Lembah Chuping
     Table 8.2: Codes for Types of Proposed Tax Incentives
     Types of Tax Incentives Code  Types of Non-Tax
                                        Incentives
1.1  Pioneer Status         1.5 Financial Assistance/Grant
1.2 Investment Tax Allowance 1.6 Access to R&D Equipment
1.3  Import Duty Exemption  1.7    R&D Incentives
1.4 Sales Tax Exemption
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Chuping Valley Development Plan
8.1.2 Current Incentives for Supporting Industries and Key
         Enablers
Cluster                        Incentives Available
               Tax Incentives
               i. PS
                        • Exemption from income tax on 70% of statutory
                             income for 5 years; or
               ii. ITA
                        • 60% of qualifying capital expenditure incurred within
                             a period of 5 years to be utilised against 70% of the
                             statutory income for each year of assessment;
Waste          iii.  Accelerated Capital Allowance
management                • Capital expenditure incurred are eligible for an initial
                               allowance of 40% and an annual allowance of 20%
and recycling                  to be written off within three years6; and
               iv. Import Duty and Sales Tax
                        • Exemption from import duty and/or sales tax on
                             imported machinery and equipment for waste
                             recycling activities
                        • Exemption from sales tax on locally manufactured
                             machinery and equipment for waste recycling
                             activities7
               Tax Incentives
               i. Contract R&D company
                              • PS - 100% income tax exemption on statutory
                                   income for 5 years; or
                              • ITA - 100% on qualifying capital expenditure for 10
                                   years to be set off against 70% of statutory income
               ii. In-house R&D
                        • ITA - 50% on qualifying capital expenditure for 10
                             years to be set off against 70% of statutory income8
 Research & iii.     R&D company
Development               • ITA - 100% on qualifying capital expenditure for 10
                               years to be set off against 70% of statutory income9
     (R&D)
               iv. Commercializing of R&D findings
                        • PS - 100% income tax exemption on statutory
                             income for 10 years on subsidiary company that
                             undertakes commercialisation of R&D; and
                        • Tax deduction equivalent to the amount of
                             investment given to a company invests in its
                             subsidiary company engaged in the
                             commercialisation of R&D10
               Additional Incentives for Research and Development
6 http://www.mida.gov.my/env3/uploads/Services/IncentivesSept2011.pdf
7 http://www.mida.gov.my/home/incentives-in-services-sector/posts/
8 http://www.mida.gov.my/env3/uploads/Forms/Manufacturing/15082012/GD-RnD-JA2-02.pdf
9 http://www.mida.gov.my/env3/uploads/Forms/Services/15082012/GD-RnD-JA1-2.pdf
10 http://www.mida.gov.my/env3/uploads/Forms/Manufacturing/23112012/GD-CRD2.pdf
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Chuping Valley Development Plan
            i. Double Tax Deduction
                     This is applicable to:
                          • Revenue (non-capital) expenditure for research
                                which is directly undertaken and approved by
                                Ministry of Finance;
                          • Cash contributions or donations o approved
                                research institutions;
                          • Payment for services of approved research
                                companies or institutions/contract R&D
                                companies/non related R&D companies/related
                                R&D
                          • Expenditure on R&D activities undertaken overseas
                                including training for Malaysian staff; and
                          • Approved R&D expenditure incurred during the tax
                                relief period for companies granted Pioneer Status
                                can be accumulated and deducted after the tax relief
                                period11
            ii. Industrial Building Allowance
                          • Initial Allowance of 10% and annual allowance
                               of 3% for expenditure on qualifying capital
                               expenditure incurred on construction or
                               purchase of a building used for R&D purpose12
8.1.3 Current Incentives for Strategic Economic Corridors in
         Malaysia
Region      Incentives available                             Promoted
                                                              Clusters
            Tax Incentives                                   • Tourism
            i. PS                                            • Oil, Gas &
                  • 100% income tax exemption on 100%          Petrochemical
                     of statutory income for 10 years; or
                                                             • Manufacturing
            ii. ITA                                          • Agriculture
                                                             • Education
                  • 100% of qualifying capital expenditure
East Coast           incurred within a period of 5 years to
Economic             be utilised against 100% of the
                     statutory income;
  Region
 (“ECER”)   iii. Import Duty and Sales Tax
                  • Exemption on imported raw materials,
                     components, machinery, equipment
                     that are not produced locally and used
                     directly in the production activity;
            iv. Stamp Duty
            • Exemption on all transfer or lease of
              land or building used for development;
11 http://www.mida.gov.my/env3/uploads/Services/IncentivesSept2011.pdf
12 http://www.mida.gov.my/home/administrator/system_files/modules/photo/uploads/20140215090558
   _03%20RnD.pdf
13 http://www.mida.gov.my/env3/uploads/IncentivesCompilation/ECERDC/2013/AppVIII.pdf
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Chuping Valley Development Plan
              v. Withholding Tax
                    • Exemption on fees for technical advice,
                       assistance or services or royalty up to
                       10 years; and
              vi. Tax Deduction on Expenses
                    • Single and double tax deduction on
                       business activities conducted within
                       ECER region
              Non-Tax Incentives
              i. TERAJU-ECER Facilitation Fund/Unit
                    Kerjasama Awam Swasta (UKAS)
                    Facilitation Fund;
                    • Allocation of RM100 million to promote
                       the implementation of high value
                       private sector projects by Bumiputera
                       companies
                    • Grants cover 15% of the project cost
                       for investments ranging from RM5
                       million to RM 50 million
              ii. Flexibility to recruit foreign knowledge
                    workers; and
              iii. Discount rate for land premium, quit rent
                    and land assessment13
              Tax Incentives                                    •                 Financial
                                                                                  Services
              i. PS
                                                                               •  ICT &
                                                                                  Creative
                    • 100% income tax exemption on 100%                           Industries
                       of statutory income for 10 years; or                       Logistics
              ii. ITA                                           •                 Tourism
              • 100% of qualifying capital expenditure •                          Education
                incurred within a period of 5 years to
                be utilised against 100% of the •                                 Healthcare
              statutory income;                                 •
Iskandar      iii. Import Duty and Sales Tax
Malaysia
(“Iskandar”)  • Exemption on imported machinery and
                equipment for qualifying equipment
                and machinery;
              • Exemption from import duty or excise
                duties and sales tax on one imported
                or locally assembled car14;
              iv. Real Property Gain Tax
              • Exemption on capital gains tax on
                disposal of property15;
              v. Withholding Tax
              • Exemption on all royalty and technical
14 http://www.mida.gov.my/env3/uploads/IncentivesCompilation/IRDA/2013/AppVII-2.pdf
15 http://www.lh-ag.com/storage/legal-herald/2013/q2-may-2013/Legal%20Herald%20Q2%202013.pdf
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Chuping Valley Development Plan
                      fee payment for non-residents for a
                      duration of 10 years; and
             vi. Personal Income Tax
                   • 15% personal income tax on
                      chargeable income for knowledge
                      workers for 5 years
             Non-Tax Incentive
             i. Flexibility to recruit foreign knowledge
                   workers;
             ii. Flexibility from foreign exchange
                   administrative rules set by BNM; and
             iii. Exemption from Foreign Investment
                   Committee Rules.
