PD Wellness Zone tax incentive lapses

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AN investment incentive approved by the Cabinet seven years ago for the development of Port Dickson, Negeri Sembilan, as a wellness zone, has been discontinued due to poor participation, despite the RM7 billion worth of hospitality development projects slated for the area.  

“There were no takers for the incentive. As such, it has lapsed,” Christiana Tharsis, Undersecretary of Tourism Policy and International Relations Division, a unit under the Ministry of Tourism and Culture, tells The Edge.

However, the ministry could not immediately determine when the incentive lapsed. Interestingly, there were reports that it had drawn interest from foreign players.

In 2007, a 61.38-sq-km plot was allocated for part of the wellness zone, which stretches from Bandar Lukut to Pasir Panjang, an area identified as ideal for medical and wellness practitioners to set up their businesses.

Essentially, the incentive was in the form of tax exemption for investors engaged in medical tourism. Up to 70% of income generated by companies through services rendered to foreign tourists was to be exempted from tax for a

10-year period, starting from the year of assessment 2008. In addition, there was an import duty and sales tax exemption on machinery and equipment used directly in the healthcare services.

The incentives approved by the Ministry of Health covered geriatric, obstetrics and gynaecology, dermatology, ophthalmology, aesthetic medicine, cosmetic surgery, terminal medicine,  wellness treatment and traditional medicine.

The blueprint on Port Dickson as a “Natural Beach Resort Town, Wellness Zone and Bandar Tentera Darat” shows that the town was identified due to its location and popularity as a tourist destination for both locals and foreigners.

To date, Majlis Perbandaran Port Dickson has approved 26 business permits or licences, but they are only for reflexology and spa businesses.

Was the tax incentive a good idea to begin with?

Previndran Singhe, group CEO and founder of Zerin Properties, a real estate firm specialising in hospitality, believes that it was a good idea, as the incentive focused on health and medical tourism and was a tool to promote tourism as a whole in Port Dickson. “It was just not properly promoted. I think it would have worked fantastically. Port Dickson is just an hour’s drive from KLIA,” he points out.  

Nevertheless, with the current hospitality-centred development projects being undertaken in Port Dickson, Previndran reckons that the incentive could be reintroduced. “It should be revisited but with the help of a proper task force ... and [the area should be] promoted as a medical tourism hub.”

Even Secretary-general of the Ministry of Tourism and Culture Datuk Dr Ong Hong Peng, says his ministry would support the reintroduction of the tax incentive.  

The hospitality-related development projects in Port Dickson are either ongoing or have been announced. Some projects include medical centres and wellness centres.

The PD Waterfront project by TSR Ocean Park Sdn Bhd, a subsidiary of TSR Capital Bhd, has a gross development value (GDV) of RM3 billion. It features a medical centre, convention centre, water theme park, hotel and Customs, Immigration and Quarantine complex that will include a ferry terminal.

The UCSI Group in 2011 indicated that its project in Bandar Springhill would include a resort hotel and convention centre and a teaching hospital that would also cater for medical tourism. UCSI plans to invest RM200 million in the former and RM500 million in the latter.

One of the more publicised projects in Port Dickson is the integrated development by Tanco Holdings Bhd’s subsidiary Palm Spring Sdn Bhd. Covering 22.98 acres, Palm Springs Resort City will have a convention centre and a 7.98-acre theme park. The first phase, featuring 830 serviced rooms, will have a GDV of RM600 million.

Another project, The Hibiscus, will offer 642 water homes built on stilts. The units, which are arranged in the shape of the national flower, are being built by a joint venture between KL Metro Group and Menteri Besar Negeri Sembilan Incorporated, the state investment arm.  The first phase of the three-phase project is nearing completion. Spread over 43 acres, the project is expected to cost RM400 million.

Another project highlighted by the state government is the Military Adventure World under the National Blue Ocean Strategy. The site identified for the project is the Pusat Latihan Armor, which covers 74.02 acres. The activities include shooting, paint ball, team building, survival, barrack homestay and water sports.

There are no updates on two planned projects. One is the Pullman Port Dickson hotel, which is said to be shaped like a cruise ship, and the other is Earth Synergy Sdn Bhd’s water chalets and health and wellness centre, to be developed at an estimated cost of RM350 million.

The International Maritime Gateway, which has been proposed on a 14.68-acre site in Bandar Port Dickson, has a GDV of RM2 billion and is touted to be an iconic development.

This article first appeared in The Edge Malaysia Weekly, on September 29 - October 5, 2014.