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BILL OF GUARANTEES

Bill of Guarantees (BoG)

In order to foster an environment where MSC Status companies are given the best opportunities to flourish, the Government of Malaysia (Government) affords them with the MSC Malaysia Bill of Guarantees (BoGs).

The BoGs are a set of incentives, rights, and privileges that reflect the Government’s commitment to providing an environment that is conducive to the development of these companies, and subsequently, of a digital economy.

The Government has drafted 10 BoGs that supplement MSC Status companies with the groundwork for economic success:

MSC Malaysia Bill of Guarantees Explanatory Notes

Bill of Guarantee No.1: To provide a world-class physical and information infrastructure


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises the importance of the physical and information infrastructure, to provide a conducive and enabling environment for companies to conduct their business operations, undertake research and develop new technologies, applications and products.

Interpretation

The Government has put in place policies, frameworks and plans to facilitate the provision of physical and information infrastructure as part of a conducive and enabling environment for the operation of MSC Malaysia Status companies. The relevant policies, frameworks and plans have been developed and will continually be updated based on global benchmark towards attaining globally competitive standards ie. “world-class”.

The key strategy in facilitating the provision of this BoG is to require MSC Malaysia Status companies to locate and operate their business operations in Designated Premises within “MSC Malaysia Cybercities” or “MSC Malaysia Cybercentres”, being areas that are measured by their respective sets of globally competitive standards, namely the “MSC Malaysia Performance Standards”, on matters such as utilities and telecommunications services.

To facilitate the expansion of MSC Malaysia, a 2-tier framework of “MSC Malaysia Cybercities” and “MSC Malaysia Cybercentres” has been formulated and implemented by the Government, recognising that different types of businesses and/or operations will have different requirements for physical and information infrastructure.

MSC Malaysia Status entities are required to conduct their own due diligence and continuously satisfy themselves as to the suitability of their respective location(s) and the adequacy of the amenities, facilities, services and business environment provided therein. MSC Malaysia Status entities are further encouraged to adopt the “MSC Malaysia Performance Guarantees with Financial Penalties (“PGFPs”)” offered by the relevant service providers.

Some of the key parties involved in the delivery of this BoG are as follows:

  • Cybercity / Cybercentre Manager.
  • Building managers and owners.
  • Utility companies, telecommunication service providers (“Telcos”) and internet service providers (“ISPs”).
  • State Government, local authorities and related Government agencies.

Responsible Ministries / Agencies

  • Ministry of Communication and Multimedia Malaysia.
  • Ministry of Energy, Green Technology and Water.
  • Ministry of Housing and Local Government.
  • Malaysian Communications and Multimedia Commission.

Bill of Guarantee No.2: To allow employment of local and foreign knowledge workers


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises the importance of human capital to meet the demands of the industry.

Interpretation

MSC Malaysia Status entities are expected to maintain a work force utilising a substantial percentage of knowledge workers, in view of the nature and demands of the ICT industry, and also because the presence of knowledge workers is consistent with Malaysia’s long-term goal of enabling and sustaining productivity-driven growth of a knowledge-based economy.

An entity applying for MSC Malaysia Status is required to specify the number of knowledge workers (local and foreign) that it requires for the conduct of its MSC Malaysia qualifying activities. Such requirements are to be set out in the entity’s business plan, which forms part of its application for MSC Malaysia Status.

An MSC Malaysia Status entity may employ such number of knowledge workers as indicated upon the grant of MSC Malaysia Status, subject to such amendments as may be subsequently approved, based on requests by the MSC Malaysia Status entity.

The process for employment of foreign knowledge workers is subject to requirements under the Immigration Act 1959/63 and the Immigration Regulations 1963. MSC Malaysia Status entities can make applications directly with the Immigration Department, or appoint MDEC to provide the relevant services.

A "knowledge worker" is an individual who holds one of the following:


  • Tertiary qualification from an institution of higher learning (in any field); or
  • Diploma in multimedia / ICT or specialised ICT certification plus at least 2 years' relevant experience in multimedia / ICT or in a field that is a heavy user of ICT; or
  • Professional, executive, management and technical work categories I information technology (IT) enabled services e.g. IT / IS Professionals, Finance / Accounting, Business Administration,

and also includes:

  • In respect of companies falling within the Shared Services and Outsourcing cluster, foreign workers with knowledge-based skills that are not prevalent in Malaysia, required by MSC Malaysia Status companies.
  • In respect of companies falling within the Creative Content & Technology cluster, workers who are utilised for their creative talent to produce value-added creative work for MSC Malaysia Status companies.

