The government today set out plans to invest billions of ringgit in infrastructure as part of its bid to create millions of new jobs and double national income by 2020 and also announced tax incentives to boost its oil industry.

State electricity company Tenaga Nasional is to invest RM4 billion in hydro and coal-powered generating plants in central Malaysia in 2011 while an unlisted company is to build a RM3 billion oil and gas hub in Pahang.

Government think-tank Pemandu said unlisted Tanjong Agas Supply Base and Marine Services Sdn Bhd (TASBMS) will develop the industrial park to support the region's downstream activities including exploration and production.

"With an investment of RM3 billion between 2011-2012, this project is expected to deliver RM30 billion to the GNI over 10 years and create 30,000 jobs by 2020," Pemandu said in a statement.

The logistics hub will include shipyards, fabrication yards, storage terminals.

In a bid to help reverse declining oil production that will see Malaysia become a net oil importer by 2012-13, tax rates for the development of new oil and gas resources and enhancing recovery from depleted fields would be cut.

State oil company Petronas contributes around half of government revenues.

New tax incentives

The new tax incentives to develop the country's oil and gas resources will be implemented by state oil firm Petronas.

Details of the incentives include:

  • An investment tax allowance of 60-100 percent of capital expenditure to be deducted against statutory income to encourage the development of capital intensive-projects. (i.e. Enhanced oil recovery, high co2 gas fields, high pressure high temperature, deepwater and infrastructure projects for petroleum operations)
  • A reduced tax rate from 38 percent to 25 percent for marginal oil field development to improve commerciality of the developments.
  • An accelerated Capital Allowance to 5 years from 10 years for marginal oil field development where full utilisation of capital cost deducted could improve project viability.
  • A qualifying exploration expenditure transfer between non-contigous petroleum agreement with the same partnership or sole proprietor to enhance contractors' risk taking attitude, which could encourage higher level of exploration activity.
  • A waiver of export duty on oil produced and exported from marginal oil field development to improve project commerciality.
- Reuters