Joint Training Program on Economic Corridor Development for Competitive and Inclusive Asia

29 August 2017 NCER Is One Of The Five Economic Corridors Established In Malaysia

Stemming from RMK-9, 5 Regional Corridors were Northern Corridor Economic Region established across Malaysia between 2006 – 2008 to address uneven development across the nation Population 2015 1 6.5 mil

Total employment 1 (at 2015) 2.8 mil

GDP as at 2015 (at 1 2010 constant price) RM 169 bil

Total investment into 1 NCER (at 2016) RM 79.9 bil 1 Jobs created (at 2016) Why Corridors? 103,597 jobs

1 2 3

Boost economic potential Address uneven development Close the urban-rural skills gap and regional imbalances 2 Capitalising The Unique Strengths Of NCER

Strategically Key To The 1 Located 2 Nation’s Food • IMT-GT & ASEAN Security Agenda • Good infrastructure • Modern Agriculture and connectivity • Usage of Technology

Top Tourists Strong 3 Destinations 4 Manufacturing Ecosystem • Langkawi • Strong Cluster and • Pulau Pinang ecosystem • Belum Rainforest • Existing Talent & Skill

3 RMK-11 Has Positioned Corridors Strategically To Enhance Inclusiveness

Chapter 3: Enhancing inclusiveness towards an equitable society

Focus Area C Encouraging more private investment in rural Strategy C2 areas

Accelerating regional growth for better Focus Area D geographic balance

11th Malaysia Plan

Targets Set For All RM236 bil 470,000 Corridor Authorities by 1 Realised Investment 2 Job Creation 2020

Blueprint 2.0’s Targets RM146.5 bil 161,197 For NCER by 2025 1 Realised Investment 2 Job Creation

Corridor Authorities continue to play significant role to ensure investments are realised and attract investment in rural / less developed areas 4 NCER Is One Of The Five Economic Corridors Established In Malaysia

3rd Wave: Concentration and Specialisation Blueprint 2.0 (80 Projects)

2nd Wave : Capacity Development (RM79.9b investment, 103,597 job creation)

1st Wave: Catalytic Infrastructure Development

(RM17.25b) 5 NCER Is One Of The Five Economic Corridors Established In Malaysia

1st Wave: 2nd Wave: Catalytic Infrastructure Development Capacity Development Legend: Airport Bridge Railway Private Investment 1 Upgrading of Penang International Airport RM79.9 bil Total Cumulative Investment RM250 mil 2 Penang Second Bridge 2009 2016 RM4.5 bil

3 Electrified Double Track Project Jobs Creation RM12.5 bil RM17.25 bil 103,597 Total Cumulative Jobs Creation

Investment By Federal Government 6 NCER Is One Of The Five Economic Corridors Established In Malaysia

1st Wave: 2nd Wave: Catalytic Infrastructure Development Capacity Development

Economic Impact up to 2014

“Setakat 2016, Wilayah Ekonomi Koridor Utara (NCER) mencatatkan tarikan pelaburan paling tinggi sejumlah RM6.6 billion”… 7 NCER Is One Of The Five Economic Corridors Established In Malaysia

1st Wave: 2nd Wave: Catalytic Infrastructure Development Capacity Development Economic Impact (Up To 2014)

NCER GDP 2005 - 2009 and 2010 - 2014 At Median Monthly Household Income Of NCER Constant Prices (In RM 'mil) (In RM) 1 2 3,797 159,924 151,000 143,776 135,972 3,023 127,720

106,268 101,464 100,584 2,315 95,159 2,111 87,593 1,927 1,810

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2002 2004 2007 2009 2012 2014 NCER experienced higher annual GDP growth Median household income in NCER has grown by rate of 5.8% compared to Malaysia’s 5.4% during 10% (CAGR) from 2009 – 2014 compared to 3% the period of 2010 – 2014 (Dept of Statistics) from 2002 to 2007 (Dept of Statistics) 8 NCER Has Attracted World Class Foreign And Local Companies

Cumulative Private Investments Top 5 Origin Of Investments By 2009 - 2016 Country (In RM mil)

79.92 USA 13,350 71.62 59.14 Germany 11,532 40.34 Japan 3,751 29.67 17.39 Taiwan 1,777 7.48 1.4 China 1,050

2009 2010 2011 2012 2013 2014 2015 2016 0 5,000 10,000 15,000

Cumulative Private Investments Share Of Private Investments By Sector (In RM mil) RM 35.8 bil 3,818 2,608 RM 44.1 bil 15,475 45% 55% 56,619

