QUEST FOR QUALITY ANNUAL REPORT 2013 . Annual Report 2013 Contents 22 26 Our Quest for Quality From Strength to Strength The country’s economic future does not rest upon its MIDA’s new philosophy for attracting investments ability to host billion-ringgit megaprojects, but on its began to gain traction in 2013 as the global economy START capacity for developing its talent and knowledge turned a corner and the world’s advanced economies FINISH resource, warns Datuk Noharuddin Nordin, began to recover from the debilitating effects of the Chief Executive Officer of MIDA 2009-2010 financial crisis. Stepping up to the 06 38 28 96 Investments in Investments in Challenge Meet MIDA’s quest for quality the Manufacturing the Services investments accelerates MIDA with new activities. Sector Sector 12 20 50 84 Malaysia’s got Talent Malaysia workforce is young, educated and proactive, The Board of and is proving to be one of the best in the region. The Home Appendices country is privileged to have such an abundance of Directors, talent to meet the needs of industries, says and Management Tan Sri Amirsham A. Aziz, Chairman of MIDA Away Team and MIDA’s strategic plans gained momentum in 2013 Organisation as the agency began to Structure implement its flagship 64 18 programmes and of MIDA kicked-off its promotion The Authority activities in earnest. in 2013 Financial and its Highlights Functions STEPPING UP TO THE CHALLENGE n terms of FDI profitability, Malaysia was MIDA’s global presence allows it to streamline ranked 11th among the top 20 economies the efforts of all investment promotion agencies I with the highest FDI rates of returns and economic corridors in Malaysia and ensure (17 per cent) in 2012, far higher than the global that the often competing objectives of these average of seven per cent or the average of rate agencies nonetheless serve the same national of return among developing economies (8 per goals. The country’s strategy of decentralised cent), transition economies (13 per cent) and investment promotion to address the economic developed economies (5 per cent). imbalances among the country’s various regions has borne excellent results, with the North and With such a strong track record, it is little wonder South economic regions successfully capitalising that the World Bank now ranks Malaysia as being on their strengths in trade connectivity and the world’s 6th best place to conduct business, infrastructure, while the Eastern and East ahead of the United Kingdom (10th), Germany Malaysia economic regions have turned their (21th) and Switzerland (29th). These rankings are natural geologic and environmental advantages Malaysia’s best yet and underpin the country’s into extremely attractive investment destinations. largest leap in competitiveness rankings in recent Together with other key economic development years. The country’s sterling performance also agencies at the very top levels of the government, reinforces Malaysia’s position as a preferred MIDA has had a major role in developing this destination for trade and investments among strategy and leading it to fruition. local and foreign investors. With such a strong track record, FRIENDLY, FLEXIBLE AND FAIR it is little wonder that the World Bank now ranks Malaysia as The country’s manufacturing sector is going being the world’s 6th best place through a period of transformation and restructuring as industry players reduce their to conduct business, ahead of the investments into low value-added sectors and United Kingdom (10th), Germany increase their activities in higher value-added Stepping Up to (21th) and Switzerland (29th). industries. To facilitate this transformation, MIDA has established the Technology and Business Nonetheless, as Malaysia enters the next phase Frontier Division with a view of developing of its economic transformation, the time has and sustaining a strategic roadmap for the the Challenge come to up the ante. country’s transition into emerging technology industries. The new division’s main role will It is MIDA’s mission to ensure that Malaysia be to identify major industrial trends in new There are few better places for business in the world than Malaysia. achieves its economic transformation goals and emerging technology and business areas and its aspiration to be a developed nation by for which Malaysia would be ideally suited. MIDA ANNUAL REPORT 2013 REPORT ANNUAL MIDA The country enjoyed a 22 percent increase of net FDIs valued at 2020. The agency is and always has been the This division will also work closely with other 12 billion dollars in 2013, making it the seventh top recipient of government’s principal agency for promoting divisions to coordinate the efforts of local and investments into the country’s manufacturing foreign