December 16, 2013

MALAYSIA ECONOMIC UPDATE

CIMB Analyst(s) ETP’s 3rd anniversary:

Jumpstarting growth has made decent progress in its Economic Transformation Programme (ETP) after three years of implementation. Broadly, the

————————————————————————————————————————— qualitative and quantitative targets were mostly met, with notable LEE Heng Guie achievements in income per capita and private investment growth. The T (60) 3 2261 9098 E [email protected] ETP pipeline will remain exciting in 2014 as the country gains traction as a centre for global operations, services and trading. Looking ahead,

a lot will hinge on the ETP to sustain the country's investment

momentum. Overall, we expect the ETP projects to sustain the private capital spending growth of 13.2% for 2014 (estimated 13% in 2013).

We have ramped up Ramped up for delivering promising results efforts to deliver our promises to Having battled external headwinds and regional competition, the ETP now ‘the ‘country and we have been enters its fourth year of implementation since Oct 2010 and Prime Minister successful‘‘ in bringing together the Datuk Seri Najib Tun Razak is pleased with the progress of the ETP, his government and private sector to brainchild. At the ETP’s third anniversary event in Putrajaya today, the PM deliver results." announced that 195 projects had been launched under the National Key – Datuk Seri Najib Tun Razak, Prime Minister of Economic Areas (NKEAs) since 2010, attracting a total committed investment Malaysia of RM219.3bn, which will generate RM143.5bn GNI and create 434,788 new jobs by 2020. As at 13 Dec 2013, the NKEAs were on track in meeting their overall KPIs, with 89% of the targets already achieved, while the strategic reform initiatives (SRI) recorded a KPI achievement rate of 85%. In 9M13, 69% or RM14.2bn of the RM20.5bn committed for 2013 has been realised (vs. 88% in 2012 and 84% in 2011). ETP's 3-year report card Notable evidence of successes in the three-year period include: 1) a 41% jump in income per capita to US$9,928 in 2012 from US$7,059 in 2009; 2) the rejuvenated private investment dynamism, which saw its annual growth rate triple from 5% p.a. in 2008-10 to 16% in 2010-12. It expanded 12.9% in 9M13. This helped to lift private investment’s share of total investment to 65%; and 3) no compromise on fiscal consolidation as the deficit was trimmed progressively to 4% of GDP in 2013 from -6.6% of GDP in 2009. The fiscal deficit targets are set at 3.5% for 2014 and 3.0% of GDP for 2015. Pushing growth with reforms We concur with Pemandu's CEO Dato' Sri Idris Jala's open-hearted assessment that while the ETP has achieved commendable results since 2009, there is still tremendous room for improvement. In our view, transformation is a continuous process and the government's attention must turn to rolling out reforms, where necessary.

Figure 1: Snapshot of the ETP's performance since its launch in Oct 2010 Indicators Cumulative* 2020 Target Potential gross national income (RM bn) 143.5 1,700 Committed investment (RM bn) 219.3 1,400 Jobs created 434,788 3,300,000 Projects/intiatives unveiled ( number of project) 195 -

*ETP Progress Update 1-14 since the launch in Oct 2010. SOURCES: PERFORMANCE MANAGEMENT AND DELIVERY UNIT (PEMANDU), CIMB RESEARCH

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Sources: CIMB. COMPANY REPORTS

ECONOMIC UPDATE December 16, 2013

Figure 2: 195 projects worth RM219.3bn in investment unveiled since Oct 2010

No of projects/initiatives RM219.3bn 210 Title: RM218.3bn 195 182 Source: 180 RM212.0bn RM205.3bn 149 Please fill in the values above to have them entered in your report 150 RM199.7bn 138 131 RM179.2bn 120 RM171.2bn 110 RM170.3bn 97 90 RM106.4bn 87 RM95.4bn 72 60 60 RM80.3bn RM13.5bn 37 30 RM5.3bn 18 9 0 1st: 2 nd: 3rd: 4th: 5th: 6th: 8 th: 9 th: 10 th: 11 th: 12 th: 13th: 14th: 25 Oct 30 Nov 11 Jan 08 Mar 19 Apr 13 Jun 08 Sep 10 Nov 28 May 13 Sep 16 Nov 29 Aug 16 Dec 10 10 11 11 11 11 11 11 12 12 12 13 13 New projects/initiatives (incl. recapped) Cumulative projects The seventh update was purely the announcement on strategic reform initiatives on 5 Jul 2011. SOURCES: PEMANDU, CIMB RESEARCH

Figure 3: About 69% of the total RM20.5bn committed Figure 4: NKEAs contributed RM474bn or 68.3% of total gross investments were realised as at 3Q13 national income in 9M13 RM bn Share of gross national income 25 (RM bn) Title: Title: 1000 Source: Source:

20 Please fill in the values above to have them entered in your report Please fill in the values above to have them entered in your report 800 6.3 284.4 255.7 15 2.7 600 219.7 1.6 10 400 14.0 14.2 69% 84% 606.9 621.0 11.4 88% 70.5% 68.7% 5 474.0 68.3% 200

0 0 2011 2012 9M13 2011 2012 9M13 Realised investment Committed investment NKEA Non-NKEA SOURCES: PEMANDU, CIMB RESEARCH SOURCES: CIMB, COMPANY REPORTS

Figure 5: The NKEAs have created 1.33m Figure 6: The overall KPI results for Figure 7: SRIs recorded 85% of KPI new jobs during 2010-YTD 2013 NKEAs reached 89% as at 13 Dec 2013 achieved as at 13 Dec 2013

Employment % % (m persons) 140 Title: 94 Title: Title: 93 16 123 118Source: Source: Source: 120 92 14 Please fill in the values above to have them entered in yourPlease report fill in the values above to have them entered in yourPlease report fill in the values above to have them entered in your report 100 90 12 89 5.10 10 4.82 80 4.67 4.81 88

8 60 86 85 6 40 8.56 84 4 7.23 7.47 7.90 (62.1%) (62.7%) (60.8%) (60.8%) 20 82 2 0 0 80 2011 2012 As of 13 Dec 2013 2010 2011 2012 YTD 2013 2012 As of 13 Dec 2013 NKEA Non-NKEA NKEA's KPI results SRI's KPI results SOURCES: PEMANDU SOURCES: PEMANDU SOURCES: PEMANDU

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ECONOMIC UPDATE December 16, 2013

Figure 8: Update #14 – 13 projects worth RM1bn in investment unveiled on 16 Dec 2013 No Projects and development Investment Sector (RM m) 1 Kia Shing Importers & Exporters Sdn Bhd to invest in EPP7: Premium fruits and vegetables Agriculture 2 Far East Import-Export (M) Sdn Bhd to invest in EPP7: Premium fruits and vegetables Agriculture 3 Exotic Star (M) Sdn Bhd to invest in EPP7: Premium fruits and vegetables Agriculture 4 Dialysis filter manufacturing by Pahang Medical Devices Sdn Bhd Healthcare 5 Orphan drug manufacturing by AFT Pharmaceuticals (S.E. Asia) Sdn Bhd Healthcare

