OPPORTUNITIES IN FORESTRY AND ENVIRONMENTAL SERVICES UNDER LIBERALISATION POLICY

This paper was presented by Hazli Jemaat, Deputy Director, Clean Technology and Environment Management Division, MIDA at the seminar On Liberalization of Forestry and Environmental Services in Malaysia, organized by the Institute of Foresters Malaysia (IRIM) and MSPC at the Forestry Department Peninsular Malaysia Headquarters in Kuala Lumpur on 12 March 2013.

Introduction

•    MIDA is established in 1967 under the Act of Parliament, 1965

•    The principal Malaysian Government agency responsible for the promotion of investments and coordination of industrial development in the country

•    First point of contact for investors who intend to set up projects in the manufacturing and services sectors in Malaysia

•    In 2011 renamed as Malaysian Investment Development Authority

FUNCTIONS OF MIDA

•    Promotion

•    Evaluation

•    Planning

•    Follow-up &

•    Monitoring

SPECIFIC LICENSING POLICY FOR WOOD-BASED INDUSTRY

Wood-based Specific Policy

1. Sawn Timber, Veneer and Plywood:

     - ML will be issued to projects that have obtained prior approval from the respective State Forestry Departments;

2. Wood-based Products Utilizing Local Logs as Raw Materials:

    - ML issued to wood-based projects utilizing local logs as raw material is subjected to:

     (i)            approvals from the respective State Forestry Departments in Peninsular Malaysia, and

   (ii)            approvals from the Ministry of Industrial Development/ State Forestry Department in Sabah/Sarawak.

INCENTIVE FOR THE ESTABLISHMENT OF FOREST PLANTATION

•      Companies intending to establish new forest plantations;

•      Existing companies with forest plantations which have not been harvested yet;

•      Existing forest plantation companies intending to establish new areas of forest plantations;

•      Companies taking over existing forest plantations provided harvesting has not commenced,

•      Are eligible to apply for Pioneer Status or Investment Tax Allowance under the PIA, 1986:

      PS – 100% Income tax exemption for 10 years;

ITA – 100% of Qualifying Capital Expenditure incurred within 5 years from the date first QE is incurred.

TAX INCENTIVE FOR RENEWABLE ENERGY (RE)

i.   PIONEER STATUS

    Income tax exemption of 100% of statutory income for 10 years; or

ii.   INVESTMENT TAX ALLOWANCE

Investment tax allowance of 100% on qualifying capital expenditure  

incurred within a period of 5 years

TAX INCENTIVE FOR RE

•      The Incentives for RE is applicable for application received until 31 December 2015

•      The project must be implemented within 1 year from date of approval of the incentive.

CRITERIA FOR INCENTIVES FOR RE PROJECTS

      •      The company must be locally incorporated  under the Companies Act 1965

•      The company must generate the following 

      energy forms:-

   (i)     Electricity

   (ii)     Steam

   (iii)   Chilled water

   (iv)   Heat

 The company must use RE resources

 RE RESOURCES

Palm oil mill / estate waste

ii.   Rice mill waste

iii. Sugar cane mill waste

iv. Timber / sawmill waste

v.   Paper recycling mill waste

vi. Municipal waste

vii. Biogas (from landfill, palm oil mill effluent and others)

viii. Hydro power (not exceeding 30 MW)

ix. Solar power                                            

TAX INCENTIVE FOR COMPANIES PROVIDING ENERGY CONSERVATION SERVICES

i.  PIONEER STATUS

     Income tax exemption of 100% of  statutory income for 10 years; or

ii.  INVESTMENT TAX ALLOWANCE

  Investment tax allowance of 100% on qualifying capital expenditure incurred

  within a period of 5 years.

•      The Incentives for energy conservation is applicable for application received until 31 December 2015

•      The project must be implemented within 1 year from date of approval of the incentive.

TAX INCENTIVE FOR COMPANIES UNDERTAKING CONSERVATION OF ENERGY FOR OWN CONSUMPTION

i. INVESTMENT TAX ALLOWANCE

  Investment tax allowance of 100% on qualifying capital expenditure incurred

  within a period of 5 years

•      The Incentives for energy conservation is applicable for application received until 31 December 2015

•      The project must be implemented within 1 year from date of approval of the incentive.

Criteria for Energy Conservation incentives

•      The company must be locally incorporated under the Companies Act 1965

•      The energy conservation project must be approved by Energy Commission of Malaysia.

STATUS OF RE PROJECTS APPROVED WITH TAX INCENTIVES

As at June 2012

158 projects approved with tax incentives Investments amounting to RM 4.27 billion.

These projects will generate : -

565.9 MW electricity from biomass & mini hydro, 8,709.36 Kwp electricity from solar, 803,889.08 ton steam, 26,008.64 Gj heat, 2,044,920 RT chilled water.

STATUS OF ENERGY CONSERVATION APPROVED WITH TAX INCENTIVES

As at June 2012

47 projects approved with tax incentives Investment amounting to RM 5.7 billion

l  33 projects approved are for companies undertaking conservation of energy for own consumption

l  14 projects are for companies providing energy conservation services