DOING BUSINESS WITH

MALAYSIA

PRESENTATION - SCOPE

2

• MALAYSIA – MAP & KEY INDICATORS

• BASIC ECONOMIC DATA

• WHY MALAYSIA?

• ASEAN ECONOMIC COMMUNITY (AEC)

RUSSIA - MALAYSIA

Malaysia: Geographically diverse

Key Indicators (2014)

5

• Land Area - 330,252 sq km

• Administrative Capital - PUTRAJAYA

• Commercial Capital - KUALA LUMPUR

• Population (2014f) - 30.1 million

• Real GDP (%) - 5.0 – 5.5

• Inflation (%) - 2.0 – 3.0

Key Indicators

6

• Per capita Income - US$ 10,898

• Unemployment (%) - 3.1

• International Reserves (Dec.2014) - US$ 116 bil.

• Retained Imports - 48 months

• Growth projection - 4.7% (2015)

Source: Economic data (www.epu.gov.my)

Additional Info

7

• Business language - English

• Currency - Ringgit Malaysia(RM)

US$ 1.00 = RM 3.68

• Time Difference - 5 hours (summer)

• Internet domain - .my

• Visa exemption for Russian citizen

International Rankings

8

World Bank: 18th Ease of Doing Business (2015)

20th Ease of Doing Business (2014)

Merchandise Trade

- 25th Leading Global Exporter (World Bank 2013)

- 24th Leading Global Importer (World Bank 2013)

A.T. Kearney: 3rd Global Services Location 2014 Index for offshore

destination of choice

Economic Intelligence Unit: 19th among 82 countries as most business

friendly Business Environment Ranking 2014

Source: Min. of Int. Trade & Industry Malaysia

MALAYSIA – RUSSIA BILATERAL TRADE (US$ MILLION)

YearTotal Export

US$

Export Growth(%)

Total Import US$

Import

Growth (%)

Total Trade US$

Total Trade

Growth

(%)

2010 682.6 27.5 413.4 11.1 1,096.0 36.9

2011 889.3 30.3 363.9 - 11.9 1,253.2 14.3

2012 696.4 - 21.7 413.4 13.6 1,109.8 - 11.4

2013 635.6 - 8.7 1,169.9 182.9 1,805.5 62.7

2014 733.5 15.4 2,074.3 77.3 2,807.8 55.5

TOP 5 EXPORTS

TO RUSSIA

TOP 5 IMPORTS

FROM RUSSIA

Electrical & Electronic

products39.0 % Crude Petroleum 64.4 %

Processed Food 10.9 %Chemical & Chemicals

products9.5 %

Machinery, Appliances

& Parts

9.0 %Manufactures of metal 9.0 %

Wood products 6.1 % Petroleum products 7.3 %

Palm oil 5.6 % Paper & Pulp products 1.6 %

MALAYSIA – RUSSIA BILATERAL TRADE (2014)

TOP 10 EXPORTS (4 digit HS code –US$)

TOP 10 IMPORTS (4 digit HS code – US$)

Television receivers 146.5 mil Crude Petroleum 1,336.3 mil

Apparel & Clothings 56.3 mil Petroleum oils 150.7 mil

Electrical instantaneous

water heaters48.5 mil Chemical fertilizers 122.8 mil

Cocoa butter 33.7 mil Coal, briquettes 118.8 mil

Vegetable fats 28.1 mil Unwrought nickel 118.1 mil

BILATERAL TRADE – products (2014)

TOP 10 EXPORTS (4 digit HS code –US$)

TOP 10 IMPORTS (4 digit HS code – US$)

Furniture 23.3 mil Copper wire 37.5 mil

Palm kernel oil 17.4 mil

Mixtures of nitrogen,

phosphorous/potassium

fertilizers

35.9 mil

Margarine 15.4 mil Unwrought aluminium 22.3 mil

Palm oil and its fraction 15.0 milUncoated kraft paper &

paperboard18.2 mil

Ball/roller bearings 13.7 mil Newsprint (rolls/sheets) 13.9 mil

BILATERAL TRADE – products (2014)..cont.

