Annual Report 2012: Malaysian Investment Development Authority (MIDA).

7/28/2019 Annual Report 2012: Malaysian Investment Development Authority (MIDA).

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2012MALAYSIAINVESTMENT PERFORMANCEI n v e s t m e n t f o r T r a n s f o r m a t i o n


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Contents

6 A Word rom MIDARaising Malaysias prole as an investment

destination

10 Malaysia on the World StageOvercoming a subdued global investment

environment

20 The Year in BrieMIDA and its partners create a record-breaking

year of investments and employment

40 New Opportunities or GrowthCreating new value in the manufacturing and

primary sectors.

114 The Way ForwardThe services sector continues to support the

countrys economy.

136 The Transormation Continues

Challenges and opportunities in the year ahead

142 Appendices


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Reports by sector

Manuacturing

Electrical and electronic products 53Transportation 58

Automotive 60

Aerospace 63Shipbuilding and ship repairing 63

Machinery and equipment 64Engineering support 70Basic metal products 72Fabricated metal products 76Textiles and textile products 78Medical devices 80Agriculture 85Food processing 86Oil palm products 87

Palm oil and palm kernel oil 88Oleochemicals and their

derivatives 89

Palm biomass 90Pharmaceuticals 92Chemical products 93Biotechnology 97Petroleum and petrochemical

products 98Plastics 100Rubber 102Wood and wood products

and urniture 104Non-metallic mineral products 108Paper, printing and publishing 112

Primary

Agriculture 113Mining 113Plantation and commodities 113

Services

Regional establishments 117Operational

Headquarters (OHQs) 118

International ProcurementCentres (IPCs) 121

Regional DistributionCentres (RDCs) 122

Regional/RepresentativeOfces (REs/ROs) 123

Global operation hubs 123Support services 128

Renewable energy 128Energy efciency and

energyconservation 130Research and development 130Integrated logistics

services (ILS) 131

MSC Status companies 131Real estate (housing)132Utilities 132Hotels and tourism 132Transport 132Telecommunications 133Distributive trade 133Financial services 134Education services 134Health services 134


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Partners

East Coast Economic Region (ECER) 28Northern Corridor Economic Region (NCER) 30Collaborative Research in Engineering, Science and Technology (CREST) 30Iskandar Malaysia 31Sarawak Corridor o Renewable Energy (SCORE) 32Sabah Development Corridor (SDC) 34Multimedia Development Corporation (MDeC) 35Halal Industry Development Corporation (HDC) 37InvestKL 38TalentCorp 38BiotechCorp 38

Box articles

Domestic investment initiatives 26Major ecosystems in the E&E industry 56The M&E industry in Malaysia 67The engineering supporting industry in Malaysia 71Initiatives to urther enhance the iron and steel ecosystem 75

Malaysias potential as a centre o pharmaceutical R&D94

The wood-based industry products ecosystem 106Malaysia: An ideal business ecosystem or regional and logistics operations 126


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List of graphs

FDI inows to ASEAN, 2011 (US$ bil) 15FDI inows by economies, 2006 - 2011 (US$ bil) 16FDI outows by economies, 2006 - 2011 (US$ bil) 17Total investments approved in the Malaysian economy, 2012 25Total committed investments in the ECER, 2012 (RM bil) 29

Total cumulative committed investments in Iskandar Malaysia as at November 2012 (RM bil)32

Strategic thrusts o Digital Malaysia 37Three strategic thrusts o Talent Corp 39Sources o investments in projects approved, 2012 and 2011 43Investments and employment in projects approved, 2007 - 2012 44Investments in new projects by industry, 2012 and 2011 (RM mil) 45Investments in expansion/diversication projects by industry, 2012 and 2011 (RM mil) 46Major sources o oreign investments in projects approved, 2012 48Value o investments rom Japan by major industry, 2012 (RM mil) 49Investments in approved projects by location, 2012 50Investments in projects approved by major industry, 2012 and 2011 51Domestic investments in projects approved by major industry, 2012 51Foreign investments in projects approved by major industry, 2012 51Status o implementation o manuacturing projects approved, 2008 - 2012 52

Structure o the E&E industry 54Approved investments in the E&E sector, 2012 (RM mil) 58Approved investments in the transport equipment industry by sub-sector, 2012 (RM mil) 60Overview o the M&E industry 66Investments in projects approved in the M&E industry by sub-sector, 2012 (RM mil) 68Investments in projects approved in engineering supporting industry by sub-sector, 2012 (RM mil) 70The basic metal products industry 72The abricated metal products industry 76Textiles and textile products ecosystem 79Investments in projects approved in the textiles and textile products industry by sub-sector, 2012 (RM mil) 80Approved investments in the ood processing sector, 2012 (RM mil) 87Petroleum and the petrochemical industry 100Investments in projects approved in the plastics products industry by sub-sector, 2012 101Approved investments in the rubber industry by sub-sector, 2012 (RM mil) 103

Approved investments in the wood-based industry by sub-sector, 2012 (RM mil) 104Advanced ceramics ecosystem 109Approved investments in the non-metallic mineral products industry by sub-sector, 2012 (RM mil) 110Number o regional establishments approved as at 31 December 2012 118IPC projects approved, as at 31 December 2012 121Investments in distributive trade, 2012 (RM mil) 133


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List of tables

Top eight industries by investment 45Top industries with export-oriented projects 46States with the largest number o implemented projects during 2008-2012 53Notable projects approved in 2012 electronic components 59Notable projects approved in 2012 consumer electronics 59

Notable projects approved in 2012 industrial electronics59

Notable projects approved in 2012 electrical 59Motor vehicles sales in major ASEAN economies 62Industry involvement in the aerospace sub-sector 63Notable projects approved in 2012 engineering supporting industry 71Notable projects approved in 2012 basic metals 72Notable projects approved in 2012 abricated metal products 76Notable projects approved in 2012 palm oil and palm kernel oil 89Notable projects approved in 2012 oleochemicals 89Notable projects approved in 2012 pharmaceuticals 93Major products o the chemical industry manuactured in Malaysia 96Investments in the chemical industry, 2012 96Notable projects approved in 2012 biotechnology 97Regional headquarter projects approved, 2012 117

New OHQs approved, 2012119New IPCs approved, 2012 121New RDCs approved, 2012 123New REs/ROs approved, 2012 123Approved investments in support services, 2012 128Notable projects approved in 2012 renewable energy 129Notable projects approved in 2012 energy efciency and conservation 129Investments in education services, 2012 134

Appendices

Approved manuacturing projects, 2012 and 2011 144New manuacturing projects approved by size o capital investment, 2012 and 2011 144Approved manuacturing projects by industry, 2012 and 2011 145Approved manuacturing projects with investments o RM100 million and above, 2012 146Approved new and expansion/diversication manuacturing projects by industry, 2012 and 2011 147Approved manuacturing projects with Malaysian majority ownership by industry, 2012 and 2011 148Approved projects in the engineering supporting industry by sub-sector, 2012 149Approved projects in electrical & electronics industry by sub-sector, 2012 149Manuacturing projects approved with oreign participation by source, 2012 and 2011 150Approved manuacturing projects by state, 2012 and 2011 151


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These are

exciting times

or Malaysia.

Despite uncertain global economic conditions,

the country attracted RM162.4 billion in direct

investments in 2012, more than any other year.

In the process, we also created 182,841 newjobs an outstanding achievement considering

the glum state o the worlds economy.

What is innitely more important than these

numbers, however, is the quality o these

investments and jobs.

Prosper the investor

Much o 2012s investments were in new and

emerging technologies, particularly within the

aerospace, semiconductors, solar, machinery

and equipment, biotechnology, petroleum

and petrochemical products and medical

devices industries as well as the services sector.

Investors are looking to Malaysia to provide the

right environment or their enterprises in theseindustries to prosper.

This remarkable achievement was made

possible by the Governments new strategies

to attract quality investments in targeted

sectors. Strategic partnerships with the


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HighlightsIn 2012, Malaysia:

Attracted the highest amount o

direct investments ever recorded:RM162.4 billion

Created 182,841jobs more thanany other year

Enhanced the domesticinvestmentlandscape

Made strong progress in thedevelopment o industries or newand emerging technologies

Strengthened the ecosystemso existing industries such as

semiconductors, LEDs, solar andM&E.

