appendices to information paper on industry … paper (appendices) – industry development rebates...

Information Paper (Appendices) – Industry Development Rebates

MCMC/G/IDRebate19122002 of 22

Appendices to Information Paper on Industry Development Rebates

Appendix A - Research and Development Report Appendix B - Report on Minority Investment in Small and Medium Industry (SMIs) Appendix C - Report on Value Added Procurement from Malaysian SMIs Appendix D - Report on Local Content and Production Attachment A – Sample Calculation of Licence Fee Rebates and Licence Fee

Payable (may differ depending on cases)



Table of Contents Appendix A Research and Development (R&D) Report ..............................................................................3

I. R&D Project - Initial Report..............................................................................................3 Section A - Allocation for R&D .......................................................................................3 Section B - Company Information ....................................................................................3 Section C - R&D Summary ..............................................................................................4

II. R&D Progress and Expenditure Report ...........................................................................6 Section A - Technical Progress.........................................................................................6 Section B : Commercial Progress .....................................................................................6 Section C : R&D Expenditure Report...............................................................................7 Explanatory notes on eligible project expenditure............................................................8

III. R&D Project Report - Completion of Project ..............................................................10 Appendix B Report on Minority Investment in Small and Medium Industry (SMIs) ...............................11

A. Particulars of the company.............................................................................................11 B. Particulars of Directors...................................................................................................11 C. Project Cost ....................................................................................................................12 D. Financing........................................................................................................................12 E. Manufacturing Process and Machinery Required ..........................................................13 F. Production Schedule .......................................................................................................13 G. Requirement of Raw Materials/Components .................................................................13 H. Market ............................................................................................................................14 I. Product Pricing ................................................................................................................14 J. Location of Factory .........................................................................................................14 K. Employment ...................................................................................................................15 L. Profits Estimates .............................................................................................................15 M. Source of Technical Know-How ...................................................................................15 N. Declaration .....................................................................................................................15

Appendix C Report on Value Added Procurement from Malaysian SMIs .................................................16

1. Particulars of Licensee ....................................................................................................16 2. Details of Procurement....................................................................................................16 3. Endorsement from Malaysian SMI Supplier ..................................................................16 4. Declaration by the Licensee............................................................................................17

Appendix D Report on Local Content and Production............................................................................18 Summary of Expenditure on Local Content and Production ..............................................19

Attachment A Sample Calculation of Licence Fee Rebates and Licence Fee Payable ..................................21



Appendix A Research and Development (R&D) Report I. R&D Project - Initial Report

Section A - Allocation for R&D Allocation for R&D This is the R&D amount for the licence year to which the licensee wishes to apply for licence fee rebate. In the case where there is existing R&D, only incremental amounts for the said year is relevant. Breakdown of R&D allocation Please specify if the total amount is for one R&D project or otherwise. Provide details accordingly. In the case where there is more than one R&D initiative, Section B and C as set out below should be completed for the respective initiatives.

Section B - Company Information Provide information about your company: Name of Company Provide the name of company directly involved in the R&D. Date of incorporation Enclose a copy of the Business Registration/Company Registration. Correspondence address Provide the company address in which all correspondence is to be sent. Equity structure Provide the breakdown of the company's equity structure. Specify the percentage of Malaysian ownership versus non-Malaysian ownership. List major shareholders. Show holding companies and subsidiaries, if any. Collaborating partners in the R&D project State the number and name of collaborating partners, and indicate their contribution to the R&D project, e.g., expertise, consultation, funds, etc. Contact Person Provide full details of the main liaison person: • Name • Position • Telephone No. • Handphone No. • Facsimile No. • E-mail address.



