MODERATOR

Dr. Anthonie Versluis

(Managing Partner Malay, Roland Berger Strategy Consultants)

DEVELOPING FREE TRADE ZONE TO SPUR INVESTMENTS

SPEAKERS

Mr. Andrew Hoad

(Chief Executive Officer & Managing Director, DP World’s,

Asia Pacific Region, Hong kong)

Dr. Simon Su

(Founder & Managing Director, ASA Projects,

Hong Kong)

Mr. Prakash Thurairasasingam

(Head of Commercial, Port of Tanjung

Pelepas Sdn Bhd, Malaysia)

2nd Sabah Port Forum:Developing Free Trade Zone (FTZ) to Spur Investments

1st - 2nd October 2019, Kota Kinabalu, Sabah

During the last decade, global maritime trade has grown slower than in the past

International seaborne trade [bn tonnes loaded]

Source: UNCTAD, Roland Berger

2.8(30%)

2.9(31%)

2.7(33%)

2.1(25%)

2.8(31%)

2.7(20%)

2.7(35%)

2.5(28%)

2.8(33%)

2.3(28%)1.8

(24%)

2.4(34%)

1.7(24%)

2.7(34%)

2.0(24%)

2.8(32%)

2.6(34%)

2.1(27%)

4.6%

1) Main dry bulk: iron ore, grains, coal, bauxite/alumina, phosphate

4.8%

2.0%

1.6%

2.1(26%)

2015

2.8(33%)

2009

1.9(24%)

8.4

1.3(15%)

8.2

2013

2.2(25%)2.3

(28%)

10.0

3.1(30%)

1.1(14%) 2.3

(25%)

2.7(33%)

1.8(17%)

2008

2.8(32%)

2.0(26%)

10.3

2.6(34%)

1.3(15%)

2.5(24%)

2.1(25%)

2.8(29%)

2.3(27%)

2010

1.5(16%)1.4

(16%)

2.4(27%)

2011

1.5(16%)

2.6(28%)

2.8(31%)

2012

2.4(25%)

1.6(16%)

2.4(24%)

3.0(30%)

2.9(29%)

2.8(29%)

2014

1.7(17%)

2.5(25%)

10.7

9.81.7

(17%)

2.5(24%)

3.0(30%)

9.5

2016

3.2(30%)

3.0(30%)

2017

2.8(30%)

7.9

8.89.2

3.1(29%)

3.0%

Container

Other Dry Cargo

Main dry bulk 1)

Liquid bulk

CAGR

The maritime industry is facing an environment that is becoming increasingly challenging – in particular to shipping lines

Source: Roland Berger

12 mega-trends/ challenges for the maritime industry

New ship types & shipping systems

Hinterland expansion & on land connectivity

Rise in short sea shipping

Digitalization

Green shipping req'ts

Green ports

Automation & robotics

BRI, dry ports Logistics industry transformation

Regionalization

E-commerce going global

Port sector reform

12 Key trends

3

910

11

1

12

2

8

7

5

6

4

Free Trade Zones in Malaysia are divided into 2 segments: Free Industrial Zone and Free Commercial Zone

Malaysia's Free Trade Zone terms and definitions

Free Trade Zone

Free Commercial ZoneFree Industrial Zone

> Intended to promote investment in manufacturing and exports

> To qualify for location in a FIZ, a company has to export at least 80% of its output and its raw materials/ components are mainly imported, even though the government does encourage the use of local raw materials/components.

> A company has the ability to obtain an approval from the Ministry of International Trade and Industry to reduce its export condition to 60%

> Formed for the promotion of commercial and trading activities in Malaysia, including entrepot trade, in line with the promotion of the services sector

> FCZs are normally located near the country’s ports due to the nature of the activities, which can include re-distribution, bulk breaking, repackaging of products, re-labelling and other ancillary activities geared for the export market

Benefits of a Free Trade Zone

Overview

A designated area where normal trade barriers are reduced to attract new businesses and foreign investments

> Typically a fenced-in area of > 10 ha

> Developed in geographically advantageous areas for trade (at or near port or airport)

