Economic Corridors
In order to propel the growth of certain underdeveloped regions within Malaysia, the Malaysian Government launched five economic growth corridors under its 9th Malaysia Plan. The primary objective of this initiative was to bridge development imbalances across the nation.
Each corridor has a distinct focus, with its own respective high-impact clusters chosen for their specific geographical and sectoral advantages. Measures were also put in place to enable businesses to benefit from the sharing of common resources, the facilitation of labour market matching, and knowledge sharing.
The Government has also sought to attract participation from the private sector to accelerate the development of these corridors. To that end, policies were implemented to incentivise investors. The Public Private Partnership Unit was established for this purpose and is responsible for formulating such policies.
Each corridor is governed by a Corridor Development Authority that is empowered to oversee and implement the development plan specific to its particular corridor.
The five corridors are:
- Iskandar Malaysia in Southern Johor (“Iskandar”);
- Northern Corridor Economic Region (“NCER”);
- East Coast Economic Region (“ECER”);
- Sabah Development Corridor (“SDC”); and
- Sarawak Corridor of Renewable Energy (“SCORE”).
The Malaysian Government supports these economic corridors by legislating and implementing supportive policies, such as liberal equity requirements, tax incentives, and the flexibility to recruit expatriates. These policies are principally implemented through the respective Corridor Development Authorities of each individual corridor.
Recent government allocations under Budget 2026 have reinforced infrastructure upgrading, talent development, and rural entrepreneurship across all five corridors, whilst preparing them for alignment with the National Investment Council’s strategic priorities.
Iskandar
Established in 2006, Iskandar Malaysia is the first economic region in Malaysia and has experienced rapid growth since its inception. Strategically located in Johor, Malaysia’s southernmost state and a neighbour of Singapore, the region benefits from abundant land, natural and human resources, and a strong and sustainable living environment.
Centrally positioned at the heart of the ASEAN region and along the world’s busiest shipping routes, Iskandar Malaysia is easily accessible. It is within a 6-hour flight of major ASEAN cities served by Senai International Airport, three (3) international ports, and a comprehensive network of highways and railway services.
IRDA is a Malaysian Federal Government statutory body established under the Iskandar Regional Development Authority Act 2007 to oversee development within Iskandar. Accordingly, IRDA’s main focus and roles are to establish policies, directions, and strategies that have a direct impact on development activities within Iskandar, and to act as a “one-stop centre” for dealing with investors and responding to their needs in a timely and efficient manner.
The region’s mission is to be the preferred destination to invest, work, live and play, focusing on holistic and comprehensive growth, recognising the importance of balancing economic prosperity, quality living and a resilient environment.
The Comprehensive Development Plan (CDPiii) Iskandar Malaysia 2022–2030 continues to guide the region’s development with two (2) main principles —resilience and inclusiveness and introduces four (4) focus areas: High-Value Economy, Productive Society, Climate Resilience and Carbon Neutral Region, and Integrated and Liveable City.
There are five (5) local authorities within Iskandar Malaysia’s 2,300 sq. km area, namely – Johor Bahru City Council (MBJB), Iskandar Puteri City Council (MBIP), Pasir Gudang City Council (MBPG), Kulai Municipal Council (MPKu), and Pontian Municipal Council (MPPn).
Iskandar Malaysia’s generous land area, strategic location and abundant infrastructure and resources have bolstered its nine (9) promoted sectors: electrical and electronics (E&E), petrochemical and oleochemical, food and agro-processing, logistics, tourism, creative industries, healthcare services, education services, and financial and business services. The region is home to many international and multinational brands from around the world, a testament to its competitive advantages and value proposition as an economic corridor.
Iskandar Malaysia is also part of the Johor-Singapore Special Economic Zone (JS-SEZ). In addition, the Forest City Special Financial Zone (FC-SFZ) is located within the Iskandar Malaysia area.
Iskandar Malaysia, a rapidly developing economic region in Johor, is home to several key industrial parks that play a pivotal role in driving the region’s industrial growth and economic development. Noteworthy among these are i-Park @ Indahpura, i-Park @ Senai Airport City, i-TechValley, Tanjung Langsat Industrial Complex, Sedenak Tech Park, and Nusajaya Tech Park. These industrial parks offer state-of-the-art facilities and strategic locations, making them attractive destinations for investors and businesses seeking to capitalise on Iskandar Malaysia’s robust infrastructure, excellent connectivity, and favourable business environment.
Iskandar’s investment facilitation has been strengthened through the Invest Malaysia Facilitation Centre Johor (IMFC-J), which was highlighted in 2024 as a key mechanism to accelerate approvals and improve investor experience. Among IMFC-J’s most investor-relevant features is its dedicated Land Taskforce—a cross-agency mechanism that consolidates land-related processes such as title registration, alienation, amalgamation, foreign ownership consent, and development approvals, including Building Plan, Earthwork, and Landscape submissions. This reduces the need for fragmented engagement with multiple authorities, thereby streamlining timelines and improving certainty.
