“Business Opportunities in Malaysia”2 Ahmad Tajudin Omar Director . MIDA Munich . 14th June,...
Transcript of “Business Opportunities in Malaysia”2 Ahmad Tajudin Omar Director . MIDA Munich . 14th June,...
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“Business Opportunities in Malaysia”
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Ahmad Tajudin Omar Director
MIDA Munich
14th June, 2012, Thursday Prague
CONTENT OUTLINE • Functions • Malaysian Economy • Investment Trends • Investment Opportunities in Malaysia • Investment Policies & Incentives • Development Corridors • International Rankings
Content Outline
MIDA’s Function in The Promotion of The
Manufacturing and Services Sectors in Malaysia
Established in 1967 under Act of Parliament, 1965
The principal Malaysian Government agency responsible for the promotion and coordination of industrial development in the country
First point of contact for investors who intend to set up projects in the manufacturing and services sectors in Malaysia
On 27 March 2004, the Government mandated MIDA to promote investments in the services sector
Milestones
Foreign Direct Investment Domestic Investment Business matching through E-Connect Manufacturing Services
Promotion
Manufacturing licenses Tax incentives Expatriate posts Duty exemption OHQ, RDC, IPC and R&D status
Evaluation
Follow-up / Monitoring
Planning
Planning for industrial development Recommend policies and strategies on industrial promotion and development Formulation of strategies, programmes and initiatives for
international economic cooperation
Assist companies in the implementation and operation of their projects
Facilitate exchange & co-ordination among institutions engaged in or connected with industrial development
Advisory Services
Functions of MIDA
Based In MIDA • Immigration Department
• Royal Malaysian Customs
• Department of Environment
• Tenaga Nasional Berhad
• Telekom Malaysia Berhad
• Labour Department
Based outside of MIDA • Department of Occupational Safety and Health (DOSH)
• Ministry of Finance
• Ministry of Health
• Ministry of Tourism
• Ministry of Human Resource
• Ministry of Higher Education
• Multimedia Development Corp. (MDeC)
• Construction Industry Development
Board of Malaysia (CIDB)
MIDA “One Stop Centre”
San Jose
Los Angeles New York
Boston
Stockholm
Frankfurt Munich
Milan Paris
London
Dubai Mumbai
Guangzhou Taipei
Shanghai Seoul
Osaka Tokyo
Sydney
24 Overseas Centres
Chicago
Houston
Singapore
Bangkok
Johannesburg
MIDA Worldwide Network
MIDA’s 12 State Offices
MALAYSIAN INDUSTRIAL DEVELOPMENT AUTHORITY Malaysian Economy
1960s – Import substitution industries
1970s – Labour intensive industries
1980s – Export-oriented manufacturing and high-tech industries
1990s to date – Capital and technology intensive industries, high value added and skill intensive
Malaysia Development Activities
Source: Central Bank of Malaysia/Department of Statistics Malaysia/MATRADE
2009 2010 2011
Real GDP (%) - 1.7 7.2 5.1
Inflation (%) 0.6 1.7 3.4
Per Capita Income (US$) 6,764 8,140 9,204f
Unemployment (%) 3.7 3.2 3.1
Trade Surplus (US$ bil) 33.6 34.2 29.6
International Reserves (US$ bil) 96.7 106.5 133.7
Retained Imports Equivalent (months) 9.7 8.5 9.6
Malaysia’s Key Economic Indicators
Investment Trends
Year No. of Projects
No. of Employment
Proposed Investment (US$ billion)
Domestic Foreign Total
2008 919 101,173 4.8 13.3 18.1
2009 766 64,330 3.0 6.5 9.5
2010 910 97,319 5.9 9.4 15.3
2011 846 100,533 6.9 10.8 17.7
TOTAL 3,441 363,355 20.6 40.0 60.6
Source: MIDA
TOTAL APPROVED MANUFACTURING PROJECTS (2008 –2011)
Industry No. of Projects
Employment Investment (US$ billion)
Electronics & Electrical Products 3,515 689,827 40.55
