5.625
%
Positive
10
mm boe
0
%
Access to the Malaysian upstream segment continues to open up, but the complexity of the tax system still remains an obstacle to further involvement by independents.
January 25, 2024
Asia - South East
mm bbl
bcf
South eastern Asia, peninsula bordering Thailand and northern one-third of the island of Borneo, bordering Indonesia, Brunei, and the South China Sea, south of Vietnam.
PSC/PSA
All licences in Malaysia are governed by production sharing contracts (PSCs), of which there are four main vintages: (i) 1976 PSC Model, (ii) Post-1985 PSC Model (conventional areas), (iii) Post-1993 PSC Model (deep-water areas), and (iv) Post-1996 PSC Model (Revenue/Cost Index). Malaysia’s PSC-based fiscal system is one of the most complex in the world, and probably counts against it in terms of barriers to entry.
Malaysia’s unity government passed a revised budget in 2023 with $88.1bn in allocations that boost public spending and revenue collection and prioritise debt management. Among the investment incentives included in the budget are an extension of tax incentives for manufacturing companies that relocate to Malaysia and extensions of income tax incentives and investment tax allowances for the aerospace sector. The New Industrial Master Plan (NIMP) 2030, which the government plans to introduce in the second half of the year, will propose changes to investment incentives for foreign companies that prioritize the creation of high-value jobs and opportunities for domestic companies to feed into global supply chains. The business climate in Malaysia is generally conducive to foreign investment, especially in semiconductor and consumer and industrial electronics and upstream oil and gas.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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