The Ministry of Investment, Trade and Industry (MITI), in a parliamentary reply to Tuan Haji Mohd Syahir Che Sulaiman (Bachok), said the New Incentive Framework (NIF) for the manufacturing sector took effect on March 1, 2026, while its implementation for the services sector was being finalised.
The ministry said the reform marked a shift from the existing product- and activity-based approach to tax incentives towards one that assessed the actual economic outcomes and impact of investments.
Aligned with the National Investment Aspirations (NIA) and the New Industrial Master Plan 2030 (NIMP 2030), the framework uses an NIA Scorecard to evaluate investments against six key pillars: economic complexity, high-value job creation, domestic linkages, the development of new and existing clusters, inclusivity, and environmental, social and governance (ESG) practices.
The scorecard determines the level of incentives an investor may receive, including a Special Tax Rate of between 0% and 10% for up to 10 years, or up to 15 years for investments in less-developed areas and small companies.
Alternatively, eligible investors may qualify for an Investment Tax Allowance of up to 100% of qualifying capital expenditure for a period of up to 10 years.
On job creation, MITI said the government was placing greater emphasis on employment quality rather than the number of jobs created alone.
Key indicators include the proportion of highly skilled employees with technical certificates, diplomas or degrees and above, median annual employee salaries, the share of workers earning more than RM10,000 monthly, and the representation of Malaysians in managerial, technical and supervisory (MTS) positions.
The ministry added that manufacturing licence approvals and tax incentives were also subject to specific requirements.
These include having at least 25% of employees in MTS positions or achieving a minimum 40% value-added output, alongside a capital investment per employee ratio of at least RM140,000.
Companies must also ensure that at least 80% of their full-time workforce comprises Malaysian citizens, subject to the implementation of the Multi-Tier Levy Mechanism.
To strengthen economic spillovers, investors are expected to collaborate with local vendors, provide industrial internship programmes, and establish partnerships with Malaysian universities and research institutions.
MITI said the reforms were designed to ensure that tax revenue forgone through investment incentives generated optimal returns for the country through technology transfer, the empowerment of local micro, small and medium enterprises (MSMEs), and the creation of higher-paying jobs for Malaysians.
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