6 Vaccine formulation facility by AJ Pharma Holdings Sdn Bhd No Healthcare 7 Local manufacturing of drugs for export market/supply to public sector in Malaysia by Servier Malaysia Sdn Bhd in collaboration with investment Healthcare Kotra Pharma (M) Sdn Bhd numbers 8 Metered-dose inhaler manufacturing by Kotra Pharma (M) Sdn Bhd, Biocare Manufacturing Sdn Bhd, CCM Bhd in collaboration with were Healthcare Cipla Ltd of India, as well as Impian Eksekutif Sdn Bhd disclosed 9 Manufacturing of dialysis solutions by Fresenius Medical Care Malaysia Sdn Bhd Healthcare 10 INTELLIS-home dialysis system by Lucenxia (M) Sdn Bhd Healthcare 11 Manufacturing and sales of specialty functional margarines, shortenings and fat spreads by IOI-ADEKA Palm oil & rubber 12 Cost effective phytonutrient extraction from physical refinery by Felda Global Ventures Downstream & Lipid Venture Palm oil & rubber 13 Wellness resort by Senja Aman Development Sdn Bhd Wholesale & retail Total 1,000 SOURCES: PEMANDU, CIMB RESEARCH

Highlights of panel discussion with ministers There was a panel discussion with five ministers: 1) Dato' Seri Mustapa Mohamed, Minister of International Trade and Industry, 2) Dato' Sri Idris Jala, Minister in the Prime Minister's Department and CEO of Pemandu, 3) Dato' Seri Abdul Wahid Omar, Minister in the Prime Minister's Department, 4) Dato' Seri Dr. S. Subramaniam, Minister of Health, and 5) Dato' Sri Ahmad Shabery Cheek, Minister of Communication and Multimedia. The discussion touched on the challenges in ensuring an adequate supply of skilled and talent workers, including how to create high-paying jobs. The measures discussed include 1) wooing more women participation in the workforce via flexible working hours, 2) a graduate employability scheme, 3) recruitment of foreign talent, as well as 4) engagement and collaboration with the private sector and government-linked companies (GLCs) to increase graduates employment opportunities. Dato' Sri Idris Jala also touched on the two pertinent issues concerning the man in the street – increasing the household income and reducing the cost of living. He continued to stress that the subsidy rationalisation will be implemented gradually. Dato' Seri Abdul Wahid concurred with the measured pace of subsidy rationalisation and acknowledged that the cost of living will inevitable rise, though the 2014 Budget has introduced some measures (such as higher cash transfers and reduction in personal income tax rate) to help mitigate the increase in living expenses. In the wrap-up session, Dato' Sri Idris Jala pointed out four challenges for Malaysia: 1) the government to institutionalise changes to reinvent and transform the civil service; 2) innovation to improve products quality and services; 3) quality education; and 4) to strengthen the nation’s net export potential.

Figure 9: Update #1 – 9 projects worth RM5.3bn in investments No Projects and development Investment Sector (RM m) 1 A German company, Lfoundry GmbH, will set up five wafer fabrication plants in the Kulim Hi-Tech Park, Kedah over five years. 1,900 E&E 2 Mydin Mohamed Holdings plans to open 14 new branches nationwide over 3 years. Also to assist small sundry shops via Project TUKAR. 1,000 Wholesale 3 St Regis plans to open a 208-room hotel and 160-unit residence on 2.2-acre site at KL Sentral. 1,200 Tourism 4 Schlumberger, oilfield services provider, has set up its Eastern Hemisphere Global Financial Services Hub in , which aims 300 GKL to attract 100 new multinational companies to . 5 Malaysia Airports Holdings Bhd has awarded a 25-year concession to WCT Bhd to build and operate integrated complex at KLIA 2. 486 Wholesale 6 Mubadala, from West Asia, to collaborate with 1MDB to develop KL International Financial District on a 34 ha site near Jln Tun Razak. - Financial 7 Premium Renewable Energy to build five bio-oil plants over five years. The first will be at Lahad Datu, Sabah costing RM124m. 124 Palm oil 8 The Higher Education Ministry has selected Asia e-University as the gateway university for the development of online & distance learning. - Education 9 Premium Outlet at Genting Indahpura offers designer labels at less than retail prices. 150 Tourism Total* 5,300 *Discrepancies with the sums of NKEAs due to some undisclosed investment values and rounding errors. SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 10: Update #2 – 9 projects worth RM8.3bn in investments No Projects and development Investment Sector (RM m) 1 Five new tax incentives in the Petroleum Income Tax Act, including a tax allowance for capital intensive projects and a reduced tax rate - OGE to 25% from 38% for marginal oil field development. These incentives are estimated to generate additional revenue of RM58.2bn to the government over the next 20 years. for marginal oil field development. These incentives are estimated to generate additional revenue of RM58.2bn to the government over the next 20 years. 2 Tanjong Agas Oil & Gas and Logistics Industrial Park in Pekan, Pahang over the next 10 years. 3,000 OGE 3 Tenaga Nasional Bhd will invest in three new power plants in 2011, two hydro plants (Ulu Jerai Hydroelectric & Hulu Terengganu 4,000 OGE Hydroelectric), one coal plant in Perak and power transmission infrastructure. 4 Cisco Systems transfers much of its manufacturing from Texas to Malaysia over the next three years. - E&E 5 Technology Park Malaysia to lead the development of an Advanced Engineering, Sciences and Innovation Cluster, in collaboration with 374 Education Universiti Tenaga Nasional and the Multimedia University over 10 years. 6 UCSI University will deliver a steady stream of qualified tourism workers and invest in a five-star hotel in Sarawak, an international 650 Education convention centre and resort hotel in Kuala Lumpur over 10 years. 7 Business tourism promotion fund. The Malaysia Convention & Exhibition Bureau has been allocated RM50m for 2011 and 2012 to - Tourism incentivise high-value business events in Malaysia. 8 YTL Hotel refurbishment of Majestic Hotel on a 3.2-acre site on Jalan Hishamuddin in Kuala Lumpur. 250 Tourism 9 The Ministry of Education, in conjuction with local colleges, will be conducting pre-school teacher training in 10 states. 11 Education Total 8,285 SOURCES: PEMANDU, CIMB RESEARCH

