MIDA calls for manufacturing companies to utilise automation CA incentive

The Malaysian Investment Development Authority (MIDA) is urging manufacturing companies to utilise the Automation Capital Allowance (CA) incentive that aims to enhance the efficiency and productivity of local industries.

Its senior executive director, strategic planning and development Ahmad Khairuddin Abdul Rahim said the incentive, introduced in the 2015 Budget, not only pushes manufacturing companies to engage in innovative and productive activities but also spearheads the quick adoption of automation.

“We want more companies, particularly manufacturers in the labour-intensive industries, to come forward to discuss their automation undertakings with MIDA.

“We want to help our domestic players in particular, to develop a sustainable competitive advantage that differentiates them from their competitors,” he told a media briefing here today.

To date, he said MIDA had approved 187 applications for the CA incentive from manufacturers in various industries, including those that manufacture fabricated metal products, plastics, textiles and textile products as well as wood and wood products.

He added those companies had invested RM359 million in automation machinery and equipment which resulted in a reduction of 1,344 unskilled workers and an average of 162 per cent improvement in production volume.

Ahmad Khairuddin said the CA approved companies had also recorded an average of 57 per cent reduction in defect rate and an average of 53.6 per cent reduction in man-hours.

Going forward, MIDA was targeting to approve 400 companies for the CA by next year, he said,

“We aim to achieve 300 approvals by the end of this year and another 100 approvals next year,” he added.

Ahmad Khairuddin said MIDA was also planning to apply to the Ministry of Finance to extend the incentive beyond its expiration date in 2020.

“We think this is a good incentive for Malaysian companies because based on the results of the current CA approved companies, there has been a lot of improvements in productivity, investment and export,” he added.

The CA is divided into two categories, namely labour-intensive industries such as rubber products, plastics, wood, furniture and textile, and other industries that include fabricated metal products, electronic and electrical products, food manufacturing and transport equipment.

For labour-intensive industries, the government is giving automation CA of 200 per cent on the first RM4 million expenditure incurred within five years of assessment from 2015 to 2020.

For other industries, automation CA of 200 per cent on the first RM2 million expenditure incurred is given within five years assessment from 2015 to 2020.

Source: Bernama