Bolstered the countrys reputationas a global and regional hub ormanuacturing and services

Balanced the development o thecountrys fve economic corridors

countrys economic development agencies has

supported MIDAs eort in raising Malaysias

prole as an ideal place or high-value added

business. Over the past ew years, MIDA and

its partners have concentrated their eorts

on strengthening Malaysias ecosystems or

investors both domestic and oreign. Malaysia

has now gained an enviable reputation as a

global and regional hub or manuacturing

and services, attracting investments thatwill accelerate the countrys shit to high

value-added, high technology, knowledge-

intensive and innovation-based industries.

MIDAs ecosystem approach to developing

investments is an important part o this

ensuring this success.


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8 INVESTMENT FOR TRANSFORMATION

Ater spending more than our decadespromoting and coordinating industrial

development, the Malaysian Industrial

Development Authority (MIDA) received a new

name and a wider scope o responsibility in

2011. With the launch o the New Economic

Model, the agency was renamed the Malaysian

Investment Development Authority and

given a key role in spearheading the national

investment agenda to drive the goals o the

Economic Transormation Programme (ETP).

Just as MIDA has been reshaped or its new

mission, Malaysias investment environment is

also being reshaped to attract the right types

o investments. The results o 2012 indicate

that the country is making good progress

towards meeting this goal. Shits in investment

underscore the role o the services sector as

a new dimension in the Malaysian economy.

We are also attracting more high value-added

and knowledge-based activities in new and

emerging industries such as biotechnology,

aerospace and advanced electronics.

Investments also continued to ow into

the primary sector, with most o the inows

directed into oil and gas exploration projects.

Clearly, Malaysia is moving up the value chain.

Evolving investments

Malaysia continues to be a competitive

destination or oreign multinational

corporations seeking an educated workorce,

sound inrastructure and business-riendly

political climate. Nonetheless, the uture o the

country is also dependent on the growth o

domestic direct investments. It is heartening

to note that domestic investment inows

increased substantially by almost our times

the FDIs achieved in 2012, a sure sign o

the condence local businesses have in the

countrys ability to prosper its investors.

MIDA will play an important role in

encouraging and mobilising domestic direct

investments by identiying opportunities,

providing support and enhancing incentives

or Malaysian-owned companies. These

strategies will help the country make the

quantum leap required in realising the

national investment agenda: to attract quality

investments.

It is crucial that we lock arms to build uponthe success o 2012. We must oster business

ecosystems that are conducive to investors,

domestic or oreign. MIDA must deliver on its

promise: Malaysia as the Prot Centre o Asia.

These are exciting times or Malaysia indeed.

Malaysias investment

environment is being

reshaped to attract

the right kinds of

investments


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MALAYSIA

Investment Perormance 20129


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While the

externaleconomic

environment

continued to be

challenging, the Malaysian

economy maintained its

growth in 2012. Real Gross

Domestic Product (GDP)

grew 5.6 per cent in 2012.


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MALAYSIA


From the supply side, all sectors registeredpositive growth in 2012. The main contributors

to overall growth were the services,

manuacturing, and mining and quarrying

sectors1.

The services sector was responsible or the

largest share o Malaysias GDP. In 2012, the

sector contributed 54.6 per cent to the

countrys GDP and recorded a growth rate o

6.4 per cent in value added. Employment in

the services sector was estimated at 6.7 million

persons or 53.5 per cent o total employment

in 20122.

Productivity o the services sector is expected

to grow more than our per cent in 20123, led

by communications (5.7%), wholesale and

retail trade (4.9%) and the other services (5.6%)

sub-sectors.

The manuacturing sector remained resilient,

contributing 24.9 per cent to GDP in 2012.

The value-added o the manuacturing

sector expanded by 4.8 per cent during the

year. Total exports o manuactured products

decreased by 0.1 per cent to RM470.4 billion

in 2012 compared with RM471 billion in 2011.

Nonetheless, these exports accounted or 67

per cent o Malaysias total exports or the year.Employment in the manuacturing sector was

estimated at 3.6 million persons, or 28.9 per

cent o total employment in 20124.

The perormance o the manuacturing sector

is reected in the expansion o the sectors

industrial output (as measured by the industrial

production index), sales value and productivity.

In 2012, the production index and sales value

o the sector expanded by 5 per cent and 5.5

per cent respectively compared to the year

beore. Productivity in the manuacturing

sector, as measured by sales value per

employee, grew 4.4 per cent or the period o

January to October 20125.

The primary sector continues to be an

important part o Malaysias economy. In 2012,

Manufacturing

remained resilient in

2012, contributing

24.9 per cent to

GDP, while the

value-added of thesector went up by

4.8 per cent.

4Economic Report 2012/2013, Ministry o Finance,Malaysia.

5Malaysia Productivity Corporation.

1Department o Statistics.

2Economic Report 2012/2013, Ministry o Finance,Malaysia

3Malaysia Productivity Corporation.


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the agriculture sector contributed 7.3 per centto the countrys GDP, a growth o 0.8 per cent

rom 2011. The agriculture sector employed

an estimated 1.4 million persons, representing

11.1 per cent o total employment in 20126.

The mining and quarrying sector contributed8.4 per cent to the countrys GDP in 2012,

growing 1.4 per cent during the year.

Employment in this sector during this period

was estimated at 41,100 persons7.

A global challengeA subdued investment environment challengesbusinesses and governments worldwide

Global investment is picking up,

but remains constrained by

macroeconomic and nancial conditions.

Foreign direct investment (FDI) ows continued

to recover ollowing the impact o the global

nancial and economic crisis o 2008-2009. This

recovery continued in spite o the on-going

European sovereign debt crisis.

Global oreign direct investment (FDI)1 inows

in 2011 increased by 16 per cent to US$1.52

trillion rom US$1.31 trillion in 2010, according

to the World Investment Report 2012 by the

United Nations Conerence on Trade and

Development (UNCTAD).

In 2011, developed countries widened their

lead in FDI inows. Flows to developed

countries increased by 21 per cent, to US$748billion. In the developing countries, FDI

increased by 11 per cent to reach a record

US$684 billion. In the transition economies, FDI

increased by 25 per cent to US$92 billion. Taken

together, developing and transition economies

accounted or more than hal o global FDI.

Global FDI inflows

in 2011 increased

by 16 per cent to

US$1.52 trillion

across all three

groups of economies

developed,

developing

and transition

economies.



1FDI is dened by UNCTAD as an international investmentmade with the objective o a lasting interest by a residententity in one economy in an entity resident in anothereconomy. It comprises equity capital, reinvested earningsand inter-company debt transactions and is largelybased on national balance o payment statistics.


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Lao PDR (0.4%)

Myanmar (0.7%)

Cambodia (0.8%)

Brunei (1%)

The Philippines (1.1%)

Vietnam (6.4%)

Thailand (8.2%)

Malaysia (10.3%)

Indonesia (16.2%)

Singapore (54.9%)

MalaysiaUS$11.9b

BruneiUS$1.2b

VietnamUS$7.4b

The PhilippinesUS$1.3b

Graph 1 FDI inows to ASEAN, 2011 (US$ bil)

MALAYSIA


The United States o America (USA) maintained

its position as the largest recipient o FDI

inows (US$226 billion) in 2011, ollowed by

the Peoples Republic o China (US$123 billion),

Belgium (US$89 billion) and Hong Kong (US$83

billion).

In the developing regions o East Asia andSoutheast Asia, FDI inows achieved new

records in 2012. Total inows amounted to

US$336 billion, accounting or 22 per cent o

global inows. Southeast Asia alone recorded

inows o US$117 billion, a 26 per cent

increase rom the previous year. While East Asia

achieved inows o US$219 billion, Southeast

Asia experienced aster FDI growth.

Among the economies o the Association

o Southeast Asian Nations (ASEAN), Brunei

Darussalam, Indonesia, Malaysia and Singapore

all saw a signicant increase in FDI inows.

Malaysia was the third largest recipient in FDIows among ASEAN countries in 2011 ater

Singapore and Indonesia.

FDI inows to Malaysia rose rom US$9.1 billion

in 2010 to US$11.9 billion in 2011, an increase

o 30.8 per cent. FDI inows into Singapore


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0

500

1000

1500

2000

World

Developed

Developing

Graph 2 FDI inows by economies, 2006 - 2011 (US$ bil)


registered a strong growth rom US$48.6 billion

in 2010 to US$64 billion in 2011, representing

an increase o 31.7 per cent. Indonesia

experienced a 37.9 per cent increase o FDI,

rom US$13.7 billion in 2010 to US$18.9 billion

in 2011. Growth in ASEAN countries was driven

mainly by robust domestic demand and strong

expansion in private sector activities.