Figure 11: Update #3 – 19 new projects and developments worth RM67bn in investments No Projects and development Investment Sector (RM m) 1 ExxonMobil Exploration and Production Malaysia Inc, and partner Petronas Carigali S/B to invest in new oil and has assets to help 10,000 OGE meet growing energy needs. Involves multiple projects including enhanced oil recovery activites in the Tapis field, and the development of the Telok project, which are expected to start up as early as 2013. 2 Shell Malaysia will invest into projects to upgrade/expand/build facilities in all level of activities across Malaysia. Projects include the 5,100 OGE expansion of the Shell MDS wax plant in Bintulu, a new diesel processing unit at the Shell Refinery in Port Dickson & the Gumusut deepwater development offshore Sabah. 3 Dialog Group Bhd to develop Independent Deepwater Petroleum Terminal in Pengerang, Johor. 5,000 OGE 4 Malaysia Nuclear Power Corporation, led by Dr. Mohd Zamzam Jaafar (CEO) - current development timeline of 11-12 years, from - OGE pre-project to commissioning. 5 Malaysia as a World-Class Data Centre Hub by: 671 Business (i) Mytelehaus (Investment: RM249.6m) services 6 (ii) CSF Group (Investment: RM21.6m) 7 (iii) Teliti Datacentres (Investment: RM400m) 8 Universiti Malaya Holdings to develop and position the Health Metropolis as Malaysia's premier medical hub, so-called Universiti Malaya 1,250 Healthcare Health Metropolis. 9 The co-manufacturing and supply of generic drugs for diabetes and pain management by Hovid Bhd JV with Winthrop Pharmaceuticals, - Healthcare a subsidiary of Sanofi-Aventis Group. 10 Teluk Datai Resort S/B to develop 300 acres of land in Langkawi by 2014, including the upgrading of The Datai Hotel & golf course, and 1,000 Tourism development of premium hotels & luxury villas for sale. 11 YTL Group will refurbish the Pulau Gaya Resort in Sabah with a spa village and 132 spacious hillside and sea-front villas. 75 Tourism 12 AUO SunPower (a JV btw AU Optronics of Taiwan & SunPower Corporation of the USA) solar cell fabrication facility in Melaka by 2013. 2,200 E&E 13 The ECER Development Council to develop a high-value herbal plantation in Pasir Raja, Terengganu. - Agriculture 14 SelecTV and hospitality internet protocol TV (IPTV) , distributing Malaysian content to local and international hotels incl. the MiddleEast, 30 CCI Thailand and Indonesia. 15 The Department of Skills Development will launch Skills Malaysia 2011, an initiative to raise awareness and showcase the vocational - Education opportunities for students who have completed their SPM and upgrades for unskilled workers. 16 MINES Resort City to be expanded and transformed into the , an integrated health and wellness resort city, by 3,000 Wholesale & Country Heights Group of Companies. retail trade 17 Guocoland to develop an integrated development (Damansara City 2) in Pusat Bandar Damansara. 1,900 GKL 18 Mass Rapid Transit (MRT) which connects Greater KL. The investment values are for 3 lines (without land acquisition and rolling stock). 36,600 GKL 19 Talent Corporation to attract the best talents required to fill the 3.3m positions that will be created by the various NKEAs. - GKL Total 66,826 SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 12: Update #4 – 23 new projects and developments worth RM14.7bn in investments No Projects and development Invt. (RM m) Sector 1 Marina Island Pangkor's International Resort & entertainment extension project by Globalports S/B & Marina Sanctuary Resort S/B. 600 Tourism 2 AirAsia X's aircraft purchase - acquire three A330-200 aircraft with an option for two additional aircraft from Airbus. 1,860 Tourism 3 Diagnostic Services Nexus, a teleradiology hub, which will be developed by General Electric & local partners, i.e. REDtone International. 30 Healthcare 4 Small Retailer Transformation Programme (TUKAR) to modernise local mom and pop sundry shops as well as prepare sundry shop 5,430 Wholesale & owners for the implementation of GST. retail trade 5 Upscaling of paddy farming in the MUDA area by MADA and Beras Nasional (BERNAS). 100 Agriculture 6 Fragrant rice production for non-granary areas by MARDI. 27 Agriculture 7 Accelerating replanting of oil palm. 297 Palm oil 8 Improving fresh fruit bunch yield. MPOB has been tasked to recruit additional Tunjuk Ajar dan Nasihat (TUNAS) officers to cluster - Palm oil independent smallholders into cooperatives. 9 Increasing oil extraction rate to 23% by 2020, categorising the palm oil mills into three groups. All "A" category palm oil mill will be - Palm oil placed with an NKEA Enforcement Officer while "B" and "C" groups will be monitored by Regional Enforcement Officers. 10 Capturing biogas for electricity generation by Felda Global Group. 100 Palm oil 11 Developing oleo derivatives by Emery Oleochemicals Group. 416 Palm oil 12 Commercialisation of Pureprena and Ekoprena by Felda Rubber Industries S/B and Mardec Bhd. 140 Rubber 13 LED-SSL Certification Centre, which will be developed by Northern Corridor Implementation Authority (NCIA) & QAV Technologies S/B. 12 E&E 14 LED manufacturing facility by Philips Lumileds Lighting in Bayan Lepas, Penang. - E&E 15 Cahaya Malaysia Cable System, a two-fibre pair cable system linking Malaysia direct to Japan and to Hong Kong, by Telekom Malaysia 419 CCI Bhd in collaboration with NTT Communications Corporation. 16 Batam Damai Melaka (BDM) Cable System, which will connect the two countries with two routes (Melaka-Batam and Melaka-Dumai) 23 CCI and will be deployed by Telekom Malaysia, PT XL Axiata Tbk and PT Mora Telematika. 17 Proliferation of broadband usage. - CCI 18 Developing marginal oil and gas fields that will be led by Petrofac (50% equity stake), Kencana and Sapura (25% each). 2,560 OGE 19 Intensifying exploration activities by Petronas. - OGE 20 Regasification plant by Muhibbah Engineering (M) Bhd, in a consortium with Perunding Ranhill Worley S/B. 1,070 OGE 21 Integrated oil and gas hub in Pulau Daat, Labuan, by RG Gas & Chemical (M) Sdn Bhd. 1,000 OGE 22 Pajam Renewable Energy Park (RE Park), which will be built by Cypark Resources Bhd. 94 OGE 23 Energy Performance Management System (EPMS) by Faber Group Bhd. - OGE Total* 14,740 *Discrepancies with the sums of NKEAs due to some undisclosed investment values and rounding errors. SOURCES: PEMANDU, CIMB RESEARCH