             Tax Incentives                                           Tourism
             i. PS                                                    Creative
                                                                      Industries
             • 100% income tax exemption on 100%                      Manufacturin
                      of statutory income for 10 years; or            g:
             ii. ITA                                             i. Medium and
Sabah        • 100% of qualifying capital expenditure                 heavy
Development
Corridor              incurred within a period of 5 years to          industries
(“SDC”)
                      be utilised against 100% of the            ii.
Sarawak
Corridor of           statutory income;                               Pharmace
Renewable
Energy       iii. Import Duty and Sales Tax                           utical
(“SCoRE”)
             • Exemption on imported machinery                        products
                      and equipment; and                              Halal Industry
             iv. Stamp Duty                                           Education
             • Exemption on land acquired for                         Healthcare
                  development16
             Tax Incentives                                           Manufacturin
             i. PS                                                    g
                   • 100% income tax exemption on 100%                Research
                         of statutory income for 10 years; or         and
                                                                      Development
             ii. ITA
                                                                      Environmenta
                   • 100% of qualifying capital expenditure           l
                         incurred within a period of 5 years to       management
                         be utilised against 100% of the
                         statutory income;
             iii. Import Duty
                   • Exemption on imported machinery and
                      equipment
             iv. Reinvestment Allowance
                   • Allowance of 60% capital expenditure
                         incurred to be utilized against 100%
16 http://www.sedia.com.my/SDC_Incentives.html
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                                                                            Page 8-8
Chuping Valley Development Plan
                                           of the statutory income;
                               v. Infrastructure Allowance
                                      • 100% of qualifying expenditure; and
                               vi. Freight Charges Allowance
                                      • Double Deduction on freight charges
                                           on certain products
                               Non-Tax incentives
                                      Allowance to own commercial land at low
                                      entry cost with nominal down payment
                                      and flexible terms of payment
Summary of Existing Incentives for Economic Corridors in Malaysia
                      Table 8.3: Summary of Existing Incentives for Economic Corridors in
                                                              Malaysia
Table 8.4: Codes of Tax Incentives for the Economic Corridors in
                                        Malaysia
Code Types of Tax Incentives  Code  Types of Non-Tax
                                    Incentives
1.1 Income Tax Exemption      1.5   Incentive for Knowledge
                                    Workers
1.2 Investment Tax Allowance  1.6   Foreign Exchange
                                    Administration Rules
1.3 Reinvestment Allowance
1.4 Exemption on RPGT
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Chuping Valley Development Plan
8.2 Comparison of Incentives and Benefits with Other Countries
           8.2.1 General Comparison against ASEAN Countries
                        Table 8.5: General Comparison against ASEAN Countries
             Corporate              Green Industry       Halal Industry                 IT Based
             Income     1.1 1.2                                               1.1 1.2
Country      Tax (%)                                1.3  1.1 1.2         1.3                      1.3
Malaysia         25
Brunei       18.5
Philippines  30
Singapore    17
Cambodia     20
Indonesia    25
Laos         24
Myanmar      25
Thailand     20
Vietnam      22
                           Table 8.6: Codes of Types of Tax Incentives
                        Code Types of Tax Incentives
                         1.1 Income Tax Exemption
                         1.2 Investment Tax Allowance
                         1.3 Indirect Tax
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8.2.2  Comparison against Southern Thailand
                                                With the aim to promote
                                                investment                 and
                                                development in the 4
                                                border provinces in
                                                Southern Thailand and 4
                                                districts in Songkhla,
                                                preferential               incentives
                                                have been introduced to
                                                entice investors and
                                                businesses to invest into
                                                these areas. This could
                                                create competition to
                                                Lembah Chuping, which is
Figure 8.1: Thailand's Southern Provinces       located in close proximity
                                                to provinces in southern
Thailand. Hence, incentives and benefits offered in Lembah Chuping should
at least be similar or more favourable as compared with the incentives in
Southern Thailand.
Incentives and Benefits in Southern Thailand
                                           Incentives available
 Tax Incentives
            8 year corporate tax income exemption – Additional 5 years reduction at
            50% of corporate income
            Exemption on import duty on machinery
            75% import duty reduction on raw materials used in manufacturing for
            domestics sales for 5 years
            Double deduction from the costs of transportation, electricity and water
            supply for 15 years
            Additional 25% deduction of the cost of installation or construction of
            facilities17
8.2.3 Comparison against Halal Food Industrial Estates at
       Pattani (‘HFEI”)
Figure 8.2: Map of Southern Thailand (Pattani)  Industrial Estate Authority of
                                                Thailand, an agency tasked
                                                to develop and manage
                                                industrial estates and free
                                                zones in the country has set
                                                up a halal food industrial
                                                estate at Pattani which is
                                                envisioned to become a
                                                global halal hub for food
                                                manufacturing due to a large
                                                population of Muslim located
                                                in the south of Thailand.
