Malaysian Investment Development Authority
Business
Opportunities in
Malaysia
National Defence Industrial
Association (NDIA)
May 27, 2010
www.mida.gov.my
1
Malaysian Investment Development Authority
MIDA is the first point of contact for
investors who intend to set up projects in
the manufacturing and its related services
sectors in Malaysia
www.mida.gov.my
2
Malaysian Investment Development Authority
MIDA’s Global Network
Dubai
Guangzhou
Mumbai
www.mida.gov.my
3
Malaysian Investment Development Authority
MALAYSIAN ECONOMY
2006
2007
2008
2009
2010f
Real GDP (%)
5.9
6.3
4.6
- 1.7
4.5 – 5.5
Inflation (%)
3.6
2.0
5.4
0.6
2.0 – 2.5
Unemployment (%)
3.3
3.2
3.3
3.7
3.6
Trade Surplus (US$ bil)
29.6
29.2
42.6
33.6
11.4
International Reserves
(US$ bil)
90.8
101.3
91.4
96.7
95.7*
* As at 15 April 2010
(Q1)
Source: Central Bank of Malaysia
Malaysian Investment Development Authority
PROJECTION OF MALAYSIA GDP
GROWTH RATE FOR 2010
Agency
Forecast GDP
(%)
Malaysian Government
4.5 – 5.5
World Bank
5.7
Morgan Stanley
7.4
Barclays Bank
7.5
Malaysian Investment Development Authority
KEY ECONOMIC INDICES OF MALAYSIA
JANUARY – MARCH 2010
Index
Jan
Feb
Mar
Inflation Rate (%)
1.3
1.2
1.3
Industrial Production
Index (%)
3.8
11.2
15.1
Manufacturing Index
3.5
- 9.7
16.3
Electricity Index (%)
2.1
- 9.6
16.8
Sales Value (USD bill)
12.7
11.8
13.7
Source: Department of Statistics Malaysia
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Malaysian Investment Development Authority
Malaysia’s Economic Strength
•Diversified Economy
•Healthy trade surplus
•Strong inflow of FDI
•Strong international reserves
•Strong Banking System
www.mida.gov.my
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Malaysian Investment Development Authority
Performance of the
Manufacturing Sector
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Malaysian Investment Development Authority
TOTAL APPROVED MANUFACTURING PROJECTS
(2008 – 2009)
Year
No. of
Projects
No. of
Employment
Proposed Investment
(RM billion)
Domestic
Foreign
Total
2008
919
101,173
16.7
46.1
62.8
2009
766
64,330
10.5
22.1
32.6
www.mida.gov.my
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Malaysian Investment Development Authority
FOREIGN INVESTMENT IN APPROVED MANUFACTURING
PROJECTS BY MAJOR COUNTRIES JAN – MAR 2010
No of Projects
Total Investments
(US$ million)
Singapore
20
541.3
China
5
140.3
Japan
8
131.0
Taiwan
7
61.5
Germany
3
32.7
United Kingdom
4
17.1
USA
5
14.1
Switzerland
2
6.8
Country
10
FOREIGN INVESTMENT IN IMPLEMENTED
MANUFACTURING PROJECTS BY MAJOR COUNTRIES
(AS AT 31 DECEMBER 2009)
Malaysian Investment Development Authority
No of Projects
Total Investments
(US$ billion)
2,287
17.7
663
13.5
Singapore
2,561
6.5
Germany
324
5.1
1,495
4.7
Netherlands
163
4.0
Rep. of Korea
287
2.6
United Kingdom
372
1.6
Spain
6
1.2
India
95
1.1
Country
Japan
USA
Taiwan
Malaysian Investment Development Authority
INVESTMENT
OPPORTUNITIES
Malaysian Investment Development Authority
High technology, capital intensive
& knowledge driven industries:
• Alternative Energy Sources
• Biotechnology
• Advanced materials
• Advanced electronics
• Optics and photonics
• Petrochemicals
• Pharmaceuticals
• Medical devices
• ICT
• Aerospace
Industries manufacturing
intermediate goods:
• Machinery & equipment
• Components & parts
• Moulds and dies
Resourced-based industries:
• Food ( Halal Hub )
• Value-added products from
oil palm biomass (Particle board,
MDF board & Plywood)
Malaysian Investment Development Authority
INVESTMENT OPPORTUNITIES IN THE
SERVICES SECTOR
Targeted Services










