The services are prescribed services performed in connection with goods for export where the service is supplied to overseas customers and prescribed services supplied in the Free Zones, including Licensed Manufacturing Warehouses (LMW) to overseas customers.
The other two services are Research and Development (R&D) services provided to overseas customers and non-recurring expenditure incurred as engineering expenses, including tools and machinery used in the manufacturing process of goods.
Speaking at the American Malaysian Chamber of Commerce (AMCHAM) dinner here, the Prime Minister said in order to accommodate the necessary amendment to the GST Zero Rate Order, a relief from charging of GST under Section 56 of the GST Act 2014 had been granted with effect from July 1, 2017.
“The Malaysian Government has always been supportive in facilitating the business community in Malaysia and welcomes frank and transparent dialogue between all the stakeholders involved,” he said.
Najib said the government also recognised that AMCHAM had been working tirelessly in support of its members.
“As such, the government under Barisan Nasional is committed to ensuring a set of guidelines regarding the exemption of withholding tax which will be announced by the end of July,” he said.
These guidelines would be formulated jointly by the Ministry of Finance (MoF), Ministry of International Trade and Industry, as well as Malaysian Investment Development Authority, together with relevant industry groups and associations to ensure the interests of all parties are taken into consideration.
A special committee under the MoF will also be established to address any ambiguity or disputes that may arise, he added.
In response to stabilising the ringgit, Najib, who is also Finance Minister, said Bank Negara Malaysia (BNM) had introduced several measures to realign the US dollar-ringgit demand and supply levels.
He said BNM had implemented this policy with a view to accommodate the business needs of exporters.
In light of this approach, exporters are allowed to retain 25 per cent of export proceeds in foreign currency, and in addition, are given the flexibility to increase foreign currency balances for up to six months of import payments and foreign currency obligation, he added.
Najib said this was at no additional cost through simultaneous reconversion at the same rate and hoped that the flexibility provided the necessary room for Malaysian exporters to accommodate their business requirements.
He added that these announcements would produce a certain level of certainty and relief to members of the industry.
“I would like to reiterate that the ministries and all the relevant agencies are always open for engagement and dialogue.”
“We are committed to ensuring that Malaysia remains a welcoming place for investors, with a vibrant and conducive business environment,” he said.
Meanwhile, Najib said that American firms have played an important role in driving the growth of several sectors in Malaysia, namely energy, finance, electronics, technology and manufacturing, with the cumulative value of US private investment in the manufacturing sector alone amounting to more than US$15 billion to date.
“Moving forward, I would like to suggest that we work towards the signing of double-tax agreement between the two countries (United States-Malaysia) because this will allow American companies to deduct their tax obligations,” he said.
Currently, American companies employed about 200,000 Malaysians workers, with the largest employers recorded in Penang, Perak and Negeri Sembilan.
“Trade has long been at the heart of our connections. The US has always been among the top ten foreign investors and trading partners of Malaysia, and at various times, has taken the top spot.
“Our rubber, for example, was crucial for the growth of the American automobile industry, and that demand spurred our production – an early synergy between our countries,” he added.
Najib said that many American firms were still expanding in Malaysia, with some perhaps very sensibly recognising that Malaysia was perfectly positioned to be a regional hub for Southeast Asia.”
“We welcome and appreciate that long-term investment, and we thank you for the confidence you continue to demonstrate in Malaysia.”
“I can assure you, that the confidence is not misplaced. Only earlier this year Malaysia was named the ‘Best Country to Invest In’ in a report co-authored by the Wharton School at the University of Pennsylvania,” he said.
Under the Economic Transformation Programme initiated in 2010, Najib said 2.26 million jobs had been created, inflation and unemployment had been kept low, and healthy growth had been maintained, even during years of great uncertainty for the global economy.
“We are looking to build a stronger ecosystem, centred on talent, skills and innovation. To do this, we will need friendly, trusted partners who will perpetuate the culture of cooperation that has defined the way we do business.
“We want American companies, which are already at the forefront of next-generation productivity, to continue to flourish in Malaysia and become strategic partners in the new businesses which will propel us to high-income nation status,” he added. – Bernama