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  [Dr. David Kahaner is a numerical analyst on sabbatical to the 
   Office of Naval Research-Asia (ONR Asia) in Tokyo from NIST.  The 
   following is the professional opinion of David Kahaner and in no 
   way has the blessing of the US Government or any agency of it.  All 
   information is dated and of limited life time.  This disclaimer should 
   be noted on ANY attribution.]

  [Copies of previous reports written by Kahaner can be obtained using
   anonymous FTP from host cs.arizona.edu, directory japan/kahaner.reports.]

To: Distribution
From: 
 David K. Kahaner
 US Office of Naval Research Asia
 (From outside US):  23-17, 7-chome, Roppongi, Minato-ku, Tokyo 106 Japan
 (From within  US):  Unit 45002, APO AP 96337-0007
  Tel: +81 3 3401-8924, Fax: +81 3 3403-9670
  Email: kahaner@cs.titech.ac.jp
Re: Malaysian elimination/reduction on computer import duties
25 Dec 1992
This file is named "malaysia.com"

ABSTRACT. A recent reduction in Malaysian import duties for computers is
reported.

See also my report, ("malaysia.92", 11 Sept 1992) for additional details
about computing in Malaysia, as well as ("malaysia.s-t", 6 May 1992)
about computer use in engineering.

Malaysia Abolishes Import Duties on Computers and Many Computer-Related
Products. This will have some benefits for importing firms.

The Royal Malaysian Customs and Excise Department, clarifying a recent
budget day speech by Malaysian Minister of Finance Anwar Ibrahim, has
said that the import duty on assembled computers and many
computer-related products was abolished with effect from November 30,
1992.  The relevant duty rates had ranged from 5 to 25 percent on some
600 items.

Software (5 percent duty) is included in the exempt products group; most
component level hardware (up to 40 percent duty) remains non-exempt.  A
10 percent sales tax will remain in effect on all computer and
computer-related products.  Moreover, the government has imposed a new
five percent tax on four businesses earlier exempt, including
telecommunications services.

Based on its assumption of a M$1.3 billion import market for 1993, the
Association of the Computer Industry Malaysia (PIKOM), roughly predicted
that the Malaysian Government will forego M$65 million in duties
collectible (about $25M US).  The elimination of all import duties
and/and sales tax for computer products was a major PIKOM objective in
the run-up to the budget day speech by Anwar.

The Industry Association welcomed the duty elimination in a press
release which praised the decision as "a clear statement (of the
government's) commitment to move Malaysia forward through making
computers more affordable." Nevertheless, members of the group noted
that the continuation of the 10 percent sales tax, and no relief for
importers of components, would exert a considerable drag on
entrepreneurs trying to make Malaysia the South East Asia hub for
Information Technology (IT).

Summarizing the frustration of local computers makers, Executive
Director Tony Lee of Microcomputer Systems  (MCS), said that government
should "not give certain advantages to (retailers of wholly imported
system) without abolishing the duties on computer components
(altogether)."  Lee pointed out that despite Malaysia's cost advantages,
it is still cheaper to make PC's in Singapore because that Republic's
tax-free status for electronic components offsets the higher labor and
facilities costs.  The cut in duties on electronic components, Lee said,
would primarily affect the audio or camera industry and not Malaysia's
microcomputer manufacturers and assemblers.

Firms exporting PC's to Malaysia will marginally benefit from the
reduction in duties on complete computer systems imported for resale.
In addition, the five percent cut in media costs offers software
publishers an easier time for the sale/resale throughout South East Asia
of software written in Malaysia.

------------------------------END OF REPORT----------------------------