> Used as a manufacturing and/ or processing hub for exports

Benefits Duty deferral, reduction or elimination on goods brought into FTZ

Relief from inverted tariffs – eliminate raw materials import costs

Duty exemption on re-exports from the FTZ

Duty elimination on waste and yield loss

Improved compliance, inventory tracking, quality control, bio-security, tracking

Waived customs duties on zone-to-zone transfers during transshipment or crossdocking

Streamlined logistics

There is currently no Free Trade Zone in Sabah

Port-based Free Trade Zone, aimed at the agri/food/fish sector

Spatial concept

Source: Expert interviews, Team analysis

Supplies & Utilities (ice storage, ice

factory, net repair, etc.)

Fish processing: Cleaning, weighing, sorting, etc.

Cold storage

Processing industries

Cold storage/

warehouse

Container freight station

Parking

Containers

Resting & Docking

Cold storage

Processing industries

Slaughter house/ Processing industries

Cold storage

Feeder/export Export

Offices & public facilities

Fishing port

Fish landing terminal.

Free Trade Zone boundaries

> Trade, processing and exporting hub for all types of agriculture, fish, food products

> "Plug-and-play" model – standard facilities AND customer-made

> Shared facilities (eg.inspection labs)

> Managed by port authority/operator

> Customs at gates

> Container facilities mainly for export

Sample only

Sabah could potentially benefit from maritime trade and export flows from and in between Indonesia and the Philippines

Brunei

Indonesia

Malaysia

Philippines

Timor-Leste

Kuala Lumpur

Jakarta

Manila

Brunei

Sabah

Surabaya

10.0

0.0

20.0

1.82.21.9 1.7 1.9 1.9 1.8 2.4

+15.3%

Brunei PhilippinesIndonesiaMalaysia

20.0

0.0

10.0

14.8 15.112.6

14.6 13.711.6 12.5

15.2

+14.1%

2015-2017 CAGR

Opportunity to direct transshipment from Jakarta & Surabaya to Sabah

Source: UNCOMTRADE, Mindanao Development Authority, Roland Berger

Intra-regional exports of Philippines & Indonesia [bn USD]

28% 17% 12% 12% 26%

Fruit NickelFood oil

100%

2%5.2

OthersFinished productsAlcoholFishery

3%

>60% of N. Mindanao top export is in food & agri

Mindanao Export [in USD bn]

Today's panel on FTZ

> Company provides services to support the public & private sectors covering transport & infrastructure planning, economic & financial assessment and tourism & leisure development:

– State-of-the-art strategic advice

– Innovative thinking and effective solutions,

Dr. Simon SuFounder & Managing DirectorASA Projects

Mr. Andrew HoadCEO & Managing DirectorDP World Asia Pacific

Mr. Prakash Thurairasasingam Head of CommercialPort of TanjungPelepas

> 30 years experience in the maritime sector

> Asia Pacific, Middle East, Europe, Americas

> Previously Executive Vice President of Asian Terminals Inc., DP World’s terminal portfolio Philippines

> Graduate of Cambridge University

> Logistics qualifications from the Institute of Chartered Shipbrokers

> BSc Information Technology from University Southern Queensland

> MBA from Nottingham Trent University, UK

> Previously IT Executive with Westport

> Also with Johor Port, developing new projects eg.bunker fuel supply expansion and international expansion

Moderated by Anthonie Versluis

> 35 years experience, mostly in strategy consulting

> Focus on transport infrastructure, maritime trade, regional economic and industrial development, logistics, ports, shipping and shipbuilding

> Led hundreds of port projects around the world, covering all aspects of port policy, port planning, construction, business and operations

> Prior to Roland Berger, Mr. Versluis worked with several other leading international consulting firms

> MSc. in Industrial Engineering and Management from the Technical University Twente, Netherlans

> BSc. in Mechanical Engineering from the University of Technology Delft

Anthonie VersluisHead of Global Ports PracticeManaging partner MalaysiaRoland Berger

SPEAKER

Mr. Prakash Thurairasasingam

(Head of Commercial, Port of Tanjung Pelepas Sdn Bhd, Malaysia)