As of 2024, cumulative investments in Iskandar exceed RM413.1 billion, surpassing earlier projections and placing the region on track to meet its 2030 target of RM636 billion. Realised investments alone stood at RM291.4 billion, driven by strong inflows into manufacturing, digital services, logistics, and high-value industrial clusters.
NCER
The NCER is a beacon of growth in the north of Malaysia, focusing on high-value-added projects and private sector participation. Spearheaded by the Northern Corridor Implementation Authority (“NCIA”), the NCER is transforming into a world-class economic region and technology hub. With a strategic emphasis on manufacturing, agribusiness, and green technologies, the NCER offers a robust ecosystem for businesses to thrive.
NCIA, as the governing body, is tasked with providing guidance, formulating policies, and devising strategies to stimulate and expedite the advancement of the NCER. Through catalysing and executing high-value development projects and initiatives, NCIA encourages private sector involvement in the region.
Malaysia’s 2026 Budget increased federal allocations to NCER infrastructure, logistics, and cross-border trade facilitation, especially at Bukit Kayu Hitam, supporting the creation of “Delapan”, a Special Border Economic Zone. Federal investment continues to follow a coordinated strategy aligned with the NCER’s long-term development goals.
The NCER aims to boost economic growth in Perlis, Kedah, Penang, and Perak by focusing on High-Value Manufacturing, Modern Agriculture, and Advanced Services.
- High-Value Manufacturing – NCER’s manufacturing sector, including aerospace, automotive, medical devices, rubber products, FMCG, E&E, and M&E, is a prime mover of the region’s economy and a strong contributor to Malaysia’s GDP.
- Modern Agriculture – NCIA aims to transform and modernise the NCER’s agriculture sector through programmes such as the NCER Agri Economic Zone (NAEZ), Superfruits Valley, and IPR-INTAN to support the national food security agenda.
- Advanced Services – The NCER’s services sector continues to be crucial to the region’s growth and development. Tourism and Logistics & Connectivity are established industries within this sector and will continue to evolve. Two newly identified industries, namely the Digital Economy and Education, will be prioritised to further boost the region’s economy.
The NCER in Malaysia is home to several strategically developed industrial parks that are integral to the region’s industrial and economic landscape. Prominent among these are Chuping Valley Industrial Area (CVIA), Kedah Rubber City (KRC), Kedah Science & Technology Park (KSTP), and Sidam Logistics, Aerospace & Manufacturing (SLAM). These industrial parks are designed to leverage the NCER’s strengths, fostering innovation, enhancing industrial capabilities, and driving economic growth. With their specialised focus areas and advanced infrastructure, these parks provide a conducive environment for businesses to thrive, making the NCER a key player in Malaysia’s industrial development.
The NCER offers several value propositions for investors. These include a dynamic business ecosystem with ideal growth opportunities, world-class facilitation and engagement services, access to high-value industries, strategic location within the states of Perlis, Kedah, Penang, and Perak, and robust infrastructure. NCER offers attractive investment incentives, including tax exemptions, grants, and ecosystem development programmes, to encourage both local and foreign investments. These incentives are designed to lower the cost of doing business and enhance profitability. NCER incentives include an Income Tax Exemption, Investment Tax Allowance and rewards for specific promoted activities such as Research and Development (R&D).
ECER
The ECER, which encompasses the states of Kelantan, Terengganu and Pahang as well as the districts of Mersing and Segamat in Johor, is rapidly transforming into a distinctive, dynamic, and competitive destination for investments.
The East Coast Economic Region Development Council (ECERDC) is a statutory body established to spearhead the execution and implementation of the ECER Master Plan. ECERDC plays a leading role in setting the directions, policies and strategies for the socio-economic development of ECER by facilitating the realisation of investment projects into the Region.
Geographically, ECER spans over 69,000 sq km, covering 52% of Peninsular Malaysia. It is home to approximately 5 million people, or about 15% of the total national population. Economic growth in the region is driven by six (6) key economic clusters, namely Manufacturing, Oil, Gas & Petrochemical (OGP), Tourism, Agribusiness, Human Capital Development, as well as Logistics, and Services. These clusters are supported by developments in transportation, infrastructure, property and the environment, making the region an ideal destination for business, investments, and quality living.