Petroleum Products (Inc. Petrochemicals)
197 10,462 14.13
Basic Metal Products 699 54,348 12.81
Chemical & Chemical Products 1,077 44,698 9.76
Non-Metallic Mineral Products 766 55,129 8.57
Transport Equipment 1,041 103,818 6.85
Food Manufacturing 1,194 79,186 5.63
Fabricated Metal Products 1,445 100,437 5.15
Machinery & Equipment 1,268 84,357 4.53
IMPLEMENTED MANUFACTURING PROJECTS BY MAJOR INDUSTRIES, as at JUNE 2011
Source: MIDA
Rank Country No. of Projects Investment
(US$ Billion) 1. Japan 2,377 18.97 2. USA 705 15.98 3. Singapore 2,679 7.08 4. Germany 343 5.22 5. Netherlands 186 4.30 6. Taiwan 1,538 5.02 7. Korea, Rep. 299 2.72 8. United Kingdom 396 1.70 9. Spain 6 1.22
10. India 108 1.13
IMPLEMENTED MANUFACTURING PROJECTS BY COUNTRY, as at JUNE 2011 (Top 10)
Source: MIDA
Type of Establishment No. of Approvals
Regional Offices (RO) 28
Representatives Offices (RE) 54
Regional Distribution Centres (RDC) 1
International Procurement Centre (IPC) 6
Operational Headquarters (OHQ) 16
TOTAL 105
APPROVED REGIONAL ESTABLISHMENT FROM JAN-NOV 2011
Source: MIDA
INVESTMENT OPPORTUNITIES IN MALAYSIA
High technology, capital intensive & knowledge driven industries:
Resourced-based industries:
Industries manufacturing intermediate goods:
•Advance Electronics
• ICT
• Solar
• Silicon / Substrates
• Aerospace
• Petrochemicals
• Pharmaceuticals
• Medical devices
• Biotechnology
• Machinery & equipment • Components & parts • Moulds and dies
• Oil & Gas •Food Products • Wood-based products • Rubber-based products • Halal Products
INVESTMENT OPPORTUNITIES IN THE MANUFACTURING SECTOR
Tourism
• Hotels
• Tourist projects
• Recreational centre
• Convention facilities
INVESTMENT OPPORTUNITIES IN THE SERVICES SECTOR
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Eligible Criteria
• Companies intending to generate energy using renewable energy resources for sale to other companies or for own consumption are eligible to be considered for incentives under the Promotion of Investments Act, 1986.
• The incentives are applicable for applications received until 31 December, 2015.
• The project must be implemented within 1 year from the date of approval of incentive.
RENEWABLE ENERGY
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CRITERIA
• The company must be locally incorporated under the Companies Act 1965
• The company must generate the following energy forms:-
(i) Electricity (ii) Steam (iii) Chilled water (iv) Heat
• The company must use renewable energy resources
RENEWABLE ENERGY
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RENEWABLE RESOURCES i. Palm oil mill / estate waste ii. Rice mill waste iii. Sugar cane mill waste iv. Timber / sawmill waste v. Paper recycling mill waste vi. Municipal waste vii. Biogas (from landfill, palm oil mill effluent, animal waste and others) viii. Hydro power (not exceeding 10 MW) ix. Solar power
RENEWABLE ENERGY
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CRITERIA
• Companies that provide consultancy and advisory services as well as project management relating to the conservation of energy or company which incur capital expenditure for conserving energy for own consumption.
• The incentives are applicable for applications received until 31 December, 2015.
• The project must be implemented within 1 year from date of approval of incentive.
ENERGY CONSERVATION / EFFICIENCY
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ELIGIBLE COMPANIES (a) Companies Providing Energy Conservation / Efficiency
Services
PS with tax exemption of 100% of statutory income for 10 years; or
ITA of 100% on qualifying capital
expenditure incurred within a period of 5 years to be utilised against 100% of the statutory income for each year of assessment.
