Evaluation of Malaysian Corporate Investment Incentives

Barjoyai Bardai

Abstract


Most policy makers in Third World Countries have postulated the analogous predicament that tax incentives were imperative to investment decision over the last two decades. Such a postulation has spawned attempts by sceptical scholars to evaluate the effectiveness of investment incentives. In this paper several approaches had been used in the evaluation attempt. We started-by comparing incentive programes between the ASEAN countries based on the indifference assumption of foreign investors in terms of location. It has then been extended by observing the cost of doing business as a whole. A more scientific approach has been adopted through the use of trend projections or shift share analysis. It is an attempt to project the excess of investment over normal investment growth in Malaysia. It is identified as the outcome of investment tax incentives programme. Finally an empirical study had also been conducted on 629 companies operating in Malaysia as multinational. Overall, findings from all the analysis above indicate that tax incentives were considered a big stimulant to foreign investment in Malaysia. The survey had also established the crucial role of foreign investment in the robust development of the Malaysian economy over the last decade.

ABSTRAK

Kebanyakan pembuat polisi di Negara Dunia Ketiga telah mempercayai kepentingan galakan cukai dalam keputusan pelaburan pelabur-pelabur asing di dalam dua dekad yang lepas di Malaysia. Kepercayaan ini telah memberangsangkan ahli-ahli akademik yang skeptikal untuk menilai keherkesanan program-program insentif pelaburan. Dalam makalah ini, heberapa kaedah penilaian telah digunakan untuk menilai program-program insentif pelaburan di Malaysia. la bermula dengan membandingkan program insentif antara negara-negara ASEAN. Ini dilanjutkan dengan memerhatikan kos menjalankan perniagaan secara keseluruhannya. Andaiannya di sini ialah pelabur tidak mengutamakan lokasi di dalam keputusan pelaburannya. Kaedah yang lebih saintifik telah digunakan kemudian dengan menggunakan perlunjuran arah atau ‘Analisa pindahan bahagian'. la merupakan usaha untuk menganggarkan lebihan pelaburan berbanding dengan pelaburan normal di Malaysia. Ini dikenalkan sebagai hash l atau kesan dari program-program insentif pelaburan. Akhirnya, satu kajian empirikal kualitatif dikendalikan ke atas 629 syarikat ‘antarabangsa’ yang beroperasi di Malaysia. Secara keseluruhannya, penemuan dari kajian-kajian di atas menunjukkan bahawa insentif cukai adalah dianggap sebagai penggalak utama kepada pelaburan asing di Malaysia. Kajiselidik lapangan menunjukkan juga kepentingan peranan pelaburan asing di dalam pembangunan tegap ekonomi Malaysia dalam masa 10 tahun yang lepas.


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