Trade Information

Contact

EMBASSY OF MALAYSIA

Mosfilmovskaya Ulitsa 50

Moscow 117192

Tel: +7499 1471512

+7499 1471514

+7499 1471523Fax: +7495 9379602

Email: mwmoscow@kln.gov.my

Address:

Trade Section (MATRADE)

2nd Floor, R 01-209

Dobrynya Business Center

No.8, 4th Dobryninsky per.

119 049 Moscow

Tel: 8 (495) 933 5626

8 (495) 933 5636

Fax: 8 (495) 933 5646

Email: moscow@matrade.gov.my

Why Malaysia

15

Economic Strength

A Dynamic Business Environment

Vibrant Business Development

Supportive Government Policies

Attractive Tax Incentives

Liberal Equity Policy

Developed Financial Facilities

Advancing with Technology

Towards the Economy of Tomorrow

Well-developed Infrastructure

Human Resources

Employment of Expatriates

Harmonious Industrial Relations

Joint-Venture Partners in Malaysia

Quality of Life

Attractive for Foreign Companies

Economic Strength

16

Natural resources - crude oil, natural gas,

tin, timber, palm oil, rubber.

GDP growth - 6.0% (2014)

Gross national savings - 30.9 % of GNI

Per capita income - RM34,123 (USD10,426)

Unemployment rate - 2.9% (p)

Inflation(CPI) - 3.2% (p)

A Dynamic Business Environment

17

Malaysia, strategically located in the heart of South East Asia.

A politically stable country with a well-developed legal

system,

Market-oriented economy and pro-business Government

policies,

Offers investors a dynamic and vibrant business environment

with the ideal prerequisites for growth and profit,

Malaysia's key strengths include well-developed

infrastructure and productive workforce.

Malaysia also provides attractive incentives for investors.

Vibrant Business Development

18

Well-developed financial and banking sector, including the

Labuan International Business and Financial Centre

Wide use of English, especially in business, legal and

accounting practices based on the British system

Large local business community with a long history in

international business links

Large foreign business community in all business sectors

Extensive trade links - country's total trade was valued at

RM1.45 trillion in 2014

Supportive Government Policies

19

Pro-business policies

Responsive government

Liberal investment policies – Avoidance of

Double Taxation Agreement signed in July 1987

Attractive tax and other incentives

Liberal exchange control regime

Intellectual property protection

Supportive Government Policies

20

Major factor that has attracted investors to Malaysia is the

government's commitment to maintain a business environment that

provides companies with the opportunities for growth and profits.

This commitment is seen in the government's constant efforts to

obtain feedback from the business community through channels of

consultation such as regular government-private sector dialogues.

These allow the various business communities to air their views

and to contribute towards the formulation of government policies

which concern them.

Attractive Tax Incentives

21

The corporate tax rate is 25% and the maximum individual tax rate 26%.

Malaysia also offers a wide range of tax incentives for manufacturing projects

under the Promotion of Investments Act 1986 and the Income Tax Act 1967.

The main incentives are:

o Pioneer Status

o Investment Tax Allowance

o Reinvestment Allowance

o Incentives for High Technology Industries

o Incentives for Strategic Projects

o Incentives for the Setting-up of International/ Regional Service-based

Operations

Liberal Equity Policy

22

Since June 2003, foreign investors could hold 100%

of the equity in all investments in new projects, as

well as investments in expansion / diversification

projects by existing companies irrespective of the

level of exports and without excluding any product

or activity.

Developed Financial Facilities

23

Well-developed financial and banking sector.

Financial facilities are available through domestic and foreign commercial banks.

Malaysia is at the forefront in the development of Islamic finance and has a

comprehensive and vibrant Islamic financial system which includes Islamic Banking,

Islamic Capital Market, Takaful and Retakaful, and Islamic Interbank Money Market.