DEVELPING FREE TRADE ZONE TO SPUR INVESTMENTS

PELEPAS FREE ZONE DEVELOPMENT

2 October 2019

2

PTP A REGIONAL TRANSHIPMENT HUB FOR SOUTH EAST ASIA

Strong Shareholder

PTP OVERVIEW

Commenced Operation

2

2000

3Core

Businesses

300PortCalls

30Shipping Lines &

Box Operators

60Government

Concession

110Million TEU

Handled

WorldRanking

18

3,500Acres For Container

Terminal & Free Zone

1998Free Zone Authority

3

12.0 MIL TEUS CAPACITY TERMINAL

TERMINAL PHASE 12.160m of quay, 26 QC’s,

max (design) depth 16.5m

TERMINAL PHASE 22.880m of quay, 32 QC’s,

max (design) depth 19.5m

FREE ZONE PHASE 1 FREE ZONE PHASE 2

FREE INDUSTRIAL ZONES(FIZ), FREE COMMERCIAL ZONES(FCZ)INTEGRATED FREE ZONES IN MALAYSIA

1 FCZBukit Kayu Hitam

1 FIZ, Kulim Hi Tech Park

K E D A H

02

01 1 FCZLabuan

S A B A H

01 1 FIZSamar Jaya (Kuching)

S A R A W A K

062 FIZsSenai, Tg. Bin2 FCZStulang, Tg. Langsat2 Integrated FZsPasir Gudang, PTP

J O H O R

29 Free Zones in Malaysia : 12 FIZs, 14 FCZs and 3 Integrated FZs

02 2 FCZsPengkalan Kubur, Mukim Rantau Panjang

K E L A N T A N

2 FIZsPerai, Seberang Perai,

Bayan Lepas 2 FCZs

Dermaga Air Penang Port (Butterworth), Mukim 12

Barat Daya

P E N A N G

04

2 FIZsHulu Kinta, Kinta

P E R A K02

10

3 FIZsTelok Panglima Garang, Ulu Klang (Gombak),

Damansara (Sungai Way)6 FCZs

Mukim Kapar (Northport), Pelabuhan Barat (Westport), KLIA Sepang, South Point (Northport),

MILS Logistics Hub, Pulau Indah 1 Integrated FZ

PKFZ

S E L A N G O R

4

01 1 FIZBatu Berendam

M E L A K A

PONTIAN

BATUPAHAT

MUAR

KLUANG

KOTA TINGGI

MERSING

PASIR GUDANG&

PENGERANG

NUSAJAYA

PTP

KULAIJAYA

SEGAMAT

SINGAPORE

16

OPPORTUNITIES - FOCUS ON JOHOR ECONOMIC CLUSTERS

PTP

1

23

4

5 6

Furniture Hub

Food & AgroProcessing Hub

Electrical & Electronics Hub

Processed Food, Bio-Product and

Engineering

Petrochemical & Oleo Chemical

Hub

FMCG’s, Commodities E-goods &

Bio-products

CLUSTERS’ ANNUAL THROUGHPUT– 1.5 MIL TEU

SingaporePopulation - 5.8 MilGDP - 3.2%

JohorPopulation - 3.7 MilGDP - 4.5%

17

INTRODUCTION

FZ5-250 Acres

FZ4-356 AcresFZ3-332 Acres

FZ2434 Acres

FZ1214 Acres

• 60-year government concession

• 1,500 acres land area with 5 phases

• Accorded Free Zone status in 1997 and Free Zone Authority in 1998

• Integral part of Port of Tanjung Pelepas business

Terminal Area

18

6.5 million square feet of warehousing space

RM 2.8 billion investment

Over 40 warehousesfrom 16 countries and local companies

Volume Up To

100,000 TEUs Per Annum

15 years fully occupied by various warehouse and logistics operators

Creation of more

than 11,000 workers

FZ2

FZ1

PTP FREE ZONE - INTEGRATED IN TERMINAL ECOSYSTEM

Warehouse Owners / Operators

3PL Logistics Companies Cargo Owners

Global Operations/Manufacturers

Regional Distribution

Note: 2018 FZ Volume@90,000 TEUs

18%

15%

14%

13%

12%

11%

7%

10%

19

Apparels

Commodities

Food Products

General Cargoes

Furniture

Solar Panels

Electronics/Electrical Appliances

Machineries/Parts

FMCGs

Automotive Parts

Medical Devices

Recycling (Metal/Others)