Regional Establishments
Business and professional services
Logistics
ICT services
Offshore and outsourcing activities
Distributive trade
Education and training
Construction
Health
Tourism
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Malaysian Investment Development Authority
REGIONAL ESTABLISHMENTS
 Opportunities
for
setting
up
Regional
Operations i.e:- Operational Headquarters
(OHQs), International Procurement Centres
(IPCs), Regional Distribution Centres (RDCs),
Regional Offices and Representative Offices.
 More then 2,700 regional establishments have
set up operations in Malaysia
Malaysian Investment Development Authority
Investment Policies
& Incentives
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Malaysian Investment Development Authority
Equity Policy

100% equity ownership is allowed,
irrespective of the level of exports
Repatriation of Profits

No restriction is imposed on the repatriation of
capital, interest profits and dividends to foreign
companies investing in Malaysia
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Malaysian Investment Development Authority
Guidelines on Employment of Expatriate Personnel
Automatic Approval:
Companies
No. Of Post
Eligible
Duration
Foreign paid-up capital of Up to 10 posts
US$2 million and above
(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
Up to 5 posts (including
but less than US$2
at least 1 key posts)
million
• Key post – permanent
• Exec. post – 10 years
• Non-exec. Post – 5 years
Malaysian Investment Development Authority
Major Incentives Provided
 Pioneer Status (PS)
Income tax exemption, ranging from 70% to 100% of
statutory income
- Manufacturing
-R&D
- Services
 Investment Tax Allowance (ITA)
ITA of 60% to 100% on qualifying capital expenditure for
a period of 5 years
 Reinvestment Allowance (RA)
60% on qualifying capital expenditure for 15 consecutive
years commencing from the 1st year the reinvestment is
made
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Malaysian Investment Development Authority