research institutions and make policy foreign direct investment (FDI) in Asia ahead of the Republic of and services sectors. With offices in 23 major recommendations to support the growth of new Korea, Vietnam and Taiwan. In comparison, global FDI increased economic centres around the world and with technology clusters and ecosystems. over 40 years of experience in international nine per cent in 2013 (6.7% into developing countries). diplomacy, MIDA is uniquely positioned to lead The United Nations Conference on Trade and Malaysia’s investment agenda. Development (UNCTAD) has noted Malaysia’s sophisticated strategy for leveraging existing 2013 REPORT ANNUAL MIDA locational strengths to encourage investments 6 7 STEPPING UP TO THE CHALLENGE STEPPING UP TO THE CHALLENGE Table 1: Trading Across Borders In 2013 into high technology manufacturing value chain segments. Thousands of prominent multinational Indicator Malaysia Singapore Hong Kong companies (MNCs) have chosen Malaysia as their regional and global operation centres with Documents to 4 3 3 Reliable Partners export (number) structured training programmes to transfer their key competencies to Malaysian employees. In Time to export 11 6 6 Schlumberger’s regional support facility (days) the long run, this environment will create high dedicated to advanced maintenance income employment opportunities for Malaysians Cost to export 450 460 590 services for oil and gas technologies in sectors such as business, accounting, finance, (US$ per container) IT, engineering, technical and other new services Documents to 4 3 3 sectors such as designing and analytical import (number) In October 2013, Schlumberger broke ground for sciences. Global and regional operation centres Time to import 8 4 5 its Asia Center for Reliability and Efficiency, which will also increase the usage of local infrastructure, (days) will be dedicated to advanced maintenance and banking services, information technology, Cost to import 485 440 565 servicing of drilling and wireline technologies telecommunications, utilities and logistics (US$ per container) for the Asia-Pacific region. Rajeev Sonthalia, president, Schlumberger Asia, hosted the services. Source: Doing Business, 2014, World Bank groundbreaking ceremony attended by Datuk The first OECD Investment Policy Review of benefit analysis (CBA) module for evaluating Phang Ah Tong, Deputy CEO II of Malaysian Malaysia also acknowledges the country’s tax incentives and financial assistances for all Investment Development Authority (MIDA), and sterling track record in investment promotion and manufacturing projects, with a similar module for guests representing oil companies, universities, recognises its achievements in building global evaluating investments into the services sector local and national government and key suppliers. expertise. The centre will also play a key role in competitiveness in high-end manufacturing and under development. the roll-out of new Schlumberger technology and in pushing out its technology frontier. According Located in Port Klang Free Zone and scheduled systems in the region. The centre will also bring to the Review, the private sector’s perceptions As the National Investment Secretariat, MIDA for completion in early 2015, the 180,000 innovative processes to the region and provide of MIDA as the key agency for investment has consistently championed the interests square-foot purpose-built centre is expected Schlumberger with the operational efficiency and promotion are positive, and the agency has of domestic and foreign businesses within to house approximately 100 people, combining equipment reliability it needs to meet the growing a good reputation for transparency and various Government economic committees local talent with international experience and demand for the company’s services. competence. and councils. The agency plays a crucial role in ensuring that Malaysia’s investment climate The OECD Review also highlighted that MIDA’s remains friendly, flexible and fair. Happy investors new organisational structure reflects a clear consistently cite the country’s open trade policies an ecosystem approach to promote private high-technology, knowledge and skills-intensive strategy of dividing the responsibilities of and strong trade infrastructure as being key investments, encouraging outsourcing activities industries with a high degree of research, promotion and facilitation into dedicated units to their decisions to invest here. World-class to enhance efficiency and introducing domestic development and design (R&D&D) activities where resources and expertise differ. The transportation, communication and financial investment promotion initiatives such as the and strong linkages with domestic industries. agency functions