Since its introduction in 1996, Multimedia Super Corridor (MSC) Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. MSC Malaysia, driven by Malaysia Digital Economy Corporation (MDEC) as the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

MSC Malaysia is now rebranded to Malaysia Digital (MD) to accelerate the sustainable growth of Malaysia’s digital economy and create substantial digital economy spill-over through equitable access to digital tools, knowledge, and income opportunities. Through this initiative, MDEC aims to attract companies, talents and investments while empowering local business to stay competitive in the global digitalisation phenomenon.  

The Government, through MDEC will award the MD Status to eligible companies which participate in and undertake MD activities. The grant of MD Status entitles companies to a set of incentives, rights and privileges from the Government, namely the MD Bill of Guarantees (BoGs), subject to the necessary approvals, compliance of applicable conditions and applicable laws and regulations.

Under the new enhanced MD initiative, companies are allowed to operate and undertake approved activities in any location within Malaysia. Companies which used to be subject to the minimum office requirement will no longer need to adhere to that requirement.

1. Eligibility Criteria
   
   To be eligible to apply for the award of MD Status in Malaysia, both local and foreign companies must fulfil the following three (3) criteria:
   

   (1)	Incorporated under the Companies Act 2016 and resident in Malaysia; and
   (2)	Proposing to carry out or is currently carrying out one or more of the MD activities.

   
   
2. MD Activities
   
   Research, development and commercialisation of solution and/or provision of services in relation to any of the following technologies or areas:
   
   

   (1)	Big data analytics (BDA);
   (2)	Artificial intelligence (AI);
   (3)	Financial technology (Fintech);
   (4)	Internet of things (IoT);
   (5)	Cybersecurity (technology/software/design and support);
   (6)	Data centre and cloud;
   (7)	Blockchain;
   (8)	Creative media technology;
   (9)	Sharing economy platform;
   (10)	User interface and user experience (UI/UX);
   (11)	Integrated circuit (IC) design and embedded software;
   (12)	3D printing (technology/software/design and support);
   (13)	Robotics (technology/software/design);
   (14)	Autonomous technologies;
   (15)	Systems/network architecture design and support;
   (16)	Global business services or knowledge process outsourcing;
   (17)	Virtual, augmented and/or extended reality;
   (18)	Drone technology;
   (19)	Advance telecommunication technology; or
   (20)	Other emerging technologies deemed significant for the digital ecosystem subject to approval by the Approval Committee.

   
   
3. Conditions of MD Status
   
   A company that has been awarded the MD Status must comply with the following conditions within 12 months from the date of award of the MD Status:
   

   (1)	Commence operation and undertake MD approved activities in Malaysia;
   (2)	Employ at least 2 full-time employees (comprising knowledge workers) with minimum average monthly base salary of RM5,000 for MD approved activities;
   (3)	Incur an annual operating expenditure of at least RM50,000 for MD approved activities; and
   (4)	Has a minimum paid-up capital of RM1,000.

   
   
4. Benefits of MD Status
   
   Under the MD BoGs, MD Status companies are eligible to access or apply for, amongst others:
   

   (1)	Foreign knowledge worker quota and passes;
   (2)	Tax incentives (income tax exemption or investment tax allowance);
   (3)	Multimedia/ICT equipment import duty and sales tax exemption;
   (4)	Competitive and ready infrastructure for business available at MD Cybercities/Cybercentres;
   (5)	Freedom of ownership by exempting from local ownership requirements;
   (6)	Flexibility to source capital and funds globally; and/or
   (7)	MDEC as the one-stop agency for MD Status companies.
   The benefits under the MD BoGs are subject to separate approvals being obtained (if required), applicable eligibility criteria and conditions, as well as applicable laws and regulations. MD Status companies are also eligible to access facilitation of other benefits such as:
   (1)	Access to local and international market and ecosystem;
   (2)	Business matching and partnership;
   (3)	Grant and funding facilitation; and/or
   (4)	Participation in MD catalytic programmes;

   
   The above benefits are subject to the applicable eligibility criteria and conditions of the respective programme.
   
   
5. MD Status with Tax Incentives
   
   MD Tax Incentives is currently being reviewed by the Government. In this regard, the Tax Incentives application will be further processed once the MD Tax Incentives is approved and announced.
   
   The MD Tax Incentives application will be subjected to applicable eligibility criteria and conditions to be set out under the new incentives scheme. Company is to observe “desirous” conditions for the proposed qualifying activity which means company must not issue any invoice for the qualifying activity in Malaysia prior to the date of tax incentive application or has 60% Malaysia equity ownership and has not issued any invoice for the qualifying activity in Malaysia more than 12 months prior to the date of tax incentive application.
   
   The company’s existing MD with Tax Incentive application may require revision in accordance with the new requirement under the new incentives scheme. The MD Tax Incentives application date shall be the MD with Tax Incentive acknowledgement receipt date.
   
   
6. MD Status Application Process
   
   Application for the award of MD Status is to be submitted through the system that is available on MDEC’s website. Each application will be assessed by MDEC and thereafter presented to an approval committee comprising representatives from the Government (Approval Committee) for deliberation, consideration and decision.
   
   The Approval Committee’s decision will be notified through a decision letter. Successful applicants are required to acknowledge and accept the terms of the approval letter. Upon the acknowledgement and acceptance of the approval letter, an MD Status Digital Certificate will be issued to the company.
   
   The MD Status is perpetual, subject to continued compliance of all approved conditions.
   
   
7. Post Approval Matters
   
   An MD Status company may apply to add new MD Activities. The process and criteria are similar to that of a new application for MD Status.
   
   In addition, the MD Status company is required to notify MDEC of the changes in the paid-up capital, equity structure, name of company, name of product or services stated in the approval letter, business operating address, contact person and contact details by completing, signing and submitting the necessary forms in the system, available at MDEC website together with the required supporting documents. The company will receive an acknowledgement from MDEC once the changes are made.
   
   Any variation to the conditions of MD Status specified in the approval letter, other than the above changes, will require the approval from the Approval Committee.
   
   The MD Status companies are also required to submit annually all documents and information as requested by MDEC for the purpose of reporting on the progress of the MD Activities and/or determining compliance of the applicable conditions through a prescribed form as specified by MDEC.
   

Kaizen, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professionals in Kaizen for further clarification.