Malaysia offers incentives to RI firms
JAKARTA (JP): Malaysian Minister of International Trade and Industry Rafidah Aziz arrived on a three-day visit offering incentives for Indonesian companies to invest in high technology industries in her country.
"Malaysia is no longer competitive to host labor intensive industries as the country moves toward being an industrialized nation," Rafidah said at the Shangri-La hotel yesterday.
Rafidah, accompanied by a group of business people, arrived here Saturday night to promote bilateral trade and investment. This is the third leg, after Thailand and the Philippines, of her Southeast Asian tour.
She inaugurated a joint venture company in Cikarang, West Java, on Sunday and met with Minister of Trade Satrio B. Joedono yesterday.
The joint venture company, PT Usra Krama Yudha, is 51 percent owned by Usra SDN BHD of Malaysia, 35 percent by PT Krama Yudha and 14 percent by Malaysian businessman Rusdi Yusof. The venture manufactures electronic, electric and automotive plastic component parts.
Rafidah is scheduled to pay a courtesy call on President Soeharto today before leaving for Kuala Lumpur.
"Malaysia is now offering an incentive package to attract investment in high-technology industries," she said at the luncheon hosted by the Indonesian Chamber of Commerce and Industry.
She defined the term high-tech industries as those engaged in aerospace, advanced electronics, biotechnology, automation and flexible manufacturing systems, electro-optics, non-linear optics, instrumentation, opto-electronics, alternative energy sources and software engineering.
"Such companies will be eligible for 100 percent relief from corporate tax or an investment tax allowance of 60 percent on capital expenditure for a period of five years," she said.
Malaysia is also encouraging present investors to reinvest profits for expansion, diversification and modernization of their operations by increasing the reinvestment allowance from 40 percent to 50 percent.
She said Malaysia is opening up new areas of investment, reducing restrictions, relaxing regulations on property ownership and easing requirements on foreign equity control.
"All payments abroad, including repatriation of capital and remittance of profits, are freely permitted," said Rafidah.
Malaysia's total two-way trade with Indonesia in 1994 amounted to US$1.77 billion, or 1.4 percent of Malaysia's total merchandise trade. Exports to Indonesia increased by 33.7 percent in 1994 to $0.7 billion, while its imports from Indonesia amounted to $0.9 billion.
"Malaysia is currently facing a shortage of labor resulting in relatively higher labor costs," said Rafidah.
Since Malaysia is losing its comparative advantage in the labor intensive industries, regional imports can be expected to replace domestic production, she added. (kod)