Exporters in Malaysia can also take advantage of the credit facilities, export insurance

cover and guarantees, offered by the Export-Import Bank of Malaysia Berhad (EXIM

Bank).

To complement Malaysia's financial system, the government has established the

Labuan International Business and Financial Centre (Labuan IBFC) on the island of

Labuan.

Companies in Labuan enjoy minimal taxes as well as confidentiality. To-date, more

than 2,700 offshore companies have commenced operations in Labuan. These include

offshore banks, trust companies, and insurance and insurance related companies.

Advancing with Technology

24

Technological advancement has become an integral part

of Malaysia's growth as an industrialised nation.

One of the most technologically developed countries

amongst industrialising nations in the ASEAN region.

Malaysia’s persistent drive to engage modern

technologies is a great advantage to manufacturers in

Malaysia.

Towards the Economy of Tomorrow

25

As a result of perceptive foresight, strategic planning and abundant resources,

Malaysia offers investors a wide spectrum of investment opportunities.

The technologically-inclined economy of Malaysia is proven through the

country's involvement in advanced electronics manufacturing, R&D,

biotechnology, photonics, logistics, design, innovation and a highly automated

manufacturing sector, to name a few.

The Government's objective is also to make Malaysia a hub for other value

chain activities, such as R&D, design and development (D&D), procurement,

logistics, distribution and marketing, business support services and shared

services.

Well-developed Infrastructure

26

Designed to serve the business community; it is one of the best in

Asia.

Telecommunications network served by digital and fibre optic

technology,

Five international airports (all with air-cargo facilities) and seven

international seaports make Malaysia an ideal springboard to the Asia-

Pacific market,

Network of well-maintained highways and railways

Fully developed industrial parks, including free industrial zones,

technology parks and Multimedia Super Corridor (MSC)

Advanced MSC Malaysia Cybercities and Cybercentres

Developed Industrial Parks

27

Industries in Malaysia are mainly located in over 200 industrial

estates or parks and18 Free Industrial Zones (FIZs)

Industrial Parks are fully equipped with infrastructure facilities

such as roads, electricity and water supplies, and

telecommunications

FIZs are export processing zones which have been developed to

cater to the needs of export-oriented industries.

Companies in FIZs are allowed duty free imports of raw

materials, components, parts, machinery and equipment directly

required in the manufacturing process.

Specialised Parks

28

Specialised parks are developed to cater to the needs of

specific industries.

Technology Park Malaysia (TPM) in Kuala Lumpur and Kulim

Hi-Tech Park in Kedah cater to technology-intensive

industries and R&D activities.

TPM is among the world most advanced and comprehensive

centres for R&D for knowledge based industries.

Regional Corridors

Hub for the services sector• Creative Industry;

• Education

• Healthcare

• Logistics

Focus on:

• Resource Based Industry

• Energy

• Tourism

Focus on:

• Agro-based Industry

• Tourism; Logistics

• Manufacturing

Focus on:

• Tourism; Oil & Gas

• Manufacturing

• Agriculture; Education

Focus on:

• Modern Agriculture

• Manufacturing & Design

• Tourism; Logistics

• Education & Health

Human Resources

30

One of Malaysia's greatest assets is her human resources.

The workforce is young, educated and productive, proving to be

one of the best in the region.

Government's emphasis on human resource development

ensures the continuous supply of manpower to meet the needs

of the expanding manufacturing and services sectors.

Comprehensive system of vocational and industrial training,

including advanced skills training

Multilingual workforce speaking two or three languages,

including English

Employment of Expatriates

31

Foreign companies in the manufacturing sector are

allowed to employ expatriates where certain skills are

not available in Malaysia.

A company with foreign paid-up capital of US$2 million

and above will be allowed up to 10 expatriate posts,

including five key posts, that is, posts that are

permanently filled by foreigners.

Harmonious Industrial Relations

32

Industrial relations in the country are harmonious

with minimal trade disputes that result in strikes.