Agriculture Manufacturing Tourism Logistics LocalLocal Participation Investments ForeignForeign Participation Investments

9 Blueprint 2.0 To Propel Further Growth Of NCER

3rd Wave: Concentration and Specialisation 80 Projects Identified In Blueprint 2.0

Growth Nodes 7 Projects

Transcending Borders 28 Projects

Localised High Impact 45 Projects The Northern Corridor Economic Region Development Blueprint (2016 -2025) (Blueprint 2.0) 10 The NCER Blueprint 2.0 Was Developed & Introduced Early This Year

GROWTH WITH SOCIAL EQUITY

Vision To be a world-class economic region by 2025

Mission To identify commercially-viable opportunities and implement strategic initiatives to: Blueprint 2.0 (BP2.0) was developed in consultation . Spur economic growth to address inter and with 409 stakeholders from the federal and state intra-regional imbalances and increase governments, the private sector as well as from inclusivity learning institutions. BP2.0 is driven by the purpose of . Achieve balanced growth in all sectors, Growth with Social Equity. Manufacturing, Agriculture & Bio-industries Key features of BP2.0: and Services . Provides specific direction to transform NCER . Enhance talent to meet the growing needs of the region . Comprises revised targets and indicators . Increase private-sector investments and private . Enhances NCIA’s strategic direction, roadmap and finance initiatives implementation plans 11 The NCER Blueprint 2.0 Was Developed & Introduced Early This Year

GROWTH WITH SOCIAL EQUITY

Enhancing inclusiveness towards an equitable society

Re-engineering growth and productivity in priority sectors

Blueprint 2.0 (BP2.0) was developed in consultation with 409 stakeholders from the federal and state Strengthening infrastructure to governments, the private sector as well as from support connectivity and growth learning institutions. BP2.0 is driven by the purpose of Growth with Social Equity. Key features of BP2.0: Fostering talent development for an . Provides specific direction to transform NCER advanced region . Comprises revised targets and indicators . Enhances NCIA’s strategic direction, roadmap and implementation plans Addressing investors’ needs 12 NCER Is Leveraging On The Strengths Of Its Key Sectors

Perlis Kedah Pulau Pinang

Perak

NCER is a brownfield area that leverages on the strengths of its economic activities

NCER is strategically located at the centre of South East Asia 13 NCER Targets In Blueprint 2.0

RM RM169 RM RM 91,221 71.6 billion 4,815 1,926 jobs 2015 billion

RM RM225 RM RM 129,197 109.5 billion 8,265 3,852 jobs 2020 billion

RM RM300 RM RM 161,197 146.5 billion 12,964 6,043 jobs 2025 billion

GDP Average household Average B40 Cumulative Cumulative income income Investment jobs created

Note: Investment and job creation targets are NCIA targets as per the corridors’ expected outcomes 14 7 Growth Node Projects

Perlis Inland Port (PIP) Kedah Science & Perlis Technology Park (KSTP) RM0.94b 4,056 PNK setahun Kedah Jumlah pada tahun RM57.4b 23,244 pekerjaan 2025 Impak Ekonomi Peluang Pulau Pinang Sehingga 2030 pekerjaan Chuping Valley Industrial Area (CVIA) Kedah Rubber Perak City (KRC) RM2.58b 12,674 PNK setahun Jumlah RM14.7b 14,471 pada tahun pekerjaan Jumlah KDNK Peluang 2025 dalam 15 tahun pekerjaan

Pembangunan Greater Kamunting Manjung- Batu Kawan Conurbation (GKC) Aman Jaya Maritime City

RM22.5B RM12.96B 90,263 35,310 peluang KDNK sehingga KDNK sehingga peluang pekerjaan tahun 2030 pekerjaan tahun 2030 15 Typically Projects Are Initiated From Strategic Plans

Typically Projects Are Initiated From The Examples Of Project Initiated By NCIA In Strategic Plans Perlis

Chuping Valley 1 2 1 Industrial Area (CVIA)

Perlis Strategic Development Plan 2012 - 2030 2 Perlis Inland Port (PIP) Perlis Strategic Logistics & Trade Development Plan Facilitation Upgrading Of Padang 2012 - 2030 Masterplan Besar Inland Container 3 Terminal 3 4 4 Perlis Superfruits Cluster

Border Economic Chuping Valley MySuria Programme Transformation Programme Development Plan 5 Chuping Valley Industrial Area (CVIA)

