Malaysia Pioneer Status for Operation Headquarters

Malaysian Pioneer Status-Operation Headquarters


Under the Promotion of Investments Act 1986, pioneer status can be accorded to industries including:-


* Operation Headquarter(OHQ)-generally refers to a company that provides support services to its offices or related companies regionally and globally.

Under the Act, companies that satisfy the criteria of an Operation Headquarter will:-
* Being locally incorporated under the Companies Act 1965 (Act 125)
* Have a minimum paid-up capital of RM0.5 million
* Have a minimum total operating expenditure of RM1.5 million per year
* Will appoint at least three senior professional/ management personnel
* Will serve at least three related companies outside Malaysia
* Have a sizeable and well-established network of companies outside Malaysia which employ a significant and substantial number of qualified professionals, technical and supporting personnel

* Will also carry out a minimum of three qualifying services like
- General management and administration
- Business planning and coordination
- Coordination of procurement of raw materials, components and finished products
- Technical support and maintenance
- Marketing control and sales promotion planning
- Data/information management and processing
- Research and development (R&D) work carried out in Malaysia on behalf of related companies or offices outside Malaysia
- Training and personnel management for its offices or related companies
- Treasury and fund management services to its offices or related companies
- Corporate financial advisory services to its offices or related companies


Where treasury and fund management services includes:
* Providing credit facilities to related companies outside Malaysia in currencies other than ringgit
* Transacting or investing in stocks, shares and securities (including bonds, notes, certificates of deposits and treasury bills) in foreign currencies that are issued in or outside Malaysia
* Investing in foreign currency deposits with onshore banks, licensed International Islamic Banks in Malaysia or overseas banks
* Foreign exchange transactions and interest rate/currency swaps for hedging purposes that are made in a foreign currency and conducted through onshore banks and licensed banks in Labuan
* Transactions in financial derivatives with onshore banks and in RM or USD denominated crude palm oil futures contracts on Bursa Malaysia for hedging purposes
* Transactions in foreign-currency denominated derivatives on overseas specified exchanges made only through resident futures brokers for hedging and investment purposes

Further, funds for carrying out the treasury and fund management activities are to be obtained only through borrowings made from authorised banks in Malaysia and onshore banks in Labuan; or from the OHQ company's paid-up capital, its accumulated profits derived from qualifying activities, or the accumulated profits of its offices or from borrowings sourced from outside Malaysia
Additionally, an OHQ set up by a financial institution is prohibited from providing treasury and fund management services to its related companies in Malaysia, unless the related companies are institutions licensed under the Banking and Financial Institution Act 1989 (Act 372) (BAFIA)

Further to that, The corporate financial advisory services to related companies or offices includes:
* Provision of credit administration denominated in currencies other than ringgit for related companies
* Arrangement of credit facilities denominated in currencies other ringgit for related companies
* Arrangement of interest rate or currency swaps in currencies other than ringgit
* An OHQ company may take over claims held by related companies and/or from third parties outside Malaysia at a discounted price (factoring)
* All products and services which related companies invoice to each other can be re-invoiced by the OHQ (re-invoicing)
* Netting of payments, other than the export proceed for goods exported from Malaysia, among related companies vis-a-vis the OHQ, is freely allowed
* An OHQ company may purchase machinery, equipment or real estate with a view to lease them to its related companies (leasing)
* An OHQ company may purchase machinery, equipment or real estate belonging to related companies with a view to lease them back to the same related companies (sales and lease back arrangements)
Other terms also apply for OHQ.

* Investment Tax Allowance may be granted.