Investment Opportunities in Malaysia 28th November 2016 BIMP-EAGA Investment Networking Session Best Western Hotel, Puerto Princesa, Palawan, Philippines MALAYSIA Your Profit Centre in Asia Investment Opportunities in Malaysia Mr. Nelson Samuel Foreign Investment Coordination Division

Malaysia’s Economic Development Journey SECTOR GDP CONTRIBUTION (%) 1970 2015 Agriculture 33.6 8.9 Mining 7.2 9.0 Construction 3.8 4.4 Manufacturing 12.8 23.0 Services 42.6 53.5 Malaysia has successfully transformed from a predominantly agriculture-based economy in the 1970s, to a more diversified economic structure. Manufacturing sector contributes 81% of total exports MNCs contribute 75% of total exports Services the largest contributor to the Economy Source : Department of Statistic Malaysia

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 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. The “3+2” subsectors were selected due to their strong inter-linkages with other subsectors and indirectly their capacities will be the base to support the development of the overall manufacturing sector. Electrical and Electronics Machinery and Equipment Chemicals 2 High Growth Sectors Medical devices Aerospace

Who Are We? Functions of MIDA 1st point of contact for investors who intend to set up projects in the manufacturing and services sectors in Malaysia The principal Malaysian Government agency responsible for the promotion of investments and coordination of industrial development and selected services sectors in the country Malaysian Investment Development Authority, Established in 1967 under Act of Parliament, 1965 Functions of MIDA Manufacturing Licenses Tax Incentives Expatriate Posts Duty Exemption Principal Hub & selected services Foreign Direct Investment Domestic Investment Manufacturing & Selected Services Promotion Evaluation Assist companies in the implementation & operation of their projects Facilitate exchange & coordination among institutions engage in or connected with industrial development Advisory Services Planning for industrial development Recommend policies & strategies on industrial promotion and development Formulation of strategies, programmes and initiatives for international economic cooperation Planning Follow-up / monitoring

v v 23 Overseas Centres around the world 12 State offices Los Angeles Houston New York Boston San Jose Chicago Tokyo Osaka Beijing Guangzhou Shanghai Seoul Mumbai Singapore Taiwan Sydney London Stockholm Munich Frankfurt Milan Paris Dubai KL Sentral 28 minutes (KLIA – KL Sentral) via KLIA Express Train Malaysia’s largest transit hub, is Kuala Lumpur’s integrated rail transportation centre. 12 State offices Headquarter KL Sentral, Kuala Lumpur Alor Setar Kota Bharu Address: MIDA Sentral No. 5 Jalan Stesen Sentral 5 KL Sentral 50470 Kuala Lumpur Tel: 03 – 2267 3633 Fax: 03 – 2274 7970 www.mida.gov.my Penang v Kuala Terengganu Kota Kinabalu Ipoh Selangor Kuantan Seremban Melaka v Johor Bahru Kuching

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

Total Approved Investment in the Economy in 2015 USD43.5 billion Approved Investment Approved Investments in the Manufacturing Sector – 2015 Year Employment Total Investment FDI:DDI Projects 2015 66,490 USD17.4 B (40%) FDI: 29% DDI: 71% 680 FDI, USD8.4 b, 19% DDI, USD35.1 b, 81% Approved Investments in the Services Sector – 2015 Year Employment Total Investment FDI:DDI Projects 2015 112,194 USD25.2 B (58%) FDI: 11% DDI: 89% 4,150 USD1.00 = RM4.29 Source: MIDA 180,240 Employment Opportunities 62.2% (112,194) were in Services Sector “Malaysia attracted a total of USD43.5 billion worth of investments in the manufacturing, services and primary sectors” 4,887 Projects Approved In 2015, FDI inflows into Malaysia reached RM39.5 billion, 11.8% higher than that recorded for 2014 In 2015, FDI inflows in the Manufacturing sector increased to RM17.7 billion compared with RM4.7 billion recorded in 2014 Services sector contributes 58% of approved investments Manufacturing USD17.4 bil.(40%) Primary USD0.9 bil. (2%) Services USD25.2 bil. (58%) 7