Figure 13: Update #5 – 12 new projects and initiatives worth RM11.2bn in investments No Projects and development Invt. (RM m) Sector 1 Pensonic Holdings S/B will spearhead an initiative to establish a manufacturing hub and international distribution network of electrical 250 E&E home appliances (EHA) and an international distribution network. 2 Infineon Technologies (M) S/B will increase the capacity to produce power semiconductors for energy efficiency applications, research & 480 E&E & development and upgrade its manufacturing facilities in . 3 The Security and Trade Facilitation System entails the setting up of Radio Frequency Identification (RFID) infrastructure to provide 45 CCI security and automation of paperless Royal Malaysian Customs Checkpoint throughout Malaysia. 4 MYLED Group comprising MyLED Master & MyLED Opto Technology will invest heavily in expanding its manufacturing capability in 175 Business the green technology sector. It is the first local company that will possess both solid state lighting (SSL) under MyLED Master and light services emitting diode (LED) manufacturing technology under MyLED Opto Technology. 5 Asia Media will invest in developing the first Digital Live Transit-TV Broadcasting infrastructure in Malaysia. By adopting international 500 CCI broadcasting standard infrastructure, Asia Media is capable of delivering live video & voice into the transportation industry in the country. 6 Baseline Study on e-Counter Services and Paperless Government. 3 CCI 7 The MyEmail.my project which features the domain name of ―myemail.my‖ is a private sector initiative led by Tricubes Bhd to provide a 50 CCI unique and official email account and user ID for interested Malaysians. 8 The International Islamic University M'sia to develop M'sia into one of the world’s leading Islamic finance education hubs. 3 Education 9 A consortium consisting of Prism Crystal Enterprises Ltd & Tan Sri Dr. Chen Lip Keong & group of companies together with the 9,600 Tourism landowners, Karambunai Corp Bhd & Petaling Tin Berhad, will develop the Karambunai Integrated Resort City (KIRC) as a premier world-class ecotourism destination. 10 This EPP within the Wholesale & Retail NKEA looks to transform various markets such as "pasar tani", "pasar malam" & "pasar tamu" 50 Wholesale & & consolidate them into one, to be called "Pasar Komuniti", which will be led by the Federal Agriculture Marketing Authority (FAMA). retail trade 11 All new housing projects in KL are required to provide internet broadband facilities. It will help to address gaps and ensure broadband - CCI services reach all inhabitants of urban areas around the nation. 12 Malaysia Petroleum Resources Corp (MPRC) will be responsible to attract RM320m worth of investments for the industry in 2011. - OGE Headed by its interim CEO, Dr Mohd Shahreen Madros, the organisation will facilitate cross-border investments and assist Malaysian oil and gas companies through the identification of suitable markets and opportunities abroad. Total 11,156 SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 14: Update #6 – 15 new initiatives worth RM63.88bn in investments No Projects and development Investment Sector (RM m) 1 The UCSI Group, the parent organisation of UCSI University, is developing a 160-acre integrated premium health education cluster in 850 Education Bandar Springhill, Port Dickson. 2 SEGi Education Group has formed a consortium together with eight other Early Child Care and Education (ECCE) providers to upgrade 1,200 Education qualifications of existing workforce to a minimum of diploma level, provide multiple and accessible training pathway, develop the national programme standards for ECCE training as well as recruiting new and qualified childcare providers and teachers. The ECCE will be fully operational by 2015. 3 Sime Darby Medical Centre is expected to commence operations in 3Q11 and will feature three centres of excellence, 240 Healthcare namely the brain centre, heart centre and the spine & joint centre. 4 Sime Darby Medical Centre Parkcity is expected to start operations by 3Q12 and will be positioned as a centre of excellence dedicated 40 Healthcare to comprehensive women's & children's healthcare with focus on breast oncology, child development & the treatment of chronic diseases. 5 Biocon is investing in the establishment of a state-of-the-art facility at BioXcell, a custom-built biotechnology park and ecosystem in 500 Healthcare Iskandar Malaysia, Johor. The facility to be operational by 2014. 6 JEFI AquaTech Resources S/B is spearheading an initiative to develop Malaysia as a leading shrimp producer in the global and halal 375 Agriculture market by developing agro-entrepreneurs in the rural areas. The three main components of this projects are the establishment of the JEFI aquatech centre, an aquatech farm and the development of an agro entrepreneur programme. It will set up its corporate office, a high-tech shrimp processing plant and a marine science and biotechnology centre at the Penang Science Park, Bukit Minyak. 7 Yanming Resources S/B investing to increase its edible bird's nest production capabilities, which will increase in the mechanism in the 5 Agriculture processing line up to 60% from the current 10%. 8 VADS Bhd and Cisco signed a collaborative agreement to build the first TelePresence Exchange infrastructure in Malaysia to offer 11 CCI Managed TelePresence Services to the private and public sectors in Malaysia and the region. 9 The Malaysian Communications and Multimedia Commission (MCMC) and the Department of Veterinary Services Department have 45 CCI entered into a MoU to develop, test and implement a new system and standards for detecting and tracking the delivery of swiftlet nests for the global market. 10 Konsortium Rangkaian Serantau S/B (KRS) is a consortium comprising 24 telecommunications companies with the objectives of 0 CCI lowering the wholesale cost of international and domestic bandwidth capacity. The consortium is expected to add at least 3Tbps per second of international bandwidth capacity by 2020. 11 The Unified Malaysia Sale will unite the three main sales events (Grand Prix Sale, Malaysia Mega Sale Carnival and Year End Sale) into - Wholesale & one central coordinated event called Malaysia Unified Sale. It will be introduced for the first time from 15 Jun 11 till 31 Aug 11. retail trade 12 SAVE or Sustainability Achieved via Energy Efficiency, is a programme spearheaded by the Ministry of Energy, Green Technology and 50 OGE Water (METGW), to improve energy efficiency through five initiatives. The pilot initiative will be launced in July 2011. 13 PETRONAS is spearheading the development of Project Refinery and Petrochemical Integrated Development (RAPID). 60,000 OGE 14 Bureau Veritas recently acquired Scientige S/B, a company based in Malaysia specialising in asset integrity management services. 24 OGE 15 Advanced Micro Devices (AMD) has opened a new state-of-the-art Global Services Centre in . The centre is operated by AMD's 500 Business subsidiary, Advanced Micro Devices Global Services (M) S/B. services Total* 63,880 *Discrepancies with the sums of NKEAs due to some undisclosed investment values and rounding errors. SOURCES: PEMANDU, CIMB RESEARCH

Figure 15: Update #7 – 37 policy measures have been grouped into 6 strategic reform initiatives (SRIs)

Title: 14 with natural homes within the Consolidate and monitor the implementation plans with the respective Source: NKEAs/NKRAs NKEAs/NKRAs Please fill in the values above to have them entered in your report 51 policy measures 1 International standards & liberalisation - 9 policies

