KUALA LUMPUR, Sept 6 (Bernama) -- Local contractors will gain from the first wave of investment from the Gulf recently and further inflow into the Iskandar Development Region (IDR) before end of this year, say tax experts and analysts.
The RM4.1 billion injection from reputable companies from the Gulf Cooperation Council (GCC) countries last week was testimony of foreign investor confidence in Malaysia, they said.
"You need to create and give a push to the area and give reasons for world-class developers to come in, such as providing income tax exemptions and gains from sale of properties," said Taxand Malaysia Sdn Bhd's managing director Dr Veerinderjeet Singh at a roundtable on the 2008 Budget organised by Bernama.
He said the foreign players would be involved in planning and marketing the area, such as luring other global players to locate in the services hub to be created in the region while local contractors would be used to build the infrastructure, such as buildings for their projects.
Veerinderjeet said the IDR was focusing more on the urban metropolis as it is close to Singapore, while the northern and eastern corridors would have a different angle, with similar activities such as agriculture and oil and gas.
"IDR has a different focus. If we are looking at development of infrastructure, there are enough companies in Malaysia which can do the job themselves. Because of IDR's closeness to Singapore, it is looking and developing itself as an urban metropolis," he said.
"It is looking itself as a global city and region. We are looking at attracting the high end level. IDR will drive the property sector," Veerinderjeet said.
"There will be jobs for our local contractors," he said.
Among the incentives provided for companies approved by the Iskandar Regional Development Authority (IRDA) or IRDA-status companies in qualifying activities are they would not be subject to the Foreign Investment Committee (FIC) requirement of a 30 percent Bumiputera equity.
The qualifying activities are to be in the targeted sectors -- creative industries, educational services, financial advisory and consulting, healthcare, logistics and tourism-related services.
These investment projects approved by the IRDA in designated zones will be eligible for a 10-year corporate tax exemption as well as waiver of the withholding tax on specific payments, provided the projects are implemented by 2015.
The companies undertaking these projects are free to source their capital globally as well as employ foreign staff without restriction, within approved zones.
The government had earlier announced the plan to introduce passport-free zoning, where two areas will be designated as Free Access Zones (FAZ) for foreigners to live and work, where there will be no Immigration and Customs checks for entry.
As for the northern corridor, Veerinderjeet said: "We will wait and see if there are some more incentives for the Northern Corridor Economic Region (NCER)."
Inter-Pacific Research Sdn Bhd's research head Anthony Dass concurred with Veerinderjeet that local players would be the ones involved in the rudimentary aspects such as building the infrastructure, but planning would be by the "foreign boys" altogether.
He said the IDR, being services- and export-driven, was aimed at wooing foreign investors, and he expected local property companies and construction players in the area to benefit from development in the south.
"The focus now will be on the IDR, that is to woo foreign investors. We are now expecting the IDR to generate the construction sector and related activities," Dass said.
The IDR, a brainchild of Prime Minister Datuk Seri Abdullah Ahmad Badawi, was launched in November last year and is being designed as a new growth centre for the country.
The RM367.5 billion project was to turn part of southern Johor state into a prosperous Asian metropolis.
The IDR, covering 2,217 square kilometres, is nearly three times the size of Singapore. It is an ambitious plan aimed at making the region bigger than China's Shenzhen, which has greatly benefited from Hong Kong.
Tax Advisory and Management Services Sdn Bhd's executive director Yong Poh Chye also noted that the incentives to attract investors were already announced by the government for the IDR, but these were not applicable to the NCER and eastern corridor.
"No rules yet for the northern region and the eastern corridor. Maybe after the budget, these will be announced," he said.