Section C - R&D Summary Provide an executive summary of the R&D. The summary should not exceed three pages and includes the following: Introduction Provide a brief description of the R&D project, its name or title, whether it is a new activity or an existing project. Is the nature of the project more research oriented or development oriented - indicate how it rates in the continuum: R________________________________________________________D 1 2 3 4 5 6 7 8 9 10 Mostly research Mostly development Little development Little research Project objective State the measurable objectives and show how these have impact on communications and multimedia development towards national objectives, including potential for commercialisation and Malaysian skills development. Indicate the Malaysian skills and resources available for project purposes. Project summary In layman terms, provide briefly: - an overview of the R&D project, its nature and scope - the technical objectives and deliverables - avenue for transfer of technology - the identified market opportunities - all the risk factors and its mitigation or how it is to be managed - its impact in terms of project benefits to the communications and multimedia sector and the Malaysian economy. Project Plan List the key details on how the R&D project is to be executed. You should include the following information: List and describe the main project activities, timeline and the expected number of milestones during the project duration. The milestone reports are a key mechanism towards spurring the progress of the project towards technical and commercial exploitation. List and describe the deliverables to result from the project as in the following table:

Deliverable title

Target date for delivery from project

commencement

Actual date for delivery from project

commencement Description



Declaration I / We hereby confirm that: i) The above information given is true and complete.

ii) The company hereby consents to any disclosure by the MCMC of this report or any

information on the company to relevant government bodies or any government appointed agencies, firms or consultants acting in a professional capacity for or on behalf of the MCMC.

Name Position Signature Date

II. R&D Progress and Expenditure Report Progress Report Progress report to the MCMC is required on a half-financial year basis and this may or may not coincide with the R&D milestones the company has projected within the project duration. However, a copy of all milestone reports should be sent to the MCMC for purposes of monitoring and assessment. A progress report to the MCMC should include the following: Covering letter • Identifies the project • Indicate the period the report covers • A statement, signed by all partners, indicating that they have contributed to the

development of the R&D milestones and concur with the information in the progress report.

Report of progress in three areas: Section A - Technical Progress Section B - Commercial Progress Section C - Financial Report The total length of Sections A and B should be limited to three pages. Details for each section should include:

Section A - Technical Progress • Provide a pictorial evidence of work in progress. • Provide evidence to demonstrate milestone(s) achieved. Performance information

detailed in the initial report should be used as the basis for reporting. • Discuss progress towards achieving the project objectives detailed in the initial report.

Note any matters that may affect the attainment of an objective. • If a change to the project time-table in the initial report is considered necessary:

- propose what variations to the dates and nature of, or projected expenditure against the projected milestones is requested

- discuss why such a change is needed and the consequences for the project - technical problems encountered and plans to overcome them should be freely

discussed - the Commercial Partner is to include a statement of the technical progress of the project

and the partner's views on the product, service or system's compliance with user requirements

Section B : Commercial Progress

• Detail the progress achieved towards the commercialization of the results of the research projects. References should be made to any commercial strategy plans as mentioned in the initial report.

• Discuss developments that may have an impact on the said commercial strategy. These may include, but not restricted to: - new research on the size and growth prospects of the market - entry of new competitors or products into the market - changes to the internal operations of the business taking the product and service to the

market


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- progress in gaining quality accreditation for the product and service - progress in establishing production arrangements or distribution networks

• Have any sales directly related to the project been achieved? If so, please indicate the domestic and export proportions of these sales.

Section C : R&D Expenditure Report

Please complete the following for expenditure incurred between the last milestone report and this current report: Subject (see explanatory notes on eligible project expenditure in the next page)

Actual Expenditure

d/m/y to d/m/y

Estimated expenditure to next milestone d/m/y to d/m/y

RM RM 1. Salary Expenditure - R&D salaries (Please attach details*)

2. Sub-Contract Research Work (Please attach details*)

3. Plant Expenditure (Please attach details*)

4. Prototype Expenditure (Please attach details*)

• Materials • Labour • Overheads @x% Subtotal

Less anticipated residual value on prototypes at end of project

Subtotal

Materials consumed in testing Total Prototype Expenditure 5. Administrative Expenditure

EPF, SOCSO and Insurance payments Administrative support costs (on R&D Salaries @x%)

6. Travel Expenditure (Please attached details*)

Total for reporting period Plus actual expenditure previously reported or assessed by the Inland Revenue Bureau

Total Expenditure to date *Note that details include receipts Declaration I / We hereby confirm that: i)The above information given is true and complete. ii)The company hereby consents to any disclosure by the MCMC of this report or any

information on the company to relevant government bodies or any government appointed agencies, firms or consultants acting in a professional capacity for or on behalf of the MCMC.