Exemption from Import Duty
on Raw Materials/Components

Exemption from Import duty
and Sales Tax on
Machinery/Equipment
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Malaysian Investment Development Authority
INCENTIVES FOR THE
SERVICES SECTOR
Malaysian Investment Development Authority
•
•
•
OPERATIONAL HEADQUARTERS (OHQ)/
INTERNATIONAL PROCUREMENT CENTRE (IPC)/
REGIONAL DISTRIBUTION CENTRE (RDC)
 Full tax exemption for 10 years
•
•
REPRESENTATIVE OFFICE (RE)/
REGIONAL OFFICE (RO)
 RE or RO status given for a period of 5 years
•
•
•
INTEGRATED LOGISTICS SERVICES (ILS)/
INTEGRATED MARKET SUPPORT SERVICES (IMSS)/
INCENTIVES FOR INTEGRATED CENTRAL UTILITY
FACILITIES (CUF)
 Eligible for PS or ITA
Malaysian Investment Development Authority
Aerospace Industry
In Malaysia
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Malaysian Investment Development Authority
Aerospace Industry
 The aerospace industry comprises the aviation and
space sub-sectors
 The aviation sub-sector encompasses manufacturing
of parts & components; maintenance, repair and
overhaul (MRO) activities; design & development; and
assembly of light aircraft
 A total of 38 aerospace companies have been
approved with various types of incentives.
- Of this, 35 companies are in operation
Malaysian Investment Development Authority
Aerospace Industry –
Companies in Operation
 23 companies undertaking MRO activities
(Malaysia has a full range of MRO capabilities which include
modification and remanufacturing of engines & engine
components, repair & overhaul of aircraft parts, components and
airframe, repair and testing of aircraft instruments and
components and provision of line and heavy maintenance to both
military and civil aircraft)
 12 companies involved in the manufacturing of aircraft
parts and components including ground support
equipment
(Parts and components include aero structures, composite parts,
metal parts, machined parts and aircraft avionic components)
Malaysian Investment Development Authority
Aerospace Industry
 Malaysia aspires to be global center for aerospace
business and a preferred location for business
expansion and strategic partnership in the Asia Pacific
region
 To further promote aerospace industry, a
comprehensive tax incentive package has been
formulated on four (4) main groupings:
Design, Manufacturing & Assembly group
Operator group
Support group
Regulatory group
Malaysian Investment Development Authority
Electronics Industry
In Malaysia
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Malaysian Investment Development Authority
EVOLUTION OF ELECTRONICS INDUSTRY
2
Started in 1970’s with 7 companies
Consumer : Clarion and Bosch
Production
Capability
Level
1
Components : AMD, HP Intel, Litronix and
National Semiconductor
Start with a few
relatively simple
discrete components
and semiconductor,
parts assembly, SKD
1970
Office &
computer
equipment (inc.
hard disk drive
and hard disks)
Consumer
electronics
(analogue) parts
to full assembly
1980
Time
1990
Higher value-added
products/activities
(research, design, wafer
fab, ingot growing e.g
semiconductor, LED,
solar), low volume, high
complexity and high
mixed products (e.g
instrument, medical,
aerospace), digital
consumers (e.g blu-ray
player, HDTV-LED
flatscreen, e-book
2010
Malaysian Investment Development Authority
Components (EC)
Industrial (IE)
Motorolla, CSL,
Flextronics
Electronics
Intel, AMD, NEC,
Toshiba, Freescale,
Spansion,
Projects Approved By Sub-sector
(USD Billion)
Sub-sector
2008
2009
Total
EC
1.50
0.88
2.38
IE
1.02
0.11
1.14
CE
0.05
0.11
0.17
Total
2.57
1.10
3.69
Consumer (CE)
Sony, Samsung,
Panasonic, Sharp,
JVC, NEC
Malaysian Investment Development Authority
Electrical Industry
In Malaysia
www.mida.gov.my
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Malaysian Investment Development Authority
Industrial Electrical
– No. of companies in production – 94
(from 1980 – 2008)
– Major products: Switchgears
 Boards
 Electric motors
– Major players: Malaysian-owned
– Malaysia Transformer
– TNB Switchgear
 Foreign-owned/controlled
– Nemic Lambda
– Hitachi Koki
– Panasonic Compressor
– Bando Electronics
– ABB Manufacturing
www.mida.gov.my
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Malaysian Investment Development Authority
Electrical Components
– No. of companies in production – 138
(from 1980 – 2008)
– Major products: Cables
 Connectors
 Batteries
 Solar cells/wafers
– Major players: Malaysian-owned
– Mitti Cables
– Leader Cables
– GP Autobat
 Foreign-owned/controlled
– Fujikura
– Sumitomo
– Panasonic Manufacturing
– Q-Cells
– Sunpower
– Elektrisola
– First Solar
www.mida.gov.my
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Malaysian Investment Development Authority
Information Communication
Technology (ICT) Industry In
Malaysia
www.mida.gov.my
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Malaysian Investment Development Authority
…cont’d
 Computer & computer peripherals
and Data Storage Devices
Project approved : 223 (from 1980 - 2008)
Plants in operation : 196 (from 1980 – 2008)
Companies
Computers:MNC’s :- Dell, NEC, Qisda
Malaysian :- MIMOS
Peripherals:Teleplan, Qisda, Affinex Technologies
Data storage devices
Western Digital, Benchmark Electronics
www.mida.gov.my
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Malaysian Investment Development Authority
…cont’d
 Telecommunications equipment/devices
Project approved : 252 (from 1980 - 2008)
Plants in operation : 211
Companies
Pernec, CSL , Balda Solutions ,
Finisar, Sanyo PT
 Optics (photonics, optoelectronics and other
optical products) and Optoelectronics
Project approved : 17 (from 1980 - 2008)
Plants in operation : 15
Companies
Finisar Malaysia,Huber & Suhner, OSRAM,
Dominant, Nichia Malaysia, PWB Technologies
www.mida.gov.my
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Malaysian Investment Development Authority
Focus on new products, applications and
technologies :-




