14 Mar 2017 Mandarin Oriental , 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 Iskandar Data Hub (SIDH)  Attracting and developing a cluster of DC / Cloud players in the ecosystem Cyberjaya  Twin existing DC hub in Cyberjaya with SIDH and position Malaysia as a global data hub  Build up Malaysia’s international Sedenak data gateways for capacity, cost competitiveness and quality 30 INFRASTRUCTURE DEVELOPMENT 2016-2020 17% Increased on budget allocation for infrastructure

2011-2015 Under the purview of CIDB RM 260 billion

RM 223 billion 31 INVESTMENTSPOLICIES, FACILITIES APPROVED& INFRASTRUCTURES IN THE SERVICES SECTOR

32 Pioneer Status Income tax exemption ranging from 70% or Less Developed Area 100% for a period of 5 or 10 years

Investment Tax Allowance Industrial Area 60% or 100% on qualifying capital Management expenditure for 5 years

Reinvestment Allowance Automation Capital Allowance Expenditure 60% on qualifying capital expenditure for 15 consecutive years Principal Hub Import Duty Exemption For raw materials / components and machinery and equipment Independent Conformity Assessment Bodies (ICAB) https://incentives.mida.gov.my/Incentives/Modules/Public/IncentiveList.aspx Investment Policies OWNERSHIP EXPATRIATE POSTS Manufacturing & selected Liberal policy, based on services sectors can be merit of each case wholly foreign-owned 33 Penang Science Park Bayan Lepas Industrial Park Batu Kawan Industrial Park South China Sea Sipitang Oil & Gas Kulim Hi Tech Park Industrial Park Supply Base (SOGIP) Kemaman Heavy Industry Park Labuan IBFC

Lumut • Integrated Petrochemical Industrial Complex (GIPC) Samalaju Palm Oil Park • Gebeng Industrial Estate Integrated Malaysia-China Tech Park Complex Industrial Park (MCKIP). Malaysia (POIC) Cyberjaya Enstek Pengerang Integrated Petroleum Complex Bio Excell Park (PIPC) ISKANDAR Puteri Chemical/Bio-tech

Developed Industrial Parks O&G/Petroleum  Over 200 industrial estates or parks  18 Free Industrial Zones (FIZs) Industrial/ Tech /ICT  Specialised parks (Kulim Hi-Tech Park, Technology Park Malaysia, Rubber City, etc) Park  21 Halal Parks in Malaysia 34 MALAYSIA HALAL PARKS

PERLIS HALAL HALMAS (15) PENGKALAN PARK MARA HALAL PARK CHEPA HALAL KUALA PERLIS PARK Non HALMAS (8) PASIR MAS HALAL PARK KEDAH HALAL PARK HALAL PARK PERDA HALAL PARK PENANG INTERNATIONAL KOTA HALAL PARK KINABALU LABUAN POIC LAHAD MARA HALAL DISTRIBUTIVE DATU PARK TAMBUN GAMBANG HALAL PARK HUB

SELANGOR HALAL HUB

PKFZ NATIONAL HALAL PARK TG MANIS TECHPARK@ENSTEK POIC TG HALAL HUB LANGSAT MARA HALAL PEDAS HALAL PARK PARK MELAKA HALAL HUB KUCHING

SEDENAK INDUSTRIAL PARK HALAL PARK Total Parks 23 35 Kudat Dermaga Tanjung Lembung Sepangar Bay Oil Terminal Kuala Perlis Sandakan Kota Bahru Kota Kinabalu Port Tumpat Teluk Ewa Jetty Labuan Port Lahad Kertih Datu Penang Port Kemaman South China Sea Miri Port Lumut Port Bintulu Port Kunak Semporna Telok Intan Klang Rajang Port Port Dickson Mersing Kuching Port Sg Udang Port Melaka Port Muar Johor Port Tg. Pelepas

Ports: Highway: Noted: The port in Sabah • Port Klang (10 million TEUs) – 2nd busiest • North-South Expressway and Sarawak are under the ports in Southeast Asia • East-Coast Expressway jurisdiction of the State • Port of Tanjung Pelepas (7 million TEUs) - • Pan Borneo Highway in 2022 Government of Sabah and 3rd busiest ports in Southeast Asia Sarawak respectively. Both ranked among the top 20 container ports in the world. 36 Penang Langkawi

Sandakan Sultan Ismail Petra Kota Kinabalu

South China Sea Labuan Sultan Mahmud Lahad Datu Sultan Azlan Shah Limbang Tawau Miri KLIA Sultan Ahmad Shah KLIA 2 Mulu Bintulu Kuching Sibu Sultan Abdul Melaka Aziz Shah Senai

Source: MOT

International Airports: International Airport (7)  7 International Airports in Malaysia Airport (16)  KLIA (capacity of handling 40 million passengers and more than 1.2 million Others: 18 airport aerodrome (short take off tonnes of cargo per year) landing ports -STOLports) 37 Potential market of 2.7 billion population Tariff reduction and elimination mostly by 2016

• Constitutes 60% of Malaysia’s global REGIONAL / BILATERAL FTAs trade via preferential treatment

China Japan Korea India Australia New Zealand Chile Turkey Pakistan

• Once concluded, will increase the ON-GOING FTA NEGOTIATIONS share of Malaysia’s global trade via preferential treatment to 80% • Potential market of additional 1.8 billion population RCEP EU 38 Air Connectivity Singapore: ASEAN Economic Community 7th Largest economy 45 minutes (90x daily) and Single Market (4th by 2050)