Labour laws safeguard the interests and spell out

the rights and responsibilities of employers and

employees, thus providing a legal framework for

the orderly conduct of industrial relations in the

country.

Joint-Venture Partners in Malaysia

33

Most large Malaysian companies have been involved in

trade and industry for generations, and many have excelled

in international and regional markets.

Foreign investors seeking joint-venture partners in

Malaysia will be able to select from a wide range of

companies to find one that matches their needs.

Malaysia also assists foreign investors in business match-

making to start joint-venture projects or to undertake

contract manufacturing.

Quality of Life

34

Friendly and hospitable Malaysians

Safe and comfortable living environment

Excellent housing, modern amenities, good healthcare and

medical facilities

Excellent educational institutions including international

schools for expatriate children

World-class recreational and sports facilities

Excellent shopping with goods from all over the world

Tropical climate with its uniform temperatures allows light,

comfortable clothing throughout the year.

Malaysian Investment Development Authority (MIDA)

35

Government's principal agency for the promotion of the manufacturing

and services sectors in Malaysia.

Assists companies which intend to invest in the manufacturing and

services sectors facilitate the implementation of their projects.

Wide range of services provided by MIDA include:-

o providing information on the opportunities for investments

o facilitate companies look for joint venture-partners.

Senior representatives from key government agencies are stationed at

MIDA's headquarters in Kuala Lumpur to advise investors on

government policies and procedures.

MIDA evaluates the following applications for projects in

the manufacturing and its related services sectors:

36

Manufacturing licenses

Tax incentives

Expatriate posts

Duty exemptions on raw materials and

components

Duty exemptions on machinery and equipment for

agricultural sector and selected services sector

Attractive for Foreign Companies

37

Conducive business environment has made Malaysia as

one of the world's top investment destinations for offshore

manufacturing operations.

Malaysia has to date attracted more than 5,000 foreign

companies from more than 40 countries to establish their

operations in the country.

Many of them have also expanded and diversified their

operations in the country, reflecting their confidence in

Malaysia as a site for their business ventures.

Alcatel

38

Malaysia is centrally located in South-East Asia and it

possesses an advanced infrastructure, a skilled labour

force, and all the necessary supporting industries.

Malaysia has shown that, even in times of crisis, it is

committed to remain actively pro-business and to provide

a stable environment to transact in.

Malaysia has many natural assets and is culturally very

rich and diverse. It is definitely a pleasant country to live

and work in.

Ericsson

39

Government policies that have been put in place

encourage growth and promote investments in a

stable political climate.

Malaysia has a well-developed infrastructure and

strong industrial linkages with supporting

industries, thus providing an excellent business

environment.

The workforce is educated and productive.

Hitachi

40

Malaysia has well-developed infrastructure in the

country's industrial parks, especially the stable power

supplies and telecommunications facilities; attractive

incentives, and most importantly, a stable government

with a flexible industrial policy.

Majority of Malaysians speak and understand English,

making technology transfer into this country much

easier.

IKEA

41

Malaysia has been chosen for its central geographical

position in Asia and it's well developed logistics network

and port infrastructure.

Malaysia is a stable and reliable business and social

environment which enables us to focus on our long term

expansion goals.

Malaysia's ethnic diversity and well educated workforce

has enabled IKEA to find the suitable manpower to meet

the company's human resource requirements.

Panasonic Industrial

42

Malaysia's multiracial and multilingual workforce that is

fluent in English was a pull factor for us in setting up

operations in the country.

The developed infrastructure and a vibrant business

environment also make it an ideal location to do

business.

Malaysian government's pro-business policies and

attractive incentives have enabled us to provide high

quality products at competitive prices.

Samsung

43

As an investor, we have enjoyed tax incentives, an

efficient and developed infrastructure, and a quality

labour force - factors which have contributed to the

viability of our business in Malaysia.