Wireless telecommunication equipment/devices
Mobile application products
Broadband equipment and networking products
Optics products
Multi service and convergent products
www.mida.gov.my
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Malaysian Industrial
InvestmentDevelopment
DevelopmentAuthority
Authority
MACHINERY AND EQUIPMENT
SECTOR
www.mida.gov.my
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Malaysian Investment Development Authority
M&E Cluster
Research &
Development
Support
Raw Materials
& Components
• NCMTT
• TPM
• Institutions
• Universities
Heat treatment
Surface treatment
Casting
Forging
Mould & die
Machining
Sub assemblies
Fabrication
www.mida.gov.my
R&D, D&D and
Prototyping
Sales and
Servicing
M&E
Engineering
Supporting Industries
•
•
•
•
•
•
•
•
Modules &
Components
Manufacturing
Associations
• MEMA
• MMADA
• FOMFEIA
• FMM-ATIG
System
Integration
Assembly,
Testing &
Packaging
Refurbishment &
reconditioning
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Malaysian Investment Development Authority
DEVELOPMENT OBJECTIVES AND STRATEGIES
FOR THE M&E INDUSTRY OF MALAYSIA
To promote Malaysia as :
1) The regional production hub for the high technology and
specialized machinery and equipment
2) The main distribution centre in the region for all types of
machinery and equipment
3) The centre for maintenance related services, refurbishment,
reconditioning and upgrading of high technology and
specialized machinery and equipment
Note : To provide total solution for machinery, automation and
engineering services
www.mida.gov.my
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Malaysian Industrial
InvestmentDevelopment
DevelopmentAuthority
Authority
MALAYSIA’S ENGINEERING
SUPPORTING INDUSTRY
www.mida.gov.my
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Malaysian Investment Development Authority
Malaysian Engineering Supporting Capabilities
Capabilities
Sectors
Mould & Die
Very Strong
Strong
√
Machining
√
Metal Stamping
√
√
Surface Engineering
√
Heat Treatment
√
Forging
www.mida.gov.my
Basic
√
Metal Casting
Metal Fabrication
Average
√
41
Malaysian Investment Development Authority
FACILITIES
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Malaysian Investment Development Authority
FACILITIES TO SUPPORT INDUSTRY
• Suitable infrastructures
–
–
–
–
–
Industrial estates
Electricity
Water
Gas
Telecommunication
• Training
– Training institutions
– Collaboration with local universities
– MIMOS
• Manpower
– to ensure constant flow of trained workforce
CONT.
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Malaysian Investment Development Authority
Training Institutions
Technical Training
Institutions
Courses/programs
Public Universities
(20)
Engineering Courses (Electrical, electronics, mechatronics, chemical etc.)
Private Universities
/college (37)
Engineering Courses (Electrical, electronics, mechatronics, chemical etc.)
Industrial Training
Institutes (8)
Industrial Electronics
Polytechnics (27)
Certificate/Diploma in Electrical & Electronics Engineering
Community College (59)
Certificate in Electrical Technology Installation & Service, Diploma in Electrical
Technology
Penang Skill
Development Centre
Industrial skill enhancement program (INSEP- partnership with company),
Engineering courses (Diploma, Degree, Master – Microelectronics, photonics,
Telecommunications
GMI (German-Malaysian
Institute), JMTI, MFI, BMI,
SMI
Industrial electronics, Productions Technologies ( Tool & Die, Mould Technology,
CNC precision), Resources Development centre – German A-Level preparatory
program
SHRDC
INSEP, Semiconductor chip design + packaging, testing, PCB Analog design,Product
design, mould making etc
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Malaysian Investment Development Authority
OUTPUT OF ENGINEERING GRADUATES FROM
PUBLIC UNIVERSITIES
Year
2008
2009
Forecast 2010
Total
Graduates
13,222
13,488
13,759
40,469
Source : Respective Universities
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Malaysian Investment Development Authority
Outsourcing Opportunities
46
Sourcing Capabilities in Malaysia
Malaysian Investment Development Authority

Engineering Supporting
- Mould and Die, Metal Casting, Machining, Metal Stamping, Surface
Engineering, Heat Treatment (more than 1,000 companies)
- Metal Fabrication (well established)