Employment Opportunities Total Approved Investment for Manufacturing (Jan – August 2016) Total Investment Approved: USD 8.8 Billion USD4.4 B (50%) Foreign 485 39,872 35,857.7 17,962.0 17,895.7 Domestic 39,872 Employment Opportunities 485 Projects Approved

Total Capital Investment FDI vs DI (Manufacturing) for Year 2010 - 2015 USD’ Billion Year No. Potential Employment Domestic Investment Foreign Investment Total Capital Investment RM (Billion) US$ RM (Billion) 1980-2000 14,813 1,920,084 159.4 57.4 176.2 62.6 335.6 120.0 2001 – 2005 4,812 433,731 53.8 14.2 74.3 19.6 128.1 33.8 2006 1,077 88,952 25.8 7.3 20.2 5.7 46.0 13.0 2007 949 97,673 26.5 8.0 33.4 10.1 60.0 18.1 2008 919 101,173 16.7 4.8 46.1 13.3 62.8 2009 766 64,330 10.5 3.1 22.1 6.5 32.6 9.5 2010 910 97,319 5.9 29.1 9.4 47.2 15.3 2011 846 100,533 21.9 6.9 34.1 10.8 56.1 17.7 2012 804 76,631 6.6 20.9 6.8 41.1 13.4 2013 787 92,988 21.6 30.5 9.3 52.1 15.9 2014 811 78,343 32.3 9.2 39.6 11.3 71.9 20.5 2015 680 66,494 52.8 12.3 5.1 74.7 17.4 August 2016 485 39,872 17.9 4.4 35.8 8.8 TOTAL 28,659 3,258,123 477.5 146.6 566.5 175.0 1,044.0 326.6

Projects Approved and Implemented as at 2015 by Major Industries Sector No. Employment Domestic Investment (USD’billion) Foreign Investment (USD’billion) Total Capital Investment (USD’billion) Electronics & Electrical Products 3,895 789,882 8.05 46.78 54.83 Petroleum Products (Inc. Petrochemicals) 245 13,785 15.98 8.27 24.26 Basic Metal Products 820 70,085 10.10 7.33 17.44 Chemical & Chemical Products 1,354 55,503 6.49 9.42 15.91 Transport Equipment 1,315 129,701 8.46 3.54 12.00 Non-Metallic Mineral Products 849 60,064 5.33 4.54 9.87 Food Manufacturing 1,437 99,144 4.76 4.23 8.99 Fabricated Metal Products 1,731 118,909 3.23 4.02 7.27 Machinery & Equipment 1,608 102,447 2.56 3.62 6.19 Natural Gas 5 2,275 1.08 5.84 1.0 0.9 0.7 0.4 0.3 0.3 0.2 0.3 0.3 0.1 Source: MIDA

Total Capital Investment (USD) Approved Projects in Manufacturing Sector By State 2015 – August 2016 Jan-August 2016 2015 State No. Total Capital Investment  (USD) Johor D.T. 109 4,442,482,046 137 7,249,958,485 Selangor D.E. 159 944,285,365 222 1,856,363,371 Pulau Pinang 75 930,816,488 107 1,567,446,847 Sarawak 12 585,642,502 22 2,754,524,679 Perak D.R. 33 554,295,347 32 906,146,334 Sabah 10 447,258,396 81,171,043 Negeri Sembilan D.K. 24 264,017,271 35 398,469,135 Melaka 240,114,237 28 1,598,835,840 Kedah D.A. 23 166,446,117 49 316,212,984 Kelantan D.N. 6 135,664,056 82,443,551 Pahang D.M. 13 112,079,426 17 270,694,220 W.P. - Kuala Lumpur 16,661,117 2 944,411 W.P.- Labuan 1 8,340,935 675,991 Terengganu D.I. 5,654,321 11 326,364,041 Perlis I.K. - 724,759 Total 485 8,853,757,622 680 17,410,975,690

Major Projects in Manufacturing Sector In Sabah & Sarawak Sabah Economic Development Investment Authority (SEDIA) Agro-based Industry Tourism Logistics Manufacturing Regional Corridor Development Authority (RECODA) Resource Based Industry - Aluminum, Glass, Steel, Oil - based Industry, Palm Oil, Fishing & Aquaculture, Livestock, Timber-based, Marine Energy Tourism

