More attractive to invest in Iskandar

PETALING JAYA: The Government move to cap personal income tax at 15% in Iskandar Malaysia is expected to attract more investment to the economic region as well as speed up its development.

Last week, in a move to fast-track development at Iskandar, the Government proposed a special tax rate of 15% for knowledge workers in Iskandar compared with the maximum rate of 26% for the rest of the country.

“This (lower tax rate) should attract more investment into the region – especially from Singapore,” AmResearch Sdn Bhd said.

Under Budget 2010, the Government has also allocated RM3.5bil for infrastructure and basic amenities for all five economic corridors.

Iskandar Regional Development Authority (IRDA) chief executive officer Harun Johari said the incentives and allocation would contribute to enhancing Iskandar’s development as well as attract more talents to contribute towards the development.

Harun believed the government support would facilitate the achievement of Iskandar’s vision of a strong and sustainable metropolis of international standing.

IRDA is the regulatory authority mandated to plan, promote and facilitate the development of Iskandar.

While the Federation of Malaysian Manufacturers welcomed the move, it opined that the personal income tax rate of 15% for knowledge workers in Iskandar could have been extended to a larger number of workers on a nationwide basis.

“We believe Iskandar will be the first to kick off. This year’s award of RM1bil worth of infrastructure jobs to WCT Bhd, Salcon Bhd and Loh & Loh Corp Bhd is testament to our view,” OSK Research.

The research house said that apart from the physical infrastructure development of Iskandar, the capped and lower tax rate for employees working there should be an “added bonus” in efforts to attract the right employees for the various service industries planned in Iskandar.

“While it should not have an immediate impact, it will definitely benefit this pioneer development corridor in the long run,” OSK said.

ECM Libra expects property developers in Iskandar to “receive a boost” in property demand if the Government’s plan to attract more knowledge workers from within and abroad yields the desired results.

Among the developers with significant exposure in Iskandar are UEM Land Holdings Bhd, SP Setia Bhd, Mah Sing Group Bhd and UM Land Bhd.

Kenanga Research said while it did not expect a stampede from overseas Malaysians particularly from Singapore to set up camp in Iskandar, it would definitely create an attractive base to attract talent back as well as speed up the infrastructure development.