Multimedia Super Corridor (MSC) (Part 2)

Published by slang October 23rd, 2006 in Corporate Tax

The earlier article has given a short introduction and background history of the MSC.

This article seeks to explain the type of companies eligible for MSC Status and the respective criteria or condition to comply with.

Basically, companies include the following:

· Institutions of Higher Learning (IHU)

· Incubators

· Shared services and outsourcing (SSO)

Generally, companies who want MSC status need to comply with the following conditions/criteria:

	A provider or a heavy user of multimedia products and services
	Must employ substantial number of knowledge work
	Provide technology transfer and/or knowledge to Malaysia or otherwise contribute to the development of the MSC or support Malaysia’s k-economy initiatives
	Should not be engaged in non-qualifying activities such as manufacturing, trading and consultancy generally providing professional advice and not tied to any new multimedia application developed in-house by the applicant)

Once companies are granted MSC status, they need to:

	Establish a separate legal business entity for the MSC-qualifying businesses and activities ( can be a locally incorporated company or a branch of a foreign company)
	Locate the MSC operations within the MSC designated areas within 6 months from the date of approval
	Ensure that at least 15% of the total number of employees of the MSC-status company are knowledge workers
	Comply with MSC environmental guidelines

(a) Institution Of Higher Learning (“IHL”)

Let’s look at the Institution of Higher Learning (IHL) who want to have MSC status.

These IHL need to have facilities offering an international recognized standard of higher education in multimedia, information technology, engineering (selected), the sciences (selected) and other related fields that will contribute to the development of human resources for the MSC.

For the IHL, the eligibility or criteria are as follows:

	Provide or be a heavy user of multimedia products and services
	Grant either diploma or degree courses in multimedia, information technology and related fields for a training period covering a minimum period of 2 years and above
	Establish a multimedia faculty or a qualified faculty conducting multimedia courses, programmes and related activities
	Employ a substantial number of knowledge workers
	Conduct and support R & D activities
	Registered as a separate legal entity
	Comply with Lembaga Akreditasi Negara guidelines

(b) Incubators

These incubators are those which house early stage growth companies involved in

ICT/Multimedia (e.g. software, e-commerce, telecom),
Biotechnology and or
Bio-informatics

For the Incubators, the eligibility or criteria are as follows:

· House early stage growth companies ( i.e. seed-level or start-up companies) involved in the ICT/Multimedia

· Provide basic facilities like utilities, internet access,share facilities, business advisory services (inhouse or outsource) and minimum 2,000 sq ft floor space

· Dedicated management team to provide business support in nurturing incubates besides managing the physical infrastructure.(all newly formed incubator must register with the Companies Commission of Malaysia within 1 month of obtaining the MSC status

Definition of early stage companies:

· seed level companies that have been incorporated within the past two years and have ideas or concepts that require funds for proof of concept;

· start-up companies that maybe in the process of setting up or have been in business for a short time and require capital for commercialization of their products/solutions. The companies may not be generating profits yet.

Outsourcing (SSO)

The eligibility or criteria are as follows:

	More than 70% of the revenue must be from outside Malaysia
	Employ at least 85% knowledge workers
	With minimum of 100 employees by 3^rd year of operation
	Comply with relocation requirements or split operations precedence where 70% of investment/operation remains in a designated cybercity

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