KL Extends IDR Incentives To Developers

Source : The Business Times, October 10, 2007

PM says 'customised incentive packages' for bigger investors with specific needs can be considered

THE first section of Malaysia's planned Iskandar Development Region, across the straits from Singapore, was yesterday identified for special incentives for approved companies.

Mr Abdullah: Package of incentives includes 10-year income tax exemptions for certain qualifying activities

It is called Node 1 and covers 96 million sq ft - 8.9 sq km - of greenfield waterfront land between the Johor state new administrative centre and the second crossing to Singapore.

The IDR-status companies for Node 1 must operate in six specific service sectors, as announced in March: creative industries, education, financial advisory & consulting, healthcare, logistics, and tourism.

The first package of incentives, which includes 10-year income tax exemptions for certain qualifying activities, will be extended to approved developers and approved development companies as well as IDR-status companies.

Approved developers are those acquiring sub-lease rights to lands within Node 1, while approved development managers are those sanctioned by the developers. In effect, these would be companies which acquire some interest in the building or management of components within the node.

The first node which has already attracted some Middle Eastern investment, is envisaged as a comprehensive development including leisure, residential, financial and high-end industrial components.

Yesterday, Prime Minister Abdullah Ahmad Badawi indicated that the government was also prepared to consider 'customised incentive packages' for bigger investors with specific needs.

Mr Abdullah told a press conference in Putrajaya after he co-chaired the third Iskandar Regional Development Authority board meeting: 'If it is important to do that, we certainly can (consider). The point is we can have discussions with them to decide.'

Malaysia is actively promoting the IDR - which is intended eventually to cover an area about three times the size of Singapore - as a new economic zone for the country and surrounding region.

Some RM4.3 billion (S$1.8 billion) would be injected by the government into infrastructure development for Node 1, and with an estimated RM40 billion required in the first five years alone, huge levels of private investment are needed to drive the plan.

In August, the IDR received its first major boost when four Middle Eastern groups - Aldar Properties, Mudabala Development Company, Kuwait Finance House and Millennium Development International Company - committed about RM4.1 billion to develop the whole area of Node 1 into various themed zones that would include lifestyle, cultural and financial districts.