IKL Brochure 2 fold FINAL A3 PagebyPage

Greater
Kuala Lumpur
The Optimal Principal Hub For
Multinational Companies In Asia
www.investkl.gov.my
In line with changing global economic trends, Multinational companies (MNCs) today are adopting principal
hub models where quicker decision making and optimized capacity/resource located at a principal hub enables
the delivery of superior service experience and maximization of operating efficiencies. By centralizing strategic
global/regional functions, activities, risks, and their associated revenue streams, a principal hub provides better
sharing of resources, services (such as management, R&D, payroll, accounting, logistics and quality control),
technology and commercialization of products.
MNCs that are traditionally located in cities with rapidly rising costs, should now consider Greater Kuala Lumpur
(Greater KL) as the optimal location for their principal hub. Strategically located in the heart of ASEAN, Greater KL
offers MNCs access to a growing talent pool that is multi-lingual, sophisticated business ecosystem, world-class
infrastructure and connectivity, competitive cost advantage and a principal hub tax incentive that caters to their
business model.
What Is Principal Hub
The Principal Hub is a centralized base for companies operating as a nerve centre to
conduct its regional and global businesses. The key functions of a principal hub include
management of risks, decision making, management, strategic business activities, human
resources, finance and trading.
Decision Making
Financial Services
Management
Human Resources
Trading
Principal Hub Incentive Framework
Introduced by the Malaysian Government in 2015, the principal hub incentive is developed in line with
an evolving regional management and global supply chain trend. It serves to enhance Greater KL’s
competitiveness as a leading regional base for MNCs to grow across the region.
The incentive further affirms the government’s commitment to attract more regional set ups by the world’s
largest MNCsCoupled with the city’s competitiveness, talent availability, world-class infrastructure and
business-friendly ecosystem, this incentive places Greater KL as a leading location for MNC’s to establish
their principal hubs in Asia.
Incentives for Principal Hub
The Principal Hub incentive offers eligible MNCs with a 3-tiered corporate taxation rate as follows:
TIER 1
Blocks (Year)
Tax Rate
5
+5
0%
TIER 2
5
+5
5%
5
+5
10%
Regional P&L + 2
Functions
TIER 3
Strategic Services + 2
High-Value Job
50
30
15
(Key Positions)
(5)
(4)
(3)
RM 10 million
RM 5 million
RM 10 million
Local Business Spend
Countries Served
Outside Malaysia
Annual Sales
Extension
5
4
3
RM300M (applicable only to goods-based applicant company)
Business Spend: Base + 30%
To be eligible for the principal hub incentive, MNCs must serve and control network companies in at least
three countries outside of Malaysia and carry out at least three qualifying services, one of which must be
from the strategic services cluster as follow:
A
Strategic
Services
Regional P&L/ Business Unit Management 1
Strategic Business Planning
and Corporate Development
Corporate Finance Advisory Services
Brand Management
IP Management
Senior-level Talent Acquisition
and Management
1 P&L Managment focuses on the growth of the company with direct influence on how
company resources are allocated -determining the regional / global direction, monitoring
budget expenditure and net income, and ensuring every program generates a positive ROI
B
B
Business
Services
Bid and Tender Management
Treasury and Fund Management
Research, Development & Innovation
Project Management
Sales and Marketing
Business Development
Technical Support and Consultancy
Information / Management
and Processing
Economic / Investment
Research Analysis
Strategic Sourcing,
Procurement and
Distribution
Logistics Services
C
Shared
Services
Corporate Training
and Human Resource Management
Finance & Accounting
(Transactions, Internal Audit)
General Administration
IT Services
Greater KL as a Principal Hub Location
Greater KL is a unique National Key Economic Area (NKEA) in
Malaysia’s Economic Transformation Programme (ETP) — a comprehensive
effort that will transform Malaysia into a high-income nation by 2020, as it has
a geographical focus rather than the industry focus of the other 11 NKEAs.
Being the pillar and engine of the nation’s economic growth, the capital
city of 7 million population contributes RM190 billion (US$60 billion),
30 percent of Malaysia’s gross national income (GNI). Greater
KL’s value proposition as a principal hub is clear:
5 WAY S GR E AT E R KL I S A P R I N CI PA L H U B
ACCESS TO MARKET
Greater KL, Malaysia, is in the heart of the ASEAN region of 633 million
people and is equidistant between China and India, making it an ideal entry point
for companies doing business in Asia’s two largest markets.
ASEAN has a GDP of $2.3 trillion and is experiencing more than 5% economic
growth.
Malaysia, taking over the ASEAN chairmanship in 2015, is considered to be one
of ASEAN’s most politically and economically stable economies.
INFRASTRUCTURE AND CONNECTIVITY
KLIA is the world’s 11th busiest international airport, serving 35 million passengers
per year.
Flights to 100 cities worldwide.
The world’s 28th busiest airport by cargo traffic.
The Port Klang seaport, 12th busiest port in the world, is linked to 300 ports globally
by 39 operators.
Greater KL has more than 1,600 acres of Free Trade Zones and 2.7 millions
warehouse space.
TALENT AVAILABILITY
Greater KL produces 110,000 graduates annually from various disciplines,
including engineering, finance and business administration.
A third of Malaysia’s new graduates move to Greater KL upon graduation.
Greater KL has 39 public and private universities.
COST COMPETITIVENESS
Significantly lower office rental rates than Hong Kong and Singapore.
Talent can cost one third to one half what it would cost in comparably sized metros.
Greater KL’s cost of living is ranked 115th globally, making it an affordable
location
for expatsof
andPrincipal
local employees.Hub
Additional
Benefits
COMPETITIVE TAX REGIME
No local equity / ownership condition
Expatriate posts based on requirements of applicant’s business plan
Malaysia
offers
wide array of competitive tax incentives.
subject to current
policy
onaexpatriates
Other markets have comparable or lower tax rates, but those are offset by higher
Foreign Exchange Administration flexibilities will be accorded in support
business costs.
of business efficiency and competitiveness of companies under the
72 Double Tax Agreements to mitigate cross border taxation.
principal hub
Bring in raw materials, components or finished products with customs
duty exemption into free industrial zones, LMW, free commercial zones
and bonded warehouses for production or repackaging, cargo
consolidation and integration before distribution to its final consumers
for goods-based companies.
InvestKL
is mandated by the Malaysian Government to attract and
facilitate large global multinationals including Fortune
500 and Forbes 2000 companies to set up their regional
business, innovation and talent hub in Greater KL and
strategically grow their business in Asia.
The agency’s business focus and consultative approach
has yieled impressive results, having successfully attracted
many large multinationals to invest in Greater KL since its
inception in 2011.
16th Floor, Menara SSM@Sentral,
No. 7, Jalan Stesen Sentral 5,
Kuala Lumpur Sentral,
50623 Kuala Lumpur, Malaysia.
Tel
: +603 2260 2270
Fax : +603 2260 2292
Email : info@investkl@gov.my
Additional Benefits of Principal Hub
No local equity / ownership condition
Expatriate posts based on requirements of applicant’s business plan
subject to current policy on expatriates
Foreign Exchange Administration flexibilities will be accorded in support
of business efficiency and competitiveness of companies under the
principal hub
Bring in raw materials, components or finished products with customs
duty exemption into free industrial zones, LMW, free commercial zones
and bonded warehouses for production or repackaging, cargo
consolidation and integration before distribution to its final consumers
for goods-based companies.