Toys

Oil & Gas Equipment

Contact Lenses

PTP FREE ZONE VOLUME IN 2018 BY PRODUCT

20

NO. OF COMPANIES (BY COUNTRIES) THAT INVESTED IN PELEPAS FREE ZONE

12

9

2

6 4

1

5

1 3

1

21

RouteFrequency(per week)

Intra-Asia >50

Europe/Mediterranean 10

India Sub Continents 5

Middle East/Red Sea 3

Africa 13

US 2

Oceania 7

30 shipping lines and box operators calling PTP

Connected to over 300 port of calls globally with >90 weekly services

Sailing Frequency

MTT

SHIPPING

MALAYSIA’S PREMIER CONTAINER HUB

http://images.google.com.my/imgres?imgurl=http://www.exportplus.co.nz/CMA_CGM.jpg&imgrefurl=http://www.exportplus.co.nz/partners.htm&usg=__XPuPskOOpm2BgE0TeQCU7kFSCc0=&h=214&w=320&sz=45&hl=en&start=10&tbnid=yak7EsfKvkmKOM:&tbnh=79&tbnw=118&prev=/images?q=cma+cgm&gbv=2&hl=en&sa=G

22

EXCELLENT MULTI-MODAL LINKAGES

4

Rail services• PTP – Kempas – Pasir Gudang• PTP – Kempas – Port Klang• PTP – Kempas – Padang Besar(Southern Thailand)

Air Services• PTP – Senai Airport (30 mins)• PTP – Changi Airport (90 mins)• PTP – KLIA (3.5 hours)

Expressway• PTP – Singapore via 2nd Link• PTP – Pasir Gudang via EDL and Kempas• PTP – KL – North/East Malaysia via PLUS

http://www.senaiairport.com/index.asphttp://www.johorport.com.my/

23

Gate • 24/7• Dedicated lane for

bonded trucks

PTP as Free Zone Authority• Nil Customs declaration• Single internal window for cargo

declaration• Paperless transaction

Terminal & Free Zone Integration • 24/7 Internal trucking

services controlled and provided by PTP

• Faster turn around time

• Competitive trucking costing

Customs Green Lane access to Singapore• Dedicated lane for bonded and

container trucks• Truck levy exempt

Import Duty Exemption

Container Repair & Storage Yard • 24/7 in house

container cleaning, maintenance and repair

• 24/7 dedicated empty container area

Tax Incentives from Malaysian Investment Development Authority (MIDA)• Income tax exemption for Pioneer Status• Investment tax allowance on qualifying CAPEX• Reinvestment allowance on qualifying CAPEX

VALUE PROPOSITIONS – PTP FREE ZONE

24

Thank you

SPEAKER

Mr. Andrew Hoad

(Chief Executive Officer & Managing Director, DP World’s,

Asia Pacific Region, Hong kong)

BUSINESS PARKS & FREE TRADE ZONES

Business Parks & Free Trade Zones

26

Andrew Hoad

CEO & Managing Director, DP World Asia Pacific

02 October 2019

2nd Sabah Port Forum

DP World

DP World A Trade Enabler

01

28

78 Terminals and 12 Business Parks

Business Parks

Indonesia – Surabaya• Grezik Container Terminal and

Business Park Project from 2020

Korea – Busan

• Pusan New Port Co. Ltd. (PNC)

China – Qingdao• Qingdao Qianwan Container

Terminals

China - Yantai• Yantai International Container

Terminals Ltd. (YICTL)

Vietnam –Ho Chi Minh City• Saigon Premier Container Terminal

Thailand – Laem Chabang• Laem Chabang International

Terminal (LCIT)• Laem Chabang 1-stop logistics

Philippines – Manila• Asia Terminals Inc. (ATI): container &

general stevedoring terminals

Philippines – Batangas• container, passenger, CBU & general

stevedoring terminals.

