New Msc Malaysia Status 2.0 msc status

Effective 1st January 2019, MDEC has approved changes to BOG 5 (Tax Exemption)

Status Update: Approval of MSC Malaysia Status Services Incentive (Non-IP)

Application of MSC Malaysia Status Services Incentive (Non-IP)

Approved Activities (promoted activities) according to INCOME TAX (TAX EXEMPTION) (NO. 10) ORDER 2018 effective 1st January 2019


MDEC has announced new Promoted Activities-Non Intellectual Property (non-IP) Derived Incomes Category


You will notice that these newly approved activities are biased towards Industry 4.0 because Mdec would like to promote business activities that are more aligned to Industrial Revolution 4.0 elements. Going forward, Mdec will sideline businesses that have obtained msc status previously. And in doing so, Mdec would like to advise those who had previously obtained the msc status to re-apply with business models that are more reflective of Industry 4.0 elements.


You may want to learn more about Industry 4.0 here


With effect from 1st January 2019, msc malaysia status activities will be categorised as either IP (Intellectual Property) derived income or Non-IP (Intellectual Property) derived income to accord either the Msc Malaysia Status or Malaysian Pioneer Status (for ict business) or both.

What is IP then?

An IP based business is a business where you have your own designed platform and you own the source code. An example will be where you design a platform to render service in which case you owns the source code.

A Non-IP based business is a business where you use other people's program to render your service. You therefor do not own source code. An example is when you use someone else's accounting program to render an accounting service. You do not possess any source code.


The below table shows you the kind of activities that are approved for msc status application. They are categorised as Non-IP derived income business. However, they can also be categorized as IP derived income business if you have designed a platform for others to render the service.

1. Big data analytics
2. Artificial intelligence (machine learning, deep learning)
3. Fintech
4. Internet of things
5. Cybersecurity (technology/software/design and support)
6. Data centre, Edge and Cloud (technology/software/design and support)
7. Blockchain
8. Creative media technology
9. Sharing economy platform
10. User interface and user experience
11. Integrated circuit design and embedded software
12. Additive Manufacturing ( 3D technology/software/design and support)
13. Robotic (technology/software/design)
14. Autonomous (technology/software/design and support)
15. Systems or network architecture design and support
16.

Global business services or knowledge process outsourcing excluding:

(a) Non-technical

(b) Low value call centre

(c) Data entry

(d) Recruitment process outsourcing


Further to this, additional sectors like Edutech, Agritech and Proptech will be encouraged as these sectors will see great growth in the coming years.



More about Msc Malaysia Status newly Promoted Activities


New Promoted Activities (with msc status in mind) effective 1/1/19


Big Data Analytics

Big Data Analytics is all about deciphering a large varied data sets to obtain insights. Market trends and security issues are the main concerns and making an analysis of it is the main concern of enterprises worldwide. Your business model must be based on Big Data Analytics and also to have substantial activities ($$) to obtain the new Msc Status. If you also want to obtain Pioneer Status (tax exemption), you will need to have an IP (your own softcode).



Big Data Analysis is now used by governments, military and private enterprises to have a better insight of what they are doing. High performance computing analysis is designed to support big data initiatives with in-memory database and grid computing options.

Examples of big data usage in aquaculture industry where big data analytics lead to smart farming techniques to better manage disease outbreaks, water quality changes, mortalities and fish lice infestations. When bunded together with artificial intelligence, big data can also establish algorithms for farmers to follow to boost productivities and also to sense biological stresses in marine lives


Examples of big data analytics use can be found in the education industry where it is used to identify the student's weak understanding of subject matters.

Examples in healthcare industry where it is used to identifying and treatment of illnesses. To be able to identify and diagnose illnesses in double quick time is a top priority for private hospitals worldwide.

Example being used in the transport industry includes enterprise mobility management tools to automate the process of securing the data so as to improve better driving habits, tracking of routes and behaviours of drivers.

Example of use in manufacturing industry where robots and automation are increasingly being used to increase efficiencies and outputs.


Artificial Intelligence

Artificial Intelligence (AI) is the main plyer in the era of Industrial Revolution 4.0. We are at the forefront of machine learning where machines can find their own solution. Engineers everywhere is trying to couple AI into everything that they can conceive as if our human brain is no more needed to run industry. Artificial Intelligence Based Business model (including facial recoqnition technology) is the intended vehicle to help mankind wean of the use of human thinking power and it will become an essential item if you were to be able to compete worldwide. Your msc status qualification will include substantial activities. You will also need your own source code to also obtain Pioneer Status.



