Investment Opportunities in Malaysia Mr
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14 Mar 2017 Mandarin Oriental Kuala Lumpur, Malaysia Investment Opportunities In Malaysia Mr. Arham Abdul Rahman Executive Director, Investment Promotion Malaysian Investment Development Authority (MIDA) 1 Table of Contents 2016 : Year Of Many Challenges Total Approved Investments - 2016 The Way Forward Investment Opportunities In Malaysia Policies, Facilities & Infrastructures MIDA In Brief 2016: Year of Many Challenges… On the global front • Significant deceleration in developed market economies led to weak aggregate demand • Volatile international financial markets, including currency fluctuations • Sentiments from world events such as Brexit • Uncertainties around the rebalancing of the Chinese economy • Commodity prices and global economic activities remain subdued • Evolving US economic policies on global trade • Elevated geopolitical risks further amplifies economic challenges 3 2016: Year of Many Challenges… Cont’d In the Malaysian context • Continued volatility in the exchange rate • Over-reliance on foreign workers • Low productivity levels • More intense competition from regional peers • Misperceptions among investors 4 2016: Year of Many Challenges… Cont’d Despite these challenges and issues, Malaysia still manages to maintain its investment growth momentum. This is reflected in the following slides on the investment performance of Malaysia’s manufacturing, services and primary sectors for 2016 5 TOTAL APPROVED INVESTMENTS IN 2016 6 Total Approved Investments 2016 207.9 FDI RM 193.0 RM59 bil. Billion (28%) RM 207.9 bil. DDI RM 148.9 bil. 72 : 28 (72%) Domestic:Foreign 2016 2015 RM207.9 Projects Approved billion Employment 2016 2015 opportunities 4.5% 15% 2016 2015 4,972 5,207 153,060 180,244 7 Investments by Sector & Source Primary RM8.2 bil. Services sector 4% remains strong and Manufacturing RM 207.9 bil. Services continues to lead RM58.5 bil. with investment of RM 141.2 bil. RM141.2 bil. 28% 68% Domestic Investments continue to 2016 2015 spearhead private Domestic Investments Domestic Investments investments RM148.9 bil. RM 156.9 bil. 72% 81% DDI 28% 19% FDI Foreign Investments Foreign Investments RM59 bil. RM36.1 bil. 8 INVESTMENTS APPROVED IN THE MANUFACTURING SECTOR 9 9 Approved Investments in the Manufacturing Sector Manufacturing Approved investments RM Million declined by 21.7% year- 80,000 on-year 74,693 70,000 Year 2016 2015 60,000 58,492 50,000 Approved RM58.5 RM74.7 21.7% Investments bil. bil. 40,000 30,000 Projects 733 680 7.8% 20,000 10,000 0 4.2% Jobs 64,120 66,494 2016 2015 10 DDI vis-à-vis FDI Manufacturing DDI slightly surpasses FDI in investments approved in 2016 2016 2015 DDI RM52.8 bil. RM27.4 bil. FDI (47%) (71%) RM58.5 RM74.7 billion billion RM21.9 bil. (29%) RM31.1 bil. (53%) 11 Sources of FDI Manufacturing RM Billion 5.0 China, the Netherlands, 4.5 Germany, the UK and 4.7 4.0 Republic of Korea were 3.5 the main sources of FDI, 3.0 3.2 contributing more than 2.5 2.0 2.6 2.6 half of total foreign 2.2 2.1 1.5 1.9 investments approved 1.0 1.4 1.3 0.5 0.6 - 12 Employment by Category 38% skilled job Manufacturing opportunities created 60 5,108 11,505 0.1% 8% from projects approved 18% 8,372 13% 38% in 2016 64,120 10,844 1,800 1,664 Craft Skills 1,600 1,440 jobs 17% 1,400 1,198 28,231 1,200 1,033 1,000 821 44% 718 800 631 600 400 200 Managerial 0 Technical & Suoervisory Skilled Workers Craft Skills Sales, Clerical & Others 13 Investments By Industry The bulk of investments came from Petroleum Products, E&E Products , Manufacturing Basic Metal Products and Transport Equipment 2016 2015 3.3 3.1 6.5 3.7 3.0 (9%) 3.73.6 4.8 2.3 2.6 (8%) 8.9 2.6 (12%) 2.3 5.0 8.3 RM58.5 (14%) 7.0 (9%) 10.4 RM74.7 (10%) billion (14%) 9.2 billion (16%) 15.9 (27%) 27.0 RM Billion (36%) Petroleum Products (Inc. Petrochemicals) Electronics & Electrical Products Basic Metal Products Transport Equipment Natural Gas Food Manufacturing Chemical & Chemical Products Non-Metallic Mineral Products 14 INVESTMENTSINVESTMENTS APPROVEDAPPROVED IN INTHE THE SERVICESSERVICES SECTORSECTOR 15 Approved Investments in the Services Sector Services sector contributed Services to 68% of approved RM Million investments in 2016 160,000 141,210 140,000 Year 2016 2015 114,548 Approved 120,000 RM141.2 RM114.5 23% 100,000 Investments bil. bil. 80,000 60,000 Projects 4,199 4,470 6% 40,000 20,000 Jobs 88,108 112,194 22% 0 2016 2015 16 DDI vis-à-vis FDI Services Domestic investments continue to dominate. FDI increased by 128% to RM28.3 bil. compared to RM12.4 bil. in 2015 2016 RM12.4 bil. 2015 RM28.3 bil. (8%) (20%) RM141.2 DDI FDI RM114.5 billion billion RM 112.9 bil. RM 102.1 bil. (80%) (92%) 17 Investments By Industry Real Estate, Global Establishment, Financial Services, Services