Implemented Projects By Major Countries, As at 31 December 2015 US$ Billion Source: MIDA

Approved Projects By Major Countries, Jan – August 2016 US$ million Country Number Employment Foreign Investment* Netherlands 10 1,115 2,535.2 China 20 5,894 2,442.8 United Kingdom 11 1,092 2,184.8 Singapore 66 4,098 1,660.9 Korea,Rep. 4 185 1,523.0 Germany 15 3,037 1,477.7 Japan 36 1,283 1,051.9 Belgium 3 195 584.7 Luxembourg 1 253 539.1 Taiwan 13 1,576 505.0

Over 5,000 companies from more than 50 countries Prominent Foreign Companies in Malaysia Over 5,000 companies from more than 50 countries

Investment Policies Major Incentives Other Incentives OWNERSHIP Pioneer Status Income tax exemption ranging from 70% or 100% for a period of 5 or 10 years Less Developed Area Industrial Area Management Automation Capital Allowance Expenditure Principal Hub Independent Confirmity Assessment Bodies (ICAB) Investment Tax Allowance 60% or 100% on qualifying capital expenditure for 5 years Reinvestment Allowance 60% on qualifying capital expenditure for 15 consecutive years Import Duty Exemption For raw materials / components and machinery and equipment https://incentives.mida.gov.my/Incentives/Modules/Public/IncentiveList.aspx Investment Policies OWNERSHIP Manufacturing & selected services sectors can be wholly foreign-owned CAPITAL Freedom to Repatriate Capital, Interest, Dividends and Profits – No Restrictions EXPATRIATE POSTS Liberal policy, based on merit of each case

Principal Hub Key Functions Management of risk Strategic Business Activities Trading Finance Management & Human Resource Decision Making ELIGIBILITY CRITERIA :- Local incorporation under the Companies Act 1965 Paid-up capital : > RM2.5 Million Approval for Principal Hub Regional Operations No. of Projects 2015 6 Q3 2016 11 GRAND TOTAL: 17

45 Sub Sectors liberalised since 2009 Investment Opportunities in the Services Sector Investment Opportunities in the Manufacturing Sector Education & training Regional Establishments Environmental Management ICT Services Offshore & Outsourcing Activities Healthcare Logistics Tourism Resourced-based industries Oil & Gas, Food & Agro based and Value-added products from natural halal resources. Industries manufacturing intermediate goods Machinery & Equipment, Components & Parts and Moulds & Dies High technology, capital intensive & knowledge driven industries Alternative Energy Sources, Biotechnology, Advanced Materials, Advanced Electronics, Optics and Photonics, Petrochemicals/Chemicals, Pharmaceuticals, Medical Devices, ICT & Aerospace 45 Sub Sectors liberalised since 2009

Key Strategic Directions New Sources of Investment Opportunities Selective Approach Leveraging on the Megatrends development and the Fourth Industrial Revolution as well as Future Manufacturing Demographics – Fast growing Gen Y population in Asia Ecosystem Approach – to identify the gaps and complete the value chain and industry clusters Targeting niche products, technologies and services Driving Existing Companies to Reinvest Collaboration with Relevant Agencies Identifying opportunities for reinvestment Provision of special incentives based on productivity Intensifying collaboration with relevant agencies in the areas of human resource, infrastructure, utilities and R&D

Investment Promotion Activities Foreign Investments Trade & Investment Mission (TIMs) Specific Project Mission (SPMs) Specialized Promotion Programme with partners / foreign IPAs i.e. WEF, Invest Malaysia, Forbes, LEP, WIEF, etc. Leveraging on promotion activities between MoUs partners eg. Mizuho Bank / BTMU / Bank of China / ICBC China / HSBC Journalist Programme Industry Leaders Programme Domestic Investments Domestic Investment Seminar Local Conglomerate “Turun Padang” by YB Minister Supplier Conference Engagement with associations / companies Supply Chain Development Initiatives