Philippines – Laguna• ICD

Philippines – Cavite• Barge Terminal project

China – Hong Kong• Container Terminal T3

• ATL Logistics Centre (ATL) –Largest Industrial Building in the world with 55.7ha leasable space.

Portfolio Overview – Asia Pacific Region

29

China – Yiwu

• Yitidong Distribution Hub

30

12 Business Parks in Operation or Development

Business Parks

We want to be the Leading Enabler of World Trade

Optimise the Core

Extend the Core

Build the new

1 2 3Offer our customers an integrated port centric industrial and logistics platform

Synergy between our port & economic zones

Creates sustainable business for both port and economic zone

Improves export competitiveness & attractiveness of the country for FDI

Key Benefits

DP World

DP World Free Trade & Economic Zones

02

Our flagship: Jebel Ali Free Zone

Properties

14,000+

Companies

7,000+

Employees

130,000+

Contributes in excess of 20% Dubai GDP

Jebel Ali Freezone

Land

Retail, Office Buildings &Other Customized Solutions

Warehouses

Specialized Parks (Food, Chemical)

Over 78 Sq km Industrial & Logistics Zone▪ Hub for logistics companies

▪ Base for global companies▪ Hassle-free & cost effective business setup▪ Smooth cargo movement▪ Sea-air connectivity within customs-bonded transport corridor

National Industries

Park

34

Growth in Jebel Ali Port and Jafza Free Zone

-

2

4

6

8

10

12

14

16

0

1

2

3

4

5

6

7

197

9

198

0

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

TEU

s h

and

led

by

DP

W D

ub

ai (

Mill

ion

s)

No

. of

Co

mp

anie

s in

Jaf

za (

tho

usa

nd

s)

TEUs handled by DPW Dubai

No. of Companies in Jafza

Some Examples

Posorja

Caucedo

South Carolina

Dakar

Kigali

Ain Sokhna

Berbera

Jafza

Mumbai

Chennai

Khorgos

London

Jafza - Dubai

90 haLogistics ParkPort Centric

London Gateway

Sokhna - Egypt

7500 haSEZ

Port CentricDakar - Senegal

1280 haSEZ

Port Centric

Posorja - Ecuador

100 haSEZ

Port Centric

160 haLogistics ParkPort Centric

Caucedo – Dominican Rep.

36

Yitidong - China

Integrated Services

• Trade between Yiwu and Dubai is abt. USD 5 billion – 100,000 TEU

• Growing by 5% pa

• Yiditong provides a seamless, door to door, cargo flow from Yiwu to Dubai and from Dubai to other destinations, in particular Africa

• This will become a superior product based on Customs Integration, Cost and Service Efficiency (one bill from China to Dubai) and all Services under one roof: storage, packing, transport, freight, final delivery

• Total investment of RMB 1 billion

37

38

Traders Market Joint Venture

agreement with CCC

First Smart Freezone Market in Mid East

39

• 26th August 2019: DP World & Zhejiang China Commodity Group (CCC) announced partnership to develop the “Traders Market” in Jebel Ali Freezone (JAFZA), Dubai, UAE.

• The region’s first free-zone hybrid marketplace (Wholesale/Retail)

• 80 hectares project total ; phase 1 capex 22 hectares at US$150m.

• Construction commences Q4 2019; 2 years to complete.

Strategic Rationale

1. Mid East/Africa/Indian Subcon region critical for BRI Chinese traders : 2bn people in less than 6 hours airtime.

2. Aligned with Dubai government strategy to transform city into hub for international investors and traders. JAFZA becomes a market place as much as a logistics area.

3. Enable small enterprises to enjoy JAFZA benefits while retaining

ability to serve local market without leasing two establishments

4. Ease international buyers accessibility to procure bulk products

through Dubai at discounted wholesale price and with shortest

delivery time.