Jakarta: Population 625 million (2015) 2 hours (32x daily) Youth 60%

Bangkok: GDP USD2.57 trillion 2 hours (34x daily) GDP Growth: 4.6% (2015) Hanoi & Ho Chi Minh: 5.1% (2016) 2 hours (18x daily) Per capita USD 4,130 (2014)

Manila: 2.5 hours (12x daily) Total FDI USD125.7 billion (2015) Intra ASEAN USD24.4 billion (17.9%) Phnom Penh & Siem Reap: 2 hours (6x daily) Total Exports USD1.3 trillion Brunei: Intra ASEAN 25.5% 2 hours (5x daily) Tourist Arrivals 105 million (2014) Yangon: Intra ASEAN 48 million 3.5 hours (3x daily) 39 Why Malaysia? STRATEGIC

LOCATION Liberal Investment Political and Economic Pro-business Home to Tropical Paradise Policies Stability Government We Embrace Multiculturalism An Unsurpassed Lifestyle

Excellent Facilities - Well Developed Harmonious Convention and Infrastructure/ Industrial Relations Connectivity Conferences

Liberal Business Young, Trainable and Banking System English speaking language Environment Educated Labour Force

Good Track Record Quality of Life IP Protection 40 Dominant position in Global offshoring destination Protecting investors Most attractive investment Islamic Finance (A.T. Kearney Global Services (World Bank Doing destination (Baseline Development Indicator Location Index™ 2016) Business 2016 Report) Profitability Index (BPI) 2015) (ICD- Thomson Reuters)

31 million population

Ranking 14 states CAPITAL: Kuala Lumpur

Malaysia ranked among Asia Pacific’s top 10 foreign direct Area: 329,847 km² investment (FDI) hotspots, according to a study by US-based global information company IHS Inc.

Most competitive economy IMD world talent Most competitive nation in In ease of doing in overall performance rankings the world business (IMD's World (IMD's World (WEF's Global (World Bank Doing Competitiveness Yearbook Competitiveness Competitiveness Report Business 2017 Report) 2016) Yearbook 2015) 2016-2017) 41 MIDA IN BRIEF

42 Who Are We? 1st point of contact for The principal Malaysian Government investors who intend to agency responsible for the promotion set up projects in the of investments and coordination of manufacturing and industrial development and selected services sectors in services sectors in the country Malaysia

Malaysian Investment Development Authority, Established in 1967 under Act of Parliament, 1965 Functions of MIDA • Foreign Direct Investment • Manufacturing Licenses • Domestic Investment • Tax Incentives • Manufacturing & Selected Services • Expatriate Posts • Duty Exemption • Principal Hub & selected services

• Assist companies in the • Planning for industrial development implementation & operation of their projects • Recommend policies & strategies on • Facilitate exchange & coordination industrial promotion and development among institutions engage in or connected • Formulation of strategies, programmes and with industrial development initiatives for international economic • Advisory Services cooperation 43 23 Overseas Centres • Los Angeles • Tokyo around the world • Houston • Osaka • New York • Beijing • Boston • Guangzhou • San Jose • Shanghai • Chicago • Seoul • London • Mumbai • Stockholm • Singapore • Munich • Taiwan • Frankfurt • Sydney • Milan • Paris KL Sentral • Dubai • 28 minutes (KLIA – KL Sentral) via KLIA Express Train 12 State offices Headquarter • Malaysia’s largest transit hub, KL Sentral, is Kuala Lumpur’s integrated Kuala Lumpur rail transportation centre. Alor Setar v Address: Penang Kuala Kota Kinabalu MIDA Sentral Ipoh Terengganu No. 5 Jalan Stesen Sentral 5 Selangor Kuantan KL Sentral Seremban 50470 Kuala Lumpur Melaka v Tel: 03 – 2267 3633 Fax: 03 – 2274 7970 Kuching www.mida.gov.my 44 Based in MIDA

Labour Telekom Malaysia Royal Malaysian Immigration Department Berhad Department Customs

Based outside MIDA

45 Entering the Malaysian Market Steps and Options for Investors: 01 Representative Regional Services provided: Free of Charge Office Office 1. Pre-Investment • Briefings Principal Hub • Data on Industries • Meetings with MIDA HQ/ Foreign Regional and global businesses and Chambers of Commerce/Foreign operations to manage, control, and Companies 02 support key functions including management of risks, decision making, • Visits to Production Facilities & Service strategic business activities, trading, Providers finance, management and human • Visits to potential locations resource. 2. Evaluation and Approval Production/R&D Centre Facility • Manufacturing License 03 • Tax Incentives Expatriate • Posts e-BizMatch: • Import Duty Exemptions • Principal Hub (Operational Headquarters, Free online registration for Procurements Centres, Distribution Centres) Business Matching 3. Implementation of Project An online business matching service connecting businesses worldwide. 46 Key Messages

Despite challenges and global uncertainties, Malaysia continues to strengthen its growth momentum and remains as a competitive investment destination. Some policy alignments are undertaken to address the misperceptions among investors.

47 THANK YOU MIDA Sentral No. 5 Jalan Stesen Sentral 5 KL Sentral 50470 Kuala Lumpur Tel: 603 – 2267 3633 Fax: 603 – 2274 7970 Email: [email protected] www.mida.gov.my

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