REGIONAL / BILATERAL FTAs ON-GOING FTA NEGOTIATIONS Free Trade Agreements (FTAs) Potential market of 2.7 billion population Tariff reduction and elimination mostly by 2016 Constitutes 60% of Malaysia’s global trade via preferential treatment REGIONAL / BILATERAL FTAs China Chile Korea Japan India Australia New Zealand Turkey Pakistan ON-GOING FTA NEGOTIATIONS Once concluded, will increase the share of Malaysia’s global trade via preferential treatment to 80% Potential market of additional 1.8 billion population RCEP EU

Malaysia’s Involvement in FTAs Malaysia has implemented 13 Free Trade Agreements: ASEAN ASEAN Free Trade Area (1992) ASEAN-China (2004) ASEAN-Korea (2006) ASEAN-Japan (2008) ASEAN-India (2009) ASEAN-Australia-New Zealand (2009) BILATERAL Japan (2005) Pakistan (2007) New Zealand (2009) Chile (2010) India (2011) Australia (2012) Turkey (1.8.2015) Malaysia is still negotiating RCEP, Malaysia-EU, Malaysia-EFTA and ASEAN-Hong Kong. Source: MITI

ASEAN Economic Community and Single Market by 2015 Association of Southeast Asian Nation (ASEAN) Air Connectivity Singapore: 45 minutes (90x daily) Jakarta: 2 hours (32x daily) Bangkok: 2 hours (34x daily) Hanoi & Ho Chi Minh: 2 hours (18x daily) Manila: 2.5 hours (12x daily) Phnom Penh & Siem Reap: 2 hours (6x daily) Brunei: 2 hours (5x daily) Yangon: 3.5 hours (3x daily) ASEAN Economic Community and Single Market by 2015 Implemented AFTA in 2010 7th largest economy in the world – combined GDP USD2.4 trillion 3rd largest market in the world - population over 633 million people in 2015 and estimated to 717 million in 2030. Intra-ASEAN trade is 24% of total global trade of USD2.28 trillion in 2015 Total FDI inflows of USD121 billion in 2015 with intra-ASEAN investments alone contributing 18.4% 97.3% of products traded in the region will be duty-free ASEAN Economic Community 2015, integrated market & production base – freer flow of goods, services, investments, skilled labour and capital AEC 2025 An Integrated Economy Sectoral Cooperation Robust Productivity and Growth Enhanced Connectivity An Inclusive Community A Global ASEAN The establishment of the ASEAN Economic Community (AEC) in 2015 is a major milestone in the regional economic integration agenda in ASEAN, offering opportunities in the form of a huge market of US$2.6 trillion and over 622 million people. In 2014, AEC was collectively the third largest economy in Asia and the seventh largest in the world. ASEAN:633 million market, 8.8% of world’s population

25th 23rd 3rd 4th 6th 1st Ranking 19th 15th 31 million population Most attractive investment destination (Baseline Profitability Index (BPI) 2015) Dominant position in Islamic Finance Development Indicator (ICD- Thomson Reuters) Global offshoring destination (A.T. Kearney Global Services Location Index™ 2016) Protecting investors (World Bank Doing Business 2016 Report) 3rd 4th 6th 1st Ranking 31 million population 14 states CAPITAL: Kuala Lumpur Area: 329,847 km² 19th 15th 25th 23rd Most competitive economy in overall performance (IMD's World Competitiveness Yearbook 2016) IMD world talent rankings (IMD's World Competitiveness Yearbook 2015) Most competitive nation in the world (WEF's Global Competitiveness Report 2016-2017) In ease of doing business (World Bank Doing Business 2017 Report)

Why Malaysia? STRATEGIC LOCATION Home to Tropical Paradise Political and Economic Stability Pro-business Government Liberal Investment Policies An Unsurpassed Lifestyle Home to Tropical Paradise We Embrace Multiculturalism Excellent Facilities - Convention and Conferences Well Developed Infrastructure/ Connectivity Harmonious Industrial Relations Liberal Business Environment Young, Trainable and Educated Labour Force Banking System English speaking language Quality of Life IP Protection Good Track Record

Thank you MALAYSIA Your Profit Centre in Asia MIDA Sentral No. 5 Jalan Stesen Sentral 5 KL Sentral 50470 Kuala Lumpur Tel: 603 – 2267 3633 Fax: 603 – 2274 7970 Email: investmalaysia@mida.gov.my www.mida.gov.my