MSC Malaysia Status entities are expected to employ these knowledge workers for roles that commensurate their expertise and experience.

Responsible Ministries / Agencies


  • The Immigration Department, under the Ministry of Home Affairs

Bill of Guarantee No.3: To ensure freedom of ownership by exempting companies with MSC Malaysia Status from local ownership requirements

Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognizes the importance of attracting world-leading companies and multinational corporations to set up their global / regional hubs and/or to conduct their business operations, undertake research and develop new technologies, applications and products in MSC Malaysia.

Interpretation

Generally, no restrictions are imposed by the Government on equity conditions for companies incorporated in Malaysia. However, for companies involved in various sectors, equity conditions imposed by the respective sector regulators will apply.

For acquisition of properties (except residential units), approval of the Economic Planning Unit of the Prime Minister's Department is required in respect of the following*:

  • Direct acquisition of property valued at RM20 million and above, resulting in the dilution in the ownership of property held by Bumiputera interest and/or Government agency; and
  • Indirect acquisition of property by other than Bumiputera interest, through acquisition of shares, resulting in a change of control of the company owned by Bumiputera interest and/or Government agency, having property more than 50% of its total assets and the said property is valued at more than RM20 million.

Companies undertaking the above transactions are required to comply with equity conditions, and paid-up capital conditions. However, MSC Malaysia Status companies are exempted from the above, provided that the property is used for their operational activities, including as residence for their employees.

Responsible Ministries / Agencies


  • The Economic Planning Unit of the Prime Minister's Department

Disclaimer:
* Guidelines on the Acquisition of Properties, Economic Planning Unit, Prime Minister’s Department, effective from 30 June 2009.

Bill of Guarantee No.4: To give the freedom to source capital globally for MSC Malaysia infrastructure, and the right to borrow funds globally

Policy Objective

As part of the efforts to promote Malaysia as a major global ICT hub, the Government recognises the need to provide flexibility to MSC Malaysia Status companies to source capital and funds globally.

Interpretation

Flexibility to Source Capital and Funds Globally
Under this BoG, MSC Malaysia Status companies are free to source capital globally, unless otherwise stated in the Anti-Money Laundering and Anti-Terrorism Financing Act 2001, or from residents, authorities, agencies or entities of countries specified in the Exchange Control Act 1953*.

Non-residents investing in MSC Malaysia Status companies are free to repatriate any amount of capital, divestment proceeds, profits and dividends arising from their investments.

MSC Malaysia Status companies are free to remit funds abroad, which are made in foreign currency and transacted through licensed onshore banks.

MSC Malaysia Status companies are also free to borrow from resident and non-resident lenders in Ringgit and in any foreign currency** to finance their business operations.

MSC Malaysia Status companies can borrow in Ringgit:

  • Any amount from licensed onshore banks and other residents.
  • Any amount from their non-resident non-bank parent companies for purpose of financing activities in the real sector in Malaysia.
  • Up to RM1 million in aggregate from other non-resident non-bank companies or non-resident individuals for use in Malaysia.

The Ringgit is currently non-internationalised. All Ringgit funding is therefore only from resident sources onshore.

MSC Malaysia Status companies can borrow in foreign currencies:

  • Any amount from licensed onshore banks, licensed International Islamic banks and non-residents in or outside Malaysia.
  • Any amount from resident companies which are within the same corporate group.

There is no restriction for principal repayment and interest payments to lenders on the Ringgit and foreign currency borrowings by MSC Malaysia Status companies.

Responsible Ministries / Agencies


  • The Central Bank of Malaysia (Bank Negara Malaysia)

For More Information

The Foreign Exchange Administration Rules of Malaysia have been progressively liberalised to facilitate a conducive and competitive business environment by enhancing the efficiency of the regulatory delivery system.