Reecting the trend or FDI inows, global FDI

outows rose by 17 per cent rom US$1.45

trillion in 2010 to US$1.69 trillion in 2011. This

level remains below the peak o US$2.2 trillion

in 2007. The rise was primarily due to growth

o outward FDI rom developed countries.

Outward FDI rom developed economies grew

by 25 per cent rom US$0.99 trillion in 2010

to US$1.24 trillion in 2011, while FDI rom the

transition economies rose by 19 per cent.

Each o the three major developed-economy

investor blocs the European Union (EU),North America and Japan had its own

contributing actors leading to this increase.

Outward FDI rom the United States reached

a record o US$397 billion, driven by a record

level o reinvested earnings (82 per cent o

total FDI outows) which was in part the result


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0

500

1000

1500

2000

2500

DevelopedDeveloping

World

Developing Asia

Graph 3 FDI outows by economies, 2006 - 2011 (US$ bil)

MALAYSIA


o transnational corporations (TNCs) building

on their oreign cash holdings. Japan re-

emerged as the worlds second largest investor,

with an appreciating yen that improved the

purchasing power o Japanese TNCs. Japan saw

a doubling o FDI outows, with net mergers

and acquisitions (M&As) purchases in North

America and Europe rising 132 per cent. In theEU, the increase in FDI outows was driven by

cross-border M&As.

In the developing worlds economies, outward

FDI ell slightly by our per cent to US$380

billion in 2011. As a result, the share o

developing and transition economies in global

FDI outows declined rom 32 per cent in 2010

to 27 per cent in 2011.

In 2011, total FDI outows rom East Asia and

Southeast Asia ell slightly by 1.2 per cent to

US$239 billion. FDI outows rom East Asia

dropped by nine per cent to US$180 billion,while outows rom Southeast Asia rose 36

per cent to US$59 billion. The main sources

o FDI outows rom the East and Southeast

Asia were Hong Kong (US$81.6 billion), the

Peoples Republic o China (US$65.1 billion) and

Singapore (US$25.2 billion).


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In Southeast Asia, Singapore was the largestsource o FDI outows in 2011 with US$25.2

billion, ollowed by Malaysia with US$15.2billion and Thailand with US$10.6 billion.

Better days aheadThe world economy is expected to make a hesitant but gradual recovery over the next two years

I

n the World investment report 2012,

UNCTAD projects that FDI ows will

continue to improve ollowing the

challenges o the 20082009 crisis but will

remain constrained by global macroeconomic

and nancial conditions. In 2012, FDI ows are

expected to reach between US$1.5 trillion and

US$1.7 trillion, with a midpoint at about US$1.6

trillion.

Ater a marked slowdown in 2011, global

economic growth is likely to remain moderate

in 2012. Most regions, especially developed

economies, are expected to expand at a pace

below potential and with subdued growth.

Sluggish import demand rom developed

economies is also weighing on trade growth,

which is projected to slow urther. Oil prices

rose in 2011 and are projected to remain

relatively elevated in 2012 and 2013, compared

with the levels o 2010.

There are risks o urther deterioration in the

global outlook. The euro-zone crisis remains

the biggest threat to the world economy, but a

continued rise in global energy prices may also

stie growth. These challenges must be aced

by all countries, including Malaysia.

Based on UNCTADs Global Investment

Trends Monitor dated 23 January 2013,

global FDI ows declined by 18 per cent to

an estimated US$1.3 trillion, down rom a

revised US$1.6 trillion in 2011, as signicant

investor uncertainty continues to hamper theFDI recovery. This uncertainty is driven by a

weakening macroeconomic environment

with lower growth rates or GDP, trade, capital

ormation and employment. Additional risk

actors in the policy environment are also

contributing to uncertainty: the Eurozone

Moderate growth inthe global economy

is expected in 2012,

with most regions,

especially developed

economies,

expanding at asubdued rate.


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MALAYSIA


crisis, the United States scal cli, changes o

government in a number o major economies

in 2012, and broad-based policy changes with

implications or FDI.

In 2012, FDI ows in developed countries

ell drastically to values last seen almost ten

years ago. The majority o EU countries saw

signicant drops in FDI ows with the total all

amounting to some US$150 billion while the

United States FDI ows ell by US$80 billion.

During 2012, or the rst time ever, FDI ows

to developing economies exceeded those

to developed countries, by some US$130

billion. FDI ows to developing economies

remained resilient in 2012, reaching US$680

billion, declining only three per cent. Flows

to developing Asia lost some momentum,

although they remained at historically high

levels.

Moving orward, UNCTAD projected that FDI

inows could rise moderately to US$1.4 trill ion

in 2013 and US$1.6 trillion in 2014 as the global

economy is expected to make a hesitant and

uneven recovery over the coming two years.

GDP growth, gross xed capital ormation andtrade are projected to rise gradually, both at

the global level and especially in developing

countries. Such a slight improvement in

macroeconomic conditions could prompt

transnational companies (TNCs) to undertake

new investments.


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The Economic

TransormationProgramme

(ETP) has set a target

to transorm Malaysia

into a high-income nation

by 2020 with a Gross

National Income (GNI) target

o RM1.7 trillion by 2020. For

this to happen, the country


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MALAYSIA


needs to attract total investments o RM1.4trillion during the period o 2011-2020, with

92 per cent (RM1.3 trillion) coming rom the

private sector and the balance o 8 per cent

(RM108 billion) rom the public sector. O the

private sectors portion o RM1.3 trillion, 73 per

cent (RM953 billion) will come rom Domestic

Direct Investments (DDI), while 27 per cent

(RM358 billion) is to be contributed by Foreign

Direct Investments (FDI).

In the shorter term, the 10th Malaysia Plan

(10MP) calls or private sector investment

to grow at 10.9 per cent per annum, or

RM148 billion worth o private investments per

year.

The ETP, which is supported by the 10MP and

the New Economic Model (NEM), will provide

clear platorms in the orm o wide-ranging

investments through its entry-point projects

(EPPs) and business opportunities across the

economy. These platorms will enable both the

manuacturing and services sectors to take on

a greater role in generating growth over the

next eight years.

In 2012, realised private investments

(measured in terms o Gross Fixed Capital

Formation GFCF) totalled RM139.5 billion,an increase o 24.8 per cent as compared to

RM111.8 billion in 2011. As a result o Malaysias

solid investment perormance, the country

exceeded the private investments target o

RM127.9 billion or 2012 by 9.1 per cent.

Malaysias cost-competitive location advantage

attracted quality projects with signicant levels

o investments. In 2012, total investments

approved in the Malaysian economy amounted

to RM162.4 billion, the highest ever recorded.

This constitutes investments approved in the

manuacturing, services and primary sectors.

Investments were approved in 6,442 projects

and are expected to generate 182,841 job

opportunities.

The total investments approved exceeded

the average annual investment target o

RM148 billion set under the 10MP by 9.7 percent. This signicant achievement indicates

that Malaysia is on track to become a high-

income economy driven by high-technology,

knowledge-based and capital-intensive

industries.

As a result ofMalaysias solid

investment

performance, the

country exceeded

the private

investments target

of RM127.9 billion

for 2012 by 9.1 per

cent.


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O the total investments approved,RM127.6 billion (78%) were contributed by DDI

and RM34.8 billion (22%) came rom FDI. The

higher DDI perormance gures suggest that

Malaysian investors responded avourably to

the Governments call to invest more within

the country, as highlighted under the ETP and

10MP.

Another positive indicator can be seen in the

investments approved in the National Key

Economic Areas (NKEAs), which amounted

to RM66.1 billion or 40 per cent o total

investments. There were also signicant

investments in projects approved within the

Non-NKEAs which amounted to RM96.3 billion.

A total o 5,536 projects were approved in

the services sector in 2012 with investments

amounting to RM117.6 billion. O the total

investments, DDI amounted to RM105.4 billion

and FDI totalled RM12.2 billion. The projects

approved during this period are expected

to create 103,180 job opportunities. Within

the services sector, the real estate sub-sector

continued to be the leading contributor with

RM58.8 billion worth o investments approved

ollowed by the utility (RM12.6 billion),

hotel and tourism (RM8.9 billion), transport

(RM6.8 billion) and telecommunications(RM6.6 billion) sub-sectors. To ensure the

growth o the services sector, one o the

Governments measures includes progressive

liberalisation. This step enhances the

competitiveness o the sector and contributes

signicantly to the ETP.