                                                Attractive incentives and
17 http://www.slideshare.net/SiamStartup/document-of-new-policy-eng-61924
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Chuping Valley Development Plan
                  benefits are offered for investments in this industrial estate and
                  similar preferential incentives and benefits should be offered to
                  investors in Lembah Chuping in order to compete with this
                  Industrial Estate.
                                         Incentives available
Tax Incentive
          Import Duty, Value Added Tax (VAT) and Excise Duty exemption on
          imported and locally manufactured material
          Export Duty, Value Added Tax (VAT) and Excise Duty exemption on
          exported goods
Non-Tax Incentive
          Right to own land in industrial estate
          Freedom to remit money abroad
          Freedom in employing expatriates and their spouse or dependents18
8.2.4 Hsinchu Science and Industrial Park (HSIP)
                                 HSIP, dubbed as Taiwan Silicon
                                 Valley has emerged as a paradigm
                                 for science parks around the world
                                 in fostering industrial clusters. It is
                                 a science-based industrial park
                                 which emphasizes on high
                                 technology industries, comprising
                                 of semiconductor, optoelectronics,
                                 precision machinery among others.
                                 Research and development is
                                 strongly supported in HSIP and it is
                                 home to a good number of state-
Figure 8.3: Hsinchu Science and Industrial owned research institutions with
Park (HSIP)
                                 advanced R&D equipment and
             human capital as privileged incentives and benefits for the
             development of R&D are offered in HSIP to encourage the
             activities of R&D.
                                         Incentives available
Incentive for Research and Development
          Import duty exemption for R&D Equipment
          Innovative technology industry-academia cooperation project grants
          i. Maximum grant of 10 Million NTD ~ RM1.12 Million
          ii. Grant could not exceed 50% of project budget
          R&D expenses can be deducted from corporate income tax up to 15% but
          the total deducted expenses can not exceed 30% of the total corporate
          income tax.19
18 http://www.hemaraj.com/page/industrial_estate_authority_of_thailand.asp
19 http://www.sipa.gov.tw/english/home.jsp?serno=201003250003&mserno=201003210002&menudata
    =EnglishMenu&contlink=content/investment_2_2.jsp&level3=Y&serno3=201003250005
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Chuping Valley Development Plan
8.2.5 Eco World Styria (Eco World)
                              Eco World Styria, an eco-
                              innovation and green
                              technology cluster with a strong
                              focus on research-industry-
                              government was formed to take
                              innovation to a higher level. Eco
                              World          environmental
                              engineering cluster has
                              facilitated the growth of 150
                              clean-technology companies
Figure 8.4: Eco World Styria        providing 15 000 jobs in
                                    renewable energy and
           environmental technology in the state of Styria in the southeast
           of Austria.
                                  Incentives available
Incentives for Research and Development
          Incentives are available for research intensive entities – form of a cash tax
          credit
          i. 10 % of R&D expenses up to a total payment of €100,000 per fiscal year
8.2.6 Comparison Analysis
Comparison against Southern Thailand
Aspects    Incentives         Incentives     Assessment
           available in       available in
            Southern
                               Malaysia
            Thailand
Corporate  8 years( 100%      10 years 100%  Even though the
 Income    income tax         income tax     exemption period in
           exemption) +       exemption      Southern Thailand is
           5 additional                      longer than Malaysia,
           years at 50%                      businesses in Southern
           corporate tax                     Thailand will only enjoy
           reduction                         50% corporate tax
                                             deduction after the end of
                                             8 year.
Import of  100%               100%           Lembah Chuping should
 Goods     exemption on       exemption on   be accorded with the
           machinery          machinery and  same incentives available
                              raw materials  in Malaysia for importation
           75% import         used in the    of goods in order to be
           duty reduction     manufacturing  competitive with Southern
           on raw             process        Thailand
           materials
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Chuping Valley Development Plan
Aspects         Incentives       Incentives         Assessment
                available in     available in
                 Southern
                                  Malaysia
                 Thailand
Transportation  Double tax       Currently, there   Despite the fact that
 and Utilities  deduction on     is no such tax     double tax deductions on
      Cost      costs of         deduction          transportation and utilities
                transportation,  available for      cost are not available in
                electricity and  such costs         Malaysia, businesses in
                water supply                        Malaysia with Pioneer
                for 15 years     Industrial         Status are compensated
                                 Building           with 10 years 100%
                Additional       Allowance is       income tax exemption.
                25%              only allowed for
                deduction of     certain indusries  For Lembah Chuping to
                the cost of                         be more attractive, such
                installation or                     incentives should be
                construction of                     extended to a minimum of
                facilities                          15 years for businesses
                                                    within the industrial park
                   Comparison against HFEI, HSIP and Eco World
                   Broadly, the incentives and benefits in HFIE (for the halal food
                   industry), HSIP and Eco World (for the Research and
                   Development sector) as specified above are currently available
                   in Malaysia. With regards to this, in making Lembah Chuping
                   to be attractive for potential investors, similar or enhanced
                   incentives and benefits should be extended to Lembah
                   Chuping for the park’s benefit.
8.3 Proposed Incentives for the Development of Lembah Chuping
         8.3.1 Rationale for Proposed Incentives for the Development of
                   Lembah Chuping
                   The proposed incentives consist of two (2) forms i.e.:-
                   Existing Incentives
                   Current Incentives that are provided by MIDA and other
                   relevant agencies in Malaysia have stringent criteria for
                   companies to adhere in order to obtain the incentives and
                   benefits provided by them. Thus, the qualifying criteria to enjoy
                   these incentives and benefits in Lembah Chuping are lowered
                   and relaxed so that tenants will be able to benefit from these
                   incentives and benefits.