ENERGY CONSERVATION / EFFICIENCY
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(b) Companies which incur capital expenditure for
conserving energy for own consumption
ITA of 100% on qualifying capital expenditure incurred within a period of 5 years to be utilised against 100% of the statutory income for each year of assessment.
ENERGY CONSERVATION / EFFICIENCY
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CRITERIA
• The company must be locally incorporated under the Companies Act 1965
• Companies which provide EC/EE services must carry out performance contracting services activities to conserve the usage of energy
Performance Contracting Services
Undertake the EC/EE project on behalf of the client (including financing), on the basis of recovery of all costs from agreed sharing of
EC/EE savings over a specified period based on performance contract
ENERGY CONSERVATION / EFFICIENCY
Classified into: Electrical Industrial Equipment Sub-sector. i.e. apparatus
for switching/signaling/distribution, industrial lighting, office and other equipment
Electrical Component Sub-sector. i.e. wires, cables, conductors
Electrical consumer sub-sector. i.e. household appliances and others (bulbs and lightings)
ELECTRICAL INDUSTRY
Performance Approved – More than 440 projects In Operation – More than 320 companies Accounted for 51.8% of the total investment
approved in the E&E sector amounting to RM3.8 billion
ELECTRICAL INDUSTRY
Promoted Activities Uninterruptible power supplies Batteries excluding manganese dioxide, dry cells and
lead acid batteries Solar panels/modules Discharge tubes and products thereof Heat shrinkable cable joints and terminations Transformers or coils* Electrical household appliances and parts thereof* Electrical industrial equipment or parts thereof* Additional promoted activities and products for
promoted ares (other than Labuan).i.e. Sabah, Sarawak, Kelantan, Terengganu, Pahang and District of Mersing in Johor)
ELECTRICAL INDUSTRY
Incentives Pioneer Status or Investment Tax Allowance Pioneer Status – exemption of 70% for 5 years (100%
in the case of Eastern Corridor of Peninsular Malaysia, Sabah and Sarawak)
Invest Tax Allowance (ITA) – exemption of 60% of qualifying expenditure (100% in case of Eastern Corridor)
ELECTRONICS INDUSTRY
Performance More than 1,500 companies in production Output value – US$ 53.9 billion Registered strong output growth of 3.0% per annum Export – 3.4% growth rate Major export destinations – USA, Singapore, China,
Hong Kong and Japan
Classified into: Electronic component. i.e. semiconductor devices such as
wafers, integrated circuits, memories and microprocessors, optoelectronics, discrete devices, hybrids, arrays and high-reliabilility military products, capacitors, relays, switches, PCB
Consumer Electronics. i.e. home theater systems, TV receivers, AV products, DVD/VCD players, digital video games console.
Industrial Electronics. i.e. Telephone sets, mobile phones, digital transmission equipment, satellite receivers, computers, disk drives, monitors, DVD/CD-ROM drives, keyboard, printers, telecommunication equipment, data storage, professional and scientific equipment.
ELECTRONICS INDUSTRY
Promoted Products/Activities: Nanotechnology. i.e. carbon nanotube, biosensor, solar cell,
super high speed transistors/high capacity memory chips Semiconductors. i.e. silicon ingots, IC design, wafer
fabrication, advanced semiconductor packages. Electronics Components. i.e. Micro-Electro-Mechanical
Systems (MEMS), multi layer PCB, Flat panel display, surface mount components, substrates for ICs
Consumer Electronics. i.e. digital AV products, electronics games/games consoles, multimedia products, digital cameras.