1Brief Overview 2 Focus Clusters 1 Project Facts Lembah Chuping,Perlis Cluster 1: Cluster 2: Cluster 3: Green Halal Renewable Land Size Industries Industries Energy Generation 2,500 acres CVIA study was completed in 2015 District 3 Potential Economic Impacts Padang Besar GNI Contribution Job Creation Per Year (By 2025) (By year 2025) 2 Project Estimated Timeline • Integrated Business Centre (IBC) Mar 2017 – Sep 2017 RM2.58 bil 12,674 jobs

• Phase 1 - CVIA 2016 – 2020 + Advantages • Rail connectivity to main ports in • Phase 2 - CVIA Malaysia (Penang Port, Port 2021 - 2025 Klang)

• Located next to the upcoming Perlis Inland Port

17 A Structured Game Plan To Attract Investors

• NCER Development Blueprint 2.0 has identified key industry segments we should focus on when we engage with potential investors. • We have been able to narrow down on: - areas to focus on - rationale behind a participation - and how these entities will operate

Investors: The investor attraction funnel • Will take action when they are ready, not when we are ready • Will not only look for geographic, demographic and cost of doing business information – also on opportunities and risks • Will try to find customers, suppliers and distributors: Lead nurturing Investor nurturing • Will not just look at incentives, but also how a community are aligned Pre Post • Will look for paths which can Investment investment investment provide soft landing for their investments 18 The Quality Of Our Handholding Will Be A Key Differentiator

Common Agenda Shared vision • A key differentiator will be our ability to respond to client Shared Measurement Shared resultsneeds & accountabilityefficiently, effectively and ahead of competitors. We Collective Mutually Reinforcing Delivery ofneed co-ordinatedto act plan ofas actiona partner to existing and prospective client Impact Activities via differentiatedcompanies approaches in the implementation of their strategic Continuous Consistent & open communication Communication objectives. Escalation• This feature, withspans ability to the entire investment process, from initial Backbone Support convene participatingawareness organisationsof our value proposition, through the full decision-making process, to the start of the investors’ Quality of operations and beyond. handholding will strengthen our position as 1 2 3 Pre Post a competitive & Investment differentiated investment investment investment destination. 19 Preparing An Investment Soft Landing Programme

Game changer Delivering the next generation of incentives Investors look for ways to maximise certainty and minimise risk in considering new locations.

Fiscal incentives: the base plus customised Tax incentives structure via MoF

Other forms of Other tools via NCIA or collaborative partners facilitation as per RMK-11 positioning & NBOS Game Plan

Support Physical infrastructure used as “carrot” to facilities attract investors

Knowledge- Involvement of IPTs in providing the right kind based support of inputs to the private sector

Community Involvement the local community via symbiotic support relationship with the private sector 20 NCER Incentive Packages

As part of Blueprint 2.0 focus areas, NCIA has submitted the NCER Incentive Packages in Mar 2017 to MOF and is currently pending approval

1 Broad Based Incentives 2 Special Incentives For CVIA & KSTP

Broad based incentives for companies carrying out promoted activities or products in the key sectors KSTP CVIA

To encourage and attract companies to establish or expand its business / operations into NCER in the key sectors

Incentives to attract individuals/talent into NCER

To promote and encourage the growth of human capital and talent in NCER

• Tax incentives for knowledge workers • Financial assistance and subsidies to promote relocation to NCER • Incentives for companies (including grants) to train and relocate employees to NCER Improvements In Logistics & Connectivity To Boost NCER’s Economic Growth 1 Upgrading Of Pdg Besar Terminal 2 Perlis Inland Port To ensure seamless 1 connectivity & mobility of people and goods 3 Electrified Double Track Project Ultimately, this will 4 Rapid Sg. Petani 2 boost the economic 5 Penang Sentral growth of NCER as a whole 7 6 Penang Second Bridge Upgrading of Penang Infra connectivity has the power to International Airport 8 Rapid Kamunting integrate economies by deepening 9 trade, investment and business Rapid Manjung links. It can expand and strengthen regional production networks and Legend: supply chains of goods and Airport services. It improves inclusivity, Bridge productivity and competitiveness; Railway and stimulates economic activity, • Note: Northern Integrated Transportation 22 And Logistics Hub trade and investment. NCIA As A Strategic Partner In IMTGT

… and can be a true logistics corridor in IMTGT Koridor Utara has an advantageous position in SEA with close proximity Padang Besar / PIP 1. Double Tracking to China and India 2. Fast Intercity Train What do we need? Service 3. Reliable Commuter Train Service 4. Integrated Transport Terminal Penang Port 5. Inland Container Terminal

Legend: Container Terminal Integrated Terminal International Airport Domestic Airport Lumut Seaport

23 NCIA As A Strategic Partner In IMTGT

… and can be a true logistics corridor in IMTGT Koridor Utara has an advantageous position in SEA with close proximity What do we need? to China and India 1 Trade & Customs Facilitation • Streamlined custom policies and processes to facilitate trade

2 Transport & Logistics Effectiveness • Assessible and connected logistics location

3 Supply of Logistics Human Resource • Steady supply of talent with Logistics experience

4 Multi-modal transport structure • Effective multi mode transportation network

24 Capitalising On Regional Trade Networks

Action plans

Grow international trade • Build comprehensive regional service provider network that offers and export activities. effective support services for international trade.