                   Enhancement or New Incentives
                   Enhanced incentives and benefits are proposed for the
                   development of Lembah Chuping in order to be competitive
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Chuping Valley Development Plan
against incentives and benefits offered to investors by similar
developments in Malaysia and the ASEAN region. Attractive
incentives and benefits are both offered in Southern Thailand
and Halal Food Industrial Estate in Pattani which will provide
competition in attracting investors to Lembah Chuping. Hence,
the proposed incentives and benefits in Lembah Chuping have
to match, or are more attractive than those offered in the areas
above.
Similar non-tax incentives and benefits that are offered by
similar development in Malaysia (Iskandar Malaysia & ECER)
are also being offered for the development of Lembah
Chuping, with an addition of few enhancements to the
incentives and benefits offered by these developments.
In addition to enhanced incentives and benefits, new attractive
incentives are also being proposed in order for Lembah
Chuping to have a unique selling proposition to attract
investments into the industrial park. The proposed
new/enhancements to the incentives and benefits are
highlighted in bold in the proposed incentives sections below.
For the development of Lembah Chuping, several privileged
proposed incentives are being offered to residents in the park.
These proposed incentives are supported by justifications and
factors in formulating these incentives. These justifications are
included in the following:
i) Lembah Chuping is a Greenfield area
         As a Greenfield area, livability factors might serve as a
         grave concern for investors considering to establish or
         relocate their businesses to Lembah Chuping. This is
         because quality of life of its employees is an important
         aspect of consideration for the establishment and
         relocation of their businesses. Furthermore, the long
         gestation period of a Greenfield area to be developed
         into matured industrial estates requires attractive
         incentives in the development phase of the industrial
         estates.
ii) Labour Supply
         It is essential for Lembah Chuping to attract semi-
         skilled and skilled labour as high-technology industries
         are knowledge-workers intensive industry. The
         demand of knowledge workers will increase in tandem
         with the growth of Lembah Chuping, therefore it is
         important for incentives for attracting knowledge
         workers are offered in Lembah Chuping.
iii) Infrastructure readiness
         As mentioned, as Lembah Chuping is a Greenfield
         area, the infrastructures (such as road, water plants,
         and telecommunication network) are not developed yet
         in this area. Therefore incentives to spur the
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Chuping Valley Development Plan
                development of hard infrastructures should be
                emphasized in Lembah Chuping.
8.3.2           Green Manufacturing
                The establishment of a green manufacturing hub in
                Lembah Chuping would create a unique selling
                proposition (“USP”) as the state of Perlis will have a
                first-mover advantage in green technology as
                compared to other states in Malaysia. Besides that, the
                rising demand for green products globally indicates the
                rise in awareness of environmental consideration.
                Therefore, attractive incentives and benefit should be
                offered in Lembah Chuping to attract investors to invest
                in green technology which could also help to reduce the
                impact and preserve its surrounding environment.
Proposed Incentives                                  Eligibility Criteria
Tax Incentives                                       i) Company must be locally
• PS – Income tax exemption of 100% of               incorporated       under
        statutory income for 10 years with twice 5-
                                                     Company Act 1965 and
        year extension (10 + 5 + 5) for the use of
                                                     resident in Malaysia;
green technology services and systems; or ii) Company which incur
• ITA – 100% of qualifying capital expenditure       qualifying         capital
        to be utilized against 100% of statutory
        income for 10 years with once 5 year         expenditure in respect of
        extension (10 + 5);
                                                     Green Technology (‘GT”)
                                                     equipments and products
                                                     must be certified by
• Import Duty exemption for raw materials,           Malaysia           Green
        components, machinery, equipments, spare
                                                     Technology Corporation
        parts and consumables that are not
                                                     (“MGTC”); and
produced locally and used directly in the iii) GT equipment and
manufacturing process; and                           products must be used in
• Withholding tax exemption on royalty and           the business carried out
        technical fees                               in Malaysia
• Incentives for Approved Knowledge
        Workers: 15% flat tax rate on chargeable
        income
• Incentive for Knowledge Workers (for both
        Local and Foreign Workers): Exemption
        on import and/or excise duty on purchases
        of one car
Non-Tax Incentives                                   Eligible Criteria      for
                                                     Knowledge Worker
• Liberalized forex regulations on outward
          remittances to non-residents               i) Malaysia citizen or foreign
                                                          citizen
• Offshore retention of export proceeds
                                                     ii) Bachelor degree or
• Unrestricted Employment of Foreign                      master degree in any
          Knowledge Workers                               professional or technical
                                                          field from a college,
• Permanent Resident Status for the                       institution or university
          spouse and dependent of knowledge               recognized by the
          workers                                         Government of Malaysia
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Chuping Valley Development Plan
          Proposed Incentives                       Eligibility Criteria
•  Relief from the obligation for                   and has at least 5 years
   contributing to HRDF fund but eligible           of working experience in
   for training grants for Malaysian                any qualified activity; Or
   employees                                        Doctoral degree in any
                                                    professional or technical
                                                    field from a college,
                                                    institution or university
                                                    recognized by the
                                                    Government of Malaysia
                                                    and has at least 3 years
                                                    of working experience in
                                                    any qualified activity
                                                    iii) The employer must be a
                                                         company incorporated
                                                         under Companies Act
                                                         1965 and carrying out
                                                         business in Lembah
                                                         Chuping
   8.3.3  Halal Industry
          To capitalise on the growing international demand for halal
          products due to a sizable and growing Muslim population
          around the globe, halal producers in Malaysia should seize the
          opportunity to grow their business domestically and
          internationally. In addition, with the implementation of Asean
          Economic Community (“AEC”) in the pipeline and a huge
          Islamic population in Southern Thailand, there will be
          increasing demand for halal products in the ASEAN and
          Middle East region that will support the growth of the halal
          industry.