Example of use of AI in agriculture: use of AI technology to increase crop yield by using precision farming. Also uses technology to replace humans by self driving vehicles and also used in sorting and grading of agricultural products where humans are replaced by AI.

Example of AI being used in E-Commerce: Increasingly use of smartphones with AI assistants have encouraged supermarkets (webspace) to now use chatbots to better engage customers.

Example of financial services to use AI to analyse customer's emotion when they spoke through their handphones.Some banks are also using AI to aid in reaal-time algorithms to recoqnise pattern of frauds and cheatings.

Example in transport use of building of richer maps of trafic flows and better understanding of passenger's preferences from ride hailing models.

Example in healthcare use where health data processing are speeded up to better diagnose serious illnesses.

Example in education where AI is used to implement adaptive learning model in higher education.


Fintech

As we move forward towards the world of Industry 4.0, one of the most potential of instrument for us to be more transparent in our financial dealing is that of the use of Block Chain methodology. We not only have disruptions in the way we travel but we also have disruption in our banking system where it has become important to incorporate block chain tehcnologies to better compete with existing financial systems. In order to obtain msc status, you will need to create a block chain business with substantive activities which is designed to help improve efficiency and cutting down on operating cost. You will need your own source code to also obtain pioneer status.



You will find Fintech revolutions mostly in the global payments and processing industry. As e-commerce is heating up and getting more competitive, you will find the retail and fashion space embracing new payment practises. Fintech is every-where where you will hear of such payments like Apple Pay, Alipay, Samsung Pay and many more. Acording to McKinsey & Co., there was an 11 percent growth in global payments in 2017.


Here is a primer. According to EY (Global Fintech Adoption Index 2019), one quater of world's small firms are 'significant' fintech users. And what do they use? Well, it was found that things like online bookkeeping, payroll management tools, online billing tools and online payment processors come into the picture. Small firms are attracted to these services because of the range of functionality and features and their easiness to use.


IoT

IoT or internet of things is the next paradigm swift we have to confront. As system engineers want to be able to know what is happening in the whole chain of events, they have came up with the idea to embed every article along the supply chain with sensors and transmitters such that they will in real time know what is going on and they will be forwarn as to when a system fail. Sort of like precautions taken to prevent huge down times. For obtaining msc status, you will need to have an IoT based business with substantive activities. You will also need to have your own source code to also obtain pioneer status.



Industries that will be impacted by the use of IoT will include automobile, healthcare, public sector and utilities, retail, shipping and transport logistics and telecom media technologies. It is essential for IoT to play its part in augmented reality platforms as well.


Cybersecurity

Cybersecurity will become of vital importance in the era of Industry 4.0 as we will have more connected devices to take care of. Hacking and roping for ransom will be more rampant so we will need to have a better secured system for all those components that are connected to the internet. Your msc status business model will need to have substantial activities. For pioneer status, you will need to have a platform and your own source code.



Data Centers, Edge Computing and Cloud

Data Center services have become critical for business processing and the storing of huge amount of data and thus also requiring large computing facilities to handle the workload. Needless to say, the potential of setting and running data centers is huge, probably even exploding as we enter the era of internet of things.

With the implementation of Internet of Things, we will need a huge expansion of data centers around the world. With Cloud technology, we will also need security. Services will include installation, deployment, design, training, maintenance and support services. With routine use of IioT devices, it becomes necessary to employ Edge Computing so as to avoid latentcy issues when going through the cloud. Your msc status model will need to be either a platform or technology/software/design and supporting system. Data centers don't require to have source code, thus there will be no pioneer status.



Blockchain

What is the effect of using blockchain technology?

Blockchain is used for cutting out the middlemen (banks), dramatically improving transparency (in accounting environment) as well as increasing the efficiency of monetary transactions (smart contract). While Blockchain technology makes its mark in crypto currencies (anyone with the means will be able to create their own brand of virtual currency), it will also help bring about revolutions in supply chains, elections, healthcare and even real estates. So the potential of blockchain technology is to say the least, huge. Although it started of as a means to timestamp digital documents, it became an attention magnet when Satoshi Nakamoto used it to create the virtual currrency Bitcoin. In a more tcechnical meaning, blockchain is a de-centralized database shared across a network of computers that can only be altered after approval from all participants (nodes)in the system. Once created, it is very difficult to amend, thus it is inherently secured.