• Enable selected industries to ride on Koridor Utara’s logistics capabilities and network.

• Form strategic relationships with international business networks, existing foreign companies.

Increase cross-border private • Leverage on the activity base and facilities of Padang Besar, Bukit sector engagements. Kayu Hitam, Durian Burung and Pengkalan Hulu.

• Implement the BETP study.

25 Agriculture Sector

The agriculture sector remains an important sector in NCER, contributing around 11% of the region’s Gross Domestic Product (GDP).

In 2016, the agricultural sector accounted for 8.1% of the national Gross Development Product (GDP), a decline from 11.9% recorded in 2011.

Malaysia also continued to widen its trade deficit on agriculture products to RM16.59 billion in 2016 from RM 11 billion in 2011, Food Security

Malaysia’s population growing at 1.8% per annum and is expected to reach 35 million by 2025.

Can we cope with the increase pressure on food demands? Nutritional Safety

National Health and Morbidity Survey (NHMS), 2015 13.3 millions are obese 70% - 80% of NCD was due to 5.6 million improper diet resulting in are overweight ailments such a diabetes and obesity.

Recent statistics already show 3.5 million that 60% of premature deaths have diabetes (below 60 years) in Malaysia were caused by NCD 6.1 millions GDP loss to Malaysia from NCD have hypertension is expected to be about US$ 22.5 billion by 2025 9.6 millions (Uni. Victoria, Australia) have > cholesterol Commercialising The Agriculture Sector

The strategy refers to intensifying the use of productivity enhancing technologies by the farmers.

Farmers Income Farm Output

Farm Surpluses Market Less number of labour Participation Commercialising The Agriculture Sector

As a pre-requisite to implementing this strategy, the local agriculture sector:

must increase its productivity to achieve lower per unit costs of production adopts the market-driven farming program.

These pre-requisite requirements however pose another huge challenge to commercialising the local agriculture sector. Challenges In Commercialising The Agriculture Sector

There is also deficient of interest towards the agriculture sector among the young and educated workforce

60% of the workforce in this sector are already over 60 years old while only 15% below 40 years old. Introduction of Modern Farm Management Concept

Paddy Yield: 2011 Paddy Yield: 2016 (Prior program) (Post Program)

3% 10% 7% 17%

26% 33%

64% 40%

<4 4 - 6 6 - 8 8 - 10 <4 4 - 6 6 - 8 8 - 10 RM465.00 RM897.00 – RM1,763.00 – RM2,462.00 – RM667.00 RM1,167.00 – RM2,167.00 – RM3,000.00 – RM1,763.00 RM2,462.00 RM3,327.00 RM2,167.00 RM3,000.00 RM4,000.00

Nota : Nota :  64% of the farmers’ yield were below 4 MT/ha with monthly gross  43% of the farmers produced average paddy yield of between 6 to 10 income of RM465.00 MT/ha with monthly gross income of between RM2,167.00 to RM4,000.00 i.e. higher than the average income of B40 Shared Value In Commercialising The Agriculture Sector

Shared value concept is a principle of integrating business efforts with social and environmental values. It is a point of connection between the activities and needs of a company and the activities and needs of the society.

The Government will act as a catalyst for creating shared value partnerships through which there is also the changing role of business and government in solving the social problems.

The introduction of the right kind of regulatory framework can encourage companies to pursue shared value. Shared Value In Commercialising The Agriculture Sector

One example of a successful shared value project in the Northern Corridor is the collaborative partnership between NCIA, Nestle Paddy Club and Pertubuhan Peladang Kebangsaan (PPK) C2-Kerpan on rice farming for baby cereal products. Agriculture 4.0

Knowledge-based farm production system such as precision agriculture (PA) could replace the current labour intensive system with low productivity.

The IoT in agriculture market is expected to grow at a cumulative average growth rate (CAGR) of over 16% in terms of market value through 2016 to 2022, to reach $20 billion THANK YOU

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