          Proposed Incentives                       Eligibility Criteria
Tax Incentives for Operators of Halal Parks i) Company must be locally
with HALMAS Status
                                                    incorporated under
•  PS – Income tax exemption of 100% of             Company Act 1965 and
   statutory income for 10 years with twice         resident in Malaysia; and
   5-year extension (10 + 5 + 5); or                ii) Company must comply
•  ITA - 100% of qualifying capital                 with HDC Designated
   expenditure to be utilized against 100% of       Halal Parks Development
   statutory income for 10 years with once          Guidelines
   5-year extension (10 + 5);and
• Import duty exemption on equipment,
          components and machinery used directly
          in the Cold Room Operations
• Incentives for Approved Knowledge
          Workers: 15% flat tax rate on chargeable
          income
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
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Chuping Valley Development Plan
   Proposed Incentives                                     Eligibility Criteria
Tax Incentives for Halal Industry Players            i) Company must be locally
•  Pioneer Status – Income tax exemption of                incorporated under
   100% of statutory income for 10 years                   Company Act 1965 and
   with twice 5-year extension (10 + 5 + 5);               resident in Malaysia;
   or ii) Company must always
•  Investment Tax Allowance – 100% of                      comply with prescribed
   qualifying capital expenditure against                  quality, hygiene and
   100% of statutory income for 10 years                   environmental guidelines;
   with once 5 year extension (10 + 5);                    and
•  Import duty exemption on raw materials            iii)  The employment of high
   used for the development and production                 valued knowledge
   of halal promoted products; and                         workers with a minimum
                                                           of 10% of the total
•  Double deduction on expenses incurred in
                                                           workforce – at least 2
   obtaining international quality standards
                                                           halal compliance
   such as HACCP, GMP, Codex
                                                           officers
   Allimentarious (food std guidelines of FAO
   & WHO), Sanitation Std Operating
   Procedures and regulations for
   compliance for export markets such as
   Food and Traceability from farm to fork
• Incentives for Approved Knowledge
          Workers: 15% flat tax rate on chargeable
          income
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
Tax Incentives for Halal Logistics Operators         i) Company must be locally
                                                          incorporated under
• PS – Income tax exemption of 100% of                    Company Act 1965 and
           statutory income for 10 years with twice       resident in Malaysia;
           5-year extension (10 + 5 + 5); or
                                                     ii) Company must be
• ITA – 100% of qualifying capital                        involved in integrated
           expenditure against 100% of statutory          logistics services,
           income for 10 year with once 5-year            comprising of three (3)
           extension (10 + 5)                             activities:
• Incentives for Approved Knowledge                            Forwarding
           Workers: 15% flat tax rate on chargeable
           income                                              Warehousing and
• Incentive for Knowledge Workers (for                         Transportation
           both Local and Foreign Workers):
           Exemption on import and/or excise duty    iii) Must have basic
           on purchases of one car                        infrastructure:
                                                               Fleet of commercial
                                                               vehicle (at least 10
                                                               units)
                                                               Warehouse (at least
                                                               2,500 sq ft)
Non Tax Incentives for Halal Industry Players        Eligible Criteria for
                                                     Knowledge Worker
• Liberalized forex regulations on outward
          remittances to non-residents                    Refer to the eligible
                                                          criteria stated in 8.3.2
• Offshore retention of export proceeds
• Unrestricted Employment of Foreign
          Knowledge Workers
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Chuping Valley Development Plan
                   Proposed Incentives                  Eligibility Criteria
• Permanent Resident Status for the
          spouse and dependent of knowledge
          workers
• Relief from the obligation for
          contributing to HRDF fund but eligible
          for training grants for Malaysian
          employees
8.3.4  Green Energy Generation
       Renewable energy is a valuable alternative source of energy to
       fossil fuels as the supply of fossil fuels will diminish and cause
       the price to increase in the near future. Therefore, the prospect
       of renewable energy generation remains upbeat as the
       demand for renewable energy will increase overtime as the
       importance of having a sustainable source of energy to
       conserve the environment is accentuated to reduce the impact
       to the environment.
       Proposed Incentives                              Eligibility Criteria
Tax Incentives                                      i)  Company must be locally
                                                    i)  incorporated under
• PS – Income tax exemption of 100% of                  Company Act 1965 and
          statutory income for 10 years with twice      resident in Malaysia;
          5-year extension (10 + 5 + 5); or
                                                        Renewable energy
• ITA – 100% of qualifying capital                      resources that can be
          expenditure against 100% of statutory         used and energy forms
          income for 10 years with once 5-year          are specified
          extension (10 + 5);
• Import Duty exemption for components, ii) Eligible Criteria for
machinery and equipments used directly                  Knowledge Worker
          in the green energy generation                Refer to the eligible
                                                        criteria stated in 8.3.2
• Withholding tax exemption on royalty and
          technical fees
• Incentives for Approved Knowledge
Workers: 15% flat tax rate on chargeable
income
• Incentive for Knowledge Workers (for
both Local and Foreign Workers):
Exemption on import and/or excise duty
on purchases of one car
Non-Tax Incentives
• Extension of Feed-In-Tariff for Solar
          Energy: Duration of FiT for Solar Energy
          to be extended for another 5 years (21 +
          5)
• Unrestricted Employment of Foreign
          Knowledge Workers
• Permanent Resident Status for the
          spouse and dependent of knowledge
          workers
• Relief from the obligation for
          contributing to HRDF fund but eligible
          for training grants for Malaysian
          employees
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Chuping Valley Development Plan
   8.3.5      Research and Development (R&D)
              R&D plays an important role for companies today in order to
              meet the global challenges of new technology revolution and
              competition, especially in high-technology industries that
              require constant innovation and invention to cater for the
              demand of consumers. Furthermore, special incentives and
              benefits for R&D are offered in HSIP and Eco World to
              encourage the tenants in the industrial parks to create a edge
              over their competitors. Hence, Incentives and benefits to
              encourage R&D in Lembah Chuping is essential for tenants to
              have a cutting-edge over their competitors.