37 2 Human capital development detailed for execution via six labs ended in - 9 policies Apr 2011 3 Public finance - 5 policies

4 Public service delivery - 7 policies

5 Government's role in business - 5 policies

6 Narrowing disparities/Bumi SMEs - 2 policies

SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 16: Update #8 – 10 initiatives involving RM1.4bn in investments No Projects and development Investment Sector (RM m) 1 Kuala Lumpur (KLK) Berhad will develop the downstream sector of the palm oil industry. Projects are integrated methyl ester 706 Palm oil sulphonate and fatty alcohol plant, a plant to produce specialty fatty ester, a plant to produce high grade tocotrienol and isomers as well as to develop a world class research and development (R&D) centre. 2 Vasseti Datatech approached Minstry of Health (MOH) with the initial proposal for MedikTV, an official broadcast channel for the MOH to 400 CCI educate the rakyat on healthcare. 3 Strand Aerospace M'sia S/B (SAM) will spearhead the initiative to develop & position M'sia as a hub for High Value Engineering Services. 177 Business serv. 4 The Northern Corridor Implementation Authority (NCIA) and Hannan Corporation S/B (HCSB) will invest in setting up two Aquaculture 73 Agriculture Complexes in Selinsing Kerian District and Pulau Gula, Perak. 5 Nova Laboratories Sdn Bhd to move herbal products from the lower end of the value chain into the high value segment of nutraceuticals 16 Agriculture with pre-clinical/clinical claims or botanical drugs. 6 Doorstep Retails will spearhead an initiative to develop a virtual mall to provide more exposure for the SMEs. 35 Wholesale 7 Koperasi Jiwa Malaysia Bhd will via its online portal VPayCash lead an initiative to provide a virtual mall platform for small and medium 15 Wholesale enterprises (SMEs) to enter the online sphere. 8 Hong Leong Manufacturing Group (HLMG) has acquired a strategic share in DSEM Holdings Sdn Bhd, a manufacturer of proprietary - E&E thermal substrates for the global LED industry and supplier to major US and European brands. 9 InvestKL has been mandated by the M'sian Govt to attract, facilitate & service large foreign multinational investments into Greater KL/ KV. - GKL 10 Clinical Research Malaysia (CRM) is a non-profit government site management organisation that will transform Malaysia into a preferred - Healthcare destination for clinical contract research. Total* 1,430 *Discrepancies with the sums of NKEAs due to some undisclosed investment values and rounding errors. SOURCES: PEMANDU, CIMB RESEARCH

Figure 17: Update #9 – 13 projects worth RM5.85bn in investments No Projects and development Investment Sector (RM m) 1 IBM will develop a new Global Delivery Centre in Cyberjaya. The Multimedia Development Corporation will work closely with IBM to 1,000 Greater KL/KV identify and place its qualified candidates in the centre under MSC Malaysia K-Workers Development Initiative. 2 Toshiba will develop its global supply chain hub and regional operational headquarters in Malaysia. 268 E&E 3 Akamai Technologies and Telekom Malaysia are collaborating on the project which will see Akamai's only Netstorage facilities in Asia 0.4 Business Pacific (excluding Japan) hosted in Malaysia. Netstorage is a secure, outsourced service that reduces the costs and hassle associated services with content storage. 4 Esterchem (M) S/B, a wholly-owned subsidiary of IOI Oleochemical Industries Bhd, will build a new fatty ester and specialty oleo 130 Palm oil derivative production facility with a total capacity of 20,000 metric tonnes per year in Prai Industrial Complex. The plant is expected to be operational in mid-2013. 5 Agilent Technologies will lead in the development of an ecosystem of local design partners to boost Malaysia's offering of design 212 E&E services, original design manufacturer (ODM) and solution partners to global players. Its local partners are Ceed Tec S/B (ODM partner) and Myreka Technologies S/B (design partner). 6 Google Inc is spearheading the 'Get Malaysian Business Online' (GMBO) intiaitve. GMBO aims to bring at least 50,000 Malaysian - CCI SMEs online within a year. It will be in partnership with the Malaysian Comminications and Multimedia Commission (MCMC), .myDomain Registry and iTrain. 7 The Pegagau Group will strengthen its shrimps exports capabilities by setting up a new processing plant in Umas Farm, Tawau. 68 Agriculture 8 Exotic Star S/B, which is a tropical fruits grower and exporter, will invest in a modern one-stop centre for fruit packaging and processing. 80 Agriculture It also plans to open new farms and engage local farms with land totalling 2,250ha. 9 KPJ Healthcare Bhd will build five hospitals offering a total of 822 beds over the next three years. The hospitals are Dato Onn 763 Healthcare International Specialist Hospital, Johor, Pasing Gudang Specialist Hospital, Johor, Sabah Medical Centre, Bandar Baru Specialist Hospital and Pahang Specialist Hospital. 10 Petroliam Nasional Bhd has awarded a Small Field Risk Service Contract (SFRSC) for the Balai Cluster Field, located offshore Sarawak 2,550 OGE to BC Petroleum S/B, a JV company between Roc Oil Malaysia (Holdings) S/B, Dialog D&P S/B and Petronas Carigali S/B. 11 The Global Incentives for Trading (GIFT) Programme is managed and supervised by the Labuan Financial Services Authority. - OGE 12 Educity@Iskandar, in Nusajaya. 582 Education 13 MAS-GMR Aerospace Engineering Company Ltd (MGAE), a JV between Malaysian Aerospace Engineering S/B (MAE), a 192 Business wholly-owned subsidiary of Malaysia Airlines, and GMR Hyderabad International Airport Ltd (GHIAL), will develop Malaysia as an services Maintenance, Repair and Overhaul (MRO) hub. Total 5,845 SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 18: Update #10 – 21 projects/initiatives worth RM20.5bn in investments No Projects and development Investment Sector (RM m) 1 Plentiful Harvest Sdn Bhd will invest in the development of a marine fish farm consisting of a fish hatchery, fish nursery and fish cage 99 Agriculture farm in Sandakan and Silam, Sabah. 2 Duria Resources Sdn Bhd will set up a durian manufacturing and processing plant and plantation in Gopeng, which will produce and 326 Agriculture introduce new high value added durian products to local and foreign market. 3 Evergreen Livestock Sdn Bhd will be the anchor company to 92 potential dairy farmers in Keningau, Sabah. It also aims to build a milk 32 Agriculture processing plant with a processing capacity of 3,000 litres per hour. 4 Boustead Heavy Industries Division plans to move up the value chain of the Shipbuilding and Shiprepair industry. 1,570 Business services 5 DreamEDGE Sdn Bhd (DESB) has been working on high gear to break into the competitive global digital engineering market as part 486 Business services of an ambitious plan for Malaysia to seize the opportunity to capture the industry's exponential growth. 6 NTT MSC Sdn Bhd has invested in the construction of Cyberjaya3 Data Centre. 250 Business services 7 American International Group's (AIG) Global Services operation in Malaysia provides regional and global IT infrastructure services to 47 Business services AIG companies throughout the world. 8 Chartis Technology and Operations Management Sdn Bhd is developing a global centre of excellence in insurance and financial 43 Business services services and operations management. 9 AIA Shared Services Sdn Bhd aims to build a world class captive shared service company through the provision of Services to the AIA 7 Business services Group by focusing on the development and retention of a high quality Malaysian workforce. 10 Frost & Sullivan plans to establish a Global Innovation Center in Iskandar Malaysia, which will specifically host five centers of - Business services excellence: Consulting Center of Excellence, Innovation Center of Excellence, GIL University, Financial Center of Excellence and Digital Media Center of Excellence. 11 UWC Group of Companies has embarked on 3 stage transformation programme shifting its business focus from E&E and industrial 40 Healthcare fabrication towards medical equipment supply chain orchestration. 12 LKL Advance Metaltech Sdn Bhd has embarked on the expansion of the premises, workforce and medical furniture manufacturing 16 Healthcare capacity by 100% by year-end 2012 in Sri Kembangan, . 13 KPJ Healthcare Bhd is investing in construction the Perlis Specialist Hospital, which is expected to be operational in 2014. 51 Healthcare 14 The Asian Women's Leadership University (AWLU) Project to establish an international, private higher education institution with a 492 Education liberal arts and leadership curriculum for women from Asia and the Middle East. 15 Heriot-Watt University (Edinburgh, UK) signed agreements in Nov 2011 with Putrajaya Holdings Bhd (PJH) to proceed with the 42 Education establishment and operation of a major international university in Precinct-5, Putrajaya. 16 KDU University College spearheads the Game Development Cluster. MyGameDev2020 was launched in Apr 2012. 2 Education 17 Burj Asia Corporation (M) Sdn Bhd will develop Snap2Get™ Virtual Stations, which is a revolutionary solution to integrate retail, payment 17 Wholesale & and delivery all in one platform. retail 18 Berjaya Hills Bhd is developing the Berjaya Hills Wellness Resort Project comprising of The Chateau Spa & Organic Wellness Resort, 170 Wholesale & Colmar Tropicale, a French theme resort, Berjaya Hills Golf & Country Club, Japanese Village, Animal park, Equestrian and Organic retail Farm in Pahang. The resort is in progressive completion by 2018. 19 The Automotive Transformation Programme (ATOM) is an initiaitve to modernise and transform the fragmented automotive service & 280 Wholesale & repair inustry. retail 20 Infineon Technologies (Kulim) Sdn Bhd, which specialises in power and logic chips for automotive and industrial power applications, will 4,000 E&E invest in a wafer fabrication facility in the Kulim Hi-Tech Park over the next 10 years. 21 GuocoLand (M) Bhd will develop the International City, a world-class and seafront development with a GDV of RM48bn. 12,500 Greater KL/KV Total 20,469 SOURCES: PEMANDU, CIMB RESEARCH

