Mida urges companies to join principal hub scheme

PETALING JAYA: Local conglomerates and multinational companies (MNCs) using Malaysia as a base for conducting their regional and global businesses are urged to take advantage of the many benefits of the principal hub (PH) scheme.
“With Malaysia as the optimal location for their principal hub, conglomerates and MNCs would have higher flexibility in serving their network companies to cater for the Asia Pacific region and global markets,” said Malaysian Investment Development Authority (Mida) CEO Datuk Azman Mahmud.
The PH scheme, which took effect on May 1, fully supports local and foreign MNCs in their offshore trading as it eliminates previous restrictions associated with the international procurement centre, and regional distribution centre schemes, such as drop shipment limit, brand distribution requirement and the requirement of serving a related local manufacturing facility in Malaysia.
In addition, foreign exchange flexibilities are also granted, tailored to meet the requirements of each principal hub in providing services to their network companies.
“The PH scheme is not confined to a specific area, but provides locational flexibility whereby companies can choose to establish their principal hub at any preferred location in Malaysia that best aligns with their strategic objectives. The scheme also fits the current trend of the way businesses manage their operations globally as MNCs are increasingly centralising key strategic value-adding functions to maximise value and be more cost efficient,” Azman added.
In the first five months since its implementation in May, Mida has approved several principal hub projects from major MNCs in the aerospace and resource-based industries, with investments worth RM703.7 million and the creation of 165 high value jobs, mainly for Malaysians.
He said these projects will involve the usage of local ancillary services particularly logistics, business services and financial services.
Currently, Mida has received a number of applications for principal hubs worth RM1.3 billion. This is estimated to generate more than 400 high skilled employment opportunities for Malaysians.
Mida said it will continue to undertake aggressive promotional programmes such as outreach programmes, seminars, specific project missions and one-to-one meetings.