The decline or stagnation in global FDI inows

as well as the increasingly competitive global

environment posed challenges or Malaysia

in 2012. Despite the challenging situation,

Malaysia was still able to attract a considerable

amount o investments into the manuacturing

sector. In 2012, a total o 804 manuacturing

projects were approved, involving investments

o RM41 billion. Foreign investments amounted

to RM20.8 billion and accounted or 50.7 per

cent o the total investments. The balance

o RM20.2 billion or 49.3 per cent were

investments rom domestic sources.

The primary sector accounted or RM3.8 billiono approved investments in 2012. Foreign

investments in the primary sector amounted

to RM1.8 billion (47%) while domestic

investments made up RM2 billion (53%).

The mining sub-sector leads the other sub-

sectors with approved investments reaching

The higher

DDI figure of

RM127.6 billion

indicates a

positive response

from Malaysian

investors to theGovernments call

for investment.


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Total investments: RM162.4 billion

Services (RM117.6 billion) 5,536 projects approved

Foreign: RM12.2 billion

Domestic: RM105.4 billion

Manufacturing (RM41 billion) 804 projects approved


Domestic: RM20.2 billion

Primary (RM3.8 billion) 102 projects approved


Domestic: RM2 billion

Graph 4 Total investments approved in the Malaysian economy, 2012

MALAYSIA


RM2.7 billion in 18 projects. The rest o theprimary sector is made up o the plantation

and commodities sub-sector with investments

amounting to RM548.7 million, as well as

the agriculture sub-sector which registered

investments totalling RM507.8 million.

To ensure that Malaysia keeps its costcompetitive edge in attracting investments

in the services, manuacturing and primary

sectors, the Government continuously reviews

and ne-tunes its business policies to make

Malaysia more attractive as a business location.


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Homespun heroesInvestments rom domestic sources drive the national investment agenda.

While inows o FDI are crucial or the

continued development o the economy,

the role o domestic investments is not to

be underestimated. The New Economic

Model (NEM), Economic Transormation

Programme (ETP) and the 10th Malaysia

Plan (10MP), 2011-2015 have identied

the importance o domestic investments

in assuming a leading role in the growth

o the economy. The ETP has targeted

domestic investments at reaching 73 per

cent o overall investments.

Malaysias continued competitiveness

is dependent on strengthening the

manuacturing and services sectors and

accelerating the shit to high value-added

and innovation-based industries. This

transormation will not be possible without

stronger domestic investments in new

growth areas, together with inows o a

new breed o FDIs. To help Malaysia make

the leap required in national investment to

drive the transormation o the economy,several new strategies have been chosen:

1. Creating Malaysian conglomerates by

identiying potential companies to

provide necessary support

2. Harnessing and leveraging on

outsourcing opportunities created by

MNCs operating in Malaysia

3. Enhancing the current incentive

schemes, to assist Malaysian-owned

companies to scale-up

4. Intensiying technology acquisition by

Malaysian-owned companies

5. Providing support to Malaysian-

owned companies or complying to

international standards/certications

in targeted industries such as

aerospace, medical devices and solar

6. Encourage small Malaysian service

providers to merge into larger entities.

To urther promote the development o

domestic investments, the government

announced several measures in 2012, in

line with the above mentioned strategies.

These measures will urther spur domestic

investment and assist Malaysia in achieving

the transormation o the domestic

investment landscape.

Box article 1 Domestic investment initiatives


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MALAYSIA


Domestic Investment Strategic Fund

A Domestic Investment Strategic Fund

o RM1 billion, to be managed by MIDA,

was established to harness and leverage

on outsourcing opportunities created

by MNCs operating in Malaysia, intensiy

technology acquisition by Malaysian-

owned companies, and enable Malaysia-

owned companies to obtain international

standards/certications in strategic

industries. This will accelerate the shit

towards high value-added innovation-

based industries.

Incentives for Acquiring Foreign

Companies for High Technology

This incentive was re-introduced to enable

Malaysian-owned companies to acquire

state-o-the-art technologies through

a leaprogging approach to move up

the value chain or to diversiy into new

areas. Under this initiative, a locally-

owned company in the manuacturing

or services sector that acquires a oreign-

owned company abroad will be eligible

or an incentive in the orm o an annual

deduction o 20 per cent o the acquisition

cost or ve years.

Companies in Production Eligible to

Apply for Incentives

Malaysian-owned manuacturing or

services companies already in operation or

a year or less and undertaking promoted

products/activities under the Promotion

o Investments Act, 1986 are now eligible

to apply or tax incentives. This exibility is

aimed at acilitating new investments by

Malaysian-owned companies.

Incentives for Small Scale Companies

Tax incentives were enhanced or small

scale Malaysian-owned companies

eligible to apply or tax incentives under

the Promotion o Investments Act, 1986.

The shareholders unds threshold was

increased rom RM500,000 to less than

RM2.5 million.

Incentives for Small Malaysian Service

Providers to Merge Into Larger Entities

Special incentives were introduced

or mergers o small service providers,

including a at tax rate o 20 per cent

on all taxable income or a period o ve

years (eective rom the date o merger)

and stamp duty exemption on the merger

document. These incentives are aimed at

building up the competitiveness o the

smaller entities. Sectors eligible or this

incentive include proessional services

(accounting and taxation services,

specialised medical and dental practices,architectural services and engineering

services), courier services, technical and

vocational secondary education services

(generic and special needs) and skill

training services.


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Partners in attracting investmentsRegional economic corridors and agencies lock arms to develop attractions or investment in

Malaysia

as one of the key agencies

tasked with transorming the economy

under the New Economic Model

(NEM) and the Economic Transormation

Plan (ETP), MIDA has adopted a new strategic

business approach to its operations. As the

execution agency or the nations investment

agenda, MIDA is looking at generating

quality investments in new and emerging

technologies which are necessary to become

a high income nation. MIDA is also looking at

ways to rebrand Malaysias image as a centre

or high technology and global activities.

To this end, MIDA has outlined new

investments strategies including leveraging

on an ecosystem approach in promoting

investments and developing targeted

industries, meeting the human resources needs

o investors and transorming the domestic

investment landscape. To meet the national

investments agenda, MIDA has been tasked

with enhancing coordination and cohesion

among the various agencies in the country

on matters related to investment promotion.As the countrys central investment agency,

MIDA has been continuously engaging and

collaborating with regional corridors and

other agencies as well as the private sector

to develop new and sustained sources o

competitiveness or the country.

ECER

creates new

opportunities

the east coast

Economic Region (ECER)

accounted or RM12 billion

in committed investments

in 2012, 20 per cent more

than its target o RM10 billion. Approximately

75 per cent o these investments came rom

domestic sources while the rest originated

rom oreign investors.

Since the implementation o the ECER Master

Plan in 2007, the region has attracted total

investments o RM37 billion and created 30,000

jobs or the region. The ECER has resulted in

a cumulative investment o RM18.7 billion in

Terengganu, creating 10,600 jobs, while Pahang

has attracted RM11.1 billion and created 14,590

jobs. Kelantan realised an investment inow o

RM5.6 billion and saw 4,600 jobs created, whilethe district o Mersing received RM1.6 billion

with 210 jobs created.

Among the highlights o 2012 are a project

by South Koreas CJ CheilJedang Corporation

(CJ) and Frances Arkema, which are investing


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Among other applications,

polyimide lm is widely used in

the production o fexed printed

circuit boards.

MALAYSIA


RM2 billion to develop the worldsrst integrated bio-methionine and

thiochemicals plant in Kertih Biopolymer

Park (KBP). In Pahangs Gebeng Industrial

Estate, the Kaneka Group o Japan

recently invested RM287.3 million

or a polyimide lm production plant

through its subsidiary, Kaneka Apical

(M) Sdn Bhd. Another investor, Tioxide

(M) Sdn Bhd, a subsidiary o Huntsman

Tioxide Limited has invested RM275

million to upgrade production acilities at

its titanium dioxide pigment plant at the

Kemaman Heavy Industrial Park.