5. Flexible Customs regime: traders pay duty after sellingin local market.

Phase 1 cluster 7&8

Expo Site

1. Part of national economic strategy with commitment from economic zone authority, relatedministries and investment promotion agencies

2. Strategy must be supported by the necessary regulatory framework to provide the necessaryconducive environment for investment and trade

3. Relevant and none discriminatory incentives must be provided to create a competitiveenvironment

4. Today economic zones have evolved into economic pillars in their own rights: Mixed use, livework play environment ( logistics, industrial, residential, hospitality, to create mixed use, work liveplay environments); multiple activities

5. Must target wide range of investors (SMEs and MNEs), allow range of activities and range of facilities

6. The zone must be considered as a business hub where goods and services can be traded freely( export, import, local market etc)

Critical success factors for economic zones

1. Over thirty years of experience in developing and managing Jafza, one of the largestand most successful economic zones in the world

2. Experience in developing a successful network of ports, container terminals & portcentric industrial and logistics zones globally

3. Network of 7000+ customers approachable for our new economic zones projects

4. Economic zones form an integrated part of our global strategy to create logistics andindustrial infrastructure in the country where we operate

5. We work closely with government authorities to adopt a unique customer centricecosystem based on the Jafza model to create a better environment forinvestment and trade

6. We are not real estate developers but trade enablers.

7. MOST IMPORTANTLY: We are open to discuss investment opportunities inAsia

DP World’s Unique Value Proposition

DP World

DP World Innovation

03

High Bay: Revolutionary Project being tested in Dubai

43

• Containers stored up to 11 storeys, delivering the capacity of a conventional terminal in a third of the surface area.

• 50 ton weights in racks 50m high.

• Eliminates unpaid & unproductive shuffling.

• Energy efficient.

• Safer.

• Less operating cost.

• Previewed Global Expo in Dubai 2020.

Cargospeed: Hyperloop technology

• JV between DPW and Virgin Group.

• Electric power & magnetics technology working in a near vacuum.

• Nevada tests successful: 28ft pod @300km/hr

• Time sensitive cargo at the speed of flight for the cost of trucking.

44

Cargospeed: Hyperloop technology

Indian Government has declared the Pune-Mumbai hyperloopproject as a public infrastructure product.

If it is awarded as a concession, construction will start on 11 km test loop.

Travel time from Mumbai to Pune reduces from 4 hours to 25 minutes.

45

Thank you

Contact Andrew.Hoad@dpworld.com

www.dpworld.com

mailto:Andrew.Hoad@dpworld.com

SPEAKER

Dr. Simon Su

(Founder & Managing Director, ASA Projects, Hong Kong)

WHY DOES KK NEED A FREE ECONOMIC ZONE?

DEVELOPING FREE TRADE ZONES TO SPUR INVESTMENTS

WHY DOES KK NEED A FREE

ECONOMIC ZONE?

Dr Simon SU

Managing Director

ASA Projects Ltd.

Kota Kinabalu, Sabah

02 Oct 2019

ASAP rojects

TOC

1. General Concept of a FEZ

2. Why Sabah?

3. Key Success Factors for a FEZ

49

1. Introduction

TOC

1. General Concept of a FEZ

2. Why Sabah?

3. Key Success Factors for a FEZ

50

1. Introduction

Types of FEZs

There is no single and universally accepted classification of the term

“Free Economic Zone (FEZ)”.

In reality, there are many different types of FEZs:

Fee Ports (FP) or Free Zones (FZ)

Free Trade zones (FTZ)

Export Processing Zones (EPZ)

Free Border Zones (FBZ)

Science Parks (SP), Technology Parks (TP), Industrial Parks (IP) or

Industrial Estates (IE)

Bonded Warehouses (BW) or Bonded Logistics Parks (BLP)

Other urban enterprise zones

51

General Concept of a FEZ

52

Domestic Overseas

Customs Supervision

Foreign

Companies

Local

Companies

Manufacturing

Export processing

Storage

Re-export

Warehousing

Consolidation

Distribution

Customs

No tax, customs dutiesTax, customs applicableDeem as exported,

export rebate applicable

Regional Distribution

Centre (RDC)

KKIP FEZBonded Area & Customs Free

Manufacturing &

Integrated Logistics Hub

Border

A Free Zone refers to:

“a part of the territory of a Contracting Party where any goods introduced are generally regarded,

insofar as import duties and taxes are concerned, as being outside the Customs territory”.