The ECERDC has seven (7) premier industrial parks—Kerteh Biopolymer Park (KBP), Malaysia-China Kuantan Industrial Park 3 (MCKIP3), Pahang Technology Park (PTP), Pekan Automotive Park (PAP), Gambang Halal Park (GHP), Pasir Mas Halal Park (PMHP) and Tok Bali Industrial Park (TBIP)—strategically located across Malaysia’s vibrant economic corridors.
The ECER Development Plan 2026–2030 sets out a strategic roadmap to drive transformative and inclusive growth in the East Coast Economic Region. It builds on the achievements of the previous master plans and lays the foundation for a collaborative approach to regional development, with a strong emphasis on partnerships across sectors to meet the region’s economic aspirations. ECER is projected to grow at a faster rate of 6–7 percent, with a Gross Domestic Product (GDP) target of RM225 billion by 2030. The Development Plan aims to attract RM55 billion in private investments through four key thrusts comprising Food Basket, Creating Destinations, Manufacturing (Hard to Abate Sectors) and the Marine Industry, supported by two key enablers which are Renewable Energy and Logistics. A total of 24 flagship projects and programmes have been identified to strengthen the Region’s competitiveness and align with national priorities under RMKe-13. These initiatives are expected to generate close to 50,000 job opportunities, ensuring inclusive growth for local communities.
Investors in the ECER may apply for various incentives and facilitation support, subject to approval by the relevant authorities. Incentives are generally granted on a case-by-case basis depending on the sector, location and scale of investment, and may include income tax exemptions, investment tax allowances and indirect tax exemptions for qualifying activities.
In addition, investors may benefit from facilitation support in areas such as land matters, infrastructure access and talent recruitment, coordinated by ECERDC and relevant federal and state agencies.
There are also several Schemes tailored for Malaysian citizens only, which are aimed at improving the livelihood of Malaysian citizens in the area. These Schemes are:
Entrepreneur ECER
This programme targets existing entrepreneurs in the ECER who wish to grow their businesses. The programme aims to increase the participation of Bumiputera entrepreneurs as well as entrepreneurs from other communities, including Orang Asli. The programme is implemented through collaboration with SIRIM and AGROBANK, and involves financial assistance and training workshops on business management skills, financial management, product development, product quality improvement, branding, product registration, research & development, Halal JAKIM certification, packaging & labelling, and market expansion.
ECER Talent Enhancement Programme (ETEP)
The ETEP is a key initiative aimed at developing a skilled workforce among local graduates to meet the demands of high-technology industries. ETEP is a collaboration between ECERDC and investors to help local graduates gain valuable skills and work experience through on-the-job training.
SDC
The SDC is an economic initiative launched in 2008 to boost Sabah’s growth by diversifying its economy, improving infrastructure, and attracting investment.
The implementation of the SDC is overseen by the Sabah Economic Development and Investment Authority (SEDIA), which is the one-stop authority that drives the SDC, with the primary responsibility to plan, coordinate, promote, and accelerate the development of the SDC, while ensuring that social development and sustainable development are kept as priorities.
Overall, the Sabah Development Corridor is a long-term initiative aimed at transforming Sabah into a vibrant, sustainable, and inclusive economy by leveraging its unique strengths and addressing its developmental challenges.
Supported by ongoing infrastructure development and government incentives, Sabah focuses on tourism, manufacturing, agriculture, as well as logistics and services. The state’s unique ecosystems, cultural diversity, and potential for eco-tourism and greener industrial practices further enhance its appeal, positioning Sabah as a dynamic region for sustainable and profitable investment.
Sabah hosts several industrial parks designed to attract investment, support manufacturing, and promote economic development, including the Kota Kinabalu Industrial Park (KKIP), Sabah Agro-Industrial Precinct (SAIP), Sipitang Oil & Gas Industrial Park (SOGIP), Sandakan Industrial Park (SIP) and Palm Oil Industrial Cluster (POIC) Lahad Datu. These parks are strategically located to leverage the state’s resources, infrastructure, and connectivity. These industrial parks are integral to Sabah’s economic strategy, offering opportunities for investors in various sectors.
The SDC tax incentive package offers lucrative benefits for both domestic and foreign investors engaging in promoted activities across designated areas within the SDC, namely the Kinabalu Gold Coast Enclave, POIC Lahad Datu, SOGIP, SAIP, Integrated Livestock Valley, Marine Integrated Cluster, and Sandakan Education Hub.
Key incentives include:
- 100% income tax exemption for up to 10 years; or
- 100% investment tax allowance for a period of 5 years. The allowance can be used to offset against 100% of each year of statutory income.
- Exemptions on stamp duty for land development related to tourism projects;
- Import duty exemption for machinery and equipment.