The high standard of supporting industries here have

also helped us to obtain quality local components,

making Samsung products more competitive in the

global market place.

Sony

44

Malaysia is an excellent place for do business. The Malaysian

government has shown exemplary support through excellent

infrastructure development and a good education system that

allows us to employ a high quality workforce.

There is in existence a large pool of component suppliers in

Malaysia

Malaysia's political and economical stability has been and will

continue to provide and ideal investment climate for us to prosper.

The establishment of business-friendly laws and policies has

helped us to remain at the competitive edge of the local and global

market.

45

Introduction to ASEAN

Established on 8 August 1967 by the Founding Fathers:

Tun Abdul Razak (Malaysia)

Thanat Koman (Thailand)

Narciso Ramos (The Philippines)

Adam Malik (Indonesia)

S. Rajaratnam (Singapore)

46

10 Members of ASEAN

Malaysia

(8 August 1967)

Brunei Darussalam

(7 January 1984)

Indonesia

(8 August 1967)

Viet Nam

(28 July 1995)

Singapore

(8 August 1967)

Lao PDR

(23 July 1997)

The Philippines

(8 August 1967)

Myanmar

(23 July 1997)

Thailand

(8 August 1967)

Cambodia

(16 December 1998)47

Inter-Governmental Organization

48

ASEAN as an inter-governmental organization conferred legal

personality with the adoption of the ASEAN Charter in 2008:

ASEAN Summit

(Supreme Policy-Making Body)

ASEAN Coordinating Council

ASEAN Community Councils

(Political-Security, Economic, Socio-

Cultural)

ASEAN Secretary General assisted by 4 Deputy Secretaries General

and the Committee of Permanent Representatives (CPR).

77 Countries have Accredited Ambassadors to ASEAN.

ASEAN Community 2015

THREE PILLARS POLITICAL-SECURITY PILLAR

Rules-based Community of Shared Values and Norms,Good Governance, Human Rights and Adherence to thePrinciples of Democracy

ECONOMIC PILLAR

Single Market and Production Base, Competitive EconomicRegion, Equitable Economic Region and Linkages to GlobalEconomy

SOCIO-CULTURAL PILLAR

Education and Human Resource Development, Scienceand ICT, Entrepreneurship, Poverty Alleviation, SocialSafety Net, Health, Natural Disasters, Environment,ASEAN’s Cultural Heritage and Regional Identity

49

10 Countries

617 Million Population

ASEAN’s Economic Assets (2012)

4,435,670 Sq Km

US$2.3 trillion GDP

US$3,748 GDP Per Capita

US$2.4 trillion Total Trade

US$110 billion FDI Inflows

50

-10

-5

0

5

10

15

An

nu

al c

han

ge

in r

eal G

DP

%

Developing AsiaASEAN-10World

Advanced economies

Except for in the mid-1980s and late 1990s (Asian Financial Crisis), ASEAN-10’s growthhas exceeded the global average, but below that of the broader Developing Asia, whichhas been powered by China and India.

Source: International Monetary Fund’s (IMF) World Economic Outlook April 2013

ASEAN’s Growing Economy

51

Malaysia’s Strategic Location in Southeast Asia

52

Malaysia’s Trade with ASEAN

ASEAN’s

Global

Trade

Intra

ASEAN

Trade

Malaysia’s

Total

Trade

Malaysia’s

Total Trade

with ASEAN

2012

(US$ bil)

2,388.6 598.2

(25%)

423.9 115.8

(27.3%)

2001

(US$ bil)

320.6 77

(24%)

161.7 38.8

(23.9%)

Source: MATRADE

53

Malaysia’s FDI Flows

Year Malaysian Investment in ASEAN

(US$ Billion)

ASEAN FDI Inflows into Malaysia

(US$ Billion)

2013 5.8 6.2

2012 7.2 7.5

2011 8.3 7.2

2010 7.7 5.0

2009 4.3 4.7

2008 7.8 5.8

Source: BNM

54

55

AEC 2015

OBJECTIVES: Reducing development gap among ASEANMember States (3 tiers of ASEAN nations)

Promoting equitable and sustainableeconomic growth

Enhancing connectivity to establish ahighly integrated ASEAN

56

Stakeholders’ Perspectives on AEC 2015

ASEAN’s economic integration has created

opportunities for businesses in Agriculture,

Mining, Real Estate, Healthcare, Tourism,

Aviation, Education, IT & Telecommunication,

Energy, Banking and Manufacturing.