- World Customs Organisation (1999).

Purposes of a FEZ

Sustainable development, focus ing on creation of

Econom ic, Social and Environmental Benefits :

▪ Value-added and job creation

▪ Environmentally friendly production

▪ Industrial ecology cultivation

▪ Contam ination & waste management

▪ Social harmony and social respons ibility

▪ Work-life balance

In particular,

▪ To stimulate the local economy by creating employment and attracting FDI;

▪ To encourage local production by providing financial incentives and special

economic and/or administrative initiatives;

▪ To facilitate free flow of commodities, services and personnel between the zones

and the global economy;

▪ To enhance local competitiveness by participating in free trade, including

transhipment with the rest of the world economy.

▪ To encourage innovation & technology and improve productivity

▪ To meet international standards by introducing FDI which helps promote the

transfer of new technology and know-how into the local industries. 53

TOC

1. General Concept of a FEZ

2. Why Sabah?

3. Key Success Factors for a FEZ

54

1. Introduction

55

KK’s Strategic Location – Sea & Air gives potential to become:

• The gateway of the BIMP-EAGA

Region

- SBCP Port to become the

transshipment hub, to accommodate

more than 5,000 TEU vessels’ direct

calls

1. Strategic Location – Sea & Air

KK’s Strategic Location – Sea & Air gives potential to become:

• The Centre of business activities

- 2-6 hours’ flight away to major cities

within the BIMP-EAGA, Southeast

Asia and Far East Region

Spoke

Network

Hub

Network

Hub & Spoke Strategies

56

P

R

O

F

I

T

P

R

O

F

I

T

Company’s Value Chain in Manufacturing (Porter’s

Value Chain Model)

P

R

O

F

I

T

Education

Greater KK

Palm Oil

Manufacturing

Tourism

Oil & Gas

Agriculture

Legend

Location of Proposed Investment Projects

Largest production of CPO, Aquaculture

Largest Oil Offshore Reserve

Resource-based indus tries :

- Palm oil industry

- Timber processing

- Rubber processing

- Fruit (e.g., Banana, etc)

- Aquaculture (Kudat)

Global manufactu ring relocation

(e.g., from Ch ina):

- Textile industry

- Electronics industry

- Automobile

- Steel industry

Consumption

- Consumer consumption

- Business consumption

- Public consumption

- Tourism & Hospitality industry

In tegrated Logis tics Hub

- Loading & unloading

- Cross-docking

- Packaging & repackaging

- Warehousing & distribution

- Just-in-time operation

2.Sabah Needs an Accelerator for

Industrial Development

57

*On Sep 1, 2019, US imposed new 10% tariff on first part of $300 bn ($112 bn)

3. Sabah Needs to Seize the Global

Opportunities

4. Sabah Needs to Benefit from Federal

and State Development Plans

58

Sector Policies

EV • National Electric Mobility Blueprint (EMB) aiming to make Malaysia the

marketing hub for Evs.

• National Automotive Policy (NAP) 2019 will place emphasis on electric

vehicles and new technologies.

Green-tech

(PV)

• Net Energy Metering project and Large-Scale Solar (LSS) to promote

industrial development.

• The Malaysian Government expected to increase to the solar power capacity

to 1,356MW by 2020.

Bio-tech • The 11th Malaysia Plan is embarking on Green Growth.

• The National Biomass Strategy (NBS) 2020

• Incentives for the Biotechnology industry (company awarded BioNexus Status

by the Malaysian Bioeconomy Development Corporation Sdn Bhd)

❑ The Federal and State Governments are both committed to carry out various

development plans in Sabah.

❑ In particular, MITI & SEDIA are devoted to turn Sabah into a regional

economic powerhouse in BIMP-EAGA.

For example:

5. SBCP’s Masterplan to Become the

Transhipment Hub of BIMP-EAGA

59

Existing Situation – No MLO Direct Calls Targeted Situation - With MLO Direct Calls

Unlocking the Bottleneck of Sabah’s Logis tics Network:

- time & cost saving

Source: SBP

6. Logistics Costs Are Expected to

Reduce Significantly

60

• Currently, cargoes from the region normally go to

Singapore/PTP/Port Klang first before onwards movement

to their final destinations or vice versa.