Further information on Malaysia's Foreign Exchange Administration Rules can be obtained from the following:

Bank Negara Malaysia Website
http://www.bnm.gov.my

BNMLINK (Walk-In Centre)
Ground Floor, Block D
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur
Operating Hours: Monday to Friday, 9am to 5pm

BNMTELELINK (Call Centre)
Tel Number: 1-300-88-5465 or 1-300-88-LINK
Fax Number: 03-2174 1515
Email: bnmtelelink@bnm.gov.my
Operating Hours: Monday to Friday, 9am to 5pm

Disclaimer:
* MSC Malaysia Status companies may not source capital from “specified persons” as determined by the Comptroller of Foreign Exchange from time to time under the Exchange Control Act 19533, such as any residents, authorities, agencies or entities of Israel and any entity owned or controlled, directly or indirectly, by Israel or its residents as well as from those belonging to or associated with individuals and entities pursuant to the United Nations Securities Council Resolutions (“UNSCR”). The list of the specified persons pursuant to the UNSCR can be obtained from the United Nations’ website at http://www.un.org/Docs/sc/
** MSC Malaysia Status companies may not borrow from resident and non-resident lenders in the currency of Israel.

Bill of Guarantee No.5: To provide competitive financial incentives, namely Pioneer Status (100 percent tax exemption) for up to ten years or an Investment Tax Allowance for up to five years and no duties on the importation of multimedia equipment


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises that the offer of financial incentives will encourage the accelerated growth of MSC Malaysia Status entities and enhance the competitiveness of their products and services.

Interpretation

Subject to applicable conditions, prevailing policy and relevant laws, MSC Malaysia Status entities are given income tax incentives under the Promotion of Investments Act 1986. Under the Act, an MSC Malaysia Status entity may choose to enjoy one of the following tax incentives:

  • Pioneer Status: 100 percent exemption on taxable statutory income in respect of promoted activity or promoted product for a period of up to 10 years (renewable after the expiry of the first 5 years, subject to compliance with terms and conditions and relevant laws); or
  • Investment Tax Allowance: 100 percent deduction of qualifying capital expenditure in respect of promoted activity or promoted product against the taxable statutory income, for capital expenditure made during the first 5 years of its operation (for qualifying capital expenditure, please refer to the Promotion of Investments ( Determination of Assets Under Section 29B in Respect of MSC Status Companies) Order 2001 [PU(A) 50/2001]).

The grant and enjoyment of tax incentives, including the application process, the criteria and conditions to be met and the withdrawal, cancellation and renewal process, are governed and regulated by the relevant laws.

Subject to the provisions under the Customs Act 1967 and the Sales Tax Act 1972, and such conditions as may be imposed by the Minister of Finance, the import by MSC Malaysia Status entities of multimedia equipment and components for direct use in the operation of their MSC Malaysia qualifying activities may be exempted from import duties and sales tax. The exemption from sales tax will cease with the repeal of the Sales Tax Act 1972 with effect from 1 April 2015.

The criteria to be met for such multimedia equipment and components are as follows:

  • Multimedia / ICT equipment;
  • Equipment is not available locally (i.e. not locally manufactured);
  • Equipment is not for trading;
  • Equipment is directly used for MSC Malaysia qualifying activities; and
  • The MSC Malaysia Status entity complies with the relocation requirement in its Conditions of Grant of MSC Malaysia Status.

To enjoy the exemption, MSC Malaysia Status entities are required to submit an application through MDEC.

Responsible Ministries / Agencies


  • Ministry of Finance
  • Ministry of International Trade and Industry
  • Royal Malaysian Customs

Bill of Guarantee No.6: To become a regional leader in Intellectual Property Protection and Cyberlaws


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises the importance of Intellectual Property as a new engine of growth to enhance economic and social prosperity, and the need for an enabling Cyberlaws framework to tackle challenges brought about by developments in the ICT industry.

Interpretation

The Government is committed to establish a conducive legal and regulatory framework of Intellectual Property and Cyberlaws, as well as to ensure that laws are duly administered, complied with and enforced. The Government further recognises the need to stay ahead of regional competition and is committed to continually enhance the framework to keep abreast with international developments and new challenges.

Responsible Ministries / Agencies


  • Ministry of Communication and Multimedia Malaysia
  • Malaysian Administration Modernisation and Management Planning Unit (“MAMPU”)
  • Ministry of Domestic Trade, Co-operatives and Consumerism
  • Ministry of Home Affairs, supported by the Royal Malaysia Police
  • Intellectual Property Corporation of Malaysia (“MyIPO”)

Bill of Guarantee No.7: To ensure no censorship of the Internet


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises the revolutionary role of the Internet in facilitating information-exchange and innovation, and providing the basis for continuing enhancements to quality of work and life.