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Explanatory notes on eligible project expenditure There are six categories of eligible R&D project expenditure (note that receipts for expenditures should be attached whenever possible) : 1. Salary Expenditure

• Relates to full time employees or contract staff (including staff employed by

collaborating partners) actually performing the R&D activity on either a full time or part time basis.

• Estimates are to be based on current pay rates and estimated time devoted to the activity. Employee time records must be maintained to support claims.

• A salary increase factor may be included where involvement extends over more than one calendar year.

• EPF, SOCSO and insurance payments should be reflected under Administrative Expenditure category.

2. Contract Expenditure

• Such costs must be for work directly attributable to sub-contract R&D.

3. Expenditure on incremental plant assets

• Cost claims against plant expenditure are those related directly to the period in which

the plant item will be used for the project. • In calculating this costs, accepted rates of depreciation for taxation purposes must be

used. • Where items are not purchased or constructed by the company, the accepted rate of

periodic hire and lease may be charged. 4. Expenditure on New Prototypes, Pilot Plants and Materials Consumed

• This includes the direct cost of constructing, assembling or re-working prototype units.

Direct costs of the acquisition of trial and demonstration units can be included. • The direct cost of prototype and plant activity typically comprises material, labour

costs and factory overheads. • Where plants, prototype or pilot plants are constructed by the company's factory

personnel, normal factory overheads expressed as a percentage of direct factory labour is an acceptable charge. Acceptable factory cost EXCLUDE those having no bearing on the research, development, trailing or demonstration effort; for example - product warranty, product reworking, after sales service, depreciation of leasing of the plant, etc.

5. Administrative Expenditure This includes administrative expenditure:

• incurred by way of employee benefits. For example: EPF, SOSCO and insurance


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payments in respect of employees. • administrative costs in support of project effort. In deriving this cost, debt collection,

entertainment and advertisement should NOT be included.

Other direct expenditure (must be specified) such as:

• purchase of technical information directly associated with the project. • patent searches.

6. Travel Expenditure

• Expenditure should relate only to travel essential to the project e.g., costs for travel to related research projects, for consultation with other experts in the field being studied or for travel to management Committee meetings in respect of the R&D projects. Costs for visits to the project by personnel outside the research partners are not eligible.


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III. R&D Project Report - Completion of Project Project in Reference Name of project Date of commencement Date of completion State the benefits of the project, its current status (commercialisation, etc) and onward impact on the R&D industry, skills development, communications and multimedia sector and the Malaysian economy. State significant problems encountered and how these were solved or mitigated to ensure project success. Any other matters you wish to raise or report in relation to the R&D project, please indicate, describe or note. Declaration I, ... (NRIC No./Passport No: ...), being a person duly authorised, hereby certify that the above statements are true and correct. Signature: Date:


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Appendix B Report on Minority Investment in Small and Medium Industry (SMIs) Introductory Particulars Information to be included in the Report on the minority investment in SMIs include:

• Particulars of Licensee Name of Licensee Paid-up capital of Company Shareholders fund and breakdown into its components. Annual turnover and operating profit from licensed activities, include breakdown by source. Board of Directors

• Stake in SMI Percentage stake of Licensee in SMI(s)

Details on SMI Please provide the following information on the SMI: A. Particulars of the company

i) Name of company ii) Date of incorporation iii) Address of registered office iv) Telephone No. v) Address of factory vi) Telephone no. vii) State any government approved incentives or products (if any)

viii) Date of commencement of commercial production ix) Shareholders fund and breakdown into its components x) Annual turnover and operating profit from licensed activities, include breakdown by source

Particulars in this section, where relevant, should be supported by ROC registration documents. The case of the SMI as a manufacturing company is illustrated in the following format. As far as possible services companies should include a similar format, but also contain relevant information in the service context.

B. Particulars of Directors

Name Identity card no./Passport no.

Nationality Residential address


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C. Project Cost

Indicate the cost of existing and proposed project (If the project is implemented in phases, indicate investment costs and the timing of each phase. For existing companies, cost of fixed assets should be based on book value).