Utilities and Distributive Trade were the major subsectors Real Estate 2016 2015 Transport 15.4 Financial Services 1.913.7 16 (13.4%) (9.7%) (14%) 11.7 Utilities 64.1 10.6 (10.2%) (45.4%) Global Establishments (7.5%) 8.2 Distributive Trade RM141.2 14.1 26.9 RM114.5 (7.1%) (23.5%) 6.8 Hotel &Tourism billion (10%) (5.9%) 9.3 billion 5.4 Telecommunications* 4.7(6.6%) 8.9 10.56.45.9 10.6 4.6 MSC Status Others RM Billion 18 Global Establishments Services Investments in RM14.1 bil. Principal Hub Global RM13.8 bil. Establishments (97.9%) RE (Extension) increased by 72% RM8.2 bil. RM1.3 bil. RO (Extension) RM 14.1 bil. (15.8%) Representative Approved 64.5 Office (RE) 53.6 99.3 investments Million RM 79.4 Regional Office 56 (RO) 211 54.8 67.1 68 114.7 29.1 Treasury Projects Management Centres (TMC) 2016 2015 19 INVESTMENTSINVESTMENTS APPROVEDAPPROVED IN INTHE THE SERVICESPRIMARY SECTORSECTOR 20 Approved Investments in the Primary Sector RM8.2 bil Year 2016 2015 Approved RM8.2 bil. RM3.8 bil. RM3.8 bil Investments 116% RMBillion Projects 40 57 30% 46% 2016 2015 Jobs 836 1,556 Agriculture 0.1 0.3 Plantation & 0.5 0.7 Commodities Mining 7.6 2.8 21 THE WAY FORWARD 22 Investment Outlook According to UNCTAD, fundamentals support a rise APPROVED INVESTMENT in global FDI flows in 2017 but uncertainties TARGETS FOR 2017 abound RM75 80 bil. Global economic growth is projected to accelerate 70 to 3.4% in 2017 compared to 3.1% in 2016. RM55 60 bil. Greater economic activity boost world trade 50 volumes and forecast to expand by 3.8% in 2017 40 compared to 2.3% in 2015 billion RM 30 UNCTAD projects global FDI flows to increase by 20 10% over the year 10 0 The World Bank expects Malaysia's economy to Manufacturing Services (Excluding remain resilient to external headwinds, with GDP Real Estates) growth projected around 4.2% in 2016 and 4.3% in 2017. Source: IMF / UNCTAD / The World Bank 23 INVESTMENTSINVESTMENT APPROVEDOPPORTUNITIES IN THE SERVICESIN MALAYSIA SECTOR 24 Eleventh Malaysia Plan (2016-2020) Three (3) catalytic subsectors namely Chemical, E&E and M&E industries; and two (2) subsectors of high potential growth namely Aerospace and Medical Devices have been identified in the 11th MP to drive the growth of the manufacturing sector. 3 Catalytic Subsectors Electrical and Machinery and Chemicals Electronics Equipment 2 High Growth Sectors Medical devices Aerospace 25 MALAYSIA AS THE GLOBAL HALAL HUB ASEAN 7th largest economy in the World Recognised world – combined GDP USD2.4 JAKIM Halal Certification trillion WORLD’S LARGEST Over 620 million population EXPORTER OF PALM OIL SOURCE : MPOB Availability of resources: • Palm Oil Derivatives ASIA’S LARGEST COCOA • Bio-diverse forest, flora PROCESSOR Malaysia WORLD’S FIFTH LARGEST COCOA Dedicated Halal Parks PRODUCER SOURCE : MCB Strategic location Pro-government Business WORLD’S FIFTH LARGEST PRODUCER OF PEPPER Attractive Incentives Well developed SOURCE : MPIC Inside & Outside Halal Parks Infrastructures 26 Investment - Malaysia is a Home For Various International Brand That Adopting Halal Standard to Penetrate Halal Market 1. Halal Food and Beverages Other famous brand manufactured in Malaysia for Halal market • Make Malaysia as Halal Centre of Excellence for Nestle world wide. • Biggest Halal Producer in the world 2. Halal Ingredients • Taking full advantage of abundant halal raw materials (palm oil based) in Malaysia – serve 70 countries 3. Halal Cosmetics, Personal Care & Pharmaceuticals • Regards Malaysia an important Hub for Halal distribution to South East Asian market 4. Halal Industrial Chemicals / Materials • Regards Malaysia an important Hub for Halal distribution to South East Asian market 27 EPP3 : MALAYSIA AS A WORLD CLASS DATA CENTRE HUB Targets by 2020 o Under the Business Services NKEA the data centre industry has been identified as a key GNI growth area which resulted in the Entry USD0.7bn Point Project (EPP) 3: Positioning Malaysia as RM 2.9 bn a World Class Data Centre Hub Projected Revenues o The main focus is to create a conducive USD2.65bn business environment for the data centre RM 11.0 bn industry by promoting the data centre services, advocating and facilitating policies, strategies and initiatives 28 DATA CENTRE TASK FORCE (DCTF) – Facilitate Foreign DC Investments In Malaysia Incentives Local Authorities Corridors Technology DCTF Industry Development Communication Mediation Facilitation The DCTF complements one another’s role in ensuring the Alignment success in attracting major investors into the country 29 SEDENAK ISKANDAR DATA HUB (SIDH) Designated 700 Acres To Be Developed As Global Hub For Cloud Content And Services Create new DC hub in earmarked zone of 700 acres for Sedenak Cherating Iskandar Data Hub (SIDH) Attracting and developing a cluster of DC / Cloud players in the ecosystem Cyberjaya Twin