          Proposed Incentives                            Eligibility Criteria
Contract R&D
• PS – Income tax exemption of 100% of i) The R&D activities
                                                         undertaken must comply
   statutory income for 10 years with twice
                                                         with the definition of R&D
   5 year extension (10 + 5 + 5); or
                                                         under the Promotion of
•  ITA – 100% of qualifying capital                      Investment Act (“PIA”)
   expenditure against 100% of statutory                 1986
   income for 10 year with once 5 year ii) The R&D activities
   extension (10 + 5);
                                                         undertaken must be in
•  Import Duty exemption for, machinery and              accordance with the
   equipments used directly in R&D; and                  needs of the country and
•                                                        bring benefits to the
   Withholding tax exemption on royalty and              Malaysian economy;
   technical fees                                   iii) 50% of the income of the
•  Incentives for Approved Knowledge                     company should be
   Workers: 15% flat tax rate on chargeable              derived from R&D
   income                                                activities;
•  Incentive for Knowledge Workers (for             iv)  At least 35% of the
   both Local and Foreign Workers):                      workforce of
   Exemption on import and/or excise duty                manufacturing-based
   on purchases of one car                               company or 3% of the
                                                         workforce of agricultural-
R&D company                                              based company must be
•  ITA – 100% of qualifying capital                      personnel with degree or
   expenditure against 100% of statutory                 diploma in technical fields
   income for 10 years with once 5 year
   extension (10 + 5); or
• Import Duty exemption for, machinery and
          equipments used directly in R&D;
• Withholding tax exemption on royalty and
          technical fees
• Incentives for Approved Knowledge
          Workers: 15% flat tax rate on chargeable
          income
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
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Chuping Valley Development Plan
   Proposed Incentives                            Eligibility Criteria
In-house R&D                                      i) The R&D activities
•  ITA – 75% of qualifying capital                undertaken must comply
   expenditure against 100% of statutory          with the definition of R&D
   income for 10 years;                           under the Promotion of
                                                  Investment Act (“PIA”)
•  Import Duty exemption for, machinery and       1986; and
   equipments used directly in R&D; and           ii) The R&D activities
•  Withholding tax exemption on royalty and       undertaken must be in
   technical fees                                 accordance with the
                                                  needs of the country and
•  Incentives for Approved Knowledge              bring benefits to the
   Workers                                        Malaysian economy
• 15% flat tax rate on chargeable income
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
Commercialization of R&D findings                 i) Company must be locally
•  PS - Income tax exemption on 100% of           incorporated under
                                                  Company Act 1965 and
   statutory income for 10 years with once
                                                  resident in Malaysia; and
   5-year extension (10 + 5); and
                                                  ii) Full Foreign Ownership
•  150% tax deduction given to a company          is permissible for
   investment for the commercialisation of        company to
   R&D findings by its subsidiary                 commercialize R&D
•  Incentives for Approved Knowledge              findings
   Workers: 15% flat tax rate on chargeable
   income
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
Non-Tax Incentives                                Eligible Criteria for
                                                  Knowledge Worker
• Unrestricted Employment of Foreign
          Knowledge Workers;                           Refer to the eligible
                                                       criteria stated in 8.3.2
• Permanent Resident Status for the
          spouse and dependent of knowledge
          workers; and
• Relief from the obligation for
          contributing to HRDF fund but eligible
          for training grants for Malaysian
          employees
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Chuping Valley Development Plan
8.3.6  Waste Management and Recycling
       A dedicated waste management and recycling plant in Lembah
       Chuping should be in place to manage the discharge and
       waste produced from the residents in Lembah Chuping. This is
       also in line with Lembah Chuping green concept proposition
       that is able to provide a conducive and environmental-friendly
       workplace.
       Proposed Incentives                            Eligibility Criteria
Tax Incentives                                        i) Company must be locally
                                                           incorporated under
• PS – Income tax exemption of 100% of                     Company Act 1965 and
           statutory income for 10 years with twice        resident in Malaysia;
           5-year extension (10 + 5 + 5); or
                                                      ii) Company have not
• ITA – 100% of qualifying capital                         commenced operation;
           expenditure against 100% of statutory
           income for 10 years with once 5-year       iii) Fulfil 1 out of the 3
           extension (10 + 5);and                          criteria stated below:
• Accelerated Capital Allowance – Capital                       Level of value-added
           expenditure incurred for purchasing waste
           recycling machinery and equipment to be              Level of technology
           fully utilized within 2 years; and                   as measured by the
                                                                Managerial,
• Withholding tax exemption on royalty and                      Technical and
           technical fees                                       Supervisory Index
• Incentives for Approved Knowledge                             Industrial Linkages;
           Workers: 15% flat tax rate on chargeable             and
           income
                                                      iv) Only recycle
                                                           material/scrap that is
                                                           obtained within Malaysia
• Incentive for Knowledge Workers (for
           both Local and Foreign Workers):
           Exemption on import and/or excise duty
           on purchases of one car
Non-Tax Incentives                                    Eligible Criteria for
                                                      Knowledge Worker
• Unrestricted Employment of Foreign
           Knowledge Workers;                              Refer to the eligible
                                                           criteria stated in 8.3.2
• Permanent Resident Status for the
           spouse and dependent of knowledge
           workers; and
• Relief from the obligation for
           contributing to HRDF fund but eligible
           for training grants for Malaysian
           employees
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Chuping Valley Development Plan
   8.3.7 Academia/ Institution of Higher Learning
            Human capital is one of the most valuable assets in any
            organization as there is a positive correlation between a
            company success and the effectiveness and efficiency of
            human capital management. Hence, an institution of higher
            learning in Lembah Chuping will provide an adequate human
            capital support that is essential to support the development
            and growth of tenants in the industrial park to become
            competitive in their respective industries.