Cost of existing

project (RM) Cost of proposed additional project (RM)

i) Land (specify area) ii) Factory building (specify covered

area)

iii) Plant and machinery iv) Other equipment v) Pre-operational expenditure vii) Working capital requirement Total

D. Financing

Existing (RM) Additional (RM) 1. Authorised capital 2. Sources of funds (i) Shareholders funds* Paid-up capital Malaysian (a) Bumiputera (b) Chinese (c) Indian (d) Others Total

Foreign Nationals (specify country) (a) (b) Total Reserves (excluding capital

appreciation)

(ii) Loan (a) Foreign (b) Domestic Total (iii) Other sources of funds (a) (b) Total *Attach a copy of the audited accounts of the company


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E. Manufacturing Process and Machinery Required

1. Explain with the aid of a flow chart the existing and proposed manufacturing process. 2. State the major items of existing and additional machinery required*.

Major items of machinery

Condition (new or used)

Country of origin Estimated cost

Existing Additional *State machinery exceeding 20% of total machinery cost

F. Production Schedule

1. For each existing product, indicate the installed production capacity and the percentage of utilisation of the installed production capacity.

Existing products Installed production capacity % of utilisation of the installed production capacity

2. For each proposed product, indicate the estimated annual production for the first 3 years. State the maximum attainable annual production capacity per 8-hour shift for each product.

Production Schedule

Year 1 Year 2 Year 3 Proposed products

Quantity Ex-factory value RM



Maximum production#

#Maximum attainable annual production capacity per 8-hour shift

G. Requirement of Raw Materials/Components

Indicate the raw materials/components required in the manufacture of existing and proposed products for the first 12 months.

Raw materials/Components

Quantity Value Indicate whether locally available or imported

Existing products Raw materials Components Proposed products Raw materials Components In the case of companies that intend to commence production on an assembly basis,


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attach programme of progressive local manufacture of components parts. H. Market

i) Domestic market

Estimate of Malaysian market Products Quantity Value Major uses Principal

consumers Existing products

Proposed products

ii) Export

Products % of finished product to be exported Principal export destinations

Year 1 Year 2 Year 3 Existing products

Proposed products

I. Product Pricing

For each existing and proposed product to be manufactured, provide the percentage cost breakdown in terms for ex-factory price for the following items:

Items Products (Indicate % of ex-

factory price) i) Cost of imported raw materials/components ii) Cost of local raw materials/components iii) Cost of energy and fuel iv) Cost of labour v) Depreciation vi) Interest payments, indirect taxes, land rates, etc vii) Administrative and marketing costs viii) Cost of technology** ix) Manufacturing profit Total 100% **Includes royalty, management services and other related costs.

J. Location of Factory

Indicate the existing factory location and state whether the manufacture of new products/expansion is to be undertaken at the same location. If not, indicate the proposed new location.


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K. Employment Existing Proposed (Additional) Full time employment Full time employmentEmployment category

Bumiputera Chinese Indian Others Foreign nationals

Total Malaysian Foreign

1. Managerial staff 2. Technical &

supervisory staff

3. Factory workers (a) skilled (b) unskilled

4. Sales, clerical & other workers

Total

L. Profits Estimates

Provide an estimate of net profit before tax that will be generated during the next 5 years of operation. Year Net profit before tax (RM) 1 2 3 4 5

M. Source of Technical Know-How

Provide details including the name and experience of the company providing technical know-how.

N. Declaration

I hereby declare that to the best of my knowledge and belief all the particulars furnished in this application are true.

Signature of applicant Name of applicant (In block letters) Designation in company Date


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Appendix C Report on Value Added Procurement from Malaysian SMIs The report on value added procurement from Malaysian SMIs should include the information as follows: 1. Particulars of Licensee

Name of Company: Address: Contact Person: Tel: Fax: E-mail

2. Details of Procurement

Reporting Period (In line with half financial year): d/m/y to d/m/y Total Value Added Procurement from Malaysian SMIs during reporting period: RM ..... Provide details in the following table:

Table 1 No. Date of

Procurement Quantity* Value*

(RM)

% Malaysian

value added

Name of SMI supplier

(also specify stake in SMI, if

any)

SMI inputs on products/ services

procured (Indicate details of

activity, e.g., manufacturing/ breaking bulk/

grading/ repacking/ installation/

configuration, etc.) *Please attach relevant receipts. 3. Endorsement from Malaysian SMI Supplier

Provide a list of the SMIs who are your suppliers as indicated below and obtain their certification as to items procured in Table 1:


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Table 2 In reference to

items in Table 1 (indicate the

item no.)