Another key development in ECER or the year

is the establishment o the Malaysia-China

Kuantan Industrial Park (MCKIP), a bilateral

project which is expected to strengthen the

bilateral trade and economic ties between

the two countries. MCKIP is the rst bilateral

project to be accorded national-level status

and is projected to attract RM7.5 billion worth

o domestic and oreign investments, as well as

create 5,500 jobs by 2020.

To attract potential investors to ECER, the

Federal Government has invested some

RM3 billion in inrastructure development

in the region over the past three years tosupport private sector investments. Kuantan

Port is being expanded to a deep water

port capable o handling vessels o up

to 200,000 DWT by 2015, and the

Government has also invested in

human capital development

The ECER has

attracted total

investments of

RM37 billion and

created 30,000

jobs since 2007.

Tourism3.2 (26.7%)

Logistics4.5 (37.5%)

Agriculture1 (8.3%)

Property1.3 (10.8%)

Manufacturing2 (16.7%)

Graph 5 Total committed investments in the ECER, 2012 (RM bil)


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programmes such as empower to boost theacademic achievement and employability o

ECER locals. Agropolitan projects are also being

rolled out across the region to eradicate rural

poverty.

NCER enters a new phase

o development

meanWhile, the

year 2012 marked

the end o Phase I

or the Northern

Corridor Economic Region (NCER) and saw a

record investment value o RM12.3 billion in

manuacturing, services and primary sectors,

representing an increase o 24 per cent rom

the previous year. The NCER has attracted a

total o RM29.7 billion in investments since its

inception in 2008 and created a total o 42,602

new jobs and business opportunities during

Phase I.

In addition to establishing strategic

partnerships with various agencies, the

Northern Corridor Implementation Authority

(NCIA) acilitated the establishment o the rst

local LED accreditation and testing centre inMalaysia in the Koridor Utara Biotech Centre

to encourage agropreneur development.

The agency also expanded the aquaculture

ecosystem and spearheaded human capital

development programmes in the region.

Private sector participation in rural areas

increased signicantly in 2012, with a total

o RM736.1 million invested over the period

compared with RM255.6 million in the previous

year. Most o these investments were in the

agriculture sector.

The Northern Corridor Implementation

Authority (NCIA) also joined in a tripartite

collaboration between the private sector,

academia and the Government to establish

CREST (Collaborative Research in Engineering,


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MALAYSIA


Science and Technology). To boost R&D in the

E&E industry, a total worth o RM14.2 million

in grants was awarded or R&D projects in

2012. O the stated amount, RM5.6 million

was unded by CREST while industry players

partaking in the R&D projects contributed the

remaining RM8.6 million.

CREST and its ounding members were among

the key contributors in developing a three-

year Talent Roadmap or E&E. The Roadmap

is a sector-wide plan to attract, nurture

industry-ready talents and grow the E&E

expert talent pool. In addition, CREST creates

awareness about career opportunities in E&E

at career airs, local universities and outreach

programmes located in the UK, Australia,

the USA and Taiwan. CREST also supports

Talent Development through the FasTrack

programme and the development o a Talent

Repository or mapping competencies andmatching students to available positions in the

industry.

CREST also drives innovation and

commercialisation in the industry through

symposiums or promoting partnerships

between local companies, academicinstitutions and global technology partners.

Iskandar Malaysia grows

rom strength to strength

guided by the

Iskandar Regional

Development Authority

(IRDA), Iskandar Malaysia

has recorded total cumulative committed

investments o RM105.1 billion in various

sectors as o November 2012, with 42 per cent

o these investments having been realised. O

the total cumulative committed investments,

64 per cent (RM67.7 billion) are domestic

investments while 36 per cent (RM37.4 billion)

are rom oreign investors.

The creative, healthcare, nancial services and

logistics sub-sectors are set to be a magnet

or new investments between 2013 and 2015.

Iskandar Malaysia is also aiming at increasing

tourist interest during this period with on-

going additions to LEGOLAND Malaysia, Johor

Premium Outlets and Puteri Harbour to name

a ew.

The Government has committed RM7.3 billion

in Iskandar Malaysia so ar under the 9th

and 10th Malaysia Plan periods to attract

investments and improve living standards.

Since the initiative was rst announced, the

ratio o private sector versus public sector

The NCER saw

record total

investments of

RM12.3 billion

in 2012.


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Manufacturing33.9 (32.3%)

Others4.2 (4%)

Creative0.4 (0.4%)

Education1.6 (1.5%)

Healthcare1.6 (1.5%)

Tourism2.1 (2%)

Port/Logistics3.7 (3.5%)

Petrochemical/Logistics5.7 (5.4%)

Government7.3 (6.9%)

Utilities9.5 (9%)

Properties35.1 (33.4%)

Graph 6 Total cumulative committed investments in Iskandar Malaysia as at November 2012 (RM bil)


investments has increased rom 1:1 in 2006

to 13:1 in 2012. The growth o investments

in Iskandar Malaysia also generated an

increase in economic activities along with

urther demand or employees rom Johor. An

estimated 154,000 new jobs were created in

the manuacturing and service sectors rom

2006 to 2012.

Signicant outcomes in 2012 that could

boost investor interest include new highway

and bus transportation improvements, the

on-going Johor Bahru Transormation

Programme, training and placement o over

1,200 employees o catalytic projects, the on-

going development o tourist attractions and

continuing social and community development

initiatives.

Energetic developments at

SCORE

the saraWak

Corridor o

Renewable Energy

(SCORE)s role in

accelerating the

States economic growth is supported by


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The waer business is dependentupon a steady supply o

polycrystalline silicon.


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its advantage in energy resources. Theseabundant resources comprise 20,000 MW o

hydropower potential, 1.46 billion tonnes

o coal and 40.9 trillion square cubic eet o

natural gas.

SCORE is expected to trigger spin-o eects

or both downstream and upstream industries

as well as provide considerable business and

high value employment opportunities to the

local populace. With an area o more than 8,000

hectares, Samalaju Industrial Park (SIP) is being

aggressively developed as one o the growth

nodes o SCORE.

The primary advantages o SIP in attracting

investment are competitively priced energy

supply rom Bakun Hydroelectric Power (HEP)

and other sources, an abundant water supply,

the availability o land, scal and non-scal

incentives and inrastructure support.

To date, 11 companies with total investments

o RM21.2 billion have been approved at SIP.

The rst oreign investor, Tokuyama Malaysia

Sdn Bhd, will begin producing polycrystalline

silicon at SIP in June 2013. This rst phase will

create 500 job opportunities, while another

500 jobs will be created in Phase 2 during the

second quarter o 2014. Press Metal Berhad,the rst local company to invest in SCORE,

has one aluminium smelting plant in Mukah

and a second plant operating in SIP. Three

more companies, Pertama Ferroalloys Sdn

Bhd, OM Materials (Sarawak) Sdn Bhd and Asia

Advanced Materials Sdn Bhd are presentlycarrying out their site preparatory works.

SDC gets ready or the

global stage

the sabah economic development and

Investment Authority (SEDIA) is the one-stop

authority driving the Sabah Development

Corridor (SDC) to attract investments in key

ocus areas. In 2012, the SDC continued to

gain eminence as an attractive investment

destination.

Since the launch o SDC in January 2008 up

until the end o 2012, a total o RM114 billion

worth o investments have been planned

and committed to Sabah. Approximately

RM1.1 billion has been disbursed to SEDIA rom

the RM1.4 billion allocated under the Ninth

and Tenth Malaysian Plans to help drive the

SDCs objectives. The Ministry o Finance has

also approved a tax incentive package to help

SEDIA attract global investors to Sabahs shores.

The key projects in the SDC include the

834-hectare Kenginau Integrated Livestock

Centre, the Sabah Oil & Gas Terminal and

Kimanis Power Plant. A geothermal power

plant in Tawau accounted or RM500 million


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The Integrated LobsterAquaculture Park in Semporna is

expected to generate RM3 billion

in annual sales by 2030.

MALAYSIA


o investment in 2012, while the PalmOil Industrial Cluster in Lahad Datu

attracted two biomass industry

players. Overall, states palm oil

sector is expected to generate

RM22.4 billion in investments

by the year 2020. Meanwhile,

the Integrated Lobster

Aquaculture Park in

Semporna involves

RM2 billion in investments and is expected

to generate RM3 billion in annual sales by

2030.

Agencies or changeGovernment institutions ocus on the countrys key growth areas.

Multimedia Development Corporation

In 2012, the economic slowdown in the

Eurozone and delayed growth in the United

States created challenges or the MalaysianICT industry, as 22 per cent o the countrys

exports o ICT are targeted at these markets.