• However, if Main Line Operators (MLOs) operate direct

calls to Sabah, SBCP can serve as a gateway to reduce the

high logistics cost for exports from Sabah.

• As a result, the cost saving for shipping Sabah’s export to

some of the destinations in Far East, such as Shanghai, is

estimated to reach as high as nearly 40%.

• This is beneficial not only to Sabah but also the BIMP-EAGA

region.

7. Creating a Virtuous Cycle for Sabah’s

Economic Development

61

→ A Virtuous Cycle to

be triggered by SBCP’s

Transform ing into a

Transhipment Hub

Port, where a FEZ

plays a very critical

and important role in

generating cargoes.

FEZ

FEZs & Local

Industrial

Development &

Consumption

8. A FEZ is a Timely and the “Must-

have” Solution for Sabah

• It has been widely recognised that a FEZ is a very effective and

powerful tool for the growth and development of a less-

developed economy. Many countries have returned to the concept

of creating FEZs as a core element in their development

strategies for economic growth.

• Sabah urgently needs a FEZ to create:

- “backward and forward linkages”

- technology transfer and skills development

• A FEZ is not a new concept in Malaysia where several free

zones (free commercial zones / free industrial zones) already

exist for many years (e.g., Pasir Gudang, Port Klang, Kulim,

Tanjung Pelepas and Bayan Lepas).

- However, none of them are in Sabah. 62

TOC

1. General Concept of a FEZ

2. Why Sabah?

3. Key Success Factors for a FEZ

63

1. Introduction

Key Success Factors (1)

SUPPORTIVE POLICY: Supportive policy always tops the list when it comes to

success factors. Attractive incentive packages are often being offered with strong

support from various government levels. (e.g., Thailand, in particular, provides very

attractive incentives which allow it to gain first mover advantage in EV industry).

CLUSTERING & SYNERGY: It allows industrialists, suppliers and service providers in

the same value chain to be clustered in one location. Companies achieve

econom ies of scale & created opportunities for industry collaboration . → closer

to their customers in the same industry, and more potential to secure new business

from other investors.

RELIABLE TRANSPORTATION SYSTEM, PROXIMITY TO KEY TRANSPORTATION

FACILITIES: The past experiences have pointed out that it is important for the FEZ to

be located close to main highway & key infrastructure, e.g., seaports & airports.

So that the overall logistics costs can be greatly reduced to facilitate exports.

PROFESSIONAL ONE-STOP SERVICES AND BUSINESS FRIENDLY

ENVIRONMENT: There are often excellent one-stop services provided – with

industrial estate authority, customs and government agency for key licenses

required. Helping tenants to sort out license and permit issue and help liaise with

government authorities – Be Proactive.64

Key Success Factors (2)

A CITY CONCEPT: A FEZ’s tenants do not only view the zone as the production

base, but also a place for working, liv ing and recreating – like a m ini city and

community – which also helps retain good talents and quality workers to work for

the tenants.

BE CUSTOMER CENTRIC: Regularly conduct customer satisfaction surveys and

send the management staff to communicate w ith the tenants directly to listen to

the needs of the customers, and also to foster the good relationship with the

customers. (e.g., EDB in Singapore finds out from the industrialists what they value

and, as a consequence, EDB can demonstrate an understanding of the industry).

HIGH QUALITY WORKFORCE: Since the targeted industries require certain skill

level, the governments have to be very supportive in developing local talents. A

proactive role bringing together univers ities, colleges and training institutes to

jointly develop courses coaching necessary industrial-sector skills would contribute

to success.

ROBUST & RELIABLE FEZ’S INFRASTRUCTURE: The FEZ should provide various

options of space, e.g. industrial land, purpose-built, office and commercial space,

catering to different spatial needs of the tenants & stable utility supply (power

supply, clean water, organised logistics and infrastructure system, CCTV systems,

etc.65

Thank you

66