Name of SMI

Address (including Tel, Fax, E-mail)

Contact person**

Certification by SMI (**Contact person to certify by signature & stamp of company)

4. Declaration by the Licensee

I, ..., certify that I have the means of knowing that the particulars entered herein are true and complete.

Date: Signature: Name: NRIC Number: Department:


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Appendix D

Report on Local Content and Production The following information should be included in the report:

Production Title:

Production Budget:

Production Type: Feature Telemovie TV Series (No. of Episodes) Short Drama Cartoons Documentary Others, please specify.

Running Time mins Gauge mm x eps

Schedule & Budget based on script:

Producer(s):

Production Company:

Address:

Telephone No:

Fax No:

E-mail:


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Summary of Expenditure on Local Content and Production ABOVE THE LINE COSTS1 RM A. Story and script2 B. Producers C. Directors D. Principal Cast 3

Sub-Total BELOW THE LINE COSTS RM RM E. Cast4 F. Technician5 G. Music6 H. Production Unit fees and

salaries

I. Wardrobe, Make-up & Hair J. Sets & Properties K. Film & Laboratory -- Shooting L. Laboratory Costs -- Editing M. Sound -- Post Production N. Equipment Cameras Lighting Sound Stills7 Units and

Miscellaneous

O. Rentals, Storage & Editing Facilities

P. Travel and Transport Q. Hotel, Living & Catering R. Video Production Costs S. Overseas Shoot

Sub-Total TOTAL

Declaration I / We hereby confirm that: i) The above information given is true and complete. ii)The company hereby consents to any disclosure by the MCMC of this report or any information on the company to relevant government bodies or any government appointed agencies, firms or consultants acting in a professional capacity for or on behalf of the MCMC.

1 Note that the items A to S under above the line and below the line costs are only examples in this paper 2Includes fee for story rights, fees for writers, script editors, story editor(s), researcher(s) 3'Principal cast' refers to leading actors and/or actresses or on screen presenters 4'Cast' refers to other than Principal Cast which includes stunts, double, standins 5'Technician' includes camera crew, sound crew, lighting crew, still camera staff, wardrobe staff, technical advisers

6'Music' includes fees for Composer/Director, Arranger, Fix/Coordinator, Musicians, Performers 7'Stills' refers to still stores including location recce pics, video hire-location recce, and instant stock


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Attachment A Sample Calculation of Licence Fee Rebates and Licence Fee Payable 1. If gross turnover from licensed activities = RM100 million

a. Therefore, the standard licence fee with no deduction for no industry development activities carried out is: RM100,000,000 x 0.50% = RM500,000

2. If gross turnover from licensed activities is RM100 million and the licensee has eligible

industry development expenditure of RM10 million, then,

a. Establish the fixed minimum licence fee from licensed activities (Reference: First Schedule, Table B, of the Communications and Multimedia (Licensing) (Amendment) Regulations 2000):

Which is set at 0.15% of gross turnover, or RM50,000, whichever is greater, i.e., RM100,000,000 x 0.15% = RM150,000

b. Establish the percentage industry development expenditure:

Which is industry development expenditure expressed as a percentage of gross turnover, i.e., (RM10,000,000 / RM100,000,000) x 100% = 10%

c. Establish the amount of eligible rebate:

As indicated in column 3 of the referenced Table B, the calculated 10% industry development expenditure entitles the operator to a rebate of 66%. Note that this example takes the 66% rebate as applicable to the difference between the maximum payable fee and minimum payable fee, i.e.,

RM500,000 - RM150,000 = RM350,000

Thus, the amount of rebate eligible is RM350,000 x 66% = RM231,000

d. Establish licence fee payable: Therefore, the amount of licence fee payable is, maximum payable fee - eligible rebate


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i.e., RM500,000 - RM231,000 = RM269,000

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