Petaling Jaya : The Government announced a range of measures under Budget 2006 to boost the development of the Multimedia Super Corridor (MSC) and the Information and Communication Technology (ICT) industry.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said in his Budget speech to Parliment last week that "we must fully capitalise on the strength of the MSC, which has succeeded in attracting the outsourcing and shared services industry."

The measures include having the Multimedia Development Corporation (MDC) work with Permodalan Nasional Berhad and Khazanah to identify leading MSC companies and match them with government-linked companies (GLC) who serve as a test-bed for the MSC companies' products.

"These GLCs could eventually become international reference sites to help the MSC-status companies' international marketing efforts," said Abdullah, who is also Finance Minister.

Kompakar Inc Bhd deputy executive chairman Looi Kien Leong was pleased with this move. "Software developers like Kompakar are well-positioned with Malaysian-made software solutions, and we welcome the move to showcase our products alongside GLCs to global customers," Looi said.

Several initiatives to enhance the development of Cyberjaya were also announced.

Cyberjaya's development guidelines would be ammended to facilitate construction of more affordable homes, while public transport in the city would be upgraded, with buses being added to serve companies operating 24 hours a day.

The Industrial Building Allowance would be also offered to 10 years to owners of buildings in Cyberjaya occupied by MSC status companies.

The Goverment also proposed to set up an ICT Development Institute to train knowledge workers in the skills required by the ICT companies, particularly shared services and outsourcing companies.

Abdullah said this would help address the shortage of suitably skilled workers and provide employment opportunities for ICT graduates.

To encourage the growth of ICT industry outside the MSC area, tax incentives that are currently available to MSC-status companies would also be offered to multimedia companies operating outside the designated cybercities, subject to the endorsement of the Multimedia Development Corporation. The incentives are a pioneer-status 50% tax exemption or an Investment Tax Allowance of 50%.

This particular proposal was welcomed by ICT industries. "The 50% tax incentive is a good start as it can encourage the traditional SME's to take part in the business of multimedia and make their way up the value chain," said Tengku Farith Rithaudeen, the president of Technopreneurs Association of Malaysia.

"The Goverment has certainly underscored their commitment towards the growth of the ICT sector in Malaysia, witnessed through the extension of MSC-status related benefits," said Microsoft Malaysia Sdn Bhd managing director Butt Wai Choon.

Pikom chairman Lee Boon Kok hoped the incentives would also be granted to ICT manufacturing, trading and consulting companies. "Due to physical constraints and other limitations, established ICT players are not able to operate in the cybercities," he explained.

Abdullah also said that online payments would be enabled for transactions with the Royal Marine Police, Road Transport Department, Immigration Department, Employee Provident Fund and Government hospitals. The payment system will provide greater convenience to the public when dealing with these organisations.

In addition, RM868 million would be allocated under Ministry of Science, Technology and Innovation R&D Grant Scheme. The funding would be used to promote research on high-tech sectors like biotechnology, advanced materials and manufacturing, ICT, nanotechnology and development of alternative energy sources.