Companies in operation before 31 December 1990 in the wood-based, textile, machinery and engineering sectors are eligible for certain incentives when undertaking or participating in approved industrial adjustment programmes.

For the purposes of these incentives, industrial adjustment has been defined as any activity proposed to be undertaken by a particular sector in the manufacturing industry to restructure by way of reorganisation, reconstruction or amalgamation within that particular sector with a view to strengthening the basis for industrial self-efficiency improving industrial technology, increasing productivity, and enhancing the efficient use of natural resources and the efficient management of manpower.

Companies undertaking approved industrial adjustment programmes are eligible for the Industrial Adjustment Allowance (IAA). The IAA provides for an allowance of up to 100% in respect of qualifying capital expenditure incurred by a manufacturing company in its efforts at undertaking industrial adjustment. The features of the IAA are:

• The industrial adjustment programme has to be approved by the Minister of International Trade and Industry and the Minister of Finance.
  
  
• The IAA is given for qualifying capital expenditure incurred within five years from the date of approval of the incentive.
  
  
• Companies enjoying Investment Tax Allowance (ITA) shall only be eligible to apply for IAA in respect of the capital expenditure on which ITA has not been granted.
  
  
• Companies granted IAA would not be eligible for Reinvestment Allowance in respect of the same expenditure.