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Figure 19: Update #11 – 7 new projects worth RM5.6bn in investments No Projects and development Investment Sector (RM m) 1 1Progres, a consortium formed between Avenion Group and Green Purchasing Network Malaysia, will invest in a waste recovery 947 Business services alternative solution that known as WARAS. WARAS is based on the internationally-accredited Wongpanit system from Thailand. 2 National Instruments Malaysia will set up the National Instruments Academy & Innovation Nucleus (NI-AIN). Two NI-AINs are proposed 270 E&E in this project - the first will be set up at Technology Park Malaysia by 3Q13 while the second in Iskandar Malaysia by 1Q15. 3 Ranbaxy Laboratories Ltd, India's largest pharmaceutical company, will set up a 'Greenfield Manufacturing Facility' in Malaysia through 125 Healthcare its subsidiary Ranbaxy Malaysia S/B. The project is expected to start in Sep 2012. 4 Medical Devices Corporation S/B will be setting up a Contract Manufacturing Hub for the production of DEHP Free Medical PVC 89 Healthcare Granule, Medical Tubing's & Sheet, IV Administrative Set & Hemodialysis Blood Lines, Peritoneal Dialysis (CAPD & CCPD) and Blood & Plasma Collection Bags. There will be three phases of the project - the construction of the first factory at the Halal Industrial Park is expected to start in Apr 2013, followed by the second and third factory in 2014 and 2017 respectively. 5 United Plantations Bhd and Oleon S/B will build a 25,000MT per year oleo-derivatives production facility in Selangor Halal Hub. Plant 96 Palm oil & rubber construction will begin in 1Q13 with completion expected in 3Q15. 6 Malaysia will invest in three clinical trials seeking medical breakthroughs by using palm tocotrienols, palm carotenes and red palm oil. - Palm oil & rubber The trials to be conducted by medical experts in UK, Australia and South Africa. 7 A consortium comprising Dialog Group, the State Government of Johor and Royal Vopak will develop the Pengerang LNG Terminal 4,080 OGE Project - an LNG storage, loading and regasification terminal to import LNG for trading purposes and for domestic use. The LNG Terminal will consist of 2 phases - Phase 1 (Independent Terminal with 2 tanks) in 2013-16 and Phase 2 (Dedicated Terminal with 2 tanks) in 2013-18. Total 5,607 SOURCES: PEMANDU, CIMB RESEARCH