Industrial Electronics. i.e. parts/accessories for automatic data processing, mechatronics and robotics, professional scientific, test and measuring equipment, biometrics
ELECTRONICS INDUSTRY
ELECTRONICS INDUSTRY
Incentives Pioneer Status or Investment Tax Allowance Pioneer Status – exemption of 70% for 5 years (100%
in the case of Eastern Corridor of Peninsular Malaysia, Sabah and Sarawak)
Invest Tax Allowance (ITA) – exemption of 60% of qualifying expenditure (100% in case of Eastern Corridor)
Incentives for High Technology Industries Incentives for Strategic Projects
PLASTIC PRODUCTS INDUSTRY
Performance More than 1,450 companies in production 80% are SMEs Turnover in 2012 – RM 16.1 billion Registered strong turnover growth of 19.8% Export – 34.2% growth rate Major export destination - the USA, Europe, Australia
and Japan
Classified into: Plastic packaging i.e. bags, films, bottles, containers E&E and automotive components fabrication i.e. Consumer and industrial products Bio-degradable plastics Other specialized plastic for medical and special purpose
use
PLASTIC PRODUCTS INDUSTRY
Promoted Products/Activities Inflatable plastic products Specialised plastic films/sheets Geosystems products [Cellular Confinement System (CCS) and Porous Pavement System (PPS)] Plastic products for engineering use Precision engineering plastic products Multiwall pipes Expanded polystyrene foam* * Additional promoted activities and products for promoted areas (other than the Federal Territory of Labuan) i.e. Sabah, Sarawak, Perlis, Kelantan, Terengganu, Pahang and the district of Mersing in Johor.
PLASTIC PRODUCTS INDUSTRY
PLASTIC PRODUCTS INDUSTRY
Incentives Pioneer Status or Investment Tax Allowance Pioneer Status – exemption of 70% for 5 years (100%
in the case of Eastern Corridor of Peninsular Malaysia, Sabah and Sarawak)
Invest Tax Allowance (ITA) – exemption of 60% of qualifying expenditure (100% in case of Eastern Corridor)
RUBBER PRODUCTS INDUSTRY
Performance More than 500 companies in production Total export value – more than RM15.0 billion World’s leading producer and exporter of rubber
products
Classified into Latex products – more than 150 companies – major
producer and exporter of latex products i.e. catheters, latex thread and medical gloves
Tyres and tyre-related products – more than 120 companies with 10 companies producing tyre while remaining companies producing tyre retreads, inner tubes and other accessories.
Industrial and general rubber products – more than 180 companies- wide range of products such as anti-vibration mountings, belting, hoses, tubing, seals and sheeting for the automotive, electrical & electronics, machinery, & equipment and construction
RUBBER PRODUCTS INDUSTRY
Promoted Products/Activities Tyres – earthmover, agricultural, commercial vehicle, motorcycle, aircraft Retreading of aircraft tyres Latex products i.e. gloves, condoms, catheters, fabrics, carper underlay*, swimming caps*, balloons*, toys*, latex thread* Dry rubber products i.e. beltings, hoses, pipes, tubing, rubber profiles, inflatable rubber products, seals, gaskets, washers, anti- vibration, linings, floorings, moulds Reclaimed rubber Rubber support * Additional promoted activities and products for promoted areas (other than the Federal Territory of Labuan) i.e. Sabah, Sarawak, Perlis, Kelantan, Terengganu, Pahang and the district of Mersing in Johor.
RUBBER PRODUCTS INDUSTRY
RUBBER PRODUCTS INDUSTRY
Incentives Pioneer Status or Investment Tax Allowance Pioneer Status – exemption of 70% for 5 years (100%
in the case of Eastern Corridor of Peninsular Malaysia, Sabah and Sarawak)
Invest Tax Allowance (ITA) – exemption of 60% of qualifying expenditure (100% in case of Eastern Corridor)
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AFTA A Potential Market
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Integrated domestic ASEAN market of more than 600 million people with total GDP of US$ 1.8 trillion.
Efficient & competitive base for foreign direct investment (FDI).
Access to cost effective source of raw materials & components.