However, the impact on Malaysias exports

was cushioned by Malaysias growing trade

ties with Asia and other emerging markets.

Indonesia, Vietnam, China and other ASEAN

countries accounted or nearly 58 per cent o

the countrys total ICT exports.

These actors are driving the transormation o

the ICT ecosystem, as laid out in Multimedia

Development Corporations Digital Malaysia

programme. With this programme, MDeC is

enabling the greater adoption o ICT and

ostering a more conducive ecosystem or

home-grown innovations. MDeC is also

ocusing on important ICT trends such asmobile computing, cloud computing and the

stacking model or ICT companies.

Founded on three strategic thrusts (see

Graph 7), Digital Malaysia aims to advance the

country towards a developed digital economy


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Mega datacentres will eature

prominently in Malaysias

uture as cloud computing gains

popularity.


by 2020. This will be accomplished by creating

an ecosystem that promotes the pervasive use

o ICT in all aspects o the economy.

Digital Malaysia is aimed at increasing

Malaysias ICT contribution to the countrys GNI

rom the current 9.8 per cent to 17 per cent

or RM294 billion by the year 2020, creating

160,000 high-value jobs in the process. The rst

eight Digital Malaysia projects were rolled out

in July 2012 with the remaining 17 projects tobe announced in stages rom 2013 onwards.

MSC Malaysia also continued to grow. With

the addition o Jaya 33 in 2012, Malaysia

currently has 25 MSC Malaysia Cybercities and

Cybercentres or ostering home-grown ICT

ecosystems and attracting quality investments

in the sector.

In addition, the EPPs in the ICT sector made

several achievements o note in 2012, including

adding 2,210 new jobs and over RM318

million in export revenue in the rst quarter

o 2012 alone. Under EPP2 (Building Globally-

competitive outsourcers), IBM will invest

RM1 billion over the next six years to build a

new IT Global Delivery Centre in Cyberjaya,creating up to 3,000 new high-skill jobs. In

2012, Frost & Sullivan also made a commitment

to invest RM595.2 million in a global acility

in the Iskandar region, which will create 830

high-value jobs. EPP3 (Positioning Malaysia as

a World-Class Data Centre Hub) succeeded in


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MALAYSIA


urther catalysing growth in the data centre

business, bringing in over RM320 million in

2011. It is on target to achieve the RM400

million revenue target set out or 2012.

Halal Industry Development Corporation

The Halal Industry

Development

Corporation (HDC)

coordinates the overalldevelopment o the

national halal industry

with the goal o

making Malaysia the

Global Halal Hub and

elevating halal as the standard o choice. To

date, 22 Halal Parks have been developed

around the country , and the HALMAS status

has been awarded to 12 Halal Parks. During

the period 2009 - 2012, these HALMAS Halal

Parks attracted investments valued at RM

7.2 billion rom the USA, Australia and Japan

among other countries. A total o 101 projects

are in operation, providing employment

opportunities or 4,967 people.

In 2012, 6 HALMAS Halal Parks attractedinvestments valued at RM1 billion. Among the

16 projects approved were multinationals and

SMEs producing halal processed ood, halal

ingredients and halal pharmaceuticals. The

largest investments involved were YPJ Palm

International Sdn. Bhd. (RM150 million), Inno-

FROM... ...TO

Low Knowledge-AddHigh Knowledge-

Add

Consumption

Centric Production Centric

Supply Focused Demand Focused

Graph 7 Strategic thrusts o Digital Malaysia


39/154


Wangsa Oils & Fats Sdn. Bhd. (RM150 million),Evyap Sabun Malaysia Sdn. Bhd. (RM350

million) and Musim Mastika Oil & Fats (M) Sdn.

Bhd. (RM250 million).

InvestKL

InvestKL provides

comprehensive

support services to

attract multinational

corporations (MNCs) to

the Greater Kuala Lumpur/Klang Valley (GKL/

KV) NKEA. During 2012, InvestKL succeeded

in attracting committed investments o

RM1.1 billion rom 11 MNCs. These investments

will create more than 12,000 new jobs and are

expected to generate GNI o RM1.6 billion.

O the 11 MNCs, our will establish their

Operational Headquarters/ Regional Control

Towers in GKL/KL, one will use GKL/KV or

global trading or agriculture commodities, ve

will set up centres o excellence and one will

establish retail business in the region. Notable

companies include Darden Restaurant Inc, the

worlds largest ull service restaurant company

and ServiceSource, a global leader in recurring

revenue management.

TalentCorp

To drive initiatives

towards improving the

countrys talent pool

or the Economic Transormation Programme

(ETP), TalentCorp directs its eorts along threestrategic thrusts: Optimise Malaysian Talent,

Attract and Facilitate Global Talent, and Build

Networks o Top Talent.

To date, TalentCorp has organised Attract

and Facilitate Global Talent outreach events

across 20 countries supported by Virtual

Career Fairs (VCFs). TalentCorp also manages

the Returning Expert Programme (REP), which

has approved more than 1,600 applications

rom January 2011 to 31 December 2012. To

enable top oreign talents to contribute in the

longer term in Malaysia, TalentCorp, together

with the Ministry o Home Aairs (MoHA) and

the Immigration Department oversees the

Residence Pass-Talent (RP-T). Over 1,000 RP-T

applications have been approved since the

initiatives introduction in April 2011 up to 31

December 2012.

The strategic thrust to Build Networks o

Top Talent ocuses on bringing together the

best Malaysian talent abroad and selected

companies in Malaysia or the exchange

o knowledge, ideas and exploration o

partnership opportunities. This is done through

talent ambassadors as well as workshops.

BiotechCorp

BiotechCorp is the lead

development agency

or the biotech industry

in Malaysia and acts as

a central contact point


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OPTIMISE MALAYSIAN

TALENT

Career Awareness

(career fairs, roadshows)

Enhancing School to Work

Transition (Structured

Internship Programme)

Upskilling Programmes

(FasTrack)

Scholarship

Management

ATTRACT AND

FACILITATE GLOBAL TALENT

Returning ExpertProgramme

Pass-Talent (RP-T)

International Outreach and

Engagement sessions

(Virtual Career Fairs)

BUILD NETWORKS OF

TOP TALENT

Malaysian Talent

Ambassadors

Workshops

Graph 8 Three strategic thrusts o Talent Corp

MALAYSIA


providing support, acilitation and advisory

services or biotech and lie sciences companies

in the country. One o the many initiatives

driven by BiotechCorp is the commitment to

advance the bio-chemical sector and to secure

a targeted RM4 billion worth o investments

in the industrial biotechnology sector by 2013

to drive the Commercialisation Phase o the

National Biotechnology Policy (NBP).

Since its establishment in 2005, BiotechCorphas acilitated the development o 215

BioNexus-status companies in Malaysia with

total approved investments o RM2.6 billion.

BioNexus-status companies qualiy or scal

incentives, grants and guarantees administered

by BiotechCorp.

BiotechCorp and East Coast Economic Region

Development Council (ECERDC) have been

actively engaging several global industry

biotechnology players especially rom the USA,

Europe, Korea and Japan to set-up their bio-

based chemical manuacturing acility in Kertih

Biopolymer Park. BiotechCorp and ECERDC

have successully secured a RM2 billion

investment rom a joint-venture between

Koreas CJ CheilJedang and Frances Arkema to

develop the worlds rst bio-methionine acilityin Kertih Biopolymer Park. The biorenery

is slated to be ully operational by 2014 and

will utilise renewable energy rom biomass.

The total project is expected to generate a

cumulative GNI o RM 20.4 billion by 2020 and

produce 2,500 green jobs or Malaysia.


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43/154


The countrys

manuacturingsector is going

through a period o

transormation and

restructuring. As low value-

added assembly becomes

less important, industry

players are expected to

reduce their investments


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Domestic investments

Foreign investments

20112012

Graph 9 Sources o investments in projects approved, 2012 and 2011

MALAYSIA


into low-value sectors and increase their

activities in new high value-added activities

that will open up new opportunities or

growth. The creation o these new business

ecosystems will support the market or high-

skill employment and spur the development o

a high-income economy.

The trend o investments approved in 2012

conrms that Malaysia continues to be an

attractive investment destination. Despite

intense competition or investment, most sub-

sectors registered an increase in investmentsexcept or E&E, basic metal products and non-

metallic mineral products.

