Malaysia to link FDI tax breaks to local SME jobs and suppliers, says Sim
Malaysia's Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong said foreign investors' tax incentives will be tied to job creation for Malaysians and business opportunities for local SMEs. Speaking at the Malaysia Industrial Forum 2026, he also urged the property sector to balan
PETALING JAYA (Nov 11): Malaysia must ensure that foreign direct investment (FDI) creates quality jobs for Malaysians and business opportunities for local suppliers, particularly small and medium enterprises (SMEs), said Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong.
Speaking at the opening of the Malaysia Industrial Forum 2026 by EdgeProp today, Sim said the government is linking foreign investors' tax incentives to their contributions to the domestic economy. “When FDI comes in, we will give them some tax breaks, and then measure how many good jobs they create for Malaysians and how many local suppliers they use,” he said.
Sim said tax benefits could then be increased based on these contributions, helping local SMEs participate more meaningfully in the country’s investment growth. He said the assessment process, introduced in collaboration with the Investment, Trade and Industry Ministry (Miti), marked a shift from the previous approach, under which foreign investors meeting prescribed criteria could receive tax exemptions of up to 100%.
In a Jan 30 statement, the Malaysian Investment Development Authority (Mida) said new manufacturing-sector incentive applications submitted from March 1, 2026 would be assessed under the New Incentive Framework. The framework links incentives to measurable outcomes, including job quality, technology transfer, supply-chain resilience and sustainability. Existing manufacturing-sector approvals continue under their approved terms and conditions.
Sim said Malaysia could no longer rely on cheap land, utilities and labour to attract investment amid growing competition and global supply-chain disruptions. Instead, the country needed to build its appeal around trust, security and resilience, while helping local businesses move up the value chain through their own technology, intellectual property, designs and products.
Sim also urged the property sector to balance property’s investment value with its practical purpose as a place to live, work and conduct business. He said an excessive focus on property prices and capital gains could strain household finances, leaving less disposable income to spend at local businesses. High property costs could also reduce businesses’ capacity to invest in innovation, technology and productivity, he added.
He described property as having two dimensions — its purpose, or use value, and its price, or exchange value — and said a healthy market needed to balance both. “Property should serve practical needs, including providing homes for families, premises for businesses and facilities for industrial operations, rather than being treated primarily as an investment vehicle,” he added.