The SDC is now guided by the SDC Blueprint 2.0 (2021–2030), a strategic plan that charts Sabah’s development to 2030 in alignment with national and state plans. The blueprint sets out an ambitious agenda for the SDC, having been formulated following an extensive review of the original SDC Blueprint implementation and taking into account the SDC’s key strengths and the implications of megatrends through to 2030. This blueprint is also timely in ensuring alignment with the Federal Government’s Malaysia MADANI concept as well as the State Government’s Sabah Maju Jaya plan. Continuing the legacy of the first blueprint, SDC Blueprint 2.0 will ensure holistic development through economic growth that is inclusive and sustainable.
Through SDC Blueprint 2.0, SDC programmes and initiatives will bring in RM95 billion in private investments, generating 70,000 jobs and contributing an additional RM20 billion in GDP by 2030. This will help to ensure that the overarching goal for SDC is achieved: Sustainable Growth with Equity and Social Inclusion.
SCORE
The SCORE, established in 2008, is a key economic development initiative by the Federal Government of Malaysia aimed at accelerating growth in Sarawak’s central and northern regions. Covering over 100,000 km², SCORE spans from Tanjung Manis to the Limbang Division, including the Upper Rajang Basin and Baram Highlands.
Aligned with the Sustainable Development Goals (SDGs) and Sarawak’s Post COVID-19 Development Strategy 2030 (PCDS 2030), SCORE is essential to Sarawak’s aspiration to become a high-income state by 2030.
Currently, around 66% of power generation in SCORE is renewable, largely from the Bakun Hydroelectric Plant (HEP), with expectations to increase to 73% upon the completion of the Baleh HEP in 2028.
Key urban centres within SCORE include Sibu, Sarikei, Mukah, Kapit, Bintulu, Miri, and Limbang, with over 1.3 million people inhabiting these areas collectively.
The Regional Corridor Development Authority (RECODA) is a State Statutory Body established under the RECODA Ordinance 2006 that leads and manages the SCORE development plan. RECODA’s primary objectives in implementing infrastructure development projects and socio-economic programmes are in line with the United Nations SDGs, the Post COVID-19 Development Strategy 2030 (PCDS 2030), and the Sarawak Government’s rural development agenda to improve connectivity, reduce wealth disparities, and create job opportunities.
In 2017, RECODA established three Regional Development Agencies (RDAs): Upper Rajang Development Agency (URDA), Highland Development Agency (HDA), and Northern Region Development Agency (NRDA). Their primary objective is to bridge the urban and rural divide from the central to the northern region of Sarawak through the implementation of infrastructure development projects and socio-economic programmes. SCORE is the catalyst that bridges the urban-rural income gap through its impactful socio-economic programmes that promote entrepreneurship and upskilling, as well as downstream value-added products and services. The infrastructure projects and socio-economic development programmes implemented in the SCORE region are in line with the advancement of biomass, green technology and the digital economy, in tandem with the Sarawak Green Economy Agenda and the Post Covid-19 Development Strategy (PCDS) 2030 to foster sustainable growth.
The Malaysian Government offers a range of incentives to attract investment in key economic sectors and promote sustainable growth. Both local and foreign investors may avail themselves of the following incentives, which can provide significant financial benefits:
- Pioneer Status: Ranges from 70% or 100% income tax exemption on statutory income for a period of 5 years or 10 years.
- Investment Tax Allowance: Ranges from 60% or 100% on qualifying capital expenditures for a period of 5 or 10 years.
- Infrastructure Allowance: Deduction for expenses on infrastructure development.
- Import duty and sales tax exemptions for machinery, equipment and raw materials used in selected activities.
The Sarawak Government provides additional incentives such as competitive land prices, electricity tariffs and water rates.
In addition to the Economic Corridors, the Malaysian Government also launched an additional zone to promote specific types of economic activity. The additional zone created is the Digital Free Trade Zone.
Digital Free Trade Zone
The world’s first Digital Free Trade Zone (DFTZ) was launched by the Malaysian Government on 22 March 2017 in collaboration with Jack Ma, co-founder of Alibaba Group. This initiative comprises both physical and virtual zones designed to facilitate SMEs in capitalising on the exponential growth of the internet economy and cross-border eCommerce activities.
The DFTZ consists of three main components that combine both physical and virtual zones. The physical zone comprises the eFulfillment Hub and Satellite Services Hub, whilst the virtual zone consists of the eServices Platform.
For a better understanding of the DFTZ and the three main components mentioned above, please refer to Chapter 17 of this Guide on Digital Economy, where the DFTZ is elaborated in more detail.
Contribution Note
This chapter of the Guide to Doing Business in Malaysia was authored by the Partner listed, with the assistance of Mitchel Chan (Senior Associate, Christopher & Lee Ong) and Eunice Yeoh (Associate, Christopher & Lee Ong).
For more information, click here to read more Doing Business Guide.
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