In the foreseeable future (next 5 years), we will have Non-fungible tokens (NFTs), Security Tokens, Tokenized assets, Self-sovereign identity and of all things Free speech! Put in short, blockchain tech will help reduce the spread of corrupted information (fake news), increased transparency, multiplied efficiencies in countless processes and also the more impactful act of cutting out unnesessary middlemen across a wide spread of industries, some of which we might not have envisioned.


Creative Media

Creative media will encompass animation, gamification and mobile applications. Substantial activities is a requirement. Your own source code will entitled you to a pioneer status as well.



Sharing Economy

A glaring example of a sharing economy is hail riding where people gets to share their assets for the good of the humankind. And for sharing it with others, there is whole gamut of things that you can share including sharing your car with the otherguy who does not own a car. needless to say, uou will need to create a platform for sharing purposess. Your sharing platform (own code) will entitled you to a pioneer status.



User Interface & User Experience

User Experience is all about the human-computer interaction. As we are going to be connected to our devices, machines and peripherals via computing interfaces, it goes to reasoned that we will need to have an interface that will make our interaction as intuitive as possible. The science and the methodology to design good interfaces becomes of utmost importance. As we not only use computer, we are heavily inclined towards our telephone as well. Also involves human-phone experience, especially on how the interface between human and internet domain. You will most likely to have a platform to enjoy pioneer status.



Integrated circuit design and embedded software

As we move towards Industry 4.0, it becomes important that we are able to enable more and more of devices to be embedded with at least a rudimentary form of computing capability such that it makes our control of these devices much more easier. For example if we were to embed our cooperative robot with a simple computing program, it would make the robot run on its own without human inputs. Embedded services is required in such industries as automotive, healthcare, military, consumer electronics, light industry and telecomunications.



Additive Manufacturing

Additive Manufacturing or 3D Printing technology has progressed to the stage where it is able to change manufacturing the way we know of it. With additive manufacturing, we are no more tied to a big scale setup to benefit from economies of scale, instead we are now more at ease at small scale manufacturing (like producing just one article) which is more adapt at handling single unit customised order. That will also mean more of the home scale manufacturing setup that is capable of handling mass customisation order.

The disruption is going to pemeate to every conceivable industry. They can now print and make spare parts up in the space station! Your msc status model will be a platform for handling additive manufacturing of all kinds. 3D manufacturing will change the face of manufacturing forever, and sooner than you would have expected! And when it is partnered with Nanotechnology, there is no telling of as to how far it will go. Again, you will need to have a program to run the hardware and if you own it then you will also get the pioneer status.



Robotics

Robots and its cohorts are taking over control of mankind and no matter where you go, you will soon encounter them. They have made good use of humanoids to accompany old folks in Japan. It is getting very popular because there is just no other way to handle the growing number of elderly folks who are left alone at home. So robots for machines and robots for human accompaniment in that order! Your msc status model should be able to handle the interactions between humans and robotic computers.



Robots will play an important part in industries such as medical & healthcare, agriculture, consumer & household, automotive & transport, emergency and first response and miliatry.


Autonomous

We should now be aware or even afraid of autnomous vehicles as every Tom and Dick and Harry is talking about being autonmous. And autonmous car is certainly the main talking point! Now Tesler is going to flood the market with autonomous taxi just to rout out Uber (so Uber is going autonmous as well). Your msc status model will be a platform to put control on all these autonomous units as much as possible.



Systems or network architecture design and support

System Architecture is being brought over from the old msc status regime as it encompasses most of IT industries as we know of it. However you will not get pioneer status if you do not own its source code.



Global Business Outsourcing

Your Global Business Outsourcing model will be bias towards knowledge process outsourcing. Since there is no IP you will not enjoy pioneer status.



Let it be known that since 12 April 2019, MDEC has begun accepting new applications. However, applications are for Non-IP derived income business only.


You might want our advisory on Promoted Activities by emailing to enqq2@iskandarproject.com (non free email account will be appreciated)

You might want to learn about what Mdec termed Substance (substantial) Activities (Non-IP) here here

You might want to learn about IP base derived income here