15 July 2021

Malaysia’s MSC Program: Why is ‘MSC’ Status so desirable?

Malaysia’s MSC Program: Why is ‘MSC’ Status so desirable?

The Multimedia Super Corridor (MSC) program was established by the Malaysian government in 1996 with the purpose to stimulate the nation’s digital economy and propel the country forward into the information age. By leveraging digital technologies, the MSC program aims to increase productivity, drive innovation, and enhance livelihoods.

What is Malaysia’s MSC Program all about?

Since its inception in 1996, the MSC program has been driving the growth and development of Malaysia’s digital economy. So far it’s been very successful, having generated nearly 500 billion MYR (~162 billion SGD) and created over 180,000 jobs since 2018.

MSC Malaysia promotes activities such as:
Big Data Analytics (BDA)
1. Artificial Intelligence(AI)
2. Financial Technology (FinTech)
3. Internet of Things (IOT)
4. Cybersecurity (technology/software/design and support)
5. User Interface and User Experience (UI/UX)
6. Robotics (technology/software/design)
7. Autonomous (technology/software/design and support)

Malaysia continues to emphasise the growth of its digital economy; in May 2021, the Prime Minister, Tan Sri Muhyiddin Yassin, launched the MyDIGITAL blueprint initiative. This new initiative supports existing digitalisation efforts and also takes steps to upgrade network infrastructure to 5G high speed. In the PM’s words, “…one of the key learnings that the world has collectively taken from the pandemic…is that technology has become far more essential than we ever thought it was.”

With this focus on digital economic growth, MDEC – Malaysia’s Digital Economy Corporation, the government agency overseeing the MSC programme – is very particular about ensuring that MSC status is granted to those companies that will bring a strong, added value to the programme.
As a result, MSC Malaysia status is awarded to only three types of businesses, each with a set of different application criteria and guidelines. The qualifying business types are:

Private limited companies (i.e. Sendirian Berhad)
1. Institutions of Higher Learning
2. Incubators

In order to be eligible for MSC Status, a business must also meet the following criteria:
1. Provide or heavy user of IT & multimedia products & services
2. Employ a substantial number of knowledge workers
3. Strong value proposition specifying how operations will contribute to the development of MSC Malaysia
4. Establish separate legal entity for MSC-qualifying activities
5. Locate in a MSC Malaysia designated Cybercity or Cybercentre
6. Comply with environmental guidelines

Why is MSC Status so desirable?

MDEC does not make its MSC applications easy, and many businesses who apply never obtain MSC Status for a whole variety of reasons. It’s fair to wonder why businesses would put themselves through the rigamarole of such a hefty qualification process. Aside from the great feeling companies get by helping add to an entire country’s digital growth, the MSC program offers financial incentives that help companies find their footing in Malaysia. For example:

  • Pioneer Status privilege with a five (5) + five (5) year 100% exemption from taxable statutory income (on income derived from qualifying activities) starting from the date when the company starts generating income
  • R&D grant eligibility (for majority Malaysian owned MSC Malaysia status companies)
  • Freedom to source capital globally for MSC Malaysia infrastructure and the right to borrow funds globally
  • Freedom of ownership by exempting companies with MSC Malaysia status from local ownership requirements
  • Unrestricted employment of foreign knowledge workers

It’s easy to see, with these – and more benefits – why companies find it more than worth it to go through the application process to earn their MSC status. It’s also understandable why MDEC is so frugal in handing out MSC status, making sure that only those companies that can realistically make a positive impact on Malaysia’s digital economy win the status at all.

One of the companies who has recently earned MSC Status in Malaysia, is 2Stallions Digital Marketing Agency.  An award-winning regional digital marketing agency focused on helping clients connect with their customers in the digital space, 2Stallions specializes in digital solutions such as digital marketing, web development, and creative design. Recognition of their work already includes awards for Best Rising Independent Digital Agency 2020,  Excellence in Search Marketing, Marketing Communications B2B, Best Use of UI/UX Design, and Marketing Campaign Of The Year. For a boutique agency like 2Stallions to be awarded MSC status is a mark of recognition for the innovative work they do in the digital world and their contributions.

Read more about 2Stallions’ MSC Status here and get further information on Malaysia’s MSC program from MDEC here.

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