   Proposed Incentives                               Eligibility Criteria
Tax Incentives                                       i) Private Higher Education
•  ITA – 100% of qualifying capital                  Institution (“PHEI”) must
   expenditure against 100% of statutory             be locally incorporated
   income for 10 years with twice 5-year             under Company Act 1965
   extension (10 + 5 + 5);                           and resident in Malaysia
•  Import Duty and Excise Duty Exemption             ii) PHEI to obtain the
   on all educational equipment including            approval of Ministry of
   laboratory, workshop, studio and                  Higher Education
   language laboratory equipment;                    (“MoHE”)
• Withholding tax exemption on royalty and
          technical fees;
• Accelerated Capital Allowances on
          computers and information technology
          assets including software acquired within
          2 years
• Incentives for Approved Knowledge
          Workers: 15% flat tax rate on chargeable
          income; and
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
Non-Tax Incentives                                   Eligible Criteria for
                                                     Knowledge Worker
• Unrestricted Employment of Foreign
          Knowledge Workers;                          • Refer to the eligible
                                                            criteria stated in 8.3.2
• Permanent Resident Status for the
          spouse and dependent of knowledge
          workers; and
• Relief from the obligation for
          contributing to HRDF fund but eligible
          for training grants for Malaysian
          employees
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Chuping Valley Development Plan
   8.3.8 Incentives for other Industries in Lembah Chuping
   Proposed Incentives                              Eligibility Criteria
Tax Incentives                                      i) Company must be locally
•  PS – Income tax exemption of 100% of             incorporated under
   statutory income for 10 years with twice         Company Act 1965 and
   5-year extension (10 + 5 + 5); or                resident in Malaysia
•  ITA – 100% of qualifying capital                 ii) Company must conduct
   expenditure against 100% of statutory            its business activities
   income for 10 years with once 5-year             within Lembah Chuping
   extension (10 + 5);
• Import Duty exemption for raw materials,
          components, machinery, equipments,
          spare parts and/or consumables;
• Withholding tax exemption on royalty and
          technical fees;
• Incentives for Approved Knowledge
          Workers: 15% flat tax rate on chargeable
          income; and
• Incentive for Knowledge Workers (for
          both Local and Foreign Workers):
          Exemption on import and/or excise duty
          on purchases of one car
Non-Tax Incentives                                  Eligible Criteria for
• Liberalized forex regulations on outward          Knowledge Worker
          remittances to non-residents                   Refer to the eligible
                                                         criteria stated in 8.3.2
• Offshore retention of export proceeds
• Unrestricted Employment of Foreign
          Knowledge Workers
• Permanent Resident Status for the
          spouse and dependent of knowledge
          workers
• Relief from the obligation for
          contributing to HRDF fund but eligible
          for training grants for Malaysian
          employees
                - This space intentionally left blank -
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8.4 Cost Benefit Analysis
8.4.1       Introduction to Cost-Benefit Analysis (“CBA”)
            A cost-benefit analysis (CBA) is often used as a means to
            evaluate the potential costs and benefits that may arise when a
            project is completed. For the purpose of this project, a CBA will
            help to assist businesses in their decision-making on the
            viability of undertaking a project. The potential costs and
            benefits that may arise for Lembah Chuping are shown in the
            table below:
Potential Costs   Table 8.7: Potential Costs and Benefits
                                       Potential Benefits
• Tax Revenue to the State and • Job Creation Opportunities
Federal Government                             • GNI Contribution
                                               • Potential Investment into the park
8.4.2 Potential Cost Analysis
                   Table 8.8: Potential Cost Analysis               Investment Tax
                                                                    Allowance (RM
                  Revenue Forgone - Pioneer Status (RM
                                       Million)*                         Million)**
Proposed          Phase 1  Phase 2             Total               Total (As at 2025)
Industries
                  (2016-2020) (2021-2025) (2016-2025)
   Green E&E      1,153    1,808               2,961                  -
Green Materials    257      403                 660                   -
  Solar Energy      17       29                  46                   -
   Generation
Halal Industries     -      135                 135                   -
                     -      382                 382                   -
      SMEs        1,427    2,757               4,184               3,596
       Total
*The revenue forgone by the government by granting Pioneer Status(Income tax exemption) is
calculated by multiplying the Value-Added (GNI) figures of each industries with 24% (the
corporate tax rate from 2016 onwards) 20
**The Investment Tax Allowance is calculated assuming 80% of the Total potential investment
value will be entitled for ITA.
20 Economic Census 2011 (Manufacturing), DOSM
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Chuping Valley Development Plan
       8.4.3 Potential Benefit Analysis
                 Job Creation and GNI Contribution
                               Table 8.9: Job Creation and GNI Contribution
                                             No. of Jobs                GNI Contribution (RM mil)
   Proposed Industries           Phase 1       Phase 2         Total    As at End of  As at End of
Green E&E                      (2016- 2020)  (2021- 2025)  (2016-2025)     Phase 1       Phase 2
                                   2,779          463          3242     (2016- 2020)  (2021- 2025)
                                                                        1077.49         1690.2
Green Materials                1,998          333            2331       239.9           376.3
Solar Energy Generation        612            0              612 24.0 24.0
              F&B              0              246 246                   0 44.7
   Halal                       0              350 350                   0 81.9
Industries
              Pharmaceuticals
SMEs                           0              5,892          5892       0 358.1
Total                          5389 (42.5%) 7284 (57.5%) 12673 (100%) 1341.3          2575.1
                 Potential Investment Inflow into Lembah Chuping
                 Table 8.10: Potential Investment Flow into Lembah Chuping
                                    Companies with                      Companies with
                                    Investment Value                    Investment Value
                                    (>RM100 Million) (RM (≤RM100 Million)
                                    Million)
Average Investment                           492,682,926.83             19,247,467.44
Value Per Company*
No.of Companies**                                  6                         80
Total.                                        2,956,097                 1,539,797
*The figures for average investment value per company are sourced from MIDA (Malaysia
Investment Performance Report 2013)21
**It is assumed that 7% of the companies in the industrial park are companies have investment
values which exceed RM100 Million.
