Tax perks, dedicated facilities may draw plastics makers

Tax perks, dedicated facilities may draw plastics makers
By Ooi Tee Ching Published: 2008/12/01

THE Malaysian Plastics Manufacturers Association (MPMA) expects some of its members to set up factories at the Kertih Plastics Park (KPP) in Terengganu, in view of attractive tax incentives and dedicated infrastructure to export plastics.

"Plastic manufacturers have long been scattered throughout the country," said MPMA president Lim Kok Boon.

"Now, there is this opportunity to be vertically integrated with just-in-time delivery and warehousing in KPP," he told reporters in Kuala Lumpur recently.

While MPMA has yet to embark on a roadshow for KPP among its members throughout the country, Lim foresees greenfield investment and new product expansions there.

"We've actually been wanting for a more systematic cluster development for our industry and now the opportunity has presented itself in Kertih. Therefore, new investments and expansions are likely to be in this dedicated cluster," he said.

Investors at KPP stand to benefit from tax holiday for 10 years from the year the company derives profit. The government will also waive stamp duty when investors buy or lease properties in KPP.

To top it off, investors can also claim investment tax allowance up to five years of capital expenditure in buildings and amenities.

MPMA represents some 900 plastic manufacturers, which collectively contribute to 80 per cent of the country's plastic output.

Lim expects members to make new investments and expansion next year because resin - the raw material to make plastic - has fallen by about 20 per cent from an all-time high in July.

"Resin or polyethylene is a derivative of crude oil. With falling oil prices, resin prices too have come down. Therefore, this is an opportune time to invest in new capacity and new product variants," he said.

By tapping the Kertih Integrated Petrochemical Complex, Lim said plastic manufacturers can benefit from reliable and just-in-time feedstock supply of plastic resin and savings in warehousing and logistics costs.

"Also, plastic exports can be shipped out from Kuantan Port via a dedicated railway line," he said.

The 140ha KPP, a project under the East Coast Economic Region (ECER) masterplan, is the country's first fully integrated plastics hub. By 2020, it is expected to draw RM2 billion investments and create new job opportunities for about 7,000 people in the manufacturing, support and ancillary services.

Malaysia's plastics industry is expected to grow by eight per cent to RM17 billion this year, driven by export sales of shopping bags, bottles and containers, film and sheets, excluding household wares.

- Business Time -