Benefits of locating in Malaysia
In 2010 total intra-ASEAN trade is at US$ 519 billion, which accounted for 25.4% of ASEAN’s global trade (US$ 2,045 billion).
Malaysia – 5th largest contributor to intra-ASEAN trade for 2010, accounted for 18.3% valued at US$ 95.2 billion.
Intra-ASEAN Trade
AFTA
DEVELOPMENT CORRIDORS
IRDA : ISKANDAR MALAYSIA • Tourism Related Services • Healthcare • Education Services • Logistics • Creative Industries • Financial Advisory
NCER : NORTHERN CORRIDOR ECONOMIC REGION • Agriculture • Tourism & Healthcare • Manufacturing • Education
SCORE: SARAWAK CORRIDOR OF RENEWABLE ENERGY
• Agriculture • Tourism • Manufacturing • Oil based sectors
ECER : EAST COAST ECONOMIC REGION • Agriculture • Tourism • Manufacturing • Education • Oil, Gas & Petrochemical
SDC : SABAH DEVELOPMENT CORRIDOR • Agriculture • Tourism • Manufacturing • Logistics
REGIONAL ECONOMIC CORRIDORS IN MALAYSIA
3rd Attractive Location For Outsourcing Destinations – A.T. Kearney Global Services Location Index 2011
10th For FDI Confidence Index 2012
– A.T Kearney
18th For Ease of Doing Business – World Bank’s Doing Business 2012 Report
MALAYSIA’S INTERNATIONAL RANKINGS
• Political & Economic Stability • Pro-business Government • Attractive Investment Incentives • Good Infrastructure / connectivity • Sound Banking System • Harmonious Industrial Relations • Young & Educated Labour Force • Excellent Track Record • Quality of Life
WHY MALAYSIA ?
Regional Establishments • Operational Headquarters (OHQ) • International Procurement Centre (IPC) • Regional Distribution Centre (RDC) • Regional Office/Representative Office
Logistics • Integrated Logistics Services • Cold Chain Facilities
INVESTMENT OPPORTUNITIES IN THE SERVICES SECTOR
Environmental Management Energy conservation/efficiency Energy generation, using renewable energy sources Storage, treatment and disposal of hazardous waste Recycling of agricultural waste and agricultural by-
products
Business Services Shared services outsourcing Research & Development (R&D) ICT Services Market Support Services Film & Video Production & Post Production
INVESTMENT OPPORTUNITIES IN THE SERVICES SECTOR
Education
Technical, Vocational & Science Training Healthcare Travel (Medical Tourism)
Private hospitals
INVESTMENT OPPORTUNITIES IN THE SERVICES SECTOR
• Guidelines on the Manufacturing License • Policy on Equity Ownership • Policy on Employment of Expatriates
INVESTMENT POLICIES
• The Industrial Coordination Act 1975 (ICA) requires manufacturing companies with shareholders’ funds of RM2.5 million and above or engaging 75 or more full-time employees to apply for manufacturing license.
Automatic Approval for Manufacturing License
• Automatic approval of manufacturing license is given for non-sensitive industries.
Guidelines on Manufacturing License
INVESTMENT POLICIES
Equity Guidelines • 100% foreign equity ownership is allowed,
irrespective of the level of exports
Guidelines on Repatriation of Profits • No restriction imposed to foreign companies investing in Malaysia on: - Repatriation of capital
- Interest - Profits - Dividends
INVESTMENT POLICIES
Companies No. Of Post Eligible Duration
Foreign paid-up capital of US$2 million and above
Up to 10 posts (including 5 key posts)
• Key post – permanent • Exec. post – 10 years • Non-exec. post – 5 years
Foreign paid-up capital of more than US$200,000 but less than US$2 million
Up to 5 posts (including at least 1 key posts)
• Key post – permanent • Exec. post – 10 years • Non-exec. Post – 5 years
Guidelines on Employment of Expatriate Personnel
Automatic Approval:
INVESTMENT POLICIES
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INCENTIVES FOR THE MANUFACTURING SECTOR
1. Pioneer Status (PS) Income tax exemption, ranging from 70% to 100% of statutory
income for a period of 5 to 10 years 2. Investment Tax Allowance (ITA)
ITA of 60% to 100% on qualifying capital expenditure incurred for a period of 5 to 10 years. The allowance can be offset against 70% to 100% of the statutory income for each year of assessment.