Semiconductor/ electronics components
- Silicon wafer, Wafer fab, IC packaging and testing, IC design house, PCB,
PCBA, LED, Other passive components (about 380 companies)

Plastic components (480 companies)

Rubber components (180 companies)

In-house design & development

Related infrastructure
-
Design centres
- Technical facilities
- Specialised colleges
- Research institutions
www.mida.gov.my
47
Malaysian
DevelopmentLocation
Authority
MalaysiaInvestment
: The Preferred
for Outsourcing
Outsourcing
Manufacturing of modules,
components & parts
Manufacturing related
service
Individual components/ services
Integrated services/ total solution
-
Product conception to serial production
-
Manage the entire process including logistics, warehousing, packaging, testing and
certification
D&D/ R&D
Raw material
components
sourcing
Modules/
parts
production
Sub/ final
assembly
QC
Delivery
Outsourcing Supply Chain Management
www.mida.gov.my
48
Malaysian Investment Development Authority
Why Malaysia ?
49
Malaysian Investment Development Authority
ADVANTAGES OF MALAYSIA
Consideration
Malaysia
Incentives
 Very attractive incentive scheme.
• Pioneer Status
• Investment Tax Allowance
• Reinvestment Allowance
 Tax savings & low inflation ensure
long term competitiveness
Income Tax After
Incentive Period
 25% on Net Income after incentive
period
Human Resources
 Skilled labor.
CONT.
50
Malaysian Investment Development Authority
Malaysia
Consideration
Facilities : Power
Very competitive tariff. Better power
quality. Very good power grid
infrastructure
Facilities : water
Abundant supply and very competitive
tariff
Government
Priority industry. Strong support from
Government
Heavy Engineering
Supporting Services
 Strong Oil & Gas and Chemical Plant
Fabrication, Maintenance, Repair,
Engineering Services
CONT.
51
Malaysian Investment Development Authority
Green Energy
Resources
 From hydro, NG, low sulphur coal, bio
mass
(wood chip & palm waste)
Financial Support
 Grants and supports for High Impact
Priority Project
Good Implementation
Track Record
Infineon Wafer Fab(Kedah)-15 months (3
months ahead of schedule)
First Solar (Kedah) - 11 months
Strategic Location
Centre of Asia-most of the new
capacities and demand are in Asia.
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Malaysian Investment Development Authority
MALAYSIA’S INTERNATIONAL RANKINGS
• 3rd Attractive Location For Outsourcing Destinations
– A.T. Kearney Global Services Location Index 2009
• 10th Most Competitive Economy In 2010
– Institute Management of Development
• 23rd For Ease Of Doing Business
– World Bank’s Doing Business 2010 Report
• 24th Most Competitive Economy for 2009 - 2010
– The Global Competitive Report 2009 – 2010 by WEF
• 25th Best Country For Business – Forbes Report 2009
•
27th Most Networked Economy
– Global Information Technology Report 2009-2010 by WEF
Malaysian Investment Development Authority
FACILITATION OF INVESTMENT
MIDA as a One Stop Agency
Processing / Evaluation of applications for:
• Manufacturing licence
• Tax incentives
• Import duty exemptions on raw materials,
components and machinery
• Expatriate posts/work permits
• Regional establishments such as Operational
Headquarters, International Procurement Centres,
Regional Distribution Centres, Regional and
Representative Offices
54
Malaysian Investment Development Authority
FACILITATION OF INVESTMENT
MIDA as a One Stop Agency to assist investors
Representatives Based In MIDA
• Immigration Department
• Royal Malaysian Customs
Liasion Officers outside MIDA
• Department of Occupational
Safety and Health
• Department of Environment
• Ministry of Finance
• Tenaga Nasional Berhad
• Ministry of Human
• Telekom Malaysia Berhad
• Labour Department
Resources
• Construction Industry
Development Board
55
Malaysian Investment Development Authority
CONCLUSION
The
Malaysian
Government
is
committed to ensuring that Malaysia
remains a competitive and business
friendly location.
Malaysian Investment Development Authority
www.mida.gov.my
Thank You
for your kind attention
www.mida.gov.my
57