Investment trends in 2012 were also strongly

inuenced by global economic uncertainties

exacerbated by the sovereign debt crisis in

Europe, and the stalled US economy. Malaysia

attracted a total o 804 manuacturing projects

worth RM41 billion in approved investments

in 2012 compared with RM56.1 bill ion or 846

manuacturing projects in 2011. Almost 50 per

cent o this total (RM20.2 billion) were domestic

investments with the rest being high quality

oreign direct investments (RM20.8 billion).

Resilience in the ace o

uncertainty

malaysias erstWhile manufacturing

sector remained resilient as a whole due to

its strong, diversied base across multiple

industries. The country attracted signicant

new investments amounting to RM26.8 billion


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Domestic investments

Foreign investments

Employment

Graph 10 Investments and employment

in projects approved, 2007 - 2012


(473 projects) or 65.4 per cent o total

investments approved.

Existing companies in Malaysia continuedto expand and diversiy their operations,

reecting their continued condence in the

countrys investment environment. A total o

331 expansion/diversication projects with

investments amounting to RM14.2 billion were

approved in 2012.

Capital-intensive projects

malaysia has adopted a more focused

and targeted approach in attracting quality

investments in new growth areas withinemerging technologies, high value-added

industries, high technology, capital-intensive

and knowledge-intensive industries.

Based on the measurement o capital

investment per employee (CIPE) ratio o

The CIPE ratio

of manufacturing

projects has risen

consistently since it

was first recorded in

1990.


46/154

20112012

Petroleum5,812 (22%)

E&E

11,234 (34%)Basic Metal7, 308 (22%)Transport

5,605 (21%)

Rubber Products993 (4%)

Machinery1,303 (5%)

E&E2,546 (9%)Chemicals

2,678 (10%)

Basic Metal3,262 (12%)

Others3,754 (14%)

Wood882 (3%)

Fabricatedmetal1,098 (3%)

Transport2,034 (6%)

Others1,972 (6%)Non-metallic

2,319 (7%)

Food2,796 (8%)

Chemicals3,453 (11%)

Scientific &MeasuringEquipment884 (3%)

Graph 11 Investments in new projects by industry, 2012 and 2011 (RM mil)

MALAYSIA


projects approved, capital intensity in

2012 stood at RM535,715. The CIPE ratio o

manuacturing projects has risen consistently

since it was rst recorded in 1990, reecting a

general trend towards more capital-intensive,

high value-added and high technology

projects. In 2012, the industry with the

highest CIPE ratio was petroleum products

including petrochemicals (RM4,738,958),

ollowed by chemicals and chemical products

(RM2,349,438) and scientic and measuring

equipment (RM1,134,442).

In 2012, a total o seven projects with

investments o at least RM1 billion or more

were approved with total investments oRM13.5 billion. In comparison, there were 11

projects which recorded investments o at

least RM1 billion or more in 2011 with total

investments amounting to RM22.2 billion.

There were also 73 approved projects which

recorded investments o at least RM100

million or more, bringing in a combined total

o RM29.2 billion or 71 per cent o the total

investments approved.

All these projects will have substantialmultiplier eects on the manuacturing sector

and the economy, including orward-and-

backward linkages eects, the development

o supporting industries, the transer o

new technologies and R&D, the creation o

high income employment opportunities,

Industry Value of

projects (rM bIl)

Transport equipment RM7.8 billion

Chemicals & chemical products RM6.4 billion

Petroleum products includingpetrochemicals

RM6 billion

E&E products RM4 billion

Basic metal products RM3.8 billion

Food manuacturing RM3.4 billion

Machinery & equipment RM1.9 billion

Rubber products RM1.4 billion

Table 1 Top eight industries by investment


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local sourcing, skills development, and thegeneration o oreign exchange earnings.

Together, the top eight industries by

investment accounted or RM34.7 billion or

85 per cent o total investments approved. All

these industries registered higher levels o

investments in 2012 compared with 2011, with

the exception o E&E, basic metal products and

ood manuacturing. The top eight industries

by investment are listed in Table 1.

Export-oriented projects

malaysia oWes its favourable

investment environment to a myriad o

actors including the availability o excellent

inrastructure, telecommunication services,

nancial and banking services, supportingindustries as well as a skilled and trainable

work orce. In 2012, a total o 239 projects were

approved involving investments o RM15.2

billion proposed to export at least 80 per cent

o their output. The top industries with export-

oriented projects are listed in Table 2.

2011

2012

Chemicals3,759(26%)

E&E8,828 (38%)Transport

3,944 (17%)

Food2,639 (19%)

Plastic Products505 (3%)

Machinery548 (4%)

Basic Metal531 (4%)

Fabricated Metal687 (5%)E&E

1,441 (10%)

Others1,930 (14%)

Transport2,175 (15%)

Rubber432 (2%)

Machinery384 (2%)

Chemicals1,497 (7%)

Food898 (4%)

Others1,842 (8%)

Petroleum

2,557 (11%)

Basic Metal2,608 (11%)

Graph 12 Investments in expansion/diversication projects by industry, 2012 and 2011 (RM mil)

Industry Value of

projects

(rM bIl)

nuMber of

projects

Petroleum productsincluding petrochemicals

5 6

Transport equipment 2.1 13

E&E products 1.6 52

Chemicals & chemicalproducts

1.2 11

Rubber products 1.1 8

Table 2 Top industries with export-oriented projects


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MALAYSIA


A changing workorceBetter jobs means better lives or everyone.

the projects approved in 2012 are

expected to create employment

opportunities or 76,631 people, o

which 23 per cent are in the managerial,

technical and supervisory (MTS) category

(17,422 ) while the other 51 per cent are in the

category o skilled workers (38,931). Most o

the employment opportunities created are

in the E&E sector (18,163 jobs) ollowed by

transport equipment (11,669 jobs) and ood

manuacturing (7,062 jobs).

The Government continues to grant approvals

or expatriate posts to Malaysian as well

as oreign-owned companies, particularly

or managerial and technical posts. This

practice will acilitate technology transer and

complement the local pool o managerial and

technical talent. A total o 2,023 expatriate

posts were approved in 2012.

Domestic investors take

centre stage

malaysias continued competitiveness

is dependent on strengthening the

manuacturing and services sectors and

accelerating the countrys shit towards high

value-added, high technology, knowledge-

intensive and innovation-based industries.

Given the current global economic climate and

increasing competition or global FDIs, it is vital

that domestic investments take centre stage

in driving Malaysias economic transormation.

The country is on track to achieve this

transormation, as the share o domestic

investments approved in 2012 rose rom 39 per

cent in 2011 to 49.3 per cent in 2012.

Becoming a magnet or

oreign capital

malaysia has adopted a more focused

and targeted approach in attracting quality

oreign investments in recent years. These

quality investments do not always maniest

as high levels o capital investments but can

have signicant multiplier eects throughout

the economy. The quality investments being

sought include investments in high technology

projects, knowledge-intensive industries, high

value-added industries and R&D activities.

Malaysia remains a competitive destinationor FDI in the region and continued to attract

encouraging levels o oreign investments in

the manuacturing sector. Foreign investments

in approved manuacturing projects amounted

to RM20.8 billion in 2012, o which RM12.6

billion (60.6%) was in new projects while the


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remaining RM8.2 billion (39.4%) was in projectsinvolving the expansion or diversication o

existing operations.

The major sources o oreign investments in

2012 were Japan (RM2.8 billion), Saudi Arabia

(RM2.6 billion), Singapore (RM2.2 billion), the

Peoples Republic o China (RM2 billion) and

the Republic o Korea (RM1.6 billion). These ve

countries jointly accounted or 53.8 per cent o

total oreign investments approved during the

period (see Graph 13).

Japans investments in Malaysia in 2012

amounted to RM2.8 billion in 62 approved

projects (see Graph 14). The countrys largest

investment came rom a new project to

manuacture passenger cars, SUVs, 4x4s and

light truck eco tyres with an investment oRM891.9 million. In addition, investments or a

new project or the manuacture o polyimide

lm amounted to RM287.8 million while

investments or an expansion project or the

manuacture and assembly o cars amounted

to RM262.7 million.

Saudi Arabia was the second largest source

o oreign investments in 2012 with RM2.6

billion in two approved projects. The large

investments rom Saudi Arabia were primarily

contributed by an expansion/diversication

project with investments o RM2.6 billion or

the manuacture o polycrystalline silicon,

sodium hydroxide (caustic soda) chlorine,

hydrogen, hydrochloric acid, silicon tri-chloride

and other chemicals.

