With both the Fourth Industrial Revolution (IR4.0) and environmental, social, and governance (ESG) agendas being heavily promoted by the World Economic Forum as well as governments across the world, there are potentially significant benefits – financial and commercial – for companies to adopt solutions related to both IR4.0 and ESG. Malaysian government agencies and GLCs can help improve the uptake of such solutions through a combination of incentives and financing opportunities.
One of the major benefits that automation and IR4.0-related technologies can bring to the table when it comes to ESG compliance is in increasing and improving data visibility and traceability across the value chain, as well as automating analytics to provide better insights into a company’s progress in terms of achieving its ESG goals.
There are more concrete examples where technologies such as additive manufacturing (also known as 3D-printing) can help with reducing a construction company’s carbon footprint. Other advanced techniques such as the Industrialised Building System (IBS) and Building Information Modelling (BIM) not only help with cost performance, but also may reduce material wastage (and hence improve sustainability).
In Malaysia, the Construction Industry Development Board (CIDB) notes that one of the core values of the Construction 4.0 Strategic Plan 2021-2025 is sustainability & resilience, with the transformation of the construction industry through smart construction. To this end, for instance, the Malaysian Investment Development Authority (MIDA) and CIDB renewed their collaboration to promote investments in IBS with a new Memorandum of Understanding in 2021.
There are multiple incentives, tax and non-tax, that are offered by multiple government agencies in Malaysia to help companies with financing, equipment upgrades, and talent upskilling when it comes to automation/IR4.0 and ESG.
One of the major players in this field is MIDA, which offers various incentives such as the Reinvestment Allowance for existing companies engaged in manufacturing that reinvest for the purposes of automation or modernisation (amongst others); Accelerated Capital Allowance for reinvestment into waste recycling/processing into finished products; and Automation Capital Allowance for automation equipment for the purpose of automating/modernising existing businesses. Other special incentives include oncome tax incentives for companies undertaking waste recycling activities that use high technology (such as the production of reconstituted wood-based panel boards or products).
Green or ESG-related incentives fall under both MIDA and the Malaysian Green Technology and Climate Change Corporation (MGTC), with MIDA offering the Green Investment Tax Allowance (GITA – Project) for green technology projects related to renewable energy, energy efficiency, green buildings, green data centres, and integrated waste management, Green Income Tax Exemption (GITE) for various green services activities including engineering, system design, green buildings, green data centres, as well as green townships; and Solar Leasing income tax exemption. Applications for all the above should be submitted to MIDA online via the InvestMalaysia portal.
Meanwhile, the MGTC offers the Investment Tax Allowance (GITA – Assets) for green technology assets such as energy-efficient appliances and electric vehicles (EVs), as well as EV charging infrastructure.
The Inland Revenue Board (IRB) also offers various tax incentives related to recruiting, training, and upskilling workers, and an Industrial Building Allowance for MSC Malaysia-status companies in Cyberjaya and for buildings used for employees’ accommodation.
Beyond that, Malaysian Industrial Development Finance Berhad (MIDF) offers Malaysian businesses, especially SMEs, several low-interest and fixed-rate financing options related to automation and ESG, especially in the area of green technology. These include the Soft Financing Scheme for Automation and Modernisation for up to RM20 million; Services Biz Financing for companies in green technology for up to RM5 million; Soft Financing Scheme for Digital and Technology for up to RM1 million; and Sustainable and Green Biz Financing to encourage greener manufacturing processes for up to RM5 million. MIDF also provides other non-financial advisory services, including digitalisation workshops and intervention programmes for automation and ESG.
This article is courtesy of the Malaysian Wood Moulding and Joinery Council (MWMJC). MWMJC wishes all members and B&I readers Gong Xi Fa Cai! For more information on how MWMJC can help facilitate companies to take up these incentives and financing opportunities, visit its website at https://www.mwmjc.my/ or call the Secretariat at +603-9283 7893.
