Incentives and Funds Available for Foreign and Local Biotech Companies in Malaysia

Malaysian Biotechnology Corporation Sdn Bhd (Biotech Corp) is awarding companies involved in biotechnology and life sciences the BioNexus status. BioNexus status companies may apply for various tax incentives/tax holiday and enjoy privileges available only to them from the Malaysian Government.

Incentives for BioNexus status companies
Some of the other incentives that are provided for BioNexus status companies are:

1. Incentives for holding companies - a holding company owning at least 70% of an approved biotechnology firm can claim group relief whereby its income can be offset by losses incurred by its approved subsidiary biotechnology company, or deductions for the investment in its approved subsidiary biotechnology company against its profits.
2. Tax exemption for biotechnology companies – approved biotechnology companies will be eligible for pioneer status, i.e. 100% income tax exemption for a period of up to 10 years, or investment tax allowance, i.e. 100% of qualifying investments over a period of five years can be set off against profits (this incentive is not available if holding company incentives have been claimed).
3. Dividends distributed from tax exempt biotechnology companies will be treated as tax-exempt income for its shareholders.
4. Import duty and sales tax exemption on approved biotechnology equipment and materials.
5. Double deduction for qualifying expenditure on R&D.
6. Double deduction for qualifying expenditure on export promotion.

Under the Ninth Malaysia Plan (2006-2010), Malaysian Government has allocated RM2 billion (Euro 450 million). This allocation is catered for commercialisation funds comprising Seed Fund, R&D Matching Fund and International Business Development Matching Fund for:

1. Individuals and researchers who are in the early stage of setting up companies (approval is subject to the company being granted BioNexus status); and
2. Start-up companies

For further information, please refer to http://www.biotechcorp.com.my


Under the Ministry of Science Technology and Innovation (MOSTI), there are number of funds allocated for project undertaken in biotechnology. Science Fund is for the following entities to apply:

• Research Institution (RIs) and Institutions of Higher Learning (IHLs) in the public sector
• IHLs and Ris in the private sector, subject to approval by MOSTI
• Government Science, Technology and Innovation (STI) Agencies; and
• Government Linked Company (GLC) Research Laboratories

For further information, please refer to http://ernd.mosti.gov.my


Besides the Science Fund, there are TechnoFund which consists of Pre-Commercialisation and Intellectual Property (IP) Acquisition Fund. The target groups for these funds:

1. Medium and Large Malaysian Companies (minimum 51% equity held by Malaysian) including Government Linked Companies (GLC) and Public Listed Companies (PLC); and
2. Malaysian Government Research Institutes (GRI) and IHL

For further information, please refer to http://www.mosti.gov.my


Malaysian Technology Development Corporation (MTDC) have launched the country’s first biotechnology venture capital fund to be known as Malaysian Life Sciences Capital Fund (MLSCF). The fund - RM100 million (Euro 22.7 million) will be co-managed with MTDC strategic partner, Burill & Co., a life sciences merchant bank based in San Francisco, California.

For further information, please refer to http://www.mtdc.com.my


Bio-technopreneurs can also apply for a grant from the Commercialisation of Research and Development Fund (CRDF) and Technology Acquisition Fund (TAF) to commercialise the products.

The recently set-up SME Bank allocated with a capital of RM1 billion (Euro 227 million), is also expected to ease the burden of starting up new ventures and commercialisation in biotech industry.