What Malaysia Digital (MD) Status means, and why it matters to our clients

Malaysia Digital is the Government's national strategic initiative for the digital economy, run through MDEC. It was launched on 4 July 2022 to succeed MSC Malaysia (the Multimedia Super Corridor), the programme that had shaped the country's technology sector for about 25 years.

MDEC describes its purpose as encouraging and attracting companies, talent and investment, while enabling Malaysian businesses to take part in the global digital economy.

MD Status is the official recognition MDEC awards to eligible companies that take part in and carry out Malaysia Digital activities. It replaced the former MSC Malaysia Status.

One practical change from the MSC era is location. EY's summary of the guidelines notes that MD Status companies can operate and undertake approved activities anywhere in Malaysia, without the minimum office requirements that applied before.

MD Status companies are entitled to a set of incentives, rights and privileges from the Government, known as the Malaysia Digital Bill of Guarantees. As summarised by MDEC and by advisers such as EY, they include:

• Eligibility for Malaysia Digital tax incentives: a reduced tax rate or an investment tax allowance
• Quotas and passes to employ foreign knowledge workers
• Import duty and sales tax exemption on multimedia and ICT equipment
• Freedom of ownership, with exemption from local ownership requirements
• Freedom to source capital and funds globally

The tax incentive deserves a note. In 2024 MDEC introduced a new outcome-based MD tax incentive for companies working with promoted technologies, a list that includes artificial intelligence and big data analytics alongside cloud, cybersecurity, robotics and others. It is applied for and assessed separately, so holding MD Status does not by itself lower a company's tax.

Status comes with conditions. According to EY's summary of the guidelines, a company must be incorporated and tax resident in Malaysia and carry out MD-approved activities. After the award it has to start those activities, employ full-time knowledge workers and meet minimum spending levels in Malaysia.

MD Status is not a product certification, and it does not guarantee the outcome of any project. What it does tell you is that the national digital economy agency has recognised Leogics as a company whose core business is digital technology work carried out in Malaysia.

For our clients that matters in three ways. Our work in AI agents, document processing and custom software sits inside the activities Malaysia is actively promoting. The status lets us apply to bring in specialist foreign talent when a project needs it. And we are part of the same national innovation ecosystem as MDEC, MOSTI and Cradle, the ecosystem behind our MYHackathon 2024 win and the Scamora pilot with NFCC.