ASEAN’s pace of economic integration has to

be accelerated to tap on these opportunities.

57

ASEAN Economic Integration

10 ASEAN countries with a Single Duty Free Market

Vibrant Region with Increasing Middle Class Population

Manufacturing and Investment Base to Export Worldwide

Rich in Natural Resources and Human Capital

Indicators (2012) Malaysia ASEAN

Market Size 30 million 617 million

Total Trade US$424 billion US$2.4 trillion

GDP US$305 billion US$2.3 trillion

GDP Growth 5.1% 5.7%58

Single Duty Free Integrated Market

Elimination of Duties

ASEAN-6

99.65% duties eliminated

(1 January 2010)

CLMV

93% duties eliminated

(1 January 2015; 7% by 2018)

Non-Tariff Barriers (NTBs) – A Frequent Complaint

ASEAN Economic Ministers have made reducing NTBs as priority towards

AEC 2015. A systematic approach taken to address NTBs – 6 pilot cases

identified; 2 have been resolved. More cases will be identified through a

compliance review mechanism.59

Liberalization of Services Sector

Business ServicesEducational Services

Tourism and Travel Related Services

Communication Services

Environmental Services

Recreational, Cultural and Sporting Services

Construction and Related Engineering Services

Financial Services Transport Services

Distribution ServicesHealth Related and Social Services

Other Services

12 Broad Sectors 128 Sub-Sectors

60

New Regional Economic Architecture

AFTA ACFTA AKFTA AJCEP AIFTA AANZFTA

ASEAN’s other

external economic

partners

61

Connected to trading partners through Preferential Trading

Agreements – Market size of 3.5 billion – 48% of world

population (7.3 billion)

Benefits of AEC

62

63

What Would be Achieved in 2015

Single Market – Substantial Elimination of Import Duties on Goods

Substantial Liberalization of Services Sub-Sectors

Comprehensive, Open and Transparent Investment Regime

Improved Logistical Connectivity, Encompassing Transport, Facilitation in

Movement of Goods and Open Skies

Trade Facilitation through Improved Customs Clearance Procedures and ASEAN

Single Window

Implementation of Self-Certification Scheme for Preferential Trade

Enhanced Cooperation in the Areas of Consumer Protection, IPR and Competition

Policy

Creation of Highly Integrated ASEAN

Vision for Post-2015 Economic Integration

64

Post-2015 ASEAN Economic Vision

Possible Areas/Measures for ASEAN to Focus on:

Addressing structural and regulatory barriers and instituting greater

trade facilitative measure;

Promoting investment in the services sector by streamlining domestic

regulations and removing impediments;

Promoting new and improving infrastructure facilities;

Enhancing financial services liberalization;

Promoting the adoption of new technologies to ensure sustainable

development;

Adopting a regional comprehensive IPR and competition policies; and

Strengthening human resource development and enhancing greater

mobility among skilled workers in the region.65

Challenges for AEC

66

ASEAN still continue to face many

challenges which must be overcome

through deeper integration.

Examples of the challenges are…

Challenges for AEC

Tariff and Non-Tariff Barriers and Local Protectionism

Inconsistent Regulations and Policies Across ASEAN

Weak Infrastructure Links Among ASEAN Nations

Diverse Levels of Market Maturity

Restrictions on Foreign Investment and Labour

Shortages of the Right Types of Workers

Cultural Diversity Across ASEAN67

TERIMA KASIH

SPASIBA