What is Malaysia Digital Status?
If you’ve been in the Malaysian business scene for a while, chances are you would have heard of the Malaysia Digital Status, or previously known as MSC Status.
Malaysia Digital status was introduced by the Malaysian government to energise the nation’s digital economy. The Malaysian government awards Malaysia Digital Status to eligible companies through the Multimedia Development Corporation (MDEC) to participate in and undertake approved digital activities.
Companies recognised with this status enjoy access to a broad range of incentives, rights and privileges from the government, and the flexibility to operate anywhere in Malaysia.
As of December 2021, 4726 companies have been awarded the MSC Malaysia status, out of which 57% continue to be actively maintaining that status. Collectively, these companies have seen a total investment amount of RM430 billion. In return, MSC Status companies have successfully generated RM 653 billion in revenue and RM 237 billion in export. More importantly for the digital economy’s growth, 198,686 job creation has been recorded by these companies.
Since 2022, MSC Malaysia has undergone a rebanding and is now known as Malaysia Digital (MD) Status. The new initiative will continue to drive the nation’s digital economy to new heights, built on the foundation laid by MSC Malaysia.
Malaysia Digital Status – What Are The Benefits?
The MD Bill of Guarantees (BoGs) is a set of incentives, rights and privileges made available for MD Status companies. The BoGs reflect the Government’s intention to provide an environment in Malaysia that is conducive to the development of MD Status companies.
Competitive Advantages
Under the MD Bill of Guarantees (BoGs), MD Status companies are qualified to access world-class physical and information infrastructure to ensure a conducive environment for their operations.
Do note that this benefit is only available for MD Status companies located in selected Cybercities / Cybercenters. These sites can command the support of several parties such as city and building managers and owners, utilities providers and local authorities.
The Malaysian government also recognises the pivotal role of the internet in fostering innovation, and is committed to ensure no censorship of the Internet for MD Status companies.
Having said that, companies are still required to adhere to laws prohibiting the spread of illegal, indecent or other banned materials.
Access to Resources & Protection
Through the formation of MDEC, MD Status companies stand to enjoy the backing of a high-powered implementation agency that acts as an effective one-stop super shop on their behalf.
- MDEC functions to develop, coordinate and promote Malaysia’s digital economy through various activities such as:
- Processing status applications
- Facilitating foreign knowledge workers and tax incentives
- Regular tariffs benchmarking exercises
- Engagement with telcos and ISPs
- Advice on Government policies and laws related to the ICT industry
- MD-specific initiatives
Additionally, MD status companies can tap into firsthand digital protection thanks to the Government’s commitment to become a regional leader in Intellectual Property Protection and Cyberlaws. IP continues to be one of the main engines of economic growth, and cyberlaws need to be properly enforced to tackle challenges brought about by developments in the IT industry.
Operational Freedom
MD Status companies are afforded the freedom to source capital for infrastructure, and the right to borrow funds globally. They’re also able to remit funds abroad for the purposes of investment in foreign currency. Non-resident investors also benefit by having the freedom to repatriate any amount of capital, divestment proceeds, profits and dividends or any income arising from their investments.
Next, and crucially, the Malaysian government allows employment of local and foreign knowledge workers for MD Status companies in recognition of the IT industry’s human capital demands.
By MDEC’s definition, a “knowledge worker” is an individual who holds one of the following:
- Tertiary qualification from an institution of higher learning (in any field); or
- Diploma in ICT, engineering, technology or specialized certification plus at least 2 years’ relevant experience in a field that is a heavy user of technology; or
- Professional, executive, management and technical work categories in information technology enabled services eg. Information Technology / IS Professionals, Finance / Accounting, Business Administration, Engineering, Medical, Legal
and also includes:
- foreign workers with knowledge-based skills that are not prevalent in Malaysia and required by MD Status companies
- workers who are utilised for their creative talent to produce value added creative work for MD Status companies.
Moreover, international companies with MD Status are exempted from local ownership requirements. Hence, they’re not required to comply with the normal regulations around direct / indirect property acquisitions provided that the property is used for their operational activities, including as residence for their employees.
Financial Incentives
A number of fiscal incentives are earmarked for MD Status companies to ensure a competitive advantage in line with Malaysia’s vision to be a major global ICT hub.
Multimedia/ ICT equipment import duty & sales tax exemption as long as they are:
- Not available locally / not locally manufactured;
- Not for trading;
- Directly used for MD approved activities
Pioneer Status (PS) privilege for 5 + 5 years 100% tax exemption and renewable to 10 years
Globally competitive telecommunications tariffs for the conduct of MD approved activities. Again, this benefit only applies for MD status companies located in MD Cybercities / Cybercenters.
Business Opportunities
Last but not the least, the Malaysia government will make efforts to tender key MD infrastructure contracts, comprising both physical and soft infrastructure, to leading companies willing to use Malaysia as their regional hub. This aligns with its target of attracting leading companies to set up their global / regional hubs in Malaysia.
Other Benefits
Malaysia Digital Status companies are also entitled to:
- Access to local and international market and ecosystem;
- Business matching and partnership;
- Grant and funding facilitation; and/or
- Participation in MD catalytic programmes
The Future is Digital
The Malaysia MD Status serves as a mark of excellence and recognition in driving the digital economy, which is highly sought for by companies. As we ride the threshold of digital transformation, earning an MD Status is the way for the future.
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