Interpretation

While the Government will not censor the Internet, this does not mean that any person may disseminate illegal content with impunity and without regard to the law. To the extent that any act is illegal in the physical world, it will similarly be outlawed in the online environment. Hence, laws prohibiting dissemination of, for example, indecent / obscene or other illegal materials will continue to apply.

In this regard, relevant ministries and agencies will continue to take appropriate actions and enforce those laws that are under their respective purview.

Responsible Ministries / Agencies


  • Ministry of Communication and Multimedia Malaysia
  • Malaysian Communications and Multimedia Commission

Bill of Guarantee No.8: To provide globally competitive telecommunications tariffs


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises the pivotal role of competitive telecommunication tariffs in attracting investments to MSC Malaysia and encouraging the growth of the ICT industry.

Interpretation

MSC Malaysia entities enjoy a set of published telecommunications tariffs that are generally competitive against selected countries, for the conduct of MSC Malaysia qualifying activities.

To ensure that the telecommunications tariffs at MSC Malaysia remain competitive, the published tariffs are continuously benchmarked and reviewed, and are therefore subject to fluctuations. Further, the said tariffs may not necessarily be the lowest, taking into consideration, among other things, the dynamic nature of the global telecommunications environment and the overall economic conditions and telecommunications framework of the country.

Responsible Ministries / Agencies


  • Ministry of Communication and Multimedia Malaysia
  • Malaysian Communications and Multimedia Commission

Bill of Guarantee No.9: To tender key MSC Malaysia infrastructure contracts to leading companies willing to use MSC Malaysia as their regional hub


Policy Objective

To realise the vision for Malaysia to be a major global ICT hub, the Government recognises the importance of attracting leading companies to set up in MSC Malaysia. Hence, the offer of contracts related to key MSC Malaysia infrastructure may be used as an incentive to attract these leading companies to set up their global / regional hubs in MSC Malaysia.

Interpretation

The Government may consider inviting leading companies that are willing to set up their global / regional hubs in Malaysia to submit proposals for key MSC Malaysia infrastructure works, as an incentive to attract such companies to invest in MSC Malaysia. Where appropriate, the offer of contracts may be made through direct negotiations based on a number of considerations, including value propositions of such companies and their expertise and track record in carrying out similar successful projects elsewhere.

"Key MSC Malaysia infrastructure works" encompass both physical and soft infrastructure.

Responsible Ministries / Agencies


  • Ministry of Finance

Bill of Guarantee No.10: To provide a high-powered implementation agency to act as an effective one-stop super shop


Policy Objective

MDEC has been set up by the Government to act as a one-stop centre, to drive the development of MSC Malaysia specifically, and the ICT industry in general.

Interpretation

MDEC is incorporated as a private limited company under the Companies Act 1965 and is an agency under the Ministry of Communication and Multimedia Malaysia.

MDEC’s functions are to develop, coordinate and promote Malaysia’s digital economy, information and communication technology (ICT) industry and the extensive use of ICT in Malaysia*.

This would include processing applications by companies for MSC Malaysia Status, and facilitating applications related thereto, such as applications for foreign knowledge workers and tax incentives.

MDEC also conducts periodic benchmarking of regional and global tariffs and facilitates discussions and engagements with Telcos and ISPs, for adoption of competitive telecommunications tariffs for MSC Malaysia Status entities.

In addition, MDEC also provides advice to the Government on policies and laws relevant to the ICT industry, and develops and implements MSC Malaysia-specific initiatives (such as MSC Malaysia Cybercity / Cybercentre Status).

The promotion of MSC Malaysia locally and globally, and support given by MDEC to MSC Malaysia Status entities, both at the national and global levels, are also initiatives undertaken by MDEC to enhance the development of the ICT industry in Malaysia, towards growing Malaysia as a global ICT hub.

Responsible Ministries / Agencies


  • Ministry of Communication and Multimedia Malaysia.

Disclaimer:
* Ministers of the Federal Government(No 2)(Amendment)(No 2)(Amendment) Order 2014 [PU(A) 201/2014].

Select another Bill of Guarantees

MSC Malaysia Status Entitles qualified entities* to enjoy different types of benefits from BOGs as illustrated below:

*MSC Malaysia Status entities include companies, incubators, and institutions of higher learning.


Located in Designated Premises within MSC Malaysia Cybercities / Cybercentres.


BoG 1

To provide a world-class physical and information infrastructure world-class physical and information infrastructure.


BoG 2

To allow employment of local and foreign knowledge workers.