3. Reinvestment Allowance (RA) RA of 60% on qualifying capital expenditure for 15 consecutive years commencing from the 1st year the investment is made.
MAJOR INCENTIVES
Exemption from Import Duty on Raw Materials / Components Exemption from Import Duty and Sales Tax on Machinery and Equipment
IMPORT DUTY AND SALES TAX EXEMPTIONS
Classified into Two Major Sectors Manufacture/assembly of motor vehicles Component parts manufacturers
National Projects (4) Perusahaan Otomobil Nasional Bhd. (PROTON) Perusahaan Otomobil Kedua Nasional (PERODUA) Industri Otomotif Komersial (INOKOM) Malaysian Truck and Bus (MTB) (Isuzu Malaysia Sdn. Bhd.)
AUTOMOTIVE INDUSTRY
Assemblers - 9
Composite Body Sports Car Makers – 3
At Present about 50 franchise holders who have rights to assemble various makes and models of passenger and commercial vehicles
Total Installed Capacity – 963,300 units per year
AUTOMOTIVE INDUSTRY
Performance Production - 526,194 unit (484,237 units passenger vehicles
and 41,957 units commercial vehicles) Sales – 550,391 units (494,264 units passenger vehicles and
56,127 units commercial vehicles)
Component Industry About 700 component manufacturers (226 PROTON
Vendors and 161 Perodua vendors) Most of component manufacturers are locally owned Major foreign companies are VDO, Robert Bosch, Delphi, ZF
Steering, Sumitomo Electric, TRW Steering and Toyota Auto Body.
AUTOMOTIVE INDUSTRY
New Automotive Policy (NAP) – 1.1.2010 New license for: - luxury passenger vehicles 1800 c.c and above and on the road price not less than RM 150,000.00 (Approx. EUR 37,500.00) - Hybrid and electric vehicles - Pickup trucks - Commercial vehicles, and - Motocycles with engine of 200 c.c. and above Import duty and Excise Duty for CBU and CKD maintained. Gazetted price of imported used CBU units Better incentives for manufacture of brake, transmission, airbag
and steering Manufacture of hybrid/electric vehicles will be granted 100% ITA or
PS for 10 years, training and R&D grants
AUTOMOTIVE INDUSTRY
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MACHINERY INDUSTRY
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Sub sector RM million
No. of project
Power Generating M&E 77 5 Metalworking Machinery 8.7 2
Specialized M&E for Specific Industry 734.3 28
General Industrial M&E, Components and Parts 1,095 57
TOTAL 1,915 92
INVESTMENTS APPROVED IN 2010 BY SUB-SECTOR
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IMPORTS OF MACHINERY & EQUIPMENT
Source: MATRADE
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EXPORTS OF MACHINERY & EQUIPMENT
Source: MATRADE
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1. Specialised/process machinery or equipment for specific industry
2. Robotics and factory automation equipment
3. Machine tools
4. Material handling equipment
5. Packaging machinery
6. Plastic injection machines
7. Plastic extrusion machines
8. Modules for the above M&E
TARGETED MACHINERY & EQUIPMENT
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Pioneer Status up to 10 years full income tax exemption for targeted high tech and specialized M&E; or
Investment Tax Allowance up to 100% of qualifying capital
expenditure incurred within 5 years for income tax exemption
Criteria:- − Targeted Machinery & Equipment − Level of Investment − Level of Technology and R&D − Transfer of Technology − Spin off/ Outsourcing
SPECIAL INCENTIVES FOR M&E