Biopharmaceuticals are big business and investing in this sector in Malaysia is a sound move for any astute investor. The Malaysian government is investing heavily in the development of this industry, with a view to making the country a regional hub for biopharmaceutical manufacturing. This is borne out by the fact that, in 2020 alone,the biopharmaceutical market was valued at $2.9 billion. Analysts predict that this sector is expected to grow even further in the coming years, with more people seeing the importance of healthcare post Covid-19 pandemic. The country also has a well-developed infrastructure, a skilled workforce and a supportive government that offers a variety of incentives for foreign investors. As a result, investing in biopharmaceutical in Malaysia represents a sound business opportunity with significant potential for growth.
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Attracting foreign investors has been a key catalyst in developing the economy in Malaysia. In its efforts, the Malaysian government is actively providing various incentives and programmes to support both local and international investors in this industry. Here are some of the efforts made by the Malaysian government to attract investors to start a Sdn Bhd company in the biopharmaceutical industry here.
Investing in biopharmaceutical in Malaysia – Government incentives
National Biotechnology Policy
In 2005, Malaysia introduced the National Biotechnology Policy (NBP), becoming the first ASEAN country, and the second in Asia after China to be involved in bioeconomy initiatives. The policy was launched to develop three major sectors, namely the agricultural sector, the healthcare sector and the industrial manufacturing sector. With the final phase of the NBP coming to an end in 2020, the Bioeconomy Corporation developed methods to improve and develop companies with BioNexus status.
The introduction of BioNexus status meant that companies with this accreditation are provided fiscal incentives, grants and other guarantees to help with their growth. Recently, in 2022, the Prime Minister launched the National Biotechnology Policy 2.0 with the aim of making Malaysia become a high technology nation by 2030. The Policy also prioritises research and development as well as the commercial aspects around it. One of the goals of NBP 2.0 was to make these BioNexus status companies to be more competitive at a global level, to eventually attract foreign direct investments in this sector.
Tax Incentives for research and development in Budget 2021
On top of that, in Budget 2021, the Finance Minister announced that they will allocate a high-level allowance of RM423 million to the Ministry of Science, Technology, and Innovation (MOSTI) and the Ministry of Higher Education (MOHE) to further promote research and development efforts. By providing tax incentives in the form of preferential tax for the first ten years and a lower tax for the subsequent tax, the government aims to attract more investors in this field both locally and internationally. Besides the Budget efforts, the National Bank of Malaysia also established the High Tech Facility National Investment Aspirations (HTF-NIA). This was established to financially support SMEs for them to compete in the global market. This just shows that investing in biopharmaceutical in Malaysia is well supported by the Malaysian government.
Digital Economy Blueprint
The Digital Economy Blueprint (DEP) was launched in 2021, in line with Malaysia’s efforts to transition into the Fourth Industrial Revolution (4IR). The Blueprint is a long-term plan that will guide the country in this digital transformation. The aim of the DEP is to make Malaysia in the top quartile of digital economies globally by 2025. Investing in biopharmaceutical in Malaysia falls under one of the 12 National Key Economic Areas (NKEA) which are identified as high-impact and priority areas for economic growth. These NKEAs were chosen due to their potential to spur job creation, accelerate gross national income, and move the country up the value chain.
NKEAs cover various aspects of the economy, such as agriculture, tourism, oil and gas, healthcare, education and so on. Investing in biopharmaceutical in Malaysia was picked as it is a high-growth industry with great potential.
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Benefit of investing in biopharmaceutical in Malaysia
After the worldwide Covid-19 pandemic, Malaysia made an economic shift. This was a wise decision made by the former MOSTI Minister. There was a Compound Annual Growth Rate (CAGR) of more than 9% between the years 2013 and 2022. With people taking healthcare seriously, this growth is only expected to continue. Various efforts have been made to boost investments in this field by the Malaysian Investment Development Authority (MIDA).
The commercialisation of healthcare solutions was vital at this point. Therefore, Astra Zeneca’s partnering with Sunway University in 2021 to establish the country’s first Health Innovation Hub (HIH) as part of their A Catalyst Network was apt for Malaysia’s goal to become the research and development hub for healthcare.
Malaysia has been making great strides in their efforts to promote and invest in the biopharmaceutical industry. The introduction of BioNexus status, tax incentives, and the Digital Economy Blueprint are all indicative of this commitment. With a growing population and an increasing awareness of the importance of healthcare, the future looks bright for this high-growth sector. Malaysia’s proximity to major markets in Asia also makes it an ideal location to invest in. If you’re interested in starting a biopharmaceutical company in Malaysia, do get in touch with us to help you get started.
FAQs about E-Commerce Expansion in Malaysia
- Yes. The good news is, as a foreigner, you are allowed to register a certain types of business entities in Malaysia provided you have a legitimate residential address in the country.
- By nurturing these BioNexus companies, Malaysia directly attracts local and foreign investors. BioNexus companies are given 10 years’ tax exemption on statutory income, maintenance of 100 percent company ownership, as well as assistance in the navigation of local procedures. So far, there are 250 BioNexus companies, 70% of which are locally owned.
- Yes. Malaysia has continued to develop and customise its infrastructure to be the prime location for biopharmaceutical companies to set up in Asia. One of the key advantages is that these biotechnology hubs are strategically located which in turn promotes logistic conveniences. Malaysia boasts of having 13 Free Industrial Zones (FIZ) where duty-free imports of raw materials, components, and equipment are allowed.
Niresh Kaur is a content development manager who writes for WeCorporate. She mainly writes legal articles, as well as analytical content that serves entrepreneurs with insights on the business scene in the APAC region.
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