8.5 Key Salient Points
         For an industrial park to be regarded as attractive to investors, it would
         depend on the incentives available in the park. Incentives offered
         would need to be comprehensive and easily implementable in order to
         facilitate the industry development and businesses growth in the park.
         Industries in Malaysia, including the main and supporting industries
         proposed for Lembah Chuping, have been benefiting from existing
         incentives provided by both the Federal and State Governments. On
         top of that, preferential/specific incentives have been given to the
         Strategic Economic Corridors in Malaysia (i.e. Iskandar Malaysia, East
21 http://www.mida.gov.my/env3/uploads/PerformanceReport/2013/IPR2013
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Chuping Valley Development Plan
Coast Economic Region, Sabah Development Corridor and Sarawak
Corridor of Renewable Energy) to stimulate more investment into
these regions.
To examine how attractive the existing incentives in Malaysia for the
proposed industries in Lembah Chuping are, comparisons have been
made against incentives in other ASEAN countries. Notwithstanding
the fact that Malaysia does not have the lowest corporate tax rate in
the region, in general the incentives offered for these industries
appear to be more attractive as compared to the other ASEAN
countries with regard to aspects such as rates, effective period and
coverage/scope. Due to Lembah Chuping’s proximity to Southern
Thailand, comparisons have also been drawn against Southern
Thailand and Halal Food Industrial Estate in Pattani. For Lembah
Chuping to compete with nearby country, the incentives within the
park needs to better off than or if not, at least match those available in
the Southern Thailand.
The proposed incentives for Lembah Chuping primarily aim to retain
and enhance (where appropriate) the existing incentives in Malaysia
as well as to seek for Lembah Chuping to be accorded with the similar
preferential incentives currently granted to other Malaysian industrial
estates (or even better) in terms of (but not limited to) the following:-
• Extension of the effective period (e.g. income tax exemption period
    from 10 years at present to 15)
• More attractive allowances (e.g. investment tax allowance on
    capital expenditure to be offset against 100% of the statutory
    income instead of 70%)
• Relaxation of eligibility criteria for certain incentives (e.g. criteria
    for 15% flat income tax rate on knowledge workers)
• Flexibility on certain administrative rules (e.g. flexibility from
    foreign exchange administrative rules set by the Central Bank)
An attractive incentives package catered to the requirements of
industries in Lembah Chuping is highly likely to distinguish Lembah
Chuping from other industrial areas and be seen as appealing for
investors to establish/expand/re-locate their operations in this park. It
could contribute in creating more job opportunities for the rakyat of
Perlis and increasing the park’s Gross Domestic Product contribution.
As recommended next steps, a special incentives package proposal
should be developed for submission to the Ministry of Finance (MoF).
The proposal should be submitted either as a special application to
the Tax Division or as recommendations to the National Budget Office
in MoF for inclusion into the National Budget. Notwithstanding the
time-consuming lobbying process, the submission of proposal as a
special application to MoF would allow such incentives (once
approved) to be dedicated to Lembah Chuping only. On the other
hand, though it would likely to be prioritised for consideration, proposal
submitted and included into the National Budget might allow other
areas to be accorded with these preferential incentives as well. The
proposal would need to include (but not limited to) areas such as:-
         The background of Lembah Chuping
         Proposed incentives package and eligibility criteria
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Chuping Valley Development Plan
         Justifications for proposed incentives (e.g. cost-benefit
         analysis and alignment with initiatives under the Malaysia Plan
         etc)
Further to the proposal submission, presentation to the MoF for a case
on the incentives package is required. Agencies such as the
Economic Planning Unit, Central Bank, Inland Revenue Board,
Malaysian Investment Development Authority and Customs might be
invited by MoF to the presentation for input. During the presentation,
MoF is likely to provide its preliminary view on the proposed incentives
including those which would not be considered.
At present, there is no prescribed timeline for a decision to be derived
from MoF. Nonetheless, the decision would be driven by the following
factors:-
         Prohibition under the current policy for enhancing/adding
         certain incentives
         Eligibility criteria for proposed incentives which are deemed to
         be excessively relaxed
         Insufficient justifications in the case of potential costs
         substantially outweigh benefits
         Difficulty in implementing the proposed incentives
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Chuping Valley Development Plan
 SUMMARY
i) It is important to offer location specific tax and non-tax
          incentives as a means to attract potential investors to Lembah
          Chuping. Proposed incentives are illustrated as follows:
            i) Pioneer Status: 10 year tax exemption with twice 5-
                     year extension
            ii) Investment Tax Allowance: 100% of qualifying Capex
                     against 100% of statutory income for 10 years with
                     once 5-year extension
            iii) Import and/or excise duty exemption for raw materials,
                     equipments and consumables
    Tax     iv)  Withholding tax exemption on royalty and
incentives  v)   technical fees
                 15% flat tax rate on chargeable income for
                 approved knowledge workers
            vi) Import duty and excise duty exemption for
                     purchases of one(1) car for both local and foreign
                     knowledge workers
            vii) Accelerated Capital Allowance on capital
                     expenditure incurred for purchasing waste recycling
                     machinery and equipment to be fully utilized within 2
                     years for waste management and recycling
            i) Liberalized forex regulations on outward
                     remittances to non-residents
            ii) Offshore retention of export proceeds
            iii) Unrestricted employment of foreign knowledge
                     workers
            iv) Permanent Resident Status for the spouse and
                     dependent of knowledge workers
 Non-Tax v)      Relief from the obligation for contributing to HRDF
incentives       fund but eligible for training grants for Malaysian
                 employees
            vi) Extension of Green Technology Financing Scheme –
                     10 years for Green Energy Generation
            vii) Extension of Feed-In-Tariff quota for Solar Energy:
                     Duration of FiT for Solar Energy to be extended for
                     another 5 years (21 + 5)
            viii) R&D grant for collaboration on a 1-to-1 basis
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