Incentives: When and why they make a difference

Foreign investments needed: History clearly illustrates the need to ensure Malaysia remains an attractive investment destination for businesses, local and foreign. This remains ever more important today, given the stiff competition among several Asean countries for foreign investments. — Bloomberg

Fiscal incentives have been a “hot” topic in recent times. The Organisation for Economic Co-operation and Development (OECD) has debated the use of incentives as a tool to attract and retain investments, whilst some governments see them as a means to level the playing field in the competition to attract investments.

Nevertheless, the key questions remain: When and why do incentives make a difference, if at all.