Graph 13 Major sources o oreign investments in projects approved, 2012


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Transport equipment

456.2 (18%)

Plastic products

430.3 (17%)

E&E products

344.8 (13%)

Paper, printing and

publishing

193 (7%)

Fabricated metalproducts

169.2 (38%)

Rubber products

984.8 (38%)

Graph 14 Value o investments rom Japan by major industry, 2012 (RM mil)

MALAYSIA


Diversiying localinvestment destinations

in terms of value, selangor received

the largest amount in approved investments

in the manuacturing sector in 2012 (RM11.7

billion) ollowed by Johor (RM5.5 billion),

Sabah (RM5 billion), Sarawak (RM4.7 billion)

and Negeri Sembilan (RM2.7 billion). These

ve states contributed 72 per cent o the totalinvestments approved in the country in 2012.

In terms o the number o projects approved,

three states proved most popular among

investors, attracting a total o 69 per cent

o the total projects approved: Selangor

(252 projects), Johor (184 projects) and Pulau

Pinang (115 projects).

Most o Selangors investments were

contributed by a wide range o industries

including transport equipment (RM5 billion),

E&E products (RM1.6 billion) and ood

manuacturing (RM1.2 billion). One major

project approved in Selangor includes a

new wholly Malaysian-owned project with

investments o RM2 billion to manuacture andassemble trucks, buses and commercial vehicle

engines.

Johor registered the second highest level

o investments at RM5.5 billion, including a

new RM577 million oreign-owned project


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Graph 15 Investments in approved

projects by location, 2012


to manuacture drug substances, insulin,analogues and drug products. Other

investments in Johor were concentrated in

the chemicals and chemical products sub-

sector (RM869.9 million), E&E (RM809.3 million),

ood manuacturing (RM697.6 million) and

abricated metal products (RM500.6 million)

industries.

Sabah attracted investments

amounting to RM5 billion

mainly due to a new RM4.5

billion Malaysian-owned project

to manuacture ammonia

and granular urea. Other

investments in the state were

in chemicals and chemical

products (RM254.2 million),

ood manuacturing

(RM132.8 million)

and machinery & equipment (RM44.3 million)industries.

Implementation o

approved manuacturing

projects

a total of 4,245 manufacturing

projects were approved during the period

rom 2008 to 2012. O these, 3,213 projects

were implemented, with 3,005 projects in

production as at 31 December 2012 and 208

projects at the stage o actory construction

and machinery installation. O the 3,005

projects in production, 776 projects had

commenced production in 2012. Total capital

investment o the 3,213 projects that were

implemented amounted to RM147.2 billion.

In addition, 76 projects with investments o

RM18.2 billion had acquired sites or actories,

while 783 projects (RM52.7 billion) were in

the active planning stage. When these 859

projects are realised, total investments o

these projects which were in various stages o

implementation will amount to RM70.9 billion.

Selangor has the largest number oimplemented projects, ollowed by

Johor, Pulau Pinang, Perak,

Kedah and Negeri

Sembilan.


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MALAYSIA


Where does the money go?Graph 16 Investments in projects approved by major industry, 2012 and 2011

Graph 17 Domestic investments in projects approved by major industry, 2012

Graph 18 Foreign investments in projects approved by major industry, 2012


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Production

3,005 (70.8%)

Active planning

783 (18.4%)

Machinery installation and

factory construction

208 (4.9%)

Not implemented

173 (4.1%)

Site acquired

76 (1.8%)

Graph 19 Status o implementation o manuacturing projects approved, 2008 - 2012


Major projects implemented during the periodrom 2008 to 2012 covered a broad range o

industries: E&E products, basic metal products,

chemical and chemical products, transport

equipment, and ood manuacturing.

The Government continues to undertake

various measures and initiatives at ederal

and state levels to acilitate investors in the

implementation o approved projects. These

measures included the setting up o State

Investment Centres (SICs), Advisory Services

Centre (ASC), Customer Service Centre (CSC),

and Immigration Unit Oce in MIDA. In

addition, MIDA appointed Special Project

Ocers (SPOs) or hands-on assistance,

introduced online application or submission

o application orms, and provided automatic

issuance o Manuacturing Licences. SpecialTask Force to Facilitate Business (PEMUDAH)

also introduced improvements to enhance

transparency and strengthen processes.

MIDA also continues to manage and monitor

projects under the Upgrading o Basic

Inrastructure Program o Existing Industrial

Areas with the goal o assisting the state

government in upgrading and improving basic

inrastructure in existing industrial estates.

In 2012, a total o 53 companies downsized

their operations, resulting in the retrenchment

o 9,194 workers. In addition, 22 companies

ceased operations altogether, resulting in

the loss o 1,969 jobs. The main reasons cited

or these closures included poor market


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MALAYSIA


conditions, increased costs and companynancial problems.

These closures were more than countered

by the creation o 79,807 job opportunities

rom the 776 projects which commenced

production in 2012. These projects will provide

alternative employment opportunities or the

11,163 workers who were retrenched during

the same period.

Electrical and electronic productsCreating new opportunities in an established industry

the sharp rise in investments in

high value-add sector such as medical

devices, biotechnology and the services

sector is osetting the gradual decline o

investments into labour-intensive industries.

As Malaysia moves towards becoming a high

income nation, its share o investments in

high value-added activities and knowledge

industries will rise while investments in

lower-value activities such as assembly and

basic manuacturing will all. This is a strong

indicator o the countrys economic prosperity

as it comes to be measured by the health and

wealth o the community rather than its GDP.

Today, MNCs in the E&E sector are

concentrating on expanding their R&D

capabilities in Malaysia, creating higher

income jobs rom higher value-added

activities. Malaysian companies are ollowing

suit and are developing their competencies

in research, design and development to

support the MNC activities. A total o 112 E&E

projects with investments o RM3.9 billion

were approved in 2012, most o which came

rom oreign investors (RM3.2 billion or 82.1%)

A total of 112

E&E projects with

investments ofRM3.9 billion were

approved in 2012,

most of which

came from foreign

investors.

state Value of

projects

nuMber of

projects

Selangor RM30.9 billion 1,091

Johor RM24.5 billion 659

Pulau Pinang RM27.4 billion 448

Perak RM5.4 billion 169

Kedah RM6.3 billion 153

Negeri Sembilan RM10.4 billion 144

Table 3 States with the largest number o implementedprojects during 2008-2012


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while domestic investments made up the rest

(RM734.6 million or 17.9%). The major sources

o oreign investments were the USA (industrial

electronics and consumer electronics), Japan

(electronic components and electrical

products) and Canada (electronic components).

In 2012, a total o 31 projects were approvedin the electronic components sub-sector with

investments o RM1 billion, while a total o

eight projects were approved in the consumer

electronics sub-sector with investments o

RM768.7 million. The industrial electronics

sub-sector attracted a total o 18 projects with

approved investments o RM325.3 million.

In the electrical sub-sector, investments

in 2012 amounted to RM1.8 billion with 55

projects contributing 46.1 per cent o the total

approved investments in the E&E industry.

The sub-sector was driven largely by oreignapproved investments o RM1.3 billion

(72.2%). The sub-sector encompasses three

segments industrial goods, consumer goods

and electrical components and the approved

projects are expected to generate 4,463

employment opportunities.

SECTORS EXAMPLES OF PRODUCTSSUB-SECTORS

Graph 20 Structure o the E&E industry


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MALAYSIA


MNCs in the E&E sector areconcentrating on expanding their

R&D capabilities in Malaysia,

creating higher income jobs rom

higher value-added activities.


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The E&E ecosystemThe E&E industry in Malaysia is ocused on deepening and strengthening the three major

ecosystems o semiconductors, solar and LED technologies.

Semiconductors

Over the past ew years, the E&E industry

has been supported by strong demand

in PCs, mobile phones and TVs. However,

mobility and connectivity trends are

changing the way people use these devices

on a global scale. The increased popularity

o using tablets and smartphones

has impacted the perormance o the

Malaysian semiconductor industry which

mostly serves the PC segment o the

market.

Future demands in communica

Annual Report 2012: Malaysian Investment Development Authority (MIDA).

Documents

Transcript of Annual Report 2012: Malaysian Investment Development Authority (MIDA).