Principal hub incentive scheme introduced

Mustapa wants Malaysian businesses to explore the growing Asean market.

Zaidi Azmi
Written by Zaidi Azmi

KUALA LUMPUR – April 6, 2015: In a bid to strengthen the country’s position as a competitive regional and global operation base, the Ministry of International Trade and Industry (MITI) has decided to introduce the principal hub incentive scheme.

Its minister Datuk Seri Mustapa Mohamed believes that the scheme can complement the increasing trend of global offshoring activities by encouraging foreign companies to leverage on Malaysia’s competitive position in Asean and Asia Pacific.

In addition, Mustapa said the scheme will position Malaysia as part of the integrated global supply chain sector, where Malaysia has a comparative advantage.

Effective this May 1, the scheme will replace the international procurement centres, regional distribution centres and operational headquarters incentive schemes that will be officially terminated by the end of this month.

According to Mustapa, via the scheme, the incentive given is in the form of a three-tiered rate of corporate tax reduction amounting up to 10 per cent, based on the level of value created.

This includes level of business spending, value added function and risk transferred to the principal company, high level job creation and the number of countries served.

Aside from tax rate reduction, applicants will enjoy an import duty exemption, foreign exchange administration flexibilities, support full offshoring trading and wider service coverage.

All applications received by Malaysia Investment Development Authority (MIDA) from May 2015 untill April 2018 are eligible to be considered for the scheme.

During the announcement, Mustapa also said that MIDA will work with other investment promotional agencies and the regional corridors to promote the incentive.

In 2014, a total of 156 regional establishments were approved.



About the author

Zaidi Azmi

Zaidi Azmi

If Zaidi Azmi isn’t busy finding his way in the city, this 26-year-old northern kampung boy can be found struggling to make sense of the Malaysian political scene. Zaidi can be reached at