Figure 20: Update #12 – 11 new NKEAs projects worth RM6.7bn in investments No Projects and development Investment Sector (RM m) 1 Seaport Worldwide S/B, a wholly-owned subsidiary of Johor Port Bhd is developing the Tanjung Bin Petrochemical and Maritime 1,020 OGE Industrial Centre in Pontian, Johor. 2 Nusa Gapurna Development S/B will develop the PJ Sentral Garden City which is poised to be the new green central business district 5,230 GKL of Selangor, supporting Kuala Lumpur and other business hubs around the city and state. 3 GPSTech Solutions S/B will roll out the Malaysian Public Transportation System (MyPUTRAS), a free online smartportal and 16 CCI smartphone application. Services will be made available by end Dec 2012. 4 CRF Computer Recovery Facility S/B (CRF) will invest in its 60,000 sq.ft purpose-built data center facility in in 2012. 16 Business services 5 Amanjaya Specialist Centre S/B will build a 108-bedded multidiscipline specialist Hospital in Sg Petani, Kedah, which is expected to be 40 Healthcare operational in 1Q14. 6 Love On Wheels Healthcare Services S/B (LOWHS) will provide a fully integrated mobile healthcare services to 2.5m senior citizens 69 Healthcare above the age of 60, including 600,000 pensioners, in the country. 7 Medical Innovation Ventures S/B will invest in its In-Vitro Diagnostic (IVD) projects as it plans to ramp up its market share in IVD by 9 Healthcare focusing on tropical infectious diseases by commercialising local technologies, driving the industry value chain, continuos investment in R&D and collaborating with universities. 8 Vigilenz Medical Devices S/B will extend its current product line and through R&D, introduce new products such as synthetic sutures, 26 Healthcare hernia mesh, wound care, haemostats and anti-adhesives. 9 Straits Orthopaedics (Mfg) S/B will expand its product offerings to include spinal implants and joints replacement products. 76 Healthcare 10 Jewel of Mabul Development S/B, the developer of Alorie Lepa Lepa will build an exclusive overwater resort at the southern tip of Mabul 168 Tourism island. Construction of the resort began in 4Q11 and is expected to be completed in 1Q14. 11 The Ministry of Education, the National Association of Private Educational Institutions (NAPEI) and Education Malaysia Global Services - Education S/B (EMGS) are working on plans to brand Malaysian International Schools, and to assist local as well as foreign recruitment agents in positioning Malaysia as a destination for primary and secondary schooling. Key target markets include S.Korea, Indonesia, China, Turkey and Singapore. Total* 6,680 *Discrepancies with the sums of NKEAs due to some undisclosed investment values and rounding errors. SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 21: Update #13 – 33 projects worth RM7bn investment unveiled on 29 Aug 2013 No Projects and development Investment Sector (RM m) 1 Cattle Integration in oil palm estates by Espek Livestock Sdn Bhd 8 Agriculture 2 Cattle Integration in oil palm estates by FELCRA Bhd 11 Agriculture 3 Cattle Integration in oil palm estates by Ihsan Permata Sdn Bhd 91 Agriculture 4 High value herbal products (local Tongkat Ali extract and its equivalent nutraceutical finished goods) by Biotropics Malaysia Bhd 9 Agriculture 5 Commercialisation of CANSSUFIVE, a standardised extract of 'Misai Kucing' by NatureCeuticals Sdn Bhd 65 Agriculture 6 Hempedu Bumi' and 'Kacip Fatimah' extract for health wellness by Bioalpha International 52 Agriculture 7 Pre-clinical and clinical trial studies of herbal formulated products by Aning Resources Sdn Bhd 57 Agriculture 8 Pre-clinical and clinical trials for anti-aging serum by Phyto Biznet Sdn Bhd 1 Agriculture 9 Pre-clinical and clinical studies on herbal formulated finished botanical product by The Mitomasa Sdn Bhd 54 Agriculture 10 Expansion of outsourcing services by Brandt International 6 Business serv. 11 Altran Malaysia Sdn Bhd opens ALTRAN regional office and innovation centre 25 Business serv. 12 Modeling and simulation in support of Economic Transformation by CAE Flight & Simulator Service Sdn Bhd 660 Business serv. 13 Telematics service platform (TSP) project by Telekom Malaysia and Milan Utama 8 CCI 14 Creative Content Association of Malaysia (CCAM) 7 CCI 15 Ramp up of international schools by The International School of Kuala Lumpur (ISKL) 294 Education 16 Transforming Malaysia into a regional accountancy hub for Asia Pacific by Sunway-TES 28 Education 17 International Montessori Preschool by Brainy Bunch Sdn Bhd 93 Education 18 Pharmeutical plant for manufacturing of inhalers and oncology injectables by RB Lifescience Sdn Bhd 95 Healthcare 19 Accessible sterile IV export project by Kotra Pharma (M) Sdn Bhd 60 Healthcare 20 Production of single or disposable medical devices and accessories by Karl Mueller Scientific Sdn Bhd 1 Healthcare 21 Contract manufacturing hub for orthopaedics by Abio Orthopaedics Sdn Bhd 225 Healthcare 22 Malaysian clinical devices champion by Sima Medical Sdn Bhd 8 Healthcare 23 Lucenxia (M) S/B will develop INTELLIS, Intelligent Automated Peritoneal Dialysis (APD) cycler designed for Chronic Kidney Disease 494 Healthcare 24 Dialysis solutions manufacturing in Malaysia by Fresenius Medical Care Malaysia Sdn Bhd 175 Healthcare 25 Specialty esters chemicals plant by ICM Specialty Chemicals Sdn Bhd 86 Palm oil 26 MAHB and Mitsui Fudosan Co. Ltd in a JV to develop the Mitsui Outlet Park in KLIA 334 Tourism 27 Nilai 3 Wholesale City by Hatia Properties Sdn Bhd 1,375 Wholesale 28 Nilai International Commercial Exchange (NICE) by KLCC Park Sdn Bhd 1,089 Wholesale 29 Oasis Square Makan Bazaar by Brunsfield International Group 117 Wholesale 30 Oasis Damansara Big Box Boulevard by Sime Darby Brunsfield Group 1,517 Wholesale Total 7,042 SOURCES: PEMANDU, CIMB RESEARCH

Figure 22: SRI update #1 – 3 programmes covering human capital development and narrowing disparities for SRIs

No Programmes SRI 1 MSC Malaysia's MyProCert, which is a program to upskill Malaysians to international/ global certification standards. The first Human capital development MyProCert course to be launched in Sep 11 is MyProCert (SAP) certification programme with a target participant of 150 in 4Q11. 2 The National Talent Enhancement Programme (NTEP) is an ETP initiative under the SRI programme for the Electrical & Electronics Human capital development (E&E) sector. It is a 12-month trainee programme to help develop industry-relevant skills via partnerships with E&E companies. 3 In Jul 2011, TERAJU launched A High Performing Bumiputera SME (HPBS) Programme known as TERAS. Narrowing disparities (Bumiputera SMEs) SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 23: SRI update#2 – 6 initiatives under 3 SRIs

No Programmes SRI 1 Minimum wage rate for Peninsular Malaysia is fixed at RM900/month while for Sarawak, Sabah and Labuan of RM800/month. The Human capital development minimum wage will cover all private sector workers in all economic sectors, except for domestic services. It will take effect six months from the date the Minimum Wages Order is gazetted. A grace period of 6-12 months will be given to employers to restructure their wage schemes. 2 Liberalisation in 9 services sub-sectors (out of 17) has been effected, which allowing up to 100% foreign equity with entry of foreign Human capital development professionals permitted. The 7 sub-sectors are accounting/taxation services, courier services, departmental & specialty stores, incineration services, private hospital services, skills training services, telecommunications and technical & vocational schools/technical & vocational schools for students with special needs. 3 The establishment of the Competition Appeal Tribunal, which is part of the government structure prescribed under the Competition Competition, standards & Act 2010 that came into force on 1 Jan 2012. liberalisation 4 The Department of Standards Malaysia have adopted accelerated timeframes to hasten the development of indigenous standards to Competition, standards & within 1.5 years (vs. 3 years previously) and for the adoption process to a maximum of 9 months (vs. >1 year previously). The liberalisation development was related to light emitting diodes (LED). 5 The MyProCert programme added 5 more partners, namely Huawei Technologies (M) Sdn Bhd, Oracle Corporation Malaysia S/B, Human capital development iTrain (M) Sdn Bhd, Scicom (Academy) Sdn Bhd and SnT Global Services Sdn Bhd into the list of training partners. 6 The Inland Revenue Board (IRB) and the Royal Malaysian Customs Department (RMCD) implemented new intiatitives to improve tax Public finance administration and compliance for direct and indirect tax collection from 2012. SOURCES: PEMANDU, CIMB RESEARCH