BoG 3

To ensure freedom of ownership by exempting companies with MSC Malaysia Status from local ownership requirements.


BoG 4

To give the freedom to source capital globally for MSC Malaysia infrastructure, and the right to borrow funds globally.


BoG 5

To provide competitive financial incentives namely Pioneer Status (100 percent tax exemption) for up to ten years or an Investment Tax Allowance for up to five years and no duties on the importation of multimedia equipment.


BoG 6

To become a regional leader in Intellectual Property Protection and Cyberlaws.


BoG 7

To ensure no censorship of the Internet.


BoG 8

To provide globally competitive telecommunications tariffs.


BoG 9

To tender key MSC Malaysia infrastructure contracts to leading companies willing to use MSC Malaysia as their regional hub.


BoG 10

To provide a high-powered implementation agency to act as an effective one-stop super shop.

Located in Commercial Premises within MSC Malaysia Cybercities / Cybercentres.


BoG 2

To allow employment of local and foreign knowledge workers.


BoG 3

To ensure freedom of ownership by exempting companies with MSC Malaysia Status from local ownership requirements.


BoG 4

To give the freedom to source capital globally for MSC Malaysia infrastructure, and the right to borrow funds globally.


BoG 5

To provide competitive financial incentives namely Pioneer Status (100 percent tax exemption) for up to ten years or an Investment Tax Allowance for up to five years and no duties on the importation of multimedia equipment.


BoG 6

To become a regional leader in Intellectual Property Protection and Cyberlaws.


BoG 7

To ensure no censorship of the Internet.


BoG 9

To tender key MSC Malaysia infrastructure contracts to leading companies willing to use MSC Malaysia as their regional hub.


BoG 10

To provide a high-powered implementation agency to act as an effective one-stop super shop.

MSC Status companies located outside Cybercities / Cybercentres.


BoG 2

To allow employment of local and foreign knowledge workers.

PROVISION: May enjoy foreign knowledge workers up to a maximum of 20 foreign knowledge workers at any time.


BoG 3

To ensure freedom of ownership by exempting companies with MSC Malaysia Status from local ownership requirements.


BoG 4

To give the freedom to source capital globally for MSC Malaysia infrastructure, and the right to borrow funds globally.


BoG 5

To provide competitive financial incentives namely Pioneer Status (100 percent tax exemption) for up to ten years or an Investment Tax Allowance for up to five years and no duties on the importation of multimedia equipment.


PROVISION: Income tax exemption of 70 percent under Section 127(3)(b) of Income Tax Act 1967 for a period of five years and no duties on the importation of multimedia equipment


BoG 6

To become a regional leader in Intellectual Property Protection and Cyberlaws.


BoG 7

To ensure no censorship of the Internet.


BoG 9

To tender key MSC Malaysia infrastructure contracts to leading companies willing to use MSC Malaysia as their regional hub.


BoG 10

To provide a high-powered implementation agency to act as an effective one-stop super shop.

MSC Status Accredited Incubators that accelerate the growth of promising entrepreneurs.


BoG 2

To allow employment of local and foreign knowledge workers.


BoG 3

To ensure freedom of ownership by exempting companies with MSC Malaysia Status from local ownership requirements.


BoG 4

To give the freedom to source capital globally for MSC Malaysia infrastructure, and the right to borrow funds globally.


BoG 5

To provide competitive financial incentives namely Pioneer Status (100 percent tax exemption) for up to ten years or an Investment Tax Allowance for up to five years and no duties on the importation of multimedia equipment.


BoG 6

To become a regional leader in Intellectual Property Protection and Cyberlaws.


BoG 7

To ensure no censorship of the Internet.


BoG 9

To tender key MSC Malaysia infrastructure contracts to leading companies willing to use MSC Malaysia as their regional hub.


BoG 10

To provide a high-powered implementation agency to act as an effective one-stop super shop.

Universities, colleges, and vocational institutes with IT programmes.


BoG 2

To allow employment of local and foreign knowledge workers.


BoG 5

To provide competitive financial incentives namely Pioneer Status (100 percent tax exemption) for up to ten years or an Investment Tax Allowance for up to five years and no duties on the importation of multimedia equipment.


BoG 6

To become a regional leader in Intellectual Property Protection and Cyberlaws.


BoG 7

To ensure no censorship of the Internet.


BoG 10

To provide a high-powered implementation agency to act as an effective one-stop super shop.