News Straits Times Press, 1 Sept 2006

Biotech firms get special goodies

By Zaidi Isham Ismail

IN WHAT industry players described as "unprecedented", the Government has provided strong support to develop the biotechnology sector under Budget 2007.

A sizeable sum of RM210 million has been allocated for biotechnology, and venture capital firms were given incentives to encourage more funding into biotech and other high-tech but risky sectors.

A biotechnology company will only get taxed after it reaps its maiden profit instead of when it sets up operations. This gives the company lead time to consolidate and grow the business.

Malaysian Biotech Sdn Bhd chief executive officer Iskandar Mizal Mahmood said this unprecedented measure demonstrates the Government's seriousness in bolstering the sector much further.

"Our immediate plan is to roll out the first BioNexus company and its network as well as realise the National Biotechnology Policy," he told Business Times.

He said the goodies is a good platform to speed up the BioNexus which will be launched by Prime Minister Datuk Seri Abdullah Ahmad Badawi next Thursday.

BioNexus is an international hub for biotechnology companies in Malaysia linking the best minds from the sector, comprising scientists, businessmen, policymakers and market movers using Internet as one of its platforms.

"The incentives announced which are specific to the biotechnology sector are strong enough on its own but the added incentives for local and foreign venture capitalists should also attract higher investments into the sector," said Iskandar.

Another incentive is tax deduction equivalent to the amount of investment made in seed capital, a move never before accorded to other companies outside the biotechnology sector.

Abdullah announced that out of the RM210 million, RM60 million is a matching grant for acquisition of technology purposes under the Biotech Acquisition Programme.

A total of RM30 million has been allocated for the commercialisation of research and development (R&D) findings under the Biotechnology Commercialisation Fund.

In addition, RM59 million is allocated under the R&D incentives for genomics and molecular biology, production of pharmaceutical and nutraceutical products and promotion of agro-biotechnology activities.

To increase funding in seed capital, venture capital companies investing at least 50 per cent of its investment funds in venture companies in the form of seed capital will be given income tax exemption for 10 years.