Figure 24: SRI update #3 – 3 initiatives under 2 SRIs yesterday

No Programmes SRI 1 Ministry of Human Resources (MOHR) has introduced a STAR Rating system for technical education and vocational training (TEVT) Human capital development for all private skills training institutes since 2011. The government has also allocated a RM200m revolving loan fund annually, via PTPK, to encourage students to take up TEVT programme since last year. 2 The Human Resources Development Fund (HRDF) has put into place a number of initiatives to improve human resources capabilities Human capital development for SMEs. Amongst the initiatives are 1) one-stop portal and contact centre for all matters regarding HR and Managing Workforce for SMEs; 2) HR Capability Building Programmes; and 3) business owners peer sharing of HR practices. 3 The government committed to divest the Government Linked Investment Companies (GLICs). In Jun 2012, FELDA raised US$3.1bn Government's Role in Business from its Initial Public Offering (IPO) and IHH Healthcare Bhd was dual-listed on the Malaysian and Singaporean stock exchanges in July 2012, raising US$2.1bn.

SOURCES: PEMANDU, CIMB RESEARCH

Figure 25: SRI update #4 – 3 initiatives under 2 SRIs

No Programmes SRI 1 The government has liberalised six more sub-sectors namely legal services, medical specialist services, dental specialist services, Competition, standards and international schools, private universities and telecommunications – Network Facilities Providers (NFP) and Network Services liberalisation Providers (NSP). 2 The Ministry of Health (MOH) have introduced Food Safety is the Responsibility of the Industry (MeSTI) to facilitate compliance Competition, standards and with food hygiene and safety requirements by the micro, small and medium-scale food industries liberalisation 3 The TERAS programme, led by TERAJU, has been created to increase Bumiputera SMEs’ participation in the Malaysian economy. Narrowing disparity

SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

Figure 26: SRI update #5 - 6 initiatives under 3 SRIs

No Programmes SRI 1 MyCC has completed a study on fixing of prices and fee scales by associations and professional bodies to examine if this was Competition, standards and consistent with the Competition Act 2010. Consultations with the 10 professional bodies with provisions in their Acts allowing fixing liberalisation of scaled fees will be carried out for better understanding of the practices. 2 Consolidation of various agriculture certification programmes to Malaysia Good Agriculture Practices (MyGAP) for better brand Competition, standards and recognition both locally and internationally (farming, rearing and aquaculture) liberalisation 3 Appointment of Standard Development Agencies (SDAs). The Malaysian Timber Industry Board already appointed as an SDA. Competition, standards and The government plans to appoint two SDAs in 2013 liberalisation 4 Business entry processes such as license registration and permit approval have been mapped out and uploaded at the MITI's Competition, standards and website for the purpose of transparency in liberalised service sectors liberalisation 5 Minimum Wage (Amendment) Order 2013 for SMEs, 40 big employers with foreign employees and 110 micro-enterprises gazetted. Human Capital Development Commencement of the Minimum Wage Order 2012 in Jan 2014. 6 The government had divested 21 GLICs as of Jun 2013. Govt's role in business

SOURCES: PEMANDU, CIMB RESEARCH

Figure 27: RECP update #1 – 9 projects worth RM19.4bn in investments were announced on 16 Nov 2012 No Projects and development Investment Corridors Sector (RM m) 1 Kimanis Power Plant, a 300MW combined cycle plant that is being built to provide sufficient and reliable electricity 1,000 SDC OGE supply to ensure economic growth. The first phase will be completed by Dec 2013. 2 The Palm Oil Industrial Cluster (POIC) Lahad Datu is Malaysia's first dedicated palm oil logistics hub, which was located 13,800 SDC Palm oil in Sabah. 3 Sipadan Mangrove Resort S/B is developing a resort in Sg . 441 SDC Tourism 4 Borneo Shrimp (Sabah) S/B will begin commercial development and production of cultured prawn in Kampung Pintasan, 716 SDC Agriculture Kota Belud and Sg Telaga, Pitas. 5 Tekun Cemerlang S/B will develop a high quality environmentally sustainable integrated Resort, named the Alila Dalit Bay 563 SDC Tourism Integrated Resort. It will be located between the Rasa Ria Shangri-La Hotel and Resorts, the Orangutan reserve and the Nexus Resort & Spa Karambunai. The soft opening of Phase 1 will be in Oct 2016 while Phase 2 will be in Apr 2018. 6 E-Arowana Trading S/B (EATSB), in collaboration with Northern Corridor Implementation Authority (NCIA), the Department 1,580 NCER Agriculture of Fisheries, will be involded in the hatching and farming of Arowana fish in Kedah. 7 Progressive Ocean S/B (POSB), in collaboration with the NCIA and the Department of Fisheries, will produce approx. 829 NCER Agriculture 800MT of Kerapu Harimau annually to meet the demand from Hong Kong, Taiwan, China, Japan and Europe. 8 The Farmers' Organisation in Pokok Sena, Lahar Bubu & Penaga will double the current paddy yield from 4MT/ha/season 49 NCER Agriculture to 8MT/ha/season in 2020 by improving the mechanisation programme in paddy farming. 9 Damansara Assets S/B, a wholly-owned company of Johor Corporation, will invest to redevelop two tourism outlets, 440 Iskandar Tourism KOMTAR (renamed Aira Shopping Mall) and Plaza Kotaraya (renamed Galleria @ Kotaraya). Total 19,417 SOURCES: PEMANDU, CIMB RESEARCH

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ECONOMIC UPDATE December 16, 2013

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ECONOMIC UPDATE December 16, 2013

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The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBS. 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This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are persons that are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”); (c) are persons falling within Article 49 (2) (a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order; (d) are outside the United Kingdom; or (e) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). 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United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (Australia) Limited, CIMB Securities (India) Private Limited, and is distributed solely to persons who qualify as "U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc.

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ECONOMIC UPDATE December 16, 2013

Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

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