KUALA LUMPUR, Feb 24 — Prime Minister Datuk Seri Anwar Ibrahim announced Tun Razak Exchange (TRX) in Kuala Lumpur and Iskandar Malaysia in Johor will become financial zones, while the Penang and Subang airports would be upgraded as it would be cheaper than building a new airport in Kulim, Kedah.

In his Budget 2023 speech, Anwar said TRX has been mandated as Malaysia’s international financial hub and that it must work to attract the global financial industry to be a main destination for high-quality foreign investment.

Anwar said the government plans to strengthen Iskandar Malaysia’s development through the establishing of a special financial zone with competitive incentive packages to attract international investors and knowledge workers, especially those who are in Singapore but can stay in Malaysia with such incentives.

"To support and attract the influx of investors, businessmen and tourists, the government plans to expand and increase the Penang International Airport’s and Subang Airport’s capabilities. This will be led by MAHB which is expected to benefit the economic growth at a far lower cost compared to building a new airport in Kulim which is expected to cost RM7 billion which cannot be considered under the current situation,” he said.

Anwar said support will also be given for the project to develop the Sanglang port in Perlis for the handling of petroleum and bulk cargo, and a new structure will also be built for beach erosion from Kuala Sanglang in Perlis to Kuala Jerlun in Kubang Pasu, Kedah.

He also said the government backs a plan by the private sector to develop a main port at the Carey Islands, which he said is expected to strengthen the Klang port’s role as a main port hub for Southeast Asia.

With the Malaysian government giving scholarships to more than 1,000 students each year to study engineering in Japan, Korea, France and Germany, he said the government will enhance cooperation with multinational companies to enable such students to serve out their bonds at the same companies in those countries.

Commenting on Malaysia’s potential in the electrical and electronics and aerospace industry, Anwar said the country plans to extend the tax incentive for manufacturing firms who shift their operations to Malaysia as well as a 15 per cent tax rate for the C-suite employees until the year 2024.

For the aerospace industry, he said Malaysia will extend income tax incentives and investment tax allowances until December 31, 2025.

He said Bank Pembangunan Malaysia Berhad will prepare RM6 billion as special strategic payments to encourage the sustainable agenda and automation besides giving support in the form of equities and working capital for companies who have high potential but are still affected by the Covid-19 pandemic.

Anwar also said a new master plan for industrialisation will be announced in the third quarter this year to map out the direction for the development of industries, with a focus on high quality activities and the use of local talents.

In line with this upcoming master plan, the finance minister said there would be a restructuring of agencies promoting investments and investment incentives towards a tiered tax system based on revenue, while there would also be monitoring of investments which had received incentives.